Author Topic: Reader Case Study - Grow my law practice or homeschool?  (Read 4178 times)

Gizsuat2

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Reader Case Study - Grow my law practice or homeschool?
« on: September 23, 2015, 03:04:11 PM »
Some background:
I have been a lawyer for 8 years.  I currently provide contract services to a government entity in Oregon; my contract pays $3,000 per month gross (since it's a contract, they do not withhold taxes).  I mostly like the job, and I have no overhead expenses other than my 60-mile round trip there, which I make about twice a month in my 50 mpg vehicle.  I am otherwise able to work from home.

I live in Washington and I have two children under the age of 4.  During my 10-16 hours of work each week, family cares for them free of charge.  My husband is the primary breadwinner, with a salary of $125,000 plus benefits.  He travels for work regularly, which makes the flexibility of my schedule all the more merciful.  We have a mortgage but no other debt.  We are new to MMM but still have about $250K in retirement and other savings.  We are in our mid-30s.

Here's the issue I can't quite wrap my head around:
Our schooling options here are limited, and after much research and discussion, my husband and I have concluded that for us the preferred educational options would be either
(1) a Montessori school, costing $1500/month for both kids, that is a 20-minute drive away or
(2) homeschooling. 
I have reservations about the former due to the cost and the drive, and I have reservations about the latter because I fear my kids would be missing out on a fun, social experience.  On balance, I slightly prefer the homeschooling option over the Montessori school, but it's probably a 52% homeschooling versus 48% Montessori school breakdown.

Here's the real money party of the issue I can't wrap my head around:
If we sent our kids to the Montessori school, then I would be free to work more hours.  I am hopeful that I would be awarded another government contract, this one in Washington, about 10 minutes drive from the Montessori school (thus 30 minutes from home).  That contract would pay $40,000 annually.  Again, I would be responsible for paying my own taxes out of that amount.  I could continue my Oregon contract and take on this new contract if the kids were in school.  I would have to acquire an office space and pay some additional liability insurance, bar dues, etc. Between those costs and Montessori school, this would amount to about $2,000 in overhead.

Because my family understandably does not wish to care for my children full-time (let me be clear ... I can't believe how lucky I've been to get wonderful, free childcare for this long), the two lifestyles would look something like this:
Option A - Oregon contract alone
I would homeschool our children, continue to get assistance with their care from family free of charge, but my monthly salary would remain at $3000 pre-tax.
Option B - Oregon contract + Washington contract
I would send our children to Montessori school, and my monthly salary would be $3000 + $3333 pre-tax, but minus $2000 in overhead.

There are two remaining intangibles:
1. Taking on the additional Washington contract would contribute to my future job security, in that I would be growing both my knowledge base around Washington laws and making professional connections here that I otherwise would not.
2.  The Washington contract work I would be doing would be interesting but stressful.  Between both contracts, I would still have flexibility but it would be a much more hurried pace of life.

I'd love to hear some thoughts from anyone who made it this far.  I can't see the forest for the trees on this one.  THANK YOU so much for your help and thoughts!

RFAAOATB

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #1 on: September 23, 2015, 03:22:07 PM »
Go with option B.  More money for the added stress of lawyering instead of no money for the added stress of homeschooling.  For the record, what's wrong with public schools there?

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #2 on: September 23, 2015, 03:28:29 PM »
There's nothing "wrong" with them, they're just not "right" for us.  That would need to be a very, very long post indeed to fully answer.  : )

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #3 on: September 23, 2015, 03:45:23 PM »
Trifele - Wow, cool!  I think my heart skipped a beat to read your first sentences.  I've yet to meet another lawyer who homeschools.  : )

I know you're right, that homeschooling is a personal decision.  I feel like it probably is the right thing, the best thing, for our particular situation.  We live in the country, so we're a little more isolated ... no neighborhood kids around.  But I do get that we could get involved in other activities for them.

Do you mind if I ask, it sounds like you started with your kids in school initially?  What prompted the change if you don't mind sharing?

I could ask you about a million questions at this point, but I'll stay with that for now!

Trifele

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #4 on: September 23, 2015, 04:00:41 PM »
PS -- Meant to say that Montessori is a great option too.  Is it a full elementary school?

zolotiyeruki

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #5 on: September 24, 2015, 08:15:41 AM »
We're a homeschooling family, too, although DW has always been a SAHM.  Trifele is right--deciding to homeschool is a big decision.  However, it's not necessarily a permanent one.  You can do it for a year, then decide to send your kids to a Montessori school the next year if it isn't working out.  If you *do* decide to homeschool, make sure to complete a whole year--it can be really tough the first 3-4 months, as you adjust to the new routine.

There are some good threads over in the "Mini Money Mustaches" subforum about homeschooling.

On another note, have you run the actual numbers for how much you're taking home from your contract job?  Between 15% SS/FICA tax, 25% federal income tax, and 9% Oregon income tax, you're already giving half your paycheck back to the government.  So taking the new job would add $3333 gross, but after half of it goes to taxes and $2k of it goes to overhead/school, you'd be losing money on the deal!   Paying for the privilege of working :P

zolotiyeruki

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #6 on: September 24, 2015, 08:16:04 AM »

We're a homeschooling family, too, although DW has always been a SAHM.  Trifele is right--deciding to homeschool is a big decision.  However, it's not necessarily a permanent one.  You can do it for a year, then decide to send your kids to a Montessori school the next year if it isn't working out.  If you *do* decide to homeschool, make sure to complete a whole year--it can be really tough the first 3-4 months, as you adjust to the new routine.

There are some good threads over in the "Mini Money Mustaches" subforum about homeschooling.

On another note, have you run the actual numbers for how much you're taking home from the new contract job?  Between 15% SS/FICA tax, 25% federal income tax, and 9% Oregon income tax, you're already giving half your paycheck back to the government.  So taking the new job would add $3333 gross, but after half of it goes to taxes and $2k of it goes to overhead/school, you'd be losing money on the deal!   Paying for the privilege of working :P
« Last Edit: September 24, 2015, 07:11:01 PM by zolotiyeruki »

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #7 on: September 24, 2015, 01:46:37 PM »
Zolo - You raise an interesting point.  I'm new to contract work in general, and haven't yet gotten to my year end taxes.  Any idea where I would begin to start calculating how much I'll owe so I can get a full picture of the numbers?  I'm not even sure what google search terms to use.

Thanks for the thoughts!

TVRodriguez

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #8 on: September 24, 2015, 03:15:30 PM »
I'm a lawyer, and my 3 kids went to a montessori until last year.  I didn't go in looking for montessori, but we fell in love with it.  I'm a huge fan of montessori.  The kids lotteried into a charter school that is fantastic, and they're in their second year there.  Otherwise, we'd still be at the montessori.

I never seriously considered homeschooling, although the thought crossed my mind more than once.  Instead, I opened my own practice with more flexible hours than at the firms I worked previously.  I friggin LOVE having my own practice.  I cannot tell you how awesome it was that first year, how rewarding, how liberating, how lovely.  I never thought I would be a solo, but I love it.  I love having a license that allows me to hang out a shingle and work for myself.  I honestly felt like I'd reached FI just from that feeling of independence.  There were a few years that I hated being a lawyer.  It was when I got out from under others that I blossomed.

Also, I love that my kids see me working in a profession that I enjoy.  I love that my son thinks that only women are lawyers b/c the only ones he knows are my friends and me.  I love that my daughter asks me "how was your day, mommy?" and that I'm able to say that work was awesome today.

And, on a personal level, I think that my DH would not deal well with being a sole breadwinner.  I think it would be stressful for him, even though he enjoys his work.  Plus, as much as I respect the heck out of SAHP, I don't think I have the patience for that.  So the decision to keep working for pay is an easy one for me.

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #9 on: September 24, 2015, 04:35:03 PM »
TV - I love the enthusiasm!  What kind of law do you practice (and are still that happy)?

La Bibliotecaria Feroz

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #10 on: September 24, 2015, 04:50:20 PM »
As others have said, this is so, so personal. You really need to think about what kind of parent and what kind of spouse you are. Do you LIKE being the second fiddle earner? It works for me. I work part-time. I wash my husband's clothes. I make his sandwiches when he is particularly stressed. I iron his shirts. I do all the grocery shopping, 90% of the meal prep, etc.

Other people have a different sweet spot. Either decision is reversible, but consult your preferences. Personally, I can't imagine working five days a week and then coming home to make dinner. (At least Montessori kids don't have homework...) but I'm not sure I could hack homeschooling, either!

zolotiyeruki

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #11 on: September 24, 2015, 07:21:06 PM »
Zolo - You raise an interesting point.  I'm new to contract work in general, and haven't yet gotten to my year end taxes.  Any idea where I would begin to start calculating how much I'll owe so I can get a full picture of the numbers?  I'm not even sure what google search terms to use.

Thanks for the thoughts!
Personally, I print off a 1040 form, download the instructions, and do a dry run on calculating taxes, extrapolating from my pay stubs and quarterly statements to get a total-year salary.

In your case, you'd have $125k+$36k = $161k earned income.  Even with the maximum possible 401k contribution ($18k each), your AGI will be $125, way over the IRA deduction phase out (starts at $98k).  Even after 4 exemptions and a standard deduction, you'll be >$90k for taxable income.  That's well into 25% territory for federal taxes.

Or, an easier way is to use taxcaster for a quick and dirty estimate.

TVRodriguez

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #12 on: September 24, 2015, 08:10:42 PM »
TV - I love the enthusiasm!  What kind of law do you practice (and are still that happy)?

Thanks! I do get comments on my passion for my work. I practice trusts and estates.  I started in commercial litigation and hated the adversarial practice. So I switched. It's the best choice I could have made. I love it, I'm good at it, and I know that I'm providing real value to my clients. It's not that difficult to get into and generally has a collegial bar.  Plus it's very possible to do as a solo with a low overhead while still earning an income. If you're interested in learning more, feel free to ask.

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #13 on: September 24, 2015, 08:46:16 PM »
Thanks Zolo, much appreciated!

Gizsuat2

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Re: Reader Case Study - Grow my law practice or homeschool?
« Reply #14 on: September 24, 2015, 08:47:08 PM »
TV - I am VERY interested.  I'm PMing you.