Trying to see if my wife can quit working

[wantstoinvest]

Hi everyone,

I've posted in various boards here over the years but never really painted my situation. I want to get some advice from you all on a dilemma me and my wife are having.

My wife (37F) and I (37M) have been working for a few years now and have saved up a decent pool of assets (in my opinon). We had a daughter who is now 2 years and three months old, but she has been diagnosed with profound hearing loss. We have gotten her Cochlear implants and she is currently going to a school in New York City for speech and hearing development that is entirely covered. That part is great! The tricky part is my wife wants to quit her job for a number of reasons:

1. She wants to spend more time with our daughter and help her develop language and hearing. My daughter still goes to a day care for a portion of the day after speech school, so my wife would be able to take her out of day care and spend the day with her (talking, practicing speech, etc).
2. My wife is really not liking her job anymore. She works in tech, but the hours are long, she taker her work home with her, she's usually stressed, and she's not sure she even likes the work itself.
3. My wife's job provides our health insurance.

The last part is the stickler. I run my own tech consultancy, but business may slow down in the next few months. Assuming my wife was working, this was manageable, but if she isn't then the business has to make money (or we start using our assets).

Here is a breakdown of our assets:

401ks and IRAs: $805k
Brokerage accounts: $780k
Savings account: $30k

The investment and retirement accounts are essentially tracking the S&P in index funds.

We live in a co-op we own, but the value of the property doesnt matter much since we are planning to live here for the long term. Our expenses are as follows:

Mortgage: $2176.63
Electric: $100 (average, summer is higher, winter is less)
Gas: $20
Car Insurance: $120
Home Insurance: $50
Phone+Internet: $200
Gym Memberships: $100
Private Speech Therapy: $520
Day care: $1800

If my wife stayed at home, we would eliminate the day care cost but we would need to essentially swap it out for health insurance we buy ourselves. We did some initial looking, and plans can be anywhere from $1800-$2500+, which would end up being our most expensive cost! Because ourdaughter has Cochlear implants, we want her to have a good plan, while we could have worse plans? That is one option.

With all the above math, if my business brings in the amount it has been (I pay myself a salary of 100k) I could cover the bills while dipping a little into my brokerage. If the business suddenly stops, we could still use our savings, but it would run out eventually.

My wife has also been looking at part time work that would provide benefits, but those are few from an initial search. the biggest advantages of her not working are:

1. She would be happier
2. She could spend time with our daughter
3. She would get her time back
4. We want another kid at some point and she would have the mental energy to focus on it

If we could have some strategy around the health insurance, we could actually manage her not working today. But if the cost of health insurance is 2500 or higher, I just don't see how the math works out long term.

Does anyone have any general advice on what we could do?

[ixtap]

Are you sure that being around other children isn't better for her speech development than being around one adult for longer periods? This is somewhat child dependent, but kids often have more to say to other children. I would check with the speech therapist about this before using it as a justification for lifestyle change, unless your child seems particularly miserable in child care at the moment.

Had your wife worked on setting boundaries at work? People in tech often feel a lot of pressure to "keep up" in ways that are mostly keeping up appearances. Setting boundaries can end up improving the situation. In order to feel comfortable setting such boundaries, my partner negotiated a part time position at their employer rather than seeking a position listed as part time. They just couldn't work less hours and accept the same money. It turned out really well for us for a few years.

[wantstoinvest]

Are you sure that being around other children isn't better for her speech development than being around one adult for longer periods? This is somewhat child dependent, but kids often have more to say to other children. I would check with the speech therapist about this before using it as a justification for lifestyle change, unless your child seems particularly miserable in child care at the moment.

Had your wife worked on setting boundaries at work? People in tech often feel a lot of pressure to "keep up" in ways that are mostly keeping up appearances. Setting boundaries can end up improving the situation. In order to feel comfortable setting such boundaries, my partner negotiated a part time position at their employer rather than seeking a position listed as part time. They just couldn't work less hours and accept the same money. It turned out really well for us for a few years.

Great points. We have spoken to numerous people and they keep saying "don't quit and leave her in day care" (these are doctor's, speech therapists, etc). They say this for 2 reasons:

1. Like you said, being around other children is good for her. She also looooves the day care and we know she does, but we are not sure if she is getting as much speaking time as my wife could give her (she would essentially be talking with her and playing with her all day)
2. A lot of it is boundary setting but my wife just has a hang up about working. It's very mental, but she has a strong tendency to work as hard as possible and not make any waves. She's also very afraid to negotiate, even though I think they would be willing to work with her on a part time situation, but I cannot negotiate for her.

Our child is also progressing nicely through therapy, but my wife is seeing this as a catalyst to evaluate whether working is worth it or not.

[MaybeBabyMustache]

Finances aside, it would be a big alarm bell for me that doctors & speech therapists are encouraging you/your wife to leave your daughter in day care, at the same time you are considering removing her. If nothing else, I'd consider keeping her part time, which would increase costs.

I mean this kindly & no slight on your wife, but she really needs to solve the boundary setting. I say that as someone who also worked in tech for 25+ years, and suffered from the same thing your wife suffers from. It's an important skill, and she needs to learn it. I'm not suggesting she can never quit, or that this isn't the right job for her, etc, but from the outside looking in, the removing your daughter from childcare sounds like an excuse so your wife can quit a very stressful job. Which, doesn't align with what might be best for your daughter (going by what the doctors are saying).

I'd recommend your wife work on boundary setting & really trying to create some balance herself and actively work on this for 3-6 months (maybe with a coach?) & see where she nets out & if she's still so motivated to leave her job.

[wantstoinvest]

Finances aside, it would be a big alarm bell for me that doctors & speech therapists are encouraging you/your wife to leave your daughter in day care, at the same time you are considering removing her. If nothing else, I'd consider keeping her part time, which would increase costs.

I mean this kindly & no slight on your wife, but she really needs to solve the boundary setting. I say that as someone who also worked in tech for 25+ years, and suffered from the same thing your wife suffers from. It's an important skill, and she needs to learn it. I'm not suggesting she can never quit, or that this isn't the right job for her, etc, but from the outside looking in, the removing your daughter from childcare sounds like an excuse so your wife can quit a very stressful job. Which, doesn't align with what might be best for your daughter (going by what the doctors are saying).

I'd recommend your wife work on boundary setting & really trying to create some balance herself and actively work on this for 3-6 months (maybe with a coach?) & see where she nets out & if she's still so motivated to leave her job.

Yeah, you are right about that. She knows she has issues boundary setting, but that is easier said than done. I think there is an upside to having her happier though, and our daughter would reap those benefits 100%. She really enjoys spending time with my wife, but currently in out day-to-day, she only spends time with her at night or on weekends (when we don't have social engagements). I think there is some benefit there, but its an emotionally charged situation.

[Dee18]

I think the non-financial factors are the most important here.  My daughter had significant hearing issues and I followed the advice of therapists to keep her in daycare.  But in retrospect I do not think that was the best decision as my daughter was not one to speak up in a crowd of more vocal toddlers. Equally important, I wish I had taken at least a year at home with her for my own benefit.  She is an adult now and we have a great relationship, but time goes by quickly and you do not get any stage of a child's or parent's life for a do-over. If this time with your daughter is really important with your wife some things to consider are:
Would she be willing to go back to work if your business does suffer a serious decline?

Is she willing to work extra time in the distant future to make up for time off now?

Is the private speech therapy short term or long term?  If your wife will be at home could she practice some of the therapist's techniques with your daughter so fewer paid visits are necessary? Without the private speech therapy and day care your posted monthly expenses are a modest $2766.

Are you planning on having more children?  If you plan to only have one, then it's only three years (or possibly two where you live) before your daughter would be eligible for public education. Would your wife be happy to have just two years at home?

Have you consulted with anyone about possible insurance subsidies under the ACA?

With 1.5 million saved at age 37 you have the freedom to make any choice you want.  I wish you and your wife the best of luck in this decision.

[GilesMM]

You have 3x what Pete had when he quit in a huff and retired so I think you could Both retire now if you so chose. Definitely wife should get out of toxic job and focus on what is best for kid.

[wantstoinvest]

thanks for the replies everyone. I'll respond in more details later but i agree that we have done a good job saving up some money and our expenses are relatively low.

i didn't include food because we order out right now when my wife gets home from work a decent amount cause she's just to tired to cook. if she was not working, our food bill would be very low and we'd eat a lot of homemade.

the biggest thing, though, is health insurance. unless we get some aca subsidy, or health insurance could be greater than the rest of our expenses combined, which presents an x factor.

i also am not sure how to represent my income for subsidies since I'm self employed. what if it goes up or down? what happens then?

[MaybeBabyMustache]

thanks for the replies everyone. I'll respond in more details later but i agree that we have done a good job saving up some money and our expenses are relatively low.

i didn't include food because we order out right now when my wife gets home from work a decent amount cause she's just to tired to cook. if she was not working, our food bill would be very low and we'd eat a lot of homemade.

the biggest thing, though, is health insurance. unless we get some aca subsidy, or health insurance could be greater than the rest of our expenses combined, which presents an x factor.

i also am not sure how to represent my income for subsidies since I'm self employed. what if it goes up or down? what happens then?

Is there a reason why you can't pick up some/all of the cooking? If your wife is tired when she gets home, maybe you come up with a system where she cooks on weekends, and you cook during the week. We've also done a plan where I could Friday, Saturday & Sunday (Friday was my quietest work day) & I'd make a double batch of each meal, having leftovers for Monday, Tuesday & Wednesday. Thursday would be a grab something out of the freezer, or super simple option.

[wantstoinvest]

thanks for the replies everyone. I'll respond in more details later but i agree that we have done a good job saving up some money and our expenses are relatively low.

i didn't include food because we order out right now when my wife gets home from work a decent amount cause she's just to tired to cook. if she was not working, our food bill would be very low and we'd eat a lot of homemade.

the biggest thing, though, is health insurance. unless we get some aca subsidy, or health insurance could be greater than the rest of our expenses combined, which presents an x factor.

i also am not sure how to represent my income for subsidies since I'm self employed. what if it goes up or down? what happens then?

Is there a reason why you can't pick up some/all of the cooking? If your wife is tired when she gets home, maybe you come up with a system where she cooks on weekends, and you cook during the week. We've also done a plan where I could Friday, Saturday & Sunday (Friday was my quietest work day) & I'd make a double batch of each meal, having leftovers for Monday, Tuesday & Wednesday. Thursday would be a grab something out of the freezer, or super simple option.

I do cook when I can but I also run a tech consulting business. The good thing is I work remote. The bad thing is I am at the beck and call of clients. I also take my daughter from her speech school to daycare, so that eats up some of my daily time. On days when I'm lighter, I do cook. On days when I'm busy, I'm glued to my desk till my wife gets home, and then I can usually help out with small kitchen tasks.

But I'm also not worried about food if she quits. I actually enjoy using everything we have in the house before buying anything new, which leads us to throw together weird mish-mash meals. We order due to the constraints of both of us working, but I would love if we only ate out occasionally (like once every few months). It's possible when we have stretches of light work on both sides (like this past week we made homemmade food 5 nights out of 7), but the consistency is hard to get since work can be unpredictable.

[AMandM]

You may be overestimating the financial risk. Between your self-paid salary and a 4% withdrawal from your non-retirement accounts, you would have $130k to live on, while your retirement accounts continue to grow. If your wife can eventually do some part-time work, even without benefits, you could withdraw less than 4%.

On the non-financial side, I agree that your wife needs to learn to set and hold boundaries... but if that is not realistically going to happen soon, holding her happiness hostage to that goal may be the wrong decision, if time with your daughter is valuable now rather than later.

As to the daycare question, I'm no expert, but your daughter is in school, so she already has lots of time with other kids, right? How big is the added benefit of the daycare time?

[wantstoinvest]

You may be overestimating the financial risk. Between your self-paid salary and a 4% withdrawal from your non-retirement accounts, you would have $130k to live on, while your retirement accounts continue to grow. If your wife can eventually do some part-time work, even without benefits, you could withdraw less than 4%.

On the non-financial side, I agree that your wife needs to learn to set and hold boundaries... but if that is not realistically going to happen soon, holding her happiness hostage to that goal may be the wrong decision, if time with your daughter is valuable now rather than later.

As to the daycare question, I'm no expert, but your daughter is in school, so she already has lots of time with other kids, right? How big is the added benefit of the daycare time?

Good point. She gets 2 hours a day with other kids who also have varying degrees of hearing loss at her school. I didn't think of drawing down 4% on the post tax money and supplementing my salary with that. That's a good option.

I think I am also approaching this a bit too conservatively. A part of me has been building this pot of cash up for so long now that spending it seems scary.

this may also be a dumb question, but the 4% withdrawal rate assumes I reinvest the money into something that generates 4%, correct?

[lhamo]

Re:  health insurance options, highly recommend you consult with a person whose job it is to navigate the ACA system -- in my area they are called Navigators, but looks like NY calls them Assistors.  Follow the links here to find one in your area:

https://nystateofhealth.ny.gov/agent/assistors

Because you control your own salary and have relatively low expenses, you can consider minimizing your income or changing how you distribute it in order to qualify for better ACA subsidies.  I can't find a table of the income cutoffs for a 3 person family, but Silver supreme and silver enhanced subisidies to up to nearly 130k/year in imcome for a family of four and really reduce the cost of ACA insurance:

https://info.nystateofhealth.ny.gov/2025costsavings

So even if your tech business doesn't slow down, you could conceivably cut back on what you pay yourself (and keep more money in business savings as a reserve) and drop your monthly income to a level that would allow you to qualify for an ACA plan with good subsidies. 

Also, if the health insurance cost is the real issue holding you back from this decision, keep in mind that you are not looking at $2500 or more of ADDITIONAL expenses.  Your additional monthly expense will be whatever the health insurance plan you choose costs - the $1800 you are currently spending on daycare.  Maybe round that down to $1500 so that your partner can hire someone a few hours a week to get some time to herself.  So lets say your new health insurance costs $2500 month.  That is a $1000/month or $12,000/year additional expense.  Something you can EASILY cover from your brokerage returns. 

I do think it is wise for your partner to start working on her boundary setting skills over time as that will lead to a happier/healthier life for all of you in the long run.  But for now this seems like a good time to experiment with her being home for your daughter and see how it all plays out, financially and otherwise.  Maybe harvest some LTCG and put a nice big chunk of that brokerage account into a money market and consider that the slush fund for this experiment and a possible market/income downturn for the next 2-3 years and see how things play out.  Both of you have the skills to get alternative employment/income should that prove necessary if you don't like the results of the experiment.


PS:  Just found the calculator here where you can experiment with different income levels to see how it affects subsidies/bottom line costs -- looks like if you drop your annual income from 100k to 80k for a family of 3 your monthly subsidy for a silver plan goes up about $250 (at least in Queens -- used my old zip code to try it out).  Max subsidy seems to be at incomes around 65k/year ($1541 in monthly subsidy, compared to $1080 at 100k) -- below that and it looks like you are into Medicaid territory ($0 subsidy offered).  Personally I have been very happy with Medicaid coverage in my state (Washington), but I am in Seattle and our healthcare infrastructure is pretty good.

https://nystateofhealth.ny.gov/individual/searchAnonymousPlan/searchPlans

[Malum Prohibitum]

You may be overestimating the financial risk. Between your self-paid salary and a 4% withdrawal from your non-retirement accounts, you would have $130k to live on, while your retirement accounts continue to grow. If your wife can eventually do some part-time work, even without benefits, you could withdraw less than 4%.

On the non-financial side, I agree that your wife needs to learn to set and hold boundaries... but if that is not realistically going to happen soon, holding her happiness hostage to that goal may be the wrong decision, if time with your daughter is valuable now rather than later.

As to the daycare question, I'm no expert, but your daughter is in school, so she already has lots of time with other kids, right? How big is the added benefit of the daycare time?

Good point. She gets 2 hours a day with other kids who also have varying degrees of hearing loss at her school. I didn't think of drawing down 4% on the post tax money and supplementing my salary with that. That's a good option.

I think I am also approaching this a bit too conservatively. A part of me has been building this pot of cash up for so long now that spending it seems scary.

this may also be a dumb question, but the 4% withdrawal rate assumes I reinvest the money into something that generates 4%, correct?

No.  He is referring to the 4% rule, or safe withdrawal rate.
https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

[Malum Prohibitum]

thanks for the replies everyone. I'll respond in more details later but i agree that we have done a good job saving up some money and our expenses are relatively low.

i didn't include food because we order out right now when my wife gets home from work a decent amount cause she's just to tired to cook. if she was not working, our food bill would be very low and we'd eat a lot of homemade.

the biggest thing, though, is health insurance. unless we get some aca subsidy, or health insurance could be greater than the rest of our expenses combined, which presents an x factor.

i also am not sure how to represent my income for subsidies since I'm self employed. what if it goes up or down? what happens then?

Health Insurance - there are very healthy subsidies for low six figure income families.  As for being self employed, you just use last year's MAGI.  I am self employed, and I adjust it every year based on my previous tax returns.  If I make more or less money, it all gets factored in when I file my income tax returns the next year.  It's really not that big of a deal.   I used to worry a lot about it because there was literally a cliff, a point at which one dollar more cost a LOT more in taxes.   Now, however, that cliff no longer exists, and that will be the case at least through next year.  We'll see what happens in 2026.

You say you pay yourself $100k, but do not really say what your MAGI is, so it is difficult for me to provide you with more information.

[wantstoinvest]

You may be overestimating the financial risk. Between your self-paid salary and a 4% withdrawal from your non-retirement accounts, you would have $130k to live on, while your retirement accounts continue to grow. If your wife can eventually do some part-time work, even without benefits, you could withdraw less than 4%.

On the non-financial side, I agree that your wife needs to learn to set and hold boundaries... but if that is not realistically going to happen soon, holding her happiness hostage to that goal may be the wrong decision, if time with your daughter is valuable now rather than later.

As to the daycare question, I'm no expert, but your daughter is in school, so she already has lots of time with other kids, right? How big is the added benefit of the daycare time?

Good point. She gets 2 hours a day with other kids who also have varying degrees of hearing loss at her school. I didn't think of drawing down 4% on the post tax money and supplementing my salary with that. That's a good option.

I think I am also approaching this a bit too conservatively. A part of me has been building this pot of cash up for so long now that spending it seems scary.

this may also be a dumb question, but the 4% withdrawal rate assumes I reinvest the money into something that generates 4%, correct?

No.  He is referring to the 4% rule, or safe withdrawal rate.
https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

Wow, you know I always thought it meant taking my asset allocation and switching to bonds. That was dumb of me. I'm invested exclusivel in VTI,VOO,VGT so I can leave that money alone and just live off 4% growth!?!?

The 4% of income off the investments may cover insurance alone....

[chasingthegoodlife]

I’m an Australian so without wanting to dismiss it, I can’t connect with the anxiety around health insurance.

What I’m hearing is that you are financially secure, caring for a young child, and both working so hard that often neither of you have the time or energy to make dinner. This seems like the textbook time to let something go.

[wantstoinvest]

I’m an Australian so without wanting to dismiss it, I can’t connect with the anxiety around health insurance.

What I’m hearing is that you are financially secure, caring for a young child, and both working so hard that often neither of you have the time or energy to make dinner. This seems like the textbook time to let something go.

Yeah, when you put it that way, something needs to change. I don't know how Australia's health insurance is, but in America it is very expensive and you still pay after for going to the doctor, having surgeries, etc.

[wantstoinvest]

Updated my original post after running numbers tonight.

Slightly over 1.6M, so that is nice. I think the biggest thing here too is I'm not very good at estimating what our tax rate will be if we live off a new, lower amount. How do you guys determine your tax rate?

[Dicey]

Find yourself a copy of "The Complete Tightwad Gazette" by Amy Dacyczyn. Some of her stuff is incredibly dated, but much of it is still golden. She wrote extensively about the ways it can be more cost effective for one parent to stay at home. I think you'll find it encouraging. It's definitely worth a read.

The problem with keeping your child in daycare it that you can't really know how much she's actually interacting with others. Your wife would know, and keep her engaged.

What about you finding a position that pays benefits? I know it's less fun than being self-employed, but still possibly worth considering.

[jeroly]

Hi everyone,

I've posted in various boards here over the years but never really painted my situation. I want to get some advice from you all on a dilemma me and my wife are having.

My wife (37F) and I (37M) have been working for a few years now and have saved up a decent pool of assets (in my opinon). We had a daughter who is now 2 years and three months old, but she has been diagnosed with profound hearing loss. We have gotten her Cochlear implants and she is currently going to a school in New York City for speech and hearing development that is entirely covered. That part is great! The tricky part is my wife wants to quit her job for a number of reasons:

1. She wants to spend more time with our daughter and help her develop language and hearing. My daughter still goes to a day care for a portion of the day after speech school, so my wife would be able to take her out of day care and spend the day with her (talking, practicing speech, etc).
2. My wife is really not liking her job anymore. She works in tech, but the hours are long, she taker her work home with her, she's usually stressed, and she's not sure she even likes the work itself.
3. My wife's job provides our health insurance.

The last part is the stickler. I run my own tech consultancy, but business may slow down in the next few months. Assuming my wife was working, this was manageable, but if she isn't then the business has to make money (or we start using our assets).

Here is a breakdown of our assets:

401ks and IRAs: $805k
Brokerage accounts: $780k
Savings account: $30k

The investment and retirement accounts are essentially tracking the S&P in index funds.

We live in a co-op we own, but the value of the property doesnt matter much since we are planning to live here for the long term. Our expenses are as follows:

Mortgage: $2176.63
Electric: $100 (average, summer is higher, winter is less)
Gas: $20
Car Insurance: $120
Home Insurance: $50
Phone+Internet: $200
Gym Memberships: $100
Private Speech Therapy: $520
Day care: $1800

If my wife stayed at home, we would eliminate the day care cost but we would need to essentially swap it out for health insurance we buy ourselves. We did some initial looking, and plans can be anywhere from $1800-$2500+, which would end up being our most expensive cost! Because ourdaughter has Cochlear implants, we want her to have a good plan, while we could have worse plans? That is one option.

With all the above math, if my business brings in the amount it has been (I pay myself a salary of 100k) I could cover the bills while dipping a little into my brokerage. If the business suddenly stops, we could still use our savings, but it would run out eventually.

My wife has also been looking at part time work that would provide benefits, but those are few from an initial search. the biggest advantages of her not working are:

1. She would be happier
2. She could spend time with our daughter
3. She would get her time back
4. We want another kid at some point and she would have the mental energy to focus on it

If we could have some strategy around the health insurance, we could actually manage her not working today. But if the cost of health insurance is 2500 or higher, I just don't see how the math works out long term.

Does anyone have any general advice on what we could do?

1. Get a handle on your current expenses.

2. Plan for at least $2,500 in health insurance costs... probably much more given the Republicans' announced plans to trash the affordable care act, which would make insuring pre-existing conditions like your daughter's hearing very expensive or uninsurable.

3. It seems like you have no clue whatsoever how much your consultancy will bring in, and that doesn't seem like a good basis for your wife quitting.

4. Might a leave of absence be a possibility for your wife? Or maybe a "mommy schedule" with reduced hours?

[wantstoinvest]

Hi everyone,

I've posted in various boards here over the years but never really painted my situation. I want to get some advice from you all on a dilemma me and my wife are having.

My wife (37F) and I (37M) have been working for a few years now and have saved up a decent pool of assets (in my opinon). We had a daughter who is now 2 years and three months old, but she has been diagnosed with profound hearing loss. We have gotten her Cochlear implants and she is currently going to a school in New York City for speech and hearing development that is entirely covered. That part is great! The tricky part is my wife wants to quit her job for a number of reasons:

1. She wants to spend more time with our daughter and help her develop language and hearing. My daughter still goes to a day care for a portion of the day after speech school, so my wife would be able to take her out of day care and spend the day with her (talking, practicing speech, etc).
2. My wife is really not liking her job anymore. She works in tech, but the hours are long, she taker her work home with her, she's usually stressed, and she's not sure she even likes the work itself.
3. My wife's job provides our health insurance.

The last part is the stickler. I run my own tech consultancy, but business may slow down in the next few months. Assuming my wife was working, this was manageable, but if she isn't then the business has to make money (or we start using our assets).

Here is a breakdown of our assets:

401ks and IRAs: $805k
Brokerage accounts: $780k
Savings account: $30k

The investment and retirement accounts are essentially tracking the S&P in index funds.

We live in a co-op we own, but the value of the property doesnt matter much since we are planning to live here for the long term. Our expenses are as follows:

Mortgage: $2176.63
Electric: $100 (average, summer is higher, winter is less)
Gas: $20
Car Insurance: $120
Home Insurance: $50
Phone+Internet: $200
Gym Memberships: $100
Private Speech Therapy: $520
Day care: $1800

If my wife stayed at home, we would eliminate the day care cost but we would need to essentially swap it out for health insurance we buy ourselves. We did some initial looking, and plans can be anywhere from $1800-$2500+, which would end up being our most expensive cost! Because ourdaughter has Cochlear implants, we want her to have a good plan, while we could have worse plans? That is one option.

With all the above math, if my business brings in the amount it has been (I pay myself a salary of 100k) I could cover the bills while dipping a little into my brokerage. If the business suddenly stops, we could still use our savings, but it would run out eventually.

My wife has also been looking at part time work that would provide benefits, but those are few from an initial search. the biggest advantages of her not working are:

1. She would be happier
2. She could spend time with our daughter
3. She would get her time back
4. We want another kid at some point and she would have the mental energy to focus on it

If we could have some strategy around the health insurance, we could actually manage her not working today. But if the cost of health insurance is 2500 or higher, I just don't see how the math works out long term.

Does anyone have any general advice on what we could do?

1. Get a handle on your current expenses.

2. Plan for at least $2,500 in health insurance costs... probably much more given the Republicans' announced plans to trash the affordable care act, which would make insuring pre-existing conditions like your daughter's hearing very expensive or uninsurable.

3. It seems like you have no clue whatsoever how much your consultancy will bring in, and that doesn't seem like a good basis for your wife quitting.

4. Might a leave of absence be a possibility for your wife? Or maybe a "mommy schedule" with reduced hours?

Say I cut the day care and the private speech therapy, what else can i cut?

[Laura33]

Hi everyone,

I've posted in various boards here over the years but never really painted my situation. I want to get some advice from you all on a dilemma me and my wife are having.

My wife (37F) and I (37M) have been working for a few years now and have saved up a decent pool of assets (in my opinon). We had a daughter who is now 2 years and three months old, but she has been diagnosed with profound hearing loss. We have gotten her Cochlear implants and she is currently going to a school in New York City for speech and hearing development that is entirely covered. That part is great! The tricky part is my wife wants to quit her job for a number of reasons:

1. She wants to spend more time with our daughter and help her develop language and hearing. My daughter still goes to a day care for a portion of the day after speech school, so my wife would be able to take her out of day care and spend the day with her (talking, practicing speech, etc).
2. My wife is really not liking her job anymore. She works in tech, but the hours are long, she taker her work home with her, she's usually stressed, and she's not sure she even likes the work itself.
3. My wife's job provides our health insurance.

The last part is the stickler. I run my own tech consultancy, but business may slow down in the next few months. Assuming my wife was working, this was manageable, but if she isn't then the business has to make money (or we start using our assets).

Here is a breakdown of our assets:

401ks and IRAs: $805k
Brokerage accounts: $780k
Savings account: $30k

The investment and retirement accounts are essentially tracking the S&P in index funds.

We live in a co-op we own, but the value of the property doesnt matter much since we are planning to live here for the long term. Our expenses are as follows:

Mortgage: $2176.63
Electric: $100 (average, summer is higher, winter is less)
Gas: $20
Car Insurance: $120
Home Insurance: $50
Phone+Internet: $200
Gym Memberships: $100
Private Speech Therapy: $520
Day care: $1800

If my wife stayed at home, we would eliminate the day care cost but we would need to essentially swap it out for health insurance we buy ourselves. We did some initial looking, and plans can be anywhere from $1800-$2500+, which would end up being our most expensive cost! Because ourdaughter has Cochlear implants, we want her to have a good plan, while we could have worse plans? That is one option.

With all the above math, if my business brings in the amount it has been (I pay myself a salary of 100k) I could cover the bills while dipping a little into my brokerage. If the business suddenly stops, we could still use our savings, but it would run out eventually.

My wife has also been looking at part time work that would provide benefits, but those are few from an initial search. the biggest advantages of her not working are:

1. She would be happier
2. She could spend time with our daughter
3. She would get her time back
4. We want another kid at some point and she would have the mental energy to focus on it

If we could have some strategy around the health insurance, we could actually manage her not working today. But if the cost of health insurance is 2500 or higher, I just don't see how the math works out long term.

Does anyone have any general advice on what we could do?

1. Get a handle on your current expenses.

2. Plan for at least $2,500 in health insurance costs... probably much more given the Republicans' announced plans to trash the affordable care act, which would make insuring pre-existing conditions like your daughter's hearing very expensive or uninsurable.

3. It seems like you have no clue whatsoever how much your consultancy will bring in, and that doesn't seem like a good basis for your wife quitting.

4. Might a leave of absence be a possibility for your wife? Or maybe a "mommy schedule" with reduced hours?

Say I cut the day care and the private speech therapy, what else can i cut?

Hard to tell from what you posted, since you're missing any sort of miscellaneous expense, like entertainment, recreation, clothes, drug stores, life/disability insurance, commuting, OOP medical, diapers, co-op fees, home maintenance/repair outside of co-op fees, etc. etc. etc.  It's things like entertainment and clothes that tend to be the easiest to cut back on. 

How far are you from FI?  I mean, are we talking about tiding you over a few years until you can hit say $2M, or are you looking for something like $3-4M?  How much does your wife make?

Have you thought about quitting the consultancy and staying home with your daughter?  It makes no sense to give up a solid, apparently high-paying job for an unknown consulting income.  Your fears of a dropoff in business are realistic, and you need to manage your downside risks so that a bump in the economy doesn't derail you.  AMHIK.

[wantstoinvest]

Hard to tell from what you posted, since you're missing any sort of miscellaneous expense, like entertainment, recreation, clothes, drug stores, life/disability insurance, commuting, OOP medical, diapers, co-op fees, home maintenance/repair outside of co-op fees, etc. etc. etc.  It's things like entertainment and clothes that tend to be the easiest to cut back on. 

How far are you from FI?  I mean, are we talking about tiding you over a few years until you can hit say $2M, or are you looking for something like $3-4M?  How much does your wife make?

Have you thought about quitting the consultancy and staying home with your daughter?  It makes no sense to give up a solid, apparently high-paying job for an unknown consulting income.  Your fears of a dropoff in business are realistic, and you need to manage your downside risks so that a bump in the economy doesn't derail you.  AMHIK.

Got it, let me look at my numbers more in depth. I appreciate all the responses so far in this topic. Like I said earlier, the X factor on the expenses is health insurance, so I need a clear picture on that before I can make any decision.

Our misc expenses are pretty low, we don't buy clothes anymore, we walk in our neighborhood or go to the park for fun, or watch Netflix (which is paid in part as part of T-Mobile) or we see friends/family. Our other expenses are random in nature, but I also harp on being frugal, so we really don't buy much and we stretch our misc dollars. Our biggest expense if my wife did would be health insurance, by far, so I need to get a handle on that number first.

[lhamo]

You are focusing on one small tree in the large forest of your lives.  You have over 800k in non-retirement funds.  You can pay for health insurance for a year or two, or more, to see if this experiment in cutting back on work for one person improves your overall quality of life.  And if it doesn't or you aren't comfortable with the numbers your partner can get a different job with less stress.

Contact a health care Assistor today. Can't guarantee that they will be as good as mine, who has saved our family thousands of dollars over the years, but they are a good person to have in your corner and they should be able to confirm what your costs and subsidy levels will be at various income points.

[Captain FIRE]

Hard to tell from what you posted, since you're missing any sort of miscellaneous expense, like entertainment, recreation, clothes, drug stores, life/disability insurance, commuting, OOP medical, diapers, co-op fees, home maintenance/repair outside of co-op fees, etc. etc. etc.  It's things like entertainment and clothes that tend to be the easiest to cut back on. 

How far are you from FI?  I mean, are we talking about tiding you over a few years until you can hit say $2M, or are you looking for something like $3-4M?  How much does your wife make?

Have you thought about quitting the consultancy and staying home with your daughter?  It makes no sense to give up a solid, apparently high-paying job for an unknown consulting income.  Your fears of a dropoff in business are realistic, and you need to manage your downside risks so that a bump in the economy doesn't derail you.  AMHIK.

+1

It seems like you are solving for the wrong problem here.

Therapists and other professionals recommend keeping her in daycare, so removing her from it and taking away the private speech lessons to boot seems like it would be to her detriment, all to solve your wife's job frustration. If it were really about the daycare, then Laura33 is correct, it makes far more sense for you to quit your job rather than your wife.

Can your wife just...look for another job? One where it may be easier to set boundaries early on rather than having to claw them back now? One where she can prioritize work life balance over other aspects when accepting?

I feel like you a leaning towards making a blind leap here because she's unhappy about the status quo, without full research and information about:
- consultancy cash flow
- health care
- full detailed picture of your expenses
- likely impact on child (how will your wife know what to do to help her without the private sessions? Will she just be relying on google?? Will your daughter be sad to leave friends?)

If you are going to leap regardless, why not wait a few months until you're over your uncertain period (at least for this year) and maybe you can better assess cash flow going forward? (Is it always uncertain? Or is it this a new business? Can you do anything to stabilize it and smooth it out?)

Logically it makes more sense to wait and sock the money away for retirement until you have that second kid, when higher daycare expenses come into play. Thurs clearly this is an emotional issue. I hear a lot about what your wife wants. What do you want? Are you ok working longer - possibly quite a bit longer than double - for this change, rather than a shorter time working together? (How much do you value the meal on the table when you get home and other stay-at-home aspects?)

[Malum Prohibitum]

I think the biggest thing here too is I'm not very good at estimating what our tax rate will be if we live off a new, lower amount. How do you guys determine your tax rate?

Well, for 2025, the married filing jointly standard deduction is $30,000.   So, unless you itemize, and your itemized deductions are higher than $30,000, then we can safely assume that you will be taxed 0% on the $30,000.

Then look at the tax brackets for 2025.

The next dollar, that is, $30,001, will be taxed at 10%, or ten cents on the dollar.  That continues until $11,925, or $41,925, for a total federal income tax of $1192.50 on the first $41,925 of income (except it will still be $0 because you have a child tax credit of $2000 and maybe some other tax credits).

The next dollar will be taxed at 12% up to $78,475 ($30k plus the tax bracket amount)

Then comes the 22% tax bracket . . .

The White Coat Investor has the 2025 tax bracket tables in this article.
https://www.whitecoatinvestor.com/how-tax-brackets-work/

Then don't forget to subtract from the tax owed any tax credits you have available.  These are different from a deduction because they are a direct credit dollar for dollar against the actual tax owed.  For example, the child tax credit is $2000 right now.  Biden, Harris, and Trump all promised to increase the child tax credit while on the campaign trail, but Congress must do that, not the President (candidates know voters have no idea how our government works, so they promise whatever).  For now it is $2k.   There are tax credits for taking care of disabled children and all sorts of other things out there, but the tax brackets ought to get you kind of close, and you can carefully review your tax forms from last year to give you an idea.

[Malum Prohibitum]

I intentionally left out payroll taxes because you own your own business and probably have a very good idea already of the payroll tax on the $100k in payroll that you pay to yourself.  Presumably you also deduct 20% of your profits in the business for the tax break from the TCJA from 2018.  <---   That is one tax provision that is likely to stay given the results of the election, which benefits your tax situation because (A) it is not payroll, so no payroll tax, and (B) no income tax.   That could be worth a lot or a little depending upon the amount of income your business generates.  Anyway, since you own your own business I intentionally did not mention these things that you already do in your business tax planning in the post about income tax brackets.  I thought I should mention them here in a separate post just so that they are not forgotten after you read my tax bracket post above.   These may or may not be relevant depending upon who stays home when you go down to one income.

[fuzzy math]

There are 2 types of people who benefit from HDHPs, those who use very little care and those who use a lot. If you're going to hit your max out of pocket annually you might as well have an HDHP. We've hit our deductible every single year, and maxed our out of pocket a few years too. I have a HOH kiddo who has had a lot of surgeries, just assume costs will be similar in future years.

Is the preschool for Deaf / HOH kids? I'm honestly surprised that your kid's IEP doesn't cover full time schooling, that would be something maybe to look into - there are IEP advocates you can speak to.

[Captain FIRE]

Is the preschool for Deaf / HOH kids? I'm honestly surprised that your kid's IEP doesn't cover full time schooling, that would be something maybe to look into - there are IEP advocates you can speak to.

The child is 2 years, 3 months. Don't know about their state, but in mine IEPs don't start until age 3.

[wantstoinvest]

Just replying to the latest comments, my child is going to a school that specializes in hearing loss children. It is covered entirely by an early intervention program. We pay nothing for that and won't while she's there.

The cost we are paying now is for a daycare after, since she is only at the hearing school for early in the day. If my wife quits, we would cut that out and have her stay with my wife.

We currently have a high deductible plan and I did have to pay for some of her surgery costs out of pocket already, but it's one of those things that I don't know how to account for, especially if we bought health insurance on the open market. We would have less money coming in monthly and could absorb some costs by dipping into the stash, but would want to avoid that as much as possible.

[lhamo]

How would you feel about taking around $50-100k from the brokerage, harvesting some of the GREAT gains you have had this year, and putting it in a money market or similar account as the "this is the money we have to fall back on while we figure out if DW staying home is financially viable long-term" fund?

That is plenty to cover increased health insurance costs.

You can get close to 5% returns on a money market right now.

Have you reached out to a Health Care Assistor yet?

[wantstoinvest]

How would you feel about taking around $50-100k from the brokerage, harvesting some of the GREAT gains you have had this year, and putting it in a money market or similar account as the "this is the money we have to fall back on while we figure out if DW staying home is financially viable long-term" fund?

That is plenty to cover increased health insurance costs.

You can get close to 5% returns on a money market right now.

Have you reached out to a Health Care Assistor yet?

no not yet, my kid also got sick with RSV lol, so im a tired dad atm. I would be ok with just selling off bits of the brokerage money to cover costs, since I'm sure I can get more than 5% on the money in the account, but I also have the 30k savings in an account that is giving 5%, so im not opposed to it.