Author Topic: Looking for thoughts or advice: Wife taking a year off with newborn  (Read 12504 times)

Hurley82

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Alright, my wife (34) and I (32) are looking for some advice/thoughts on how we are doing. We are both teachers in our 10th year and are expecting our second and final child come March. My wife expressed to me that she would like to stay home for a year after the 2nd child is born. As teachers weíre not making crazy money but completing my masterís degree and hitting the ten year mark has improved this considerably. We have been taking various steps to make this easier for us. My stipulation to my wife was that I didnít want to be living paycheck to paycheck struggling to make this work so we needed to be prepared as possible. Slowly over last year or so weíve been reducing bills and debt. Cars were sold that we owed money on, cable dropped, rarely go out to eat maybe once every month/month and half, spend little on clothes, no yearly vacations etc. Iím getting ready to drop Verizon for a more economical carrier as well as cutting our grocery bill down. So, come May my wife will be taking the year off and returning to work in August of 2016. Due to the way we are paid and the fact we are teachers Iím planning for 13-14 months of single income. Below is a rundown of bills and our current financial standing. Iím just wondering if people have any thoughts and or tips on how we are doing.

Current Financial Status

Debts
Mortgage: $200k
Student Loans $40K (Undergrad and grad school)

Random Investments
Scottrade Investments: $17.5K (not diversified all in a single company)
Wifeís Investments through a banker: $25K

Retirement Investments
Roth: $5K
403B: $24K
Savings:
Cash: $42K

Monthly Expenses
Mortgage: $1360 /Owe $200k
Student loans: $380 /Owe $39k
City Utilities: $115
Xcel Gas: $50
Internet: $50
Car Insurance: $80
Cell Phone $140 (Will be $50 once I switch Carriers)
Roth Contribution $100
Gas: $150
Groceries/Personal: $600
Day Care: $650 (Will go to Zero when the baby is born)
Health Insurance: $980 (In Sept with employer family plan)
Buying on the open market for my wife and children $$$? Estimate $500 my portion with employer $50
** Health Insurance becomes an issue when my wife loses hers in September. Because weíre both with the same school district we currently pay a reduced rate which we will lose for a year, bumping the price significantly. Exploring only insuring myself through my employer and buying the rest insurance on the open market.

Projected Total Expenses (High/Low)
Monthly bills with employer health insurance $3915
Monthly bills buying on the open market: Est. $3415
My take home will be $2,900 Month/ $49,000 Salary.

Vehicle Situation Ė Paid cash for all.
2006 Pacifica 90k miles
1999 Range Rover 65K Miles
2001 BMW F650 Motorcycle 18K miles

Some other Background info:
We are currently putting around 25% of our take home into some type of savings.  We both will be eligible for retirement around age 55 with a pension equal to 80% of our pay. Personal retirement accounts could be better funded, still trying to learn about and find the best approach factoring in the pension. The Pension is fairly well funded and steps have been taken to continue to improve its stability.  My wife will earn a small income when she is on her leave. She will be babysitting for my brotherís newborn. Should be around $500 a month for anywhere from 5 to 12 months. We both started from scratch after divorces in 2009, and we are both on the same page in terms of spending habits and goals.

Again, just looking for some input or thoughts about how we are doing. Sometimes when youíre in the thick of it, it is easy to overlook things or miss something. I apologize for the length, just wanted to be as a clear as possible.

ShoulderThingThatGoesUp

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #1 on: January 08, 2015, 11:25:46 AM »
Groceries/Personal: $600 - that seems high.

Can you refinance your mortgage to bring in any high-interest student loan debt?

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #2 on: January 08, 2015, 11:40:19 AM »
Groceries/Personal: $600 - that seems high.

Can you refinance your mortgage to bring in any high-interest student loan debt?

Groceries: $600 includes all food, personal care products,  and baby diapers/supplies.  My wife does cook every night mostly from scratch, and we splurge on organic milk for the 2 year old.  With that being said I agree there is money to be saved in that category.

Home Refit: House was originally mine and refinanced in 09 after divorce. Current rate is 4.5% 30 years. It looks like it might make the most sense to refi to a 15 year, but not sure if that would help over the next year, obviously long term it would be the smart thing to do.

ShoulderThingThatGoesUp

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #3 on: January 08, 2015, 11:43:33 AM »
Worth looking into cloth diapers. They have gotten very good (we're using Bumgenius Freetime).

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #4 on: January 08, 2015, 11:52:46 AM »
WIth a new baby on the way, you might want to start encouraging big brother/sister to potty train. Then put your second one in cloth diapers. I used flour sack towels from target to start then won some flat diapers from a diaper blog as my daughter got older. You just fold these into a pad and place them in a cover. Check out Diaper Rite http://www.diaperjunction.com/diaper-rite.html

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #5 on: January 08, 2015, 12:29:38 PM »
Thanks for the feedback so far. The cloth diaper is definitely something I'm going to look into.

ShoulderThingThatGoesUp

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #6 on: January 08, 2015, 12:34:19 PM »
Cloth diapers are an arena where I think cheaping out is a false economy. Bumgenius freetimes are $400 for a 24-pack, but they wash and dry easily, keep our daughter's privates fairly dry and completely rash-free, and hold in poop even when it attacks in force.

Future Lazy

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #7 on: January 08, 2015, 12:40:35 PM »
$150 for gas seems like quite a bit. Will this be reduced as well, with DW not commuting, and is that factored into your projected monthly expenses?

+1 for cloth diapers and potty training asap if possible.

Looks like DW might need to take on more than just a little babysitting to keep you guys above paycheck to paycheck. You've done a lot of cutting back, and I don't know what more cutting back you can do here. Would she be willing to do some tutoring to bring in extra income?

historienne

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #8 on: January 08, 2015, 12:42:42 PM »
Cloth diapers are an arena where I think cheaping out is a false economy. Bumgenius freetimes are $400 for a 24-pack, but they wash and dry easily, keep our daughter's privates fairly dry and completely rash-free, and hold in poop even when it attacks in force.

Quality is important, but you can still save by buying them used.  We use the Flip system (made by the same people as Bumgenius) and were able to buy our full stash for about $100.  Check your local cloth diapering facebook groups, we well as craigslist/ebay.

mxt0133

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #9 on: January 08, 2015, 12:53:17 PM »
Liners will make cloth diapers more managable and save you a lot of time.

http://www.amazon.com/GroVia-BioLiners-One-Size-Unscented/dp/B00483GAJU/ref=sr_1_2?ie=UTF8&qid=1420746300&sr=8-2&keywords=diaper+liners

My only other recommendation is live on your income alone now and bank your wife's income so it won't be such a shock come May and will also give you more time to adjust and optimize.

I totally get the wanting to have one parent at home, my wife and I decided for her to be a SAHP once our first was born.  She really enjoys being home and have adjusted our lifestyle to make it happen.

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #10 on: January 08, 2015, 01:02:14 PM »
I would think your goal would be to get your expenses less than your income, correct?  With the extra babysitting you should come out even, but you might want to cut back to build in a buffer.

With only one more child to go, cloth diapers may or may not be cheaper than stocking up disposables on sale.  We did cloth for the first year for our Little Miss but then decided to switch to disposables.  We had got a great deal on our prefolds (seconds on ebay, $30 for the lot) and cute covers for $5 from an online store where proceeds go to help an orphanage.  Looking at full cost for the next size up knowing we weren't planning on having more kids to share the cost was a bit daunting.  It would be worth it to run the numbers yourselves to see.  Buying used would be a good option here.  For cloth, not disposables obviously.

You've done a good job of cutting your expenses down so far.  If you'd like to cut more, $600 for groceries/personal looks like the next easiest place to cut. 

As a stay at home mom I found our costs are lower when I'm at home because I can meal plan more and check deals and don't need to worry about keeping up a professional appearance.  Also, it wasn't mentioned, but breastfeeding can also be great for cutting costs if the costs for extra food for mom is cheaper than formula.  Obviously only a good cost cutting measure if possible and if your wife wants to.

justajane

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #11 on: January 08, 2015, 01:15:59 PM »
Cloth diapers are an arena where I think cheaping out is a false economy. Bumgenius freetimes are $400 for a 24-pack, but they wash and dry easily, keep our daughter's privates fairly dry and completely rash-free, and hold in poop even when it attacks in force.

Just to play the devil's advocate here (and keep in mind that I am also a cloth diaper user on the third kid). I have managed to find disposable diapers for my third child this time around for around 12 cents a piece at Target (Up and Up with coupons, Red Card and other sundry deals). That means that I would need to change my baby over 3,000 times before I reached $400. At 10 changes a day (which is WAY more than I currently change my 8 month old!), I can change my kid for 10-12 months before I spend that much. Plus when you factor in time, hot water, detergent, etc......I'm not seeing how this saves money if this is their second and last kid. Yes, I know a kid sometimes doesn't potty train until three, but 24 diapers used continuously for three years? Will they really last that long or be able to be sold to someone else? My Bumgenius (used on my first kid) were starting to look ratty after 6 months to a year.

IMHO, the only way to really save money on cloth diapers is to buy used or the cheaper systems with flats and reuseable covers. 

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #12 on: January 08, 2015, 01:25:02 PM »
$150 for gas seems like quite a bit. Will this be reduced as well, with DW not commuting, and is that factored into your projected monthly expenses?

+1 for cloth diapers and potty training asap if possible.

Looks like DW might need to take on more than just a little babysitting to keep you guys above paycheck to paycheck. You've done a lot of cutting back, and I don't know what more cutting back you can do here. Would she be willing to do some tutoring to bring in extra income?

Gas will go down $150 is our current spending with both of us working.

Wife will be breast feeding as long as it is possible so that will help.

As far as covering the bills I'm trying to reduce them as low as possible, I guess I always figured we couldn't completely cover our bills on one salary and planned on using 5-7K from savings throughout her time off. I feel slightly better that she is guaranteed a job back with her school after the year is up and it would be extremely rare for me to lose my job part way through the school year. So I felt like $42k was more than enough for an emergency fund and didn't mind setting aside the 5-7k for expenses throughout the year. 
« Last Edit: January 08, 2015, 01:27:25 PM by Hurley82 »

d3minimis

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #13 on: January 08, 2015, 01:33:52 PM »
My wife stays home with our daughter and soon to be son while I work. She works part-time with adults in the evening and weekends with disabilities and also is a consultant with Norwex which brings in a good amount.

I bring home slightly more than you (but don't have summers off!).

A couple things:
- consider house refi; we just did it to free up monthly budget space to finish off remaining student loans
- car insurance seems really high; call GEICO and see what they can do for you
- internet could also be reduced; call and haggle with your provider or switch.
- good call switch cell carriers; we just dropped to $40/month with ptel for two of us
- groceries also seem high; try and hammer away at those with lower cost meals, shopping at costco, etc. we run betwen $350-400/month in larger midwestern city for 2.5 adults (brother in law lives with us) and a 1.5 year old

Sorry if any of those were duplicative with what you've already received.

MrFrugalChicago

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #14 on: January 08, 2015, 01:34:03 PM »
I think are doing pretty good given your cards.

Clearly, your mortgage is high. You have a house loan for 4x your annual salary. For comparison, my mortgage balance is 1.3x my annual salary alone (or < 1x if my wife worked). Really good to aim for the 2x-3x range for this guy (despite that bankers will loan you).

Assume due to your location, you are stuck with that expensive of a house?

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #15 on: January 08, 2015, 01:37:20 PM »
I would think your goal would be to get your expenses less than your income, correct?  With the extra babysitting you should come out even, but you might want to cut back to build in a buffer.

With only one more child to go, cloth diapers may or may not be cheaper than stocking up disposables on sale.  We did cloth for the first year for our Little Miss but then decided to switch to disposables.  We had got a great deal on our prefolds (seconds on ebay, $30 for the lot) and cute covers for $5 from an online store where proceeds go to help an orphanage.  Looking at full cost for the next size up knowing we weren't planning on having more kids to share the cost was a bit daunting.  It would be worth it to run the numbers yourselves to see.  Buying used would be a good option here.  For cloth, not disposables obviously.

You've done a good job of cutting your expenses down so far.  If you'd like to cut more, $600 for groceries/personal looks like the next easiest place to cut. 

As a stay at home mom I found our costs are lower when I'm at home because I can meal plan more and check deals and don't need to worry about keeping up a professional appearance.  Also, it wasn't mentioned, but breastfeeding can also be great for cutting costs if the costs for extra food for mom is cheaper than formula.  Obviously only a good cost cutting measure if possible and if your wife wants to.



Thanks,  I'm realizing that I need to look a little closer into the cloth vs. regular diapers. Seems like its a little more complicated than I first thought.
« Last Edit: January 08, 2015, 01:58:02 PM by Hurley82 »

surfhb

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #16 on: January 08, 2015, 01:44:10 PM »
Am I missing something?   

Why do you own $70,000 in vehicles?!    I could be wrong but doesn't Range Rover and BMW cost a lot of money?  ;). That's almost half of what you owe on your home.

You make at or slightly below the national avg salary and you're driving a range rover.  Lol
« Last Edit: January 08, 2015, 01:49:41 PM by surfhb »

MrFrugalChicago

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #17 on: January 08, 2015, 01:49:01 PM »
Am I missing something?   

Why do you own $70,000 in vehicles?!     That's almost half of what you owe on your home.

What?


Quote
2006 Pacifica 90k miles
KBB 4500

Quote
1999 Range Rover 65K Miles
KBB 2500

Quote
2001 BMW F650 Motorcycle 18K miles
KBB 2200

He has < 10k in vehicles which he owns free and clear. Where did you get 70k? Like more clown cars, range rovers that are > 3 years old are not worth much.

surfhb

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #18 on: January 08, 2015, 01:50:44 PM »
Sorry.    Thought Range Rovers were upwards of $50k. 

MrFrugalChicago

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #19 on: January 08, 2015, 01:55:09 PM »
Sorry.    Thought Range Rovers were upwards of $50k.

New they are.

I also suspect it gets bad gas mileage.

But if he uses the motorcycle instead of it, it may not matter too much.

Cassie

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #20 on: January 08, 2015, 02:00:49 PM »
Don't they sell regular cloth diapers anymore & plastic pants to put over them?  You only need 1 size & they don't wear out. I used them many years ago & they lasted thru 2 kids.  I put vaseline on them everytime I changed their diapers & never had any rashes. The first kid I used disposables & he had tons of rashes.   

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #21 on: January 08, 2015, 02:15:32 PM »
Am I missing something?   

Why do you own $70,000 in vehicles?!    I could be wrong but doesn't Range Rover and BMW cost a lot of money?  ;). That's almost half of what you owe on your home.

You make at or slightly below the national avg salary and you're driving a range rover.  Lol


Motorcycle was purchased before wife and kids for $3500
Rover was purchased for $8k
Pacifica was purchased after the sale of our CRV that we owned free and clear, sold CRV for $18k purchased the Pacifica for $6k

I do all my own maintenance and work which helps quite a bit.

I realize I'm getting some flak for the Rover but we do use it to do many of our free hobbies here in Colorado. Camping, Hiking, Wheeling etc. Yes the mileage is not great, right around 15MPG. I do ride the bike to work so that reduces fuel dramatically. Not completely against dumping it if need be. The older Rover was a compromise I made down from a lifted 4dr wrangler that I use to have. I saw that the value of wranglers was crazy so I drove it for 4 years and sold it for $1500 more than I paid for it.

 
I think are doing pretty good given your cards.

Clearly, your mortgage is high. You have a house loan for 4x your annual salary. For comparison, my mortgage balance is 1.3x my annual salary alone (or < 1x if my wife worked). Really good to aim for the 2x-3x range for this guy (despite that bankers will loan you).

Assume due to your location, you are stuck with that expensive of a house?

Yes, mortgage is high, it is definitely an average home in our community. Average home price is around the 250,000 price point.  With my wife working it is about 2x our yearly salary but with her not working that skyrockets, what your saying makes sense though.

« Last Edit: January 08, 2015, 02:50:59 PM by Hurley82 »

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #22 on: January 08, 2015, 02:48:22 PM »
Some great feedback,  thanks.

So far I'm going to;
-Take a closer look grocery budget see exactly how much is going where and find places to reduce.
-Look into cloth diaper
- Check car insurance rates
-Explore home refinance options
-Switch mobile carriers
- Reduce internet monthly bill

My goal is to get the bills/income as even as possible. My goal was to not have to deplete my saving throughout this time period. I think with a few more changes I will be in pretty good shape.
« Last Edit: January 08, 2015, 02:59:34 PM by Hurley82 »

dilinger

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #23 on: January 08, 2015, 03:06:47 PM »
The first thing I'd do is sell off those (risky?) investments and pay off debt. Investing that much in one company makes me nervous, and you don't need those extra student loan payments right now.  You also have a huge cash cushion (which I would hold onto until after the baby's born and any hospital bills are taken care of).

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #24 on: January 08, 2015, 03:22:11 PM »
The first thing I'd do is sell off those (risky?) investments and pay off debt. Investing that much in one company makes me nervous, and you don't need those extra student loan payments right now.  You also have a huge cash cushion (which I would hold onto until after the baby's born and any hospital bills are taken care of).

I'm torn on the selling off of the Scottrade investments. Purchased them in 2012, they doubled in value and have since then split, doubling my shares. I've added to them in spurts and feel pretty good about the company. The stocks are in CERN.

Is it worth selling off a well performing stock to pay off a debt, or would it be better to sell off some of my shares to diversify the portfolio.

Tortoise Banker

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #25 on: January 08, 2015, 03:28:29 PM »
I think selling the individual company stock is best bet, and using the proceeds to pay off high interest debt and/or diversifying into risk appropriate allocation of index funds.

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #26 on: January 08, 2015, 04:00:26 PM »
I think people have mostly beaten the cloth diaper thing to death already, but I do want to chime in since we had a baby last summer and started out with cloth diapers. After two months of dealing with them we switched to disposable and have never looked back.

Neither of us wanted to be filling up landfills with poopy diapers, but good lord they are SO much easier. Everyone talks about diapers like they are this crushing expense but we just haven't found them to be that much money. Especially several months in when the kid isn't pooping every 30 minutes and you can use the overnight/12-hour diapers. As a new mother who still hasn't gotten a good sleeping rhythm back, let me tell you that not having to change a diaper in the middle of the night is a GIFT FROM HEAVEN.

Good luck and remember to cut yourselves some slack. Having a bay is the hardest thing I've ever done (and I used to think my degree in chemical engineering was hard!).

TerriM

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #27 on: January 08, 2015, 11:07:12 PM »
My suggestion if you're worried about the cost of cloth diapers since you've said this is your last kid is to either find someone else with the newborn to 6months size to borrow them from, or do disposables until 6months, then find diapers that will fit the kid from 6mo to 2years.  For the most part, you can get away with one size that looks huge at 6months, and they're growing out of at 2years.

athomeintheworld

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #28 on: January 08, 2015, 11:18:31 PM »
Sorry I just briefly skimmed the replies -

That seems like a lot of cash in savings. Can you do something better with it?

Cloth diapers - yes. Cloth diapering, breastfeeding, reusing items from your first child will save you lots. Prefolds and covers are the way to go. You can even buy used from a friend if you like. As a bonus - anecdotally these kids potty train faster. Ours was done with diapers ~21 months (before we even needed the next size of prefolds!)

I say go for it. You only get this time now. If your wife wants some time with the kids, figure it out! You can totally do this on the cheap.

MDM

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #29 on: January 09, 2015, 02:27:23 AM »
My take home will be $2,900 Month/ $49,000 Salary.

Some other Background info:
We are currently putting around 25% of our take home into some type of savings.  ... My wife will earn a small income...around $500 a month for anywhere from 5 to 12 months.

Again, just looking for some input or thoughts about how we are doing. Sometimes when youíre in the thick of it, it is easy to overlook things or miss something. I apologize for the length, just wanted to be as a clear as possible.
Just checking - how sure are you of the "take home" amount?  The tax code becomes more favorable as your income drops.

It can be helpful to start with gross income, then include taxes and pre-tax deductions along with all other expenses to get the most accurate picture of your cash flow.  E.g. you should be increasing your W-4 exemptions (if you haven't already) to match your eventual 2105 tax bill.

fields

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #30 on: January 09, 2015, 04:20:44 AM »
A thousand dollars a month for insurance?  Is that for a family plan through your employer?  I pay under $300/month for a family plan. 

MayDay

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #31 on: January 09, 2015, 04:34:00 AM »
Definitely shop around your car insurance. I did it last year and this year. Last year I called all the major carriers, plus an independent agency who shopped me out to a bunch more carriers. We saved a bunch. This year I called Costco and saved even more.

kathrynd

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #32 on: January 09, 2015, 05:03:21 AM »
As a mother of 3,(raised 4)  I cloth diapered all of them from the time they were born until they were potty trained. Used the same 6 dozen flat unfolded flanellette diapers, with the old fashioned plastic pants and diaper pins
 They were cheap, long lasting, easy to wash and I air dried them (in a heated basement , under a vent, in the winter) and outside in the summer.
  You will save a lot of money there. We only used disposables when away from home.
Don't worry about potty training the 2 year old too soon, if the child doesn't seem ready. It will only stress you and the child.

Babysitting another newborn plus your own, and a toddler is plenty of work.
Your wife doesn't need any more, so as 'to earn her keep'.
If she decides to quit work until the youngest goes back to school..or forever,  you should support that decision too.

With the cost of daycare, work clothes, and food, you will probably not make any more income than if she continues to stay home and looked babysat one other child.

$600 is a lot of money for groceries. This could be easily reduced to $400 month (or even lower)

Don't be in such a hurry to retire, or forget what is really important....family.

We almost always had one parent at home, while the kids were growing up.
When they were small, I also babysat in our home.(3-5 extra, some days) If I had it to over again, I probably would have found other ways to reduce costs. It was very stressful  babysitting and having 2 preschoolers.

We still ended up retiring at 46 & 50...when the youngest finished high school.

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #33 on: January 09, 2015, 07:24:46 AM »


Wife will be breast feeding as long as it is possible so that will help.



I would do your budget assuming she is unable to. Plan for the worst and hope for the best, you know.  Milk supply doesn't always come in, or isn't sufficient; some babies can't tolerate their mother's milk or can't latch properly to nurse.  You can't assume you won't have the expense just because you intend to breastfeed.


I think the advice to start living on only your salary NOW is very sound.  Not only will you know whether or not it is enough, but you will also have a savings for unexpected expense.  (DH and I have started trying to get pregnant. We started putting the cost of daycare as an additional principal mortgage payment each month- that way daycare is already "in the budget" and we don't have to worry about how the cost will affect other things.  Plus in the meantime, the mortgage is paid down.)

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #34 on: January 09, 2015, 07:41:22 AM »
My take home will be $2,900 Month/ $49,000 Salary.

Some other Background info:
We are currently putting around 25% of our take home into some type of savings.  ... My wife will earn a small income...around $500 a month for anywhere from 5 to 12 months.

Again, just looking for some input or thoughts about how we are doing. Sometimes when youíre in the thick of it, it is easy to overlook things or miss something. I apologize for the length, just wanted to be as a clear as possible.
Just checking - how sure are you of the "take home" amount?  The tax code becomes more favorable as your income drops.

It can be helpful to start with gross income, then include taxes and pre-tax deductions along with all other expenses to get the most accurate picture of your cash flow.  E.g. you should be increasing your W-4 exemptions (if you haven't already) to match your eventual 2105 tax bill.

Take home will be pretty close, we are on  steps and columns so I can see exactly where I should be at for the next school year. I probably should change my exemptions as I will be the sole provider for a family of 4 and I am currently claiming 1.

A thousand dollars a month for insurance?  Is that for a family plan through your employer?  I pay under $300/month for a family plan. 

Yes the $1k a month for insurance is through my employer. Seems crazy, as of now my plan is to continue insurance for myself and purchase insurance for the wife and kids.




Babysitting another newborn plus your own, and a toddler is plenty of work.
Your wife doesn't need any more, so as 'to earn her keep'.
If she decides to quit work until the youngest goes back to school..or forever,  you should support that decision too.

With the cost of daycare, work clothes, and food, you will probably not make any more income than if she continues to stay home and looked babysat one other child.


Don't be in such a hurry to retire, or forget what is really important....family.

We almost always had one parent at home, while the kids were growing up.
When they were small, I also babysat in our home.(3-5 extra, some days) If I had it to over again, I probably would have found other ways to reduce costs. It was very stressful  babysitting and having 2 preschoolers.


Yes, watching a third child will be a lot of work, my brothers family is due within in a week of ours. Our plan is to watch their child while my wife is home. The sister in law plans on leaving work about a year later and at that time our kids will go to their house, saving both families money and expenses throughout that time period.

I'm not pressuring my wife to work she wants to go back after a year.

As teachers it makes little sense to work over 30 years based on the pension data ill be doing 33 just to hit certain levels. Definitely not rushing it, just doesn't make  sense to continue past that point.

Blonde Lawyer

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #35 on: January 09, 2015, 08:01:21 AM »

If she decides to quit work until the youngest goes back to school..or forever,  you should support that decision too.



Sorry, but I don't agree with the "or forever" part of your statement.  If they have enough money at that point to retire early and be financially independent than sure.  But I disagree that an able bodied adult that isn't taking care of the kids should just stay home all day and not contribute towards the family's end financial goal.

This is also a risky proposition if something were to happen to the financial provider.  (Death, disability, divorce).  Until you are financially independent, everyone needs the ability to make a living.

Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #36 on: January 09, 2015, 08:37:58 AM »
Definitely shop around your car insurance. I did it last year and this year. Last year I called all the major carriers, plus an independent agency who shopped me out to a bunch more carriers. We saved a bunch. This year I called Costco and saved even more.

I shopped car insurance as well as home owners last night. Three companies came back with the same figures for auto but I was able to save $450 a year on home owners with the same coverage. Also saved some on auto by bundling home owners. Waiting on final numbers for the auto savings. So that's some good news.
« Last Edit: January 09, 2015, 08:39:40 AM by Hurley82 »

lhamo

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #37 on: January 09, 2015, 09:11:25 AM »
Your withholding should change dramatically when you become the primary earner and you add the extra child.  A simple estimate based on 2014 rates (SD and exemptions may actually be higher in 2015)

Base wage:  49,000
 
Less 2014 standard deduction: -12,400

Less exemptions (4*3950): -15,800

Taxable wages:  20,800

Federal tax owed:  $2216

That's not even counting the child tax credit, etc.

So you should adjust your federal tax withholding to be no more than around $200/month, less if you expect to qualify for the child tax credit.

Your HR people should be able to help you figure out where your withholding should be.




Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #38 on: January 09, 2015, 10:39:23 AM »
Your withholding should change dramatically when you become the primary earner and you add the extra child.  A simple estimate based on 2014 rates (SD and exemptions may actually be higher in 2015)

Base wage:  49,000
 
Less 2014 standard deduction: -12,400

Less exemptions (4*3950): -15,800

Taxable wages:  20,800

Federal tax owed:  $2216

That's not even counting the child tax credit, etc.

So you should adjust your federal tax withholding to be no more than around $200/month, less if you expect to qualify for the child tax credit.

Your HR people should be able to help you figure out where your withholding should be.

Good info, thanks for the input.

kathrynd

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #39 on: January 10, 2015, 07:36:01 AM »

If she decides to quit work until the youngest goes back to school..or forever,  you should support that decision too.



Sorry, but I don't agree with the "or forever" part of your statement.  If they have enough money at that point to retire early and be financially independent than sure.  But I disagree that an able bodied adult that isn't taking care of the kids should just stay home all day and not contribute towards the family's end financial goal.

This is also a risky proposition if something were to happen to the financial provider.  (Death, disability, divorce).  Until you are financially independent, everyone needs the ability to make a living.

When it comes to children, don't be chasing the almighty dollar.
This family (OP)  will have the children cared for by a relative, which is the next best thing to parents.

However, if the mother or father, wanted to stay home, that should be an option.
Money will always be found, if it is important.

As always, being a SAHP is never consider valuable by some.

4alpacas

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #40 on: January 10, 2015, 09:30:55 AM »
Money will always be found, if it is important.
I think this statement is dangerous.  If something is important to you, you rearrange things and plan for it.  "Finding" money makes the process sound trivial.  In order to cut your income by half, your expectations and "needs" have to change.  Some people will never "find" the money because they also value "safety" (need AWD because of snow), "safe" neighborhoods (huge mortgages), and other things that might need to be sacrificed in order to facilitate a stay-at-home parent. 

Blonde Lawyer

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #41 on: January 10, 2015, 03:07:04 PM »

If she decides to quit work until the youngest goes back to school..or forever,  you should support that decision too.



Sorry, but I don't agree with the "or forever" part of your statement.  If they have enough money at that point to retire early and be financially independent than sure.  But I disagree that an able bodied adult that isn't taking care of the kids should just stay home all day and not contribute towards the family's end financial goal.

This is also a risky proposition if something were to happen to the financial provider.  (Death, disability, divorce).  Until you are financially independent, everyone needs the ability to make a living.

When it comes to children, don't be chasing the almighty dollar.
This family (OP)  will have the children cared for by a relative, which is the next best thing to parents.

However, if the mother or father, wanted to stay home, that should be an option.
Money will always be found, if it is important.

As always, being a SAHP is never consider valuable by some.

I think you missed the part where I said "if you aren't staying home with the kids."

TerriM

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #42 on: January 10, 2015, 04:03:38 PM »
I think you missed the part where I said "if you aren't staying home with the kids."

Perhaps it would be better stated "If you have free time beyond taking care of household matters or staying home with the kids."  Families generate a lot of laundry, paperwork, and meal prep.  Sadly, with the homework load a lot of the kids have, they don't have time to chip in on it. :(

kathrynd

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #43 on: January 11, 2015, 07:53:32 AM »
I think you missed the part where I said "if you aren't staying home with the kids."

Perhaps it would be better stated "If you have free time beyond taking care of household matters or staying home with the kids."  Families generate a lot of laundry, paperwork, and meal prep.  Sadly, with the homework load a lot of the kids have, they don't have time to chip in on it. :(

Yes, I should have used better words.

If  having  a SAHP is important, a budget can always be modified.

By the time childcare, work clothing, restaurants/ take out (because too tired to cook), extra groceries (too tired to cook from scratch) , second vehicle, taxes, etc is take into consideration, many times a household will not notice much of a difference in income.

If the SAHP was to take in another child, or a before/after school aged child, that would be helpful too.


Hurley82

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #44 on: January 11, 2015, 04:31:08 PM »
The insurance thing is a huge expense. It isn't for everyone but "Medical Bill Sharing" is an allowable alternative to regular health insurance under the individual mandate of Obamacare. The basic premise for medical bill sharing is that religious people get together and "share" each others medical bills. These groups can exclude "morally dubious" activities from coverage and people with pre-existing conditions. Because they can exclude those things, the cost of coverage is much, much less. I'm not pushing the religious aspect. I participate because it saves me money. So far, so good.

This is the link for the company I use:  https://mychristiancare.org/medi-share/

Thanks for the link. This is not something I've ever heard of, going to read up on it.

justajane

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #45 on: January 12, 2015, 07:50:53 AM »
The main problem with Christian "insurance" is that they are not legally bound to pay your bills. Plus they are smaller operations than real insurance companies. What if a critical mass of users have extremely high medical bills in one year. Will it bankrupt the company and leave you high and dry? Plus the payments from other users trickle in slowly, leaving you vulnerable to being sent to collections if you are relying on that money to pay the medical bill.

A few more caveats: if your daughter gets pregnant out of wedlock, they won't pay. The jury is out on if they will pay if YOU get hit by a drunk driver. Lung cancer from secondhand smoke? No go. The reason is they can interpret the morality clause however the heck they want. Also, preexisting conditions can be interpreted in strange ways too. Don't be surprised if you get denied for things. I read a lot about it after I learned that my neighbor uses it. The potential for financial disaster on many fronts made me very nervous.

But if you're confident that you will always be healthy and never get in an accident, by all means...   

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Re: Looking for thoughts or advice: Wife taking a year off with newborn
« Reply #46 on: January 12, 2015, 10:14:22 AM »
You'll have 2 tax years of reduced earning.  Sell as much of that stock as you can while staying in the 15% income tax bracket (capital gains will be taxed 0%).  Is the 403b from a past employer?  If so, maybe a Roth conversion in a lower than typical for you tax bracket.

If you can stomach the paperwork think about re-fi'ing before your wife goes on unpaid leave.  Can you get lower than 4.5% while sticking with a 30 year mortgage?