One Income, Zero Hope — Not With 2 Kids and a (Big) Student Loan

Photo (cc) by yomanimus

Kimberly and her husband have no credit card debt, a reasonable $963 monthly mortgage payment for their restlessHdr (1)North Carolina home, and recently saved $600 a month on child care when their oldest child started kindergarten.

And they are drowning.

With two kids, ages 5 and 3, and now only one job between them, the family spreadsheet shows a red number at the bottom that means they will be nearly $1,000 short every month for the foreseeable future.

Kimberly-holding-Eleanor-3-crop-1
Kimberly with one of her children.

Kimberly, 34, just lost her $72,000-a-year human resources job, so the family’s new reality is stark. Their bills are higher than their income, and that’s how it’s going to be until Kimberly finds work.

“We never travel, and even when our jobs both were stable, have lived very modest lives. We have never been late on any payment in our lives,” said Kimberly. “[As] I lose the job I have held for nearly a decade, I do not know what we will do.”

Kimberly’s husband has a good job as a lawyer, earning $56,000 a year, but he ended law school with $150,000 in student loan debt.

Even after recently renegotiating his monthly debt payments from $1,031 down to $821, and further reducing their child care costs, the family budget is badly broken.

“We still fall approximately $800 a month short of what we need to keep the law school loans out of default and pay our mortgage,” Kimberly said.

Kimberly and her husband are the definition of “the two-income trap” as described in Elizabeth Warren’s 2003 book. With both parents working and both incomes required to balance the budget, the couple faced twice the risk of job loss as does a single-income family. And there is no safety net when one partner loses his or her job. In the past, single-income families faced with unemployment enjoyed this safety net: the stay-at-home partner could find temporary work while the main breadwinner conducted a job search. With both partners working, there is no such emergency plan available. In other words, there’s very little margin for error.

There also is no way for most single-income families to make a $1,000-a-month law school student loan payment.

Kimberly was lucky in this sense, her job loss was predictable. Her old firm was bought out, making some human resources functions redundant. The extended warning gave them a chance to hunker down, to look for ways to save on the student loan payment, for example, but it hasn’t helped with the job hunt.

“I have looked for new employment, to avoid this storm, for the past 11 months,” said Kimberly, who requested the family’s last name be withheld for privacy reasons. “In that time, I have applied for well over 100 opportunities, and been selected to interview for seven. Though two of these interviews led to second interviews, none resulted in an offer.”

Here is their monthly budget. Their take-home pay is about $3,100, and their expenses are more than $3,800.

WalkerBudget

More from Bob Sullivan:

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
19 Things You Should Never Buy at a Grocery Store
19 Things You Should Never Buy at a Grocery Store

These household necessities are overpriced at the grocery store. Get them cheaper at these places instead.

7 Reasons You Should Change Careers After Age 50
7 Reasons You Should Change Careers After Age 50

Many older workers have the energy and experience to make a successful career change.

3 Ways to Downsize Your Life to Save Money, Time and Stress
3 Ways to Downsize Your Life to Save Money, Time and Stress

Downsizing can cut the bloat in your finances — and give you more free time and less stress.

How to Achieve Your Financial Goals in 2020
How to Achieve Your Financial Goals in 2020

New year, new you. Get your finances on track with the help of these tools for investing, saving, budgeting and earning.

5 Home Improvements That Help You ‘Age in Place’
5 Home Improvements That Help You ‘Age in Place’

These safety-conscious home upgrades can help retirees stay in their home.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Do This in the Car If You Want to Avoid COVID-19
Do This in the Car If You Want to Avoid COVID-19

It takes just seconds to take this simple preventive measure.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.