Author Topic: Case Study: Implications of Becoming a 1-Income Family  (Read 11444 times)

sunflower_yellow

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Case Study: Implications of Becoming a 1-Income Family
« on: September 10, 2015, 12:09:36 PM »
Life Situation:
Mr. Sunflower and I are expecting our first child around the end of this year, and due to a variety of factors, we are considering the option of me (soon-to-be-mother) staying home with the SunflowerSeed for his/her first year.  This option is available to us ONLY because we have been living a rather Mustachian lifestyle for many years, and I'm grateful that we can even consider the option (many of our friends cannot).  We are married, filing taxes jointly, and will have 1 dependent before the end of 2015.

The numbers/ situation presented below assume that my husband would work full-time outside the home to earn wages ($$$), and I would work full-time inside the home to ensure that husband's wages go as far as possible AND we have the best quality of life possible.

Gross Salary/Wages:
$54,760 - my husband's wages, before taxes.  He is paid hourly, so this number may be a little higher (with overtime) or lower (if he doesn't work a full 40-hour week).

Pre-tax deductions:
NONE.  My husband's job does not offer a retirement plan, at all.  My job offers a SIMPLE IRA, to which I'm currently contributing, but that will go away if I leave my job.

Other Ordinary Income, Qualified Dividends & Long Term Capital Gains, Rental Income, Actual Expenses, and Depreciation
None.  I don't even know what "qualified dividends" means.

After Tax Income:
I am estimating that our monthly take-home pay will be roughly $3,560, after taxes and taking into account that not every work week will have exactly 40 hours.

FUTURE Anticipated Expenses
As we're first time parents, I've had to make some educated guesses here and there on items related to children.  Everything else is based on our current budget.

SAVINGS/ PAYING OURSELVES FIRST:  $ 773
Retirement (Roth IRA)    $ 423 (maximum contribution, to my husband's Roth IRA)
New car    $ 100
Extra mortgage principle payments    $ 100
Car Maintenance    $ 150

TOTAL FIXED HOUSING BUDGET:    $ 1,062
Mortgage    $ 517
Taxes (School + Property)    $ 375
Home Insurance    $ 55
Internet    $ 15
Utilities (annual average)    $ 100
   
TOTAL FIXED OTHER BUDGET:    $ 436
Car Insurance    $ 58
Mrs. Sunflower's Health Insurance    $ 340
SunflowerSeed's Health Insurance   $9
Cell phone    $ 29
   
TOTAL VARIABLE BUDGET:    $ 1,000
Food    $ 500
Gas    $ 100
(1)Variable Other     $ 400
   
(2)TOTAL PERSONAL ALLOWANCES:     $ 100
Mr. Sunflower $ 50
Mrs. Sunflower $ 50

-----

(3)TOTAL ACTUAL EXPENSES  $2,498
INCOME MINUS ACTUAL EXPENSES  $1,062

(4)TOTAL BUDGETED LINE ITEMS    $ 3,371
(5)WIGGLE ROOM   $ 189

-----

Retirement savings as percentage of after tax income:  11.9%  :-/
Total savings as percentage of after tax income (retirement, new car, car maintenance, and extra principle payments):  21.7%

-----

NOTES:
(1)"Variable Other:"  I can separate this out more, if needed.  Basically, this is EVERYTHING else, including gardening supplies (e.g. seeds, fruit tree purchases, etc); household products (e.g. TP, soap); baby products (e.g. thrift store clothes, I don't know what else babies need); entertainment (e.g. annual trip to the used book sale); gifts (most/ all of which we make ourselves, we're crafty); home renovation projects (e.g. paint, lumber, drywall, etc - our labor is free!).  The actual category changes based on what we're doing that month/ season and has almost always been less than $400, but I like to budget high and have extra left over than the converse!
(2)"Personal Allowances:"  Husband and I deposit our paychecks into our joint checking account and get small personal allowances for things like our own clothing purchases, the occasional drink out with friends, new running sneakers, etc.
(3)Everything that we actually have to pay.  Doesn't include the savings / paying ourselves category, including savings like Roth IRA, new car fund, car maintenance savings; extra mortgage principle payments; or personal allowances.
(4)Everything that has a line item allocated to it in our budget.
(5)The difference between everything that has a line item in our budget and our actual income.

Assets
Investments totaling ~$183,000 spread across two Roth IRAs, three brokerage accounts, a rollover 401k, a retirement plan from Mr. Sunflower's former employer, and a SIMPLE IRA from my current employer.

Our car is approaching 10 years old, but it's in excellent shape, mostly highway miles, and completely paid off.  We plan to drive it into the ground and are saving up for a new car in +/-5 years.  We share one car, and because of the climate in which we live, the fact that we'll have a small child and live on a busy road, and we live to take frequent weekend adventure trips out of town, it is DEFINITELY more cost effective to have a single, small, gas-efficient car than to rent one every week.  Husband does bike to work whenever possible.

Our home is worth an estimated $180k; we've still got some mortgage on it (below).  It is energy efficient, appropriately sized, and the backyard has decent gardens to supplement our diet during the summer.

Liabilities
We have $59,000 left on our mortgage at 3.375%.  No PMI.  I am currently throwing extra at the principle each month before SunflowerSeed shows up, as I don't know if I'll be able to do that after I stop working.

No student loans.

No consumer debt.

Specific Question(s):
1) What would you change about our budget?
2) What pre-tax savings options might be available to us to reduce our taxable income?
3) What else should we be doing differently?  If you are a parent, what are we missing from this 1-income plan?  Feel free to bring out the face punches!

We are likely be willing to push our freedom date back if it means having a better quality of life while our children are very young.  Important note:  I DO NOT see myself being a stay at home parent for the long term.  So, in another year or two, we'll be back to two incomes (I can expect to make slightly less than my husband, and also can expect much of my income to go directly to childcare costs).  If we have another SunflowerSeed, push that back to 3-4 years, but I will LOSE MY MARBLES if I stay home with small children longer than that.

Ready...  set...  go!

---------

EDIT:

Health insurance:  Mr. Sunflower's company offers lots of flexibility and crappy benefits.  It's more expensive to add me and Seed to his insurance than it is to purchase it (subsidized) from our state's health marketplace.  So, those estimates above are what I expect to pay for a privately purchased plan (New York State).  Cheap for babies, expensive for adults.  The plan I'm considering for me is a Bronze level plan, high deductible - can you have an HSA if you're not employed/ your employer doesn't contribute to it?

QUESTIONS about HSAs:  Can I have a HSA if I'm not employed?  Or is this something only an employer can contribute to?  Can my husband contribute to my HSA?  Can I use my husband's HSA for my medical expenses?  So many questions!
« Last Edit: September 10, 2015, 02:29:20 PM by sunflower_yellow »

Gin1984

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #1 on: September 10, 2015, 12:27:13 PM »
Well, first both of you can contribute to an IRA (as the non-working spouse of a working person you can put the full amount in).  I would do that prior to putting extra money towards your mortgage.  Personally I would do that in a traditional, not a Roth.  How will your health insurance change with all of you on your husband's insurance?  Also does he have any other benefits since he does not have a retirement account?

Catbert

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #2 on: September 10, 2015, 12:42:28 PM »
1.  Your budget looks pretty good to me.  I'd quit paying extra on the mortgage for the moment and save it instead.  Re-institute it later if paying off your house is a priority.  If your post-baby budget works out (and/or you go back to work) you can always pay what your saved in a lump sum later.

2.  I don'/t think you'll have a tax issue next year.  Family of 3 with 54K income should keep you in a low tax bracket.  Since you don't have access to a 401k or similar there isn't much else you can do for this year.  You could do deductible IRAs rather than Roths.

3.  Not a parent so no thoughts here

Neustache

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #3 on: September 10, 2015, 12:52:00 PM »
Ask your mortgage company if they will do a mortgage recast, and if so, what are the conditions....this will take into consideration any extra payments you've made, recast the mortgage and lower your monthly payment.  You have a great rate, though...so after you meet the conditions of the recast I'd stop paying extra on it.  Usually there's a small processing fee to do it.  It's not a refi- you would have the same rate and the term date would remain the same. 

You all are doing great, BTW!  You are starting this way ahead of the game compared to us 7 years ago when I quit working to stay at home.  We had less income and less savings. 

Your husband will probably end up making more money down the line.  My husband's pay has more than doubled in the past 7 years, with some diligence and extra work on his part.   Frugalwoods is a blog about frugality and they are having a baby soon.  You might check their posts on low-cost options for getting kid gear.  You can make having a kid as cheap or as expensive as you want it to be!


Bracken_Joy

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #4 on: September 10, 2015, 01:03:36 PM »
No feedback, but following because you're likely where we will be in 2 years.

Your budget looks great.

I know it's a huge topic of debate around here, but personally, I don't think I would pay down the mortgage more with how good of a rate that is. I would make sure you're maxing a tIRA for both of you first. (As mentioned previously, non-working spouses can still contribute). http://www.investopedia.com/articles/retirement/03/021903.asp

The order of action I see around here is often:
Quote
0. Establish an emergency fund to your satisfaction   
1. Contribute to 401k up to any company match   
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
3. Max HSA   
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)   
6. Fund mega backdoor Roth if applicable   
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.   
8. Invest in a taxable account with any extra. 

Axecleaver

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #5 on: September 10, 2015, 01:23:20 PM »
Quote
1) What would you change about our budget?
2) What pre-tax savings options might be available to us to reduce our taxable income?
3) What else should we be doing differently?  If you are a parent, what are we missing from this 1-income plan?  Feel free to bring out the face punches!
When Little Axe showed up, we had a tough time transitioning from a pretty frugal household of two to a frugal household with kids. It's easy to skimp on stuff for ourselves, it was hard to deal with not spending on the kid. Took us a few years and some silly wastes of dollars to fix that. So, you might need to adjust to a slightly bigger budget for the unexpected baby stuff. Lots of folks here made the transition just fine. There are a lot of recurring kid expenses like bottles, breast pads for clothes, diapers, clothing (they outgrow it very fast), etc. that everyone underestimates.

The other thing that we struggled with was trading money for convenience. With an exhausted mom, and a dad working 60-80 hour weeks, it was really tough for us to find time for cooking and cleaning, and a lot of our home improvement projects that seemed easy before kids, ended up taking a lot longer than we had expected. If you can resist this, great! But plan to have a little set aside for convenience tradeoffs.

Regarding budget, you look like you're in pretty good shape. Why is Seed's health insurance so low? Some kind of work incentive? There are two ways you could go on health insurance. Consider looking into high deductible plans, which you can pair up with an HSA. A family can deduct $6650 in HSA contributions this year (some of which you'd be spending on healthcare post-tax, anyway). That can reduce your taxable income, but you must take a high deductible plan to do it. May be cheaper during the birth and first year to keep a more expensive plan with lower copays and deductibles.

The other way to go is to look at your state's health insurance exchange. Your MAGI (after Seed is born) appears to be in the 150-175% range, which qualifies you for some big subsidies for health insurance. Most exchanges allow "what if" anonymous shopping where you can plug in various income and family size amounts to see what is available. I'm fairly sure you can get lower cost (and possibly higher quality) insurance for your family.

Stop the mortgage prepayment. Focus on maximizing Roth IRA contributions first. If you're at 54k gross, with 3 dependents, you're probably around 32k AGI. That's in the 15% bracket, so conventional wisdom here is to contribute to a Roth until you get to the 25% bracket. You say $423 is the maximum contribution for your husband's Roth, but unless you've contributed a bunch already this year, it is a little bit short. Redirect the 1200 a year from the mortgage into these. The SIMPLE IRA doesn't restrict your ability to open a Roth for yourself (or even a traditional, since your income is below the contribution limits). See: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Contributions



catccc

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #6 on: September 10, 2015, 01:34:01 PM »
My family went to one income after welcoming our first child.  And the much smaller one, at that.  I was earning 80K, DH about $25K when I quit my job.  We kept expenses quite low and did absolutely fine.  I returned to work a little over a year later. 

Don't feel committed to your feelings on how long you will want to stay at home (or not stay at home.)  I think it's hard to tell how you feel about it until you are in it.  I never thought I'd be a SAHM, but I loved it and would do it again.  My sister planned on it for a year, and 6 weeks in felt "bored."  (and she had twins!)  Be flexible.

Your food budget seems a little high- currently, my family of 4 is at about $400/month, and that primarily unprocessed whole foods, a bulk of which are organics.

Congrats and have fun!

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #7 on: September 10, 2015, 01:38:33 PM »
You can easily do this.  We did it - two adults, one child on ~$55k/year for two years.  We also had student loans and a similar mortgage and one car.  I did not find that the first year with a baby to be very expensive.  We were lucky by having a baby shower and generous parents who gave us a few larger items (stroller, car seat, bassinet).  We got tons of second hand clothing and I got nursery furniture on craigslist.  You can get great deals on diapers on amazon or go with cloth diapers.  You could do probably get your food costs under $500 - we average $450 for a family of 4.

I agree that you should stop with the mortgage prepayments.  I don't get the health insurance thing, can you get a family plan through your husband's job?

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #8 on: September 10, 2015, 02:20:14 PM »
Well, first both of you can contribute to an IRA (as the non-working spouse of a working person you can put the full amount in).  I would do that prior to putting extra money towards your mortgage.  Personally I would do that in a traditional, not a Roth.  How will your health insurance change with all of you on your husband's insurance?  Also does he have any other benefits since he does not have a retirement account?

WHOA!  I thought you had to contribute EARNED income.  I didn't realize I could contribute a spouse's earned income.  Cool.  I agree with the recommendation to put that into a traditional IRA for me, while I'm unemployed, to reduce our taxable income (since we have no pre-tax savings opportunities of which I'm aware).

Mr. Sunflower's company is fantastic on flexibility and awful on benefits.  He gets good individual health insurance, but it's MAD EXPENSIVE to add me or the baby.  So, we'll both be purchasing health insurance on the open market, subsidized.  I'll add that note to the original post.  Otherwise, no real benefits to speak of.

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #9 on: September 10, 2015, 02:24:04 PM »
1.  Your budget looks pretty good to me.  I'd quit paying extra on the mortgage for the moment and save it instead.  Re-institute it later if paying off your house is a priority.  If your post-baby budget works out (and/or you go back to work) you can always pay what your saved in a lump sum later.

2.  I don'/t think you'll have a tax issue next year.  Family of 3 with 54K income should keep you in a low tax bracket.  Since you don't have access to a 401k or similar there isn't much else you can do for this year.  You could do deductible IRAs rather than Roths.

3.  Not a parent so no thoughts here

Yeah, you are probably right on both the mortgage and the deductible IRA points.  Thanks!

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #10 on: September 10, 2015, 02:28:52 PM »
No feedback, but following because you're likely where we will be in 2 years.

Yay.  :o)

0. Establish an emergency fund to your satisfaction
DONE.  We have 8 months sitting in cash.  With unemployment, this could easily go to 12.

1. Contribute to 401k up to any company match   
Not available.  :o(

2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
Don't have any.

3. Max HSA   
QUESTION:  Can I have a HSA if I'm not employed?  Or is this something only an employer can contribute to?  Can my husband contribute to my HSA?  Can I use my husband's HSA for my medical expenses?  So many questions!

4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
Point taken.

5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)   
Nope.

6. Fund mega backdoor Roth if applicable   
What the heck is this?  Lemme go google.

7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
So, we should be paying down the mortgage before throwing extra into our brokerage accounts?  Which would you do?

8. Invest in a taxable account with any extra.
I'll often transfer a few hundred/ thousand when our checking account balance gets too high.  Or I'll put a little more to the mortgage.  Don't really have a strategy, just a little here and a little there into both/ either.

Gin1984

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #11 on: September 10, 2015, 02:32:53 PM »
Well, first both of you can contribute to an IRA (as the non-working spouse of a working person you can put the full amount in).  I would do that prior to putting extra money towards your mortgage.  Personally I would do that in a traditional, not a Roth.  How will your health insurance change with all of you on your husband's insurance?  Also does he have any other benefits since he does not have a retirement account?

WHOA!  I thought you had to contribute EARNED income.  I didn't realize I could contribute a spouse's earned income.  Cool.  I agree with the recommendation to put that into a traditional IRA for me, while I'm unemployed, to reduce our taxable income (since we have no pre-tax savings opportunities of which I'm aware).

Mr. Sunflower's company is fantastic on flexibility and awful on benefits.  He gets good individual health insurance, but it's MAD EXPENSIVE to add me or the baby.  So, we'll both be purchasing health insurance on the open market, subsidized.  I'll add that note to the original post.  Otherwise, no real benefits to speak of.
No, you won't.  If you have access to an employer plan, you won't get subsidized unless the cost for your husband's self plan is more than 9.5% of his income.

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #12 on: September 10, 2015, 02:35:04 PM »
When Little Axe showed up, we had a tough time transitioning from a pretty frugal household of two to a frugal household with kids.

I hear ya.  Between the nausea and the exhaustion of pregnancy, we do spend more on food.  I *NEED* more protein (MEAT, none of that lentil bullcrap I used to eat) and iron.  I can't really handle carbs without my blood sugar going nuts (bye bye, sweet potatoes and brown rice!).  And gas - biking to and from my job along a state highway with a 7-months pregnant belly, yeah no.

Quote
The other thing that we struggled with was trading money for convenience. With an exhausted mom, and a dad working 60-80 hour weeks, it was really tough for us to find time for cooking and cleaning, and a lot of our home improvement projects that seemed easy before kids, ended up taking a lot longer than we had expected. If you can resist this, great! But plan to have a little set aside for convenience tradeoffs.

If I stay home, my JOB is to cook and clean.  I've got literally all day to do it.  And I don't have to start "working" until after the first month post-partum, as Mr. Sunflower will get some time off to spend with Seed before he goes back to work and I'm on my own.  I dunno, maybe that's a first-time parent's naivety, but I already cook and clean and garden and work full time and I'm exhausted from pregnancy...  can't be MUCH worse having a baby.  At least I'll be able to breathe deeply.

Quote
Why is Seed's health insurance so low? Some kind of work incentive?

Added details above - private plans on the private marketplace.  The child plans in NYS are heavily subsidized.  Adult plans, not so much.

Quote
Stop the mortgage prepayment. Focus on maximizing Roth IRA contributions first. If you're at 54k gross, with 3 dependents, you're probably around 32k AGI. That's in the 15% bracket, so conventional wisdom here is to contribute to a Roth until you get to the 25% bracket. You say $423 is the maximum contribution for your husband's Roth, but unless you've contributed a bunch already this year, it is a little bit short. Redirect the 1200 a year from the mortgage into these. The SIMPLE IRA doesn't restrict your ability to open a Roth for yourself (or even a traditional, since your income is below the contribution limits). See: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Contributions

10-4.  I already have a Roth; we don't have a traditional IRA.  Might look into that during the time I'm unemployed.

Gin1984

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #13 on: September 10, 2015, 02:35:19 PM »
No feedback, but following because you're likely where we will be in 2 years.

Yay.  :o)

0. Establish an emergency fund to your satisfaction
DONE.  We have 8 months sitting in cash.  With unemployment, this could easily go to 12.

1. Contribute to 401k up to any company match   
Not available.  :o(

2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
Don't have any.

3. Max HSA   
QUESTION:  Can I have a HSA if I'm not employed?  Or is this something only an employer can contribute to?  Can my husband contribute to my HSA?  Can I use my husband's HSA for my medical expenses?  So many questions!

4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
Point taken.

5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)   
Nope.

6. Fund mega backdoor Roth if applicable   
What the heck is this?  Lemme go google.

7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
So, we should be paying down the mortgage before throwing extra into our brokerage accounts?  Which would you do?

8. Invest in a taxable account with any extra.
I'll often transfer a few hundred/ thousand when our checking account balance gets too high.  Or I'll put a little more to the mortgage.  Don't really have a strategy, just a little here and a little there into both/ either.
If you are covered under his high deductible plan, yes the money he puts in can be for both of you (and the child to be).  Mega back door is not applicable to you.  8 is optional.  I put money in my brokerage before paying my mortgage.

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #14 on: September 10, 2015, 02:36:13 PM »
Your husband can use his HSA funds for your health care needs, but he can only contribute up the single max, not the family max contribution if he doesn't have a family plan.  I would look at the cost of getting a family HDHP with an HSA through his employment.  All the preventive well child treatment is fully covered. 

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #15 on: September 10, 2015, 02:38:02 PM »
Your food budget seems a little high- currently, my family of 4 is at about $400/month, and that primarily unprocessed whole foods, a bulk of which are organics.

We eat like you and used to have a $400 food budget.  Then I got pregnant and a lot of our former staples just don't work for my health status anymore (e.g. sweet potatoes, rice, lentils).  Adding in more organic meat, fish, eggs, and dairy drove up these costs.  We never exceed $500 and are usually in the $450 range.  I imagine that I'll probably need to eat similarly while I'm nursing.

I'm planning on making a freezer-full of crockpot meals to last us the first ~6 weeks postpartum, so that should help a ton when I'm too tired to cook!

Man, fetuses are like little leaches.  ;-)

Gin1984

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #16 on: September 10, 2015, 02:38:06 PM »
When Little Axe showed up, we had a tough time transitioning from a pretty frugal household of two to a frugal household with kids.

I hear ya.  Between the nausea and the exhaustion of pregnancy, we do spend more on food.  I *NEED* more protein (MEAT, none of that lentil bullcrap I used to eat) and iron.  I can't really handle carbs without my blood sugar going nuts (bye bye, sweet potatoes and brown rice!).  And gas - biking to and from my job along a state highway with a 7-months pregnant belly, yeah no.

Quote
The other thing that we struggled with was trading money for convenience. With an exhausted mom, and a dad working 60-80 hour weeks, it was really tough for us to find time for cooking and cleaning, and a lot of our home improvement projects that seemed easy before kids, ended up taking a lot longer than we had expected. If you can resist this, great! But plan to have a little set aside for convenience tradeoffs.

If I stay home, my JOB is to cook and clean.  I've got literally all day to do it.  And I don't have to start "working" until after the first month post-partum, as Mr. Sunflower will get some time off to spend with Seed before he goes back to work and I'm on my own.  I dunno, maybe that's a first-time parent's naivety, but I already cook and clean and garden and work full time and I'm exhausted from pregnancy...  can't be MUCH worse having a baby.  At least I'll be able to breathe deeply.

Quote
Why is Seed's health insurance so low? Some kind of work incentive?

Added details above - private plans on the private marketplace.  The child plans in NYS are heavily subsidized.  Adult plans, not so much.

Quote
Stop the mortgage prepayment. Focus on maximizing Roth IRA contributions first. If you're at 54k gross, with 3 dependents, you're probably around 32k AGI. That's in the 15% bracket, so conventional wisdom here is to contribute to a Roth until you get to the 25% bracket. You say $423 is the maximum contribution for your husband's Roth, but unless you've contributed a bunch already this year, it is a little bit short. Redirect the 1200 a year from the mortgage into these. The SIMPLE IRA doesn't restrict your ability to open a Roth for yourself (or even a traditional, since your income is below the contribution limits). See: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Contributions

10-4.  I already have a Roth; we don't have a traditional IRA.  Might look into that during the time I'm unemployed.
LOL, no your job is to take care of the infant.  And some kids won't be put down except to sleep.  My child slept very little, I pumped (she would not attach) and would cry if not held so I limited that to necessary times like pumping.  And yes, I was going to school when my daughter was born but seriously cooking/cleaning was much easier pre-baby.

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #17 on: September 10, 2015, 02:40:18 PM »
No, you won't.  If you have access to an employer plan, you won't get subsidized unless the cost for your husband's self plan is more than 9.5% of his income.

That doesn't sound...  quite right.  So you're saying that I could be forced to pay $500/ month for my husband's terrible insurance, just because it's a possibility?  I'm going to call the health insurance exchange folks to check that out.  I'll definitely report back!

EDIT:  I used a bad word.  Trying to clean up my language.  :o)  Edited to say "terrible" instead!
« Last Edit: September 10, 2015, 02:45:46 PM by sunflower_yellow »

Gin1984

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #18 on: September 10, 2015, 02:43:44 PM »
No, you won't.  If you have access to an employer plan, you won't get subsidized unless the cost for your husband's self plan is more than 9.5% of his income.

That doesn't sound...  quite right.  So you're saying that I could be forced to pay $500/ month for my husband's shitty insurance, just because it's a possibility?  I'm going to call the health insurance exchange folks to check that out.  I'll definitely report back!
Quote
If you decide to check out Marketplace plans, be aware that you may not qualify for premium tax credits and other savings that can lower the cost of your health coverage. This may be true even if your income would qualify you otherwise.

Whether you qualify for savings depends on the coverage the employer offers. You won't be able to get lower costs if your job-based coverage is considered affordable and meets minimum value.

Your employer can tell you if the insurance plan it offers meets minimum value.
It can provide you with information to determine if the plan is considered affordable to you.
Quote
A job-based health plan is considered “affordable” if the employee’s share of monthly premiums for the lowest-cost self-only coverage that meets the minimum value standard is less than 9.56% of their family’s income.
These are quotes from: https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #19 on: September 10, 2015, 02:55:57 PM »
LOL, no your job is to take care of the infant.  And some kids won't be put down except to sleep.  My child slept very little, I pumped (she would not attach) and would cry if not held so I limited that to necessary times like pumping.  And yes, I was going to school when my daughter was born but seriously cooking/cleaning was much easier pre-baby.

I'm sorry you had a challenging experience.  I'm not afraid of life being harder.  Gotta flex those "bad-assity" muscles.  ;-)  More importantly, all babies (and parents, and families) are different.  As such, I'm going to wait to see how my post-partum experience goes and what my baby is like before I make any decisions regarding cooking/ cleaning/ managing life post-baby.

Rein1987

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #20 on: September 10, 2015, 03:03:03 PM »
I am also an expecting mom, and I'm considering the possibility of becoming a SAHM. I'm still very hesitate giving up my job (A very good job..). May I ask how you come to the decision of becoming 1-income family?

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #21 on: September 10, 2015, 03:03:36 PM »
LOL, no your job is to take care of the infant.  And some kids won't be put down except to sleep.  My child slept very little, I pumped (she would not attach) and would cry if not held so I limited that to necessary times like pumping.  And yes, I was going to school when my daughter was born but seriously cooking/cleaning was much easier pre-baby.

I'm sorry you had a challenging experience.  I'm not afraid of life being harder.  Gotta flex those "bad-assity" muscles.  ;-)  More importantly, all babies (and parents, and families) are different.  As such, I'm going to wait to see how my post-partum experience goes and what my baby is like before I make any decisions regarding cooking/ cleaning/ managing life post-baby.

I had two very different babies - first one slept well and rarely cried, second one rarely slept and cried unless he was held.  Each baby has their own unique set of challenges and I had very little time to cook or clean during at least the first 3 months with either of my babies.  My friends and I always say that we were better mothers before we had children. Crockpotting will be a great way to deal with the time suck.

Butterfingers

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #22 on: September 10, 2015, 03:03:52 PM »
If I stay home, my JOB is to cook and clean.  I've got literally all day to do it.  And I don't have to start "working" until after the first month post-partum, as Mr. Sunflower will get some time off to spend with Seed before he goes back to work and I'm on my own.  I dunno, maybe that's a first-time parent's naivety, but I already cook and clean and garden and work full time and I'm exhausted from pregnancy...  can't be MUCH worse having a baby.  At least I'll be able to breathe deeply.
I'd say yes to "first-time parent's naivety". The first few months can be really really tough (we have two offspring). With our first child, Mrs Butterfingers' entire attention was on the baby (my mother-in-law stayed with us and took care of the cooking and looking after Mrs B), and she was still exhausted all the time. You know infants feed every three to four hours, right? They don't stop at night, which means that you can't get a proper stretch of sleep. And if you have a fussy, colicky, screamy baby, three hours sleep at a stretch will seem like heaven.

Number one rule with new babies: any time they sleep, you sleep. You will need it. When sunflower_seed gets to a few months old, maybe starts sleeping through the night (pray to your deity/numinous concept of choice that this comes to pass quickly), then you can start up again with the household chores. It's admirable to be badass, but you need to look after yourself and and the baby first. If the dusting doesn't get done and you eat a few microwave meals to get through it with your sanity intact, so be it.

okits

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #23 on: September 10, 2015, 03:26:19 PM »
LOL, no your job is to take care of the infant.  And some kids won't be put down except to sleep.  My child slept very little, I pumped (she would not attach) and would cry if not held so I limited that to necessary times like pumping.  And yes, I was going to school when my daughter was born but seriously cooking/cleaning was much easier pre-baby.

I'm sorry you had a challenging experience.  I'm not afraid of life being harder.  Gotta flex those "bad-assity" muscles.  ;-)  More importantly, all babies (and parents, and families) are different.  As such, I'm going to wait to see how my post-partum experience goes and what my baby is like before I make any decisions regarding cooking/ cleaning/ managing life post-baby.

I'll chime in on the kid stuff. A comedian I like advised "you might have an idea of what it'll be like, but the baby is going to tell you how it's going to be." I hope you have a happy, low-needs baby but know that sometimes life throws a curveball!

Kid costs: I recommend you get the car seat and crib mattress new (car seats do expire and may not readily show any damage or weakness; used mattress associated with increased incidence of SIDS). Otherwise, gifts, hand-me-downs, or used for clothes, furniture, toys, gear (swing, bouncer, monitor, carriers, strollers), cloth diapers if you do cloth.  From a cost-perspective, breastfeeding and pumping saved us a TON of money.  Some pumps can safely be shared (I think the Ameda Purely Yours is one), so you can save by buying used.  For things like disposable diapers, formula, bum creams, etc. figure out the best deal for this and be relentless in stocking up when on special.

Our pediatrician gets tons of stuff as free samples (infant Tylenol, formula, etc.) or coupons. Don't be shy in asking for some!

Lots of stuff is gender coloured.  I use blue stuff we've gotten for my daughter and will use our existing pink stuff should we ever have a boy (I tried to buy yellows and greens but gifts were almost uniformly pink.)  A blanket is still a blanket even if it was coloured/meant for the opposite sex.

There's tons of stuff you can buy for a baby but really, most is unnecessary.  Don't get sucked in by the consumerist machine and you can have a bundle of joy on a budget. :)

okits

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #24 on: September 10, 2015, 03:30:03 PM »
LOL, no your job is to take care of the infant.  And some kids won't be put down except to sleep.  My child slept very little, I pumped (she would not attach) and would cry if not held so I limited that to necessary times like pumping.  And yes, I was going to school when my daughter was born but seriously cooking/cleaning was much easier pre-baby.

I'm sorry you had a challenging experience.  I'm not afraid of life being harder.  Gotta flex those "bad-assity" muscles.  ;-)  More importantly, all babies (and parents, and families) are different.  As such, I'm going to wait to see how my post-partum experience goes and what my baby is like before I make any decisions regarding cooking/ cleaning/ managing life post-baby.

I had two very different babies - first one slept well and rarely cried, second one rarely slept and cried unless he was held.  Each baby has their own unique set of challenges and I had very little time to cook or clean during at least the first 3 months with either of my babies.  My friends and I always say that we were better mothers before we had children. Crockpotting will be a great way to deal with the time suck.

Ba ha ha!  Yes!  Agree!

But on the flip side, you will discover amazing reserves of love, patience, energy, and resourcefulness you didn't know you had, pre-child.  Keep trying, your kid's needs and abilities change so fast, difficult phases do not last forever.

justajane

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #25 on: September 10, 2015, 03:38:58 PM »
If I stay home, my JOB is to cook and clean.  I've got literally all day to do it.  And I don't have to start "working" until after the first month post-partum, as Mr. Sunflower will get some time off to spend with Seed before he goes back to work and I'm on my own.  I dunno, maybe that's a first-time parent's naivety, but I already cook and clean and garden and work full time and I'm exhausted from pregnancy...  can't be MUCH worse having a baby.  At least I'll be able to breathe deeply.
I'd say yes to "first-time parent's naivety". The first few months can be really really tough (we have two offspring). With our first child, Mrs Butterfingers' entire attention was on the baby (my mother-in-law stayed with us and took care of the cooking and looking after Mrs B), and she was still exhausted all the time. You know infants feed every three to four hours, right? They don't stop at night, which means that you can't get a proper stretch of sleep. And if you have a fussy, colicky, screamy baby, three hours sleep at a stretch will seem like heaven.

Number one rule with new babies: any time they sleep, you sleep. You will need it. When sunflower_seed gets to a few months old, maybe starts sleeping through the night (pray to your deity/numinous concept of choice that this comes to pass quickly), then you can start up again with the household chores. It's admirable to be badass, but you need to look after yourself and and the baby first. If the dusting doesn't get done and you eat a few microwave meals to get through it with your sanity intact, so be it.

This is so true. I remember with my first being so amazed that, when my husband came home from work, the house was still a complete wreck. And getting an actual meal? It just rarely happened. I lived on Clif bars and string cheese, because every time I tried to even make a sandwich, he would start screaming.

The day just evaporated with breastfeeding, diaper changes, and trying to soothe a newborn. It's really amazing what a time suck they are. But I loved the first, because I had time to just hold him for his short little naps and take some time to watch a television show or read a book. With the second and third, I didn't really get to do that.

I've heard of moms during all their chores with their baby in a sling or carrier. I tried that, but it always bothered my back to lean over or do other things with a baby strapped to me. I loved the carrier for walks and for holding the baby in a restaurant, but chores didn't work for me.

LiveLean

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #26 on: September 10, 2015, 03:47:30 PM »
Looks great and one reason -- aside from your stellar MMM ways -- is that hubby has the medical coverage.

I'm self-employed and the primary income generator in our family. Wife quit work when our first son (of two) was born and stayed home for eight years. We had health insurance through her employer. No regrets, though the constant dance with self-employed health insurance was a bear. With ObamaCare looming in 2011, wife launched second career, getting teaching certification and going back to work.

Anyone can dial it back to one income if they follow MMM ways. But the uncertainty of self-employed health insurance -- let alone the expense of it -- is what turned us back into a dual-income family.

Bracken_Joy

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #27 on: September 10, 2015, 03:53:53 PM »
No feedback, but following because you're likely where we will be in 2 years.

Yay.  :o)

0. Establish an emergency fund to your satisfaction
DONE.  We have 8 months sitting in cash.  With unemployment, this could easily go to 12.

1. Contribute to 401k up to any company match   
Not available.  :o(

2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
Don't have any.

3. Max HSA   
QUESTION:  Can I have a HSA if I'm not employed?  Or is this something only an employer can contribute to?  Can my husband contribute to my HSA?  Can I use my husband's HSA for my medical expenses?  So many questions!

4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
Point taken.

5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)   
Nope.

6. Fund mega backdoor Roth if applicable   
What the heck is this?  Lemme go google.

7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
So, we should be paying down the mortgage before throwing extra into our brokerage accounts?  Which would you do?

8. Invest in a taxable account with any extra.
I'll often transfer a few hundred/ thousand when our checking account balance gets too high.  Or I'll put a little more to the mortgage.  Don't really have a strategy, just a little here and a little there into both/ either.
If you are covered under his high deductible plan, yes the money he puts in can be for both of you (and the child to be).  Mega back door is not applicable to you.  8 is optional.  I put money in my brokerage before paying my mortgage.

"3% or more above the 10-year Treasury note yield"  ---> the 10-year Treasury note yield is currently 2.23%, so that means any debt above 5.23%... which you have none, since your mortgage is below that. So you would do taxable accounts before your mortgage, because you can 'safely' expect your returns to exceed the return of paying down your mortgage.

AlwaysLearningToSave

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #28 on: September 10, 2015, 04:04:50 PM »

Kid costs: I recommend you get the car seat and crib mattress new (car seats do expire and may not readily show any damage or weakness; used mattress associated with increased incidence of SIDS). Otherwise, gifts, hand-me-downs, or used for clothes, furniture, toys, gear (swing, bouncer, monitor, carriers, strollers), cloth diapers if you do cloth.  From a cost-perspective, breastfeeding and pumping saved us a TON of money.  Some pumps can safely be shared (I think the Ameda Purely Yours is one), so you can save by buying used.  For things like disposable diapers, formula, bum creams, etc. figure out the best deal for this and be relentless in stocking up when on special.

...

Lots of stuff is gender coloured. 


Yes, buy mostly used things and accept as many gifts as people are willing to give.  Don't be afraid to ask for things, either, as many people are quite happy to be rid of out-grown baby stuff.  There is a good chance you will find an acquaintance with a child just the right amount older than yours that will provide a steady stream of used baby stuff for the first six months to one year.

To the extent you can, try to control what people buy you for gifts and get them to give you practical gifts.  It is probably too late for you if you already chose to find out SunflowerSeed's gender, but our choice to not find out our baby's gender prior to birth was one of the most mustachian things my wife and I have ever done without the intention of being mustachian.  We chose to not find out gender just for the fun of the surprise, but what we found was that we received far more practical gifts prior to the birth than any other young family we know.  We ended up having a daughter.  Knowing our family and friends, I can only imagine how large the pile of frilly pink 0 to 3 month baby clothes would have been had we found that out prior to the showers.  Instead, we received a reasonable amount of gender-neutral clothing and lots of other very useful, very practical baby equipment.  More than enough "girly" baby stuff came along after the birth. 

Regarding breast pumps:  The ACA requires ACA compliant insurance policies to cover 100% of the cost of a new breast pump under "preventive care."  So if you go that route, get a new one on your insurance company's dime. 

catccc

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #29 on: September 10, 2015, 09:30:49 PM »
Your food budget seems a little high- currently, my family of 4 is at about $400/month, and that primarily unprocessed whole foods, a bulk of which are organics.

We eat like you and used to have a $400 food budget.  Then I got pregnant and a lot of our former staples just don't work for my health status anymore (e.g. sweet potatoes, rice, lentils).  Adding in more organic meat, fish, eggs, and dairy drove up these costs.  We never exceed $500 and are usually in the $450 range.  I imagine that I'll probably need to eat similarly while I'm nursing.

I'm planning on making a freezer-full of crockpot meals to last us the first ~6 weeks postpartum, so that should help a ton when I'm too tired to cook!

Man, fetuses are like little leaches.  ;-)

I see, but 2 healthy eatin' kids eat way more than single fetus, and we also don't do a lot of rice or carb-y fillers due to DH's dietary preferences.  Looking at your numbers it probably doesn't matter that much, but I might have a look at it because what you spend on food is only going to go up in the future.   It's $500 now for 2.5 of you, what is it going to be when kiddo (or kiddos, if you plan for siblings), are in grade school and eat just as much as you do?  (Truth, my 6 year old regularly consumes more that I do.)  $750-$800 or more?  That's getting to be a face-punchy number. 

I'm sure individual needs/preferences really vary, but the recommendation is about 200 extra calories per day while pregnant (average, it changes as the baby grows).  I didn't really find it necessary to change what I ate much when I was pregnant, and in fact maintained my pesce-vegetarian diet the whole time.  (unfortunately my diet choices aren't the source of my savings- good seafood is expensive...)

I will say I was surprised how much I craved sweets when I was nursing.  500 extra calories a day (more than double what you need during pregnancy) for nursing, and I wanted them all to be brownies!! 

If you haven't already reached out for breastfeeding support, I highly recommend you do so.  I started attending la leche league meetings when I was maybe 4 months along.  I really wanted breastfeeding to work with me and wanted to learn as much as possible about it, because I'd had so many friends that "couldn't."  When in reality, there are very few that really cannot.  They gave up too soon, because they thought it would come naturally, and it didn't.  I ended up getting lucky and it was very easy for us.  And then I became one of those moms.  I nursed my first until she turned 3, and when her sibling arrived at 2.5, I tandem nursed for 6 months.  I never thought I'd go beyond the first year, but it worked so well for us.

We also saved $ by not setting up a big old nursery.  Just had a portable sized crib next to our bedroom.  Used cloth diapers with elimination communication.  None of the big plastic rocket looking high chairs, swings, or "activity center" junk things.  All unnecessary.  Babies really don't need much at all.


sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #30 on: September 11, 2015, 08:10:09 AM »
I am also an expecting mom, and I'm considering the possibility of becoming a SAHM. I'm still very hesitate giving up my job (A very good job..). May I ask how you come to the decision of becoming 1-income family?

For us, this is entirely a quality of life decision.

With both of us working full time, our free time is very tightly scheduled.  Garden chores, spending time with friends and family, house renovation projects, outdoor activities, and just the daily maintenance of life (we DIY everything, from car maintenance to cooking) - it doesn't leave a lot of slack time.

Adding in a baby with both of us working means that we would have to give up some (many?) of the things we love to do, probably be significantly less happy, and take part in a family life pattern with which we don't agree.

I ask myself, what's the point of making myself miserable during my child's early years so I can retire a little earlier?  We are already on track to retire earlier than average, and I would rather have a year or three when my child is a baby than another year or three out of the workforce later on.  Yes, it's a trade-off.  You have to decide if it's a trade-off that makes sense for you and your family.

In short:  if you've been doing it right for a while, it's not a decision that you make on financial grounds.  If you were making decisions strictly based on financial grounds, you wouldn't have children at all.  ;-)

Hope that helps.

SomedayStache

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #31 on: September 11, 2015, 09:06:40 AM »

If I stay home, my JOB is to cook and clean.  I've got literally all day to do it.  And I don't have to start "working" until after the first month post-partum, as Mr. Sunflower will get some time off to spend with Seed before he goes back to work and I'm on my own.  I dunno, maybe that's a first-time parent's naivety, but I already cook and clean and garden and work full time and I'm exhausted from pregnancy...  can't be MUCH worse having a baby.  At least I'll be able to breathe deeply.


hahahahahahahahahhahahahahahahahahhahahahahahahahah (stop to breathe)
hahahahahahahahahhahahahahahahahahhahahahahahahahah!!!

Yes - naïve. 

<said with love as we were there once ourselves>

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #32 on: September 11, 2015, 09:26:41 AM »
Oh my!  So many good responses.  Thank you all.  This will be a mega-response post to all of you (short on time today!).

EXPECTATIONS OF LIFE AFTER BABY

I feel like this thread has been slightly derailed by parents piling on and judging my expectations as naive.  I wrote a long rant, but I think I'll condense it down to this:

Do I think that giving up a full time job outside the home will be replaced by a more than full time job inside the home?  YES.
Do I think it will be hard?  YES.
Do I know that I can handle taking care of a baby, cooking, and cleaning?  YES.  (Especially because my standards for cleanliness aren't particularly high, ha!)
Do I think that all the snarky and judgmental comments about how hard it is to take care of a baby says more about you and our society's lack of support for families than about me and my family?  YES.

There is a difference between an experience that is objectively miserable and an experience that, subjectively, involves suffering.  Both Mr. Sunflower and I regularly and voluntarily put ourselves into situations that are objectively miserable, but don't happen to involve subjective suffering for us.  (I think this has a lot to do with our mindset and life philosophy and what we love, not any sort of super human powers.)  Sleep deprivation and a diet of Clif Bars and string cheese is objectively miserable...  but it's what we want, we love this baby, and we will not suffer because of it.  I'm honestly sorry if you did.

Anyway!  Why don't I tell you a little more detail about our postpartum plan.  I would welcome constructive suggestions on whether it's reasonable and what you would change.  And then we can get back to our regularly scheduled financial discussions.  :o)

My expectations for the first few months are VERY low.

(1)  RE: support system for first month postpartum:  I really don't need to do anything other than recover from childbirth and nurse.
---My husband has the entire first month off from work and will be home with me and SunflowerSeed.
---We will have daily help around the house (dealing with crockpot, running errands, laundry, etc) for the first 2 weeks.
---My midwife will make ~2 house calls to me in that first week to check on my healing, adjustment, nursing, and baby.
---We are not scheduling out-of-town visitors until nursing is well established (I don't need that stress), and when they visit, they will be helping out during weeks 2-4.
---I already have the name and phone number of the lactation consultant I plan to use programmed into my phone, if I need her.
(2)  RE: cooking and food:  as this is baby #1 and I have the luxury of time, our freezer will have ~6 weeks of crockpot dinners in it by the time I deliver.  We have eaten the same thing for breakfast for years, so that is easy.  Lunches and snacks are not cooked, and honestly, will probably include Clif Bars and string cheese (and a bunch of other "staples")!
(3)  RE:  garden chores:  baby is due after the end of the growing season.  Our gardens will be put to sleep by then, so I will have no garden chores over the winter.  Husband already knows that shoveling snow is his duty.
(4)  RE:  home renovations:  Home renovation projects will be done by the time baby arrives (or they're not getting done).
(5)  RE:  social and emotional support:  Already have the lactation consultant, as previously noted.  Also have noted the various "new mothers" groups around town.  Have started keeping a list of ideas of activities in case I get stir-crazy.  And husband knows the warning signs of post-partum depression.

So, for months 2-4 months of baby's life this winter, my "job" is pretty simple:  nursing, laundry, and keeping the kitchen from getting too gross.

I will deal with months 5+ once I get there.  Those months will involve planning for the growing season, starting seeds, and planting.  On the bright side, I do plan to wear the baby for much of its first year of life.  This is common and "normal" where I live, and it seems to give parents much more mobility and flexibility (my anecdotal experience is that babies seem to cry much less when they're with/on you).

Regarding household cleanliness expectations:  I haven't mopped my floors in 20 months (dark laminate for the win!).  HAHAHA yeah, I don't dust.  My standard of cleanliness is to keep outside outside and inside inside...  mostly.

Do you still think I'm being unreasonable?

KID COSTS

-Planning on nursing, breast pump covered in full by insurance.  Great tip to connect with LLL now, before baby comes.
-Already building a stash of (used) cloth diapers
-Good tip on using samples provided by pediatrician - we end up throwing out OTC medicines because they expire
-Don't know the gender, hate both pink ruffles and camo, though I know my mother can't wait to bring out the pink ruffles (UGHHH ask me how my childhood was)
-Have bought everything used, including carseat, BUT that was ONLY because I knew the seller and the history and it doesn't expire for another 5 years
-Baby is sleeping in a closet.  Yes really.  Should cut down on the amount of crap people (grandparents) give us, as well as make it impossible to accumulate too much.

FOOD COSTS

I grabbed our actual food spending numbers from the past few months.  I was wrong, we totally went over $500 twice, when my morning sickness was at its peak.
Jan = 362
Feb = 379
March = 432
April =620 (hello, morning sickness!)
May = 578 (is it done yet??)
June = 374 (ok, we're starting to eat from the garden)
July = 365 (garden veggies definitely offsetting higher meat costs)
August = 456 (included a restaurant meal for a very special occasion)

Our food spending didn't increase because I was eating more - unlike catccc, it increased because I WAS eating differently.  (Check out this sad face post from April:  http://forum.mrmoneymustache.com/ask-a-mustachian/nausea-during-pregnancy-gt-lots-of-take-out-solutions-or-tips/msg624436/#msg624436).  So, our actual food costs have averaged $450 for the two of us during a time when I was pregnant, dealing with morning sickness, and was purchasing a lot more organic animal products.  Not saying it's good, just more accurate than my original post.  I think it's reasonable to plan to go back to our old trusty mostly vegetarian diet after I'm done with pregnancy (or after I'm done nursing).

MY TO DO LIST

-Stop throwing extra at the mortgage
-Consider opening a traditional IRA under my name while I'm not working
-Figure out how much more we can add to an HSA (whose?)
-Get a definitive answer about whether I can qualify for the marketplace tax credits for health insurance - I called the marketplace help line yesterday, and they DIDN'T KNOW.  The website referenced above is relevant if I were employed and had an employer-provided health plan.  I wouldn't.  So, I'll call again and try someone else...

Thanks again for all of the suggestions!
« Last Edit: September 11, 2015, 09:33:11 AM by sunflower_yellow »

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #33 on: September 11, 2015, 09:29:13 AM »
No feedback, but following because you're likely where we will be in 2 years.

Yay.  :o)

0. Establish an emergency fund to your satisfaction
DONE.  We have 8 months sitting in cash.  With unemployment, this could easily go to 12.

1. Contribute to 401k up to any company match   
Not available.  :o(

2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
Don't have any.

3. Max HSA   
QUESTION:  Can I have a HSA if I'm not employed?  Or is this something only an employer can contribute to?  Can my husband contribute to my HSA?  Can I use my husband's HSA for my medical expenses?  So many questions!

4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
Point taken.

5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)   
Nope.

6. Fund mega backdoor Roth if applicable   
What the heck is this?  Lemme go google.

7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
So, we should be paying down the mortgage before throwing extra into our brokerage accounts?  Which would you do?

8. Invest in a taxable account with any extra.
I'll often transfer a few hundred/ thousand when our checking account balance gets too high.  Or I'll put a little more to the mortgage.  Don't really have a strategy, just a little here and a little there into both/ either.
If you are covered under his high deductible plan, yes the money he puts in can be for both of you (and the child to be).  Mega back door is not applicable to you.  8 is optional.  I put money in my brokerage before paying my mortgage.

I wanted to correct the bolded - A spouse or dependent can used the insured spouse's HSA funds whether or not they are covered under the insured's HDHP.

SK Joyous

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #34 on: September 11, 2015, 10:46:30 AM »
Oh my!  So many good responses.  Thank you all.  This will be a mega-response post to all of you (short on time today!).

EXPECTATIONS OF LIFE AFTER BABY

I feel like this thread has been slightly derailed by parents piling on and judging my expectations as naive.  I wrote a long rant, but I think I'll condense it down to this:

Do I think that giving up a full time job outside the home will be replaced by a more than full time job inside the home?  YES.
Do I think it will be hard?  YES.
Do I know that I can handle taking care of a baby, cooking, and cleaning?  YES.  (Especially because my standards for cleanliness aren't particularly high, ha!)
Do I think that all the snarky and judgmental comments about how hard it is to take care of a baby says more about you and our society's lack of support for families than about me and my family?  YES.

There is a difference between an experience that is objectively miserable and an experience that, subjectively, involves suffering.  Both Mr. Sunflower and I regularly and voluntarily put ourselves into situations that are objectively miserable, but don't happen to involve subjective suffering for us.  (I think this has a lot to do with our mindset and life philosophy and what we love, not any sort of super human powers.)  Sleep deprivation and a diet of Clif Bars and string cheese is objectively miserable...  but it's what we want, we love this baby, and we will not suffer because of it.  I'm honestly sorry if you did.

Anyway!  Why don't I tell you a little more detail about our postpartum plan.  I would welcome constructive suggestions on whether it's reasonable and what you would change.  And then we can get back to our regularly scheduled financial discussions.  :o)

.....


MY TO DO LIST

-Stop throwing extra at the mortgage
-Consider opening a traditional IRA under my name while I'm not working
-Figure out how much more we can add to an HSA (whose?)
-Get a definitive answer about whether I can qualify for the marketplace tax credits for health insurance - I called the marketplace help line yesterday, and they DIDN'T KNOW.  The website referenced above is relevant if I were employed and had an employer-provided health plan.  I wouldn't.  So, I'll call again and try someone else...

Thanks again for all of the suggestions!

Your expectations and ideas sound all perfectly reasonable.  I have had two children and I too believe that when you are a SAHP then your job is the home including the cleaning and etc.  I am sorry that some people seem to have had exceptionally difficult experiences with their babies, but I don't believe that is the norm (i.e. not being able to put a baby down for a minute and so forth).

Now back to financials:
- no idea about health stuff as am Canadian and never had to worry much about that stuff (thankfully);
- agree about stopping the mortgage pre-payment (plenty of time for that later AND you have a nice low rate)
- good job on the emergency fund (it's nice to have one post-baby so you don't have to worry about anything unexpected)
- good work overall getting yourselves into such a good position before you first child; you are ahead of the game by a long shot and doing great!

little_brown_dog

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #35 on: September 11, 2015, 11:25:19 AM »
regarding the health insurance marketplace - my understanding is that if you have access to an employer plan, regardless of whether it is yours or a legal spouse's, you may not qualify for subsidies. the only exception to this being if your spouse's plan was so expensive that paying just for his insurance (no dependents) would be more than 9.5% of his salary. this makes sense, as the goal behind the marketplace was to make insurance available to those without any other option...not to necessarily provide cheaper insurance for those who just didn't like the price of their employer plans but could theoretically afford it.

if it were me, i would plan on paying the full cost of a marketplace plan (without any govt subsidy) for you and baby, or plan on paying for the expensive family plan through your husband's employer. that way you don't hinge such a big expense on a discount you may not receive.
« Last Edit: September 11, 2015, 11:27:49 AM by little_brown_dog »

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #36 on: September 11, 2015, 11:27:43 AM »
I don't think having a newborn cry when you put it down qualifies as an "exceptionally" difficult experience.  It's more difficult than having an easy going baby, but it is fairly common experience for people who have had more than one child to have at least one baby like that.   Also, no one said anything about being miserable after having a baby.   It may come across negatively to hear about experiences that sound like suffering to you, but I don't believe that is how they were intended and you may be reading to much into what are fairly common experiences of new parenthood.  That being said, I think you have set up a good postpartum situation.  I hold the same standards of cleanliness and my youngest is 2 at this point.

justajane

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #37 on: September 11, 2015, 11:50:46 AM »
Sleep deprivation and a diet of Clif Bars and string cheese is objectively miserable...  but it's what we want, we love this baby, and we will not suffer because of it.  I'm honestly sorry if you did.

I'm totally confused, and since my anecdote features in your description, can you clarify? It was hard, but I wasn't miserable, at least not all the time. Or at least the good things outweighed the misery. But I still don't understand your distinction between misery and suffering. 

Edited for clarity.
« Last Edit: September 11, 2015, 12:31:13 PM by justajane »

SomedayStache

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #38 on: September 11, 2015, 12:00:38 PM »
I feel like this thread has been slightly derailed by parents piling on and judging my expectations as naive.  I wrote a long rant, but I think I'll condense it down to this:

Sorry if my long laugh a few posts up came across as judging.  Wasn't meant to be.

Maybe there is more advice along the "expectations" line than financial advice because you really appear to have the financials quite squared away.


Thegoblinchief

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #39 on: September 11, 2015, 12:03:58 PM »
The food jumped out at me a little but otherwise you've got a solid plan.

I'm (at long last) a SAHP to three kids (9,8,5). Took us a while for income and expenses to balance out enough to manage it. My wife makes a bit more than your DH, especially with benefits factored in, but we also have considerably higher fixed costs in mortgage and SLs than you do. You can totally do this on DH's income with all your other financial particulars. You definitely got solid optimization advice already.

If you're not already reading NWEdible, she's a Mustachian with two kids that leads a life very similar to yours (and mine, actually) with lots of gardening, etc.

Consider starting a journal if you want/need continuing input, advice, and affirmation. I'd totally follow it :)

Otherwise, good luck!

Folks: just relax a little bit about the naïveté thing. It's counterproductive.

hunniebun

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #40 on: September 11, 2015, 12:22:09 PM »
It certainly seems like you are as prepared as you can be and it is great to be so proactive and have a plan in place before that baby arrives.  I might consider adding a budget line item specifically for baby.  Are you doing cloth or disposable? and cost those out. I was 100% sure I would breastfeed and after 3 months of limited success I ended up spending a fair amount on bottles and a quality pump, so it might be good to budget something for that just in case.  I also didn't account for things that I didn't even know I would need such as prescriptions (resulting from complications after the birth), so maybe just a 50-100$ accounting for potential baby related needs to cover those things that can come up? And then if you don't need it, you can just add it to your savings.  I stayed home for 1.5 years with both of my kids and as you have said, yes there will be challenges and low points, but there is some pretty great stuff in there too and like they say...it is all worth it in end :)

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #41 on: September 11, 2015, 12:31:22 PM »
It certainly seems like you are as prepared as you can be and it is great to be so proactive and have a plan in place before that baby arrives.  I might consider adding a budget line item specifically for baby.  Are you doing cloth or disposable? and cost those out. I was 100% sure I would breastfeed and after 3 months of limited success I ended up spending a fair amount on bottles and a quality pump, so it might be good to budget something for that just in case.  I also didn't account for things that I didn't even know I would need such as prescriptions (resulting from complications after the birth), so maybe just a 50-100$ accounting for potential baby related needs to cover those things that can come up? And then if you don't need it, you can just add it to your savings.  I stayed home for 1.5 years with both of my kids and as you have said, yes there will be challenges and low points, but there is some pretty great stuff in there too and like they say...it is all worth it in end :)

This brings up a good point.  I did nurse both of my children for a year, but my first, perfectly healthy full term, average birth weight, had a very difficult time.  It took costly interventions over three months to get things right (renting hospital-grade pump, many LC visits, bottles, pump parts, etc).  I had no idea about the costs that could accompany the allegedly low cost nursing. 

little_brown_dog

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #42 on: September 11, 2015, 12:33:56 PM »
just found this on the healthcare website: https://www.healthcare.gov/have-job-based-coverage/part-time-workers/

it was hidden under a question related to part time workers whose spouses have insurance:

"If your spouse’s job-based coverage is offered to spouses or other family members but you don’t enroll in it: You may not qualify for lower costs. It will depend on whether the job-based coverage you’re offered is considered affordable and meets certain minimum standards."

sunflower_yellow

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #43 on: September 11, 2015, 01:50:20 PM »
I wanted to correct the bolded - A spouse or dependent can used the insured spouse's HSA funds whether or not they are covered under the insured's HDHP.

Quote from: little_brown_dog
if it were me, i would plan on paying the full cost of a marketplace plan (without any govt subsidy) for you and baby, or plan on paying for the expensive family plan through your husband's employer. that way you don't hinge such a big expense on a discount you may not receive.

Excellent advice all around.

Quote from: little_brown_dog
"If your spouse’s job-based coverage is offered to spouses or other family members but you don’t enroll in it: You may not qualify for lower costs. It will depend on whether the job-based coverage you’re offered is considered affordable and meets certain minimum standards."

NICE sleuthing!  I did call the health marketplace exchange help line, and this is pretty much what they told me.  HOWEVER, they were able to tell me what is considered "affordable;" there are no published guidelines for individual+spouse or family plans, only individual plans.  The customer service rep's advice was to apply and see if I qualified.  However, I wouldn't know what I actually qualified for until I lost my employer-based health insurance, because the application must be based on current conditions.  Catch-22!  I need to quit my job in order to know how much it would cost if I quit my job!  We both got a good laugh out of that.  Ah, the absurdity of the American health "care" system.

Quote from: justajane
I'm totally confused, and since my anecdote features in your description, can you clarify? It was hard, but I wasn't miserable, at least not all the time. Or at least the good things outweighed the misery. But I still don't understand your distinction between misery and suffering.

Of course.  I may have gone on a bit of a tangent with the whole misery v. suffering thing.  Let's use this example. 

I had some pretty gnarly nausea in my first trimester.  I remember puking my guts out helping my husband with some garden work.  I even had a favorite puke spot in the yard!  Every time I retched when I bent over to plant a seed, I would make the victory sign with my arms, because it meant I was growing a baby and had a strong dose of hormones in my system.  That was misery, but I didn't mind so much.  It was kind of fun, in a sick (literally) way.

Now, I used to have this co-worker who would tell me that his wife's nausea lasted the entire nine months of her pregnancy.  He reminded me this at least a half-dozen times, pretty much every time he saw me turning green.  He also liked to tell me about how difficult her delivery was.  I found myself feeling afraid that I would be sick for most of 2015.  I started worrying that my body would betray me.  Even if I wasn't feeling physically sick at the time, I was suffering, because I was listening to his experiences and assuming that they would be similar to my own (because hey, he had a kid and I didn't, right?).

In short: 
Misery = living off the proverbial string cheese and Clif bars, not sleeping well for months, dealing with poop all day long, and getting NO time to yourself, much less adequate time to take care of a never-ending To Do list.  I think most people who are parents will get at least a dose of that.
Suffering = your mental state of being upset that is your reality.

I've just been amazed during this pregnancy by the number of people who have adamantly insisted that my life is going to be over after the baby comes, that I won't sleep for months, that husband and I won't be intimate for years, I won't be able to do anything productive, and basically be ready to sign over my life because it belongs to Sunflower Seed.  Basically, to prepare myself for both misery and suffering.

I've found that people are FAR more likely to share horror stories than happy stories when it comes to pregnancy, labor, delivery, and parenting.  I think it's because these life events aren't celebrated or supported in our culture.  I'm being genuine when I feel sympathy that the proverbial "Clif bars and string cheese" would be the basis of ANY nursing mother's diet!  People are walking around with a lot of baggage, hard memories, and even trauma, and when they have an opportunity to unload, they take it.  In my opinion, it perpetuates a cycle of fear and distrust of what are totally normal, natural, and yes, challenging but ultimately worthwhile life events.

I am VERY fortunate that, had I been in that situation/ should I end up in that situation, I have any number of people who live nearby who would be at my doorstep with a sandwich.  Then again, over the past few years, I have done a lot of cleaning of kitchens that are not my own, making of meals that I did not eat, and wiping of bums that are not my own or my offspring's.

I think my support system is what allows me to be a little cavalier about the postpartum adjustment.  Yes, it will be my job to take care of the baby, ensure that my family is fed, and try to keep up some basic maintenance around the house.  But if I'm having a terrible week and just can't handle it, it WILL be fine - I have a safety net of people who know the combo to my house and can help out through a temporary rough spot.  And, as I'm sure you know, little babies go through their phases so quickly that surviving one week at a time is a useful strategy.  :o)

Thank you for taking the time to consider my point of view.  I'm not saying it's going to be easy.  But I am saying that I think I can do it.

Quote
It certainly seems like you are as prepared as you can be and it is great to be so proactive and have a plan in place before that baby arrives.  I might consider adding a budget line item specifically for baby.  Are you doing cloth or disposable? and cost those out. I was 100% sure I would breastfeed and after 3 months of limited success I ended up spending a fair amount on bottles and a quality pump, so it might be good to budget something for that just in case.  I also didn't account for things that I didn't even know I would need such as prescriptions (resulting from complications after the birth), so maybe just a 50-100$ accounting for potential baby related needs to cover those things that can come up? And then if you don't need it, you can just add it to your savings.  I stayed home for 1.5 years with both of my kids and as you have said, yes there will be challenges and low points, but there is some pretty great stuff in there too and like they say...it is all worth it in end :)

Man, more good advice.  Forgot to say that we have ~$1500 stached away in a savings account for the baby.  We started saving a little each month when we decided we'd be parents "some day"...  that day ended up happening, uh, much sooner than we expected.  But that's an excellent point.  It's just hard to budget for that type of stuff, because you really don't know how it's going to go!

Quote
If you're not already reading NWEdible, she's a Mustachian with two kids that leads a life very similar to yours (and mine, actually) with lots of gardening, etc.

Rad!  Thanks for the tip.  And good luck with your late season!

Ok, signing off for the weekend.  Have a good one, everyone, and thank you for the suggestions and tips!

charis

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #44 on: September 11, 2015, 02:08:58 PM »
I found the opposite, I heard a couple of extreme horror stories while pregnant, but not much about the harsher realities of new parenthood (and everything that goes along with it).  People celebrate parenthood more than any other life event around here.

Rein1987

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #45 on: September 11, 2015, 04:19:05 PM »
I am also an expecting mom, and I'm considering the possibility of becoming a SAHM. I'm still very hesitate giving up my job (A very good job..). May I ask how you come to the decision of becoming 1-income family?

For us, this is entirely a quality of life decision.

With both of us working full time, our free time is very tightly scheduled.  Garden chores, spending time with friends and family, house renovation projects, outdoor activities, and just the daily maintenance of life (we DIY everything, from car maintenance to cooking) - it doesn't leave a lot of slack time.

Adding in a baby with both of us working means that we would have to give up some (many?) of the things we love to do, probably be significantly less happy, and take part in a family life pattern with which we don't agree.

I ask myself, what's the point of making myself miserable during my child's early years so I can retire a little earlier?  We are already on track to retire earlier than average, and I would rather have a year or three when my child is a baby than another year or three out of the workforce later on.  Yes, it's a trade-off.  You have to decide if it's a trade-off that makes sense for you and your family.

In short:  if you've been doing it right for a while, it's not a decision that you make on financial grounds.  If you were making decisions strictly based on financial grounds, you wouldn't have children at all.  ;-)

Hope that helps.

Thanks for the sharing! I agree with you that this is entirely a lifestyle/life quality decision rather than a financial decision.

Thanks again.

TomTX

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Re: Case Study: Implications of Becoming a 1-Income Family
« Reply #46 on: September 12, 2015, 05:16:24 AM »
Lots of stuff is gender coloured.  I use blue stuff we've gotten for my daughter and will use our existing pink stuff should we ever have a boy (I tried to buy yellows and greens but gifts were almost uniformly pink.)  A blanket is still a blanket even if it was coloured/meant for the opposite sex.
That's one of the reasons nobody knew our impending baby's gender until he was born. We had told our doc we didn't want to know, but he slipped up one day during the ultrasound. NBD, we just didn't "officially" know.

I found the opposite, I heard a couple of extreme horror stories while pregnant, but not much about the harsher realities of new parenthood (and everything that goes along with it).  People celebrate parenthood more than any other life event around here.

We found new parenthood much rougher than the pregnancy. And I mostly stayed home with my wife for 10 weeks.

I was Full time @ home for the first month, then I started checking work emails for maybe an hour a week for the next few weeks. For the last 3 weeks I did go in to work for half a day per week. Going in to work was a strategic decision - our leave time accrues monthly, but only after you have at least 1 hour actually worked in the month. Between that and the half days, I was able to be home for 10 weeks instead of 9.
« Last Edit: September 12, 2015, 05:33:36 AM by TomTX »