Can we afford to live on one income?

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

Post by KlingKlang » Tue Dec 12, 2017 2:53 pm

DaftInvestor wrote:
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.
Knowing the percentage of married households with children under the age of 18 with a stay at home parent would be a much more useful statistic for the purposes of this discussion.

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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 3:03 pm

KlingKlang wrote:
Tue Dec 12, 2017 2:53 pm
DaftInvestor wrote:
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.
Knowing the percentage of married households with children under the age of 18 with a stay at home parent would be a much more useful statistic for the purposes of this discussion.
Actually I believe for the sake of the OPs questions the statistics don't matter at all. When we chose to have a stay-at-home parent we never consulted statistics - similar to the OP - we knew it was what we wanted to do and just figured out how to afford to make it happen.

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

Post by Watty » Tue Dec 12, 2017 4:34 pm

DaftInvestor wrote:
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.
That number could be misleading. I looked at the link and it is counting any households with kids under 18 so a lot of the households don't have a young kid at home. If they only counted households with a kid under 13, or some other age, the number would have been a lot different.

It was also not clear to me how it counted single parent house house holds which would be I would expect to have a very small percentage of stay at home parents.

It would be interesting to see what percent you would get if it was measuring something like "two parent households with kids under 13".

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

Post by runner540 » Tue Dec 12, 2017 4:51 pm

Watty wrote:
Tue Dec 12, 2017 4:34 pm
DaftInvestor wrote:
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.
That number could be misleading. I looked at the link and it is counting any households with kids under 18 so a lot of the households don't have a young kid at home. If they only counted households with a kid under 13, or some other age, the number would have been a lot different.

It was also not clear to me how it counted single parent house house holds which would be I would expect to have a very small percentage of stay at home parents.

It would be interesting to see what percent you would get if it was measuring something like "two parent households with kids under 13".
Thanks, all. I edited my post to clarify the statistic. Agree there are many interesting ways the data could be cut. Good luck to OP and spouse in any case.

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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 4:57 pm

Watty wrote:
Tue Dec 12, 2017 4:34 pm
DaftInvestor wrote:
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.
That number could be misleading. I looked at the link and it is counting any households with kids under 18 so a lot of the households don't have a young kid at home. If they only counted households with a kid under 13, or some other age, the number would have been a lot different.

It was also not clear to me how it counted single parent house house holds which would be I would expect to have a very small percentage of stay at home parents.

It would be interesting to see what percent you would get if it was measuring something like "two parent households with kids under 13".
The single mothers were 9% of the 29% shown in the graphic (20% Mom's are married SAHMs; 9% single Mom's are SAHMs).
Again - I don't believe statistics are at all relevant to the OP but if you are interested there is more data here (You'll see single parent breakdowns versus two-parent households with only one parent working, etc.):
https://www.census.gov/prod/2013pubs/p20-570.pdf
While the census cite "Children under 15" after Table 10 - Table 10 seems to include children under 18. Personally - I'm not sure why 13 versus 18 is really relevant to you - perhaps you are saying if you only counted young children the numbers would be higher than the 20%/29% cited?

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

Post by sergeant » Tue Dec 12, 2017 6:40 pm

You can do it and still be fine financially. Once you make the leap don't look back and wonder how much better financially you would have been just enjoy having the wife home with the baby.
Lincoln 3 EOW!

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

Post by basspond » Wed Dec 13, 2017 12:29 am

1. Should be at least 15%, main reason is to make your lifestyle a little uncomfortable so you have to adhere to a tight budget. Also consider a 50/50 split between 401 and Roth which will also lower your tax liability. And yes claim at least 3 dependents.
2. If your family likes the house and plans to be there 10+ years it should be fine.
3. Your after tax accounts are sufficient to handle most emergencies. Work with cutting budget before you reduce your savings here though.
4. Would your wife regret staying home and not workin or working and not be at home 20 years from now? Also look at part time work, but that would depend on how much you can assist.

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

Post by Triple digit golfer » Wed Dec 13, 2017 8:33 am

basspond wrote:
Wed Dec 13, 2017 12:29 am
1. Should be at least 15%, main reason is to make your lifestyle a little uncomfortable so you have to adhere to a tight budget. Also consider a 50/50 split between 401 and Roth which will also lower your tax liability. And yes claim at least 3 dependents.
2. If your family likes the house and plans to be there 10+ years it should be fine.
3. Your after tax accounts are sufficient to handle most emergencies. Work with cutting budget before you reduce your savings here though.
4. Would your wife regret staying home and not workin or working and not be at home 20 years from now? Also look at part time work, but that would depend on how much you can assist.
1. We could do 15%. I was actually considering keeping my 401k maxed and simply drawing down our taxable accounts. So we would have $18k going into 401k, $11k going into Roth IRAs, and something like $10k coming out of taxable accounts annually. More out of taxable for big items like roof, etc. as needed. Is this advised? The way I see it, we have $116k in bonds/cash in taxable and $90k equities, so even if equities drop 50%, we'll have $161k liquid in taxable. At $10k coming out each year, plus say another $10k conservative for other big ticket expenses (this is in addition to the $8,400 annual that I have budgeted for these items), even after a market drop and three years, we'll have $101k left.
2. Yes, we plan on being there a very long time, hopefully until our daughter is in college or even longer.
3. Agreed on after tax accounts. I don't plan on dipping into the after tax accounts except for large expenses like our new roof, air conditioner, and our next car - things that we cannot pay for in the regular monthly budget.
4. I don't think so. She is a teacher and talked about how she would even be happy going back as an aide when our daughter is in school if she can't find a teaching job. The important thing to her (and me) is that someone is there for our daughter growing up.

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Soul.in.Progress
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Re: Can we afford to live on one income?

Post by Soul.in.Progress » Wed Dec 13, 2017 11:09 am

OP,

I agree with others that you can do it, especially since it aligns with what you and your wife want. It may feel tight at times because, in our experience, we have seen expenses grow much higher than we thought with kids. Also, I don’t see any mention in this thread (unless I missed it) about college savings. Do you plan to delay college savings until your wife goes back to work? or not fund college savings for your kid(s)? Just some things to consider.

In general I think you have good savings and seem on top of your financial awareness. Keep up the great work, and good luck with the arrival of baby. It’s a very special time, that first born :D
Start by doing what is necessary; | then do what is possible; | and suddenly you are doing the impossible. | -- Francis of Assisi

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

Post by seity » Wed Dec 13, 2017 11:19 am

I think you can easily do this. My husband stayed home with our kids and I make less than half your salary and we live in a high cost of living area.
We didn't really have the option of him working because childcare costs in this area are higher than any salary he would have brought in, but we also prefer to have one parent at home and it's worth the sacrifice of being on a tight budget for us.

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

Post by bloom2708 » Wed Dec 13, 2017 11:37 am

Maybe it comes down to this:

Your 32 year old financial picture, time, values

versus

Your 55 year old financial picture, time, values

Looking back, sending an infant or toddler to daycare when they sleep a good chunk of the day was better for the "future us". My wife kept working, we saved away, paid off debt, got way ahead and when the kids were older, in activities, could look you in the eye and say "I don't want to go to daycare", THEN we made the decision for one of us to stay at home.

It is the opposite of what I thought. Stay home when the kids are little. Go back to work when the kids are in school. But, when they are older, that is when being flexible is most important. At least that is how it worked for us.

Classic, "you don't know what you don't know".

You can and likely will do it. Does your 32 year old self know you are probably locking into one of you working until 65/67/70 to achieve your goals? Your 55 year old self who is burned out and still has another 10-15 left maybe isn't as happy.

Great discussion. Many ways to get there. Maybe a 6 month maternity leave will clear things up. Some thrive on the time. Some can't wait to get back to work. A good, clean, well run daycare can feel like a blessing for some. For others, daycare just doesn't fit into the plans. Neither are wrong. Good luck!
Last edited by bloom2708 on Wed Dec 13, 2017 3:45 pm, edited 2 times in total.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

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

Post by Naismith » Wed Dec 13, 2017 2:36 pm

JBTX wrote:
Mon Dec 11, 2017 5:13 pm
Personally, just given how I am, I would really be uncomfortable if our financial security totally depended on me all of the time.
We couldn't have any biological children if my spouse took this approach. I am very ill during pregnancy and not able to hold a paid job during that season. I'm grateful to Kate Middleton for publicizing the reality that some women are so profoundly affected--but few of us have access to the excellent medical care she received. (I had to have stomach surgery later because of the damage from the vomiting.)

I also think it would be overstating the situation to say that a season at home made that person "totally dependent...all of the time." For one thing, income-earning is only one part of the financial security equation. As others have noted, the ability to manage a household, cook from scratch, save money in various ways--those also contribute to financial security. As does eventual workplace re-entry.

I'm not sure there are solid statistics on the issue of re-entry. It certainly depends on your field and where you live. I did it twice without any problems or much drop in pay, although I endured a lot of resentment and ugly comments from co-workers who were outraged that I made more than they did after "sitting on my butt at home" for years.

And that is perhaps one of the biggest barriers to workplace re-entry, that idea that full-time parenting is not seen as work (albeit in another field). I hate the term "stay at home" and never used it to describe my work during those years. I'm an Army veteran, I went to grad school, but being a mom at home was the toughest job I ever did. And actually very good training for the project management that I did afterward.

"Not working'? Not really.

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

Post by Texanbybirth » Wed Dec 13, 2017 2:45 pm

Naismith wrote:
Wed Dec 13, 2017 2:36 pm
JBTX wrote:
Mon Dec 11, 2017 5:13 pm
Personally, just given how I am, I would really be uncomfortable if our financial security totally depended on me all of the time.
We couldn't have any biological children if my spouse took this approach. I am very ill during pregnancy and not able to hold a paid job during that season. I'm grateful to Kate Middleton for publicizing the reality that some women are so profoundly affected--but few of us have access to the excellent medical care she received. (I had to have stomach surgery later because of the damage from the vomiting.)

I also think it would be overstating the situation to say that a season at home made that person "totally dependent...all of the time." For one thing, income-earning is only one part of the financial security equation. As others have noted, the ability to manage a household, cook from scratch, save money in various ways--those also contribute to financial security. As does eventual workplace re-entry.

I'm not sure there are solid statistics on the issue of re-entry. It certainly depends on your field and where you live. I did it twice without any problems or much drop in pay, although I endured a lot of resentment and ugly comments from co-workers who were outraged that I made more than they did after "sitting on my butt at home" for years.

And that is perhaps one of the biggest barriers to workplace re-entry, that idea that full-time parenting is not seen as work (albeit in another field). I hate the term "stay at home" and never used it to describe my work during those years. I'm an Army veteran, I went to grad school, but being a mom at home was the toughest job I ever did. And actually very good training for the project management that I did afterward.

"Not working'? Not really.
My wife prefers "stay at home mom" after we found this quote by GK Chesterton: "How can it be broad to be the same thing to everyone, and narrow to be everything to someone? No; a [SAHP]’s function is laborious, but because it is gigantic, not because it is minute." (edited to make it applicable to this discussion)

I still have to run by the grocery store or Home Depot on the way home from work some days, but it's not because my wife was sitting on the couch all day eating bon bons. This took some getting used to on my part. (Took about a year, I'd say.)
"Knowledge and innocence are both excellent things, and they are both very funny. But it is right that knowledge should be the servant and innocence the master." - GK Chesterton

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

Post by JBTX » Wed Dec 13, 2017 3:23 pm

Naismith wrote:
Wed Dec 13, 2017 2:36 pm
JBTX wrote:
Mon Dec 11, 2017 5:13 pm
Personally, just given how I am, I would really be uncomfortable if our financial security totally depended on me all of the time.
We couldn't have any biological children if my spouse took this approach. I am very ill during pregnancy and not able to hold a paid job during that season. I'm grateful to Kate Middleton for publicizing the reality that some women are so profoundly affected--but few of us have access to the excellent medical care she received. (I had to have stomach surgery later because of the damage from the vomiting.)

I also think it would be overstating the situation to say that a season at home made that person "totally dependent...all of the time." For one thing, income-earning is only one part of the financial security equation. As others have noted, the ability to manage a household, cook from scratch, save money in various ways--those also contribute to financial security. As does eventual workplace re-entry.

I'm not sure there are solid statistics on the issue of re-entry. It certainly depends on your field and where you live. I did it twice without any problems or much drop in pay, although I endured a lot of resentment and ugly comments from co-workers who were outraged that I made more than they did after "sitting on my butt at home" for years.

And that is perhaps one of the biggest barriers to workplace re-entry, that idea that full-time parenting is not seen as work (albeit in another field). I hate the term "stay at home" and never used it to describe my work during those years. I'm an Army veteran, I went to grad school, but being a mom at home was the toughest job I ever did. And actually very good training for the project management that I did afterward.

"Not working'? Not really.
Thanks for sharing and indeed everybody’s situation is different. If we were faced with your difficult situation I imagine we would have managed just fine for a spell on one income. When I speak of the potential disadvantages of staying home I’m really talking longer term over many years.

And in our situation it isn’t as if we both worked full time salaries 50 hr per week jobs. I worked part time contract consulting for many of those years and my wife opted out of her management position and took a more analytical position that was at most 40 hrs and sometimes part time. Later she took a job at a smaller company. We’ve always modified our careers to take care of family issues. Over the years I’ve done as much and maybe more of the various child rearing and home activities. It’s very plausible that we could be making twice as much or more income if we completely “outsourced” our child rearing and home activities.

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

Post by mouses » Wed Dec 13, 2017 3:42 pm

JBTX wrote:
Mon Dec 11, 2017 5:13 pm
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.
In my circle there would be a guilt trip laid on mom's who stay home. Wasting their education and all that. None of my close friends with kids did that. We all had technical educations.

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

Post by JBTX » Wed Dec 13, 2017 3:55 pm

mouses wrote:
Wed Dec 13, 2017 3:42 pm
JBTX wrote:
Mon Dec 11, 2017 5:13 pm
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.
In my circle there would be a guilt trip laid on mom's who stay home. Wasting their education and all that. None of my close friends with kids did that. We all had technical educations.
I can certainly see that. If I had to generalize (which can always be dangerous) more often than not from I see women that are in a professional or technical job or are higher paid typically don’t stay home, at least not for very long. Most of the stay at home moms we knew tended to be moms had second income types of jobs as well as teachers. I don’t recall a lot of women at work (various megacorps) dropping out of the workplace to stay home with kids.

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

Post by Triple digit golfer » Fri Dec 15, 2017 8:27 am

Hi all, OP here again.

Got some great news that changes things significantly. I received a job offer for $135k + 15% bonus. In addition, the bi-weekly insurance cost for my family is $336 cheaper than my current job! 8-)

By my math, that gets me a $16.7k annual pre-tax raise before factoring in the bonus (I never count on bonuses). With the bonus, $37k.

:sharebeer

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

Post by bloom2708 » Fri Dec 15, 2017 9:42 am

Congrats on the new job offer.

How is the commute? 401k match better?

(If accepted) the pay bump should help the budget. I was hoping our spending would decrease when my wife decided to stay at home. It didn't, but we are still able to max out tax-sheltered savings. We just aren't able to save in taxable like we used to.

Good luck!
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

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

Post by miamivice » Fri Dec 15, 2017 9:45 am

Triple digit golfer wrote:
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.
While I am not sure what part of the country you are in, in general, daycare is not one of the things that we go cheap on. $150/week seems far too low for infant daycare.

Ours is about $500 per week (through a center, not at-home). I cannot fathom paying 1/3 the price without a drop in quality.

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

Post by Triple digit golfer » Fri Dec 15, 2017 10:07 am

bloom2708 wrote:
Fri Dec 15, 2017 9:42 am
Congrats on the new job offer.

How is the commute? 401k match better?

(If accepted) the pay bump should help the budget. I was hoping our spending would decrease when my wife decided to stay at home. It didn't, but we are still able to max out tax-sheltered savings. We just aren't able to save in taxable like we used to.

Good luck!
Thanks!

The commute is six minutes longer, about 2.5 miles.

The 401k match is only $300 per year compared to my current 2% of income. HOWEVER, in my current role, the 401(k) is not a safe harbor plan and I get around half of my contribution "refunded" to me each year and have to pay ordinary income tax on it. So in the new role, the match is almost non-existent, but I get to keep my full contribution invested in the tax-deferred 401(k) instead of having to pay tax and invest half my contribution in a taxable account.

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

Post by Triple digit golfer » Fri Dec 15, 2017 10:08 am

miamivice wrote:
Fri Dec 15, 2017 9:45 am
Triple digit golfer wrote:
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.
While I am not sure what part of the country you are in, in general, daycare is not one of the things that we go cheap on. $150/week seems far too low for infant daycare.

Ours is about $500 per week (through a center, not at-home). I cannot fathom paying 1/3 the price without a drop in quality.
I would think the same thing. The lady who does it has been doing in-home daycare for 34 years out of the same house. She's 60 now. We received references from around ten people who my wife knows and works with who have used her and they say she is wonderful. Her husband makes a lot of money and she said she does it because she can't imagine not doing it. I have no idea why she doesn't charge more. She could realistically double her price and still be low.

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