‘Are we doing ok?’: My spouse is about to start working, but we’ll be in the red for two years. How can we make ends meet and plan for unexpected expenses?

Hey Money Minder,

I gotta spill the beans about our cash flow lately. So here’s the deal:

I’m hauling in 76k per year, while my better half is hitting the books and will hopefully snag a 65k gig in a couple of years once they graduate. We’re footing the college costs ourselves to dodge those pesky student loans. Oh, and we’ve got a herd of 3 kids (twins are double the trouble but also double the joy, right?), all under 8. Renting a house, got one car paid off, some investments worth 85k, and 45k in the bank.

Here’s the kicker – our monthly expenses are beating our monthly income by about 2k until my partner starts raking in some dough. We’re talking rent, utilities, tuition, insurance, phone bills, internet, and groceries – no frills, no extra splurges. Crunching the numbers, we’ll be in the red by 48k by the time we get that second income, which we can handle by tapping into our bank accounts and investments.

But let’s be real, it’s kinda nerve-wracking knowing we’ll be running on empty for the next two years with the kiddos growing up and who knows what money pits popping up out of nowhere.

So, spill the beans, are we on track here? Any tips to breeze through the next couple of years a bit smoother?

Catch you later,
Budgeting Boss

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the proactive step to assess your financial situation and seek advice. It’s evident that you have a clear understanding of your current financial standing and are actively working towards a brighter future for your family.

Given your income and expenses, it’s understandable that having one income stream can put a strain on your budget, especially with three children and college costs to cover. It’s commendable that you are avoiding student loans and managing your expenses diligently.

To make the next two years a bit easier, here are some practical steps you might consider:

1. Budgeting: Since your expenses currently exceed your income by around $2k, it might be helpful to create a detailed budget to track where your money is going and identify areas where you can cut back or reduce costs.
2. Emergency Fund: Considering your concern about unexpected expenses, focus on building up an emergency fund that could cover 3-6 months’ worth of expenses. This will provide a financial cushion in case of unforeseen circumstances.
3. Side Income: While your spouse is finishing their degree, explore opportunities for them to earn a side income from freelance work, part-time jobs, or other flexible options that won’t compromise their studies.
4. Childcare Costs: Since you have young children, childcare expenses can add up. Look into more affordable childcare options or community resources that can help alleviate this cost.
5. Regular Savings: Set up automatic transfers to your savings account each month to slowly build up your savings and investments while staying on top of your regular expenses.

By taking these practical steps, you can gradually improve your financial situation and feel more secure as your family navigates the next two years. Remember, it’s all about progress, not perfection. Keep a positive mindset and stay focused on your financial goals.

Best of luck to you and your family as you work towards a brighter financial future.

Farewell from THE MONEY MINDER.