by Ashley
The average household income in the U.S. in 2014 is somewhere between $50,000 and $55,000, depending which source you look at (median = $52,000 here, but nearly $54,000 here). Given these numbers, our household is doing really well!
Remember when I first introduced myself and my debt situation?
I said at that time that our income averaged about $5,500 per month (after taxes). Only….as soon as I’d hit “publish” our income went sky-high. In the following months, things shot up and we were able to make some seriously hefty debt payments as a result. I created a little table below.
| Month | Month Income | Debt Payment | % of Income |
| April 2014 | $8290 | $3819 (1622 regular + 2197 surplus) | 46% |
| May 2014 | $10965 | $7451 (5453 regular + 1998 surplus) | 68% |
| June 2014 | $9406 | $5659 (1959 regular + 3700 surplus) | 60% |
| July 2014 | $10420 | $1939 (surplus money was saved for transition to living on last month’s income) | 19% |
| August 2014 | $8322 | $2610 (surplus money saved for transition to living on last month’s income) | 31% |
| September 2014 | $6317* start of living on last month’s income | $1779 | 28% |
| October 2014 | $6410 | $1752 | 27% |
Table Note: This is a little confusing so here’s some explanation. When I first started blogging I would make a debt payment at the beginning of the month (called my “regular” payment), then make an additional payment at the end of the month with leftover money (called my “surplus” payment), so April through June all had 2 debt payments. In July and August I saved the surplus money as I tried to transition to living on last month’s income. September was my first full month living on last month’s income, so the surplus payment disappears since I knew exactly how much money we’d have for the month and, therefore, did a zero-based budget where we weren’t left with any surplus funds at the end of the month.
This month (November) I told you that our income was $5855. This is almost half of what we made in May-July! What’s happened? And, more importantly, how do we get back to those super high-income months so we can continue smashing our debt?
I’ve been studying my budgeting excel spreadsheets to try to determine what is causing such a huge variation in income. And, like most things in life, it seems to be the confluence of many factors.
A lot of it was my pay.
- I received a large check for a project I’d been working on (unrelated to either of my current job situations).
- Over the summer semester I received my teaching pay in two lump sums (in June and July), whereas in Fall and Spring semesters the money is spread over four months.
- Due to various issues I won’t delve into (mentioned here), I haven’t received a check from my research job for work completed in August, September, or October. The check(s) is/are forthcoming, but for those months my pay was slightly lower than usual since I wasn’t getting paid from this job.
And the rest of it was due to my husband.
- My husband is a small business owner (he does hard wood floor installation). He has two crews of people doing install work. In September, he had to let his second crew go. This was a very tough decision and, obviously, negatively impacts our income. I won’t go into details for privacy sake, but I will say that this was not entered into lightly and there was a LOT of talk and negotiation before the decision was made that he would have to part ways from his second crew-leader.
- Some unfortunate business expenses came up: a costly repair that had to be done, some pricey equipment that had to be bought, and payroll for jobs that were net negative (i.e., for the repair work). He has business savings that were able to compensate for some of the expenses, but some of the expenses had to come from his current earnings (meaning, less money for income during those months).
So, how do we get our income back up into that super-high range where we can be putting 60+ % of our income toward debt? Those months where I was paying $5,000+ toward debt payments made such a HUGE boost psychologically. I want to get back to that place! If we do, then we could eradicate our debt so much more quickly; its so encouraging to really see those debt numbers fall so rapidly!
The first target is to increase my income.
I asked my teaching university boss if I could take on an additional class in the Spring (to be honest, I asked if I could have TWO extra classes, but I was told there wouldn’t be enough to go around). Although I haven’t signed the paperwork guaranteeing me the extra class in Spring yet, let’s just say that I’m cautiously optimistic (knock on wood!) I was supposed to have an extra class this semester, too, but it was cancelled due to low enrollment, so this is a “wait and see” type thing.
In terms of my research job, I expect that I should be paid for my time (for work from August-October) sometime this month. I don’t feel comfortable divulging too many details, but this job and relationship is a bit tenuous. Rather than trying to look for another way to supplement my income (finding another part time job or something similar), I’ve decided to devote any extra time right now to applying for full time positions. If nothing turns up this hiring season (meaning, if I don’t land an academic job starting in August 2015), then I will move my attention to longer-term alternative solutions to earn income. Right now I don’t want to distract myself with something short-term just to make a little extra money at the expense of a potentially very lucrative long-term career. I need to keep my eye on the long-term prize.
The second target is to increase husband’s income.
In reference to his second crew, husband took his time and found someone who has just started working as a crew boss for a second crew. This is still brand new but so far things are going well (though turnover tends to be high in the first few months, so fingers crossed that things work out). This will help boost income a bit.
Then, here’s where things get really hairy.
Husband’s only other real way of boosting income is to continue growing his business. He has several big retailers that he does contract work through and would like to get to a point where he sits in the showroom making sales and doing customer bids all day (leaving the install work for his crews to complete). To make that financially possible he needs at least 3 crews running at all times. He has 2 crews currently, but that includes himself and a helper as one crew so he really needs 2 additional crews to be able to quit doing install work himself.
Enter: dilemma.
This is the hard part of having such an unpredictable future. Husband could bust his butt to try to build things up and then we find out I’ve landed an academic position and we’re moving in July. We have no way of knowing what the future holds. Regardless, Winter is not a great time to build up crews of people since business traditionally slows down around the holidays. But come Spring (right when I’ll hopefully be interviewing), husband has the choice to start advertising and trying to hire more people. I’m not sure what we’ll do at this point. I want his business to be as lucrative and rewarding as possible. But I’d also hate for him to work so hard to try to get to right where he wants it….and then we find out we’re moving.
Anyway, when I started off writing this post I wasn’t intending for this to take such a philosophical turn. I just wanted to do a little analysis of our income and to try to analyze how we can get it back to such a super high range. I guess the answer, to some extent, is simply time. Hopefully I’ll be making more money come Spring. Maybe I’ll land a job and make even more the following Fall. Husband’s job could really get booming in the Spring. He could hire more people, get more crews running, and transition to office-only by Summer.
I guess only time will tell.
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
Ashley, I guess my question is why your husband must always adjust to your job. Your answer may be that you need to follow those rare professorships wherever they may be, and thus your family adjusts to your job. However, it seems like your husband has brought in the majority of your income with his business (am I correct in saying this?), and he would be working from the ground up, establishing himself in a new location. Can you earn enough as a professor to compensate for his loss of business income in a new location? And also, how long does it typically take for him to build up his business again?
Lots of good questions! First, my husband has adjusted to me (in the past) before he had a real career path going. Arizona is the first place where he has owned his own business. However, I am sensitive to this fact and am only applying for positions where I would be paid enough to compensate for a complete loss of his income (assuming it would take at least 3 years before his business gets up and going, so I need to earn enough to compensate for his loss of income). In terms of our current earnings, I’ve never broken down exactly who earns what and don’t really feel comfortable to do so. In general, he earns more than I do but there are months where I end up earning more. In terms of earning potential, I also have the potential to be employed in an environment where I’ll also get various benefits and perks (e.g., paid vacation/time off, 401k matching, health insurance, etc.), and my job would potentially be more stable/steady. As a small business owner his earning potential is, in theory, limitless if he continues to build it up but, in reality, there are several obstacles in the way and he will not be able to operate in his current position (doing install work) forever.
Yes, I can see that the benefits of a steady job with a 401k and health care etc. would be very attractive for a family. Is the floor install business something you feel would be hard to sustain for many more years because of the hard physical work?
I am curious, if you do move, how would he handle warranty work when (now) living out of state? Just something to think about. Keep the eye on the long-term prize, but consider the short-term expenses you might incur.
Maureen – this is something worked out with the contractors he does business through. In all of his retail locations he had to put down a $3,000 “refundable” (in quotations) deposit for warranty work. If we leave the state and something needs to be repaired, the company uses the deposit to cover any warranty work by paying someone else to do the work. The companies keep the deposit for up to 3 years and, after that time, any money remaining is returned. I put “refundable” in quotations because in practice my husband has never, ever seen anyone get refunded any of their deposit. We have viewed it as an expense of doing business and don’t expect to get any of that money back but, if we do, it will simply be a bonus.
Anonymous – That’s exactly correct (regarding: hard physical work). If he gets it to a point where he’s not actually doing the installation then its a different story. And he’s still young and could continue doing install for several more years so this isn’t an immediate concern, but a reality that he won’t be able to do it forever.
Wow I like the median income. Income in my area is no where near this. Most are lucky if they get paid $9-10 an hour maybe $15-17 with a college degree. Unless they are a doctor, nurse or lawyer or something. Even when I worked in a restaurant as a manager in Philly I was making $13 as a swing manager–doing the exact same job where I am now I got paid $10 an hour. We just have lower wages up here.
Well, you should know by December if there’s a realistic chance of you having good employment elsewhere (because you’ll know if you’ve scheduled conference/first round interviews.) And you should know for sure by, what, March/April. Given that time frame, I’d say it doesn’t make sense for your husband to kill himself growing the business *right now* — he could do that next spring/summer.
Good point. Of course, I have several friends who got hired in last minute May situations, but in general, we should have a pretty good idea by early Spring.
Another perk there may be tuition savings for your daughters in 15 years if you are employed by a university or college.
True! No small savings in today’s world!
Ashley – I assume your husband will have some opportunity to sell his business? Perhaps one of his employees would be interested in carrying on?
Ehhh….this would have to be a “wait and see” type thing. He could sell his business name and contacts, but he would likely want to keep his equipment, so it would really only be a shell of a business. Last year (when I was applying) we’d talked about him leaving it to his first hired employee (a guy whose been with him for 3 years now), but it’s tricky. The guy – while an excellent employee, hard worker, etc. – just doesn’t have the business savvy to keep it running. There’s a lot more to it than just doing the flooring installation. So, who knows?
Is this the kind of business your hubby could sell to someone else? That’s a possible consolation to having to give it up and move.
There is also learning during the time that he’s building up, it’s not just all thrown away. If he’s shifting the business to a different model, he’ll learn a lot along the way and that’s something he can take with him.
So, so, so true!!!! There were a LOT of mistakes made in his first year of operation. Lots of COSTLY mistakes!! I remember a full summer (like 3 months??) with net negative income (and having to dip into our personal family savings to bail him out). We were able to weather those storms at the time (before having kids), but a similar situation in a different place or time may have wiped him out of business entirely. We were lucky to learn those lessons early on and the things he has learned we can carry with us wherever we end up next – whether staying here and continuing to grow or moving to a new place entirely.
In our home, large required expenses, such as interview clothes or travel expenses to see family, would come out of that monthly-savings-for-irregular-expenses account. I wouldn’t see it as stopping savings, it would be using it for another purpose that month.
I use Quicken’s “Reminder’s to show in register” function to look ahead 12 months. All known upcoming expenses are entered as soon as possible. If I don’t have an exact amount, I round up from last year’s amount. I can look ahead to see how the cash flow is going. In our case, we’re mostly out of debt, so I like to keep it above $1000 at the lowest point to cover any unexpected expenses without going into our larger emergency fund. This system let’s me see that, yes I can use $100 for ABC this month because we’ll make it up before having to pay XYZ.
As far as interview clothes, I made out pretty good with Land’s End’s sale sections and two shirts from Target. Less than $100 for a week’s worth of outfits. My bigger expense will come when I am working full time and need more non-mommy clothes.
I just love that you have been able to figure out what is working for you and what is not! Sounds like you are really trying to keep on top of this budget! You go girl! I struggle with this as well. You may find that writing down where your cash goes makes you feel better.