Author Topic: To work or not to work  (Read 2520 times)

firelight

  • Handlebar Stache
  • *****
  • Posts: 1061
To work or not to work
« on: August 11, 2014, 07:14:43 PM »
About me: I work in software industry and make a decent salary for Bay Area (170k). I'm also a to-be new mom that is trying to figure out if I should work after having baby or not. I have 3 months of maternity leave but for certain reasons, would be doing 2 months off and then go back to work and then do a month off sometime later. Also, though my team is understanding, due to nature of work, they can't be super flexible of me working from home regularly and the job is super competitive that I can't expect to be employed unless I show results consistently. I need to be exceptional in what I do to stay employed (read, longer more stressful hours). I've enjoyed working there so far and would continue working there if nothing had changed.

However, life happens and we are looking at new changes (baby and motherhood). I'm wondering if it would be better to take a year or two off (move to a place where job load/expectations and salary are lower but I get to work from home or do remote work). This way I can spend more time with my baby and not be worried about the baby's day to day care. I can have a nanny come home but I'd be around to spend time with baby too.

Currently, we have a decent emergency fund and my husband works outside bay area, so we would definitely move out of bay area (resulting in lower monthly expenses). We also have been careful to spend only within the limits of my husband's salary so that even if I lost my job (my job is unstable - that is why we are paid highly as well) we can manage fine. I'm sure the baby would test the limits but with reduced costs of moving out of bay area, we would still be saving around 30-40% of his salary if I stop working.

Pros:
1) I get to spend more time with my baby without any stress - reading through all the baby books, I see that giving time to the baby/toddler is the best investment a parent can make in shaping their lives (mental, emotional and physical security). I agree lot of parents make other choices (I would too, if nothing works out and I'd have to put my kid in daycare - trust me, I was one of the parents that started looking at daycare asa we found out we are pregnant) but I'm starting to lean towards being with the baby for his/her sake for atleast two or three years. I still don't feel strongly enough for this one reason to sway my decision and hence the post.
2) We would be in a lower tax bracket and live in a lower COL area. We are not tied to bay area (no own house, no job ties except mine, no relatives, don't care too much about sunshine/weather, etc). So we might save equally or a bit less.
3) My husband has pretty much put his career on hold for my job. He works from home and has a horrible commute just so we can live in bay area. He's been great about it for the past few years and I feel I need to give him some years to get his career going again. My husband is fine either ways and is happy doing the horrible commute if it would help my career (I know, I lucked out on this guy!!)
4) Life would be easier with one person's schedule being flexible. Sadly, my husband's job can't be done remotely all the time even though he can WFH when needed.

Cons:
1) Our savings rate would not be this great for the years I take off (>50%) and we would be putting off our FI date further.
2) I'm not sure if I can come back to this position (I might be able to or I might not - I got into this position by chance and I'm not sure I can do it again). There are other jobs that pay well enough in other companies but I'm not sure how easy/hard the transition would be from remote work to a regular schedule. Also I'm concerned I might not get back into the career trajectory I have for myself.
3) I'm not even sure how much of remote work I'll get to stay home all day and still work most of the time. I've heard of software developers do it but I'm not sure how easy it is to get and retain such jobs. Further, though I want to spend time with my baby and work, I know I can't do a great job at both and would have to have nanny/use daycare atleast part time (I'm fine with this if I can get to see my kid when needed). Also, as my kid grows to toddlerhood, he/she would be going off to preschool and would no longer need a lot of time and attention from me.
4) Also we are hesitant about going from two dependable incomes to just one. We've been a two income family ever since we got together. In a bad economy, its better to have two dependable sources than just one.

Here are some numbers:
Emergency fund: 30k
His salary: 120k
My salary: 170k
Tax rate:33% fed + 10% state
Take home after funding 401ks, insurance and HSA (through his work): 11k (4+7)
Monthly expenses:
Rent:2700
Rest:1200 making it pretty close to 4k or just a bit below/above based on that month's expenses (this includes utilities, phone bills, grocery, eating out, entertainment, insurance, etc)
I expect this will go up a bit once baby is here but we don't expect it to balloon out if we don't add daycare/nanny expenses (around 1700-2500 per month).
We also have investments and Roth IRAs that we don't plan to touch unless we go through our emergency fund.
Current savings rate: 64% take home + 35k in 401ks
Projected savings rate after baby comes: 45% take home + 35k in 401ks

IF we give up my job and move to a lower COL area:
Emergency fund: 30k
His salary: 120k
My salary: anywhere between 40k-70k based on company and projects I work on (would be taking a 60-80% salary cut)
Tax rate:28% (close) + 10% state
We would fully fund his 401k, insurance and HSA (through his work) and will try to setup 401k for me at new workplace.
Monthly expenses:
Rent:1200
Rest:1000 (I don't expect this to go down a lot since we've already cut out quite a bit... also I'm keeping it at a higher number to have a buffer. I expect it to be more around 800 but I don't want to not have a buffer)
Also, nanny/daycare at the LCOL area is around 1200-1600 per month and we'll have flexibility in our schedules to reduce it even more.
Projected savings rate: 40-50% based on baby's needs from his salary + fully save mine (depending on what I get).

I have not included travel expenses (comes to around 3k per year since we take yearly international trips to visit family - this is non negotiable and I try to earn this amount through credit card rewards, bonuses, etc. We've been able to earn about half every year through this method but we have not been super aggressive. If push comes to shove, we can work harder to get our travel spending done through rewards and bonuses. Or give up 1-5% of our savings for travel expenses.

I know careers can't be charted in advance and that it is silly to face huge consequences if I give up a year or two of regular work especially if I can do remote work and be 'active' in my chosen field. However, I also know that software field can change rapidly (my area does) and that if I don't be really 'active', I might have a lot of issues coming back. I also hear scary stories of women not being able to come back to regular work after taking a break to care for family. I know I can pick up work easily but I'm not sure how easy it would be to come back to current track (lead, manager, etc).

Further, we plan to have another kid or two in the next few years. I'm not sure how to include that into our current planning and if it would strongly favor one scenario vs other (earn a lot now to spend for two kids vs stay home so I can save on two kids' expenses)
We also don't plan to buy a house in CA since we are not sure we want to settle in CA and the ROI is terrible.
My husband's job is safe enough for now but with the economy being as it is, nothing is sure anymore. We need to have backup plans for all cases.

Questions:
1) what would you do in this case? Move to a lower COL and take up remote work for a couple of years with lesser income or power through with daycare at higher COL area with the expectation career would pan out better?
2) Has anyone (especially from software or engineering field) gone from full time regular work to remote/part time work and transitioned back successfully?
3) For those that went from two income family to one, what issues did you face?
4) For those that decided to stick to two income family after having a baby, what issues did you face?
5) For women, have you faced issues in coming back to work after taking breaks? How did you explain it? Would you do it all again given another chance?

Any help/suggestions would be great.

PS: I know our ideas can change after the baby actually comes but I'm trying to work out different scenarios just so we know what to do if things change after baby comes.

fxsts12

  • 5 O'Clock Shadow
  • *
  • Posts: 31
Re: To work or not to work
« Reply #1 on: August 11, 2014, 09:05:39 PM »
Two incomes to one isn't bad off your debt free and only have one child.  You know you can always go back to dual income and daycare isn't bad,  not free but not bad.  After 2 or more those options are limited until kids are in school. Look for a lower col area and take project work when ready.  Make sure you plan for your husband to take time off to spend with the baby. The bonding will help keep a family focus.

NathanDrake

  • 5 O'Clock Shadow
  • *
  • Posts: 75
Re: To work or not to work
« Reply #2 on: August 11, 2014, 09:17:30 PM »
I don't think you mentioned this, but how far away are you from financial independence?

It sounds like if you kept going at your current rate, you'd be saving approximately 120K per year. It may be worth it to stick with it for a few years to  build up a sizable net worth if you don't already have one, and then move to a lower cost of living area and take a less stressful position. I don't think the very early years for child development are as important as when they get to the point where they start reading.

Now, if you already have a sizable net worth and are quite close to FI, then it may be worth it just to move now. Sure, it may delay your FI date a bit, but at the same time it may allow you to enjoy those years much more with a lower stress job, and who knows you may decide you don't want to FIRE just yet with a more comfortable position.

DecD

  • Bristles
  • ***
  • Posts: 298
Re: To work or not to work
« Reply #3 on: August 11, 2014, 09:29:42 PM »
It sounds like you are thinking this through thoroughly and logically. 

To hit your questions:
1) this is a tough decision without one right answer, so I hate to flippantly give you an opinion.  But since you asked! I would scale back for at least the first year.  In fact, I did.  I'm an engineer.

2) when I got married and we saw kids in our future, we left our jobs in high COL Los Angeles.  Moved to low COL Midwest and I enrolled in a PhD program.  Had child #1 just after my qualifying exams.  Had child #2 two weeks after finishing my dissertation.  As a student, I had the flexibility focus on the baby without giving up my career.  We kept him home with us for 1.5 years.  It was not easy- trying to be a good parent and a good engineer at the same time is hard no matter how you slice it.  After I graduated, I planned to take a year off with #2 since I never took a proper maternity leave with #1.  But I discovered that staying at home with an infant is challenging in ways that I don't manage we'll (I got bored and depressed.) Through colleagues, I found a position with an engineering company that let me work 10 hours per week from home until #2 was a year old, at which point I transitioned to full time and now lead a small software development team.

3) we didn't have this issue.  Lifestyle inflation didn't hit due to status as grad student prior to baby #2.  Though....I guess I should mention that going from respected engineer to peon grad student was really hard on the ego.  And then trying to be a stay at home mom after identifying as an engineer was equally hard.  I confess to having some percentage of my identity tied up in my profession.  And, thinking about missed income during the grad student years and the year off is to be avoided.

4) we are now a two income family.  We are lucky that my husband works at a university and so has flexible hours.  My hours are also flexible to some extent.  But I'm tired a lot.  I've recently changed up my schedule to work 7-3 so we can pull the older child from after-school care and I can meet him off the bus.  But what I'm finding is that even if I'm home at 3:15, I've still put in an 8 hour day and I'm beat.  If one of the kids wakes up in the night? Devastating to quality of sleep.  It's far easier now that the youngest is 3- the first year of sleep deprivation is pretty rough, and a good reason to question whether you'll be able to do top quality work at a demanding job during that first year.  Yet  the older the kids get, the more clear it is to me that they'll benefit from a parent at home after school to talk over the day, sit down and do homework, get a healthy supper in the table.

5) I experienced no issues at all in taking a break after graduating to stay home with the kiddo.  My current company is very family friendly.  They had zero problems with me having taken a break.  Is didn't explain it away- I was straight up about the reasons.   I'm actually not at all shy at sharing this fact now that I'm back at work, either- I figure it's good for everyone to notice that it's possible to take extra time to be at home with a baby and still come back successfully.

I've been working full time for 2 years now.  My current plan is to work full time another 3 years and then reassess: options are to continue for another few if its going well...or transition to part time in order to free up my time and yet still add to the stash, or to throw in the towel- we should hit FI in about that timeframe.