Hi Mustachians,
My wife and I are working out a plan for about 1 year from now for me to stop working and stay at home full time with our newborn and preschooler while my wife continues working part time. I wanted to share a summary of our situation and plans here and ask if anyone has any financial or budgeting advice on this plan especially if you’ve been in a similar situation!
I currently work 40 hours/week and my wife works at a hospital every Thursday and Friday. Our son is in daycare for those days when we’re both working...this costs $1500/month.
We are expecting our 2nd kid this November. Between maternity/paternity leaves and help from family, we can avoid daycare until June 2022, and that’s when I’m planning to leave my job. If we were to start our 2nd kid in daycare, the infant room is over $2k a month for part time so we’d be paying almost $4k a month in daycare expenses!!
We could make this work financially between our two salaries, but both decided it’s not worth the immense monthly cost. We want to capitalize on this precious baby/toddler time before our kids are in school and actively try to avoid us with their friends and activities :-)
Okay….with all that backstory here is the part that we’re really looking for advice from mustachians:
Based on our mortgage payment and monthly expenses (minus childcare costs) we won’t be able to fully cover our expenses with just my wife’s part time salary, so our plan is to sell about $1-2k of stock to make up the difference each month from our taxable accounts that we’ve been building up. Here is a current snapshot of our taxable stock accounts and savings:
Taxable stock accounts:
Betterment (90 stocks/10 bonds) - $60k
VTSAX - $90k
VTIAX - $15k
VASIX (Vanguard LifeStrategy Income Fund) - $30k
Savings
Health Savings Account - $15k
Savings account (emergency funds, we built this up 5 years ago and we don’t touch it) - $15
We’re thinking that we would primarily sell the VASIX (life strategy) at first since it’s less volatile than the others but depending on what the stock market is doing each month we could sell from the other funds (especially the Betterment since the higher mgmt fee I would like to eventually clear out that account and just have Vanguard). The plan would be for me to be a SAHD for 5 years until both kids are in school at which point I would likely get another fulltime or partime job, so there will likely be a 5 year stretch where we’re not buying any additional stock.
Does that seem reasonable? Any other advice on how to most efficiently sell a portion of one or more of these stock funds each month to cover living expenses? We’ll be in a lower tax bracket while we just have my wife’s salary- are there any other ways we can make the most of this?
And one last area that I wanted to run by the community - since I’ll be working for one more year I’m planning to do the following to best prepare before my paycheck stops:
maximize my 401k contributions and an HSA account
In an average year, I’m able to save about $50k that in previous years I split 50/50 between the taxable investment funds above and extra principal mortgage payments
I had a plan to pay off our mortgage in about 3 years from now. But with this change of plans, I might allocate the $50k I can save this year into the various Vanguard accounts above to build them up and skip the extra principal payments. We refinanced our mortgage to a very low rate last year and we can live with monthly payments and accrued interest over the coming years
Sorry for the essay just wanted to try to provide as much detail as possible, appreciate your time and advice!