Going to one income-seeking testimonials

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BradJ
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Joined: Sun Jan 21, 2018 6:06 pm

Re: Going to one income-seeking testimonials

Post by BradJ » Sun Jan 21, 2018 9:57 pm

PS241 wrote:
Sun Jan 21, 2018 9:44 pm
OP,
I have a very similar situation to yours. We have lived on 1 income for almost 5 years. Income is about $20k lower than yours. Very similar mortgage. We have 3 children, the oldest is in private (religious) school. We give 10+% gross and save 15% ala Dave Ramsey. You can do this!

We don't do a real strict budget, but do a sort of envelope system via gift cards in a fund raising system. I have found it helpful to have automated weekly savings into several sinking funds.

Most peoples numbers on this website *boggle* my mind. My wife and I budget $20 each every month in fun money! :moneybag :oops:
We are considering moving to a bigger home, possibly pushing our mortgage up to $1000-1100/ per month. The main reason, we want an easier to maintain home and a bigger place. Should we push away the temptation?

BradJ
Posts: 52
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Re: Going to one income-seeking testimonials

Post by BradJ » Sun Jan 21, 2018 10:00 pm

KlangFool wrote:
Sun Jan 21, 2018 9:46 pm
BradJ wrote:
Sun Jan 21, 2018 8:59 pm
KlangFool wrote:
Sun Jan 21, 2018 8:44 pm
Olemiss540 wrote:
Sun Jan 21, 2018 8:38 pm
KlangFool wrote:
Sun Jan 21, 2018 8:27 pm


Olemiss540,

<<Being in (most likely) the 12% fed bracket >>

OP has low six figures income. So, please explain to me how does this translate into 12% Federal Tax Bracket for OP?

https://taxfoundation.org/2018-tax-brackets/

The standard deduction is 24K. To reach 22% tax bracket, you only need another $77,400. So, a taxable income exceeding $101,400 will reach 22% tax bracket.

KlangFool
That's assuming no other above the line deductions such as healthcare or carryover capital losses. With healthcare costs alone, OP could be in 12% bracket making 105 or 107k per year. Would that effect your advice if so?
Olemiss540,

<<OP could be in 12% bracket making 105 or 107k per year.>>

As per my comprehension of English, 105 to 107 K per year does not translate into low 6 figures of income.

I guess OP could answer this question if he wants to.

KlangFool
I currently make a little over 108k, plus the possibility of 15k bonus (or 15% of current salary).
BradJ,

That is not low six figures income as per my comprehension. In any case, Roth 401K still may not make sense. You should max up 2 X 5.5K = 11K of Roth IRA instead of Roth 401K if you want to put the money into the Roth space.

KlangFool

Thank you for your advice, I may put that into action. Will I need a back door Roth for her, since she’s not working?

KlangFool
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Re: Going to one income-seeking testimonials

Post by KlangFool » Sun Jan 21, 2018 10:02 pm

BradJ wrote:
Sun Jan 21, 2018 10:00 pm
KlangFool wrote:
Sun Jan 21, 2018 9:46 pm
BradJ wrote:
Sun Jan 21, 2018 8:59 pm
KlangFool wrote:
Sun Jan 21, 2018 8:44 pm
Olemiss540 wrote:
Sun Jan 21, 2018 8:38 pm


That's assuming no other above the line deductions such as healthcare or carryover capital losses. With healthcare costs alone, OP could be in 12% bracket making 105 or 107k per year. Would that effect your advice if so?
Olemiss540,

<<OP could be in 12% bracket making 105 or 107k per year.>>

As per my comprehension of English, 105 to 107 K per year does not translate into low 6 figures of income.

I guess OP could answer this question if he wants to.

KlangFool
I currently make a little over 108k, plus the possibility of 15k bonus (or 15% of current salary).
BradJ,

That is not low six figures income as per my comprehension. In any case, Roth 401K still may not make sense. You should max up 2 X 5.5K = 11K of Roth IRA instead of Roth 401K if you want to put the money into the Roth space.

KlangFool

Thank you for your advice, I may put that into action. Will I need a back door Roth for her, since she’s not working?
BradJ,

No. As long as you file your tax under "married filed jointly" as per my understanding. Google "Spousal IRA" for more information.

KlangFool

PS241
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Re: Going to one income-seeking testimonials

Post by PS241 » Sun Jan 21, 2018 10:06 pm

We are considering moving to a bigger home, possibly pushing our mortgage up to $1000-1100/ per month. The main reason, we want an easier to maintain home and a bigger place. Should we push away the temptation?
Here are my thoughts: 1. Can you currently afford this? A check would be to pay extra on your current mortgage to match what a potential future bigger mortgage would be. 2. Check the property income tax, that is our biggest reason for waiting.

We are currently saving up for a larger house. We will likely move to a 30 yr mortgage at that time and end up with a similar mortgage payment (but higher RE taxes).

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Sun Jan 21, 2018 10:17 pm

PS241 wrote:
Sun Jan 21, 2018 10:06 pm
We are considering moving to a bigger home, possibly pushing our mortgage up to $1000-1100/ per month. The main reason, we want an easier to maintain home and a bigger place. Should we push away the temptation?
Here are my thoughts: 1. Can you currently afford this? A check would be to pay extra on your current mortgage to match what a potential future bigger mortgage would be. 2. Check the property income tax, that is our biggest reason for waiting.

We are currently saving up for a larger house. We will likely move to a 30 yr mortgage at that time and end up with a similar mortgage payment (but higher RE taxes).
The bigger mortgage takes into consideration the higher taxes. We are looking at a home that needs work, but it’s built well. We could probably get it for 200k, put in 30 or so, and walk away with a mortgage of 180k or so after +20% down payment. The only thing that keeps us from making an offer is the one income change, plus no desire to rehab again.

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willthrill81
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Re: Going to one income-seeking testimonials

Post by willthrill81 » Sun Jan 21, 2018 10:34 pm

KlangFool wrote:
Sun Jan 21, 2018 10:02 pm
BradJ wrote:
Sun Jan 21, 2018 10:00 pm
KlangFool wrote:
Sun Jan 21, 2018 9:46 pm
BradJ wrote:
Sun Jan 21, 2018 8:59 pm
KlangFool wrote:
Sun Jan 21, 2018 8:44 pm


Olemiss540,

<<OP could be in 12% bracket making 105 or 107k per year.>>

As per my comprehension of English, 105 to 107 K per year does not translate into low 6 figures of income.

I guess OP could answer this question if he wants to.

KlangFool
I currently make a little over 108k, plus the possibility of 15k bonus (or 15% of current salary).
BradJ,

That is not low six figures income as per my comprehension. In any case, Roth 401K still may not make sense. You should max up 2 X 5.5K = 11K of Roth IRA instead of Roth 401K if you want to put the money into the Roth space.

KlangFool

Thank you for your advice, I may put that into action. Will I need a back door Roth for her, since she’s not working?
BradJ,

No. As long as you file your tax under "married filed jointly" as per my understanding. Google "Spousal IRA" for more information.

KlangFool
That's right. My wife has had a spousal IRA for years. Actually, we can deduct contributions to her traditional IRA but not mine since I have a retirement plan at work.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

thangngo
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Re: Going to one income-seeking testimonials

Post by thangngo » Sun Jan 21, 2018 10:40 pm

BradJ wrote:
Sun Jan 21, 2018 6:16 pm
Hello,everyone.
Long time reader, but first post. My wife and I are having our second child in May, where she will be staying home with him and our 3 year old daughter. Our finances are good, not great:
I make lower six figures in “safe” industry
No debt besides home ($860.00 mortgage payment per month, on 15 year)
Currently over 200k in investments, we try to invest 15%
Good emergency fund

All that being said, I’m terrifed. I’ve heard great stories about one income experiences, but it just seems like a new world to me. Anyone out there have advice for a young family (lower 30s) transitioning to a one income?
Financially, I would not be comfortable enough with one income. But it is what it is and family always comes first. Like everyone else, you're going to have many chapters in life. This is the one that you will probably remember the most: raising kids and watching them grow up. Just make sure to live below your means and learn to live under one income. Never feel bad about the %'s or how much you can save. As long as you're doing your best, you'll be fine.

BradJ
Posts: 52
Joined: Sun Jan 21, 2018 6:06 pm

Re: Going to one income-seeking testimonials

Post by BradJ » Sun Jan 21, 2018 10:45 pm

willthrill81 wrote:
Sun Jan 21, 2018 10:34 pm
KlangFool wrote:
Sun Jan 21, 2018 10:02 pm
BradJ wrote:
Sun Jan 21, 2018 10:00 pm
KlangFool wrote:
Sun Jan 21, 2018 9:46 pm
BradJ wrote:
Sun Jan 21, 2018 8:59 pm


I currently make a little over 108k, plus the possibility of 15k bonus (or 15% of current salary).
BradJ,

That is not low six figures income as per my comprehension. In any case, Roth 401K still may not make sense. You should max up 2 X 5.5K = 11K of Roth IRA instead of Roth 401K if you want to put the money into the Roth space.

KlangFool

Thank you for your advice, I may put that into action. Will I need a back door Roth for her, since she’s not working?
BradJ,

No. As long as you file your tax under "married filed jointly" as per my understanding. Google "Spousal IRA" for more information.

KlangFool
That's right. My wife has had a spousal IRA for years. Actually, we can deduct contributions to her traditional IRA but not mine since I have a retirement plan at work.
You may have sold me on that idea, especially because our ROTH IRA is also our college saving tool. We both had to pay our college tuition, and we have no plans of paying all of our kids. Our idea for college is to feed two ROTHs, and tell our children we will help once they get an associates (give them some skin in the game). I will move all ROTH 401k amount to new, spousal ROTH. Thank you!

Pluto9th
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Re: Going to one income-seeking testimonials

Post by Pluto9th » Sun Jan 21, 2018 11:29 pm

KlangFool wrote:
Sun Jan 21, 2018 9:46 pm
BradJ wrote:
Sun Jan 21, 2018 8:59 pm

I currently make a little over 108k, plus the possibility of 15k bonus (or 15% of current salary).
BradJ,

That is not low six figures income as per my comprehension. In any case, Roth 401K still may not make sense. You should max up 2 X 5.5K = 11K of Roth IRA instead of Roth 401K if you want to put the money into the Roth space.

KlangFool
If I had an income of $100,001 I'd call it "low six figures" :D. Why wouldn't ~108k be called that? I'm not familiar with the terms - is it usually understood to be 200k-300k? Or are such things done in hexadecimal, so what I would have naively thought of as "low six figures" is properly understood as "low five figures"?

Shikoku
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Location: USA

Re: Going to one income-seeking testimonials

Post by Shikoku » Mon Jan 22, 2018 12:32 am

Our family always had single income but we both work as a team. When in grad school we two happily lived on $20K/year. Not bad as grad student! After grad school, we lived in more than one countries while one of us worked in different research labs. At that time, we were three and lived on $40K/year stipend. About 15 years ago, one of us started a job with a salary of mid-$60K which has barely reached to a six figure number last year. We have one child in college and another will start in less than five years. Our plan is to fund their education. We have just north of $1M in investment, most of which are in tax sheltered accounts. If we can, I do not see why you cannot with your income. Best wishes to your family.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

OldSport
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Re: Going to one income-seeking testimonials

Post by OldSport » Mon Jan 22, 2018 1:05 am

BradJ wrote:
Sun Jan 21, 2018 7:30 pm
MikeWillRetire wrote:
Sun Jan 21, 2018 7:26 pm
Financially, you can do it. But it really depends on what your wife wants to do. She should be happy with the decision. What does she want to do? You can make it work either way, as long as you are both on the same page. Good luck to you.

My wife is the one who brought the idea to me, but I still have doubts how well she will enjoy it. Her mom worked, and my wife is not a “homemaker” type. But, as many people who life on the frugal edge of life, we live that way to have freedom and options. We are ready to see how it turns out.
Why does she want to stay at home? Is this a temporary plan for a few years? Does she want to work again after one or both children start preschool or kindergarten?

My wife stayed at home for a few years when we lived in a HCOL area. The combination of supporting a family on one income in a HCOL area caused an enormous amount of stress on me. Annual savings were the minimal to get full match (401k sucked) and then max the Roth for just me. That was it. We got out of the HCOL area and things got much better all around.

HIinvestor
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Re: Going to one income-seeking testimonials

Post by HIinvestor » Mon Jan 22, 2018 2:13 am

For our family it gave us a lot of flexibility to keep our expenses low enough so we could live on primarily one income.

I was able to do a bit of contracting work part-time and eventually work up to more hours and other part time and full time work, depending on our family’s financial needs as well as whether I was needed to coordinate other family needs (medical appts for kids with chronic health conditions).

I know others who have been able to make things work with one primary income. Sometimes the other partner is able to work part-time while others choose to just go back to full-time work. One is an MD who has worked part-time nearly her entire career. One is a teacher who has opted to tutor part time for the flexibility. One is a business consultant who has switched between full and part time. I’ve held a variety of positions myself.

quantAndHold
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Re: Going to one income-seeking testimonials

Post by quantAndHold » Mon Jan 22, 2018 2:46 am

If my salary was over $100k, my mortgage was $860/month, I had no other debts, but I was struggling to save 15% of my income, I think the first thing I would do is figure out where the rest of the money is going. You won’t know if you can make it on one salary or afford a bigger house until you can answer that question.

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FiveK
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Re: Going to one income-seeking testimonials

Post by FiveK » Mon Jan 22, 2018 2:54 am

BradJ wrote:
Sun Jan 21, 2018 9:57 pm
We are considering moving to a bigger home, possibly pushing our mortgage up to $1000-1100/ per month. The main reason, we want an easier to maintain home and a bigger place. Should we push away the temptation?
That's really your call, as it gets into qualitative issues regarding quality of life, short term vs. long term, etc., that you will know best.

With ~$108K-$123K/yr income, you should be more than fine. You may want to put your specific numbers into a cash flow tool. Anything that considers income, expenses, and does decent tax estimation, should be helpful. Try the personal finance toolbox spreadsheet if you don't have something already.

From a brief glance, it seems you could put $18.5K into a 401k and $11K into IRAs and have plenty left over, but I don't know all your expenses.

As others have implied, or flat-out suggested, taking a reasonably detailed look at your budgeted cash flow (and then tracking spending to verify the budget projections) is probably the best way to relieve anxiety. Anxiety is often heightened when one doesn't know what to expect. Good luck!

carolinaman
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Re: Going to one income-seeking testimonials

Post by carolinaman » Mon Jan 22, 2018 6:56 am

BradJ wrote:
Sun Jan 21, 2018 7:30 pm
MikeWillRetire wrote:
Sun Jan 21, 2018 7:26 pm
Financially, you can do it. But it really depends on what your wife wants to do. She should be happy with the decision. What does she want to do? You can make it work either way, as long as you are both on the same page. Good luck to you.

My wife is the one who brought the idea to me, but I still have doubts how well she will enjoy it. Her mom worked, and my wife is not a “homemaker” type. But, as many people who life on the frugal edge of life, we live that way to have freedom and options. We are ready to see how it turns out.
My wife was SAHM for our kids and I am proud to say that my daughter is also although she has a BS in Finance and could do well working. My daughter was not handy around the house growing up and did no cooking. She has turned into a super mom who does a great job with her 3 kids and husband. There are a number of expenses that can be eliminated or reduced, like day car, eating out, housework, etc. But the greatest benefit is that she will be there for the children. That is priceless. If you can make the finances work, go for it. Best wishes.

DarthSage
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Re: Going to one income-seeking testimonials

Post by DarthSage » Mon Jan 22, 2018 7:19 am

I think your numbers can support her staying home, but as others have said, you really need to figure out where your money is going now, so you can see where you could make some budget cuts.

I've been home with our kids for a couple decades. This wasn't our original plan, things just worked out that way. We have 4 kids over an 11-year span, one with special needs. It actually worked out well for us, in that we took the financial hit/adjustment with the first child, which made us ready for kid #2, who has the special needs. My being home has also allowed DH to concentrate on his career while I worry about the kid stuff, which has been beneficial to him.

We did save less in the "early kid years", but we had saved a lot before having them, and always got the full company match in our 401ks. We're currently early-mid 50's, and are in the 2-comma club, so it can be done. Starting early was the key.

As to keeping down costs, here are a few things that work for us:

(1) Cooking from scratch.
(2) Very rarely eating out
(3) Buying used items--clothing, furniture, toys
(4) Shopping sales. Coupons never worked much for me--I'm a store-brand person. Others do fabulously with coupons.

It's important to know that it does take time to find free or cheap sources for things. Thrift stores are always worth checking, as are yard sales and consignment stores. Aldi's a super popular for basic groceries. Some places have book or toy swaps. My BFF has 5 kids--she and I swapped bins of kids clothes for decades. By the time we got to Kid #9 (my youngest), I swear, there were a couple of onesies that had gone through all 9 and were practically see-through!

You can do this if you make it a priority.

P.S. There are things I will NOT scrimp on--health care, insurance, good nutrition.

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bottlecap
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Re: Going to one income-seeking testimonials

Post by bottlecap » Mon Jan 22, 2018 7:53 am

We are currently doing this. OP, you don’t give us much information, so it's hard to say anything with certainty.

But if you are coming short of your goals with your wife’s income, you will definitely have a problem without it.

The one plus is your mortgage payment is manageable.

Budget, cut the the bone, and start adding stuff back in if after you go to one income you feel you can afford it.

Good luck,

JT

pennywise
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Re: Going to one income-seeking testimonials

Post by pennywise » Mon Jan 22, 2018 8:07 am

BradJ wrote:
Sun Jan 21, 2018 7:30 pm
MikeWillRetire wrote:
Sun Jan 21, 2018 7:26 pm
Financially, you can do it. But it really depends on what your wife wants to do. She should be happy with the decision. What does she want to do? You can make it work either way, as long as you are both on the same page. Good luck to you.

My wife is the one who brought the idea to me, but I still have doubts how well she will enjoy it. Her mom worked, and my wife is not a “homemaker” type. But, as many people who life on the frugal edge of life, we live that way to have freedom and options. We are ready to see how it turns out.
Is there any possibility of your wife continuing to work but on a part time basis, or finding something that would allow work at home or flexible hours?

We never went to a one-income family status but during the years our children were born and before they entered school I cut way back to part time status. We were blessed and fortunate to have an understanding boss (both my spouse and I work in academia though we are not faculty) and great child care provided by family. I found working just a few hours per week meant I kept a foothold in the adult world, it gave me the sense I was still helping contribute to the family funds and I didn't lose my professional identity and opportunities by being out completely for an extended period of time.

Best wishes on whatever you and your wife choose. As life has unspooled I've come to understand that there are many roads to Dublin, as the saying goes and lots of ways to balance family and work life for everyone.

coupleofcents
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Re: Going to one income-seeking testimonials

Post by coupleofcents » Mon Jan 22, 2018 8:53 am

Yes, we went to single income household in 2016 with the birth of our first son and we are loving it. I make low six figures if you count my company's profits sharing retirement trust. My wife thinks its absolutely worth it to stay home and she intends to probably for the next 10 years to raise our growing family until school age. Studies have shown that besides the drop in expenses related to 1 spouse staying home, the added benefit is that you will learn to live on just one salary. Often 2 income houses adjust their spending up to match the income they receive from 2 salaries. Sounds like you didn't do this for your house but maybe on other things?

I hope this is helpful but here is our situation to show you it's doable.

1. Our mortgage is $1350/month.
2. We tithe 10% gross every month (our second largest "expense") after our mortage. Do not drop this! as someone else mentioned. Besides religious reasons aside, studies have shown those who give will often do better financially in the long run.
3. Our spend per year is about $50K (including tithe). We save over $35K per year including company match.

What stands out to me is that it seems like you have room for better budgeting based off your far above average salary and low mortgage.

1. Do you have car payments? It's possible to sell 1 or 2 cars and replace for an older model in cash. We have never purchased a car on a payment plan. Always used, $10,000 or less.

I encourage you to go for it. We are in a very similar situation to yours and really enjoy it. Feel free to PM me if you have any specific questions.

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 9:31 am

coupleofcents wrote:
Mon Jan 22, 2018 8:53 am
Yes, we went to single income household in 2016 with the birth of our first son and we are loving it. I make low six figures if you count my company's profits sharing retirement trust. My wife thinks its absolutely worth it to stay home and she intends to probably for the next 10 years to raise our growing family until school age. Studies have shown that besides the drop in expenses related to 1 spouse staying home, the added benefit is that you will learn to live on just one salary. Often 2 income houses adjust their spending up to match the income they receive from 2 salaries. Sounds like you didn't do this for your house but maybe on other things?

I hope this is helpful but here is our situation to show you it's doable.

1. Our mortgage is $1350/month.
2. We tithe 10% gross every month (our second largest "expense") after our mortage. Do not drop this! as someone else mentioned. Besides religious reasons aside, studies have shown those who give will often do better financially in the long run.
3. Our spend per year is about $50K (including tithe). We save over $35K per year including company match.

What stands out to me is that it seems like you have room for better budgeting based off your far above average salary and low mortgage.

1. Do you have car payments? It's possible to sell 1 or 2 cars and replace for an older model in cash. We have never purchased a car on a payment plan. Always used, $10,000 or less.

I encourage you to go for it. We are in a very similar situation to yours and really enjoy it. Feel free to PM me if you have any specific questions.
Thank you for your testimonial, and I agree with your thoughts on tithing. I looked at our expenses, and they are the projected to be exactly the same as yours (51K), with about $1100.00 in fluff each month. I know this should be pushed into savings/investing on an automatic level, but I feel better about moving that when the month is over ($0 balance budget). One thing we currently do is take zero deductions on our paychecks. I have considered increasing this to two, but have not done so at this moment.

BradJ
Posts: 52
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 9:32 am

pennywise wrote:
Mon Jan 22, 2018 8:07 am
BradJ wrote:
Sun Jan 21, 2018 7:30 pm
MikeWillRetire wrote:
Sun Jan 21, 2018 7:26 pm
Financially, you can do it. But it really depends on what your wife wants to do. She should be happy with the decision. What does she want to do? You can make it work either way, as long as you are both on the same page. Good luck to you.

My wife is the one who brought the idea to me, but I still have doubts how well she will enjoy it. Her mom worked, and my wife is not a “homemaker” type. But, as many people who life on the frugal edge of life, we live that way to have freedom and options. We are ready to see how it turns out.
Is there any possibility of your wife continuing to work but on a part time basis, or finding something that would allow work at home or flexible hours?

We never went to a one-income family status but during the years our children were born and before they entered school I cut way back to part time status. We were blessed and fortunate to have an understanding boss (both my spouse and I work in academia though we are not faculty) and great child care provided by family. I found working just a few hours per week meant I kept a foothold in the adult world, it gave me the sense I was still helping contribute to the family funds and I didn't lose my professional identity and opportunities by being out completely for an extended period of time.

Best wishes on whatever you and your wife choose. As life has unspooled I've come to understand that there are many roads to Dublin, as the saying goes and lots of ways to balance family and work life for everyone.
She may research these avenues later, or even go back to and become a teacher (which I think she will). When the children are young, I think it best for us that she solely focus on them. Once they are a little more independent, I will encourage her to look for part-time opportunities.

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Ethelred
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Re: Going to one income-seeking testimonials

Post by Ethelred » Mon Jan 22, 2018 9:46 am

badbreath wrote:
Sun Jan 21, 2018 8:28 pm
read what Kitces has to say about a one income household.

www.kitces.com/blog/dual-income-househo ... linearity/

I have to agree with alot of his points as DW and I have been a 1 income for a long time.
Honestly, I just read that article with bemusement. It's frankly plain wrong for many two-income families, and dominated by faulty logic. I also note from the author's picture (not Kitces) that it's very likely he is too young to be doing this research based on his own experiences. I can explain further, but I think explaining my own experiences would be more useful.

We went through this transition six months ago, as two working professionals with school-aged kids. My wife was good at her job, but unhappy and very stressed by the working atmosphere, and wanted to try running a small home business. We talked it through, and agreed that we could afford it, and she should quit.

After six months, it's working OK. She is obviously happier, and the kids are pleased that she's there for them more. However, it's a big hit to our finances. With both of us working, we filled all of our tax-advantaged accounts (2 401ks, a 401a and an HSA), and saved about the same amount in taxable accounts. With one of us working, we will likely fill my 401k and the HSA only, with no further savings. The single thing the kitces .com article is correct about, though, is that expenses can expand to fill income. Despite being generally careful with money, this is still an issue, particularly since we now have less money, but my wife has more time to spend it.

What is the correct way to view the decision, financially? Consider the loss of income, accounting for the difference in taxes paid. Then compare that against the expenses avoided - commuting costs, child care and whatever else. Consider other possible financial advantages, but everything else is a maybe, or just wishful thinking. For most working professionals, your hourly rate is much higher than the hourly cost of childcare and other help, but if one spouse's earning potential is lower, the comparison may be closer.

Money isn't everything though, so one parent staying at home is often still the right decision.

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 9:57 am

Ethelred wrote:
Mon Jan 22, 2018 9:46 am
badbreath wrote:
Sun Jan 21, 2018 8:28 pm
read what Kitces has to say about a one income household.

www.kitces.com/blog/dual-income-househo ... linearity/

I have to agree with alot of his points as DW and I have been a 1 income for a long time.
Honestly, I just read that article with bemusement. It's frankly plain wrong for many two-income families, and dominated by faulty logic. I also note from the author's picture (not Kitces) that it's very likely he is too young to be doing this research based on his own experiences. I can explain further, but I think explaining my own experiences would be more useful.

We went through this transition six months ago, as two working professionals with school-aged kids. My wife was good at her job, but unhappy and very stressed by the working atmosphere, and wanted to try running a small home business. We talked it through, and agreed that we could afford it, and she should quit.

After six months, it's working OK. She is obviously happier, and the kids are pleased that she's there for them more. However, it's a big hit to our finances. With both of us working, we filled all of our tax-advantaged accounts (2 401ks, a 401a and an HSA), and saved about the same amount in taxable accounts. With one of us working, we will likely fill my 401k and the HSA only, with no further savings. The single thing the kitces .com article is correct about, though, is that expenses can expand to fill income. Despite being generally careful with money, this is still an issue, particularly since we now have less money, but my wife has more time to spend it.

What is the correct way to view the decision, financially? Consider the loss of income, accounting for the difference in taxes paid. Then compare that against the expenses avoided - commuting costs, child care and whatever else. Consider other possible financial advantages, but everything else is a maybe, or just wishful thinking. For most working professionals, your hourly rate is much higher than the hourly cost of childcare and other help, but if one spouse's earning potential is lower, the comparison may be closer.

Money isn't everything though, so one parent staying at home is often still the right decision.
Thank you for your testimonial, appreciate the honest feedback. A little background on myself, I worked swing shift work for close to 6 years. For those of us who have done that, you understand the love/hate relationship with working abnormal working hours; but one thing is for certain, you can compartmentalize your life. I have been working 8-5 for close to 5 years now, newly married with a small child and another one on the way. I will be honest, I find 8-5 soul sucking and the "quality time" I was promised when getting off shift work was a ruse. My wife came to me years ago with a big debt free strategy, a desire to get her teaching license, and the interest in staying home for a while.....all of which I was on board with. We are still trying to figure out our life, where we want to settle and what we want to do. My wife may stay home for 6 months, 1 year, or forever...we just don't know. All we know is that we want to try to see if the family "machine" works better when one focuses on work, and the other focuses on the home. I am one who desires input and loves personal testimonials, good or bad. If I have not said it enough, thank you for everyone's input.

Jags4186
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Re: Going to one income-seeking testimonials

Post by Jags4186 » Mon Jan 22, 2018 10:02 am

As with most articles like this it is simply wrong to assume since the average couple does X it means it’s likely what will happen to you. Average people don’t have $1000 for an emergency and average retirement age people have something like $100,000 in investable assets.

This is an exceptional community and therefore I find many of these articles about “average” people, while entertaining and perhaps enlightening, not all that applicable.

For what it’s worth if you choose to live a lifestyle on one income and tithe 10% of your income, as long as the numbers work go for it. You know it will detrimentally affect your savings and lower the amount of material goods you can have, but it is a lifestyle choice. Not my cup of tea, but then again what’s right for me and my family is not right for everyone else’s.

coupleofcents
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Re: Going to one income-seeking testimonials

Post by coupleofcents » Mon Jan 22, 2018 10:52 am

BradJ wrote:
Mon Jan 22, 2018 9:31 am
coupleofcents wrote:
Mon Jan 22, 2018 8:53 am
Yes, we went to single income household in 2016 with the birth of our first son and we are loving it. I make low six figures if you count my company's profits sharing retirement trust. My wife thinks its absolutely worth it to stay home and she intends to probably for the next 10 years to raise our growing family until school age. Studies have shown that besides the drop in expenses related to 1 spouse staying home, the added benefit is that you will learn to live on just one salary. Often 2 income houses adjust their spending up to match the income they receive from 2 salaries. Sounds like you didn't do this for your house but maybe on other things?

I hope this is helpful but here is our situation to show you it's doable.

1. Our mortgage is $1350/month.
2. We tithe 10% gross every month (our second largest "expense") after our mortage. Do not drop this! as someone else mentioned. Besides religious reasons aside, studies have shown those who give will often do better financially in the long run.
3. Our spend per year is about $50K (including tithe). We save over $35K per year including company match.

What stands out to me is that it seems like you have room for better budgeting based off your far above average salary and low mortgage.

1. Do you have car payments? It's possible to sell 1 or 2 cars and replace for an older model in cash. We have never purchased a car on a payment plan. Always used, $10,000 or less.

I encourage you to go for it. We are in a very similar situation to yours and really enjoy it. Feel free to PM me if you have any specific questions.
Thank you for your testimonial, and I agree with your thoughts on tithing. I looked at our expenses, and they are the projected to be exactly the same as yours (51K), with about $1100.00 in fluff each month. I know this should be pushed into savings/investing on an automatic level, but I feel better about moving that when the month is over ($0 balance budget). One thing we currently do is take zero deductions on our paychecks. I have considered increasing this to two, but have not done so at this moment.
If you move to 1 income you'll definitely want to take some deductions otherwise you will have a big fat refund. I don't think you said how much your spouse was making, but I'm assuming you would still get a refund if you didn't take any deductions when she was working.

You could also do some research about the new tax rates. You will be eligible for either Roth or Traditional IRA in your salary range. I also make sure I'm in the 15% which is now 12% for 2018 bracket. Contributing $5,500 each to your traditional IRA and your wife's can lower your taxes. Many on this bard would recommend Roth instead. I contribute to both in whatever amount I need to get into the lower tax bracket.

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 11:10 am

coupleofcents wrote:
Mon Jan 22, 2018 10:52 am
BradJ wrote:
Mon Jan 22, 2018 9:31 am
coupleofcents wrote:
Mon Jan 22, 2018 8:53 am
Yes, we went to single income household in 2016 with the birth of our first son and we are loving it. I make low six figures if you count my company's profits sharing retirement trust. My wife thinks its absolutely worth it to stay home and she intends to probably for the next 10 years to raise our growing family until school age. Studies have shown that besides the drop in expenses related to 1 spouse staying home, the added benefit is that you will learn to live on just one salary. Often 2 income houses adjust their spending up to match the income they receive from 2 salaries. Sounds like you didn't do this for your house but maybe on other things?

I hope this is helpful but here is our situation to show you it's doable.

1. Our mortgage is $1350/month.
2. We tithe 10% gross every month (our second largest "expense") after our mortage. Do not drop this! as someone else mentioned. Besides religious reasons aside, studies have shown those who give will often do better financially in the long run.
3. Our spend per year is about $50K (including tithe). We save over $35K per year including company match.

What stands out to me is that it seems like you have room for better budgeting based off your far above average salary and low mortgage.

1. Do you have car payments? It's possible to sell 1 or 2 cars and replace for an older model in cash. We have never purchased a car on a payment plan. Always used, $10,000 or less.

I encourage you to go for it. We are in a very similar situation to yours and really enjoy it. Feel free to PM me if you have any specific questions.
Thank you for your testimonial, and I agree with your thoughts on tithing. I looked at our expenses, and they are the projected to be exactly the same as yours (51K), with about $1100.00 in fluff each month. I know this should be pushed into savings/investing on an automatic level, but I feel better about moving that when the month is over ($0 balance budget). One thing we currently do is take zero deductions on our paychecks. I have considered increasing this to two, but have not done so at this moment.
If you move to 1 income you'll definitely want to take some deductions otherwise you will have a big fat refund. I don't think you said how much your spouse was making, but I'm assuming you would still get a refund if you didn't take any deductions when she was working.

You could also do some research about the new tax rates. You will be eligible for either Roth or Traditional IRA in your salary range. I also make sure I'm in the 15% which is now 12% for 2018 bracket. Contributing $5,500 each to your traditional IRA and your wife's can lower your taxes. Many on this bard would recommend Roth instead. I contribute to both in whatever amount I need to get into the lower tax bracket.
My wife's current income is around $39,000, with zero benefits. Maybe the only family in America where quitting your job to become a teacher one day is good financial move.

soccerrules
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Re: Going to one income-seeking testimonials

Post by soccerrules » Mon Jan 22, 2018 11:13 am

Brad
We did it for 15 years and it was worth the sacrifices.

You have a few months to reduce unnecessary expenses and perhaps negotiate down auto/home insurances,cell phone plan etc.

Make sure you have term insurance for you and your spouse.

$860/mo mortgage on a 6 figure income. You should be able to handle it without issue.

just remember when #2 comes along you have to switch to man to man defense and then on #3 you go to zone. :D
Don't let your outflow exceed your income or your upkeep will be your downfall.

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 11:20 am

soccerrules wrote:
Mon Jan 22, 2018 11:13 am

and then on #3 you go to zone. :D
and then on #3......cold sweat forms down my neck thinking of juggling 3 rugrats.....

JuniorBH
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Re: Going to one income-seeking testimonials

Post by JuniorBH » Mon Jan 22, 2018 11:48 am

Following this thread intently as we're considering this move next summer when DD is born and DS will be 2yrs old.

Based on your finances, it seems like you can swing it, especially if it's the path you want to take (it's nice to be able to choose this rather than be forced into it). As others have mentioned, DW may want to consider staying engaged in the workplace to some extent to allow for an easier re-entry if that becomes at option in the future.

soccerrules
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Re: Going to one income-seeking testimonials

Post by soccerrules » Mon Jan 22, 2018 11:51 am

BradJ wrote:
Mon Jan 22, 2018 11:20 am
soccerrules wrote:
Mon Jan 22, 2018 11:13 am

and then on #3 you go to zone. :D
and then on #3......cold sweat forms down my neck thinking of juggling 3 rugrats.....
Going from 2 to 3 is a bigger adjustment than 1 to 2. They out number you and I think they know it. :shock:

Love my kids (young adults now). The best and hardest job in the world. Have fun, they grow up fast. :beer
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
Posts: 279
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Re: Going to one income-seeking testimonials

Post by soccerrules » Mon Jan 22, 2018 11:59 am

BradJ wrote:
Mon Jan 22, 2018 9:57 am
Ethelred wrote:
Mon Jan 22, 2018 9:46 am
badbreath wrote:
Sun Jan 21, 2018 8:28 pm
read what Kitces has to say about a one income household.

www.kitces.com/blog/dual-income-househo ... linearity/

I have to agree with alot of his points as DW and I have been a 1 income for a long time.
Honestly, I just read that article with bemusement. It's frankly plain wrong for many two-income families, and dominated by faulty logic. I also note from the author's picture (not Kitces) that it's very likely he is too young to be doing this research based on his own experiences. I can explain further, but I think explaining my own experiences would be more useful.

We went through this transition six months ago, as two working professionals with school-aged kids. My wife was good at her job, but unhappy and very stressed by the working atmosphere, and wanted to try running a small home business. We talked it through, and agreed that we could afford it, and she should quit.

After six months, it's working OK. She is obviously happier, and the kids are pleased that she's there for them more. However, it's a big hit to our finances. With both of us working, we filled all of our tax-advantaged accounts (2 401ks, a 401a and an HSA), and saved about the same amount in taxable accounts. With one of us working, we will likely fill my 401k and the HSA only, with no further savings. The single thing the kitces .com article is correct about, though, is that expenses can expand to fill income. Despite being generally careful with money, this is still an issue, particularly since we now have less money, but my wife has more time to spend it.

What is the correct way to view the decision, financially? Consider the loss of income, accounting for the difference in taxes paid. Then compare that against the expenses avoided - commuting costs, child care and whatever else. Consider other possible financial advantages, but everything else is a maybe, or just wishful thinking. For most working professionals, your hourly rate is much higher than the hourly cost of childcare and other help, but if one spouse's earning potential is lower, the comparison may be closer.

Money isn't everything though, so one parent staying at home is often still the right decision.
Thank you for your testimonial, appreciate the honest feedback. A little background on myself, I worked swing shift work for close to 6 years. For those of us who have done that, you understand the love/hate relationship with working abnormal working hours; but one thing is for certain, you can compartmentalize your life. I have been working 8-5 for close to 5 years now, newly married with a small child and another one on the way. I will be honest, I find 8-5 soul sucking and the "quality time" I was promised when getting off shift work was a ruse. My wife came to me years ago with a big debt free strategy, a desire to get her teaching license, and the interest in staying home for a while.....all of which I was on board with. We are still trying to figure out our life, where we want to settle and what we want to do. My wife may stay home for 6 months, 1 year, or forever...we just don't know. All we know is that we want to try to see if the family "machine" works better when one focuses on work, and the other focuses on the home. I am one who desires input and loves personal testimonials, good or bad. If I have not said it enough, thank you for everyone's input.
adding to this post. The cool thing is YOU have options. You have started a good savings habit, live below your means and cutting your spouses income will not be a big adjustment. Also it appears you guys are on the same page about spending/Goals etc. I'd say you are in good shape. You can see how things go in 6 mo, 1 year and then re-access. One thing is for your spouse to find connections outside of the house. She will need to be able to have conversations with adults and not "feel" stuck in the house. I think many times this is overlooked. Congrat's on #2 !
Don't let your outflow exceed your income or your upkeep will be your downfall.

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akblizzard
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Re: Going to one income-seeking testimonials

Post by akblizzard » Mon Jan 22, 2018 12:33 pm

BradJ wrote:
Sun Jan 21, 2018 6:59 pm
I find it hard to see how people have money to do anything after tithing, investing and kids. I joke with people about hiring a private investigator to follow me around and tell me what I’m doing wrong! Just venting, thank you everyone.
What you need is a budget (cheaper than a P.I.), I recommend and use YNAB.com. If you’re a Ramsey fan you will like the 21st century version of his envelope system.

bloom2708
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Re: Going to one income-seeking testimonials

Post by bloom2708 » Mon Jan 22, 2018 12:50 pm

The hardest thing for us was seeing our progress slow down.

We can still max my Pre-Tax 401k, Roth x 2 and HSA on my salary. We can't do much after that with 3 kids. After my wife left her job it was pretty clear that quickly saving up $5k for a trip or buying $3,000 of Total US in taxable after a paycheck was not going to happen. :annoyed

On the positive side, it slowed things down a lot. We felt like we were scrambling all the time with two working 50+ hour tech jobs. No school days, sick kids, work travel. You get by, but you feel like you are winging it (we were) on a lot of things

I think my wife will likely go back to work when the oldest two are off to college and the youngest can stay home alone. It will be nice to stomp the saving accelerator back down a bit, but we won't regret slowing things down for these key years.

+1 for Pre-tax 401k over Roth 401k.
Last edited by bloom2708 on Mon Jan 22, 2018 1:14 pm, edited 1 time in total.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Dottie57
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Re: Going to one income-seeking testimonials

Post by Dottie57 » Mon Jan 22, 2018 12:54 pm

KlangFool wrote:
Sun Jan 21, 2018 7:57 pm
BradJ wrote:
Sun Jan 21, 2018 7:18 pm
My current investments/savings are:
8% pre tax in 401k
4% post tax in Roth 401
4% in ROTH IRA
+40k in emergency fund
BradJ.

If you have 6 figures income, it rarely makes any sense to contribute to Roth 401K.

A) Max up your Trad. 401K

B) Put your tax savings into the Roth IRAs.

KlangFool

+1

I can't say it better. Just do it.

BradJ
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Re: Going to one income-seeking testimonials

Post by BradJ » Mon Jan 22, 2018 1:17 pm

bloom2708 wrote:
Mon Jan 22, 2018 12:50 pm
The hardest thing for us was seeing our progress slow down.

We can still max my 401k, Roth x 2 and HSA on my salary. We can't do much after that with 3 kids. After my wife left her job it was pretty clear that quickly saving up $5k for a trip or buying $3,000 of Total US in taxable after a paycheck was not going to happen. :annoyed

On the positive side, it slowed things down a lot. We felt like we were scrambling all the time with two working 50+ hour tech jobs. No school days, sick kids, work travel. You get by, but you feel like you are winging it (we were) on a lot of things

I think my wife will likely go back to work when the oldest two are off to college and the youngest can stay home alone. It will be nice to stomp the saving accelerator back down a bit, but we won't regret slowing things down for these key years.
I love how you mention the $5k trip. My wife and I are not people who have expensive hobbies, or any hobbies for that matter, but we loved going on one vacation a year (Rosemary beach, highly recommend). We understand that vacations are out of the question for this year and the next.

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luminous
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Re: Going to one income-seeking testimonials

Post by luminous » Mon Jan 22, 2018 1:53 pm

My husband has stayed home with the kids for 8 years while I work, and it is absolutely the best choice for us. The ability to have kids at home instead of in care all day, have him do chores like grocery shopping, plus the flexibility in our schedule all give us more ease and less stress as a family. We've had to forgo things like buying a house, but we have solid retirement and college savings and feel great out our balance of earning and being with our kids and each other.

He started working part time this past fall, as an experiment, and I was shocked at how much harder it has been. We've definitely been on Easy Mode up until now. We aren't sure yet if he'll keep working, either staying at part time or going to full time.

alfaspider
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Re: Going to one income-seeking testimonials

Post by alfaspider » Mon Jan 22, 2018 2:08 pm

Not Law wrote:
Sun Jan 21, 2018 6:36 pm
When we did it in the 80's, the loss of "take home" pay was 50% of spouse's gross wage. Eliminating commuting costs, day care and other such expenses made it pretty much a break even situation.
Keep in mind that "break even" situations may only apply to the short term. If the spouse who stays home intends to eventually go back to work, the eventual loss of income long term due to lack of career development can be significantly greater than just the foregone income during the time they took off. Also, if the breadwinner spouse loses their job, the stay home spouse may have more difficulty finding employment if necessary because most employers tend not to like candidates who have been out of the workforce. How badly that hurts may depend on the industry. A teacher may have greater flexibility to resume working on the same track after several years hiatus than an engineer (for example).
Last edited by alfaspider on Mon Jan 22, 2018 3:40 pm, edited 1 time in total.

Jack FFR1846
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Re: Going to one income-seeking testimonials

Post by Jack FFR1846 » Mon Jan 22, 2018 2:28 pm

I won't comment on whether you can/can't do it. We did it and some things we found.

Wife's car when commuting put 12k miles on it a year. Once SAHM, went to 18k a year.
Wife needed breaks. Ended up with both kids in part time day care. Still not working.
Getting a job to work around kids schedule is harder than keeping the job and having them yield a bit to deal with the kids.
Getting back in to the field (nursing) was a complete start over. She went from a manager to having peers with days of experience and pay to match.

For the most part, none of the savings people talk about were realized. All of the costs remained or increased.
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darrvao777
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Re: Going to one income-seeking testimonials

Post by darrvao777 » Mon Jan 22, 2018 2:40 pm

We just made this transition and love it

One of us focuses on work and the financial side

One of us focuses on the home and the kids

Not quite the norm amongst our peers but it has worked beautifully for us and we are both much happier since the change

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TierArtz
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Re: Going to one income-seeking testimonials

Post by TierArtz » Mon Jan 22, 2018 3:21 pm

We made the transition in 2005 when our first child was born. We went from Army pay + teacher salary to just Army pay (drop of about 1/3). Other than no longer having extra cash to invest in taxable mutual funds, we did not miss the 2nd paycheck. Go for it if you can after a careful budget review, and considering cost-cutting ideas! We waited a few years before opting for a bigger house.

Carl53
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Re: Going to one income-seeking testimonials

Post by Carl53 » Mon Jan 22, 2018 3:48 pm

It wasn't part of my plan but spouse stayed home occasionally working part time/partnering in a local small business (paid about $1 per hour)/volunteering for twenty-five years after getting a masters in economics and two years of in a corporate position. Spouse later developed RA. Two kids, both went to in-state universities where we largely funded their educations. We had a few long painful discussions on expenditures and did detail budgets for a few years. We did not take expensive vacations, buy new cars, but had a nice home that was paid off after ten years, were able to maintain our tithing and charitable donations, and made enough contributions to retirement (not maxed out most years) accounts such that I was able to retire just before my 55th birthday. I had a reluctant promotion or two and can say that we were blessed. We now live somewhat modestly, still have not bought any more new cars, travel out of the country perhaps once a year, feel good about being able to give money as we see fit to our adult offspring.
Last edited by Carl53 on Mon Jan 22, 2018 4:28 pm, edited 1 time in total.

TOJ
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Re: Going to one income-seeking testimonials

Post by TOJ » Mon Jan 22, 2018 4:10 pm

We went from DINK to single-income 1 kid, then 2 kids. I had to buck up and get a better job, but we're in roughly the same situation as the OP except with a more expensive mortgage. You can do it, but will have to adjust your expectations for savings. You learn to pound the pennies when it comes to monthly bill items like cable, internet, car insurance, auto insurance, wireless, etc. You will also have to learn to compromise on the wants. When you were making $150k, either of you could buy something and it not hurt the finances much. Now it will be more of a trade off. I can tell you that from experience, SAHMs do not just sit home and help count money. Expect a line item on the monthly budget for outings during the day that was not there before. Communication, reasonable expectations, and patience will all be required from both parents for it to work.

It's well worth it, though. My wife would be a shell of a person if we were rushing the kids around between commutes instead of spending that time with them. It also allows me to be more focused at work. I don't get calls from a daycare that a kid is sick and I need to go pick them up, for example. Some jobs aren't flexible enough for that kind of thing. That could be a stressful situation. I also know that my kids are well cared for, which is another concern off my plate.

Texanbybirth
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Re: Going to one income-seeking testimonials

Post by Texanbybirth » Mon Jan 22, 2018 4:21 pm

Hi OP,

We've been doing this for a little over 3 years now. We have a freshly-minted 3 yo and a 15-mo. I make roughly your income if I count a discretionary-to-the-company bonus, much less if not. (We don't plan for it, but it certainly helps!) Our mortgage is literally twice as much as yours (P+I+T+I), and yeah the gross tithe is our second biggest "bill" each month. (Makes me uncomfortable to mention it, too, but you asked for testimonials and mentioned it as an expense for your family also.) We save 15% gross into my 401k, and I have no pension. My retirement savings are a little less than half of yours after this GOOD market.

All that being said: neither of us would change our situation for the world, and we sleep very well at night. (It's probably some function of faith, regular exercise, chasing toddlers around the house, and temperament.) We could even make our situation work on quite a bit less, but of course some things would have to change.

The point of my post is to show you that people (even on BH) make it work on a lot less, and if it's truly a decision you've come to together with your wife, then you've got nothing to fear. You'll make it work. We pay off our CCs each month, and put away money for things like house repairs, Christmas gifts, and a new car. (We have two paid off new cars, so this fund is gonna grow for quite a while hopefully!) Klangfool and many others call it "pay yourself first", and I think it's a fantastic idea. We technically don't even really budget, beyond making sure the CCs can be paid off each month and the mortgage gets paid. Everything else is on auto-pilot. It's truly the fruits of a struggle-journey to come to a frugal perspective. I think y'all are probably doing much better than you imagine, and when you start budgeting you'll get categories aligned to where you can still take that vacation every once in a while. Do keep in touch and let us know how it goes! :beer

ETA: My wife is easily re-employable as a niche teacher, but has no plans or desires to work until at least the youngest is out of high school. (We're hopefully not done even having kids yet.) So my perspective isn't coming from someone counting the ticking clock until we can get our hands on her future earnings again. (Said in a greedy voice.) We're just taking it day by day. :happy
Last edited by Texanbybirth on Mon Jan 22, 2018 4:28 pm, edited 1 time in total.

runner3081
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Re: Going to one income-seeking testimonials

Post by runner3081 » Mon Jan 22, 2018 4:24 pm

Another testimonial here.

We went from two incomes down to one when our daughter was born. This was 5.5 years ago and there has not been any issues.

In fact, I am still on target to retire at or shortly 50.

Now, we are very frugal and our annual expenses hover right around $36K per year, so this helps.

At first, my wife was pushing to go back to work, but it just didn't make sense financially. I told her she could go for it, but also showed her that after taxes and daycare expenses, her actual take-home would be minimal. She hasn't really talked about that for the last 3-years and has gotten into a good routine and is exploring some "side hustles" she can do to make money.

For us, it works perfectly. Her being home allows me to focus on my job and not call out every-other-time our daughter is sick.

With that said, in another 5 or so years, I can't wait for her to work and plow all of her earnings into the 401K :)

denovo
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Re: Going to one income-seeking testimonials

Post by denovo » Mon Jan 22, 2018 4:32 pm

BradJ wrote:
Sun Jan 21, 2018 7:40 pm


Great advice, thank you for those. We currently only have internet, Netflix and amazon-very few monthly subscriptions.

We drive old cars, currently on the lookout to pay cash for a new (to us) car for my wife.

Groceries are a fixed budget item at $140/week (that’s everything from snacks to shampoo).

We are not big buyers when it comes to our little one, she’s a Tom-boy so we just let her go crazy outside at parks and in the neighborhood (free!).
Another thing that comes to mind. Make sure peer pressure is not a thing for you or your wife. In your age group, two-income households are going to be the norm probably, and the way it just going to work out math-wise, people in your peer group are going to afford more "consumption" than you.

denovo
Posts: 3763
Joined: Sun Oct 13, 2013 1:04 pm

Re: Going to one income-seeking testimonials

Post by denovo » Mon Jan 22, 2018 4:35 pm

alfaspider wrote:
Mon Jan 22, 2018 2:08 pm
Not Law wrote:
Sun Jan 21, 2018 6:36 pm
When we did it in the 80's, the loss of "take home" pay was 50% of spouse's gross wage. Eliminating commuting costs, day care and other such expenses made it pretty much a break even situation.
Keep in mind that "break even" situations may only apply to the short term. If the spouse who stays home intends to eventually go back to work, the eventual loss of income long term due to lack of career development can be significantly greater than just the foregone income during the time they took off. Also, if the breadwinner spouse loses their job, the stay home spouse may have more difficulty finding employment if necessary because most employers tend not to like candidates who have been out of the workforce. How badly that hurts may depend on the industry. A teacher may have greater flexibility to resume working on the same track after several years hiatus than an engineer (for example).
Also, the biggest factor, day care is much less of a issue and maybe goes down to zero when the kids are in school full-time. From a purely numbers standpoint, I suspect in 90 percent of situations it makes more sense when two spouses are working.

HIinvestor
Posts: 1400
Joined: Tue Apr 08, 2014 3:23 am

Re: Going to one income-seeking testimonials

Post by HIinvestor » Mon Jan 22, 2018 4:57 pm

I think it's very important for the spouse staying at home (in your case W) to try to keep herself networking and working at least part-time to keep options open if and when she wants (or has) to go back to work for financial or any other reason. Totally staying out of the job market will leave a gap in the resume and job skills and that person will need training and/or classes to be marketable again.

I did work part-time to try to keep skills but still had a bumpy time getting re-hired after being out of the workforce for a decade. It is definitely something worth exploring and trying if the family wants it and can be the best of all worlds when it is done successfully.

J295
Posts: 1323
Joined: Sun Jan 01, 2012 11:40 pm

Re: Going to one income-seeking testimonials

Post by J295 » Mon Jan 22, 2018 6:50 pm

We did it. Three kids through college and retired at 53.

Seama
Posts: 2
Joined: Mon Sep 04, 2017 1:39 am

Re: Going to one income-seeking testimonials

Post by Seama » Mon Feb 19, 2018 11:14 am

Whether you can or cannot depends almost 100% on your wife. She will/can increase or decrease your spending dramatically as a stay at home parent.

FWIW: we did it in 2006, in a HCOL area making around $65k. It was half our previous income, and we kept contributing 10% to charity and 10% to retirement (we are able to do much more now!). I made it my job to find the least expensive way to do everything. Our rent was higher than your mortgage, and we were still paying off our student loans. We are still on track to retire in our mid-fifties.

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