Husband was laid off - Now he'd like to start new career...

[Marigold]

Hi Everyone

I've posted before looking for budgeting tips. And have made good progress since then.

Awesome new situation - my husband was laid off.

He was previously making 90-106k as a software engineer (90 base and then bonus - last year it was 106).  He'd now like to build up his side business as a web developer/software specialist (he's been doing this since 2000) and not return to a good income software job.  He has regular clients that have sought him out through word of mouth and prior to lay off a local marketing specialist contacted him looking to partner on his business.  She would find him clients and manage client needs and he will do the web work.  For what she'd be doing she isn't taking a large percentage of web design money either.  She's already found him at least two new clients in a month.

I am supportive of this because the lay off was a blessing in disguise as he was really unhappy with how the company was not investing in quality products.  Even in the two weeks since lay off, I've noticed an improvement - he's happier and he's been doing more creative projects.  I am very happy about this because my husband has always been a creative type - excellent illustrator, musician etc., but I felt that his last job was sapping his energy and he wasn't using his talents.

All this to say, my income (65,000) can cover our basic expenses, but we will probably still be at least 20-30k in debt after his severance payout....

So I am torn between him taking a risk on a new adventure and the lessened possibility for fast debt repayment if he does.

I think the right thing to do is support him in having a happier life, but I am also worried about the finances.  I am much more debt averse than he is.

Some general numbers

Mortgage (255,000 - home is estimated at 400-450k)
Husband's RRSPs (100k)
My RRSPs (2500) - I also will have a DB pension with fed. govt if I stay the required amount.
car is paid off and worth about 10k

debt - 20k student loan (mine- down from 42k in 2010) - I could still afford the $500 monthly payment, but couldn't increase it.
LOC - 40 k - this was his down payment on the house and associated house expenses before I met him.  His severance will pay off 20-30k of it. 

All of our basic expenses I can cover on my income - we don't live the high life.  The one problem would be my daughter's daycare expenses. At $1000, I can't cover that myself, and if husband goes this route, I would want to cut this cost in half by having her go to mornings only (565 per month) with him taking care of her from noon to 4  when I get home (she would sleep two of those hours anyway)...


So - Are we being crazy in trying something new at this point, or should hubby return to a regular job until debts are paid and then try to build his company? 

[Self-employed-swami]

Good for you, for looking at his layoff, as a blessing.  With those debt levels though, I'd want to try and knock those out ASAP.  Can he take a contract for the next year, and then use all of his income, to get rid of the student loans and the LOC?

[katheh]

I would reverse the daycare schedule. Have her sleep in, then go in the afternoons. I worked at home when my kids were little and that schedule worked for us better than them going in the am. They slept in while i got early am work done, then i had my afternoons free in a huge chunk of time.

I found our kids were more relaxed and self-caring in the morning, better than when they came home all riled up from daycare. As a bonus i was able to send the younger 2 to preschool 3 afternoons a week. The cost of preschool vs daycare those days was a huge savings.

[Zamboni]

Congratulations on your positive attitude!  It sounds like the layoff was a blessing with a severance bonus.

I would reverse the daycare schedule. Have her sleep in, then go in the afternoons.

This totally depends upon the age and existing schedule of your child.  My tots took 2-3 hours afternoon naps when they were little, so having them in daycare at that time would have been kind of a waste of money.  They would have benefited from the social aspect of morning daycare or preschool much more.  They struggled in afternoon pre-school when they were three, and did much much better in morning pre-school when we switched it for them.

You and your spouse must both realize the might not get any work done during that after school time (or whenever your daughter is with him.)  Really he should plan to not work at all during that time so he can give her undivided attention as needed.  Can he work early morning, and then again in the evening?  My brother and his wife are both self employed, and they have worked out a great schedule that involves him working without interruption from 6am to noon while she watches children, takes them to dance lessons, etc.  Then they all have lunch together and he takes over watching children while she teaches afternoon piano lessons until dinner time.  Part of what makes is work is that they have very isolated working spaces, so the working parent is completely uninterrupted (and likely gets done in 6 hours what the rest of us do in 8 if you include co-worker chat, useless meetings, etc.)

It sounds like your husband will be very happy with an expansion of his venture.  Good luck!

[Marigold]

Thank you all for your kind and helpful responses.

I also appreciate those that made suggestions regarding daycare.  In our situation, our daughter is nearly 2 years old, but will not sleep in.  6:30 am is a late morning for her.  Prior to lay off, my husband was taking care of her from 6-8 then dropping her off to daycare, and I was leaving at 6 am and back from work at 4pm.  I agree that he shouldn't have to try and work around her in the afternoons - good point.  My thoughts are that in the morning is outdoor play, crafts, show and tell etc., but afternoons are just nap and outdoor time again, so he could pick her up after lunch and put her right down for her nap 12:30-2:30 - she wouldn't be missing out on as much and it would be pretty easy for him to make up an hour or two if necessary at another time.

Thanks for the supportive comments.  I really think this will be good for him. And I don't mind slowing down debt repayment a bit for his happiness and health.

At a set time, we'll re-evaluate how it is going :)