It sounds crazy, but going back to work outside the home would cost my family money. I’ve done the math and it just doesn’t work; staying home is simply more cost effective.
My former job paid an hourly rate of $14/hr., double the minimum wage at the time, and was a standard 8am – 5pm with a one hour lunch break. If I were to go back at that same rate full time, I would make about $29,000 a year, which would certainly help out our financial situation, right? Not so much.
Adding $29,000 to our current income would bump our tax bracket up from 15% to 25%. Our current Federal tax on $24,000 a year is $2,765. Our Federal tax bill would be $7,115 if we added in my potential income. (I used the IRS tax calculator to figure this out.) Right off the bat, my income would go down $4,350 by the difference in Federal taxes alone, bumping it down from $29,000 to $24,650, even without state taxes.
Still, $24,650 is nothing to sneeze at! But we haven’t factored in childcare, which is ridiculously expensive in our neck of the woods. Full time childcare for my two children would be (are you sitting down?) at least $2,000 a month. I’m not exaggerating this for effect; I called 5 day care centers and 4 in-home daycare providers to ask the current rate for full time care. I would make too much for subsidized childcare. So my $24,650 would be down to a measly $650 a year.
So I’d be bringing in a whopping $650 a year, just over $50 a month, without taking into account the cost of work clothes (since my shlubby mom gear won’t cut it), transportation, hidden work expenses like contributing to birthday gifts and baby showers for co-workers, more expensive convenience foods because I wouldn’t have enough hours to cook from scratch, and potentially the cost of unpaid time off when the kids or I got sick. And that is if I could find a job paying $14 an hour; with so many people looking for work, with more experience and education, who have not been out of the work force for 5 years, I doubt I’d be able to command my old wage.
While the economics are a primary factor in our decision for me to stay home, we also value this special time in our children’s lives and I appreciate the opportunity to spend it with them. Having the time to share our values and shape them into the people they will become is priceless to our family. I’ll return to work when they’re old enough to go to school, but this time together is so special and I’m willing to make sacrifices to have it.
Once the kids are in school full time and the cost of daycare doesn’t suck out the vast majority of my income, I intend to go back to work. In the meantime, I’m going back to college in the fall to complete my Bachelor’s degree so that I can return with a higher earning potential and I’m enjoying the little years of my kids’ lives.
Is staying home is cost effective in your family? Plug your numbers into this calculator to find out.
This post is linked to Frugal Friday at Life As Mom.