SAHM or Continue Working???

[COlady]

My husband and I are planning on trying to have a baby soon. We've been saving aggressively (for us it's aggressively) since getting married 3 years ago. The plan was that when I had a baby I'd stay home with the baby because we have no family in the area.  I can't imagine leaving a 3 month old at a daycare facility (not judging anyone who does). I get anxiety when I think about quitting my job because it has great pay for my position and excellent benefits and I firmly believe that I won't be able to find another job that's similar in the future if I quit.  I work for a small corporation and my job is definitely a full time job so there's no way that I could go part-time (although if I get to that point I would definitely ask).  I have about 3 months per year that I'm required to work overtime and it's generally about 50-65 hour weeks. My husband generally works a pretty flat schedule of 45 hours year round.  I can't imagine doing this with a small child and lack of sleep!! I'm sure some of you have gone through this analysis and I'm hoping that you can bring me some clarity.  I'll provide some numbers below but if you have any questions please ask.

Me: 30 years old, him: 32 years old

Total pre-tax retirement accounts:$260k
Total non-retirement investment acct: $150k
FMV of house (conservative): $300k (lots of sweat equity we purchased for $165k- was a foreclosure in 2008)
Mortgage: $140k
Vehicle 1 - Toyota Tacoma: $30k
Vehicle 2 - Subary Legacy: $10k
Vehicle 1 Loan @ 1.5%: $24k
Total estimated NW: $586k

I can't tell you exactly what our fixed costs are.  We are not on a strict budget, we are naturally pretty small spenders and I think we're doing pretty well on saving.

Me:
Gross pay: $93k
401k match is 35% of total contribution so $17,500 X 35% = $6,125 (5 year vesting at 20% per year)
opportunity for stock options and/or awards - not yet received - only been here 1 year
$150/mo. health ins. premiums for a family. $750 deductible, $3,000 max out of pocket
2X salary life insurance at no cost to employee

Him:

Gross pay: $90k
401k match is standard - not sure exactly
He receives stock options and has ESPP - He doesn't hold onto the shares - he exercises and sells ASAP because the company can have large swings in stock price.  Usually the gain on all stock options and ESPP come out to about $18,000-$20,000 per year.
$150/mo. premiums for a family. $3,000 deductible?!?!, $11,000 max out of pocket?!?!
1X salary life insurance at no cost to employee

I could quit this job and easily get a part-time consulting job making around $70 per hour so that is always an option. HELP!

[matchewed]

Because you don't know your expenses it is tough to help with a decision. For all we know you guys are living on 75% of your take home. Ignoring that, you and your husband make similar amounts of money. Your benefits seem a bit more generous in the 401k, an ESPP can be powerful but it's in a taxable. The health insurance is fairly equal depending on how high of a deductable you want to swing.

It's mostly just a toss up. You guys just have to decide if you want to raise your child at home. Once you've decided that (as it seems you want)

I can't imagine leaving a 3 month old at a daycare facility

then the next step is just deciding who stays at home.

In short you've already made the decision is seems as to whether you want your child raised at home or through daycare/home. You just have to decide who and how. If you really feel that the question isn't resolved then just ask yourself which you value more, your career or raising a child at home.

[COlady]

Thanks for the reply.  We've been tracking only what we save, not spend over the last three years (the spending just then falls out).

Last year we saved about $80k between retirement and investments, which is about 59% of our after-tax income (last year gross approx. $180k X 75% = $135 (both gotten raises since)).

[COlady]

Also, forgot to add, this last year was a high spending year for us.  We went on multiple vacations that we won't be going on when we have a small child:

$4k Mexico
$1.5k San Francisco
$1k San Diego
$1k Las Vegas
Total 7.5k (about 6% of take home)

I love travelling so I'm trying to get it out of my system!

[Jules13]

My 2 cents.  You are in a WAY better position, financially, than we were when I decided to become a SAHM.  We were not struggling by any means, but you already have a lot more saved than we did and plenty of time for it to keep growing. You are younger and have more saved and your husband makes more than mine did at that time.  Granted, you make more than I did when I quit working.  I planned to quit work for a year, but never looked back.  I love what having a parent at home provides for our family. 

Having said that, everyone is different.  You might try it and hate it.  It's not easy.  Far harder than my office job ever was.  But, FAR more rewarding.  And I would have been horrible at trying to juggle, emotionally, those two roles. 

What we did was to live on just my husband's income as soon as we were ready to start our family.  We just banked my paycheck.  That way, we knew we could do it and felt far more confident going into it.  And had extra savings to boot. 

Besides, once you get your groove with a baby, you can always decide about taking on part-time consulting work, like you said.  If you want to go back to work, that is always an option too.  Once mine hit 2 years old, I put then in a parents-day-out program that was 2 days a week from 9-2.  They loved it and it gave me a break for appointments, etc. and it was inexpensive. 

Good luck with your decision.

[Jules13]

Also, my husband is Australian, so while still on only one income (less than what your hubby makes now), we traveled to Australia when our oldest was 6 months, 18 months, 2.5 and 4.5.  So, travel and savings can still be done simultaneously!  You just have to prioritize! :)

[matchewed]

Ignoring retirement accounts how much of your take home do you save? You're pretty close to the razors edge on that one. I highly encourage you to understand how much you spend to know whether you can go down to one income.

[dbanta]

You might want to wait and see until after the baby comes.  I just had my little one a few months ago.  I stayed at home for 12 weeks.  I then returned to work Full Time (I work 1 mile from home so I go home over lunch and have minimal commute).  My husband is currently taking his 12 weeks.  My leave and his leave are both unpaid, but our employers are required to allow them under the Family Medical Leave Act (insurance won't change, and position can't change).

This has been a great experiment for us for what we want to do long term.  We were able to see how much we were able to save when I stayed home and when he stayed home.  Also we were able to see who liked staying home better.  I swore that I would want to stay home, but in reality I am much happier working.  At this point we are considering having my husband stay home since we know we can be ok on my salary only and he is much happier at home than at work. 

We are considering some compromises.  I asked if I could work from home on Fridays with a shorter hours on Friday (make up the time M-Th) and my husband is considering consulting/writing apps (we are both developers) part time from home.

My advice is not to make any decisions before the baby comes and once baby arrives explore your options.  We have also started reading Equally Shared Parenting which was recommended on this forum.  There are also a few similar posts under the Mini-Mustaches area that you might want to consider reading.

[wtjbatman]

It's been said, you kinda brushed it off, but I'll repeat it. You need to figure out your expenses. Not guesstimated, estimated, or what the tea leaves tell you... but what you actually spend. Take advantage of a free online service like Mint to help you out if necessary. You need to know more than just how much money you have saved in retirement accounts. If one of you stays home, you need to know if one salary can even pay the bills! Until then, I'm not sure you can even attempt to figure out if having a stay at home parent is possible.

For example, you say you saved 80k last year in retirement accounts, and that was about 60% of your after-tax income. Alright, what happened to the other $50k of take home pay? Is that what your actual expenses are? Assuming in the future you spend less on traveling, but the costs of a baby make up at least part of that, you're still not exactly living on the cheap. Or am I missing something? I'm sure I am, but that's the problem when trying to offer advice when someone doesn't share their actual expenses :)

[COlady]

I see your point.  I know our non-negotiable fixed costs but it's the variable that I don't know. I know that we can afford for me to stay home we just won't be able to save as much.  I don't know if this is helpful, but here our are fixed costs (estimated).  I'll start tracking everything so that we know.

Mortgage: $1,054 X 12 = $12,648 (incl. prin./int./escrow)
Electric and gas: Average $100 X 12 = $1,200
Trash: $30 X $12 = $360
Sewer: $300 annually
Cell Phone: $150 X 12 = $1,800
Car Insurance: $1,560 annually
Vehicle Maintenance: $400 annually
Gas: $150 X 12 = $1,800 annually
Truck payment (2 years left, financed for 3): $775 x 12 = $9,300
Food: $600 (I like my Whole paychecks)
Total: $29,968, round to $30,000

[Balance]

We were in a similar situation last year.  My wife and I are similar in age as you and your husband. My wife has the more stable job with better income and benefits for the whole family.  So we made the decision that I would be the SAHD and she would go to work.  It has been going well but the thing I noticed after about the 5th or 6th month staying at home that you get a little bored and want to be more productive.  Sure I do all the house work, cooking/cleaning/gardening etc.  But for a young person I felt like I wasn't being productive financially.  I know that sounds a bit selfish but I ended up feeling that way probably because other friends and family around the same age were all back to work. Luckily, I am able to work from home with very flexible hours.  There is no way I can maintain a full time work week like I did in the past, but working a couple days a week from home was just enough for me to feel like I contributed financially even though it pales in comparison to what my wife is doing. I honestly, can't imagine working full time since raising a child is by far the most demanding thing I have ever done in my life. At the same time it is very rewarding, you never get this time back to spend with them, and my son is thriving and is really really happy! I think it is worth it and I definitely recommend it. 

PS - I agree to get all that traveling out of the system.  We did it the year leading up to pregnancy.  We didn't regret it at all.  Good luck :)

[matchewed]

Food is probably 600*12 I imagine bringing your fixed costs up to $36.5k. So you're not even accounting for the variable costs there. Let's say you drop down to one income but keep maximizing your 401k.

90k-17.5k=72.5k pre-tax. 1785+8197.50=9982.50 is your total taxes owed assuming you file jointly. That leaves you with 62.5k for expenses. Let's take out those fixed expenses and you're left with 26k or so for variable expenses and whatevers.

How confident are you that your variable expenses don't come to more than 26k? If you're very confident that they are lower than that then you can probably pull it off.

Simplistic calculation but it is much easier to give you a closer answer on this one.

[COlady]

Yeah I messed the food up, you're correct. I am certain that we do not spend $26,000 on the variable, probably closer to $20,000 currently, which is a ton of money! That's amount $2,000 per month on incidentals and replacement of stuff (clothing, furniture, house up keep, occasional dinner out, etc.).

[COlady]

Thank you to the people who provided input on what they did, it's helpful. I don't plan on quitting until I know I want to. Is it wrong to tell an employer you'll be back from maternity leave and then decide at the end that you don't want to come back?

[matchewed]

For expenses like you and your husbands, nearly 60k annually a 6k buffer is pretty tiny IMO. My encouragement will be quite familiar with this board, cut your expenses. Learn to live on less and you'll increase your security.

As for whether it is wrong to tell them one thing and do another... well I'm personally an honesty policy sort of person so I'll fall into the yes it's wrong camp. I'd prefer to be honest with the employer about my indecision. This allows the employer to act appropriately and train/hire/do something about your potential non-return. If you tell them yes then no they have to scramble. But I understand the trickiness of that strategy. It puts you out there and leaves you vulnerable. Only you can decide what to do there.

[COlady]

I guess for me my stress is in the following areas since I know that we can "afford" for me to stay home:

1) Will I absolutely hate being at home?
2) Am I an idiot for quitting a job that pays well? A lot of people would say so. I could easily get another job making $70k per year full-time, but not $93k. Part time I could make $40k or so.
3) Is it smart for me to completely quit saving on my side? 401k, 401k match, other savings.  We would only be able to save about $17,500 401k husband + $10k husband stock options + $8,000 ESPP = $35.5k per year if I'm not working.

[COlady]

thanks Matchewed for all your input.  I will work on tracking everything better and we could go through adn see what things are totally optional, i.e. sushi dinners, happy hour, beer tour thingys that are $75 a ticket.

[matchewed]

I guess for me my stress is in the following areas since I know that we can "afford" for me to stay home:

1) Will I absolutely hate being at home?

Only you can answer that. No one else will be able to. I'm a big fan of finding my happy regardless of the circumstances. SAHM or career climber you need to be the one who makes sure you are happy. Don't hang your happiness on your circumstances. Hang it on yourself.

2) Am I an idiot for quitting a job that pays well? A lot of people would say so. I could easily get another job making $70k per year full-time, but not $93k. Part time I could make $40k or so.

No you're not. 70k is plenty of money if you decide to go back to work. Plenty of people make this decision every day. They're not idiots. They're just making a choice.

3) Is it smart for me to completely quit saving on my side? 401k, 401k match, other savings.  We would only be able to save about $17,500 401k husband + $10k husband stock options + $8,000 ESPP = $35.5k per year if I'm not working.

You mean until the baby? It's probably not smart. You'll save much more money starting to figure out what is truly important and provides you value for your dollar. Take some time to find out what is important to you. That is where your resources should go; cash, mental, and other resources. Have these discussions with your partner. You're in it together. And GL. :)

[rujancified]

Thank you to the people who provided input on what they did, it's helpful. I don't plan on quitting until I know I want to. Is it wrong to tell an employer you'll be back from maternity leave and then decide at the end that you don't want to come back?

This is just my opinion, take it or leave it. This is one of my hot buttons, so feel free to skip the middle and get down to advice :)

I think going into Mat Leave knowing that you don't want to go back to work is wrong.  I don't much care about the morality aspect but, sure, it's probably not the best move karmic-ly speaking (I mean, you're technically stealing from not only the company, but the person who would have the job if it weren't being held for you). My problem with it is subtler: There are HOARDS of managers out there who feel it is dicey to hire a woman of child bearing age because they think we'll all just abandon work once we have kids. If you take mat leave and don't come back, you're affirming that and making it more difficult on other women.

Obviously there are several scenarios where the priorities change that would make going back to work the wrong decision for your family. But knowing you want to quit & taking the "leave" anyway really bugs me.

Unrelated to that, I pretty much second what everyone else says:
-Run the numbers and make sure you'll be financially comfortable staying home.
-You're both relatively young and could potentially see some significant upticks in income in the coming years (I'm 35 and my income has gone up about 35-37% since age 30; My husbands is 33 and is up 45% since age 30).
-Money isn't everything and spending time with children is time you'll never get back. But...Either of you staying home means that person loses out on lifetime earnings. Make sure taking time away won't impact long term goals
-If you're not sure about staying home and assuming you don't have a baby during their busy season, why not ask your current employer about cutting back to 10-20 hours post-baby or negotiate a different schedule/work from home? They may say no, but at least put that out there.

You guys are in pretty good shape! Kudos!

ETA: I just noticed that I picked up your question completely wrong. Apologies! I told you the mat leave thing was my hot button - so much so that I put it places it doesn't belong :(

[Noodle]

As mentioned above, although it's great to start thinking through scenarios and talking to your spouse about them, it's also very early to make decisions. You say you haven't started trying yet--it may be harder than you expect. You could end up with special needs or multiples. All of those could alter the equation.  Your job situation could also be different by then.

Also, in terms of the general process of decision-making, I recently read a book called "Decisive" by Chip and Dan Heath. One of the things it mentioned is that the human brain tends to make decisions into "yes/no" questions when they should be multiple choice--ie, we pick one solution and agonize over it instead of generating several solutions and picking the best. For instance, having a nanny-share, or having your husband stay home, or finding a more flexible job in the field. You might still end up w SAHM, but it is a more effective way of getting there.

The other thing that I would just mention is that once out of the workplace it can be difficult to get back in, which is a risk for the family. Some people feel like that is a referendum on their marriage, but really it could be anything...death, disability, job or field disappearing. So for a lot of couples that is a factor in the decision.

[catccc]

I say go for it.  start practicing now living only on your husband's income.  Save your entire paycheck, have the whole thing go to a savings account.   I stayed home for a while with my first, we gave up my 80K salary and lived on DH's 25K.  Didn't even need to dip into savings to make it through my SAH time.  Took advantage of our low tax bracket to re-characterize and roll some pre-tax 401K funds into a Roth IRA; it was a great move that saved us thousands in taxes.

I don't think it's wrong not to be totally upfront with your employer about your plans.  I would tell them that you plan on returning, and then decide later.  If you tell them yes and then later say no, they won't be scrambling, because they will have already had a plan in place to cover your work for the duration of your maternity leave. 

I told my employer I was returning, and spent my leave deciding whether or not I wanted to be a SAHM.  I decided to stay at home.  My sister told her employer she was taking a year off, then changed her mind  3 months after delivery and went back part time.  The point is, you can't really know how you feel about being a SAHP until you do it, I think.

I spent 15 months out of the workforce (I'm in corporate finance) to SAH and started looking for work in Dec 2008.  A terrible time for job hunting, if you recall.  But if you have desirable experience/credentials, it shouldn't be a problem.  I did take consulting work through a staffing agency for 3-4 months while I looked for the new job, since DH had already left his to take his turn as a SAHD.  It all worked out fine, and my year at home was one of the best decisions ever for my family.

[catccc]

I don't think taking maternity leave and not returning is like stealing from the company.  It's usually covered by short-term disability insurance, which is an employee benefit.  And even if it wasn't covered by insurance, I don't think it would be stealing.  If took 2 weeks of front-loaded paid-time off and then left the company, I would see that as just using one of my benefits. 

If I got an expensive medical procedure covered by my employer subsidized insurance, then took short term disability, and then left the company, again, I'd just be using my benefits.  Returning for a token month may make it seem better, but if I were the manager, I'd rather just keep the temp that was filling in for you during leave that had already been trained than starting over again.

After I told my employer I wasn't coming back from leave, I did return for a 1/2 day (wearing my baby, who just slept the whole time) to transfer files and tie up loose ends, and do an exit interview, which was appreciated, I think.

[historienne]

Just one point: you may not want to leave your kid in daycare at 3 months.  I sympathize with that.  3 months is very young, and even daycares with good ratios can't be holding every kid at every minute.  However, you are earning enough to pay a full-time nanny and still come out ahead.  Your baby would still be getting one on one attention, and you would be getting a chance to go back to work and see how it feels before making the decision to stay home or continue working.  And if you decide to keep working, you may feel more comfortable putting your kid in a group daycare when he or she is a bit older.

[COlady]

I could definitely look into the full-time nanny situation.  I have no idea how much it would cost.  I do know that you have to pay them as a W-2 employee though so that's a negative with additional FICA tax, etc.  But you're right, I shouldn't write off that option.

[waltworks]

Time to find a friend who has a small child or two and volunteer to watch them all day for a week. Seriously. You may love it, or you may HATE it. Newborns/infants are cute, wonderful bundles of joy (I am not being sarcastic). They are also not great conversationalists and flat out boring a lot of the time - when they're not demanding things of you. And you can't just wander off to do what you want and leave them to their own devices all that often, either.

If you are used to a relatively intellectually engaging job I am guessing you will absolutely be delighted to return to work when your leave is up. But I could be wrong!

That said, IMO with a bit of cost cutting you guys can operate just fine on one income and even still save a great amount. So you're in a great position, congrats!

I might also mention that we stopped doing the nanny thing when our son was about 18 months old and he LOVED going to daycare. It was amazing - he just needed other kids around. For a newborn, that's obviously not so important - but be ready to relinquish your little one at some point, because oh man, they really like being around other kids, or at least ours does.

-W

[Noodle]

I don't think there is anything wrong with going into maternity leave with the intention of using that time to figure out what you want to do, and letting your employer know your decision after you make it. It sounds like that is what you are suggesting.

I do think knowing you are not intending to come back, but telling the workplace that you are, is much iffier. While not illegal, it does mean that you are leaving after having lied about something substantial. Depending on your field, you may work with people again and memories are long. Not to mention that in many cases employers do NOT hire temp staff to cover a leave, they just split up the work. Your colleagues would probably appreciate getting a search underway...

[lauren_knows]

Consider asking your employers for some flexibility (if possible).  My wife and I had our first child 2 years ago. We wanted to raise him at home, too.  We ended up both cutting our hours (Wife is 60% FT and I am 90% FT), my inlaws watch my son 1-day a week, and we have a babysitter come to the house once a week for 4-hrs so my wife can work from home.

Basically, My inlaws watch my son on Monday while we both go to the office, Wife watches him from Tues-Thurs (with the exception of a 4hr window on Wednesday she dedicates to working from home), and I watch him on Friday while she goes to the office.

If you have the option to work at home even 1 day a week, and the ability to reduce hours, you could figure out some combination of care to make it work.

[historienne]

I could definitely look into the full-time nanny situation.  I have no idea how much it would cost.  I do know that you have to pay them as a W-2 employee though so that's a negative with additional FICA tax, etc.  But you're right, I shouldn't write off that option.

True!  There are services that will do that part for you, but it does add to the cost.  Total cost will vary a lot based on location.  Where I live now, $11/hour is roughly standard for one child, but I know places where it's more like $15/hour.  Either way, though, even with doing the taxes properly, you can afford it.  And really, my experience has been that by now (at 10 months) I am no longer apprehensive about putting my daughter in group care.  She will be starting at a center in a month, and I think she will love it - all the toys and other kids to play with!  At 3 months, I felt very differently.   So the higher cost may only be for a short period.  If you do want to keep working, then paying for a nanny  in order to stay at your current job seems like a great investment.

[Dollarbill49]

COlady:  One thing that wasn't mentioned by any of the responders was, you will need to replace the LIFE insurance as once you stop working, you won't be covered.

You should also do a complete analysis as to how much life insurance you need and figure out the best way to buy it.  While it's great you and hubby  get free insurance from the employer, if the employment status changes, that coverage is out the window.

My wife and I both worked fulltime with our first two children.  It wasn't easy balancing everyone's needs.  But we did it.  For our third child, my wife decided to stay home and that worked out great too.  Our first just graduated college and will be working on Wall Street starting next week.  The 2nd will be a college junior in the fall  (premed), and our 3rd is a high school sophomore in the fall.  All are pretty well adjusted kids so the early early childhood experiences, while varied, doesn't seem to have negatively impacted them.


My best to you and your husband.

[LatteLaura]

There are pros and cons to both.  I have no interest in the mommy wars and think kids can be pretty resilient.    I would like to give my perspective as a mom of 4 who has stayed home with my kids for over 14 years.  My oldest is 14 and my youngest is 7.

When you leave your baby and young child with someone else, that person is going to be the one to feed them, hug and comfort them (or not) when they need it, cuddle them (or not), rock, read stories, play with, etc your child.  Children need attention and bonding and I wanted to be the one to provide it for them the majority of the time as their mother.  It was also nice not to worry about having to go to work when my children were sick and the stress associated with that.   

Friends that I have had that have worked in daycares found it very frustrating as they had too many babies and toddlers to look after and had to leave some crying in their cribs, leave bottles propped up to feed them- you get the idea. 

I was a daycare kid from until the age of 10 and experienced a variety of situations- homes & centers.  Even in the best ones I never felt truly cared for and at worst I had to physically fight a boy my age who was abusing my little sister when I was age 7.   

It sounds trite but children do grow up quickly.   It sounds like you are smart and skilled and should give your part-time and freelance options serious consideration. 

I know not all daycare situations are bad and if you could find a situation you trust, then it could be a different story.  Given a choice, I think most children would choose to be with their mothers over a daycare/nanny situation, but I may be wrong.  I know my kids would and I would have too. 

[ltt]

You are young and doing great!!!

You will easily be able to live off your husband's salary--your savings rate may decline some, but that's how it is with children.  But I must ask, is it necessary to be living in a house with a value of $300,000??  Or, is that the norm where you live?  I would definitely try and pay off the vehicles prior to leaving your job should you decide to leave the workforce.

I left the workforce when I was a little older than you after our second child was born, and have never returned (we have four children).  Taking care of a home and children is a full-time job.  No one, and I mean no one, not even a nanny, will take care of your child like you will be able to take care of your child.  I know a lot of people will mention that you can return to the workforce once the child enters school, however, children start getting really, really busy at that age.  Who knows, you may decide to home school.

You will find that making meals from scratch tastes much better than meals eaten out, plus your husband will appreciate it a lot more.

Besides you will be able to stay home and manage the finances and continue on your path to financial independence and, quite frankly, that's worth a lot. :)

[COlady]

Thanks everyone. So much to think about.  The nanny idea good but pretty steep - $15/hour X 8 hours X 20 working days per month = $2,400 per month or $28,800 per year before employer paid taxes. Yikes but yeah it's still not as bad as quitting my job all together, I would still net $41k per year after tax and nanny. Something to consider. Maybe I could nanny share with some friends of ours - if a nanny can handle a newborn and a toddler...

I appreciate the perspective of the mothers who stayed home here too - both my husband and I were raised by SAHMs and I think our parents are expecting the same.  I realize it's not their decision though.

Regarding our house - it's not a mcmansion.  We live in a major metro area.  Our house is 1,800 square feet - 3 bedrooms, 2 tiny bathrooms and a 2 car garage.  We do have a 1/4 acre lot which may contribute to the value.  My husband loves his yard and garden so that can't go anywhere. The average net worth (based on the link someone provided a few weeks back) of our neighborhood is around $200k so that gives you some perspective on how nice it is.  Most of our neighbors work in non-professional positions. Our friends keep asking us when we're going to move to a nicer house/area.  I tell them never!

[Ellen]

1. No, it's not wrong to tell an employer that you will be back when you're not 100% sure that you will be. What IS wrong is our country's policies around maternity/paternity leaves and the fact that many parents have to return work when their children are 6 or 12 weeks old. What might be better is for you to say that you are planning to return to work, but that you do realize you're entering an entirely new phase of your life.

2. Like Jules (?) said, you and your spouse are so far ahead of the game in retirement, savings, etc. (stop w/the car loans, though--at $180K/year, you should figure out a better way) than many people! You are in MUCH better shape than many mothers or fathers who stop outside work to become SAHP.

3. Tracking expenses is certainly important, if only because you'll may realize that many of your expenses are discretionary. I found those very easy to cut back on when I quit full-time work to freelance after my first child was born. People like to talk about the expenses of a child, but I myself found that all the little self-indulgent habits I had completely dropped off after I became a parent. I used to spend money on clothes, going out to restaurants w/friends, getting my hair cut at a super-nice salon. I still did these on occasion after becoming a parent, but a lot less (these cuts were painless).

4. Taking care of others' children as practice is totally exhausting and not necessarily predictive of how you'll feel as a SAHP. (I know because I took care of nieces as an aunt before I became a mom.) Doing so is a good exercise, but it really isn't the same as taking care of your own. It's like being a substitute teacher vs. having your own classroom--very different experiences.

5. Be the best employee you can be before you go on maternity leave. If you do decide to stay home, stay connected to people in your field however you can (consulting, small projects, even dropping by your old office for lunch w/coworkers every now and again). If you can keep one foot in the pool, returning in a few years (or even more) will be so much easier.

Good luck, whatever you decide. These things do have a way of working themselves out.

[ltt]

Thanks everyone. So much to think about.  The nanny idea good but pretty steep - $15/hour X 8 hours X 20 working days per month = $2,400 per month or $28,800 per year before employer paid taxes. Yikes but yeah it's still not as bad as quitting my job all together, I would still net $41k per year after tax and nanny. Something to consider. Maybe I could nanny share with some friends of ours - if a nanny can handle a newborn and a toddler...

The $41K per year after tax and nanny---have you figured in the cost of work clothes, shoes, commuting cost (gas, insurance, and wear and tear), lunch cost, dry cleaning cost, miscellaneous expenses (there's always people asking to chip-in for someone's birthday at work), expenses for hair (which people tend to get done much more often when they are working versus staying at home).  That $41K figure will now drop again.

I think when we were trying to make the decision regarding me staying at home, once we really figured out the numbers, it was under $10K.  Then you have to consider whether it is worth leaving your child in someone's care.

[EscapeVelocity2020]

My husband and I are planning on trying to have a baby soon. ...
The plan was that when I had a baby I'd stay home with the baby because we have no family in the area.  I can't imagine leaving a 3 month old at a daycare facility (not judging anyone who does). I get anxiety when I think about quitting my job because it has great pay for my position and excellent benefits and I firmly believe that I won't be able to find another job that's similar in the future if I quit. 
...
Me: 30 years old, him: 32 years old

Total estimated NW: $586k

Have you considered him quitting?  I was a similar age when Thing 1 came along (and there's always the chance that Thing 2 will not be too far behind).  It's nice to see how well prepared you have made yourselves.  At this point, it is a game of optimization, not something to be stressed out by. 

I understand the issue of not having family close by, it has always been a sensitive issue with my DW, but that's a whole 'nother thread :)

Your family can, and should easily forego one income for the rewards that raising a child properly (i.e. not relying so heavily on daycare) will bring.  Of course, there is always the middle ground, where you hang on to the double income for a little longer until you are ready. 

There is no right or wrong answer with all the variables, but I do think you have a nice situation that you can make the most of in a lot of ways that you play it, so I'm interested to follow this thread a bit and see what you decide. 

Just to help, we had our first child in 2003 and my wife continued to work until our second came along in 2005.  She went SAH, but had a few part time gigs over the years.  She just got a full time job starting this August at our children's elementary school (3rd and 5th grader children), and life could not have worked out better, and we did not have the NW you guys have...  I was the higher earner, but also had the less dependable job, so it was a little stressful at first, but having her at home was well worth the foregone income, and maybe you could convince your husband of that, depending on who has the better situation...

Good luck, but you guys are in great shape!

[Cressida]

My problem with it is subtler: There are HOARDS of managers out there who feel it is dicey to hire a woman of child bearing age because they think we'll all just abandon work once we have kids. If you take mat leave and don't come back, you're affirming that and making it more difficult on other women. 

Exactly. It's not that we owe anything to our employers, that's not the problem. Perpetuating the stereotype that women don't take work seriously, that's the problem.

OP, it sounds like you're reluctant to give up your job. So listen to that. It's a legit feeling.

[JustTrying]

Whoa. I would have a hard time giving up that 401k match! That's amazing!

[Thegoblinchief]

I'll challenge you one further: to use hybrid's phrase, stop being an exploding volcano of wastefulness.

Take a thoughtful look at all your expenses. Embrace simplicity.

In my mid-low COL area, DW and I would own our house outright and be flat out, never work unless we wanted to again retired with THREE kids in the house if we had your NW.

If either of you wants to be a SAHP, absolutely you can do it financially. But the real question is - why aren't you talking full-on FIRE dates yet? Your savings progress is amazing. Work on the "defense" a bit.

[cchrissyy]

when you consider your salary minus taxes minus the cost of daycare, don't make the mistake of looking only at this current year.

if you can find a way to keep working, you will have pay raises over time.

I don't know if you plan to have other kids, and if you would work with multiple kids or start staying at home then, but if this is your only child, then daycare costs turn into preschool costs which turn in to free public school or private tuition...

just don't analyze this as if it's just for right now, based on right now's salary and infant nanny costs. This season will pass soon enough, you probably can afford whatever it costs, but where will it put you 2,4,6 years down the line?

[Jules13]

The $41K per year after tax and nanny---have you figured in the cost of work clothes, shoes, commuting cost (gas, insurance, and wear and tear), lunch cost, dry cleaning cost, miscellaneous expenses (there's always people asking to chip-in for someone's birthday at work), expenses for hair (which people tend to get done much more often when they are working versus staying at home).  That $41K figure will now drop again.

This. 

I was SHOCKED at how much I didn't spend when I first became SAHM.  Shocked.  I had no idea.  I just didn't realize how much I needed to spend JUST to be presentable, get to and eat while working.

Good luck with your decision. 

[annod]

There will be factors that you won't know until you have a baby, like, will you get cabin fever and miss the social contact at work, or you may love being a SAHM and won't miss work at all....

If you become a SAHM, can you sell one of the cars? That would certainly lower expense.
Probably you will be cooking at home more, another lower expense...
Your taxes will be lower, and you possibly will qualify for subsidized healthcare (for example, in our county, if you are a family of 3 living on less than ~$78,000 gross adjusted income, you qualify for subsidy according ACA, and after contributing to 401K, and some tax deduction, you probably will qualify)

One thought of working full-time (esp. you work 65 hours/wk sometimes) and raising a child is it would be difficult to cook all meals, and do all the housework, if you end up having to hire housekeeper 2x/month, or buy more ready-made meals, that's another increased expense.

I thought nanny expense is after tax, not pre-tax?
 

[COlady]

To the person that said whoa to the 35% 401k match: I know, it's unheard of and that's why I feel I've been given this great opportunity, do I really want to quit knowing that I won't be able to find a job like this again? Also, at 10 years the match goes up to 55%, at 20 years it goes up to 65%.  There are numerous people in my office that have worked here for over 30 years.  At 30 years they give you and a significant other (and children if you have any) a trip to anywhere you want to go in the world with spending money.  It really is a great company.  However, my two male supervisors have a strong dis-like for children (one is married, one is divorced and neither of them want children).  Like having children will ruin your life, how could you ever in a million years purposefully have a child, dis-like children.  For this reason, I don't see them being particularly flexible with me.  I see it being, do you want to work or do you not? We aren't going to cut you slack when your kid is sick, etc.  I guess I should've included this earlier - it is kind of an important point.  The company as a whole is very family friendly, but my department - not so much.  There are only 3 people in the department including me so there is no one to cover for me.

Regarding the tax on nanny: I was referring to the "nanny tax".  A nanny is treated as a household employee and you must pay them as an employee and not a contractor.  You must issue them a W-2 and you have to pay the employer portion of all taxes.

I agree about the cost of working - between dry cleaning, hair, makeup, replacing worn out shoes and other clothes I spend a lot of money. I'm sure this would go down substantially if I was hanging out at the house.  Not that I would just "let myself go" but I just wouldn't need to dress in business casual clothes daily.
 

[Gin1984]

You might want to wait and see until after the baby comes.  I just had my little one a few months ago.  I stayed at home for 12 weeks.  I then returned to work Full Time (I work 1 mile from home so I go home over lunch and have minimal commute).  My husband is currently taking his 12 weeks.  My leave and his leave are both unpaid, but our employers are required to allow them under the Family Medical Leave Act (insurance won't change, and position can't change).

This has been a great experiment for us for what we want to do long term.  We were able to see how much we were able to save when I stayed home and when he stayed home.  Also we were able to see who liked staying home better.  I swore that I would want to stay home, but in reality I am much happier working.  At this point we are considering having my husband stay home since we know we can be ok on my salary only and he is much happier at home than at work. 

We are considering some compromises.  I asked if I could work from home on Fridays with a shorter hours on Friday (make up the time M-Th) and my husband is considering consulting/writing apps (we are both developers) part time from home.

My advice is not to make any decisions before the baby comes and once baby arrives explore your options.  We have also started reading Equally Shared Parenting which was recommended on this forum.  There are also a few similar posts under the Mini-Mustaches area that you might want to consider reading.

This is only if your employer is larger than 50 people AND you do not work for the same employer. 

[COlady]

Regarding selling one of the cars: No, not really. My car (the Subaru Legacy) is worth around $10k and it's paid off.  I pulled out in front of someone the weekend of our wedding three years ago (it was the nerves I tell ya!) and got t-boned on a busy street.  It was scary but I was fine and insurance paid to fix the car.  But the carfax has a nice ding on it for that.  It would probably be hard to sell.  Also, biking very far isn't too safe where I'm at.  I road my bike to work a few times (3 miles each way) and almost got hit a couple of times. Not worth it. And with a small child, I could only bike in good weather.

My husband uses the truck for all the remodeling etc, so we wouldn't sell that. I realize it was a huge purchase - I almost had an anxiety attack when I purchased it all by myself one day (after a discussion w/ him of course). We only financed it because at rate of 1.5% why give up the cash? I realize he didn't need a $30k truck for his renovations but he really wanted a Tacoma and those really hold their value in Colorado so it didn't make sense to buy an old used one for 75% of a new one.  He will drive it for the next 20 years - no joke.  He only puts $6k on it a year so it might go even farther than that.

[Gray Matter]

...No one, and I mean no one, not even a nanny, will take care of your child like you will be able to take care of your child.

I have not found this to be universally true, at least not in my case.  In my case, it's a combination of having found a truly exceptional nanny and not being a very good stay-at-home mom.  I do not have the temperament for it, and our nanny takes better care of our kids than I could if I were home with them all day, every day.  (Being away from them all day, every day is hard, too, in an entirely different way.  Ideally, you will have some flexibility to find what works for you.)

Your preferences and personality are important to take into account, and it's not always possible to predict how you will feel until you're in it.  You may feel strongly that you can't leave your baby, you may feel strongly that you need to go back to work, or you may feel somewhere in between, which makes the decision harder but gives you more options.

If I were in your situation, I would do what I could to keep my options open and make the decision after you've been home at least two months (any time before that, the sleep deprivation may make it hard to think clearly).

Good luck!

[ch12]

You might want to wait and see until after the baby comes.
This has been a great experiment for us for what we want to do long term.  We were able to see how much we were able to save when I stayed home and when he stayed home.  Also we were able to see who liked staying home better.  I swore that I would want to stay home, but in reality I am much happier working.  At this point we are considering having my husband stay home since we know we can be ok on my salary only and he is much happier at home than at work. 

We are considering some compromises.  I asked if I could work from home on Fridays with a shorter hours on Friday (make up the time M-Th) and my husband is considering consulting/writing apps (we are both developers) part time from home.

My advice is not to make any decisions before the baby comes and once baby arrives explore your options.  We have also started reading Equally Shared Parenting which was recommended on this forum. 

Take a thoughtful look at all your expenses. Embrace simplicity.

In my mid-low COL area, DW and I would own our house outright and be flat out, never work unless we wanted to again retired with THREE kids in the house if we had your NW.

If either of you wants to be a SAHP, absolutely you can do it financially. But the real question is - why aren't you talking full-on FIRE dates yet? Your savings progress is amazing. Work on the "defense" a bit.

As I read down this thread, I was thinking pretty much what GoblinChief said. I also am pro-keeping your options open. You don't know how you'll feel when the baby comes.

At a 4% rate of withdrawal http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ you would have $23,440. (Classic response and answer here: OP: But it's locked away in 401ks and IRAs! I won't be able to pull it out until age 59.5, unless I want to pay the steep penalty. Older Mustachian: Please read http://www.madfientist.com/retire-even-earlier/)

For me, $23,400 per annum would be enough money to live an exploding volcano of wastefulness life. For that kind of money, I'd swan around Spain and Italy up to the 90 days that you can stay without a visa in each country. I would sit on a Mediterranean beach EVERY DAY.

A much smaller, slightly more practical dream would be having both of you retire and live next to your family members. Surely your parents (the 4 of them) would like to see their newborn grandchild. Free, loving babysitters are fantastic.

I could quit this job and easily get a part-time consulting job making around $70 per hour so that is always an option.

That makes it sound like you have a solid safety margin. http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/
Even if you insisted on spending $50k per year, you'd only need to work 380 hours per year to get up to $50k. (Ok, yes, taxes make that a bit more complicated, but it's a ballpark number.) http://www.mrmoneymustache.com/2011/10/25/the-joy-of-part-time-work/

This is all based solely on your contributions+4% withdrawal, and your husband's earning power adds an additional layer of safety. Really consider if either of you really needs full-time employment.

[COlady]

Well folks, good news here.  It took officially one month to get pregnant! We are still in shock but so excited!

Thank you all for your feedback on my questions it makes me feel like we're in a perfectly fine position to handle anything that comes our way.  And to the person that said we need additional life insurance - I'm currently looking at quotes.

[Numbers Man]

I might be late to the party here but here are my two cents. Housing is usually the biggest item in everyone's budget and based on your numbers, I can't see you spending more than $13k a year on housing when earning around $90k if one person works. In addition, you have a cushion of $150k in taxable accounts. You can definitely stay at home based on your numbers.

[Goldielocks]

I could definitely look into the full-time nanny situation.  I have no idea how much it would cost.  I do know that you have to pay them as a W-2 employee though so that's a negative with additional FICA tax, etc.  But you're right, I shouldn't write off that option.

It helped me when going back to work to know my daughter was being taken care of by her dad.  He took 1-2 months off when I went back, and it really helped me transition knowing that someone I trusted was with her.   We also did not have family nearby.   I recommend this regardless of what you decide to do, even part time consulting.   

[MsRichLife]

When we made the decision to start a family, we did it knowing that we wanted our child to be raised by us. That meant one of us was going to become the SAHP.

I earn twice what my husband did. I also enjoyed my job, and he didn't. So it was a reasonably easy decision to make that DH would become full-time SAHD when I went back to work at 3 months. I was lucky enough to have a very flexible job, so I worked part time from home for the first year (and got completely on DH's nerves :))

He has found it to be a tough gig, mostly because he feels like he's not contributing financially to the family (although he forgets that he contributes by 'saving' us money). DH was also lacking mental stimulation and adult interaction, so when our son was 11 months we decided to put him in daycare for 2 days a week.

For us the first decision was how you want your child to be raised (parent or childcare worker). We chose parent, so our second question was which parent? From there, you just need to make it work. If you feel strongly enough about how you want to raise your child, everything else is secondary in my opinion.

MRL