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November 17, 2010

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Some quick math. Pretend they have an amazing 0% interest rate on everything they owe. Say the value of everything they sold (including the 19k car) was 23k total.

Say he did a LOT of extra web design and made an extra 20k a year.

Say they saved 500 a year on car insurance and they previously had a top of the line phone + cable package ($400 a month) which is now a $50 family plan for some cell phones.

Taking all that into account (and pretending they said two years instead of less than two years), the left over amount is 24.8k or 1k a month. They were likely just over spending.

Sorry--it's just an incredibly lousy financial move for one member of a couple to just quite their job. I cannot believe you'd promote it as something positive on this blog.

From whatever perspective you look to look at it--saving for retirement, for college for their kids, future social security payments for the person who quits their job, income and health insurance back-up for the entire family in case someone loses their job or they get divorced--it's just flat out terrible and an enormous risk.

Unless of course they have 2 million in the bank? But that doesn't sound like the situation here.

This is my plan. My wife and I had our first child and now want to go to one income. We both make the same amount of money and have about 50k in debt (no credit cards thankfully). We are trying to do it in a year. But we are struggling to do it. Stories like these give us hope. Thanks for posting it. I also blog about our journey to get to one income daily.

MC --

So you're saying that in every case it's a bad idea for one person in a couple to quit their job (unless they have $2 million or more in the bank)? Really?

@MC,

Financial prudence is certainly absent from many American's choices. However life does not consist solely in the size of your retirement fund. There are many quality of life issues to be considered and having the ability to stay home and raise your child is a choice many people consider very important. Some are well off enough to just do it. Others find ways to make sacrifices to do it. And plenty of others dream longingly about doing it but just can't seem to make the numbers work (although many of them also refuse to make some of the tough choices made in this example).

It is certainly not for everyone or even for most people, but to say that unless you have 2 million dollars in the bank that you are making a lousy choice and a terrible financial move? That just sounds like you put all your hope, and security in your bank account. And while I certainly advocate being as wise as possible with finances, I don't want all decisions in my life to be secondary to the singular issue of building my bank roll. To me that is a little bit sad.

And by the way, before you attack FMF for advocating such an unwise financial move, you should have been able to glean from past comments that he and his wife made this choice many years ago, well before he had 2 million dollars in the bank (no idea if he has 2 million yet).

My wife has made this choice as well and we don't have close to 2 million in the bank either although we are doing quite well. I am sure plenty of others have made this choice and done so in a wise and prudent manner.

The fact that you don't feel comfortable doing it does not automatically make it an unwise move.

I'm not dissing FMF, but I am baffled why this particular financial decision is so sacrosanct that we can't even bring it up?

Also there is no evidence that kids with 2 parents working are deprived. Maybe if your child has special needs, but otherwise the vast majority of children do absolutely fine in daycare/preschool. Many preschooled children in fact enter kindergarten much better prepared for school. And after age 5 children are in school most of the day anyway, so why does anyone need to stay home all day and not work?

I think that a couple deep in debt should definitely reconsider a decision that would result in them losing 1/3 or 2/3 (in the example) of their combined income. It's by far the most expensive decision they might ever make.

KH --

I don't think it's so sacrosanct that it can't be brought up, but to make such an emphatic statement like the one MC made seems way over the top to me.

And as for "no evidence that kids with 2 parents working are deprived", who said there was evidence in the first place? I've re-read the piece a couple times now and I can't find it.

This family wanted to make a lifestyle choice and then took action to make it happen financially. Is there really something wrong with that?

There are no absolutes here. If you are in debt struggling to pay bills then cutting your income by half or more isn't a good idea. But if you can handle it financially and want to then theres nothing wrong with it. If one spouse makes a lot more than the other than quitting the lower paying job can actually save a couple money.

Jim - I totally agree that quitting the lower paying job can save money, but what really confuses me about this post is that the higher paid spouse quit. This makes no sense to me.

Of course, the better "accomplishment" is to not get into $70,000 worth of debt in the first place! However, I don't see too many articles about those people.

I don't have a problem with one parent staying home per se. However, the majority of such situations seem to be "man works, woman stays home", which -to me- reeks of proscribed and outdated gender roles. I know there are plenty of men who stay home to take care of the kids, but I have a feeling that this is the minority of cases.

Thomas:

I agree from a purely financial standpoint, it would have made more sense for the wife in the article to keep her job and the husband to stay home with the baby, since she is making double what he makes. I am wondering if the reason why it is usually the woman who stays home is sociological or biological. I honestly don't know the answer but I am open to the possibility that the reason why more woman stay home to care for the kids is because of some difference in the innate biology between men and women. However, my education in biology is limited to one year of it in high school, so I will leave it to the experts to hash out.

KH, MC: When you factor in the cost of day care, it is possible that it is more financially prudent for one of the parents to stay home for the first few years, or only work part time, or sacrifice pay for flexibility, etc. It isn't so cut and dried as you two make it out to be!

Jamie writes a blog. Theres more detail here:
http://www.eventualmillionaire.com/blog/2010/04/how-i-paid-off-over-70000-in-debt-and-quit-my-job/

@Thomas.

You are frankly stuck in an outdated proscribed feminist agenda world view. You should talk to women who stay home to raise kids and ask them if their husband forced them, or strongly suggested, or indicated this is what he thought was her proper gender role.

Your statement is non-sense. And if you read the article and tons of them like it, the woman really really really wanted to stay home. Did you see what she said about her husband. She sat down and figured out how to make it happen and after SHE prodded him he got on board. He didn't suggest this and when he first heard about it which was entirely her idea, he didn't want it. Plenty of women don't want to stay home but more and more of them do as they get freed up from this outdated backward thinking that the only way they can find fulfillment in life is to have a "job" (as if raising kids isn't a huge job).

It's a pretty obvious fact of biology that women are more drawn to the nurturing roles than men. And if people weren't so stuck in a PC world they would see that in nature it is almost always that way. Women are rarely forced or even pushed into staying home with kids in today's America (yes I am quite certain it happens in some skin head community somewhere, that hardly proves anything). Women can do anything they want and a lot of them want to stay home.

Who are you to suggest women not be allowed to do what they want to do rather than what society or some woman's movement that purports to represent what is best for women tells them they are supposed to do.

My wife stayed home and I never once told her to do it. She told me she wanted to do it. I would be happy to have the extra money. But I also appreciate very much what she does with the kids and I frankly can't imagine us both working and driving 10 hours a day and then trying to deal with all the kid and other stuff that has to happen after work. It's a more enjoyable life for us both this way. And that's because that's what SHE wants.

BTW, I would take a bet with anyone, that there are far more women in America who are currently working who want to stay home with kids, but their husband has told them there is no way they can afford it due to their lifestyle choices, than there are women who want to work but are staying home with kids because their husband has told them that's where he wants them.

If husbands are making women do things they don't want to, I guarantee you it's them making her work, not making her stay home.

I guess she had to quit to take care of the baby. Tough move given how much she made relative to her husband.

My wife quit her job a few years ago, it was an easy move for us since I am earning nearly 15 - 20 times what she was making.

The sad part is I can't quit my job :-)

Mike

Daycare is indeed expensive. For two children younger than school age it can run over $10,000a year! However, daycare is only needed for a few years. Once the kids are in school, daycare costs go down significantly. Once one of the kids gets to about 10 or 11 years old they can watch their younger siblings and you might not need daycare at all. Eentually your kids will grow up and leave the nest in 10 or 20 years or so--and you're still in the prime of life. What will you do then?

Typically, the mom who "opts out" of work to have kids never returns to work at the same level of a career track, even if she does go back to work when the kids are older. For many professions, you just can't be out of the working world for years and expect to jump back in at the level you were when you left. For many professions, you'll actually be ineligible to do so.

Thus, quitting your job to stay home with your children very severely negatively impacts your earning power your whole life, very similar to not attending college. While the arguments in favor of staying home (like saving daycare costs) only give short-term savings, sort of like deciding not to get a bachelors degree in order to save money.

Most people with careers find them interesting and engaging as well as financially rewarding. In contrast, low-paying jobs are not satisfying to perform and also don't pay well.

I live in the midwest where the cost of living is cheap and the culture is conservative--a lot of women I know who are my age now decided to stay home earlier in their lives.

But now they find they have to work and only low-paying jobs are available to them. Two of these women clean my house. Another is my secretary. Another works at the mall in a clothing store. More are receptionists, janitors or are employed at similar low-skills, low-pay jobs elsewhere in my company. They raised their kids, but that was years ago. Their husbands either left them, died, or have chronic healthy problems or were laid off from their own jobs. They have no savings or retirement accounts.

I do think women should think long-term when making decisions like this. It's no longer the case that it will take your entire life to raise your family--you'll live much longer than that.

Jess --

What does it matter which job is given up as long as the numbers work?

Apex --

Gotta say that I agree with your thoughts...

KH --

It's true that there are risks involved. A career can get significantly off-track and, as we all know, many marriages don't work out these days, people lose jobs, etc. So I agree that much consideration needs to be given before such a step is taken. (In fact almost any time you're making a career-related decision, it's a big decision.)

What I admire about this couple is that they did all this and decided what they wanted to do. Then they made it happen despite being at a big disadvantage at the start. They have the determination and discipline to work through a very tough situation when most Americans have very little financial discipline. So for this, I commend them.

I think the problem lies in two different viewpoints here. The point of being good with your finances and being able to budget may be so that you have the option of doing things in other aspects of your life which AREN'T the best financial decisions, and have the luxury to do so.

That being said - it is a lot like KH said above - not going to college to save money. It will have an overall financial impact on your entire life. However, sometimes you make financial sacrifices for what is important to you. But it woudl be foolish to not look at the entire impact it will have before making that decision.

@Apex - I would make that same bet about men as well. In fact, who wouldn't love to quit their job? The people who are happy with their careers and their jobs are less likely to be the ones considering being a stay at home parent.

There are social factors involved here too - such as the idea that it is an option for women to quit their jobs and stay home, but not for men. (and no, I'm not seeing that on this blog - I'm just talking about American societal pressures). Motherhood in general has been "sanctified" in this country to the point where women feel a tremendous pressure to sacrifice everything. I do think that there needs to be that balancing viewpoint where it is pointed out how much this will affect retirement, careers, etc. later on.

I think its great that her husband was so supportive of her. I know in most families it is the person who earns less who ends up staying home. I wonder what the general reaction would be if the genders were reversed here though, and the husband who earned twice as much as the wife decided he wanted to quit to stay home.

All,

Here is a quote from Jamie's blog that gives more explanation for why she quit her job:

"I hated my work. I had worked so hard, for what? I had some cool stuff. But I was stuck in airports all the time. When I was home I dreaded Sunday nights because they marked the beginning of yet another long work week.

I determined that living an enjoyable life was worth far more than a million dollars. So I updated my goal. Instead of just a million dollars, I wanted to find work I loved, and the life I loved and THEN make my million."

and she didn't drop out of the workforce entirely.

She has the blog and says : "I work 20 hours per week as an entrepreneurial coach"

@Sarah and KH,

I don't disagree with the bulk of what you are saying. It is a decision that requires careful consideration.

As to men wanting to quit their jobs, sure, many want to do that too. But do a survey and ask how many men specifically want to quit their job to stay home with kids. I assure you it is not very many. I know some do it and do a great job. But men who want to quit their jobs usually either want to just not work at all (and raising kids is a lot of work, I would sooner be in the office than doing that) or have some other vocation or profession or side business they want to do. Or they think they can go be a professional day-trader or poker player or something silly like that.

But I assure you there is not a long line of men who want to quit their jobs to stay home and raise kids. But there are many women who are drawn to that role. There is a woman who is a good friend of my wife's. She was a professional woman with a good sales job. After her first child she took 6 weeks off and then went back to work. She made it 1 day and quit. She just felt she needed to be home with her baby. I cannot tell you what was going on inside her mentally and emotionally because it happened to her not me. And I have never heard a story like that from a man. She has since found a way to do some side business work at nights because she does seem to be the type of woman who needs to contribute professionally as well and she has found a way to make both work and that is great as well.

I don't have any opinion on what women should do. I am fine with any choice they make. It seems to be when they make the choice to stay home with kids that the choice is questioned and derided and suggested to be potentially oppressive.

I support any choice they make, isn't that the ultimate in women's liberation? To let them choose any path they want? And I do know this, they want to make a choice to stay home with kids far more than men do. That's just a fact of biology and frankly to think differently is something one has to be taught, because no one would reach a conclusion that men and women's desires and natural inclinations in the areas of child raising are the same without someone trying to teach them differently.

From the perspective of a stay at home mother (who really wanted to stay home and arranged to do so before having children): My husband and I did not choose to have a child only to pay someone else to raise my child for 9-10 hours a day. When you consider nighttime sleep hours in addition to daytime daycare hours for a young child, a working parent has very little time with their children. It's not like I do nothing as a stay at home parent. I do a job everyday - I raise a child and see to his needs while also running a household. Unless you bring your child to work with you, the only reason you are able to work outside the home is because you have paid someone else to physically take your place in your job as a parent for those working hours. Additionally, I made the choice to breastfeed my child because that is the best thing for him. I recognize that technology now allows a woman to pump breastmilk and feed that to her child, but that physically can be very difficult to achieve long term. Biologically, I am the obvious choice of parent to stay home with my child while he is of nursing age. (I recognize that this is a financial blog, but for me there was more behind the decision to stay home with my child than just the financial impact of saving daycare costs. Life isn't all about money though it does help smooth the road.)

I'm a little taken aback at the hostility towards having a stay at home parent. If a family is financially able to have a parent stay home and makes that decision, then why should anyone else bat an eye at their decision? They haven't handed down some mandate that everyone else must follow their example.

I will also add that I am a military wife. We move every couple years to places that we don't necessarily have any control over. Many times (like currently) we are stationed in small towns quite far from larger cities. I would have a very difficult time maintaining any sort of "professional career" even if I chose to work outside the home. Yes, the military is a choice my husband (and I when I married him) made and we as a family do what is necessary to meet the obligations that choice has entailed.

@Apex - I think the biology argument can obviously be made with an infant however I wouldn't say that wanting to stay home with kids has something to do with biology - traditionally both parents work. Middle class women may have done most of their work in the home, but cooking and keeping a house was a lot more time-intensive previously. How much quality time do you have with your children while you are baking bread and hanging your laundry out to dry? I think if you are going back to biology than it is the older generation who would be watching the kids, while both parents worked.

I also think that your idea about what women and men want is probably much more linked with sociology than biology. If you ask a man from 50 years ago vs a man today how much time he would want to spend with family and kids you woudl probably receive vastly different answers, and biology hasn't changed.

I was a stay-at-home dad and happily quit my full-time job to do so.

I never stopped working entirely. I did a little spare work on the sides, found a niche to fill, and now that the little guys are bit older I'm finding that I make about double what I made before in half the time.

@Sarah,

You are wrong and were taught to think that way from multiple sources. I understand you disagree, you were taught to. Such blatant denial of something as obvious as gravity can only come from in depth training.

@Apex - what am I wrong about? I'm not trying to get into a nature vx. nurture argument here, but most studies have shown that it is a combination of nature and nurture. Are you seriously saying that Men who want to spend time with their families and would enjoy being stay-at-home / work-at-home dads are going against their nature, and are only doing so because they were trained?

Of course everything depends on goals and what you want for your family. For our family, we wanted the financial security of two jobs, plus private music lessons, sports , the option to decide between public and private schools, international travel, and owning income-producing property in France. We could not accomplish this on one salary. In Silicon Valley, many companies allow telecommuting, so we have the best of both worlds. Both my husband and I contribute financially and we work at home: we both can pick our kids up from school, and we have an equitable division of housework and maintenance.

@Sarah,

Q: "what am I wrong about?"

A: "however I wouldn't say that wanting to stay home with kids has something to do with biology"

It has almost everything to do with biology. disclaimer: not everything, not all the time, and not for every single person on the planet.

I debated whether I needed to put in my other statement to you the disclaimer that there are obviously some women who would hate being home with children and actually seem to have no inclination towards child rearing at all, and that there are some men who seem to just be drawn to it and born to do it. It's a bit annoying that everytime one makes a general statement one has to debate whether one has to remind people that things that are true most of the time are spoken of in the general as being true but that there can be 1%, 5%, 20% of people for whom the exact opposite is true. That doesn't make the general statement any less true.

Men are taller than women. Do I really have to say but just as a means of full disclosure I fully recognize that there are many women who are taller than many shorter men and even some women who are taller than the average man and even some women who are so tall they are taller than 97% of men. Do I really need to say that? Seriously?

So, no, stay at home dads do not have to be going against their nature. Some of them will have such a nature. And some will stay at home because they and their wife have decided that they together think it is important and she makes too much money so he has to do it. I know of such instances. Generally he is probably going against his nature a bit in this sense but usually he will fall into the role just fine. He is doing it because they think its important for a parent to be there and so he chooses to take a role he didn't want because they think its important.

But if all dads stayed home with kids all day long and did the raising (not playing football in the yard as important as that can be at least with boys, I am talking about the real daily work of raising them, especially in the before school years), most dads would be going against their nature. Regardless of how they were nurtured. No doubt about it. Men have a different bond with their kids than women do. And even for women who don't particular enjoy that kind of raising of the kids, many have what seems to be an innate desire to do it regardless (although some are repelled from it like a magnet). It's just in there.

It's also very interesting to me how many people promote the sociology over biology angle. No one wonders why female lions take care of the cubs, or wolves, or dogs, or cattle, or whatever. But for humans, we must not be programmed different based on gender. That only occurs in every other living organism on the planet. For humans, society must be telling women to do that. That's what I mean when I say you have to be taught to think like that.

Just another little social proof.

Go into a day care center and count the number of males directly taking care of kids.

You have to be taught to not see the obvious.

I'd like to contribute my future experience that actually has nothing to do with children!

We will be moving to one income next year when I return to school full time (2-3 years undergrad, then hopefully 2-3 masters). I'm sure I'll pick up some part time work but it will probably just cover the cost of my cheapo instate tuition at best. I'm pretty psyched- I never had a "real college experience" 10 years ago, so this is my chance to focus 100% on my studies instead of striving to make ends meet to pay for tuition while taking a measly 6 hours here and there... It is a fantastic luxury, but I feel like I've made years of financial sacrifices to make it work and I deserve it.

We did it via the same formula FMF posted:

We created a 50% (take home) cushion between our income and spending after we got married in 2008.

We still are paying above the minimum for my wife's student loans- the only debt we have (although we are buying a house next year as well).

We socked away plenty for the house and many other expenses, as well as a six month emergency fund.

And finally next year, we'll move to one income and keep our spending at the same as it is now. The bonus will be our mortgage will be 2/3 of our current rent (moving to a much cheaper city).

I have two other quick comments to make:

This one of the few times I've seen a "reasonable" grocery bill in these stories. I consider my wife and I as extremely healthy eaters, and we rarely spend more than $250 / mo on food (we don't buy a lot of meat or organic produce though, maybe that's it?) I really just don't get it, we have so many friends who have $500 grocery budgets for just the two of them. I mean, what?

This actually is something I thought of when I read the other story FMF posted about saving 1/3 of your income. The author posted about indulgences to make a frugal lifestyle easier. This is so true. Our big indulgence is travel. If you have ambitious saving goals, don't forget to budget for indulgences! Even if it is as small as a night out at the bar (one of my faves) or as big as a brand new 60 inch TV, do SOMETHING to take the pressure off.

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