Can we afford to live on one income?

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Triple digit golfer
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Can we afford to live on one income?

Post by Triple digit golfer » Sun Dec 10, 2017 10:15 am

My wife is on maternity leave and we would strongly like her to be able to not go back, quit her job and stay home with our baby.

Here is our situation:

Age: Both 32
My income: $127k
Her income: $53k
Total income: $180k

Debt: $337k, 29 years left on 30 year, 3.50% fixed mortgage
No other debt
Own two cars, a 2013 Accord (72k miles) and 2016 Civic (27k miles)

Assets:
Tax-deferred retirement accounts (401k, 403b, Rollover IRA): $303k
Tax-free retirement accounts (Roth IRAs): $103k
Taxable accounts (Vanguard investments, Ally savings, Ally CD): $206k
Total portfolio: $612k

Current allocation is around 74% equities, 26% bonds/cash

Taxable account is $90k equities, $116k bonds/cash, so even with a 50% market drop we'll have $161k liquid.

Monthly expense budget (I left everything as is on two incomes):
$2,292 Mortgage:
$375 Insurance (auto, umbrella, life, LT disability for me)
$100 Auto maintenance/repairs
$475 Utilities (gas, electric, water, internet, cell phones, trash/recycling, one streaming TV service)
$1,300 Groceries, toiletries, restaurants, entertainment, household items, all baby items
$300 Gas, tolls
$150 Clothing for wife and me
$125 Medical, prescriptions, doctor visits
$150 Gifts
$700 Savings for home repairs/maintenance, next new (used) cars, vacations, etc.
$917 Roth IRA contributions

This gets us to $6,884. Right now, my take-home is $2,822 every two weeks, but that is without my wife on my insurance but also with my 401k being maxed. I also think I'm having too much withheld.

If I go to a paycheck calculator and drop 401k down to a level that will make overall 401k/Roth IRA contributions 12.5% of my salary (an arbitrary number I chose) and increase insurance to add my wife to my plan, my take-home increases to $2,993.

However, that is with 0 personal exemptions. If I make it 3, pay jumps to $3,123. Multiplied by 26 and divided by 12, that gives us take-home pay of
$6,766, within around $100 of our budget above. I can cut out $100 pretty easily from there and also have a nice cushion with our $600k+ portfolio.

Questions/general comments/concerns

1. Is 12.5% of income enough for retirement contributions for two 32 year-olds with a current $600k portfolio? I know that generally, 12.5% is too low, but we're off to a great start and I feel like it may be sufficient given our great start. Given the fact that $11k of our roughly $16k planned contributions will be in Roths, that money will be tax-free in retirement and is therefore theoretically more valuable than the 401k contributions.

2. Our mortgage payment will be about 22% of gross pay. That is high enough to make me a little uneasy, but I think it's manageable. Thoughts?

3. I am concerned that we will be okay on month to month recurring expenses, but when something big hits (like our new roof and gutters this coming spring for $13k), we will end up ultimately spending more than we are making. I did allow $700 per month or $8,400 per year for things like cars and home repairs. Thinking long-term, $84,000 over ten years should be enough for two cars and any major home repairs/replacements done in that time (roof, gutters, siding, windows, air conditioning, furnace, water heater, kitchen appliances, washer/dryer, and the list goes on and on). Worst case, we have a nice portfolio that we could draw from in a pinch. What are your thoughts?

4. My wife and I both agree, we are just simply more comfortable with her being here for our baby growing up. We may have a bit more financial stress/anxiety, but the peace of mind knowing that our baby is in great hands and that my wife will be here for all the future school events, drop off, pick-up, before and after school care, etc. seems to be worth a lot to us.

stan1
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Re: Can we afford to live on one income?

Post by stan1 » Sun Dec 10, 2017 10:30 am

Yes you can do it. It looks like there are some areas to reduce expenses if you are willing to do so. How much would you be paying for child care? I don't see that mentioned anywhere in the post and that's a major part of the financial decision. What are your prospects for pay raises over the next few years?

curmudgeon
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Re: Can we afford to live on one income?

Post by curmudgeon » Sun Dec 10, 2017 10:34 am

By the time you account for daycare expenses and taxes, in your situation your wife would probably be netting about $2/hour if she goes back to work. There might be reasons to do it (personal, career, etc), but I don't think the finances are a big factor. If incomes were more even, it would be a larger hit.

Spend a little time with a tax calculator such as the following to estimate what your real taxes will be.
https://www.taxact.com/tools/tax-calculator

Triple digit golfer
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Re: Can we afford to live on one income?

Post by Triple digit golfer » Sun Dec 10, 2017 10:35 am

stan1 wrote:
Sun Dec 10, 2017 10:30 am
Yes you can do it. It looks like there are some areas to reduce expenses if you are willing to do so. How much would you be paying for child care? I don't see that mentioned anywhere in the post and that's a major part of the financial decision. What are your prospects for pay raises over the next few years?
Childcare would be very cheap - around $150 per week. We know a person who does it out of her home and several of my wife's co-workers have used her and love her.

No significant pay raises expected over the next few years. I have been at my level for just a couple years and it will be a few years before I'm qualified for the next bump up.

Triple digit golfer
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Re: Can we afford to live on one income?

Post by Triple digit golfer » Sun Dec 10, 2017 10:36 am

curmudgeon wrote:
Sun Dec 10, 2017 10:34 am
By the time you account for daycare expenses and taxes, in your situation your wife would probably be netting about $2/hour if she goes back to work. There might be reasons to do it (personal, career, etc), but I don't think the finances are a big factor. If incomes were more even, it would be a larger hit.

Spend a little time with a tax calculator such as the following to estimate what your real taxes will be.
https://www.taxact.com/tools/tax-calculator
I'll use that tool. Thanks!

How do you figure $2 per hour?

She was maxing her 403b and taking home around $900 every two weeks.

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Top99%
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Re: Can we afford to live on one income?

Post by Top99% » Sun Dec 10, 2017 10:39 am

I went through the same analysis with my wife except in her case she quit her paying job to look after her aging parents. My wife's salary and my salary were just a bit higher than yours but the ratios were about the same. You have a pretty complete analysis of your financial picture but one additional piece of analysis to do is the net cost of your wife giving up paid work.
On the negative side of the ledger:
1) Income
2) Social Security (only an issue if she never goes back to work)
3) Backup income in case you lose your job
On the positive side of the ledger:
1) No day care expenses
2) Expenses related to work go away: tolls, reduced gasoline, reduced car maintenance, reduced clothing expenses
3) What I found with my wife not working was she had time to shop for bargains which reduced our grocery bills
4) With 2 people working, dining out tends to become more frequent
5) You will have less income in the higher tax bracket which reduces the impact of the loss of $53K gross

I would "go for it" and look for other opportunities to save money and increase your savings rate:
1) Keep your Hondas for at least 200K miles and when it comes time to replace them replace them with 2-4 year old Hondas or Toyotas.
2) Cut cable, switch to cheap cell phone plans like Republic Wireless or Consumer Cellular
3) Take advantage of seaonal foods, sales etc to cut your grocery bill
4) Since you have a decent after tax savings pile, increase your insurance deductables to the maximum and consider dropping collision on your cars once the value gets <$10K.

Your mortgage seems high to me but I suspect moving to a less expensive house would take a long time to pay off once you factor in the cost of selling your place, buying a new place and potentially any needed repairs/updates.
Adapt or perish

chevca
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Re: Can we afford to live on one income?

Post by chevca » Sun Dec 10, 2017 10:42 am

If having DW at home with the baby is most important to you guys, you can make it work. Go for it!

You can lower savings rates and cut expenses to make it work. I wouldn't count new roofs and future cars as monthly expenses. You have a taxable account to take from for those things. You have already save for those, in my mind.

curmudgeon
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Re: Can we afford to live on one income?

Post by curmudgeon » Sun Dec 10, 2017 10:46 am

Triple digit golfer wrote:
Sun Dec 10, 2017 10:36 am
curmudgeon wrote:
Sun Dec 10, 2017 10:34 am
By the time you account for daycare expenses and taxes, in your situation your wife would probably be netting about $2/hour if she goes back to work. There might be reasons to do it (personal, career, etc), but I don't think the finances are a big factor. If incomes were more even, it would be a larger hit.

Spend a little time with a tax calculator such as the following to estimate what your real taxes will be.
https://www.taxact.com/tools/tax-calculator
I'll use that tool. Thanks!

How do you figure $2 per hour?

She was maxing her 403b and taking home around $900 every two weeks.
I'm not being exact, but in this situation, her income is essentially "stacking" on top of yours, and so it is taxed at your highest marginal rate, plus FICA. The "take home" doesn't really reflect that because her withholding is based on her lower income (and you have more withheld to make up for it). So if you are at 25% marginal fed rate, plus maybe 5% state, if she goes back to work, the first 37.5% of her income goes to taxes. Add in daycare costs (for more hours than she is getting paid for), and the net isn't as much as you might expect. That's why it is good to look at the total picture rather than just the take-home.

harrychan
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Re: Can we afford to live on one income?

Post by harrychan » Sun Dec 10, 2017 11:08 am

A bit house poor. As you say, it is manageable but with very little wiggle room. Is your taxable considered your emergency fund? What is your income projection in the next 3 years? I left a cush 6 figure work from home job and got 45% raise by switching jobs so my wife could stay at home for 3 years. She's now back working but we found ways to make it work.
This is not legal or certified financial advice but you know that already.

KlangFool
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Re: Can we afford to live on one income?

Post by KlangFool » Sun Dec 10, 2017 11:20 am

OP,

1) There is a simpler way to analyze this.

2) What is your annual savings?

3) Take your gross income minus the taxes (Including social security and Medicare) and annual savings, you will get your annual expense.

4) It is really not a financial question. You only have a mortgage. You have no other debts. You could make it work if you want to.

5) Do not assume that you can improve your cash flow substantially by reducing your 401K contribution. Most of the reduction will be eaten up by taxes at your income level.

<<Taxable accounts (Vanguard investments, Ally savings, Ally CD): $206k>>

6) You have enough money in the taxable account to max up your 401K contribution for many years. If you have not done this, you should do it as soon as possible.

KlangFool

bloom2708
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Re: Can we afford to live on one income?

Post by bloom2708 » Sun Dec 10, 2017 11:24 am

It will be tight.

One idea would be to have your wife work while the first kid is young. Make it a goal for when kid 2 comes along.

Power save, pay down debt, make it less of a shock.

It was easier for my wife to stay home when the kids were older and had more activities.

It won't make sense until you get farther along. With that mortgage it will feel very hard.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

TheHouse7
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Re: Can we afford to live on one income?

Post by TheHouse7 » Sun Dec 10, 2017 11:31 am

Yes, just do it, the tax savings will be huge.

We just gave up 40k for my DW to stay home with our first.

I am shocked at your cheap child care option.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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Sandtrap
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Re: Can we afford to live on one income?

Post by Sandtrap » Sun Dec 10, 2017 11:46 am

Yes. . . and . . . No.
Yes. . . you could make it work. . reduce expenses. . .etc.
No. . . you would be very vulnerable to financial and life "black swans" so there might be periods of struggle.
So. . .
Yes & No.

j :D

flyingaway
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Re: Can we afford to live on one income?

Post by flyingaway » Sun Dec 10, 2017 11:52 am

Yes, you can if you choose to.
But I have a colleague who is from a place where women usually stay at home after marriage. He is still working very hard at 65 because he still has a big mortgage.

stan1
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Re: Can we afford to live on one income?

Post by stan1 » Sun Dec 10, 2017 11:56 am

Selection bias is showing. Only on Bogleheads would someone say a $2292/month mortgage on a $127K income is "tight". OP is spending a lot and saving a lot. They have a lot of choices to make but they have the flexibility to be a SAHM if that's the decision. Eating out less, lower cost gifts, review of mobile phone plans, paying down mortgage then refi, lower cost clothing and in the short term possibly less savings all are part of the choices they can make.

blastoff
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Re: Can we afford to live on one income?

Post by blastoff » Sun Dec 10, 2017 12:03 pm

Some comments:

Your child care option might skew things from what others have assumed. It appears to be a tremendous deal.

You will pay a lower effective tax rate, so not sure if your paycheck math is correct. Could be even more in your favor.

Salary trajectories? What does yours look like? I assume she isn't a medical resident! Does she enjoy her job? Etc.

Your job stability?

Naismith
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Re: Can we afford to live on one income?

Post by Naismith » Sun Dec 10, 2017 12:10 pm

flyingaway wrote:
Sun Dec 10, 2017 11:52 am
But I have a colleague who is from a place where women usually stay at home after marriage. He is still working very hard at 65 because he still has a big mortgage.
There is a huge difference between "staying home after marriage" and being at home fulltime for a few years with a young child.

I returned to part-time employment when our youngest was in kindergarten, and was able to spend another 20 years in the workforce before retirement. Even though we had five children and thus my season at home was longer than many.

Jack FFR1846
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Re: Can we afford to live on one income?

Post by Jack FFR1846 » Sun Dec 10, 2017 12:11 pm

I expect you'll make your decision on things other than financial. Assuming she does stay home (my wife did), some surprises will come up.

Her annual mileage will skyrocket. My wife's went up 50%. I have no idea where she went but compared with a 50 mile a day round trip, I think it was a few miles here, a few miles there a hundred times a week.

If she is in a professional position, expect that when she does want to return to the workforce that it may be difficult to get back in, she may have to start all over again at entry level and her salary could be dramatically lower than it is now. My wife attempted to get back in and found that (as a nurse), nobody would even talk with her without a year recent clinical experience (she had 20 years as nurse, nurse manager). She ended up going back per diem along with recent grads making 1/3 what she made 15 years earlier. She's on her 3rd year back and there are zero raises.

Your wife may need a break, so there goes your daycare savings. It's quite understandable that an adult would need a break but figure this into your finances or you'll be surprised with more costs. If she can find a part time, flexible job while the child is in daycare, she'll bring some money in and her brain won't turn to mush. It really doesn't matter what the job is. A school job is ideal because of the hours but McDonalds, Starbucks, a supermarket could work and if the job gives her trouble about the hours, she can just quit.

My wife went part time with our first then left with our second. If we got a redo, I think if she stayed part time all along, things would have been better all around.
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Pacman
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Re: Can we afford to live on one income?

Post by Pacman » Sun Dec 10, 2017 12:12 pm

A couple other things I would think about that haven't been mentioned:
- Is there a plan for your wife to ever go back to work?
- Will you be doing public or private schools for the kids?
- What was the original goal for the money you acquired? Is this decision in line with that original goal?
- Ages & plans for retirement?

I'm about the same age but don't have a kid yet, so keep this in mind in my response, but my view is that each adult in a household should be able to support themselves. The $150/week childcare expenses is extremely low, so this would be another reason for a wife in this situation to keep working. Lastly, some of your expenses categories looked they could be trimmed if you are interested: republic wireless phones, using credit card rewards for vacations, etc. Good luck!

Litfury
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Re: Can we afford to live on one income?

Post by Litfury » Sun Dec 10, 2017 12:16 pm

You have 600k saved at 32 years old. She can definitely stay home. May have to cut back on retirement contributions but you can afford to.
We decided in March this year for my wife to stay home with our two kids. She left a job making 75k a year. We have less saved than you and roughly same age. Don't regret it one bit. I love having her and the kids home.
I think in your case it just comes down to if you and your wife would enjoy her being home. If it would stress you all out or cause conflict don't do it. If you both like the idea then go for it. You won't regret it.

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Watty
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Re: Can we afford to live on one income?

Post by Watty » Sun Dec 10, 2017 12:19 pm

curmudgeon wrote:
Sun Dec 10, 2017 10:34 am
Spend a little time with a tax calculator such as the following to estimate what your real taxes will be.
https://www.taxact.com/tools/tax-calculator
A better way is to do dummy tax returns useing tax software that will also show you your state taxes.
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
My income: $127k
......
$2,292 Mortgage:
I didn't even try crunch the numbers but just a back of the envelope calculations would to look at the fact that efter paying your mortgage you will still have over $100K of your income free so even when you have large expenses like the roof you should be able to quickly replenish your emergency fund. You will still need to pay taxes out of that but under the current tax laws you would likely be in the 15% federal tax bracket so that will not be too much.

Living on that will should be very doable since after paying taxes and your mortgage you will have something like $70K a year to live on. There are lots of details as long as you are willing to adjust to it that is more than enough to have an above average lifestyle on one income.
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
This gets us to $6,884. Right now, my take-home is $2,822 every two week
......
1. Is 12.5% of income enough for retirement contributions for two 32 year-olds with a current $600k portfolio? ...
...
2. Our mortgage payment will be about 22% of gross pay.....
No offense intended but you are making a confusing mess of your numbers by mixing monthly costs, biweekly pay, percentages, and pre and post tax numbers. It would be good to redo all your numbers and look at everything as an annual basis so you can better see how they work work together. For example you need to figure out annual numbers for;

1) pre tax income
2) Federal taxes
3) state taxes
4) Fica
5) other payroll deductions like retirement savings and other and healthcare.
6) Take home pay
6) Mortage
7) expenses

and other things on an annual basis.
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
1. Is 12.5% of income enough for retirement contributions for two 32 year-olds with a current $600k portfolio?
Again I did not really crunch the numbers but in 29 years when you are 61 your house will be paid of and the kid(s) should be out on their own. With a modestly optimistic, but realistic, growth assumption your current $600K may double in value in real inflation adjusted dollars every 15 years or so. If it does double twice that would be worth $2.4 million in 2017 dollars by then. Compounding is wonderful! :beer

You don't want to cut back completely since you can have career, health, or life setbacks and might need to retire early but you should be fine with even modest ongoing savings.

A couple of other points;

You need to make sure that you have plenty of life insurance on your wife. If something happens to her then you would have lot of expenses to pay someone to do what she is doing.

That day care did sound very cheap, but there is no guarantee that would work out or that the person will always be available. You also need to consider what it would cost if you had to get day care somewhere else.

My wife also wanted to be a stay at home parent so one thing she did when my son was a toddler(not an infant) was to do daycare in our home for one or two kids that were my sons age. This was legal in the state we were in without getting a formal day care license within strict limits about the number and ages of the kids. We were able to get an inexpensive rider on our home insurance to cover the day care. The extra income helped the numbers work better and it also gave my son someone to play with.

In addition to the current costs your wife also needs to consider what being a stay at home parent will do to her career prospects if she ever needs or wants to go back to work. In some fields it will be hard to get back into the job market if she is out of it for a long time. I have seen a number of women face this after being widowed or divorced and it can be hard. Working part time could be an option to consider just to keep her career skills current.
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
Debt: $337k, 29 years left on 30 year, 3.50% fixed mortgage
....
Taxable accounts (Vanguard investments, Ally savings, Ally CD): $206k
There would be all sorts of pros and cons but one option would be to check with your lender to see if you make a large prepayment if they will "recast your mortgage"(Google this). They are not required to but they usually will for a small processing fee. The way this works is that if you pre-pay your mortgage in a recast by a 33% (or whatever makes sense) then your required mortgage payment is reduced by the same percentage. The length of the loan and the interest rate stay the same.

If you did that then your monthly cash flow numbers might feel more comfortable.

Another option for the money in the taxable account would be do something like spend $800 a month out of your taxable savings each month but also increase your 401K payroll deductions by around $1,000 a month to help max out your 401k contributions. The differences in the numbers would be because of the tax advantages of saving maybe 15% federal and 5% state taxes.

delamer
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Re: Can we afford to live on one income?

Post by delamer » Sun Dec 10, 2017 9:45 pm

Just wanted to highlight what a couple others have mentioned -- what is your job security like? How difficult would it be for you to find a job if you were laid off? Do you have life insurance and disability that is not tied to your job? Have you priced health insurance for all three of you from your job?

It is a very different thing to be home taking care of an infant/toddler versus being at home when your child is in school all day. Just something for your wife to think about for the future.

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TxAg
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Re: Can we afford to live on one income?

Post by TxAg » Sun Dec 10, 2017 9:59 pm

I’d be uncomfortable with it, but it appears to be more of an emotional decision than a financial decision.

Olemiss540
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Re: Can we afford to live on one income?

Post by Olemiss540 » Sun Dec 10, 2017 10:01 pm

What Watty said +1. Continue maxing all tax advantaged space while spending down the taxable account if needed.

You guys really stretched on the house considering this life decision was probably in the works, but you will just have to pay for it with reduced vacations, eating out, etc. If it doesn't work as planned after 3 or 4 years, can always huddle back up and change plans!

Also, be a little weary considering yourself too far "ahead of the game", due to a tremendous bull market. Corrections can make you feel behind in a hurry. Just know working a few more years may be worth it in your situation to have your spouse stay at home or atleast it does to us. Good luck!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

pennywise
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Re: Can we afford to live on one income?

Post by pennywise » Mon Dec 11, 2017 7:55 am

Also consider your wife's long term career plans, viability of taking extended time away and likelihood of wanting to/obtaining employment after such a hiatus.

The financial aspect has lifelong consequences, and the percentage of women who are able to resume or excel at a career track after leaving for years is small. This may or may not be something that will be influential in your wife's decision but it should be considered. Then too, leaving paid employment almost always affects any woman's future retirement resources in a very negative way. During the first months of parenthood no one is considering that a marriage may not last, or that financial dependence may make for very challenging marital issues years or decades in the future. But again, it should be considered.

As always these decisions can only be made by the people involved. And plans are plans--as the saying goes man proposes, god disposes. The dollars and cents calculations are sometimes the easiest part of life; the rest is what gets thorny. Best of luck in this very important decision and may your family prosper in every way once you do decide.

bloom2708
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Re: Can we afford to live on one income?

Post by bloom2708 » Mon Dec 11, 2017 9:21 am

stan1 wrote:
Sun Dec 10, 2017 11:56 am
Selection bias is showing. Only on Bogleheads would someone say a $2292/month mortgage on a $127K income is "tight". OP is spending a lot and saving a lot. They have a lot of choices to make but they have the flexibility to be a SAHM if that's the decision. Eating out less, lower cost gifts, review of mobile phone plans, paying down mortgage then refi, lower cost clothing and in the short term possibly less savings all are part of the choices they can make.
OP says he takes home 2,822 every 2 weeks. Almost one of his checks would go to the mortgage. The other to live on.

My guess is that their savings is largely funded by the second salary. That is very fine and quite normal. Our scenario was almost the same.

So, 401k would be reduced, more tax paid. Not a slam dunk. Seeing different opinions is the whole point. If everyone said "yes" this place would have no value. :|
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

bigred77
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Re: Can we afford to live on one income?

Post by bigred77 » Mon Dec 11, 2017 9:24 am

OP,

My wife and I have our first due in February and are planning for her to stay home as well. Our household income and expenses are eerily similar to yours. We are going to try and make it work as well.

I'm going into this knowing it's going to be tight but I'm hoping for a couple of salary bumps in the next few years to help ease the pain. Our plan is for my wife to stay home until the last of our kids gets into school full time and then my wife will try to re-enter the workforce. She's a teacher.

If your 32 with 600k invested your so far ahead of the game you just need to play defense. Just don't have a negative savings rate and your going to be just fine. These first few years will the toughest financially.

JBTX
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Re: Can we afford to live on one income?

Post by JBTX » Mon Dec 11, 2017 9:46 am

It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.

Isabelle77
Posts: 310
Joined: Thu Dec 17, 2015 1:43 pm

Re: Can we afford to live on one income?

Post by Isabelle77 » Mon Dec 11, 2017 10:23 am

I stayed home with just about the same ratios as you, our savings were a little less but we were also a little younger.

You can definitely manage having a sah parent. I didn’t find it particularly difficult to cut back on our spending, kids really aren’t that expensive until they’re older.

A few other thoughts. In our case I planned on staying home a few years and wound up never going back. My husband’s job got crazier, we made some big moves, had a second child, and by the time we looked up my career was irrelevant and my spouse was fond of having me at home to run things. I miss working sometimes but this is what works for us, just something to be aware of.

Also, if your wife can really get into managing the household in addition to caring for your children, it can be a fulfilling and useful role for her, especially in the years before the kids are at school. I get to use my brain managing our finances and I’ve enjoyed learning to really cook from scratch. I also make sure to always have a nonfiction book on hand.

Finally, remember that while staying at home with babies is absolutely fulfilling, it also is isolating. Make the effort to spend time with your wife and remember that some days you’re the only adult she’s seen all day. My husband and I spend an hour together every night decompressing and it has been excellent for our marriage.

Sorry for the ramble, best of luck!

mw1739
Posts: 523
Joined: Mon Mar 21, 2011 5:44 pm

Re: Can we afford to live on one income?

Post by mw1739 » Mon Dec 11, 2017 11:00 am

We were in your position a few years ago. My wife worked three days a week after our first and became a stay at home mom after our second. After years of maxing out the 401k, I had no hesitation to cut that back to fund this. Realistically, we (and your savings aren't much less than ours), don't need to save another dime to have a perfectly fine retirement. Some other financial considerations:

1. Make sure to allow plenty of room in your "entertainment" budget. Not everything for a parent and child to do are free.
2. We have babysitting as a line item in our budget now. Despite being a stay at home parent, there's always errands and appointments that are easier without a child.

delamer
Posts: 6428
Joined: Tue Feb 08, 2011 6:13 pm

Re: Can we afford to live on one income?

Post by delamer » Mon Dec 11, 2017 11:37 am

JBTX wrote:
Mon Dec 11, 2017 9:46 am
It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.
I am going to push back on your first comment, even though I agree in general with the rest of your post.

There are many different parenting choices represented here on the forum. While there are some families that have decided on the SAHM model, I don't see the evidence that "most in BH advocate" for it.

You were right to point out that It is important that families think about the long-term financial implications for the stay-at-home parent when making these decisions.

WhiteMaxima
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Re: Can we afford to live on one income?

Post by WhiteMaxima » Mon Dec 11, 2017 11:42 am

Cut your expense by 50%, your life will be much easier and simple. Yes you can live on single income. The other half should also be ready to take the responsibility if one half is sick and unable.

Independent
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Re: Can we afford to live on one income?

Post by Independent » Mon Dec 11, 2017 2:34 pm

Of course you can afford to live on one income. The median income for a US married couple with children at home is under $100k. So, somehow, more than half the couples with kids would be very happy with $137K.

The real question is "What would we need to give up?". I think most posters answered that question instead.

Here is one more piece of data for that question -- actual spending of three person families by income level.
It's one way to compare your spending mix to other people. https://www.bls.gov/cex/2016/CrossTabs/ ... woorup.PDF

Texanbybirth
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Re: Can we afford to live on one income?

Post by Texanbybirth » Mon Dec 11, 2017 3:05 pm

Can you "afford" it? Absolutely. We're a few years further into the situation than y'all are. Our mortgage is 26% of gross take home pay. Yeah it's not going to win any Ratio Awards, but I don't lose any sleep at night. I "only" save 15% in my 401k. I feel like our life is extravagant.

Some categories to quickly tackle if y'all get in a bind: $1300 for "groceries, etc." and $150 clothing. You may find that your wife can find good deals on many of the things y'all buy now that she is at home. Depends on how frugal/motivated you want to be.

You should definitely use the TaxCaster from TurboTax, or some other tool, to forecast your liability to you can make a proactive informed choice on exemptions. I bet you're having a lot more withheld than you need to.

winterfan
Posts: 103
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Re: Can we afford to live on one income?

Post by winterfan » Mon Dec 11, 2017 3:28 pm

Yes, you can afford it. I remember when my husband and I were mulling this too. I didn't stay home with the baby (although I wish I did now), but left work when my child was entering preschool. We went from a combined income of 125K to one income of 62K. We don't regret it for a moment. It's amazing how many expenses you can cut when you aren't rushing around everywhere. Our net worth has done pretty well in the the six years I've been home. Husband can retire, but chooses not to (he loves his job). IMO, life is less stressful with someone at home.

User avatar
KlingKlang
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Re: Can we afford to live on one income?

Post by KlingKlang » Mon Dec 11, 2017 3:30 pm

A couple of things that I haven't seen mentioned yet:

As far as obtaining health insurance through your employer you will not only have to add your wife but your child as well. Employer provided family plans can range from almost nothing to over a $1000/month (plus deductibles and co-pays).

I know this is heresy but could you function as a single car household? Could you use public transportation or car pool a couple of days a week?

My wife stayed home during her pregnancy (previous miscarriages) and for the first ten years of our daughter's life. I truly think that this was the happiest time of her life and that even though she would never say it that her goal in life was to be a SAHM caring for a young daughter.

ICMoney
Posts: 170
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Re: Can we afford to live on one income?

Post by ICMoney » Mon Dec 11, 2017 3:32 pm

Watty wrote:
Sun Dec 10, 2017 12:19 pm
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
Debt: $337k, 29 years left on 30 year, 3.50% fixed mortgage
....
Taxable accounts (Vanguard investments, Ally savings, Ally CD): $206k
There would be all sorts of pros and cons but one option would be to check with your lender to see if you make a large prepayment if they will "recast your mortgage"(Google this). They are not required to but they usually will for a small processing fee. The way this works is that if you pre-pay your mortgage in a recast by a 33% (or whatever makes sense) then your required mortgage payment is reduced by the same percentage. The length of the loan and the interest rate stay the same.

If you did that then your monthly cash flow numbers might feel more comfortable.

Another option for the money in the taxable account would be do something like spend $800 a month out of your taxable savings each month but also increase your 401K payroll deductions by around $1,000 a month to help max out your 401k contributions. The differences in the numbers would be because of the tax advantages of saving maybe 15% federal and 5% state taxes.
We did a mortgage recast recently/painlessly, let me know if you have any questions on it - agree with Watty that it would help your monthly numbers to work out better. If you were to recast with a large portion of your taxable account then you would likely be able to max out your 401k and IRAs comfortably as well.

If you sell off taxable investments in 2018, assuming you are contributing the max to traditional 401k and/or tIRAs, and your wife becomes a SAHM (i.e. no income for her), you may want to do some tax projections to see how much room you'd have at 0% long-term capital gains rates if you were to sell off taxable to do a recast or to fund your 401k as Watty also suggested.

Best, ICM

soccerrules
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Joined: Mon Nov 14, 2016 4:01 pm

Re: Can we afford to live on one income?

Post by soccerrules » Mon Dec 11, 2017 4:02 pm

If that is what you want to do -- do it. Make it work.

I am in the SAHP camp. We did it for 15 years before spouse went back to work part time for a few years and now full time because our youngest is in HS.
For us the sacrifices we made in other areas was worth having the SAHP.
Don't let your outflow exceed your income or your upkeep will be your downfall.

JBTX
Posts: 4268
Joined: Wed Jul 26, 2017 12:46 pm

Re: Can we afford to live on one income?

Post by JBTX » Mon Dec 11, 2017 4:39 pm

delamer wrote:
Mon Dec 11, 2017 11:37 am
JBTX wrote:
Mon Dec 11, 2017 9:46 am
It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.
I am going to push back on your first comment, even though I agree in general with the rest of your post.

There are many different parenting choices represented here on the forum. While there are some families that have decided on the SAHM model, I don't see the evidence that "most in BH advocate" for it.

You were right to point out that It is important that families think about the long-term financial implications for the stay-at-home parent when making these decisions.
You may be right on my comment. It was a general feeling i had but not based on hard evidence. Some time ago I was struck by some comments on another threat advising a successful woman making high well
Into 6 figures to quit her job and stay home with her children. But that doesn’t necessarily mean that is how most think here. However I do think a sizeable contingent believe in the SAHM model. Is it a majority? I don’t really know.

delamer
Posts: 6428
Joined: Tue Feb 08, 2011 6:13 pm

Re: Can we afford to live on one income?

Post by delamer » Mon Dec 11, 2017 4:50 pm

JBTX wrote:
Mon Dec 11, 2017 4:39 pm
delamer wrote:
Mon Dec 11, 2017 11:37 am
JBTX wrote:
Mon Dec 11, 2017 9:46 am
It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.
I am going to push back on your first comment, even though I agree in general with the rest of your post.

There are many different parenting choices represented here on the forum. While there are some families that have decided on the SAHM model, I don't see the evidence that "most in BH advocate" for it.

You were right to point out that It is important that families think about the long-term financial implications for the stay-at-home parent when making these decisions.
You may be right on my comment. It was a general feeling i had but not based on hard evidence. Some time ago I was struck by some comments on another threat advising a successful woman making high well
Into 6 figures to quit her job and stay home with her children. But that doesn’t necessarily mean that is how most think here. However I do think a sizeable contingent believe in the SAHM model. Is it a majority? I don’t really know.
"Sizeable contingent" I can live with. :happy

Although I don't think that sizeable contingent is unique to Bogleheads. It may be that because Bogleheads are better savers that having a stay-at-home mother is more doable for them than for most families.

User avatar
DaftInvestor
Posts: 4092
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Re: Can we afford to live on one income?

Post by DaftInvestor » Mon Dec 11, 2017 4:57 pm

Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
1. Is 12.5% of income enough for retirement contributions for two 32 year-olds with a current $600k portfolio? I know that generally, 12.5% is too low, but we're off to a great start and I feel like it may be sufficient given our great start. Given the fact that $11k of our roughly $16k planned contributions will be in Roths, that money will be tax-free in retirement and is therefore theoretically more valuable than the 401k contributions.
Funny - many feel 10% is plenty - others barely squeak in 4%. You can start at 12.5% and work to slowly increase it as your income increases (Do you expect income increases).
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
2. Our mortgage payment will be about 22% of gross pay. That is high enough to make me a little uneasy, but I think it's manageable. Thoughts?
The good news is, provided your income goes up (and not down) over the years it will never be higher than 22% of gross pay. This is one of the advantages of owning versus renting - property tax and maintenance may increase over time but P&I mortgage will stay fixed.
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
3. I am concerned that we will be okay on month to month recurring expenses, but when something big hits (like our new roof and gutters this coming spring for $13k), we will end up ultimately spending more than we are making. I did allow $700 per month or $8,400 per year for things like cars and home repairs. Thinking long-term, $84,000 over ten years should be enough for two cars and any major home repairs/replacements done in that time (roof, gutters, siding, windows, air conditioning, furnace, water heater, kitchen appliances, washer/dryer, and the list goes on and on). Worst case, we have a nice portfolio that we could draw from in a pinch. What are your thoughts?
This was my biggest concern 23 years ago when my spouse and I made this decision. We wondered if our EF was large enough and if we could replenish it as time went buy. Based on your numbers - I think you'll be find
Triple digit golfer wrote:
Sun Dec 10, 2017 10:15 am
4. My wife and I both agree, we are just simply more comfortable with her being here for our baby growing up. We may have a bit more financial stress/anxiety, but the peace of mind knowing that our baby is in great hands and that my wife will be here for all the future school events, drop off, pick-up, before and after school care, etc. seems to be worth a lot to us.
EXCELLENT! We made the same decision 23 years ago and never regretted it for a moment. For us there was nothing more important than raising our children and to me - a key component to that - was assuring we'd always be there when needed. Also - children tend to pick up their values from those they spend most of their time with - we wanted to assure that was one of us versus a day-care provider.

grettman
Posts: 388
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Re: Can we afford to live on one income?

Post by grettman » Mon Dec 11, 2017 5:08 pm

I make about $163K annually and my wife didn't work for about 8 years to raise two kids.

During this time we had a larger mortgage than you. We also had no debt other than the mortgage.

During this time a fully funded my 401K to the max and started a traditional IRA for her. We also contributed to 529 plans and did some other investing.

We were fine.

JBTX
Posts: 4268
Joined: Wed Jul 26, 2017 12:46 pm

Re: Can we afford to live on one income?

Post by JBTX » Mon Dec 11, 2017 5:13 pm

delamer wrote:
Mon Dec 11, 2017 4:50 pm
JBTX wrote:
Mon Dec 11, 2017 4:39 pm
delamer wrote:
Mon Dec 11, 2017 11:37 am
JBTX wrote:
Mon Dec 11, 2017 9:46 am
It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.
I am going to push back on your first comment, even though I agree in general with the rest of your post.

There are many different parenting choices represented here on the forum. While there are some families that have decided on the SAHM model, I don't see the evidence that "most in BH advocate" for it.

You were right to point out that It is important that families think about the long-term financial implications for the stay-at-home parent when making these decisions.
You may be right on my comment. It was a general feeling i had but not based on hard evidence. Some time ago I was struck by some comments on another threat advising a successful woman making high well
Into 6 figures to quit her job and stay home with her children. But that doesn’t necessarily mean that is how most think here. However I do think a sizeable contingent believe in the SAHM model. Is it a majority? I don’t really know.
"Sizeable contingent" I can live with. :happy

Although I don't think that sizeable contingent is unique to Bogleheads. It may be that because Bogleheads are better savers that having a stay-at-home mother is more doable for them than for most families.
No it isn't. it isn't uncommon at all within upper middle class families. I would say a majority of our friends, all of whom have above average income, did the stay at home mom things for a while. Now that they kids are teens, most are back doing some type of work, but generally fairly low paying and part time. I think for some it has worked out well, and for some it was a disaster, primarily because they weren't very financially savvy, and were determined to keep up with the Jones's even though they only had one income. A couple of those instances ended up in divorce, but the issues were bigger than just financial or only having one income.

Like I said at first, I grew up in SAHM house, and it was great for us. Good for kids, good for Dad. Whether it was good for mom is a complicated question. But that was an era when a person could work their whole life in one company.

Personally, just given how I am, I would really be uncomfortable if our financial security totally depended on me all of the time. I'd probably be miserable, and so would everybody else. In our case, DW is just not the SAHM type anyway, so it works well. Over the years we have both flexed up and down as needed to adapt to the situation.

There are merits to either path, and it really depends on the situation. However, in certain circles, I do think there is a bit of a guilt trip laid on moms who work, and that trend may have got its legs back in late 90's with the Dr. Laura "I'm my own kids mom" thing.

Bottom line kids have to be well taken care of, either by parents or quality day care alternative. And when you get to more than one kid if both work you really need to have flexible employers or life will be pretty stressful.

lolbatross
Posts: 129
Joined: Thu Feb 20, 2014 10:36 pm

Re: Can we afford to live on one income?

Post by lolbatross » Mon Dec 11, 2017 7:34 pm

Ran these numbers through firecalc - 600k starting +15k/year till 60, 100k expenses, retirement starting in 28 years lasting for another 30. 100% success with and without SS (you should be on pace for max).

Seems like a Yes. Adjust as needed in the future if you ask yourself the same question in 5 years and get a different answer.

FWIW DW & I had similar numbers and similar conversations a few years ago - she continues to work by choice - not by necessity.

KyleAAA
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Contact:

Re: Can we afford to live on one income?

Post by KyleAAA » Mon Dec 11, 2017 7:57 pm

You can easily afford it unless retiring by 50 is a goal.

Triple digit golfer
Posts: 2984
Joined: Mon May 18, 2009 5:57 pm

Re: Can we afford to live on one income?

Post by Triple digit golfer » Tue Dec 12, 2017 7:35 am

Thank you all for your great replies, personal stories, and recommendations and suggestions.

I like the idea of the mortgage recast. I think it would help me sleep better at night, even though if I don't recast I simply have that money sitting in a taxable account. Just the thought of having say, $270k remaining on my mortgage instead of $337k feels better.

In 2018, assuming my wife does not work and I put her on my insurance and keep maxing out my 401k, that will get us VERY close to the 15% tax bracket, at least under current laws, which means 0 taxes paid on long-term capital gains.

What happens if I sell $70k from my equities in taxable on January 1, 2018, trigger a $14k long-term capital gain (current gain if I sell now), and our taxable income for the 2018 tax year comes in at $1 into the 25% tax bracket? Does that mean that we pay 15% on the entire $14k?

livesoft
Posts: 63009
Joined: Thu Mar 01, 2007 8:00 pm

Re: Can we afford to live on one income?

Post by livesoft » Tue Dec 12, 2017 7:38 am

Aren't you a corporate accountant? I thought accountants were supposed to figure out these things easily.

The extra $1 will be taxed at 15%, 25%, or 30% depending on other things on your tax return.
Last edited by livesoft on Tue Dec 12, 2017 7:58 am, edited 1 time in total.
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bottlecap
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Re: Can we afford to live on one income?

Post by bottlecap » Tue Dec 12, 2017 7:43 am

If you calculations are correct, $100 is probably too tight. Something will have to give. I’m speaking from experience.

However, you could do this for a few years if you don’t mind dipping into savings every few months when the need arises.

Good luck and congrats on the baby,

JT

runner540
Posts: 770
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Re: Can we afford to live on one income?

Post by runner540 » Tue Dec 12, 2017 8:15 am

JBTX wrote:
Mon Dec 11, 2017 5:13 pm
delamer wrote:
Mon Dec 11, 2017 4:50 pm
JBTX wrote:
Mon Dec 11, 2017 4:39 pm
delamer wrote:
Mon Dec 11, 2017 11:37 am
JBTX wrote:
Mon Dec 11, 2017 9:46 am
It generally seems that most in BH advocate the SAHM family model. Obviously there are many benefits to it. It is what I grew up in.

If I were in your situation I would not be comfortable with:

1. Only saving 10% of income. Granted it is better than most in the US, but not as much as I would like.
2. Having that big of house payment on one income.
3. Totally relying on one job and one employer for our entire economic well being. If you get laid off and economy tanks you will have little margin for error.
4. DW deteriorating work skill set. The longer you stay away the less marketable she becomes.
5. Having only one income and one spouse not having work outlet can lead to more financial stress and more stress marriage.

Does she like her job? If she hates it and works 50-60 hrs a week, then yes she should bail. But if she likes it and it is manageable and you have good options for childcare then I don’t think it is necessary for DW to be your child’s permanent babysitter. Looking after an infant and toddler really isn’t that complicated. Just requires diligence and attention. Now I will say if and when you get to 2 or more kids it does become more logistically complicated.

If you are both set on her staying home I’m sure you can make it work. But my inclination would be for her to take a leave, then try continuing to work since you have good and affordable child care options available. It is easier to decide to quit your job than to decide to go back to work after a long absence. If she does decide to do that, don’t feel guilty about your decision. There is a heavy bias to SAHM parenting in certain upper middle class circles.

Whatever you do, but especially if she stays at home, I’d really look at reducing some expenses. If you are going to go with one income then you need to give yourself more wiggle room.
I am going to push back on your first comment, even though I agree in general with the rest of your post.

There are many different parenting choices represented here on the forum. While there are some families that have decided on the SAHM model, I don't see the evidence that "most in BH advocate" for it.

You were right to point out that It is important that families think about the long-term financial implications for the stay-at-home parent when making these decisions.
You may be right on my comment. It was a general feeling i had but not based on hard evidence. Some time ago I was struck by some comments on another threat advising a successful woman making high well
Into 6 figures to quit her job and stay home with her children. But that doesn’t necessarily mean that is how most think here. However I do think a sizeable contingent believe in the SAHM model. Is it a majority? I don’t really know.
"Sizeable contingent" I can live with. :happy

Although I don't think that sizeable contingent is unique to Bogleheads. It may be that because Bogleheads are better savers that having a stay-at-home mother is more doable for them than for most families.

No it isn't. it isn't uncommon at all within upper middle class families. I would say a majority of our friends, all of whom have above average income, did the stay at home mom things for a while. Now that they kids are teens, most are back doing some type of work, but generally fairly low paying and part time. I think for some it has worked out well, and for some it was a disaster, primarily because they weren't very financially savvy, and were determined to keep up with the Jones's even though they only had one income. A couple of those instances ended up in divorce, but the issues were bigger than just financial or only having one income.

Like I said at first, I grew up in SAHM house, and it was great for us. Good for kids, good for Dad. Whether it was good for mom is a complicated question. But that was an era when a person could work their whole life in one company.

Personally, just given how I am, I would really be uncomfortable if our financial security totally depended on me all of the time. I'd probably be miserable, and so would everybody else. In our case, DW is just not the SAHM type anyway, so it works well. Over the years we have both flexed up and down as needed to adapt to the situation.

There are merits to either path, and it really depends on the situation. However, in certain circles, I do think there is a bit of a guilt trip laid on moms who work, and that trend may have got its legs back in late 90's with the Dr. Laura "I'm my own kids mom" thing.

Bottom line kids have to be well taken care of, either by parents or quality day care alternative. And when you get to more than one kid if both work you really need to have flexible employers or life will be pretty stressful.
(Edited for clarity on statistic)
Among American families in general, it's pretty rare: only ~20% of households with children under 18, have a stay at home wife. In 1970, it was <50%.
http://www.pewsocialtrends.org/2014/04/ ... e-mothers/
Last edited by runner540 on Tue Dec 12, 2017 4:46 pm, edited 1 time in total.

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DaftInvestor
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Re: Can we afford to live on one income?

Post by DaftInvestor » Tue Dec 12, 2017 2:40 pm

runner540 wrote:
Tue Dec 12, 2017 8:15 am

... it's pretty rare: only ~20% of married households have a stay at home parent...
I would call 0.2% pretty rare. 20% (1/5 of households) is a lot higher than I would have guessed.

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