Two-Income Trap - Page 2

boefixepa · #21 (**permalink**) 01-10-2007, 11:22 AM

I did the first budget of 'my furture married life' last night. One while both of us are working and one on just his salary. It was an eye opener for me. I knew I had chosen well when he was very agreeable about it and is willing to live by it....PHEWW

vsjhoc · #22 (**permalink**) 01-10-2007, 12:12 PM

Quote:

Originally Posted by boefixepa

One while both of us are working and one on just his salary. It was an eye opener for me.

How about calculating one on just your salary?

What was the eye opener?

boefixepa · #23 (**permalink**) 01-10-2007, 01:47 PM

We've already both agreed that I will stay home with the baby once it's born. It was an eye opener in that it was not as fluffy as I had hoped. Very doable, but to see the difference between both of us working and just one of us was...aagghh. As far as money goes it really wouldn't matter who stayed home as there is only a difference of 1200 spread in our yearly salaries. Not to mention I'm making about as much as I am going to make at my current job and he has much more opportunity to move up then I do.

lillyb · #24 (**permalink**) 01-10-2007, 10:50 PM

We had it pretty ideal for a while. Older kid, so no daycare worries. One income, dh's, and we were living on nearly half of it. So in that case, yes, I could have went and replaced half his income should something had happened to him.

And here I go and mess it all up by getting a job.

But what I did learn by reading this, and other books, was just because we have more income now does not mean we should up our cost of living. We are still living on about half of dh's income. The other half and my income are going to reducing debt, upping the emergency fund, funding retirement, cash flowing dd's tuition and paying extra on the mortgage. As it is, either of us could lose our jobs tomorrow and we'd be fine.

Broken Arrow · #25 (**permalink**) 01-11-2007, 06:22 AM

Great job, lillyb.

gackle · #26 (**permalink**) 01-11-2007, 08:19 AM

We both have full time jobs, but I work overnights and the wife's job has pretty much flexible hours. The only time we need child care is Sunday nights and we're very thankful that family can watch the kids for us each week. After our first child was born we looked into daycare for her (wife was in a different job). First one we went to we observed an infant unsupervised next to a moving rocker. We were horrified of the possibility of that child sticking her hand in the rocker.

After that, we quit looking. Wife resigned from her job and found some part time work to stay home with the kids. She has the itch to work as well, but we both feel it's important that we raise our kids. Our schedule is tight now, can be hectic, I don't get too much sleep during my work days, and the house can be a mess, but we are thankful that God has allowed us to care for our kids.

vishenda · #27 (**permalink**) 01-11-2007, 10:48 AM

If you figure of that 50% that 30% goes to the child care provider then are they really losing that much money if one of the parents stays home?

disneysteve · #28 (**permalink**) 01-11-2007, 02:51 PM

Quote:

Originally Posted by vishenda

If you figure of that 50% that 30% goes to the child care provider then are they really losing that much money if one of the parents stays home?

Once, a friend was complaining about her job. After listening to it, I finally said, "Why don't you quit?" Her answer, totally serious, was, "I have to work so we can afford daycare." She just didn't get that if she stayed home, she wouldn't need daycare.

DivaJen · #29 (**permalink**) 01-11-2007, 03:00 PM

When I left teaching to stay home, we gave up health insurance that had been paid for by my district along with roughly 45% of our income. My working wasn't costing a lot of extra money (we weren't paying for daycare, I didn't have an expensive wardrobe, my commute was about 5 miles roundtrip, there were no expensive lunches or business trips). So my resigning was a huge hit to our finances. The arguments about how much all the hidden costs add up to for a working parent just didn't apply in my case. Somehow, we were determined and we made it work. It was completely, 100% worth it, to both of us.

LivingAlmostLarge · #30 (**permalink**) 01-11-2007, 03:29 PM

When in grad school a friend of ours had a kid. He worked nights because his wife had a job that paid the bills. His income was too low to allow her to stay at home. So instead she made the dough and he worked nights and stayed home during the day. She would have love to stay at home but living on $12k/year wasn't going to happen. Lucky he could. But could they have made it on her salary? Probably.

cschin4 · #31 (**permalink**) 01-11-2007, 03:36 PM

Personally, I think there is an overemphasis on daycare costs in all these "calculations" that show why someone can quit their job. Yes, daycare is expensive. But, it is not as simple as just comparing income to daycare costs. There are many other financial benefits associated with working besides income. If you quit your job, you not only lose income but other benefits such as medical, dental, life insurance. And, don't forget retirement since you are no longer receiving those contributions. And, you are not paying into Social Security either so those benefits may be reduced as well. In addition, you have lost the time of experience, possible job promotions and the possible rising income that may come along with that. I think all that needs to be considered as well not just I make $X and pay $Y for daycare. And, daycare doesn't go on forever. Kids go to school before you know it.

disneysteve · #32 (**permalink**) 01-11-2007, 04:23 PM

Quote:

Originally Posted by cschin4

daycare doesn't go on forever. Kids go to school before you know it.

You are right. It isn't that straightforward. Another thing to consider is personal preferences. We did not want someone else raising our child. We decided long ago that when we had a child, my wife would stay home to raise her. That definitely came with a price. My wife was a SAHM from the time she got pregnant until 2 years ago when my daughter was in 3rd grade. My wife now works full-time, pays into SS (for whatever that's worth) and is contributing 80% of her gross to a 403b plan. We were just fine without her income for 10 years. We have no need for it now, so we're socking away almost all of it. She brings home $78 twice a month after taxes and retirement.

b4freedom · #33 (**permalink**) 01-12-2007, 01:07 PM

Quote:

Originally Posted by cschin4

Personally, I think there is an overemphasis on daycare costs in all these "calculations" that show why someone can quit their job. Yes, daycare is expensive. But, it is not as simple as just comparing income to daycare costs. There are many other financial benefits associated with working besides income. If you quit your job, you not only lose income but other benefits such as medical, dental, life insurance. And, don't forget retirement since you are no longer receiving those contributions. And, you are not paying into Social Security either so those benefits may be reduced as well. In addition, you have lost the time of experience, possible job promotions and the possible rising income that may come along with that. I think all that needs to be considered as well not just I make $X and pay $Y for daycare. And, daycare doesn't go on forever. Kids go to school before you know it.

Well said. Being a stay at home mom has some disadvantages. For example, you can't get social security disability benefits if you haven't worked the 5 of the past 10 years. (http://www.friendsofclaire.org/story.html)

cschin4 · #34 (**permalink**) 01-12-2007, 03:00 PM

When I had children, I significantly cut back my working schedule to be home with my children. But, it has come at a financial price. I could have potentially earned alot of money during these years. But, I would rather be home with my children. Next fall, my youngest will start Kindergarten. So, I am planning to work more then.

Gruntina · #35 (**permalink**) 01-12-2007, 03:03 PM

Quote:

Originally Posted by b4freedom

Well said. Being a stay at home mom has some disadvantages. For example, you can't get social security disability benefits if you haven't worked the 5 of the past 10 years. (http://www.friendsofclaire.org/story.html)

Kind of ironic if we already have the hunch that there might be no social security benfits by the time we retire.

Tree0164 · #36 (**permalink**) 01-12-2007, 04:13 PM

My husband and I were about 50/50 when I decided to stay home several years back. Honestly I wished I had planned for it better. Many months I honestly didn't know how I was going to pay the mortgage, it made me so sick Luckily, my husband started making a little bit more and I started doing some online stuff. My online stuff now (almost 5 years later) equals to what I was making when I left work so all in all we are good now. I get to stay home and doing some website work while the kids are in school and on weekends.