Can I afford to stay home?

[mdcrim]

Okay, I have been stalking this forum for a long time as a guest and would now like to get some opinions about my situation.

I am 35 yrs old, married with one child in school. I have ALWAYS worked (since 13 years old). I have been performing consulting work since 2006 which has provided me a pretty decent income but in November the work dried up with the company I had been contracting for. I could get a contract with a different company making slightly less than I was, but still decent money (probably $55,000/yr working 30 hours per week, give or take). The job is flexible, I can work full time or 20 hours per week and get paid for what I work. It really is a great gig. Problem is, I have really really enjoyed staing home. I am getting house projects done and am able to be home when my child gets off the bus. I am going to the gym regularly and spending time on me! So I think I have gotten spoiled. My husband seems thrilled that I'm home and he is now the "breadwinner" for the first time in our marriage and supports whatever decision I choose to make.

So here are the details. He takes home about $2500 biweekly after all deductions. He is a federal government employee, so we think his job is pretty secure. He contributes to his retirement up to matching (I think it's 5% or 6%). Fixed expenses are approximately $4000 per month and we have $40,000 in savings, which includes our emergency fund. He is 37 years old. We have approximately $100,000+ in retirement accounts and he will be getting a small pension (approximately $300/ month) in 2014 and will be eligible for federal government pension from the feds at full retirement age. I will be eligible for a small pension (about $300/ month) in 2029.

Our childcare expenses last year were $8500 which I can avoid if I stay home. Summer camps alone in our area run between $220 and $250 per week. I just don't want to jeopardize our retirement or quality of life by not working. We like fun things.

I just don't know what to do. I don't know if it would be a horrible idea to stop working, especially because I could work a 20 hour per week schedule to bring in the fun money. I think I may just be burned out and very suprised at how much I enjoy being home. I have historically defined myself by my career.

What are everyones thoughts on this?

[Fairchild]

Well, it is a personal decision, but I will say that I am a stay-at-home mom with 2 kids in school and I wouldn't trade it for anything. My home and family run sooooo much more smoothly with me home all day. I am rested, organized, and ready when the kiddos get home. I am there to get homework done and everything else ready, so that when dad gets home in the evenings and all day on the weekends, it is just fun fun fun -- no stress, no laundry, no grocery, no housework.

Sounds to me like you can afford it with the numbers you gave -- you can always change your mind later and add a part-time job or go back full-time.

Good luck with your decision!

[Tree0164]

How about staying home atleast through the summer and then revisit the opportunity. That way you won't have to pay for summer camps.

[TBH]

Without crunching the numbers, I say go for it. It might mean making some sacrifices, though.

However, I'd recommend trying to find something very very part-time to keep your skills and contacts fresh. If you stay home for a few years and then want or need to go back, it will be much harder if you've been completely not working.

If you want more specific help with how to pull it off, list your expenses. Everyone on here will tell you you're not saving enough for retirement. You should be saving 10-15 percent of your husband's salary, not 5-6%. If you can cut back in other ways and manage to up your savings to at least 10% for retirement, I think you can stay home. Now that he's saving for 2 retirements on one income it's even more important to save adequately.

[PrincessPerky]

To me it sounds easy for you to stay home (you have less kids, more savings and your husband makes more than I do).

But then I am not you.

Whatever decision you make, it wont be forever, you can take the summer off, and decide to go back later, you can work for now and decide to quit later.

[Bernz]

I would suggest that you go for it as well, the fact that you always have a choice to change your mind anyway. If you feel that you are liking it more then stay with it. What I am trying to point out is don't be afraid that you may really like it. It's always a wise decision to do something that you like anyway.

[maat55]

I'm all for stay at home moms, besides, the rugrats will grow up and you may choose to go back to work, so to add to your investing.

I would take a really good look at your budget to see if you could get alittle more going into his 401k or an Roth.

[mdcrim]

I'll have to take a good look at our retirement accounts (we have quite a few-opened over the years whenever we switched jobs and never consolidated) to see exactly what's there. Basic monthly budget is this:

Mortgage $1,530
Gas $120
Electric $132
Water $35
Car insurance $125
Motorcycle Insurance $200
Personal Property Tax $100
Property Tax and Home ins. $500
Directv $75
Vonage Home phone $25
Comcast internet $45
T-Mobile $180
Home Equity Loan $508
Gym $135

Total $3,710

These are the fixed expenses. The cell phone bill is high because it is our primary phone and the phone I use for my business purposes-it has two lines with internet on one. I need the home phone for fax capabilities only. The gym is expensive, but it is well worth it. It's like a country club without the golf and I go 4-5 days per week. I look at it as money going toward my long term health.

I need to check the retirement contributions but I do think they are around 6% of his salary ($107,000). His take home pay is approximately $2500 biweekly. This is after taxes, health and life insurance and health and dependant care spending (we signed up for $500 in dependant care for the year and $5000 for the health account). The dependant and health spending accounts are another $200 per month (pretax). I always contribute 20% of my income to a SEP IRA (last year was $12,000).

If I can put my hands on the retirement account info, I'll post it, but I think this is a pretty good snapshot of the finances.

[zetta]

I work 20/hr per week from home and love that amount of time. There's a big difference between working 20 and 30 hours, IMO. If your child is in school from 8 to 2 you'd likely be able to hit the gym and still get your hours in. I'd recommend at least trying the 20/hr schedule to see how well it works (or doesn't work) for you.

If you're heart is really set on being home, there's probably a way to make it happen. Life is all about making tradeoffs -- giving up x in order to have y.

From a quick calculation, if you were living on just his take-home, you'd be spending 64% on needs. A rule of thumb is that needs should take up no more than 50%.
I'd recommend working for a bit and aggressively paying off that home equity loan before you stay home. I don't see any other savings in your budget for your next cars or college savings, so you need to work that into your budget and account for spending on groceries, clothes, household items, etc. in order to make a more informed decision.

[creditcardfree]

It looks a tad tight to me, but it looks like there is wiggle room...or places to cut back if it is worth it to you.

[mdcrim]

Okay, I just checked his most recent paystub and 10% is going to TSP. I think I may try the 20 hour per week route and see where it gets me. I can keep my little toe dipped in the workforce and still have more time at home. It's just a really tough decision to make psychologically.

Thanks for all the responses!

[wincrasher]

I'd say you can't afford it. Your discretionary money is very low. Youll start dipping into savings immediately for all the things that "come up".

I'd bet that the savings you have today is largely from your income when you worked.

How much have you saved for your kid's college? Start looking into the projected costs and you'll see it's a huge number. Unless of course you don't mind having them start off their adult lives deep in debt.

[LivingAlmostLarge]

Try it. Why not?

[mdcrim]

College is pretty much covered-we have a rental property we own that (even in this market) we have about $75,000 in equity. We also have approximately $20,000 (current value) in stocks earmarked for college, if needed. My son has about $6000 in savings (gifts from random relatives) that can also be used for college. And we intend to continue to save- the theory is if he doesn't need it (scholarship/ state school/ military academy) he can keep whatever is left over to use to start out with. He's in first grade so we have some time.

But you're right about the discretionary income and savings-they come from my income. We like toys, our house is in desperate need of updating, we like to travel.

I also need to tackle that home equity loan!

[SnoopyCool]

I'd say continue to do something work-related, but minimize it. The benefits of staying at home are great, but I've learned you should stay fresh career-wise just in case.

[mom-from-missouri]

I say go for it, I did, and I don't regret it . We have adapted by less toys and simpler fun things that really are just as fun.
By my not working outside of the home full time, we went down a tax bracket, saved on childcare, saved on gasoline to and from work, saved on meals out, saved on my work clothing (by homeschooling we have also saved on kid clothing as well), I volunteer at the camps the kids go to in the summer (church camp, music camp, 4H and science camp), and by doing that some of the camps give reduced tution. These are camps my kids would go to regardless of if I worked or not. My husband has not had to hire someone to mow or help during hay season.
I do some babysitting and sub teach. That brings in some money without the expenses of working outside the home full time.

[zetta]

But you're right about the discretionary income and savings-they come from my income. We like toys, our house is in desperate need of updating, we like to travel.

This is what I mean about tradeoffs -- financially you could probably find a way to make it work if you really had to (or really wanted to.) Since your son is already in elementary school and you are looking at part-time work, it seems the immediate trade off for you is whether you'd rather have money for travel, redecorating, and toys, or more free time for yourself, the gym, and home projects. The long term tradeoff is for free time now vs employment security, college savings, and paying off the home equity loan early.

[My English Castle]

I'd pay off the Hone Equity Loan and see if you can crunch some other numbers before I'd commit to it. Can you get better rates on your insurance? Your internet? And I'd be a little nervous about retirement plans, but I am a cautious soul.

I'm all for part time if you can swing it, but no work makes me a nervous nelly.

[PennySaved]

Start a side biz that you can do from home.... write articles for people or something. Based on what you posted, your writing style looks clear and correct.

I'd have some small income stream going before I made the leap. That's just me.

[buildmybudget]

You simply must start by creating a budget to see if you can continue living your life the way you want to. And not just any budget--a budget that helps you see where you are headed so you can make adjustments today to make things work out tomorrow. Systematically look at where every dollar goes and identify if each will help you get where you want to be.