BOSTON – For many families, the “job-loss recovery” is hitting home.

The number of married-couple families in which both spouses were employed declined sharply in 2002. The drop of 368,000 is the first recorded since the Bureau of Labor Statistics began reporting income characteristics of families in 1993, according to Challenger, Grey & Christmas Inc., an outplacement firm.

This decline in dual-income families is worrisome because during previous recessions the number of dual-income families actually grew as financially strapped families worked several jobs to make ends meet.

Another troubling factor is the loss of household income: the median income of single-income households was $34,517 in 2001, almost half that of dual-earner households at $66,151, according to U.S. Census Bureau data.

Whether by choice or not, when going from a dual-income to a single-income household, families need to come up with some creative cost-cutting strategies and renewed financial discipline.

When faced with a loss of income, the first reaction may be to think that somehow it will work out. Rather than waiting, families need to sit down and run their numbers, listing each expense and payment and comparing the total to their income. Focus on the largest expenses first and discuss what can be done to reduce those.

Working couples that review their expenses carefully may be surprised by what they find: that many expenses are incurred exactly because both spouses are working.

Here are some of the major expenses that can be reduced or eliminated for families faced with going from dual-income to single income status:

Childcare. The savings on the annual cost of care for one child can range from $5,000 to $12,000. Other costs that can be saved include gifts to caregivers, supplies, trips and of out-of-pocket costs for those extra visits to the doctor caused by those germs kids seem to pick up in day care.

Second car. Considerable savings can be realized from selling the second car and cutting expenses associated with car payments, maintenance and insurance.

For many families, doing this is not practical, as they still need another car for errands and carting the kids around. One way to address this is for the working spouse to share a ride or use public transportation, and leave the car with the stay-at-home spouse.

Mortgage savings. Families struggling to get by on one income should also look to refinance their mortgage to a longer term or to a mortgage that allows interest-only payments.

These options stretch out the mortgage but can lower the monthly payment considerably. When your family income rebounds, you can pay additional principal to get back to the original payoff plan.

Many outlays can be reduced when one spouse is at home and has some time to become a more involved “expense manager.” Here are a few strategies:

Raise the deductible on your auto and homeowners insurance to $500 or $1000. Buy these policies through the same insurance company. This can save you ten to 15 percent, or $200 to $350 a year on these costs.

Compare costs at the gas pump and use regular gas. This can save $4 to $6 per fill up, or $200 to $300 per year. Also, keeping the engine tuned, your tire pressure up and your speed down can save an additional $100 a year.

Turning the thermostat down five degrees for four hours a day can save 10 percent on your heating bill. In the northern part of the country, that could save $150 to $300 this winter. You can do this yourself, or buy a programmable thermostat to do it for you.

Wrapping your hot water heater with insulation can save an additional $50 to $100 a year. Using lower watt light bulbs can add to the savings.

Avoid ATM and transaction fees by using only in-network ATMs and avoiding PIN-based debit cards. Keep your bank balance above the minimum to avoid additional account fees. This can save you $150 to $250 per year in ATM and bank fees. Use your bank’s online bill payment service – they write and send your checks according to your online direction. This can save you the cost of checks and $80 to $150 in postage per year.

Drop optional telephone services such as answering services (buy a $25 answering machine instead) and don’t use directory assistance. This can save you $75 to $100 per year. Also, cancel that extra cell phone, reevaluate your calling plan or call only during nights and weekends when costs are lower – this can save you $250 to $500 a year.

While you’re at it, drop that extra phone line and save $35 a month. You won’t need it for Internet access if you have a cable or DSL Internet connection. Also drop premium cable programming channels and rent the entire series of the “Sopranos” on DVD after the end of the season for only a few bucks.

You can save a bundle when you buy food in bulk, avoid prepackaged items such as deli meats and cheese and don’t be brand loyal. Also, fill a water bottle and bring that to work instead of buying bottled water and soda. These tips can save $30 to $50 a month, or $360 to $600 a year.

Cut the weekly dining out to once a month. This can save $150 per month or more – and it could also be good for the waistline.

Cancel unnecessary magazine subscriptions. Instead, ask friends which magazines they subscribe to and drop the ones you both buy. Then swap magazines each month. This will save you $15 to $30 per cancelled subscription per year.

Review medical, life and retirement benefits. One spouse may work for a company that offers important benefits such as medical, life and disability insurance coverage.

It’s important to quickly assess your coverage and decide how to replace insurance and medical benefits that were provided by a spouse’s former employer.

Retirement savings can be interrupted because individuals must have income from wages or earnings to contribute to 401(k) and other employer-provided retirement plans. However, non-working spouses are now entitled to contribute up to $3,000 in 2003 to a spousal IRA or a Roth IRA.

One positive effect on families going from dual-income to a single income status can be lower federal, state and FICA taxes. Also, families who did not qualify for certain tax credits, such as the Child Tax Credit or Education Credits, may now qualify. In some cases, a portion of these credits is refundable, which means that you can receive a refund of the credit even if it exceeds your tax liability.

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(c) 2003, MarketWatch.com Inc.

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AP-NY-10-13-03 0626EDT