Well readers you are going to have a field day. Earlier a book review about healthcare and now a question about whether to stay at home, work, or move. Interesting. Also please no jealous comments (because they are doing FANTASTIC!), this is a serious question by the reader and she is considering all options! Also they both have pretty stable government jobs.
Background, a female reader is wondering whether she should stay at home, work, or possible move now that she and her spouse are pregnant and expecting their first child in December. Currently they live on the East Coast in a High Cost of Living Area. Ideally they would like to move back to the West Coast to a lower cost of living area (me too). They are 29 DW and 37 years old DH respectively. Because of the drop in the stock market they are currently reconsidering their relocation plans.
1. Income – $100k DW = $8333/month
$130k DH = $10,800/month
$20k/yr – gifted from family
Total = $250k /yr gross
2. Retirement – Contribute $30k/year to 2 – 401ks, would contribute to Roth if qualified
- current balances $70k DW, $120k DH
3. Taxable Accounts – $210k, down 50% from 1 year ago despite adding $60k last year
4. Mortgage – $0, own farm valued at $75k
5. Average Monthly Expenses – $5k/month, $3k is just rent/utilities and $2k on extras like food, etc
6. Average Annual Savings – $30k 401k + $20k Family Gift + $45k taxable account = $95k savings/year
7. Projected Daycare – $2k/month (hey it’s a HCOLA)
8. Projected Mortgage – $350k-$400k home, current COLA is $750k for a SFH
9. Projected Income after move – $100k – $130k because, DW would likely stay at home
10. Until last year the couple had around $400k in a taxable account and was looking at buying a home in a LCOLA area for cash and thus having no mortgage when the baby came. Of course they could not predict how long or when they would have a baby and have been trying for 2 years. Thus with the 50% decrease in savings from the market, the DW is curious as to the best course of action now.
- Does it make sense to move after the baby is born after maternity leave?
- Or should we move in a few years after building up savings so the DW never has to work again?
- Or should we stay put and not have DW work at all?
- Or should we move and let DW work in a LCOLA?
A few issues are
- Don’t like the current area they live in
- No family and friends in the area, the relocation would be closer to family and friends
- But would prefer not to do daycare
- Is hesitant to use taxable account for a large down payment because of the recession, because house is not paid off, unlike previously
- DW is burnt out and would like to consider a career change.
So that’s the scenario, do they move, stay put, and should the DW give up her job or not.
Wow, that’s a lot of possibilities. A lot of information to process as well.
So what do I think? I think that they should relocate and rent a house so the DW can have flexibility with staying at home. Then when they feel the DH’s job is secure and have scouted the area more thoroughly they can purchase a home. I think they can actually do any of the scenarios without too much financial hurt. I think that renting also gives them flexibility for one year in case the DW decides she doesn’t want to be a stay at home mom.
I am not sure if being in HCOLA that they don’t like without many friends and family would be good for a SAHM either. But maybe I’m wrong. Readers weigh in.
9 responses so far ↓
1 dogatemyfinances // Apr 3, 2009 at 9:53 am
Depends on the careers and the “career change.” This economy plus a new baby makes it sound like an awful time to be job/career hunting to me, but it really depends on the careers.
2 Kristy // Apr 3, 2009 at 10:03 am
I think relocation at the current time with the economy the way it is would be a bad move. As for staying at home, that is completely personal and up to the couple. They should do whatever works for them.
3 Mary // Apr 3, 2009 at 12:22 pm
I don’t think they can lose. Sure they networth might be slightly smaller, but not significantly. I think this is something they need to decide for themselves. They put themselves in this great position to have options and now they can’t make a decision. Personally, if the husband can line up a job … I would go all in and move. Maybe not necessarily buy a house at the new location. But you work for years to ge to a point and now it is like they can’t pull the trigger. DO IT. Start living a little for today.
4 LivingAlmostLarge // Apr 3, 2009 at 10:49 pm
Apparently it’s a hot career field.
I agree mary they might not lose much either way.
5 fengshui // Apr 4, 2009 at 3:46 pm
They have a home that is paid for, TONS in savings, and more than enough of a salary from DH…..
Anyway, I personally would NOT pay $400k cash for a home. The interest rates are next to nothing right now. I would put 50% down and finance the rest for a short term…. keep the cash. Knowing that they have gifted money should allow her to be a SAHM too.
And, never having to work again? I really think that the romantic baby feelings are behind that. One a child is in school all day, many moms get the itch to go back to work, unless they had more children.
With such an unstable market, I wouldn’t move now and take the risk of a new job and then the company downsizing. Things are unstable and bad in ALL fields, even government.
We actually have NURSES being laid off from hospitals here, and hiring freezes. I have friends that are new graduates that are bartending that have master’s degrees because they can’t find work in the insurance and medical fields….. So….. they should feel fortunate for having a roof over their heads, jobs, and money in the bank. Many people are losing everything……
Also, just to clarify, they live in a HCOL, but their home is only worth $75k, or did I read something wrong?
6 fengshui // Apr 4, 2009 at 3:54 pm
Ok, I see, they are currently renting, and NOT living in the farm house? I see now. I still think that they are in such a great spot, I wouldn’t change anything right now. They are “safe”. And although saving $95k is incomprehensible to me- and probably most people in this country right now (because I’ll likely never know what it would be like to save that much in 1 year, let alone 10 years), I’m glad that they are able to do so. lol. Oh well!
7 LAL // Apr 4, 2009 at 5:35 pm
I have no idea where the farm is, I’m assuming maybe where they want to move to? At least that’s my guess.
8 sarah // Jul 8, 2009 at 10:25 am
LAL, the farm is in another country so we wouldn’t be able to live there while employed in the US. The farm is a longer term (retirement) plan.
The very sad update is that I lost the little-one-to-be…heartbreaking for us.
I appreciate the comments/feedback and will take them into consideration when we are lucky enough to enact the change in the future. Another update is I have negotiated with my current employer to be able to take my job with me whenever DH finds employment elsewhere. So this opens up a whole new range of alternatives.
9 LAL // Jul 8, 2009 at 5:14 pm
Sarah sorry to hear about your loss. I hope that things are okay with you otherwise.
Sounds like you area getting reorganized.
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