New baby and considering going to one income

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Triple digit golfer
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New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 10:28 am

Hi all,

My wife and I have a one month old baby and we are considering having her stay home with the baby.

It will be a much tighter budget with far less savings, so I am trying to determine what our take-home pay would be. Essentially I am trying to run down a 1040 and see what the tax calculation would be, because once I know that I could calculate very closely our total take-home pay.

Our (my) gross income will be $127,308
Insurance (medical, dental, vision) will be $545 bi-weekly
I would contribute 4% of salary to my 401(k).
I expect to have approximately $1,000 in taxable interest each month

By my math this gets us to AGI of $109,046.

We will have itemized deductions of approximately $4,000 in state income tax, $8,000 in property taxes, $11,500 in mortgage interest, for total itemized deductions of $23,500.

Personal exemption will be $4,050 x 3 of us = $12,150.

This gets us to taxable income of $73,396, which will equal federal tax liability of $10,077 based on 2017 tax brackets for Married Filing Jointly.

That means roughly $388 in federal tax per pay period.

I went to a payroll calculator and using 6 exemptions and Married Filing Jointly, my take-home pay would be $3,244 every two weeks with federal tax withholding of $397. This means that we'd get back about $234 each year - close enough to zero for me and enough of a cushion to pay the state tax amount owed, if any.

Is my logic and rationale sound? Could I budget take-home pay of $7,028 per month based on $3,244 per pay period (every two weeks) using the above logic?

Nate79
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Re: New baby and considering going to one income

Post by Nate79 » Mon Oct 30, 2017 12:06 pm

Triple digit golfer wrote:
Mon Oct 30, 2017 10:28 am
Hi all,

My wife and I have a one month old baby and we are considering having her stay home with the baby.

It will be a much tighter budget with far less savings, so I am trying to determine what our take-home pay would be. Essentially I am trying to run down a 1040 and see what the tax calculation would be, because once I know that I could calculate very closely our total take-home pay.

Our (my) gross income will be $127,308
Insurance (medical, dental, vision) will be $545 bi-weekly
I would contribute 4% of salary to my 401(k).
I expect to have approximately $1,000 in taxable interest each month

By my math this gets us to AGI of $109,046.

We will have itemized deductions of approximately $4,000 in state income tax, $8,000 in property taxes, $11,500 in mortgage interest, for total itemized deductions of $23,500.

Personal exemption will be $4,050 x 3 of us = $12,150.

This gets us to taxable income of $73,396, which will equal federal tax liability of $10,077 based on 2017 tax brackets for Married Filing Jointly.

That means roughly $388 in federal tax per pay period.

I went to a payroll calculator and using 6 exemptions and Married Filing Jointly, my take-home pay would be $3,244 every two weeks with federal tax withholding of $397. This means that we'd get back about $234 each year - close enough to zero for me and enough of a cushion to pay the state tax amount owed, if any.

Is my logic and rationale sound? Could I budget take-home pay of $7,028 per month based on $3,244 per pay period (every two weeks) using the above logic?
I'm not going to comment about the tax calculation. But if I understand correctly are you saying that by going to one income you would only save 4% of your income for retirement? Do you think this would be a permanent choice or only temporary (for example until the baby goes to school)?

4% to retirement is extremely low and I would be worried but if it is only for a few years it isn't the end of the world.

rkhusky
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Re: New baby and considering going to one income

Post by rkhusky » Mon Oct 30, 2017 12:16 pm

Don't forget about the child tax credit of $1000.

+1 for trying to put more in the 401K. How about using whatever is generating $1000/yr (I assume the per month was a typo?) in interest for living expenses and putting more into the 401K?

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 12:59 pm

We both also max out Roth IRAs, so the total retirement contributions will be 12.6% of income, and 14.6% including my company match.

We already have a net worth of $650,000 including $390k in tax deferred or tax free accounts, $198k in taxable, and the rest in home equity. Therefore, I am not overly concerned with contributions dropping from the 30% area to 14% of income.

mega317
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Re: New baby and considering going to one income

Post by mega317 » Mon Oct 30, 2017 1:03 pm

The math looks good except did you figure the state income tax in your final numbers?

If the stay-at-home is temporary then I think money is only one factor in the decision. But remember there might be more kids, so a longer stay-at-home period, and depending on the type of work it might be difficult for your wife to find something when she wants to.

(Edited a little when I saw your last post.)

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 1:06 pm

mega317 wrote:
Mon Oct 30, 2017 1:03 pm
The math looks good except you didn't figure the state income tax in your final numbers.

If the stay-at-home is temporary then I think money is only one factor in the decision. But remember there might be more kids, so a longer stay-at-home period, and depending on the type of work it might be difficult for your wife to find something when she wants to.

(Edited a little when I saw your last post.)
Thank you. I did not figure state income tax because I'm figuring it'll be somewhat close - within a few hundred dollars one way or the other.

delamer
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Re: New baby and considering going to one income

Post by delamer » Mon Oct 30, 2017 1:43 pm

Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.

LAFiddler
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Re: New baby and considering going to one income

Post by LAFiddler » Mon Oct 30, 2017 1:50 pm

Go for it.

Try it for a year. My wife and I did it on 80k.

There are certainly sacrifices, but you can definitely do it with your income.

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 2:41 pm

delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?

delamer
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Re: New baby and considering going to one income

Post by delamer » Mon Oct 30, 2017 3:45 pm

Triple digit golfer wrote:
Mon Oct 30, 2017 2:41 pm
delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?
You are probably right about the exemptions being higher due to your itemizing.

I just wasn't sure if you were taking into account the SS and Medicare withholding when determining take home pay. You mentioned insurance and 401(k) withholdings which reduce your take-home (and your AGI), but not SS/Medicare which also reduce your take-home (but not your AGI).

student
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Re: New baby and considering going to one income

Post by student » Mon Oct 30, 2017 3:54 pm

The math seems good. Can you try it for 6 months and see whether you can live on your salary without while maintaining similar lifestyle?

runner540
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Re: New baby and considering going to one income

Post by runner540 » Mon Oct 30, 2017 3:57 pm

Triple digit golfer wrote:
Mon Oct 30, 2017 2:41 pm
delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?
I'm not following...Double check your calcs and your paycheck assumptions. SS and Medicare will be ~9% off the top of your income (401k contributions do not reduce the SS taxable amount). SS/Medicare taxes are not part of the 1040. They will be on your W2.

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 3:57 pm

student wrote:
Mon Oct 30, 2017 3:54 pm
The math seems good. Can you try it for 6 months and see whether you can live on your salary without while maintaining similar lifestyle?
Probably a good idea. My wife is supposed to go back to work January 22. So we have a good 2.5 months to try it out, at least.

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 3:58 pm

runner540 wrote:
Mon Oct 30, 2017 3:57 pm
Triple digit golfer wrote:
Mon Oct 30, 2017 2:41 pm
delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?
I'm not following...Double check your calcs and your paycheck assumptions. SS and Medicare will be ~9% off the top of your income (401k contributions do not reduce the SS taxable amount). SS/Medicare taxes are not part of the 1040. They will be on your W2.

Yes, the SS and Medicare are coming out of take home pay. They are shown on my W2 but do not reduce the "wages, salaries, and tips" line. In other words, they are not deductible for federal income taxes. Right?
Last edited by Triple digit golfer on Mon Oct 30, 2017 4:00 pm, edited 1 time in total.

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Meg77
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Re: New baby and considering going to one income

Post by Meg77 » Mon Oct 30, 2017 3:59 pm

Triple digit golfer wrote:
Mon Oct 30, 2017 2:41 pm
delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?
For one thing, you don't have to back into the number of exemptions. Once you set withholding at whatever level you're comfortable, on the W4 form you can simply write in whatever dollar amount you want into "additional to be withheld." You can change this any time, for example if you have unexpected non-wage income throughout the year such as a large capital gain.

I too am wondering from your description where SSI taxes come into play. As long as the payroll calculator you fiddled with showed withholding of $388 per paycheck PLUS state taxes PLUS social security and Medicare tax, then your estimate is probably close. You are only referencing the federal tax liability estimate though which is why people are mentioning it.

For what it's worth, you can only ballpark your take home pay. Insurance rates could change, congress is messing with the tax code which could change your tax bracket or standard deduction amount, you could get a raise or bonus or even get laid off. Interest rates and stock values could rise or fall, impacting your non-wage income. It's all just an educated guess. I think you're definitely in the ballpark though.
"An investment in knowledge pays the best interest." - Benjamin Franklin

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Mon Oct 30, 2017 4:02 pm

Meg77 wrote:
Mon Oct 30, 2017 3:59 pm
Triple digit golfer wrote:
Mon Oct 30, 2017 2:41 pm
delamer wrote:
Mon Oct 30, 2017 1:43 pm
Try the TaxCaster app. It will give you a good estimate of your federal (although not state) income taxes. And you can play around with the inputs to see the net effect of increasing/decreasing your 401(k) contributions.

Also, I think you may have missed the withholding for Social Security and Medicare as far as your take-home goes. But I am a bit confused because I am not sure how you handled the taxable interest in computing your take-home.
I don't think I missed the Social Security and Medicare in take-home. What I did was put on a spreadsheet a simulated 1040 following last year's format, but plugging in the income numbers as if we only had my income. I then at the end came to federal tax liability of $10,077. I divided that by 26 to come up with a bi-weekly federal tax of $388. I then went to a payroll calculator and fiddled with the exempt allowances to get the bi-weekly withholding close to that.

Does that make sense?

My goal is to determine what my take-home pay will be on one income. The only way I knew how to figure it was to calculate my tax liability and work backwards - because I did not know how many exempt allowances to elect on my W-4. So once I knew the annual tax liability, I backed into the # of exempt allowances, which happened to be 6. That kind of scares me - why so high? Probably because we have high itemized deductions?
For one thing, you don't have to back into the number of exemptions. Once you set withholding at whatever level you're comfortable, on the W4 form you can simply write in whatever dollar amount you want into "additional to be withheld." You can change this any time, for example if you have unexpected non-wage income throughout the year such as a large capital gain.

I too am wondering from your description where SSI taxes come into play. As long as the payroll calculator you fiddled with showed withholding of $388 per paycheck PLUS state taxes PLUS social security and Medicare tax, then your estimate is probably close. You are only referencing the federal tax liability estimate though which is why people are mentioning it.

For what it's worth, you can only ballpark your take home pay. Insurance rates could change, congress is messing with the tax code which could change your tax bracket or standard deduction amount, you could get a raise or bonus or even get laid off. Interest rates and stock values could rise or fall, impacting your non-wage income. It's all just an educated guess. I think you're definitely in the ballpark though.
Regarding the bolded and underlined in your post above - BINGO! The paycheck calculator showed withholding for federal, state, SS, Medicare, insurance, and 401k. I apologize that I was not clear in my previous posts.

I think that I'm in the ballpark as well. Thank you for reviewing.

fishandgolf
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Re: New baby and considering going to one income

Post by fishandgolf » Mon Oct 30, 2017 4:33 pm

Triple digit golfer wrote:
Mon Oct 30, 2017 10:28 am
Hi all,

My wife and I have a one month old baby and we are considering having her stay home with the baby.
Greeting Triple digit golfer:

Aside from the income, I've gotta tell ya a quick story about our situation......~37 years ago.

When my wife and I got married, I didn't want kids......she did, I was more interested in my toys.....fishing, golfing, motor cycles, etc. The day she approached me about starting a family (~ 5 years into the marriage), I agreed but told her she had to go back to work; she agreed. The night our first daughter was born, in the delivery room, I held her for the very first time.....I can't even begin to tell you what a precious little treasure she was. On my drive home from the hospital that night, I believe the good Lord touched my heart. I knew then that the only person that would care for our precious daughter was her mother....my beautiful wife.

So the very next morning I called my wife and told her how I felt.....she cried...we both cried....with happiness. So from that day forward, she was a "fabulous stay at home mom" until the girls (we are blessed with two daughters) got into their second year of high school; she then went back to part-time work.

What I hope to communicate to you and others contemplating this important decision is...it's not always about the money. For certain, it is necessary to have a steady income to support your family. But we learned to give up many things (yep....fishing trips and golf were trimmed way back) and live on a reduced budget. Today........I reflect back on the beautiful family that we have and that our daughters have.......and...I would do it all over again.....in a heart beat!

Best wishes to you and your family :)
Last edited by fishandgolf on Tue Oct 31, 2017 9:03 am, edited 1 time in total.

overthought
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Re: New baby and considering going to one income

Post by overthought » Mon Oct 30, 2017 5:21 pm

I can't speak to the tax side, but I have two thoughts to inject:

First, your living expenses will change significantly with a little one in the equation, and differently depending on whether somebody stays home to care for the bundle of joy. Child care, second car for commute, extra restaurant meals because nobody's home to cook, etc. all make dual-income less of a net advantage than you might expect. That's besides the higher tax bracket you probably already accounted for.

Second, I have to agree with fishandgolf: Nobody will do a better job taking care of your kids than their mother. In my opinion the alternatives don't even come close. If you are both able and willing to give them that gift, do. It will impact them more than any money inheritance you could pass them later.

(we've been single-income family with kids since before I got out of university, and I wouldn't change it for the world)

remomnyc
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Re: New baby and considering going to one income

Post by remomnyc » Mon Oct 30, 2017 8:45 pm

Make sure you have at least 12 months emergency fund if you become the sole breadwinner. Don't forget to good term insurance coverage for each of you and long term disability for the breadwinner. Staying at home is a very personal decision, but considerations would be contributions to social security and 401k, job loss of the breadwinner, and ability/difficulty of re-entering the job force later for stay-at-home.

J295
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Re: New baby and considering going to one income

Post by J295 » Mon Oct 30, 2017 9:01 pm

Congrats on the new baby. FWIW, we went to one income for 30 years, and managed to "retire" at 53. Somehow, often in unexpected ways, things work out. I have a feeling you are both great parents.

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Watty
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Re: New baby and considering going to one income

Post by Watty » Mon Oct 30, 2017 9:08 pm

Insteading of taking shortcuts it would be good to do a dummy tax return including your state taxes to get better numbers. If you did your own taxes last year with tax software you can just make a copy of last years tax return and modify in a few minutes. This will be using the last years tax rules but it should be in the reasonably close.

When looking at the daycare costs if she works one thing to check on is if your employer has a child care flexible spending account that you can use for pay for part of that with pre-tax dollars.

Kababayan
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Re: New baby and considering going to one income

Post by Kababayan » Mon Oct 30, 2017 9:29 pm

I agree with everything fishandgolf said. My wife stays home with our 14 month old. Her being there raising our daughter is far more beneficial to our family then the income she would earn (we are both teachers). I know you weren't asking that with your original post, but at least know that if she choses to stay home it can be such a blessing for your child.

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Tue Oct 31, 2017 7:20 am

Thank you all for your comments and personal stories. I would love to one day be able to tell people that we did what was absolutely best for our daughter and that my wife stayed home with her.

I just look at her little face and I can't imagine sending her to somebody else to care for her for 9 hours. Maybe that will change in a couple months, but who knows?

stoptothink
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Re: New baby and considering going to one income

Post by stoptothink » Tue Oct 31, 2017 9:37 am

Triple digit golfer wrote:
Tue Oct 31, 2017 7:20 am
Thank you all for your comments and personal stories. I would love to one day be able to tell people that we did what was absolutely best for our daughter and that my wife stayed home with her.

I just look at her little face and I can't imagine sending her to somebody else to care for her for 9 hours. Maybe that will change in a couple months, but who knows?
Yes, keep in mind that it may change. My wife was very gung-ho about staying home when we had our 2nd, but that lasted all of 3-months. Being a SAHM was not for her and it was affecting her parenting. We, as a family, are better off with my wife working and finances have nothing to do with it.

OnTrack2020
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Re: New baby and considering going to one income

Post by OnTrack2020 » Tue Oct 31, 2017 10:40 am

We went to one income around 17 years ago....with less income and less invested than you have currently. Things have a way of working out. And we now have 4 teens (2 of them in college). You will not regret it. Every time I thought about returning to work---it lasted for about 30 seconds....then went away.

Yes, your income will go down, but so will the expenses associated with the second income--clothes, transportation (gas, insurance, maintenance costs), more meals will now be cooked at home, daycare expenses, etc. When we ran the numbers way back when (and I didn't make very much money), we found out that I was really only netting somewhere between $5k-$6k per year with all the associated costs of working outside the home . It just was not worth it.

hightower
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Re: New baby and considering going to one income

Post by hightower » Tue Oct 31, 2017 10:59 am

Triple digit golfer wrote:
Mon Oct 30, 2017 12:59 pm
We both also max out Roth IRAs, so the total retirement contributions will be 12.6% of income, and 14.6% including my company match.

We already have a net worth of $650,000 including $390k in tax deferred or tax free accounts, $198k in taxable, and the rest in home equity. Therefore, I am not overly concerned with contributions dropping from the 30% area to 14% of income.
With that much already in savings during your childbearing years (I assume you're younger than 40?), you can definitely afford to go to one salary, easily. You could stop contributing completely and still end up a multi-millionaire in retirment if you just let your current investments grow. So, yeah, while your baby is young, you two should feel free to stay home as much as you'd like. You're very fortunate! Congrats!

hightower
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Re: New baby and considering going to one income

Post by hightower » Tue Oct 31, 2017 11:01 am

stoptothink wrote:
Tue Oct 31, 2017 9:37 am
Triple digit golfer wrote:
Tue Oct 31, 2017 7:20 am
Thank you all for your comments and personal stories. I would love to one day be able to tell people that we did what was absolutely best for our daughter and that my wife stayed home with her.

I just look at her little face and I can't imagine sending her to somebody else to care for her for 9 hours. Maybe that will change in a couple months, but who knows?
Yes, keep in mind that it may change. My wife was very gung-ho about staying home when we had our 2nd, but that lasted all of 3-months. Being a SAHM was not for her and it was affecting her parenting. We, as a family, are better off with my wife working and finances have nothing to do with it.
Just curious, is this because she got bored? Or just needed space from all the screaming:) My wife and I are trying to start a family and she's already planning on not working if we have a child. Right now it seems like a great thing to both of us, but it's interesting to hear that people end up changing their minds after trying it.

Triple digit golfer
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Re: New baby and considering going to one income

Post by Triple digit golfer » Tue Oct 31, 2017 2:21 pm

hightower wrote:
Tue Oct 31, 2017 10:59 am
Triple digit golfer wrote:
Mon Oct 30, 2017 12:59 pm
We both also max out Roth IRAs, so the total retirement contributions will be 12.6% of income, and 14.6% including my company match.

We already have a net worth of $650,000 including $390k in tax deferred or tax free accounts, $198k in taxable, and the rest in home equity. Therefore, I am not overly concerned with contributions dropping from the 30% area to 14% of income.
With that much already in savings during your childbearing years (I assume you're younger than 40?), you can definitely afford to go to one salary, easily. You could stop contributing completely and still end up a multi-millionaire in retirment if you just let your current investments grow. So, yeah, while your baby is young, you two should feel free to stay home as much as you'd like. You're very fortunate! Congrats!
Thank you. We are 32. I've always been frugal and have been working full-time since I was 18, even through college and grad school, and I lived at home until I was 25. My wife came into our relationship with no debt and a good teaching job. She is also frugal and I am very fortunate that in addition to finances, we are also on the same page on almost every other important issue.

Regarding having such a good start on savings and investments, that is why I am not overly worried with reducing contributions to just enough to get my 401(k) match and maxing out Roth IRAs. That would get us to approximately 14.6% of income, or 12.6% without the employer match.

The one semi elephant in the room is our mortgage - around $2,400 per month including interest and taxes, or almost 23% of my gross salary.

We own our vehicles, a 2016 Civic with 26k miles and a 2013 Accord with 70k miles.

I do think it would work, but the thought of dropping my wife's salary and benefits is a little scary. If I lose my job, it becomes much scarier.

delamer
Posts: 3097
Joined: Tue Feb 08, 2011 6:13 pm

Re: New baby and considering going to one income

Post by delamer » Wed Nov 01, 2017 3:50 pm

hightower wrote:
Tue Oct 31, 2017 11:01 am
stoptothink wrote:
Tue Oct 31, 2017 9:37 am
Triple digit golfer wrote:
Tue Oct 31, 2017 7:20 am
Thank you all for your comments and personal stories. I would love to one day be able to tell people that we did what was absolutely best for our daughter and that my wife stayed home with her.

I just look at her little face and I can't imagine sending her to somebody else to care for her for 9 hours. Maybe that will change in a couple months, but who knows?
Yes, keep in mind that it may change. My wife was very gung-ho about staying home when we had our 2nd, but that lasted all of 3-months. Being a SAHM was not for her and it was affecting her parenting. We, as a family, are better off with my wife working and finances have nothing to do with it.
Just curious, is this because she got bored? Or just needed space from all the screaming:) My wife and I are trying to start a family and she's already planning on not working if we have a child. Right now it seems like a great thing to both of us, but it's interesting to hear that people end up changing their minds after trying it.
I am not sure if this is due to ignorance, denial, individual temperaments, etc., but my observation is that a lot of mothers (using mother as a surrogate for at-home parent) do not realize how much of childcare is really dull stuff. The 5th diaper change of the day, the 10th load of laundry of the week, the 20th orthodontist appointment of the treatment, and the 35th spelling worksheet of the year just get really, really old. It is hard to tell how you'll deal with all that on a full-time basis. It is harder when both parents work, but I only know of one mother -- with the stipulation that my circle is women with college degrees and professional jobs -- who wishes that she had stayed home full-time.

There are well-raised, happy kids with all kinds of parenting arrangements.

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