Coping With Income Loss

The major problem we are experiencing with our personal finance is income loss. In deciding to go back to graduate school, James went from a salary of approximately $2,750 per month to about $600 per month. As you can imagine, this was a significant hit to our monthly cash inflow.

We’ve done the following to cope with this.

1) Reduction in Savings:

Both of us dropped our active level of savings. For example, James’ saving level declined from about $1,000 to $100 per month. All things being equal, its difficult to save a great deal on a graduate students salary.

2) Shift in Family Financial Leadership:

Miel’s salary is currently the primary income source for our family. While we still set priorities jointly and have our own checking and savings accounts, Miel is covering an increasing share of the family expenses, which also means that she has more say in how household funds get allocated (good thing she’s the most wonderful partner on earth!).

3) Interest Exposure Management:

We’re refinancing both of our real properties from adjustable to fix rate notes. Rates may go up or down, but we’ll have a predictable level of expenses in the future. This should help us to 1) better manage our income and 2) more quickly pay down our real estate debts.

4) Alternative Income Sources:

The income from our side project (e.g. our blog) and our investment property should both be improving in the next few weeks (especially post refinance). Both of these will help us alleviate the income cruch we’ve been experiencing in the work/graduate school transition.

We’ve also received some family money, but won’t be asking for or expecting further contributions. Finally, these aren’t optimal solutions to coping with the income loss, but this is what has happened so far.

Thanks for reading and happy surfing!

Best,

James