Good afternoon, PTP!
“Long time listener, first time caller” here. My husband and I are both currently employed (combined income: $150,000 roughly) and welcomed an adorable little girl this year.
Since returning to work this past August, our daughter has been cared for by a fabulous nanny. Unfortunately, we had to let the nanny go because we could no longer afford to keep her. My take-home was almost breaking even with her salary and taxes. This has stirred up a whole host of emotions and questions.
First and foremost, can I afford to stay home (for one to two years)? I re-read your blog post from 2012 and was hoping we could get more information. My husband ran the numbers a little over a week ago and he said it probably wouldn’t work for me to stay home. I think we just aren’t studying the numbers with an objective eye.
We are at a exciting point in our lives – we are hoping to list our house on the market in 2014, but feel like we can’t make a move to a new house until we sell this one AND before we make some small(ish) fixes. We have minimal credit card debt (less than $3k), paying for one car, mortgage and typical utility items.
Thanks so much for your time and thoughtful consideration.
Thanks for the question! I answered your question this week on The Pete the Planner Radio Show on 93 WIBC. Listen to the clip below to hear what I have to say:
This questions is all about cash flow. If you take away a second income, can you still afford your life? This is a really common question and one that I’m happy to attempt answering. There are a few ways to clear up cash, I’ve listed three below. If you can do one, two, or all three of these things then you should be able to alleviate some financial stress and clear up enough cash to be a stay-at-home parent.*
1) Move to a cheaper home. You mentioned you hope to move this year, so it’s a great time to make a smart financial decision. You don’t necessarily have to move into a smaller home, but if you can decrease your housing payments you can clear up cash. But I’m guessing that you aren’t going to do this. People who have a new baby rarely, and understandably, want to move into a smaller or cheaper home.
2) Change your lifestyle. Changing consumption habits is not appealing for many people. And I get it. You make a decent income so why would you want to limit yourselves? But the truth is if you want to stay home, you may need to cut back. I don’t have information about your money behavior, but chances are you have a weakness in one or two areas of your budget (we all do!). Go through every expense last month and look for patterns. Can you cut back on your lifestyle?
3) Pay off your debt. You have a credit card payment and a car payment which probably means you are paying around $600 a month toward debt. That’s a lot of money you could clear up by paying off your debt. Line up your debts with the smallest balance first and start aggressively paying it off. Once your debt is paid off you have not only cleared up $600 a month, but you’ve also made sacrifices in order to do so. Those sacrifices can help you maintain a more budget-conscious lifestyle.
It all comes down to this, can you free up enough cash to quit your job or to re-hire a nanny? Cutting expenses is really the only way to do it.
*This isn’t a cut and dry situation though. I would need more information in order to give you a better answer. Do you have any savings? Feel free to email me more information and I can give you a more specific answer.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.