Hello!
Yes your husband can quit his job asap, and you can quit before you have your second born as well. Alternatively, your husband can find a job closer to home, and/or can work part time or work from home. You can work part time or work from home as well.
The good: you have a ton of savings, a great job income, and a supportive partner. You are very well off for starting a family, and more well of then people in general. It takes approx 700K base savings to retire comfortably for 2 adults at the Mustachian level of living. You are practically there, at such a young age. You can always go back to work. With a few tweaks you can both considering retiring today :)
Details
Your mortgage is below the rate of inflation, so don’t worry about paying it off sooner. You can consider to make it a 30 year to lower your monthly payment. Make sure you can keep the amazing interest rate you have, which is less then inflation. Essential your house payment is interest free. Tomorrow’s dollars are worth less then today’s dollars so just keep paying it without worrying about the balance. If you want to decrease your housing costs you can consider downsizing to a smaller house in a cheaper more kid-friendly area, if you both decide to stop working and if you want to find a less urban and more kid-friendly area with more outdoor space and parks. My ideal is 800 sq feet 1 story for a 3-4 person family with small bedrooms. Make sure its laid out effectively, 1 story Cape Cod style, with small bedrooms and small kitchen. With outdoor spaces such as a patio in the back yard and front yard patio, it will feel plenty big. A shed in the backyard holds any seasonal storage. You don’t need a big house with big kitchens and big bedrooms.
Congratulations on having ~500K in interest producing assets. Do you know what investments these are in? Hopefully the Vanguard or Fidelity index fund, which easily throughs off 5% every year above inflation. That is 25K every year that you get to save or spend without working and without reducing your principle. That is about what Mr Mustache’s family spends each year. Neither of them work.
Why do you have 2 cars? Hubby needs one to commute, and you don’t. Keep whichever one will hold value for the next 8-15 years. Sell the other one. This decreases maintenance cost and insurance costs for the extra car, and depreciation costs. Good decision to own a Honda, hopefully its the small Civic or hatchback that gets great gas mileage for your hubby’s commute or recreational driving.
Can hubby get a job closer to home? This would free up time for him to have less commuting time and more family and cooking time :)
Assets typically don’t include the value of your house which is a not producing anything. The value of your home yearly is the cost of renting an adequate living space minus the cost of your mortgage, utilities and insurance and taxes. Most people spend a lot on housing when they own, more then they need to. You have a great mortgage rate so that is good. Maybe you could turn the property into income producing rental, and live in a smaller space. Either way sounds like you have good house althoguh I’d need to know the age and upcoming maintenance schedule to really asses whether its a good financial tool. Anything over 50 years is going to need major electrical and plumbing upgrades plus roof and siding.
If you have a baby soon will you plan on breastfeeding? Plan on taking off 1 year of work to breastfeed. Also it is better to not make a lot of decisions before your have your baby, because your body and perspective will change afterwards.
To sum up, is it possible for your family to be a one income family right now? Yes. Possible for you both to retire either permanently or short term for a few years to raise your family? Yes!
The following costs are off the charts and what I would replace them with:
Restaurants: 180/month (average over past year) $50
Utilities: 200/ month $100
Insurance (term life and auto): 100/month no life, $50 auto 1 car
Cell phones: 75/month $25 a month, ptel
Internet: 50/month $25 a month, 3MBSP is enough
Misc expenses: ~1000/month scratch, $25 a month.
Daycare: 1200/month (for our three year old) scratch
Groceries: 600/month $250 a month, this is alot.
Gasoline: ~$250/month scrach, $20 a month maximum
Off the Charts Total: 3655 per month
New total: 545 per month
Savings per month: 3110.
*life insurance is for people with no assets and dependents. you have enough assets to support your dependents in case of tragedy. the monthly payment is money down the drain.
If you invested the difference over 2-5 years, will throw off 3,750- 9300 extra per year! In 10 years you will be 100K richer for cutting these costs today, without doing an inch more of work.
If your husbands decides to retire then he will want to do some household work at least to feel productive. He can easily cover the daycare costs by hosting toddler days with neighborhood children, possibly even get paid as a substitute for daycare. He can teach Montessori in the Home for your toddler which covers through preschool up until she’s ready for kindergarten. Kids love having “school” with their parents, private preschools are a rip off unless they are part time and Montessori driven (sorry I feel strongly about that). The whole point of Mustachian is DIY, do it yourself. Mow your lawn, cook your food, teach your kids. Pretty cool :)
I would recommend on trimming the cost before you get pregnant so that they are a habit. Some ideas:
Slow cooker. Easy breakfast and dinner with little work.
Grow a roductive garden to lower your grocery bills and to keep deliciousness factor
Sell your 2nd car and have hubby either retire or find job close to home
Plan grocery spending on essentials: butter, rice, salt, spices, occasional meat
Make eating out a real treat without toddler food (feed them your food)
Twice per month you can go out for lunches and skip the alcohol and high dinner prices
Switch cell phones to Ptel
Cut down on internet expenses by getting the cheaper internet
Realize those 1K miscellanous expenses are costing you 12k per year, which would require and extra 150K in the investments to cover annual. Nip them in the bud.
Seriously make great tasting food. With high quality ingredients it costs little
Fresh veggies from farmers market cost approx $6-8 per person each week. this is higher quality then produce in the grocery store. fresher, tastier, more nutrients.
Rice*butter*salt*spices*coconut cream are the staples of delicious global cuisines. Sugar.
Eliminate the day care by either hubbie retireing full time, or you working from home 2 days per week and him working part time and then being with the toddler at home
Eliminate private preschool costs by practicing Montessori at home. See book “Teaching MOntessori in the home” For more ideas and this website
http://www.howwemontessori.com/how-we-montessori/2013/02/pouring-a-drink-and-snack-preparation-.htmlBig thought: make sure your investments are in the low cost Index Funds that through off dividends. Make those dividends reinvest while you are working, and then rely on them to pay your mortgage while you are on maternity leave.
Misc thoughts
If you want to keep your job for security and for fullfilment, will your employer let you go part time so you can raise your newborn? Can you work at home 3 days per week with a newborn?
Does hubbie want to work part time, closer to home?
In short, congratulations!