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

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KATNYC
Posts: 434
Joined: Fri Apr 07, 2017 4:34 pm

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

Post by KATNYC » Thu Jan 25, 2018 10:11 am

Move your emergency funds to Lake Michigan Credit Union Max Checking for 3% with a few easy to automate hoops.
We have two accounts, 3% up to $15,000 each.

You have enough in the EF to cover the deficit for a while without making drastic changes or asking your wife to get a job. Give it a few weeks to settle down and then you need to have a heart to heart about more kids and determine who will work versus stay home. We know 2 stay at home dads and it works well for their families. Daycare in NYC is outrageous. One couple was paying $40K per year for 3 kids at once while others are paying $2k per month for 1 child (they have 2 now). Depending on career trajectory for you versus your wife, it may make sense for her to work and you take care of your son. Most doctors push women to have kids by 35 so if you are having more kids, that will likely be in 1-2 years. One of the dads we know went back to work once the kids were in school full-time. All of this depends on who can take the hit for being out of the workforce for 2-5 years without their skills becoming obsolete.

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

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

Post by Applestock » Thu Jan 25, 2018 10:20 am

cherijoh wrote:
Thu Jan 25, 2018 8:11 am
Applestock wrote:
Wed Jan 24, 2018 11:08 pm
1. How so? Please explain. My take home after taxes around 4.8k-4.9k/ month - 5.5k monthly expenses = -700 / month deficit.
2. Agree, only temporary path.
3. With wife's income we were around 9.2k/ month - 6.0K monthly expenses = 3.2K/ month surplus. I respectfully disagree that we not formerly ok. Please explain, maybe there s something I am not seeing.
4. Yes agree I need to cut expenses.
I originally thought you might be house poor and had taken on too much debt. With this new information, a couple things have become clear to me:
  • You appear to have confused tax withholding with what you owe in taxes. Unless you are confident that your wife will be back in a FT job within the month, i strongly suggest you redo your W-4 to free up some cash flow. This will more than likely eliminate all or most of your $700/month shortfall. (When she goes back to work, you can do another W-4 or just have more money withheld out of her salary). But it makes no sense to take money out of savings to give the government an interest free loan! :oops:
  • IMO You need to STOP throwing extra money at the mortgage and re-evaluate your financial priorities. (Especially if you are looking at a longer-term reduction in household income). You have 360K tied up in illiquid home equity, $67K in an underperforming savings account and $85K in a retirement account - in other words FULLY 70% of your net worth is tied up as equity in your house!! :shock: :shock: :shock:
  • Frankly, your current retirement savings are extremely skimpy for someone who previously had a $3200/month surplus and who has had the advantage of an extremely long bull run in the market. Yes I understand that the extra money was going towards your mortgage, but you have been throwing away tax-advantaged space that you will NEVER get back. You've also been squandering away the time that a healthy retirement nest egg would have to grow. You can't afford to wait 10 years for your mortgage to be paid off before starting to seriously save for retirement! If you had been maxing out your retirement savings vehicles, you would have had the breathing room to cut back on your contributions without endangering your ability to retire in the future.
  • You need to look at that budget one more time. There is no way that you can only cut out 8% of your expenses. Did you account for the commuting expenses attributed to your wife's former job? Discretionary expenses like entertainment, etc.? Buying stuff for the baby at full retail prices? Too many people facing job loss wait too long to cut back on the discretionary expenses build into their budget on autopay - premium cable channels, expensive cell phone plans, etc.
1. How many withhholdings can I claim without giving a free loan ? Maybe 3?
2. Yes, I will take another look at expenses.

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

Post by lostdog » Thu Jan 25, 2018 10:56 am

How well does she handle toxic corporate environments? Maybe try something different if she couldn't handle management.
Hear the clock ticking? That’s your life flying by while you listen to market pundits and watch stock prices fluctuate. -Humble Dollar

tarmangani
Posts: 75
Joined: Thu Dec 28, 2017 10:14 am

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

Post by tarmangani » Thu Jan 25, 2018 11:12 am

cherijoh wrote:
Wed Jan 24, 2018 11:11 pm
tarmangani wrote:
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.
Everyone seems to be taking the OP's wife's statement as face value that management changed and made it a hostile work environment. I don't doubt that that his wife was miserable - but how much of that was post-partum depression, lack of sleep, and added stress on her part related to being a new mom? Without more details, I wouldn't rate her chances of making a case for unemployment very high since she apparently got into an argument with management and quit.
I brought it up as a possibility for OP. Obviously I'm taking the wife's statement at face value because we are here to advise OP. If the claim has no merit, then he will find that out himself. Results involve the facts of the case.

That she got in an argument with management and quit doesn't matter if it comes after a prolonged period of mistreatment. In fact, I could see an argument that her employer, frustrated with having to deal with a new mom and all of the burdens it potentially brings, began to abuse her in the hopes that she would get fed up and quit. That is the definition of a constructive discharge. She might even have a case for discrimination, now that I think about it, depending on her state, especially if she had requested some manner of accommodation after her maternity leave and the company was in a position to grant it. In Massachusetts, where I've studied this subject, if she genuinely felt that she had been treated disparately because of her circumstances (female, new mother), then she should visit an MCAD office for an initial hearing. Other states I would have no idea.

For all we know the employer was great, understanding, and she was completely in the wrong. We don't know. I am trying to tell OP that if his wife really was mistreated, and this mistreatment especially could be linked to her circumstances, then she may have legal recourse.

N10sive
Posts: 583
Joined: Thu May 05, 2016 6:22 pm

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

Post by N10sive » Thu Jan 25, 2018 11:17 am

OP I believe you are in a better position than you think given your expense however you are very light on your retirement which is the biggest concern. There isn't much room to save for that unless you refinance or recast your mortgage. Many numbers like your misc expense and unforeseen expenses are $400. That's half of your deficit. But I don't believe you necessarily will hit those numbers. Plus that is what your 67k emergency fund is for.

Cable, Internet, Alarm = 165 - could you get rid of the alarm?
Car Insurance (2 cars) = 167* -Have you shopped around for car insurance lately?
Gas = 200 - I imagine this could go down as well(unless it already has)
Car Maintenance (Unforeseen)= 75 - This item is nice to budget for but you can take off, that is what your emergency fund is for. Also having two cars and a stay at home mom you could always use one car if the other is down.
Lunch and take out = 250 - if your wife stays at home, she can meal prep lunches more often for you
Groceries = 500 - this seems in the realm of a 3 person family.
Misc Exp. = 400
-Includes: Netflix(12)
Gym (32), Landscaper (80),
Pool supplies (20), subscriptions(25),Hygiene, house supplies, and maintenance (231)

I would get rid of the gym and landscaper. If you absolutely need the landscaper, what about less frequent use? Every other week, every third week etc?

As I mentioned very early on, get your W-4 changed(I believe you are going to do this). Recasting your mortgage/refinancing would be my next step. From there you can live comfortably and save for retirement.

*And FYI are you using any cash back credit cards? If you aren't research ones and I would suggest using that for all expenses. You could probably get 50 dollars cash back a month just from that.

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

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

Post by Applestock » Thu Jan 25, 2018 12:28 pm

lostdog wrote:
Thu Jan 25, 2018 10:56 am
How well does she handle toxic corporate environments? Maybe try something different if she couldn't handle management.
She loved her job. She had really good relationship with management, her staff, clients, etc. Her relationship with management deteriorated when she got back from maternity leave. The job wasn't the problem it was the work environment with upper management only.
Last edited by Applestock on Thu Jan 25, 2018 12:38 pm, edited 1 time in total.

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

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

Post by Applestock » Thu Jan 25, 2018 12:30 pm

tarmangani wrote:
Thu Jan 25, 2018 11:12 am
cherijoh wrote:
Wed Jan 24, 2018 11:11 pm
tarmangani wrote:
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.
Everyone seems to be taking the OP's wife's statement as face value that management changed and made it a hostile work environment. I don't doubt that that his wife was miserable - but how much of that was post-partum depression, lack of sleep, and added stress on her part related to being a new mom? Without more details, I wouldn't rate her chances of making a case for unemployment very high since she apparently got into an argument with management and quit.
I brought it up as a possibility for OP. Obviously I'm taking the wife's statement at face value because we are here to advise OP. If the claim has no merit, then he will find that out himself. Results involve the facts of the case.

That she got in an argument with management and quit doesn't matter if it comes after a prolonged period of mistreatment. In fact, I could see an argument that her employer, frustrated with having to deal with a new mom and all of the burdens it potentially brings, began to abuse her in the hopes that she would get fed up and quit. That is the definition of a constructive discharge. She might even have a case for discrimination, now that I think about it, depending on her state, especially if she had requested some manner of accommodation after her maternity leave and the company was in a position to grant it. In Massachusetts, where I've studied this subject, if she genuinely felt that she had been treated disparately because of her circumstances (female, new mother), then she should visit an MCAD office for an initial hearing. Other states I would have no idea.

For all we know the employer was great, understanding, and she was completely in the wrong. We don't know. I am trying to tell OP that if his wife really was mistreated, and this mistreatment especially could be linked to her circumstances, then she may have legal recourse.
We are in Florida.

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

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

Post by Applestock » Thu Jan 25, 2018 12:34 pm

N10sive wrote:
Thu Jan 25, 2018 11:17 am
OP I believe you are in a better position than you think given your expense however you are very light on your retirement which is the biggest concern. There isn't much room to save for that unless you refinance or recast your mortgage. Many numbers like your misc expense and unforeseen expenses are $400. That's half of your deficit. But I don't believe you necessarily will hit those numbers. Plus that is what your 67k emergency fund is for.

Cable, Internet, Alarm = 165 - could you get rid of the alarm?
Car Insurance (2 cars) = 167* -Have you shopped around for car insurance lately?
Gas = 200 - I imagine this could go down as well(unless it already has)
Car Maintenance (Unforeseen)= 75 - This item is nice to budget for but you can take off, that is what your emergency fund is for. Also having two cars and a stay at home mom you could always use one car if the other is down.
Lunch and take out = 250 - if your wife stays at home, she can meal prep lunches more often for you
Groceries = 500 - this seems in the realm of a 3 person family.
Misc Exp. = 400
-Includes: Netflix(12)
Gym (32), Landscaper (80),
Pool supplies (20), subscriptions(25),Hygiene, house supplies, and maintenance (231)

I would get rid of the gym and landscaper. If you absolutely need the landscaper, what about less frequent use? Every other week, every third week etc?

As I mentioned very early on, get your W-4 changed(I believe you are going to do this). Recasting your mortgage/refinancing would be my next step. From there you can live comfortably and save for retirement.

*And FYI are you using any cash back credit cards? If you aren't research ones and I would suggest using that for all expenses. You could probably get 50 dollars cash back a month just from that.
Defitnetly agree very light on retirement. Agree I do not think I will hit the unforeseen expenses which should bring monthly expenses down (I just wanted to budget those items just in case). I need to do some more shopping around for insurances and see what else I can cut. Florida is really hot and I got a big yard I'll keep landscaper for now. Plus I do not have any of the tools or equipment. Yup using cash back already.

tarmangani
Posts: 75
Joined: Thu Dec 28, 2017 10:14 am

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

Post by tarmangani » Thu Jan 25, 2018 12:44 pm

Applestock wrote:
Thu Jan 25, 2018 12:30 pm

We are in Florida.
Florida doesn't have, uh, the best reputation, but unlike some states they do have a Commission: http://fchr.state.fl.us/fchr/complaints__1/employment

She presumably would file discrimination under "Pregnant or condition related to pregnancy or childbirth." Now whether you all pursue that route really does depend on the facts of the case. In my research of Massachusetts, which is clearly one of the more liberal states, about 90% of employment-based discrimination cases get tossed for a lack of Probable Cause. Of the remaining 10%, most are mediated (good), withdrawn to court (neutral), or dismissed (sad face). Of the few that make it to a public hearing, the employer prevails almost 60% of the time. So the odds are stacked against the complainant, although that's probably because 1) most filings are spurious, just vindictive/angry and 2) the overburdened agency cannot investigate all cases thoroughly. So, again, if she really does have a strong case, I'd consider filing, but only if honestly believe she was constructively discharged, and not as her husband but as a neutral third-party.

I don't know anything about unemployment insurance especially in that state.

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

Post by JuniorBH » Thu Jan 25, 2018 12:54 pm

sbh8 wrote:
Thu Jan 25, 2018 2:43 am
Btw, I agree with the previous poster that your budget for formula and diapers seems high.
This was my first takeaway also. Coming from someone with a 15mo old, I would expect that estimate is about $200 too high. Doesn't change the larger discussion, but along with some other tips, might get you back to break-even.

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

Post by JGoneRiding » Thu Jan 25, 2018 1:06 pm

I too have a infant at home. We do not spend 450/month on baby stuff.

Also I would cut cable immediately but keep internet and Netflix. Get whatever you can with an attanea.

Those would be my too target itemd

I would make putting enough into 401k to get match top priority.

So yesterday I would move the emergency fund to ally yo get 1.15% but on that much money it would really add up

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

Post by getthatmarshmallow » Thu Jan 25, 2018 1:27 pm

Do NOT go without health insurance. Medical emergencies bankrupt people. Don't be pennywise and pound-foolish.

Looking at your budget, I think the biggest areas which you're likely to be able to trim in the short term are groceries and baby supplies. Kids are pricey, not doubt, but I'm not seeing $450 on diapers and formula as being plausible. Get diapers from Target or Costco, and if your kid doesn't have any sensitivities, generic formula is most likely fine. Groceries vary a lot by area, but I'm feeding 4 on about $300 per month, and we eat well. If your wife is at home it will probably be easier for you both to cook and prep lunches. Frozen veggies, milk, eggs, chicken, and other staples are pretty cheap. Gas will go down if she's not commuting, and you can probably do better on car insurance (although that varies a lot by locale.)

Take the "surprises" out of your budget -- that's what the emergency fund is for. And for the moment, don't pay extra on the mortgage.

Contrary to some other posters, I wouldn't cut the gym unless you have a plan to continue to exercise at home, as it's a good way to increase your health and relieve stress. The Netflix budget is not going to break you over two months. I'd be inclined to get rid of the landscaper.

If she decides she wants to stay home, and you want to make that work, the housing expense might be the next place to look.

cherijoh
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Location: Charlotte NC

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

Post by cherijoh » Thu Jan 25, 2018 2:16 pm

Applestock wrote:
Thu Jan 25, 2018 10:20 am
1. How many withhholdings can I claim without giving a free loan ? Maybe 3?
2. Yes, I will take another look at expenses.
The new tax law changed withholding, so I don't know what the answer is for 2018. But in previous years you might have added 2 - one for your wife who is no longer working and 1 for the baby. You could have also had allowances for the difference between your itemized deduction and the standard deduction.

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

Post by celia » Thu Jan 25, 2018 3:01 pm

Jags4186 wrote:
Thu Jan 25, 2018 7:32 am
I might suggest you consider explaining to her that she made this decision and there are ramifications. If she wants to live XYZ lifestyle she needs to work or she needs to downgrade. And what you think matters to. I discussed with my wife before we got married that her being a full time SAHM was not in the cards as I couldn’t handle the pressure, nor did I have a desire to handle the pressure, of it being all on me. If that was a dealbreaker then it was good to know before we tied the knot.
researcher wrote:
Thu Jan 25, 2018 8:51 am
Applestock wrote:
Wed Jan 24, 2018 6:09 pm
The plan was always for her to go back to work after her maternity leave. She loved her job before maternity leave when she came back things changed.
Once your first child is born, even well thought out plans tend to change drastically.

You need to have a heart-to-heart with your wife and figure out exactly what you want as a family.
Most of the suggestions you've received so far are completely irrelevant until this happens.
Your current situation is not a HIS or HER decision. It must be a joint decision. It may take place over a period of time, not just in one sitting. And the joint plan will evolve over time. After all, you both need to live with the new "normal" and be supportive of it. Just do what is best for the family while recognizing you are both going through a life change. You have good resources for your age and seem flexible enough to make some changes. Since child care can be a 24-7 responsibility, I'm sure you will do your part in being a good parent too.

Now, since we are talking about budgets here, don't forget that you both need life insurance and disability insurance. If you think things are tight now, imagine what it would be like if you or your wife were no longer here. How would the survivor be able to continue? Start by seeing what your options are through your company since that would be group rate.
AntsOnTheMarch wrote:
Thu Jan 25, 2018 9:55 am
One last thing: I believe much of the saving advice bandied about is no longer valid. Young people can’t follow grandma’s advice on how she survived the depression by patching clothes and growing vegetables in her garden.

Hey, what's wrong with patching clothes and growing your own vegetables? I do that all the time. :happy
But I agree with the rest of the comparisons to past generations.

ze233
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Re: Dear wife quits job and now we are down to 1 income

Post by ze233 » Thu Jan 25, 2018 8:05 pm

Agreed as well. We saved a lot of money by buying Costco diapers and Costco brand formula. Their formula is made by the same manufacturers of Similac. Our newborn had no problems with it.
JuniorBH wrote:
Thu Jan 25, 2018 12:54 pm
sbh8 wrote:
Thu Jan 25, 2018 2:43 am
Btw, I agree with the previous poster that your budget for formula and diapers seems high.
This was my first takeaway also. Coming from someone with a 15mo old, I would expect that estimate is about $200 too high. Doesn't change the larger discussion, but along with some other tips, might get you back to break-even.

Saving$
Posts: 1611
Joined: Sat Nov 05, 2011 8:33 pm

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

Post by Saving$ » Thu Jan 25, 2018 9:13 pm

Wow - I'm shocked by some of the responses. The suggestions of moving into a townhouse, drastically changing your life, etc are, in my opinion, far too premature.

OP, you are ok. You have a healthy emergency fund, and you now have a TEMPORARY situation in which you will use it. That is why you have it.

You have an infant, a wife whose hormones are changing drastically, and an entire new family dynamic. Give this situation 2-6 months to mature. At the very worst, at the end of six months, you will have used $4200 of your emergency fund, which is less than 10% of it.

In the meantime,
1. Emergency fund to a high yield savings
2. Wife MUST have health insurance
3. Change your withholdings at work
4. Try to cut some out of that budget. Your wife may have time to research a better deal on internet, cellphone (Comcast combined plan?), cable (try OTA - with Netflix, it works), etc. Maybe you can get rid of the landscape maintenance. You know that some of that etc. could be cut - just work on it and see how you do.
5. Look into resetting your mortgage; it might be worth it if it is no or low cost. If they refuse, get data on refinancing, but don't pull the trigger

Reassess periodically. Maybe in 2 weeks your wife wants to start looking for another full time job; maybe not. After a few months your wife and you will know more about what she wants to do long term. If it is stay home, you will have a better handle on your budget and you will know what it takes to make that work.

In summary, use the emergency fund TEMPORARILY (give it 6 months) and enjoy your infant and family...

MMMsentMe
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Joined: Sat Jun 04, 2016 3:32 pm

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

Post by MMMsentMe » Thu Jan 25, 2018 10:41 pm

getthatmarshmallow wrote:
Thu Jan 25, 2018 1:27 pm
Do NOT go without health insurance. Medical emergencies bankrupt people. Don't be pennywise and pound-foolish.

Looking at your budget, I think the biggest areas which you're likely to be able to trim in the short term are groceries and baby supplies. Kids are pricey, not doubt, but I'm not seeing $450 on diapers and formula as being plausible. Get diapers from Target or Costco, and if your kid doesn't have any sensitivities, generic formula is most likely fine. Groceries vary a lot by area, but I'm feeding 4 on about $300 per month, and we eat well. If your wife is at home it will probably be easier for you both to cook and prep lunches. Frozen veggies, milk, eggs, chicken, and other staples are pretty cheap. Gas will go down if she's not commuting, and you can probably do better on car insurance (although that varies a lot by locale.)

Take the "surprises" out of your budget -- that's what the emergency fund is for. And for the moment, don't pay extra on the mortgage.

Contrary to some other posters, I wouldn't cut the gym unless you have a plan to continue to exercise at home, as it's a good way to increase your health and relieve stress. The Netflix budget is not going to break you over two months. I'd be inclined to get rid of the landscaper.

If she decides she wants to stay home, and you want to make that work, the housing expense might be the next place to look.
+1

Do not go with out health insurance. Buy the staple groceries in bulk; contrary to popular belief, you can eat healthy for relatively cheap. I would also cut the dining out in half at a minimum.

I agree with keeping the gym membership as well. $32 to maintain your health and sanity is well worth it. And $12 for Netflix as entertainment would be foolish to cut.

As mentioned by several others, be patient and do not rush anything. Have an open conversation with your wife and take some time to think about what you discussed before you make any decisions.

Twood
Posts: 80
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Re: Dear wife quits job and now we are down to 1 income

Post by Twood » Thu Jan 25, 2018 11:39 pm

I saw budget cutting measures of more groceries / food prepared at home instead of eating out. Same type of idea works for baby; breastfeeding is much cheaper than formula. And cloth diapers are much cheaper than disposables.

Enjoy the time with your new baby, and I hope sleep comes to your household soon (at least, that was a big problem for us).

mushripu
Posts: 2
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Re: Dear wife quits job and now we are down to 1 income

Post by mushripu » Fri Jan 26, 2018 8:35 am

Have you considered that you are going to get a $2000 tax credit for the baby with the next tax cuts.
You are also likely to get a 1000 dollar tax cut in the tax slabs.
With that your deficits looks smaller now (700*12) - 3000 = 5400.
With some spending cuts you shall get through without spending the savings.

halfnine
Posts: 856
Joined: Tue Dec 21, 2010 1:48 pm

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

Post by halfnine » Fri Jan 26, 2018 4:43 pm

Saving$ wrote:
Thu Jan 25, 2018 9:13 pm
Wow - I'm shocked by some of the responses. The suggestions of moving into a townhouse, drastically changing your life, etc are, in my opinion, far too premature.

OP, you are ok. You have a healthy emergency fund, and you now have a TEMPORARY situation in which you will use it. That is why you have it.

You have an infant, a wife whose hormones are changing drastically, and an entire new family dynamic. Give this situation 2-6 months to mature. At the very worst, at the end of six months, you will have used $4200 of your emergency fund, which is less than 10% of it.

In the meantime,
1. Emergency fund to a high yield savings
2. Wife MUST have health insurance
3. Change your withholdings at work
4. Try to cut some out of that budget. Your wife may have time to research a better deal on internet, cellphone (Comcast combined plan?), cable (try OTA - with Netflix, it works), etc. Maybe you can get rid of the landscape maintenance. You know that some of that etc. could be cut - just work on it and see how you do.
5. Look into resetting your mortgage; it might be worth it if it is no or low cost. If they refuse, get data on refinancing, but don't pull the trigger

Reassess periodically. Maybe in 2 weeks your wife wants to start looking for another full time job; maybe not. After a few months your wife and you will know more about what she wants to do long term. If it is stay home, you will have a better handle on your budget and you will know what it takes to make that work.

In summary, use the emergency fund TEMPORARILY (give it 6 months) and enjoy your infant and family...
This. Sort out some of the low hanging fruit but save the rest of the decisions for 6 months.

e5116
Posts: 401
Joined: Mon Oct 05, 2009 11:22 am

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

Post by e5116 » Fri Jan 26, 2018 7:32 pm

OldSport wrote:
Wed Jan 24, 2018 10:04 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.
$28k daycare for 1 kid?? Where is this?? That is crazy expensive!! A top notch program in my area is ~$1k/month before tax.
I wish I could find daycare for $1k/month. That's unheard of here (Chicago and its surroundings suburbs -- certainly not a super HCOL place). The more expensive ones run about $2300/month for an accredited one for newborns as IL has a strict caregiver/child ratio regulations. There also are limited options that stay open past 5:30 which is needed if you have a 9-5 job with a commute. It goes down in price about $150/$200 for the monthly fee after the first year though (as the ratio is allowed to be larger) so by the time they're 3 it's more like $1700. We found daycare at the Y for a more reasonable $1850/month for newborns. I do know people who get "in home" daycare (not licensed) for closer to $1300 but those usually require much more flexible jobs and pickup closer to 5.

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

Post by Boglephool » Fri Jan 26, 2018 10:56 pm

OP,
People here have already given you lot of good financial advice so I will refrain from doing that. What I will tell you is to focus on your Wife more right now. She already will be having so many mixed thoughts about leaving job plus stress that taking care of an infant creates, bringing all these financial stress on top of it would not be good IMHO. She needs you most right now and to support her decision. You have to be the person to say it will all be OK.
As for practical matters,You have the EF, use it for this emergency temporarily and slowly figure out what to do in a month or two when you guys can discuss it more objectively. Don't make decisions in panic mode.In next couple of months, you will also have more idea about your expenses with one spouse at home, tax cut relief and other ways to save more to reduce the monthly expense deficit.
We became one income household just before our first child was born and remained like that for 9 years. It happened in 2006 only, not that far in time. My salary in the beginning was in same range as you have today. Before my wife left job, we did discuss and decided what we had to do to manage household in one salary and it worked well without any undue hardship. Keep in mind, when both of you work, you have more expenses for various reasons as well as more taxes. Your take home will increase little bit now, so if you can reduce some expenses over course of next few months after analysis, you should be OK.
Look on positive, your kid and wife gets to spend time with each other more. Think of all the emotional satsfaction she will get, IMHO its priceless. Don't worry, everything will turn out fine in few years.
Good Luck with everything!

Nate79
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Re: Dear wife quits job and now we are down to 1 income

Post by Nate79 » Sat Jan 27, 2018 12:19 am

We went to one income about 2 months before we had our baby a few months ago. For about 1 year before I really dug down and trimmed our budget. Sold things we didn't need, cut down debt, cut cable, subscriptions, cell phones, etc.

When the baby came we really watched the budget for baby items like diapers (cloth diapers and cheapest disposables we could find), formula (Costco is super cheap), etc. We also watched Craigslist for any used item, hand me downs from family and friends, etc.

It can be done.....

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

Post by ClaycordJCA » Sat Jan 27, 2018 1:13 am

I’m assuming your child and you have medical insurance through your employer. Can you add your wife to that coverage? If so, how does that compare to continuing her insurance under COBRA? All of you need medical insurance - not having it could exhaust your savings in a day or two if hospitalized.

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

Post by thefireguy » Sat Jan 27, 2018 1:33 am

My wife and I have an 8 month old and she had a similar ish experience in her work life. I knew she was pretty much done with her prior job, but being away from that environment (very high stress nursing position) for 3 months expeditied the process.

She was only back for a month or two and has now moved to a lower stress part-time position. Is it perfect - no, no job is. But she doesn’t have 12 hour shifts anymore and it fits well in our specific situation. I don’t get to save quite as much as previous (welcome to the world of having kids - amirite?) but we still make it work.

We have other friends with babies that both work FT on opposite schedules and barely see each other. I’d personally hate that. But everyone has a different situation and different goals so I’m not going to judge. Just grateful for what we have.

It sounds like you guys are on the same page and your wife doesn’t necessarily even want to stay home? I think being open and honest with each other is #1.

For example - we both agree if we have another child and have more than one at day-care at the same time (ouch! :shock:) then she is going to have to move to full-time. 2 full-time day-care bills and a part-time working momma won’t work well financially for us. That instance is at least 2 years away but we are talking about it now.

If you are both connected that she will go back to work, remember that your current situation is a short-term solution and EXACTLY why you have that big juicy emergency fund balance.

If you all decide that it’s best for her to stay home FT, you just have to remember something will have to give financially. Maybe it’s pausing retirement (that’d be a tough pill for me since it extends timeline to financial independence) or maybe it’s refinancing the house and/or moving.

Good luck - don’t get lost in the forest among the trees. She needs medical insurance - don’t make a mistake on the big stuff like that. The landscaping thing I’m with you, it’s not that big of a deal in the scheme of things and it’s also time you can spend with your family or doing something else (perhaps even a side hustle as a family).

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

Post by fossil_fuel » Sun Jan 28, 2018 12:41 am

As others have mentioned, the shortfall would largely be eliminated by refinancing or recasting into a new 30-year mortgage. You don't need to take 30 years to pay it off, rather pay it down aggressively in a few years when you have more cashflow available. Health insurance is a must, do not go without it under any circumstances. With your large emergency fund and large amount of home equity, I would say that you are in a pretty decent position financially.

I wouldn't worry about trying to save much for the next 3-4 years. Outside of Bogleheads, few families with very young children are able to put much money aside until the children are in school full-time. Either one parent is staying at home or they are paying $1,500+ per month in daycare fees. Make it a goal to at least put enough in 401(k) to get the full company match (if any is available).

The bigger issue right now is your relationship with your spouse. Up until now, you were both working full-time in equally-paying jobs. Were you also both sharing duties 50/50 around the house, including nighttime feeding and care of the infant? If one spouse is getting significantly less sleep than the other, stress and resentment can build quickly. Does she have a support network, friends, family and especially grandparents who are able and willing to help out occasionally? How well does your baby sleep during the night? Some infants are extremely poor sleepers, resulting in parents (especially mothers) who are fatigued to the point that trying to manage two demanding careers is physically and mentally unhealthy for both the parents and child.

I'm not saying any of the above necessarily applies to your situation, but you should take some time to reflect and ask yourself if it does. Suddenly quitting a formerly beloved job seems like a drastic decision, but one that can easily be made under a toxic combination of stress, lack of sleep, and resentment due to a (perceived or real) lack of support or equality in parenting duties. You need to have a serious heart-to-heart with your wife, as presently the health of your marriage may be significantly more at risk than the health of your finances.

OnTrack2020
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Re: Dear wife quits job and now we are down to 1 income

Post by OnTrack2020 » Sun Jan 28, 2018 9:07 am

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)

-----------------------------------------------

I'm a SAHM and have been for many years. It was tight for us when our kids were younger, but we've managed and came out pretty well.

Here is where I see potential savings now that she is home:

You will be in a lower tax bracket and should have your withholdings changed as soon as you can.
You will also see some of the benefits of the new tax plan starting next month in your check.
Also, now with a new born, you will get the benefit of the child tax credit this year. That is one credit I've always liked. :happy
Gas (wife not commuting) - $100
Lunch and take out (cut in half) - $125
Landscaper (no longer needed) - $80
Subscriptions (no longer needed) - $25
Your wife absolutely needs health insurance, but I find your health insurance plan somewhat expensive if you are on an employer-plan. Please tell us more about this.

I think between cutting your expenses, the withholdings being changed, and the new tax plan, you shouldn't have to withdraw much from your emergency fund when all is said and done. Please keep us posted on how things are working out in this regard.

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

Post by boglegirl » Sun Jan 28, 2018 9:41 am

OnTrack2020 wrote:
Sun Jan 28, 2018 9:07 am
...
Landscaper (no longer needed) - $80
...
I think we should cut Applestock a break over the landscape maintenance. I don't agree this $80/month savings is the low-hanging fruit that many make it out to be. He already explained that he has a large lot, it's Florida-hot, and he doesn't even own the equipment. (he could spend a few hundred $ on lawnmower, weedwacker, clippers, etc etc).

I hope he comes back in a month or two and posts that the ridiculous "diapers & formula" budget has been cut by $250, and taxes were miscalculated by $250, and Voila! This was much less of a problem than he thought.

(full disclosure: My husband and son do our yard maintenance. So I don't have anything against the idea of a homeowner doing this honest work. It just seems like a tough lifestyle change for the OP for $80 savings)

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

Post by Applestock » Mon Jan 29, 2018 8:22 am

About to change my w-4 withholdings so that I am not giving out a free loan. What is the best number of withholdings (2 or 3) to have for myself, DW, and son.

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

Post by danaht » Mon Jan 29, 2018 9:08 am

You can probably get that $700 deficit down a lot more:

1) Cable can be cut to $0 (or cost as little as $39 a month if you get something like You Tube TV.
2) Your cell phone bills can be as low as $1 (using prepaid) to $10 a month (low cost plan) with Tello (uses Sprint network)
3) Your wife will probably not be driving as much to get to work - so that should save on fuel
4) If you had any day care expenses - that goes to $0 if your wife stays home.
5) Landscaping can be done by you - buy a lawn mower.
6) If you are using a land line phone - you can switch to Google Voice and pay $0 a month for it (but make sure you have 911 on your cell phone - since Google Voice does not support 911 unless you buy another service with it)

Probably other items as well.

bungalow10
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Re: Dear wife quits job and now we are down to 1 income

Post by bungalow10 » Mon Jan 29, 2018 9:39 am

My kids are 10, 8, and 5, so it's been a few years.

$450 for diapers and formula seems expensive. We did breastfeeding (has the ship sailed on that?) and cloth diapers. Seems like you could cut this down a bit with cloth diapers. If DW is still nursing at all she could up that back to where you don't need formula.

Refi the house to a new 30 year to lower the payment additionally?
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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

Post by Luke Duke » Mon Jan 29, 2018 9:43 am

dm200 wrote:
Wed Jan 24, 2018 12:58 pm
2. Perhaps MOST important - what does SHE want to do?
This is not "MOST important". What's most important is to do the best thing for the family. Given the OP's financial situation as stated in the first post, losing half of the household income does not appear to be what's best.

It sounds like the OP's wife has decided on her own that she is no longer going to work. Good luck.

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

Post by JeffAL » Mon Jan 29, 2018 5:17 pm

Applestock wrote:
Mon Jan 29, 2018 8:22 am
About to change my w-4 withholdings so that I am not giving out a free loan. What is the best number of withholdings (2 or 3) to have for myself, DW, and son.
Depends on deductions, etc. Just to give you an idea, with myself, SAHM, 2 kids, I do 9 on my w-4 and come out pretty even at tax time (usually owe a little but state refund covers it). I see the withholding calc: https://www.irs.gov/individuals/irs-wit ... calculator is unavailable at the moment

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

Post by matt fe2o3 » Wed Jan 31, 2018 1:20 am

The thing on filing for unemployment benefits is not to wait. Get in line. Even if there is a rejection then you can get a hearing. Hey who knows - the employer may just simply sign off on it.

I have seen many people qualify for UI benefits that made me scratch my head. I had a neighbor who was a UI hearing officer (basically a UI judge) and her spin was even when people quit because they cannot get ahead in the workforce - that's a perfectly good reason. Nothing ventured nothing gained.

Let us know how that works out.

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

Post by HIinvestor » Wed Jan 31, 2018 3:03 am

Your W leaving her job and you having a new baby are qualifying events so you should be able to add both to YOUR health plan ASAP. Talk with your HR. Not having insurance can be a great way to blow a huge hole in your savings and budget--it's amazing how much any condition or hospitalization can cost, even in a person who is otherwise in excellent health. Please, please, please keep all of you on a good medical insurance plan.

rob65
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Re: Dear wife quits job and now we are down to 1 income

Post by rob65 » Wed Jan 31, 2018 8:00 am

HIinvestor wrote:
Wed Jan 31, 2018 3:03 am
Your W leaving her job and you having a new baby are qualifying events so you should be able to add both to YOUR health plan ASAP. Talk with your HR. Not having insurance can be a great way to blow a huge hole in your savings and budget--it's amazing how much any condition or hospitalization can cost, even in a person who is otherwise in excellent health. Please, please, please keep all of you on a good medical insurance plan.
+1000 and there is a time limit on making changes due to a qualifying event. Not sure off the top of my head, but it might be as short as 30 days. Talk to your HR today if you haven’t already.

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

Post by Applestock » Thu Feb 01, 2018 9:16 am

I revisited expenses and there is room for cutting specially the formula/ diaper line item. I will cut out other line items and post revised total expenses.

1. Wife and son have health insurance as of today.
2. Started transferring EF to capital one earning 1.4% plus $200 bonus. I am going to open up 2nd account for DW with capital one to get additional $200 bonus.
3. Have not changed withholdings. Either going to change withholdings to eight 2 or 3, don't really want my employer know that my DW does not have a job.
4. I shopped for car insurance, they are either the same price or higher.
5. Cable company will be giving me $20 credit for 3 months they told me to call them again in 3 months and see what they can do.
6. Received my paycheck it was higher than before due to new tax plan. Will be getting an additional 145/ month.

Since my and DW Roth IRA are not fully funded for 2017 do you think I should completely fund? We have about 3.7k left to fund in both.

With our tax return which should be a few thousands dollars should we fund our Roth IRA?

I am thinking about funding our Roth IRA since contributions can be withdrawn for any reason.

Jack FFR1846
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Re: Dear wife quits job and now we are down to 1 income

Post by Jack FFR1846 » Thu Feb 01, 2018 10:22 am

My question.....what do you use at the gym? Can you buy the equipment on craigslist and simply use it at home? I have a weightlifter son who uses the college gym and had been doing monthly gym memberships during the summer. We bought a setup in our basement for his Christmas present and even with the very part time gym costs, it's about paid for itself a bit more than a year later. Heck.....mowing the grass with a push mower is exercise, is it not? There's $80 and $32 monthly saved.

Having a baby changes your life and your old life is gone. For better or worse, it's gone.
Bogle: Smart Beta is stupid

sbh8
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Re: Dear wife quits job and now we are down to 1 income

Post by sbh8 » Thu Feb 01, 2018 11:20 am

totallystudly wrote:
Wed Jan 31, 2018 1:08 am
I wouldn't advocate diving back into the corporate grind, but wifey needs to do something to generate income on or about the level that she was at. I don't want to hear about this cost savings stuff. Top line growth, period.

Driving for Uber, home business, selling stuff online, babysitting, whatever. It has literally never in the course of human history to make money, ever.

Sitting at home is not an option, period. I'd go all starship troopers LT rasczack style on her and explain my one rule about how everyone fights and nobody quits.
While I don’t necessarily disagree that Applestock’s wife could earn some side income, she’s hardly “sitting at home”. She’s caring for a newborn which is an incredibly difficult job.

LK2012
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Re: Dear wife quits job and now we are down to 1 income

Post by LK2012 » Thu Feb 01, 2018 11:49 am

Applestock wrote:
Thu Feb 01, 2018 9:16 am
Since my and DW Roth IRA are not fully funded for 2017 do you think I should completely fund? We have about 3.7k left to fund in both.

With our tax return which should be a few thousands dollars should we fund our Roth IRA?

I am thinking about funding our Roth IRA since contributions can be withdrawn for any reason.
Congratulations on your new son, and I hope you can take a few deep breaths and relax now and then. I am glad your wife is back on health insurance this is essential! You're making progress, and I think you will be fine in the end. Give yourselves a break.

Regarding the Roth IRA, I would say a strong YES to funding it. It is precious space, and once that 2017 opportunity is gone, it's gone forever. That money can be withdrawn (contributions) if necessary, but most importantly, it will grow tax-free forever. Do it!

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

Post by jharkin » Thu Feb 01, 2018 12:41 pm

OK I stopped reading midway though page 2 - I see the Bogleheads guilt trip squad is out in full force :oops:


OP:
Remember that contrary to what you will be told here, life is not all about the $$$$.
You did not "fail" if you dont become a millionaire.
You only answer to yourself, and your family.
The health an happiness of the 3 of you is whats important here, not dollars on a spreadsheet.

You can close this gap. You can change your withholding to account for the much lower tax you will pay now (remember that 900 health insurance is all pretax, and there is the 2k child credit... I roughly figure your total annual fed income tax will now be less than $2k) and then you can trim some of those expenses - take out, restaurant lunches, gym, landscaper, etc should all be easy to cut and close that gap.

Don't lay down the law and demand your wife work, or up and move just some people hiding behind screen names on the internet guilted you into it.

Deep breath, you will work this out.

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