Baby on the way: Advice on staying/moving and wife working/not working

[hoyahoyasaxa]

My wife is 3 months pregnant with our first child and we're trying to figure out what to do in terms of our housing / whether we can afford for her not to work.  Our goal is to live in a particular area in Rockland County, NY where my wife's large family all live within about 5 miles of each other.  We've been saving for a few years (I'm 28 and went to work right after college, she is 27 and has been in the workforce for just two years following grad school) but I'm not sure we're in a place to pull the trigger on actually buying yet.  Our financial picture is below:

Monthly income: $5600 take home ($3500 for me, $2100 for her)
Average monthly expenses: $3500

Assets:

- (my) Vanguard Roth IRA: $33,000
- (her) Chuck Schwab Roth IRA: $12,000
- (her) TIAA Cref 403b: $2,000
- (my) Lending Club account: $6,000
- (her) Savings Bonds: $3,200
- (our) Savings: $41,500
- (our) CD's: $30,000, 5-years @2%, maturity date Oct/2016
- (our) Other assets: $6,000

Liabilities:

- We have no debt, credit cards or otherwise.

Options:

1) Live in the Rockland area + my wife continues to work

$5600 take home pay
$1850-2000 rent or mortgage (including property taxes) - rent and mortgage expenses are roughly the same in this area and the low end for purchases for the type of home we're looking for is between 300-325k.
$675-$800 - Commuting costs (we both work in Manhattan and jobs are not plentiful in this suburb)
$1700 - other expenses on average
Childcare - we have to figure this out, but we think my wife's mother will be able to watch the baby at least one day per week, with the other days being daycare or nanny.

2) Live in the Rockland area + my wife stops working

$3500 take home pay
$1850-2000 rent or mortgage
$300-400 commuting costs
$1700 - other expenses on average
Only way I can see this working out is if my wife finds something that can bring in some cash from home, ideally at least $1000 a month

3) Keep living in Queens + my wife keeps working

$5600 take home pay
$1550 rent
$225 - Commuting costs
$1700 - other expenses on average
Childcare - again, we have to figure this out - we might be able to get my wife's sister, who is a yoga instructor in the city and lives nearby, to watch the baby one day per week with the other days requiring daycare or nanny

4) Keep living in Queens + my wife stops working

$3500 take home pay
$1550 rent
$225 - commuting costs
$1700 - other expenses on average
Again, would be ideal if my wife could find a way to make some $ while staying at home.

I've used a few mortgage vs. rent calculators and it seems that buying in the Rockland area becomes better than renting after 6 years.  But at the same time, we can preserve quite a bit of cash by not dropping $60k on a down payment.  Regardless of whether we stay in Queens now or not, we want to eventually raise our kids in the neighborhood where our family lives and I want our child to go to those schools rather than the public schools in Queens (which I guess means we've got a limit of 5 years or so).

So what do you think - thoughts on these scenarios and what our best options are at this point?  Would it make sense to rent vs. buy right now in Rockland to preserve our down payment funds?

[ScottEric]

Other than the money thing, how much time do you both spend commuting now vs living in Rockland? 

I ask because I just went from a half hour commute to a one hour commute (each way) as a result of moving just 5 miles out of Boston.  That extra hour a day, plus having to schedule everything around the commuter rail schedule makes a huge difference that I didn't really anticipate. 

In your shoes, knowing how much of a difference that made to me I'd do option 3 or 4 for a while.

[avonlea]

Can you list specifically how much you spend on each of your "average other expenses"?  $1700 a month seems a little high when housing and transportation costs are not included.

Congratulations by the way!

[Ellen]

My guess is that daycare is going to be your largest expense. You really need to look into the range of options, and their costs. That could help you in your decision.

[Mega]

Firstly, congratulations on the baby! But I have a couple of face punches for you.

My wife is 3 months pregnant with our first child and we're trying to figure out what to do in terms of our housing / whether we can afford for her not to work.

If your wife stays home to take care of the baby she is most definitely working. Never tell her she isn't working, or you may get a real life face punch. Taking care of a baby is the most exhausting thing I have ever done. I dont know how my wife was able to stay home and do it for a year.

- (our) CD's: $30,000, 5-years @2%, maturity date Oct/2016

Why do you have money in a CD? That interest rate doesn't even keeping up with inflation. Take the money out ASAP.

Again, would be ideal if my wife could find a way to make some $ while staying at home.

Best recommendation is for your wife to take in other kids as a home daycare. But as said previously, it is an extremely exhausting job.


In total, you have about $75,000 in cash / cash equivalents. Why? Do you suddenly expect to need $75,000, perhaps for a down payment on a house? If so, why do you have $30K locked in til 2016?

For someone who is 28, you are actually in quite a good position, financially.

Find out what home daycares charge per day, so you can budget accordingly.

[avonlea]

Best recommendation is for your wife to take in other kids as a home daycare. But as said previously, it is an extremely exhausting job.

If your wife does choose to do this, I recommend waiting until the baby is about six months or a year in age before she starts watching other children.  You have enough savings to get you through that. The first few months with a new baby can be really tough.

[hoyahoyasaxa]

To answer a few questions:

To ScottEric: Right now, my one-way commute is 40 minutes by bike, 50 minutes to an hour by subway.  By NJ Transit/Subway from Rockland, it will be about an hour and a half to 2 hours each way.

To Avonlea: Averages for monthly expenses outside of rent:

$56 - Internet
$100 - Gas/Electric
$45 - Monthly cell bill for both of us
$400 - Groceries and household supplies
$190 - Dining out (includes any time we don't bring lunch to work)
$350 - All transportation expenses (subway fare, gas/tolls, car repairs, insurance)
$30 - Entertainment (concerts, games, Netflix, etc.)
$120 - Vacation/travel (we've gone to approximately 800 weddings in the last two years)
$171 - Gifts (did I mention the weddings?)
$100 - Charitable giving
$115 - Medical expenses
$100 - Misc. expenses

To Mega: 1) Yes, I of course know that taking care of a child is work.  I was referring to salaried employment.  2) When we originally got the CDs in 2011, our timeline for purchasing a home was a bit shorter - we were thinking we'd be in one within 3 years and didn't want to risk putting our down payment fund in the market considering the short term need.  3) Most of this answered in the previous response - the 30k is locked in because the math worked out - Ally has a very low early withdrawal penalty and it was a better option to do the 5-year CD at the higher interest rate and take the penalty than doing the 2 or 3-year CD.

In terms of watching a few other kids, my wife has said she is open to doing that, but only if it's one or two kids from the neighborhood, really no more than that.  But I agree that this would help out (and bring it probably at least $1500 a month if she watched two others) quite a bit.

[avonlea]

hoyahoyasaxa,

I'm wondering how you and your wife have been able to accumulate $140,000 in savings and investments.  Your personal take home pay is about equal to the current living expenses and she has only been out of school and working for 2 years. The take home amount you are listing--is that what you have left for expenses after you have already taken out some other amount for savings?

Thanks for listing your expenditures!  I see that you and your wife are generous people. It might be best to consider if you should start cutting back on giving so much to others.  With a new baby, they should understand.  If they really care about you, they would want your family to be secure and happy.  You also might want to cut back on some of the eating out, too--hard, I know.  I love to go to restaurants as well.  It might seem like nothing, but a few hundred extra dollars less in spending each month really can help in the long run.

I really can't wrap my head around how long the commute would be if you choose to live in Rockland.  Would you be able to see the baby on the weekdays when he/she is awake?

[hoyahoyasaxa]

In addition to our current 38% savings rate, I lived at home rent-free for two years following graduation, received a small inheritance from an uncle upon his death, and we received $ from friends and family as gifts for our wedding.

[avonlea]

Thanks for explaining.  I'm sorry if I pried too much into your financial history.  I mostly just wanted to know if there were other current funds not being discussed.

I love the idea of a parent staying home with the baby if it's possible (and if the parent wants to do so).  If you stay in Queens, living off of your income alone will be pretty easily doable.  You won't be able to accumulate much more in savings, but you already have enough in savings to serve as a good safety net.  When/if your wife starts watching other children or returns to work in her current field, you two can pick back up on your savings goals. 

I wouldn't recommend moving to Rockland unless there was definitely a way for one of you to be with the baby often.  With a 2 hour commute each way, if you both work, you would both would be missing out on a lot of time with the baby (and vice versa)...unless you found childcare near one of your places of employment and then you'd be spending your time with the baby during the commute home from work--I wouldn't imagine it would be very enjoyable.  If you live in Rockland and your wife stays home, she would have her family to support her there, but you and your wife would also feel more financial strain.  And, again, you wouldn't personally see the baby very often.  Perhaps deciding about whether to move to Rockland could be put off for a few years and brought up again when the baby is getting closer to school age(?).

But like Mom to 5 said, the decision should be based on the preference of you and your wife. 

[ZiziPB]

I would consider staying put for a while because of the commuting time alone.  I think having a 2 hour commute each way and a baby would be really difficult, especially with both parents working (which seems to be necessary if you move because your housing costs will go up).  2 hours is very long time if your baby gets sick while at day care and you have to get there quick....  And if your wife would like to stay home to take care of the baby, staying in Queens would make it much easier financially (if you cut out some of the discretionary spending like restaurants, gifts, travel, she may not need to work).

Give it a couple of years and re-assess after that - you may be in a different financial or job situation then that may make the choice easier.

[StarryC]

What does your wife do with a grad school degree that brings in only $2,100 a month in one of the highest cost of living areas in the country?  At that wage, you are probably looking at a close call on working for pay v. the cost of day care.  If she stays home, you could hopefully reduce the $600 you spend on food to $400 and reduce commuting costs, and maybe spend less on things like diapers/ formula. 

However, if she's in a job that is going to have rapid salary increases in the next 5 years, it might be more worth it to work for money (financially) at least. 

I think her feelings might make the difference.  To me, it would seem ridiculous to attend 5-7 years of school to engage in a meaningful career that I am interested in for 2 years and then stop for 2-5 years.  But, I am not pregnant.   In her field are there opportunities to work part time/ work from home part time/ or otherwise reduce day car expenses? 

Now is the time to reap what you have sown gift-wise: Be sure to use your baby registry wisely so you don't have to buy much for the first 2-3 years of baby life! 

[seattlecyclone]

Yeah, I agree with StarryC about the potential for your wife's salary/commuting/daycare coming out to a wash, more or less. This is especially true when you take taxes into account. You get some federal income tax benefits for having children, but all of these (except for the dependent care credit) are the same whether one of you works or both of you do. So the first salary ends up being taxed very little, while the second salary is taxed at your full marginal rate (sounds like you're pretty near the top edge of the 15% bracket). You might want to run the numbers for your situation to see how much her job would actually increase your overall take-home pay compared to if only you worked. It might bring in less than you think.

On the other hand, time away from the work force has a negative effect on your long-term salary prospects. If your wife would ideally like to be in the workforce when the kids go to school most of the day, she might want to keep working now even if her salary doesn't quite make up for the cost of daycare, so that her career can stay on track for later.

[Albert]

I can't really comment on financial details, but the potential two hour one way commute is a killer. I'd advise strongly against it, particularly with a child on the way.

[ASquared]

This becomes more of an issue of personal/family decisions rather than strictly financial decisions.  Does you wife WANT to stay home with the baby?  I may be in the minority here....but I think this is the first question to answer.  Then - work your finances around that. 

Yes childcare super expensive/etc.  But if mom really wants to continue working then this may be the best option. 

Yes - she could still make "some money" but if she really wants to be at home with baby - then should do that.  Your babies are babies for such a short time.  You can't ever get that time back.  I understand not very "mustachian" but consider this carefully.

I left a high paying professional career after the birth of our first baby.  I did not expect to "want" to stay home.  I thought I would be most happy working after baby - but after she was born my husband and I realized that staying home was a better fit.  Does not financially make sense (I was the higher earner) but was the right decision for our family.  And fortunately my husbands income is enough to support us and save.....just obviously not as much as before. 

[MrsPete]

Childcare - we have to figure this out, but we think my wife's mother will be able to watch the baby at least one day per week, with the other days being daycare or nanny . . . our kids in the neighborhood where our family lives and I want our child to go to those schools rather than the public schools in Queens (which I guess means we've got a limit of 5 years or so).

Something you may not realize since you're not yet "in the daycare system":  When you enroll a kid in daycare, you have to enroll him full time.  So even if a relative watches the child 1-2 days a week, you'd probably still have to pay for full time care.  Of course, if you found an at-home sitter who only wanted part-time work, you might avoid that problem, but that's a fairly remote possibility.   

When your baby's born and you're so involved in infant and toddler care, school seems so far away . . . but those five years will fly by in no time, and it won't be long 'til you'll be the parents of a school-aged child.  If you're dead-set on those schools, don't wait 'til the last minute.

If your wife does choose to do this, I recommend waiting until the baby is about six months or a year in age before she starts watching other children.  You have enough savings to get you through that. The first few months with a new baby can be really tough.

Excellent advice!  You can't know whether she'll have an easy or difficult delivery.  My first delivery wasn't that bad, but my recovery was awful.  In contrast, an hour after my second child was born, I could literally have picked her up and walked home.  I was "myself" again in days.  You just can't know which outcome she'll have.

I'll throw this in:   

If I were going to take in kids,  I'd consider after-school kids instead of all-day kids.  The money is less, of course, but you still get most of the day to yourself and your own children.

To ScottEric: Right now, my one-way commute is 40 minutes by bike, 50 minutes to an hour by subway.  By NJ Transit/Subway from Rockland, it will be about an hour and a half to 2 hours each way.

No, no, no!  This is way too long -- unless you have extenuating circumstances, like you can work from home a couple days a week.  If you're looking at an everyday thing, this would take you away from your new baby.  After working and making that commute, you'd be exhausted and no use to your wife when you come home.  No way I'd agree to this on an every-day basis.

This becomes more of an issue of personal/family decisions rather than strictly financial decisions.  Does you wife WANT to stay home with the baby?  I may be in the minority here....but I think this is the first question to answer.  Then - work your finances around that. 

Yeah, I agree that this is the first question that should be answered.  Likely you can afford to do whichever you want, but either way some sacrifice will be required:  Do the two of you want her home enough that you're willing to accept the financial sacrifices that come with that choice, or Do you want to give up family time for the financial stability.  This question involves so many moving parts:

- I'm sure you can put food on the table and live indoors if you're the only breadwinner, but how does this choice affect your long-term financial plans?
- If she leaves the work force, how easy would it be for her to get another job if she needs/wants to return?
- If she leaves the work force, does she have any method for keeping her toes in the professional world so that in future years she won't be "behind" and unqualified? 
- Does she have any options for part-time or job sharing? 
- Do you have good insurance options for the family?
- Nobody wants to think about this one, but is the marriage stable?  In case of divorce, a spouse who hasn't been working sometimes finds herself in dire straits.
- How will each option affect your daily lifestyle?  If she works, how will the two of you manage the day care pick-up/drop-off, cooking, cleaning and more?  If she stays home, how will the two of you divide the household chores?  Don't assume anything -- talk about these things.

In closing, no suggestion.  I see big pros and cons for each of your options, and I don't see a clear-cut "This is the right answer".  I can only suggest things you should consider! 

[ThatGuyFromCanada]

Is there any way that you can move closer to your family, and find a new job out there to cut out the 4hrs/day of commuting? We've got two small kids and my commute is ~1.5hrs/day - and given the kids' bed times it means that I only get 3-4hrs max with them each day. It really isn't enough! My family leaves close, ~20min away, and their help has been invaluable; especially since we had 2 under 2!

So, is there anyway to move closer to family *and* cut the commute?

[bogart]

This becomes more of an issue of personal/family decisions rather than strictly financial decisions.  Does you wife WANT to stay home with the baby? 

...  I did not expect to "want" to stay home.  I thought I would be most happy working after baby - but after she was born my husband and I realized that staying home was a better fit. 

Totally agree with the basic point.  I had the opposite experience (well, not totally -- I had always planned on going back to work, but no idea how very much I'd be grateful to do so.  I don't have the "only babies once" sentiment; I had plenty of time with my son as a baby while I was also working outside the home, and have continued to feel that way as he's grown to elementary school age.  Obviously this isn't everyone's experience and it may not be yours (or your wife's), but I've known enough women who'd have sworn they would want to go back (but didn't) or who have thought they wanted to stay home (but didn't) that I'd be really leery of making a move (or other major life changes) structured around that expectation.  Let the baby arrive and then see how things are going and what feels right for you (plural) and decide then.

Congratulations on your growing family!

[SassyDenim]

My husband has a 1.5 hour to 2 hour commute and has since our son was born almost 2 years ago. His mom takes care of our son and lives close to my husband's work. I work in the opposite direction. It is miserable for everyone. My husband is exhausted and traffic makes him a bear.

If I were you guys, I'd live in Queens and have your wife take in kids all day as soon as she's able. Also, I would take in kids after work as well as soon as you are able. Having the extra kid or two after school will keep a toddler occupied and he/she will sleep easier at night because he is so worn out. :)  Then I would bank every dime. I would stop going out to eat completely. I would save and cut back to the bone. 

If just watching 2 kids all day would bring in $1500 then watching kids after school would bring in another what? $500 at least? $2k a month saved for five years (assuming you'll get a little more than $500 for after school kids later on) -- well, that's $120k saved not counting interest. That could knock down your mortgage payment allowing you to take a closer job at less pay. Or you could invest it and get $300 a month extra if you only earn 3% on it.

right now until the baby is born, dad, I'd work all the overtime you can or get a second job. Bank all of it. Work 100 hours a week if you can. Add it to your stache. You won't see your wife and she won't like it, but it's only for a few months.

While this isn't for everyone, I personally would cash out all of my funds at $140k in 5 years. I'd add the $120k plus dad's overtime, etc., and in 5 years and buy a livable foreclosure (or one that could be made ready to live in in a short time while you are living with family) at $260k and fix it up as I go. That way you have no mortgage and you would have more options. the best of all worlds would be to find a livable foreclosure that has a garage apt/basement and rent it out first before the house is ready if you have to choose between fixing up the house or the apt/basement. If you have no mortgage, the rent could pay your property taxes and insurance at least. Very Mustachian. 

Good luck! Be sure to write back what you decide to do.

[hoyahoyasaxa]

I want to thank everybody for their input.  My wife is on the fence about exactly what she wants to do.  Just for reference, she went to school for Museum Studies and manages the collection (read: takes care of the items in the museum) at the museum she is working at now.  She absolutely loves what she does, but she also has harbored desires to be a stay at home mom.

With regards to the commute, yes it's quite an annoyance, but it might just be something that we have to live with.  We're dead set on living in the same area with our big family, and my guess is that most people who live in the Rockland area commute to NYC or CT for work as there just isn't much outside of retail and engineering work in the area (unless you're a teacher, of course).  My wife's father commuted all the way to lower Manhattan on a daily basis for 30 years but worked odd hours (woke up at 3:30am, got to work at 6am, got home by 4pm).  The other alternative is finding a job in upper Manhattan (I have a job on the line at Columbia right now) and working out a carpool situation with other commuters.  The car ride would only be 45 minutes each way and they have ridiculous EZ Pass deals for carpools (like $30 a month).

One thing I can see us trying to work out is living in Queens another year, and putting out some feelers to see if people in Rockland would be interested in some kind of at-home daycare.  I feel like people are always looking for affordable daycare and if we can charge them like $750 a month for more personal attention compared to the $1200+ that other daycare centers charge, people would jump at the opportunity.  If there's interest, we can reassess whether we think we can afford to have her stay at home and take care of a couple kids and whether it would be best for us to purchase or rent given our current situation.

[MrsPete]

My wife is on the fence about exactly what she wants to do. 

I was on the fence when my first was born too.  Having been abandoned by a parent and having grown up in poverty, I have a real need to have "my own money" and to know that if something happened to my husband, I could support myself and my children without help.  At the same time, as we reached "the last month" and "the last Monday" at home with the baby, I waivered. 

My husband, who is always very wise, gave me some good advice:  He said, "Just go back for two months."  If you're not happy, you can quit then.  He said he'd be fine either way.  At the end of two months, we evaluated the situation, and we were doing fine, so I stayed at work. 

Don't get me wrong:  We had some bad times.  You will no matter what you choose.  If your wife works, she'll have days when the kids are sick,  yet she just can't be out of work; or days when she's just exhausted from trying to balance it all.  In contrast, if she stays home, she'll have days when she is dying to speak to an adult and just wants to spend on something that she knows she shouldn't.  Don't judge anything by those few extreme days:  Make your judgements based upon your typical days. 

Also, remember that what you decide today isn't a permanent decision.  I know a couple women who worked when their children were small and then decided to stay home for their teen years.  Their argument:  You can get good day care for small children, but you can't let teenagers run wild. 

19 years later, I can say my working was a good choice for us.  Good day care fell into our path at every step -- not all my friends could say this, and it wasn't my doing; rather, it was good luck.  We are more financially successful than I expected we would be.  We are able to pay our children's college tuition without serious sacrifice.  I've been able to pay the kids' very expensive dental work (yeah, they both had to inherit their dad's teeth -- it's been way more than just braces).  Most importantly, however, my children have turned out well.  They are lovely young ladies, honors students, and good people.  If I could go back in time, I would do a few small things differently, but I wouldn't change the decision to work. 

Changing the subject slightly, if you're planning to return to work EVER, I think it's easier if you work from the beginning.  You never have to make an adjustment.  I've seen a couple girlfriends who've returned to the work force after being home for 5-10 years STRUGGLE with the adjustment.  And it's not just mom who has to adjust. 

[bogart]

One thing I can see us trying to work out is living in Queens another year, and putting out some feelers to see if people in Rockland would be interested in some kind of at-home daycare.  I feel like people are always looking for affordable daycare and if we can charge them like $750 a month for more personal attention compared to the $1200+ that other daycare centers charge, people would jump at the opportunity. 

Makes sense.  As you're in the info. gathering stage a good first step would be to check on regulations for what's allowed.  I used two in-home daycare services, one licensed, one not.  The licensed one was able to run full-day whereas the one that wasn't was, I believe, limited to four hours/day (it's certainly the case that that's all it offered).  Obviously this will vary by state, age and number of kids, and possibly training of provider, but no sense planning on doing something that's not legal where you live (or want to live).

[FIRE Realtor]

I agree that the most important thing to consider is whether or not your wife wants to return to work.  If she dislikes her job even a little, or thinks that she might want to stay home even a little bit, that's what you should do. 

I returned to work just 3 days a week when my daughter was 12 wks. (not even a demanding job) and even that was terrible.  I was exhausted all the time and breastfeeding suffered because it is really hard to keep up your supply by pumping.  I quit when she was 6 mos. and was the best thing I ever did. 

Since then we've watched other people's kids part time for extra money and it's fantastic.  People are willing to pay good money for essentially a private nanny, and once they get a little older it's practically easier having 2 than 1 because they play with each other.

[snuggler]

Childcare - we have to figure this out, but we think my wife's mother will be able to watch the baby at least one day per week, with the other days being daycare or nanny . . . our kids in the neighborhood where our family lives and I want our child to go to those schools rather than the public schools in Queens (which I guess means we've got a limit of 5 years or so).

Something you may not realize since you're not yet "in the daycare system":  When you enroll a kid in daycare, you have to enroll him full time.  So even if a relative watches the child 1-2 days a week, you'd probably still have to pay for full time care.  Of course, if you found an at-home sitter who only wanted part-time work, you might avoid that problem, but that's a fairly remote possibility.   

Just wanted to say that, while it is rare to be able to enroll a child in part-time daycare, it can be do-able. My sister lives in Minneapolis and her children go to a daycare facility 3 days/week, and my mother watches them the other 2 days/week. I also have a friend here in CA who has an in-home daycare, and offers similar options to her clients.

[snuggler]

Another thing you may want to consider is future earning potential. While your wife may not be bringing in a lot of dough right now, she only has 2 years working experience compared to your 5-6. Her graduate degree may mean that, with more work experience, she could eventually bump up to a salary that is higher than yours.

A lot of times these days, the mother may out-earn the father in terms of lifetime earnings, so assuming the mother should stay home instead of the father is no longer a given. Not saying that will be the case in your situation, just that you should look at career paths for BOTH of your careers before making a decision that works best for your family.

Also, I would consider reading Lean In as a couple. There are lots of good discussions and questions in there that I think are helpful for any parent who is considering leaving the workforce.