Adjusting to A Drop in Income

Thinking back to when our income first dropped there was quite an adjustment. My gut reaction was to make money so that we wouldn’t have to adjust our standard of living. That got exhausting, more exhausting than adjusting our standard of living. So, I figured out another way to adjust to the drop in income.

A reader posted a link to this video, and Amy Dacyczyn says something noteworthy in it.

Amy said in the interview that if you track your spending, you don’t need to buy her book. I think her book is full of worthwhile information, and I am thankful for it, but essentially she is right. If you write down every penny you spend, you can see where you are spending and what you can cut. If you need to cut dramatically, you will need to redefine needs.

When I evaluated our spending, I switched to cloth diapers and we dropped Netflix. We cut out all convenience foods and I learned to cook everything from scratch. I shopped around for auto insurance and we conserved energy. Now, not only have we adjusted to this standard of living, we feel better about our lives in general. The time I have at home with the kids is more valuable than the money I could earn outside of the home.

We did not dump all discretionary spending. Our entertainment is the internet, which pays for itself every month one way or another, and satellite radio, which we have on constantly and enjoy. We could afford these things in our budget, and losing them would alter our quality of life in a way we were not willing to if we did not have to. These were prioritized over disposable diapers and Netflix.

The key is to track spending. We use a debit card, so our bank tracks everything, but keeping receipts to see what we bought that we could have skipped helped to. For a while, I did the pen and paper method, where I wrote down everything, but after I got the hang of not spending, that was no longer necessary. How you record spending and what you decide to cut is different for everyone, but if you are truly interested in cutting spending, this step cannot be skipped.

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