SAHM - Is it time to go back to work?

[Mirwen]

Currently my husband works and I'm a stay at home mom to two kids 5 and 2 months.  I'm not planning any more children.  I've been at home for the last 6 years and I'm thinking it will be hard to return if I stay out much longer. 

Last year's AGI: 34,500

Because of our low income we qualify for many different programs including WIC, EIC, and $0 IBR student loan payment.  If I went back to work I would basically double our income.   However we would then have several costs associated with me working.

Student Loan payment would increase to :  $370
Childcare (by family) $500
Transportation increase: $100
Federal Taxes increase by $540 (includes loss of EIC and saver's credit)
Clothing first year**: $100

Total increase in costs per month: $1610

**I don't buy business clothes normally, so I don't have anything but some ratty t-shirts at the moment.   I can't wear regular button down shirts without them being drastically tailored and I have to custom order bras so just a few work appropriate blouses can get really expensive.  I don't expect to spend as much the following year.

The job I'm considering is for the school district.  So I won't have to pay into Social Security and they will contribute 25% toward my pension fund.  Vesting is in 5 years.  Health care is free if both spouses work for the District.

My paycheck calculator estimates my take home pay would be $2740 with no 457 contributions.

Considering my expenses would go up by an estimated $1610 this would mean I'm really only bringing home an extra $1130 per month.

Other relevant thoughts:  The kids would be staying at home and their grandmother would be watching them.  She's great with kids and probably has more patience with them than I do.  I'm not naturally good with kids, but I'm getting better.  The baby girl would still be nursing, which may cause some pumping issues during the first few months.  I have an "in" with this job and the relevant work experience is about 10 years old, which may be too out of date if I try to find a job later.  The job is a 10 month job (meaning I get summers off) and my husband will be starting the same position at a different location, so we can still have some quality family time together even if I work. 

So...  Should I take the job even if I only net an additional $1130/mo?  It doesn't seem like much in absolute terms, but we don't currently save much aside from retirement and HSA accounts so it could make a big difference in terms of emergency savings, real estate investments, travel, or other things we can't do now.

[MDM]

Federal Taxes increase by $540 (includes loss of EIC and saver's credit)
My paycheck calculator estimates my take home pay would be $2740 with no 457 contributions.

What if you contributed $18K to the 457 and $12K to the 403b (assuming the school provides both options)?  A quick look using the case study sticky spreadsheet indicates you might "pay" only ~$100/mo extra in federal tax.  Actually, it indicates ~$100/mo less in refunds.

That might make it worth your while - what do you think?

[mxt0133]

This is such a personal decision and it will really vary based on how you like to approach problems.  I'm a numbers guy so I would first start with doing as accurate a calculation as you can given what you know.  So first of you might be underestimating the true cost of you working, i'm sure your food and entertainment expenses would go up just because of the added stress with you both working.  Also you might be underestimating your transportation costs, you need to take into account increased use of a vehicle and the maintenance cost associated with that. Work related obligations like going out with colleagues and present contributions.

On the plus side there is the 25% contribution towards a pension which could be significant.

Another thing to consider is what is your current savings rate?  If it's in the single digits then you might want to take that into account on what your new savings rate would be and how much that reduces your time to FI.

After that now comes the intangibles that you can't really quantify.  How much do you value being able to raise your kids?  If you would rather work then be honest with yourself.  I have two boys 4 and 2 with a girl on the way, if i'm honest with myself I would rather work than take care of them full-time, if there were no other considerations like it costing more to work than to stay at home, I would just suck it up.  I love them to death and enjoy spending time with them but all day is too much for me and would stress me out.  Which would make me irritable with them and they would end up suffering in the end.  My wife on the other hand would give up a six figure income to be home because there is nothing more important to her and makes her happy than being able to be with them all. day. long.

Hope that gets you thinking and helps you come to a decision.  If you are still on the fence just remember you can always find another job but you will never get to experience the early years of your kids life back.  I really value being able to experience them at this age just not on a 24/7 basis.

[Mirwen]

Our current savings rate is a little complicated.  Currently my husband saves 13% in his 401k and $60 per week in the HSA.  However, when he takes the new job (the same one I'm considering taking) he will no longer need to contribute to the retirement account or HSA because of the pension and health plan of the new job.  So it will look like we are saving little to nothing after he switches jobs and his take home will be the same (gross amount is a lower rate).  I consider the pension basically equivalent to what we were saving for retirement before.

[Cressida]

It sounds like you want to take the job and it sounds like you could use the money. So I would do it.

[Krnten]

I also think it sounds like you want the job and should go for it.  It's ok not to stay home full timr- your kids will turn out great.  You'll value the time you spend with them more win it's not all day every day.  The fact that their grandma will watch them and it sounds like you have a good relationship with her, is fantastic.  I'd say you have it set up really well to go back!

[Setters-r-Better]

It sounds like a really good opportunity.

[Merrie]

I have heard from quite a few SAH parents that it's hard to get back into the workforce down the line. I'm assuming you do want to get back in, you like this prospect, you feel okay about the time away from your kids and the childcare available to you, and you think this childcare arrangement will last a while or if it didn't you could deal with it (i.e. if after 6 months mom decides not to do granny daycare anymore, you would be okay with switching to regular daycare or quitting, or you think mom is highly unlikely to do this). There's all sorts of rhetoric swirling around about how nothing is more valuable than raising your own kids, how dare you choose a job, etc. and it's all crap imo. Some people are better parents when they're not with their kids 24-7. You have to choose what works for you. As for pumping at work, I did it with both my kids and it is a pain but if you are determined you can do it. I am guessing your baby will be 5-6 months old by the time you go back and so should be well-established with nursing.

Definitely save the 2nd income if you can, to avoid lifestyle creep and increase your options for early retirement down the line.

[Zamboni]

I agree that it sounds like you want to go back. From a purely financial perspective, that is what you should do as well. I agree that if the gap in work gets too long eventually it damages your chances for going back to the same type of job. Grandma will benefit from the child care money, and your children will benefit from time with her. 

Is any money you put into a 457 tax deferred?  If so, then put as much in there as you can handle. 

I'm not familiar with the student loan program you mentioned. Are the student loans being gradually forgiven, or is that balance just sitting there waiting for your household to earn more?  If it's the latter, then I think you should start paying them now.

Your job opportunity sounds fantastic.  Summers off rules! I had summers off when my children were small, and that was enough each year to feel like I was a stay at home mom even though I was earning a full time salary!

Also, I really don't think you should think about it as "I'll only be making $1130 per month." Women who do that sell themselves short.  In terms of adding up earnings, you have to count the money that is going toward your retirement, social security credits, healthcare benefits, and the money that is supporting family (grandma in this case.) If you have to pay those student loans off eventually anyway, you definitely shouldn't deduct that as a "work expense"; count that as money you earned as well.

[Scandium]

Our current savings rate is a little complicated.  Currently my husband saves 13% in his 401k and $60 per week in the HSA.  However, when he takes the new job (the same one I'm considering taking) he will no longer need to contribute to the retirement account or HSA because of the pension and health plan of the new job.  So it will look like we are saving little to nothing after he switches jobs and his take home will be the same (gross amount is a lower rate).  I consider the pension basically equivalent to what we were saving for retirement before.

Except you're now relying on a pension that may or may not exist in the future? Yikes, that sounds scary. Part of the appeal of FI to me is relying only on myself, my own stache, and nobody else. Would make me nervous. Just something to thing about.

[Theresa Wiggin]

I was a SAHM for 1 year - (now have 2 kids, 4 and 2) - and when you say grandma is a little more patient with the kids but I'm getting better - I completely identify! (I would even go further to say, motherhood has been very difficult for me - I'm not naturally nurturing. But I was raised by a SAHM, so there's lots of work-guilt in my family.)

Go to work if you want! You'll love it! Read Lean In by Sheryl Sandberg (good audio book at your local library?). She makes an important point that I found very freeing being a mother of young children who works outside the home: part of your compensation now is that it can set you up to make more later. Lots of people run the math on staying home with the kids without accounting for the impact staying at home has on future earnings.

That's not to say every mom should work outside the home on the hope of higher pay tomorrow. I just want to say: I love my kids, and I really enjoy my career, and while we're paying a lot for daycare right now relative to my income, part of my compensation today is that in a few years I'll be able to more up the corporate ladder, so factor that in.

[KCM5]

Our current savings rate is a little complicated.  Currently my husband saves 13% in his 401k and $60 per week in the HSA.  However, when he takes the new job (the same one I'm considering taking) he will no longer need to contribute to the retirement account or HSA because of the pension and health plan of the new job.  So it will look like we are saving little to nothing after he switches jobs and his take home will be the same (gross amount is a lower rate).  I consider the pension basically equivalent to what we were saving for retirement before.

Except you're now relying on a pension that may or may not exist in the future? Yikes, that sounds scary. Part of the appeal of FI to me is relying only on myself, my own stache, and nobody else. Would make me nervous, just something to thing about.

Also, money put into a 457 is accessible as soon as you are not longer working at your job and then taxed as regular income. It also reduces your AGI to make you eligible for the savers credit (I'm not sure about the EIC?). You should both be putting money into your 457s regardless of the pension. It is a very valuable tool. 

Edited to add:

It sounds like a great opportunity to have a job you would enjoy after being out of the workplace. Its hard to get back in. I'd take it.

[charis]

The drawbacks to keeping yourself out of the workplace are only going to get bigger the longer you stay out.  Plus, grandma will have a (paid) opportunity to be with her grandchildren this much for only so long, and it goes by so fast. 

Free health care and a 25% pension contribution?  That is a salary boost right there!  Plus, if you funnel most of your salary into your 457 and 403(b), your AGI won't change that much.  Get on this.

[nottoolatetostart]

Congrats on new baby!

I'm a working Mom of 2 (2 yrs old and almost 1 yr old). I love what a previous poster (Theresa) said about future earnings. I think I am a better Mom because I get that little break. I am not trying to advance my career, just trying to maintain for a few more years until I retire. Plus, I have heard from other friends & this forum that kids need you MORE when they older for guidance & activities, so I want to just get this time of working over with.

It's nuts with both my husband and I working with 2 small kids, a house, and a dog. Every day that we work, I say a little silent prayer that we made it another day, adding more to our net worth and everyone is alive and doing well.

If you are concerned about expenses rising, I would seriously look at sheltering as much of your income as possible (traditional IRA, 401k, health savings account, etc). It sounds like you guys are getting by on his income, so this would help you with future earnings, as well as getting more set aside for retirement & such. RootofGood has some good articles on how they make $100k a year and virtually pay no taxes because of all the sheltering they do.

Also, check if you can do a dependent care Flexible spending account to further reduce your AGI to help with tax and the various subsidies you get.

[DecD]

It's not a permanent decision- why not try it for a year and see if it works out, since you sound quite interested?  Especially since you have good family childcare!  Not only will it give you a good change in pace, more income, solid healthcare, and more retirement benefits, it'll also give you good experience for your resume and security for your family in case your husband lost his job, or was injured, or something unexpected happened with your marriage, etc.  With an AGI of $34K, even if you're just pulling in an extra $14K per year, that's a huge percent increase, you know? 

I choose to work full time rather than stay home with the kids.  It has its advantages and its disadvantages.  There is no perfect solution (perhaps until FI, ha).  But I found that being a traditional SAHM is not really my cup of tea- it's not an easy job for sure.  Our family has chosen to have two working parents.

If I were you I would give it a try.  If the first year doesn't work out, then leave on good terms and you'll still have the income you earned and the experience on your resume.

[CommonCents]

Are the student loan payments increasing because you're on a payment schedule tied to income?  If so, check what portion of the payment is going to principal, as the debt repayment is another form of savings and shouldn't just be viewed as an expense.  It would shorten the repayment time and interest paid.

[Lucky Girl]

I'm a working mom of two, and I have to agree with most of the other replies.  It has always felt safer to me to be working for our long term financial security.  The most important thing to me when making the decision to continue working was the long term consequences of staying out of the job market.  What if you need a job at some point in the future?  It is not about just what you are bringing home month to month.

I actually had a part time job for a while and chose to go back to full time when my second child was one year old.  This has allowed us to dramatically ramp up savings, and now I hope I will be comfortable getting out for good in about 5 years when we hit my modest FI number (DH will continue to work, but my efforts mean he can choose to leave sooner rather than later!).

[CommonCents]

One more thing.  I'm been horrified before reading on these pages about how people who are married and get divorced think that if they were the working parent, they should get close to 100% of the stash rather than splitting it with the stay at home parent, and can be vicious about it.  (Read the Divorce as a weapon of mass destruction thread.)  No one ever thinks or expects it'll be them in that situation, but if you go back to work, you aren't left without rusty skills in the event of an unfortunate situation such as a divorce or your husband having employability issues.

[apricity]

Hi there!  I was a SAHP for ~8 years.  It was tough to get back into the workforce, and I had to work part-time w/o benefits for a time to pay my dues. I was also paying for childcare at that time so for basically a whole year we barely broke even.  But now, having paid those dues, things are looking way way up. And I'm so very happy to took the chance and tried it! 

But enough about me.  You can try it too, and if it's not working out then it's not working out.  It doesn't have to be a forever decision.  The combination of being able to have family help with the kids, and the benefits make it so much more than "only" such an such an amount per month. 

Best of luck to you!

[Mirwen]

Thank you all for the thoughtful replies. 

Good points I missed: 
- the pension has value after vesting
- the amount paid to MIL is kept in the family and is sorely needed
- if it doesn't work out nothing is lost, I can always stay home again

This job was my ideal job back when I worked - hands on IT  for a government entity with summers off.  I think what's holding me back is that I swore I would never be an employee again and if I needed money I would restart my online business which I ran for three years.  However, I think working for public education is a little different than "working for the man."

[Gin1984]

If you saved most of your income in pre-tax accounts, you would not pay that much in fed taxes and I believe you also would not have to pay that much in your student loan payments.

[TN_Steve]

I was SAHD for 15 years, but in your situation, the job opportunity seems pretty compelling.   (DW and I made the right decision for us, but your situation is quite different both on the hours worked by spouse (looks 9-5ish) and economically....)

[crispy]

I want to echo the poster who said it is not a permanent decision.  If you go back to work and it doesn't work for your family, you can always quit or look for PT work.  I stayed home for 5 years and then worked at my youngest DD's preschool to earn extra money and get out of the house.  I just moved back to a FT career position this past month.  I figured that I can always quit if I hate it or if it doesn't work out.  So far, I have loved it and my kids have adjusted to the change in schedule quickly.  I say give it a try and see how it works out for you.

[La Bibliotecaria Feroz]

I really think the #1 most important decision is whether you WANT go go back to work. My kids are 4 and almost 3 and I work part-time, which is perfect for ME. I make a negligible amount of money working, but I love my job (I'm a public librarian).

As you describe it, it sounds like a win-win for everyone... except maybe your husband? Will he miss the convenience more than he'll like the money? You know him better than I do :-). I only thought to mention it because my job is rather hard on my husband (who has to put the kids to bed two nights a week when I work until 8, and is currently with them all day today as I am working Saturday.

[JenniferOnFIRE]

A couple of thoughts on the financial analysis:

• The increase in SL repayment seems more like a savings, in the form of debt reduction, rather than an increased expense.  Unless you are losing some amount of debt forgiveness, count the speedier reduction in SL principle as a plus toward accelerated FI.
• Have you captured all the costs?  For example, will you eat out more or rely more on convenience foods?

Sounds like you already know what you want to do, and since it's financially net positive, it's not a life commitment, and you have the support of your family, there's no reason not to.

Best wishes on the new job!

[Mirwen]

I didn't get the job.  They rejected my application with a form email saying I didn't meet the qualifications.  I did meet all the qualifications posted so I think they must have rejected the older experience.  I did include a cover letter explaining my employment gap.  I tried to call and understand why.  I mean, I was recruited by a member of HR.  No one could explain why.  They kinda belittled me saying "hun, those guys down in IT have to work hard.  You should apply for a different job"  AHHHHHHGH!

Bureaucracy is bureaucratic.  I don't need them having that much control of my life if they are going to treat me like that.  I'll continue to work hard supporting my family from home.

[okits]

I didn't get the job.  They rejected my application with a form email saying I didn't meet the qualifications.  I did meet all the qualifications posted so I think they must have rejected the older experience.  I did include a cover letter explaining my employment gap.  I tried to call and understand why.  I mean, I was recruited by a member of HR.  No one could explain why.  They kinda belittled me saying "hun, those guys down in IT have to work hard.  You should apply for a different job"  AHHHHHHGH!

Bureaucracy is bureaucratic.  I don't need them having that much control of my life if they are going to treat me like that.  I'll continue to work hard supporting my family from home.

I'm so sorry you didn't get it and they were really dumb about it!  Hopefully this experience has helped you decide if you do want a job outside the home (FT, PT, occasional).

[La Bibliotecaria Feroz]

I didn't get the job.  They rejected my application with a form email saying I didn't meet the qualifications.  I did meet all the qualifications posted so I think they must have rejected the older experience.  I did include a cover letter explaining my employment gap.  I tried to call and understand why.  I mean, I was recruited by a member of HR.  No one could explain why.  They kinda belittled me saying "hun, those guys down in IT have to work hard.  You should apply for a different job"  AHHHHHHGH!

Bureaucracy is bureaucratic.  I don't need them having that much control of my life if they are going to treat me like that.  I'll continue to work hard supporting my family from home.

That's a bummer :-(. I know it sucks when you put a lot of thought/emotional energy into something that doesn't come to fruition. I hope something else works out soon or you find your groove at home!

[apricity]

Oh, been there :( sorry you didn't get it. Silver lining... Sounds like perhaps not the best place to work anyway.

You'll find the right job at the right time.

[TN_Steve]

I tend to forget, but when I came back out after raising the kids, it took a while, and quite a few resume sends--until I worked to develop contacts and developed a route around the HR/computerized intake procedures.....

Thus, you didn't fail.  Rather, you got your first practice round in!!

[Mirwen]

Ok,
A bizarre thing just happened.  The job that I was originally applying for (as was denied as "not meeting minimum qualifications") was closed and then re-opened.  I felt that I am fully qualified so I applied to this new posting and now I've been placed in the qualified candidate pool. I have my first interview on Wednesday morning!   I'm very excited.  All my previous tech experience was in a call center environment and I *loved* fixing computers but hated the work environment.  I can't wait to be able to walk around and fix things myself.

This is a really unique opportunity to work 10 months out of the year.  I don't just want any job.  I want this one because it allows for yearly sabbaticals.  That means less burnout and plenty of quality time with family.  Thanks for your well wishes!

[KCM5]

Excellent! Sounds like something went wrong with the initial posting. Fingers crossed for an interview!

Also, that discussion you had with HR sounds really frustrating and demeaning. Gross.