Dear wife quits job and now we are down to 1 income

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Applestock
Posts: 37
Joined: Wed Jan 24, 2018 8:46 am

Dear wife quits job and now we are down to 1 income

Post by Applestock » Wed Jan 24, 2018 9:51 am

Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.

*******************New Info********************************************

House worth 480k, mortgage = 121k
Retirement = 85k

Monthly Expenses:
Mortgage, Taxes, Insurance = 1896
Electric =135
Cable, Internet, Alarm = 165
Water = 80
Cell (2 phones) = 86
Car Insurance (2 cars) = 167*
Gas = 200
Car Maintenance (Unforeseen)= 75
Lunch and take out = 250
Groceries = 500
Sons formula, diapers, etc = 450
New Health Insurance cost = 975
Misc Exp. = 400
-Includes: Netflix(12)
Gym (32), Landscaper (80),
Pool supplies (20), subscriptions(25),Hygiene, house supplies, and maintenance (231)

TOTAL = 5296+ 200 (Unforeseen expenses) = 5579/ month

1. What can I cut out?
2. DW said she would be ok without health insurance(savings would be 300/ month). She is getting all her medical/ annuals done by end of month before her insurance is terminated. I didn't agree with her.
3. Should i still contribute to Roth IRA?
4. Any suggestions to lower health and home insurance?
5. Should I be including a 5k raise I was promised by my employer to take place in June2018? I did not account for it.
6. Should I be including tax return I will be getting back? Should be a couple thousand dollars.

*Adjusted car insurance amount
Last edited by Applestock on Thu Jan 25, 2018 8:32 am, edited 3 times in total.

Hikes_With_Dogs
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Re: Dear wife quits job and now we are down to 1 income

Post by Hikes_With_Dogs » Wed Jan 24, 2018 12:52 pm

I guess it depends what you and your wife ultimately decide is the right thing to do with your family. The good news is you are on pretty solid footing and don't have to make rash judgments. You have a healthy EF and have some time to do some soul searching and figure out the best course of action.

First, is your wife, in general, happy and healthy following pregnancy and birth? Make sure there is no PPD entering into the picture before you make big decisions.

Second, does your wife want to work? Or is she interested in staying home with the kiddo for awhile? Does she just want a different job?

Third, I'm guessing (but not sure) that you could get your expenses down quite a bit. It might be harder (canceling cable, going down to one vehicle, etc) than you expect but usually there's always room to trim. Especially since now you shouldn't have child care expenses. Check out MMM if you want to know more.

Fourth, at -700 a month, you could use your emergency fund to cover this deficit until your son is in school full time. That's not to say this a good idea but you are doing ok and have a large emergency fund so you DO have options.

Fifth, given the size of your EF, I would not stop retirement savings. I would stop extra contributions to the house payment.

Best of luck with whatever you decide.

miamivice
Posts: 2197
Joined: Tue Jun 11, 2013 11:46 am

Re: Dear wife quits job and now we are down to 1 income

Post by miamivice » Wed Jan 24, 2018 12:55 pm

How many kids do you and your wife want?

I don't know your area, but daycare for 1 kid costs around $20k/year aftertax (maybe $28k pretax.) If you are thinking about having a baby brother or sister at some point, you'll be paying about $56k pretax dollars in child care.

If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.

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dm200
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Location: Washington DC area

Re: Dear wife quits job and now we are down to 1 income

Post by dm200 » Wed Jan 24, 2018 12:58 pm

1. You seem in good shape to deal with this - short term at least.

2. Perhaps MOST important - what does SHE want to do?

3. IMO, paying down extra on the house is at the lowest priority
Last edited by dm200 on Wed Jan 24, 2018 1:00 pm, edited 1 time in total.

N10sive
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Re: Dear wife quits job and now we are down to 1 income

Post by N10sive » Wed Jan 24, 2018 12:58 pm

Can you change your withholdings from your paycheck now? Having a kid and reducing your gross income in half I imagine your taxes will be drastically different this year allowing to increase your withholdings from each paycheck and maybe be able to recoup the 700.

Agggm
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Re: Dear wife quits job and now we are down to 1 income

Post by Agggm » Wed Jan 24, 2018 12:59 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am
Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.
I'd go for #1.

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dm200
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Location: Washington DC area

Re: Dear wife quits job and now we are down to 1 income

Post by dm200 » Wed Jan 24, 2018 1:02 pm

If she chooses to stay at home, and wants to return to the workforce when child(ren) are in school, a big factor is how being away from employment may affect her career. For some career, it is very bad, while in others - she could go right back.

KlangFool
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Re: Dear wife quits job and now we are down to 1 income

Post by KlangFool » Wed Jan 24, 2018 1:03 pm

OP,

1) Move to a cheaper house or rent.

2) How much of the 5.5K is tied to the house?

3) What is the price of the house?

KlangFool

LadyIJ
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Joined: Thu Mar 06, 2014 8:00 pm

Re: Dear wife quits job and now we are down to 1 income

Post by LadyIJ » Wed Jan 24, 2018 1:03 pm

you can handle it - good for your wife. A 5 month old baby needs to be cared for by someone who loves it - you guys are young - cut expenses and she can go back to work in 5 years.

kerplunk
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Re: Dear wife quits job and now we are down to 1 income

Post by kerplunk » Wed Jan 24, 2018 1:04 pm

Sounds like she wants to be a stay-at-home mom for the rest of her life. Otherwise, she would/should have found a another job before quitting.

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WpgGuy
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Re: Dear wife quits job and now we are down to 1 income

Post by WpgGuy » Wed Jan 24, 2018 1:08 pm

miamivice wrote:
Wed Jan 24, 2018 12:55 pm
If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.

TravelforFun
Posts: 1962
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Re: Dear wife quits job and now we are down to 1 income

Post by TravelforFun » Wed Jan 24, 2018 1:13 pm

Applestock, $5,500 expenses a month? If this is after-tax amount, your income alone won't sustain it. If your wife decided to stay home, you're gonna have to find other cuts in your budget (childcare, entertainment, etc.), take on a part-time job, or do both. I did that every time we had a new child, and we have three kids.

TravelforFun

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HomerJ
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Re: Dear wife quits job and now we are down to 1 income

Post by HomerJ » Wed Jan 24, 2018 1:15 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am
Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.
You only list your emergency fund. Do you have substantial other assets?

If that $67,000 is 10% of your total money, I suppose you could spend $30,000 of it while the wife stays home for a few years. Not saving anything at all during that time will hurt, but if you already have a good chunk saved, it might be doable.

If that $67,000 is 50% of your total money, I think it would be a very bad idea for her to stay home for years.

I think the wife should look for a part-time job, but she can be picky which one she takes. You have some time with that large emergency fund.

It's one thing to stay home with the kids and spend and save less. It's quite another to stay home and bleed NEGATIVE 700 dollars every month.

If you can't get the expenses down farther, she's going to have to go back to work sometime. And soon, if you guys don't already have a big retirement account.

onourway
Posts: 2148
Joined: Thu Dec 08, 2016 3:39 pm

Re: Dear wife quits job and now we are down to 1 income

Post by onourway » Wed Jan 24, 2018 1:18 pm

WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm

This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
Agreed. Even if the spouse spends all take-home income on child-care, but can put away $10k/year in retirement funds, that translates to hundreds of thousands of extra dollars at retirement age for someone 33 years old. Not to mention the hit to future earnings.

miamivice
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Joined: Tue Jun 11, 2013 11:46 am

Re: Dear wife quits job and now we are down to 1 income

Post by miamivice » Wed Jan 24, 2018 1:20 pm

onourway wrote:
Wed Jan 24, 2018 1:18 pm
WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm

This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
Agreed. Even if the spouse spends all take-home income on child-care, but can put away $10k/year in retirement funds, that translates to hundreds of thousands of extra dollars at retirement age for someone 33 years old. Not to mention the hit to future earnings.
What if the mom doesn't want to work?

alfaspider
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Re: Dear wife quits job and now we are down to 1 income

Post by alfaspider » Wed Jan 24, 2018 1:23 pm

miamivice wrote:
Wed Jan 24, 2018 1:20 pm
onourway wrote:
Wed Jan 24, 2018 1:18 pm
WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm

This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
Agreed. Even if the spouse spends all take-home income on child-care, but can put away $10k/year in retirement funds, that translates to hundreds of thousands of extra dollars at retirement age for someone 33 years old. Not to mention the hit to future earnings.
What if the mom doesn't want to work?
What if the dad or other mom doesn't want to work?

matt fe2o3
Posts: 28
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Re: Dear wife quits job and now we are down to 1 income

Post by matt fe2o3 » Wed Jan 24, 2018 1:24 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am
Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.
I don't know what State you are in. If in California or a more progressive State wife should file for unemployment benefits citing working conditions after maternity leave. Basically it should be a slam dunk - though it may take some time - its usually retroactive.

In going that route - remove all emotion - state facts and hostile work conditions forcing her out as discriminatory - she should get benefits, or at least may get them. In Calif that's roughly 2k a month so that will temper the panic you see.

On your savings - go out and shop some CDs you can get anywhere from 1% to 3% depending on duration. Read the fine print - but usually you are oly out interest for if you take 40K over a couple years - yea it's not a lot but it could pay a few months of groceries. Stay conservative.

5500/month is pretty big nut. Re-evaluate what you can. DO NOT have her start a self employed/consulting gig unless you understand the self employment tax, local business license and sales tax issues - or you can find yourself poorer for the effort. Especially if not done right. The States, counties and cities mine IRS and tax board data and if you do it wrong it's expensive.

HIinvestor
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Re: Dear wife quits job and now we are down to 1 income

Post by HIinvestor » Wed Jan 24, 2018 1:25 pm

Your spouse can also consider whether there is anything she may want to do part time to help bring in income—rent a room in your home, watch another child or two, do some contracting work to bring in money and stay in her field, sell items online it at craft fairs, etc. I’d try to keep contributing SOME to retirement accounts so you can get the advantage of compounded savings.

The time when our youth are small is fleeting. Enjoy it! The memories are truly invaluable!

Dyloot
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Re: Dear wife quits job and now we are down to 1 income

Post by Dyloot » Wed Jan 24, 2018 1:25 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am
Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.
How are you doing on retirement accounts?

Even without knowing, I'll say you need to take care of your wife. Nothing good comes from a new parent who is experiencing additional stress (added to the stress of caring for a new child). Avoid strain on the marriage (and strain everywhere else) by helping your wife get back to a good place.

If you think you have challenges now, consider the challenges if your marriage falls apart.

mouses
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Re: Dear wife quits job and now we are down to 1 income

Post by mouses » Wed Jan 24, 2018 1:25 pm

It's too bad they didn't fire her, then she'd have unemployment coming in. I suspect they made her life miserable on purpose. If they had fired her, they'd probably be in some legal trouble ref maternity leave.

Update: I see Matt has a better take on this.

bloom2708
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Re: Dear wife quits job and now we are down to 1 income

Post by bloom2708 » Wed Jan 24, 2018 1:27 pm

I picture a young child stomping their foot "I don't want to work!" (Not the OP, but in reference to a spouse not wanting to work)

That is great IF your financial picture supports that. You take out a mortgage. You have to pay it or sell.

The worst part is, their 50 year old selves are the ones who will be miffed by near term decisions. The only thing we can do now is offer perspectives.

If the expenses were less than one salary, they have options. I'm not seeing that.
Last edited by bloom2708 on Wed Jan 24, 2018 1:30 pm, edited 1 time in total.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

miamivice
Posts: 2197
Joined: Tue Jun 11, 2013 11:46 am

Re: Dear wife quits job and now we are down to 1 income

Post by miamivice » Wed Jan 24, 2018 1:27 pm

alfaspider wrote:
Wed Jan 24, 2018 1:23 pm
miamivice wrote:
Wed Jan 24, 2018 1:20 pm
onourway wrote:
Wed Jan 24, 2018 1:18 pm
WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm

This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
Agreed. Even if the spouse spends all take-home income on child-care, but can put away $10k/year in retirement funds, that translates to hundreds of thousands of extra dollars at retirement age for someone 33 years old. Not to mention the hit to future earnings.
What if the mom doesn't want to work?
What if the dad or other mom doesn't want to work?
Uh, in the case of the OP, the OP is male and the wife is female. The wife was the one who quit, so I think it's not a sure thing whether she actually wants to work or not. If wanted to work, she probably would have lined a replacement job up before quitting her current job, so I suspect she wants to be a stay-at-home mom.

If she wanted to work, I'm not sure why she got into fights with management (those never turn out well) or submitted resignation papers.

DCChak
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Re: Dear wife quits job and now we are down to 1 income

Post by DCChak » Wed Jan 24, 2018 1:29 pm

HomerJ wrote:
Wed Jan 24, 2018 1:15 pm
You only list your emergency fund. Do you have substantial other assets?
This x 1000. Are you holding "Applestock" with substantial gains? What about your current retirement holdings and asset allocation? Any pensions? Expected inheritances?

All that said, you've probably got a bigger issue managing what appears to be postpartum depression in your wife. Might want to focus on helping with that first before making any rash housing or other financial moves.

onourway
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Re: Dear wife quits job and now we are down to 1 income

Post by onourway » Wed Jan 24, 2018 1:30 pm

miamivice wrote:
Wed Jan 24, 2018 1:20 pm
What if the mom doesn't want to work?
That's a family decision not a 'mom' decision. It's going to be a hard one when you are $700/month in the hole and no longer saving anything at all.

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dm200
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Re: Dear wife quits job and now we are down to 1 income

Post by dm200 » Wed Jan 24, 2018 1:30 pm

mouses wrote:
Wed Jan 24, 2018 1:25 pm
It's too bad they didn't fire her, then she'd have unemployment coming in. I suspect they made her life miserable on purpose. If they had fired her, they'd probably be in some legal trouble ref maternity leave.

Update: I see Matt has a better take on this.
Whether someone can successfully file for and collect unemployment (even if you quit or are fired for cause) depends on the details of the applicable state.

TwstdSista
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Re: Dear wife quits job and now we are down to 1 income

Post by TwstdSista » Wed Jan 24, 2018 1:31 pm

I think you really need to look at that $5500/month. Pick it apart, maybe post it over at MMM and then take to heart what they do with it.

tarmangani
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Re: Dear wife quits job and now we are down to 1 income

Post by tarmangani » Wed Jan 24, 2018 1:33 pm

mouses wrote:
Wed Jan 24, 2018 1:25 pm
It's too bad they didn't fire her, then she'd have unemployment coming in. I suspect they made her life miserable on purpose. If they had fired her, they'd probably be in some legal trouble ref maternity leave.

Update: I see Matt has a better take on this.
Yeah, true, she could argue she was constructively discharged.

coupleofcents
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Re: Dear wife quits job and now we are down to 1 income

Post by coupleofcents » Wed Jan 24, 2018 1:34 pm

Sorry to hear about the trouble for your wife. Good news is you have quite a large emergency fund given you monthly expenses. Don't feel bad to use it because that's what it is for.

I say in your situation to keep 6 months of monthly expenses (in case you lose your job), so that means you can spend down to $33,000 before you may want/need to consider doing something different. I think that gives you about 4 years if you are only depleting $700/month. I'm sure by then you will have a raise/your wife will find more work or part time work.

As far as concerns about house and retirement, I would not worry about paying down the house at all considering your low rate and only 10 years left at age 40. For retirement, I would only start once you are cash flow positive. That may be from your spouse going back to work, cutting your budget further, or future raises.

miamivice
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Re: Dear wife quits job and now we are down to 1 income

Post by miamivice » Wed Jan 24, 2018 1:35 pm

onourway wrote:
Wed Jan 24, 2018 1:30 pm
miamivice wrote:
Wed Jan 24, 2018 1:20 pm
What if the mom doesn't want to work?
That's a family decision not a 'mom' decision. It's going to be a hard one when you are $700/month in the hole and no longer saving anything at all.
The OP has $67,000 in a taxable account. If the mom takes a year off to spend with the kid, they might use like 12% of the taxable account. While $700 a month in the hole might not be easy, it's also not the end of the world for the OP since they have a large taxable account.

I feel that people here are having a hard time with what I'm saying. I am not passing judgment on family choices. All I am saying is that daycare is expensive and often can wipe out most or all of one's income, especially since daycare is paid for with mostly after tax dollars. Having a couple kids in daycare can easily equal the salary of one parent (usually but not always the moms).

Often moms stay home with the kids when they are infants and then go back to the workforce when the kids are older (maybe 1, 2, or 5). They have plenty of money to provide that as an option for the OP's family. By having a large amount of taxable, they've have options available.

I don't see it as the crisis everyone is seeing it.

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HomerJ
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Re: Dear wife quits job and now we are down to 1 income

Post by HomerJ » Wed Jan 24, 2018 1:37 pm

Another option might be to refinance the house to a new 30-year mortgage.

That could lower the monthly expenses quite a bit. Then, once she is working again, or you're making more money, you can make extra payments again.

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bottlecap
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Re: Dear wife quits job and now we are down to 1 income

Post by bottlecap » Wed Jan 24, 2018 1:39 pm

$700 in the hole every month means that you are in financial trouble. Get wife back to work part time to plug that leak and then figure out what you each want and what changes it will require.

Good luck,

JT

alfaspider
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Re: Dear wife quits job and now we are down to 1 income

Post by alfaspider » Wed Jan 24, 2018 1:42 pm

miamivice wrote:
Wed Jan 24, 2018 1:27 pm
alfaspider wrote:
Wed Jan 24, 2018 1:23 pm
miamivice wrote:
Wed Jan 24, 2018 1:20 pm
onourway wrote:
Wed Jan 24, 2018 1:18 pm
WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm

This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
Agreed. Even if the spouse spends all take-home income on child-care, but can put away $10k/year in retirement funds, that translates to hundreds of thousands of extra dollars at retirement age for someone 33 years old. Not to mention the hit to future earnings.
What if the mom doesn't want to work?
What if the dad or other mom doesn't want to work?
Uh, in the case of the OP, the OP is male and the wife is female. The wife was the one who quit, so I think it's not a sure thing whether she actually wants to work or not. If wanted to work, she probably would have lined a replacement job up before quitting her current job, so I suspect she wants to be a stay-at-home mom.

If she wanted to work, I'm not sure why she got into fights with management (those never turn out well) or submitted resignation papers.
My point was really that it's a family decision. Most people would probably prefer not to work if given the opportunity.

As an aside, if you can't stand your job, the best option is to start looking for a job while you currently have one rather than quit in a huff. Unfortunately, it sounds like it's too late for that.

onourway
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Re: Dear wife quits job and now we are down to 1 income

Post by onourway » Wed Jan 24, 2018 1:43 pm

miamivice wrote:
Wed Jan 24, 2018 1:35 pm

The OP has $67,000 in a taxable account. If the mom takes a year off to spend with the kid, they might use like 12% of the taxable account. While $700 a month in the hole might not be easy, it's also not the end of the world for the OP since they have a large taxable account.

I feel that people here are having a hard time with what I'm saying. I am not passing judgment on family choices. All I am saying is that daycare is expensive and often can wipe out most or all of one's income, especially since daycare is paid for with mostly after tax dollars. Having a couple kids in daycare can easily equal the salary of one parent (usually but not always the moms).

Often moms stay home with the kids when they are infants and then go back to the workforce when the kids are older (maybe 1, 2, or 5). They have plenty of money to provide that as an option for the OP's family. By having a large amount of taxable, they've have options available.

I don't see it as the crisis everyone is seeing it.
The point I and others were making is that even when childcare consumes all take home income, the real effect is typically much larger when you consider the entire picture. Easily to the tune of hundreds of thousands of dollars over a career.

The $67k emergency fund is great. But knowledge of the overall financial picture is essential. It might be a crisis if that's everything they have saved.

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Re: Dear wife quits job and now we are down to 1 income

Post by alfaspider » Wed Jan 24, 2018 1:47 pm

miamivice wrote:
Wed Jan 24, 2018 12:55 pm
How many kids do you and your wife want?

I don't know your area, but daycare for 1 kid costs around $20k/year aftertax (maybe $28k pretax.) If you are thinking about having a baby brother or sister at some point, you'll be paying about $56k pretax dollars in child care.

If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
I think that overstates daycare costs a bit. I pay $14,400 a year for my son in a major metro (perhaps things are worse in California or NYC). You may also qualify for tax benefits related to childcare costs.

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climber2020
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Re: Dear wife quits job and now we are down to 1 income

Post by climber2020 » Wed Jan 24, 2018 1:49 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am

Monthly Expenses: about 5.5k/ month
You need to get this down. A lot. Unless you bought a ridiculous house (very common, unfortunately), you should be able to reduce this number by quite a bit.

Can you break down your monthly expenses? I'm sure people can help point out areas where you can cut costs until your combined income goes back up.

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Re: Dear wife quits job and now we are down to 1 income

Post by miamivice » Wed Jan 24, 2018 1:51 pm

alfaspider wrote:
Wed Jan 24, 2018 1:47 pm
miamivice wrote:
Wed Jan 24, 2018 12:55 pm
How many kids do you and your wife want?

I don't know your area, but daycare for 1 kid costs around $20k/year aftertax (maybe $28k pretax.) If you are thinking about having a baby brother or sister at some point, you'll be paying about $56k pretax dollars in child care.

If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
I think that overstates daycare costs a bit. I pay $14,400 a year for my son in a major metro (perhaps things are worse in California or NYC). You may also qualify for tax benefits related to childcare costs.
Not intentionally. We are paying $18,000 a year for our 3 year old right now. Infant care would be more today, probably about $21,000. We have our child go to a good daycare in a less expensive town. Folks that have their kids go the expensive town pay about $36,000 a year for care ($3000 a month). It's expensive.

Most of this is post-tax dollars. We have a dependent care FSA where we can pay for $5500 (per family) of childcare pretax. I believe our income precludes other tax discounts.

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Re: Dear wife quits job and now we are down to 1 income

Post by N10sive » Wed Jan 24, 2018 1:54 pm

OP once you make the decision about the stay at home or whatever about the future and paint a clearer picture here about your financials, as HomerJ mentioned you could refinance to a 30 year mortgage. That puts you at 71 to have it paid off, while a temporary fix to allow your spouse to stay at home. If your wife starts working once your child goes to school, at least part time you could at least breathe easier, possibly still contribute to retirement accounts etc.

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Re: Dear wife quits job and now we are down to 1 income

Post by an_asker » Wed Jan 24, 2018 2:01 pm

Applestock wrote:
Wed Jan 24, 2018 9:51 am
Hi all,

First post so please be gentle.

Background Info:
Me: 41- Income 72k/yr
DW: 33- was making 70k/yr. Now 0.
Son: 5 months

Debt: Mortgage 10 yrs left @3.2%. No other debt.
Monthly Expenses: about 5.5k/ month
Emergency Fund: 67k in savings earning 0.0000001%

DW comes back from 3 month maternity leave and her job is not the same (DW states Management not treating her the same) Everyday she would literally comeback miserable. The final straw was when DW had a huge disagreement with Management. She submitted her resignation last Friday.

We already had a budget in place, but we sat down over the weekend to see what else can be cut down. We got our expenses down to 5.5k/month,we cut down retirement savings to 0, Extra principal payment towards house, etc.

We will be approximately -700 every month.

Options:
1. DW finds a full time job
2. DW finds a part time job
3. DW stays at home with Son

Any suggestions and or advice? What is the longest DW should stay at home with son?

I am concerned that we will not be saving for retirement or paying down house while wife is at home.
Not enough information to provide suggestions/answers/advice. Need to know at least:

- is DW planning to return to work? If not now, then when?
- what's DW's field? Is it easy or tough to get a job in that field?
- break out of monthly expenses to see which are necessary and which are fluff.

BTW, FWIW we've been there done that (with one exception - in our case, she didn't quit because of any disagreement; just wanted to spend more time with son). Years down the road, ... no biggie.

TravelGeek
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Re: Dear wife quits job and now we are down to 1 income

Post by TravelGeek » Wed Jan 24, 2018 2:30 pm

Staying at home and cutting income by 50% isn't an emergency, it's a life style choice/change. I wouldn't use the emergency fund to cover the cost of that. I would find a way to adjust my expenses/budget, or if that doesn't work, reverse the choice.

An emergency would be if the OP subsequently loses his job.

But overall there just isn't enough information/data in the OP's post to answer questions like "how long can wife stay home".

ICMoney
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Re: Dear wife quits job and now we are down to 1 income

Post by ICMoney » Wed Jan 24, 2018 2:32 pm

OP, congratulations on your growing family! Not sure the circumstances at your wife's former place of employment of course, but "mommy tracking" women is real and I appreciate that could be in play here. I'm sorry she's had to go through all of this at such a special time in your family's life.

I started a thread related to our stay-at-home mom decision a few weeks ago (viewtopic.php?f=1&t=235516&p=3680209) - the numbers and replies may be helpful for you to read as our numbers are relatively similar. I also listed out our expenses so maybe that could be a starting point for you to compare yours to (and read some of the replies we got related to expenses, as they were helpful).

Best,
ICM

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Re: Dear wife quits job and now we are down to 1 income

Post by Engineer250 » Wed Jan 24, 2018 2:33 pm

an_asker wrote:
Wed Jan 24, 2018 1:56 pm
+1! I would in fact go ahead and generalize it to "Bogleheads have a chip on their shoulders about expensive homes." Back when polls were permitted, there was a poll that suggested that - IIRC (my memory might be playing tricks with me) - the typical Boglehead house cost about 1.5 to 2 times the annual income.
Not surprised given the salaries folks on here tend to bring in often despite not living in expensive areas. Easy to keep your ratio down when you are somehow making six figures in an area where nice homes can be had for $150k. :D

I will be a jerk and point out everyone questions the house or the mortgage or the “high cost” state but fewer people point out the cost disadvantages of having kids. So be frugal in the approved Boglehead way :twisted:
Where the tides of fortune take us, no man can know.

soccerrules
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Re: Dear wife quits job and now we are down to 1 income

Post by soccerrules » Wed Jan 24, 2018 2:41 pm

take 30 days to breath. Let your wife unwind emotionally from the resignation/work situation. In 1-2 weeks you both will be in a better place to discuss next steps.
Take $700 from EF to cover expenses.

short answer. If you can not dramatically decrease expenses and/or increase your income to allow for a minimum of 10% of income to go to retirement account - your wife probably needs to go back to work fairly soon.

if you have BIG retirement accounts, then you might have some options. Also without knowing your $5,500 expense detail, hard to know if there are options there. I would go into expense reduction mode. Keep Life Insurance (assume Term) and then cut everything else to the bone that is non-essential.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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Re: Dear wife quits job and now we are down to 1 income

Post by Cuzz35 » Wed Jan 24, 2018 2:42 pm

miamivice wrote:
Wed Jan 24, 2018 1:35 pm
onourway wrote:
Wed Jan 24, 2018 1:30 pm
miamivice wrote:
Wed Jan 24, 2018 1:20 pm
What if the mom doesn't want to work?
That's a family decision not a 'mom' decision. It's going to be a hard one when you are $700/month in the hole and no longer saving anything at all.
The OP has $67,000 in a taxable account. If the mom takes a year off to spend with the kid, they might use like 12% of the taxable account. While $700 a month in the hole might not be easy, it's also not the end of the world for the OP since they have a large taxable account.

I feel that people here are having a hard time with what I'm saying. I am not passing judgment on family choices. All I am saying is that daycare is expensive and often can wipe out most or all of one's income, especially since daycare is paid for with mostly after tax dollars. Having a couple kids in daycare can easily equal the salary of one parent (usually but not always the moms).

Often moms stay home with the kids when they are infants and then go back to the workforce when the kids are older (maybe 1, 2, or 5). They have plenty of money to provide that as an option for the OP's family. By having a large amount of taxable, they've have options available.

I don't see it as the crisis everyone is seeing it.
I am with you Miamivice. Part of my family's decision to have her stay at home was that the incremental after-tax income she would be making after paying for daycare to watch our son 14 hours a day just wasn't worth it to us. Now, there were some other factors like having a son with autism, spouse being a nurse with 13+ hour shifts, me working 60 hour weeks with a 3 hour daily commute. But the point is you really can't boil it down to just finances unless you truly cannot afford to live on one income.

I would suggest to her to take some more time off from working and then considering doing something part time. Keeps her skills up, brings in some revenue but helps you manage your life better until the children are a little older and easier (in some ways versus others). As others have also said, I would too take a deeper look at expenses.

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Re: Dear wife quits job and now we are down to 1 income

Post by Redfactor » Wed Jan 24, 2018 2:46 pm

WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm
miamivice wrote:
Wed Jan 24, 2018 12:55 pm
If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
I wouldn't normally respond to internet trolls, but your criticism of the poster is entirely unfair and your comment is not at all 2018.

If your post is genuine, I believe you're deeply misguided and should study feminism, gender equality and progressivism more rather than lecturing about it.

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Re: Dear wife quits job and now we are down to 1 income

Post by Cuzz35 » Wed Jan 24, 2018 2:51 pm

WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm
miamivice wrote:
Wed Jan 24, 2018 12:55 pm
If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
How does this set a wrong example? What's wrong with a spouse, male or female deciding to stay home and raise their children? Would you have anything to say if it were a male deciding to stay home? I work all the time and my son tells me (he's 6) he doesn't want to work when he grows up because that's all I do.

Also, the poster quoted only said it was for a few years. Their children won't even remember their mother not working if she decides to do so.

We can all understand that some decisions don't make sense financially. Having kids is not a good thing to do financially speaking, but we do it anyway.

You can find folks on both sides that think they would have worked if they could go back and do it over and others that would say working wasn't worth it.

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Re: Dear wife quits job and now we are down to 1 income

Post by Hikes_With_Dogs » Wed Jan 24, 2018 2:57 pm

kerplunk wrote:
Wed Jan 24, 2018 1:04 pm
Sounds like she wants to be a stay-at-home mom for the rest of her life. Otherwise, she would/should have found a another job before quitting.
That is a bizarre assumption considering she hasn't posted here and there is scant little information about what she actually wants in this thread.

If my job was making me miserable every day of my life, and I was still recovering from having a baby, probably not getting enough sleep, lactating, and healing from childbirth and we were financially stable - I'd probably quit without another job lined us as well.

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Re: Dear wife quits job and now we are down to 1 income

Post by onourway » Wed Jan 24, 2018 2:58 pm

Cuzz35 wrote:
Wed Jan 24, 2018 2:51 pm

How does this set a wrong example? What's wrong with a spouse, male or female deciding to stay home and raise their children? Would you have anything to say if it were a male deciding to stay home? I work all the time and my son tells me (he's 6) he doesn't want to work when he grows up because that's all I do.

Also, the poster quoted only said it was for a few years. Their children won't even remember their mother not working if she decides to do so.

We can all understand that some decisions don't make sense financially. Having kids is not a good thing to do financially speaking, but we do it anyway.

You can find folks on both sides that think they would have worked if they could go back and do it over and others that would say working wasn't worth it.
In this case it doesn't sound like the family decided that one spouse should stay home and raise the children. The wife up and quit rather suddenly cutting the family income in half. Without a plan in place. Very different situations.

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KlingKlang
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Re: Dear wife quits job and now we are down to 1 income

Post by KlingKlang » Wed Jan 24, 2018 3:04 pm

Just a couple of small suggestions:

That $67k emergency fund could earn about $80/month in interest if you transferred it into a 1.40% online savings or money market account. Every little bit helps.

With your incomes basically cut in half and a new child your income tax bills should be dramatically lower. Have you factored this into your monthly expenses?

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Re: Dear wife quits job and now we are down to 1 income

Post by sergio » Wed Jan 24, 2018 3:04 pm

Don't mean to be patronizing in any way, but I'm just thinking what I'd do in your situation.

Seems to me like part time work would be the best option. Even just 15/hours a week @ $10/hour (Target, Starbucks, Bank Teller etc.) + any reduction in your income taxes, should be enough to cover the $700 shortfall. The jobs I suggested have fairly flexible schedules (she could work afternoons, evenings, some hours on weekends) to avoid any childcare expenses. While it's a substantial "downgrade" from her previous salary, it's what I would suggest to my wife if we were in the same situation to avoid being in a negative cash flow situation.

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Re: Dear wife quits job and now we are down to 1 income

Post by kjvmartin » Wed Jan 24, 2018 3:09 pm

WpgGuy wrote:
Wed Jan 24, 2018 1:08 pm
miamivice wrote:
Wed Jan 24, 2018 12:55 pm
If your wife is interested in raising them at home, you might find there isn't much difference financially whether she works or stays home for the next few years.
This is a very old fashion way of thought. Even if it’s break even, a spouse *should* continue to work to maintain their skills and career prospects, especially one who was pulling in 70k (!!). It is well understood that women take huge future earnings hits by doing this, it’s bad for equality, it’s bad for your future and it sets the wrong example for children (especially daughters).

This isn’t 1978, it’s 2018. Sorry to push back hard, on this but reasoning like this needs to be tempered. It’s old, it’s out of date.
People change, jobs change. Pregnancy and child birth = a lot of changes in a mom.

If a mom wants to stay home, that's a great goal. OP and I are in a very similar situation. Wife was plugging along in her well paid career and after childbirth, particularly with a special needs kid, thought processes change. This is not a negative. We did the same thing, sat down with the budget and came up short. I'll be picking up more hours in a new job to try and make this happen. Of course, if we were going to starve or be homeless this would be a different discussion. But, if the choice is between padding our savings, having newer cars and smart phones, etc. This is a no brainer. The kids come first.

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