Hellobee

I think about this a lot myself, I know we have very similar working from home scenarios with variable contracts, no benefits and paid leaves. We’ve been fortunate this time around with my husband being able to take a leave through the parental leave offered in Canada; however he too is about to start his own small business, so the idea of a second child in the future feels really far away and unattainable right now. I was back to work at 3 weeks, and fullish time at 8 weeks and I know we couldn’t have managed this without my husband on leave.

I think as I navigate through where I’m at now, I’m definitely thinking about how I’d like to be able to step back and scale back more if/when baby #2 comes along in a few years… because while we have a great situation now… I also get bummed out that I am spread so very thin and can’t spend all day with my child.

I think there is so much taboo around debt. It really really sucks… but at the same time, it’s necessary sometimes, and the fact that you have the ability to utilize your home, your credit scores to be able to make something that seems impossible happen for you makes it worth it for me. Paying that debt off will likely seem much more worth it when you know you’re doing it because it was quality time in those fleeting early days with babe #2 (vs. debt from foolish spending, bad choices, etc.)

best wishes as you navigate this and figure it all out!!

Wow…the only reason I’ve continued to work is *because* of the benefits (especially the retirement plan I have). My husband and I have decided that, depending on how DS1 does in school next year (when he enters 1st grade), I might stay home to homeschool our boys full time for a few years. I’ve always felt so torn about whether to be a SAHM mom or a WOHM; until this year, I’ve always felt that the benefits (for me/my family) of working outweigh the benefits of staying home.

I admire you for taking the plunge :), and look forward to reading how things are going.

When discussing selling your home, one of the reasons you give for not wanting to move is that you don’t want to give up the equity you have built. If you sell the home, you don’t give up your equity, you use it to purchase a less expensive house and have a very minimal mortgage. If you open a HELOC, you do in fact give up equity you have built in your home. So I would do quite a bit more research and considering of your options before you move forward.

To answer your question, no, I would absolutely not go further in to debt in order to be a SAHM. Particularly if I were still paying off large student loans. From a psychological stand point, I would have a really hard time with my family struggling to pay off debt created by an education that I’m not putting to use. My husband and I work very hard and planned really extensively before having children to make sure we could meet our current financial needs as well as save for the future for both ourselves, and our kids so that we can do our best to help them from ever ending up dealing with severe debt. We believe that sending our kids into the world debt free is one of the greatest gifts we can give them, but if we are in debt ourselves, that would be impossible.

From what I can tell it seems like your income took a big hit in December, and you became pregnant in January. I know you had a prior miscarriage (I had one before my first and I know how hard that is to go through). But I’m curious, when you and your husband decided to move forward with TTC, did you discuss your decreased income and how that would affect the future financial plan for your family? You said you don’t want to make major lifestyle changes but it sounds like that’s what will be necessary in order to afford two children.

@Truth Bombs: Yes, of course we discussed my decreased income and how it would affect us going forward. We are making it just fine now, but if I take time off work, we will not be able to make it through without incurring some debt. The amount we would be taking out as a HELOC would be less than 20% of our total equity in the home, so I feel okay about that, and I feel confident that we would be able to pay it back within 3 to 5 years of me going back to work.

We live in a city that is very expensive to buy a house, and selling our house and buying somewhere for significantly less than where we currently own would mean moving away from the diverse neighborhood we love and where we have set down roots. Not to mention losing the potential for more growth that our current home has. It’s not worth it to us.

Of course I would love to send my kids into the world debt free as well. We are saving for retirement and for our current kid’s college education. We do have a long term plan for paying off my student loan debt. Right now we have pre-paid so much principal that we don’t owe a payment for 1.5 years, but we continue to pay monthly in order to prevent interest from building. We’d like to leave it as is for now so that when I stop working we have the option to not pay for a few months, but once I am working again we plan on refinancing and paying off my student loans on an accelerated plan.

I totally respect your choice to work and I 100% get your reasoning. But I am thinking of this as a short term solution and feel confident that it won’t set us back too far from our long term goals.

@tlynne: Yes, it is tricky not having benefits through my job, but overall I am very lucky. I love freelancing and the freedom it gives me, and I have a Roth IRA set up that I can contribute to whether I am working or not. And I get medical benefits through my husband’s job. I don’t know that I would be able to freelance if he didn’t have a traditional job.

Good luck if you decide to try home schooling! Sounds like it could be a great option for you.

@Mrs. Marshmallow: Thank you! Yes, navigating parenthood as a freelancer is so tricky! That’s awesome that your husband was able to take advantage of parental leave. I could never imagine how a second child would work with my job, and I guess taking a huge step back from work is really the only way it ever made sense in my head. We’ll see how long I go before I’m ready to get back to work, haha.

@Mrs. Cotton Candy: Your choices don’t seem in line with each other. You continue to pay on student loans so interest doesn’t build, but you’re willing to take on additional debt in order to stay at home. Why not pause on retirement and 529 contributions to stay home for six months rather than taking on additional debt to meet your expenses? Does your plan involve stopping those contributions and still being negative on your budget every month? If so, I don’t think staying home is a financially sound decision.

These choices obviously only affect you and your family, and they are yours to make for yourself. However, as a financial professional, it always makes me a bit uncomfortable when financial advise is discussed on the blog, especially when it’s something I don’t think would make financial sense for the average reader who may not know better.

@Truth Bombs: I’m not giving financial advice, I’m talking about my personal financial situation. I can go into detail with you about the specific financial decisions we have made, but I have done a lot of research and discussed these issues in depth with my husband and my mom, who is a CPA, and I feel okay about where we are now. I think a lot is getting lost in this discussion we are having in the comments here because there are many details that I left out in order to simplify this post.

Is loan forebearance an option that you can explore?

@looch: On my student loans? No, my husband makes too much money. Also, we have paid so much extra on my student loans that we don’t owe a payment for 1.5 years.

@Mrs. Cotton Candy: You’re correct, your post didn’t actually advise others to take this action. However, my understanding is that HB blog posts are expected to be not just personal, but helpful and informational and you are presenting an option of going in to debt simply to meet regular living expenses so a parent can stay home and I believe that for a very large portion of readership, that’s not a smart or viable option.

It sounds to me like you want to have your cake and eat it too. You’re not willing to make major lifestyle sacrifices, but you’re willing to take out a loan (for possibly up to two years!) to SAH. I don’t work in financial planning but that sounds sort of crazy to me.

And to answer the question, no, I would not consider going further into debt so that my spouse or I could stay home.

Sounds like you have some tough choices to make. For our family, going into debt to SAH would not be a responsible or acceptable option.

this is definitely a situation where it’s frustrating that there aren’t government benefits available to make it workable for you to take a more substantial leave even while doing the freelance work that you love! i can definitely understand why two weeks was NOT enough, even with your mom’s help : )

that said, i would be far too nervous to take out new debt at the same time i was giving up a substantial source of income. one cautionary note about HELOCs in particular is that they generally re-set after 10 years, going from relatively inexpensive interest-only payments to principal plus interest payments. obviously if you go back to work in relatively short order and are able to pay it off in 3-5 years, that’s no problem, but it can also be a more dangerous product if you do fall behind or find you’re not able to find re-employment at the level you’re expecting. here’s just one article on it if you are interested: http://www.newsmax.com/Finance/StreetTalk/home-refinance-resets-helocs/2016/08/12/id/743327/ (original WSJ article is here behind a paywall: https://www.wsj.com/articles/home-equity-loans-come-back-to-haunt-borrowers-banks-1470933020)

@nellywm: Thank you, that’s very helpful information. I’ll take a look at these articles before we make an appointment to discuss our options.

I think it’s an interesting option. And, I appreciate that you are saying that you could live in a cheaper house but that you don’t want to. I hear a lot of people say that they can’t afford to be a SAHM, but I often don’t think it’s true. You can get a smaller house, take a loan, etc etc. It’s just a matter of what your priorities are. In your case, being a SAHM in your home is more of a priority than being in debt. I wish you luck!

@lawbee11: I can understand how it might sound crazy. I feel like I’m stuck between going back to work before I’m ready and making some hard financial decisions. Ultimately I’m hoping for a third option, maybe finding a great part-time gig that I could start after a few months of staying home, but it will be nice to have the security of some extra cash in case I don’t line up a gig right away.

It is always fascinating to read how families with a SAHP make it work especially if the lifestyle doesn’t change (much). I did not expect to read taking on debt in the form of a HELOC or other vehicle for that matter as a solution to finance SAH. Barring an absolute need (job loss/ unemployable or child needing round the clock care) we would not take out a loan for one of us to SAH. In the extreme circumstance where we had to, I am confident we would also reduce expenses to reduce the burden on the working spouse to repay the loan.

Ugh what a tough decision! We are in a kind of similar (but also different) situation with Baby #3 due to arrive in June. I make over 1/2 of our family’s income and now work at a start up that only pays for 4 weeks of maternity leave (vs. 6-8 at my previous job). I really wanted to take the full 12 weeks of leave this time, but it’d be very difficult for our family to absorb 8 weeks of no income form my job without making some type of major life change. We have a ton of equity in our home so we’ve considered selling our house, but there are a lot of downsides to that (moving while pregnant ranking right up there but also the expense/ stress with young kids). It stinks to have to make these types of decisions just to spend time at home with your kids, and I can completely understand and respect thinking outside the box for a solution that works for you (even if it doesn’t work for, or even seems crazy to, other people).

`I have heard of people using a HELOC as an emergency fund, but not with the plan to continuously withdraw from it. It doesn’t sound like a great plan to me, sorry. If you don’t have an emergency fund and can’t figure out how to close the gap, it sounds like you need to either go back to work sooner or have you husband pick up extra work. I mean, I guess you could do it but it is risky and there is a good chance you will regret it in the future. Why don’t you start saving an emergency fund rather than paying down the student loans? Have you looked into tax withholdings to see if you can increase take home pay (without owing taxes in April)? Could you refinance your mortgage to take advantage of the extra equity? Taking out a HELOC by definition is reducing your equity and you said that’s what you don’t want. It just doesn’t make much sense to me. I hope you are able to figure out something that works for your family.

It sounds like you are looking carefully at your options and trying to make the best decision for your family.

We intentionally bought a less expensive house and cars than we could afford in order to allow for me to stay home while our children are very young. I do still work one day a week, for professional reasons and because that income covers my (very high) student loan payments. Before my husband took on his new job where his salary increased we rented and lived off an even smaller budget, including not saving for retirement and making minimal student loan payments for a few years (we knew his income would increase dramatically after residency so we felt comfortable postponing that savings for a few years). We made some significant financial sacrifices, some of which still make me a little nervous but it felt important for me to stay home AND we knew our financial picture would change significantly, allowing us to make up for lost time.
I did look into caring for an additional child in my home, and its something I may explore again when we are through with the very small baby stage.

I applaud your bravery at posting about finances! It’s an uncomfortable topic but it’s such a huge part of all our lives, we should talk about it more. My husband stays home with our kids and to answer your question, no, we would not have considered taking out a loan to make that an option. It took us a lot of planning, including moving to another state with a lower cost-of-living but also closer to family, to make it work for us. If it were me, I know I’d spend my entire leave stressed about how we will pay off that loan. I’d suggest considering dropping the preschool, even if it’s not enough to bridge the gap, it will help. And your child will do just fine at home with you. There might be other places to cut back that would add up. Other ideas might be for your husband to pursue a promotion at work, maybe do some freelance on the side, or even take on a second job nights/ weekends. It’s an extreme view, but check out Mr. Money Mustache for inspiration. The other money management software & blog I use and love is You Need a Budget – they have some great advice about aligning priorities with how you spend your money.

@Moxy: Thank you, it is difficult to talk about. I feel very vulnerable writing about my personal finances. Thanks for the ideas. We are considering switching Little CC from his current preschool to a (free) Pre-K program, but he loves it so much and is learning Spanish and French, and I really hate to make him transition when there will already be so many changes going on in his life with the new baby. But I’m definitely still mulling that one over. It would make a big difference in our finances, and at least then we wouldn’t need to take out as much money for me to stay at home. I’m also contemplating keeping my current gig going, but I just keep coming back to the concept of no leave and not knowing how I’m going to handle that. It’s going to be a hard decision either way, but we’ll figure it out. I will definitely check out Mr. Money Mustache (my mom was telling me about that the other day!) and You Need a Budget. Thanks for the recs.

I think if I were in your shoes I would go old school. I would try to figure out a way before your baby is born to hustle up as much money as possible through side jobs, gigs, and hustles with the goal to cover 6 or 12 weeks of leave. Sell Lularoe or Usborne books, do paid online surveys, babysit, have your husband find something random to do for extra cash. Sell everything that’s not nailed down, purge, and comb over your budget to get rid or reduce everything you can. Shop your insurance policies around, change cellphone carriers, get rid of cable. If you make some extra money, reduce your expenses, and just go super lean and frugal for the next 6 months, I think you will save a lot of money. Opt out of holidays and birthday gift exchanges. No vacations or eating out. I would also suspend making payments on your student loans now to help with the savings since you don’t have to make payments for 1.5 years. It will be tough but it’s easier to make those sacrifices with a specific goal and a specific period of time in mind.

I would line up contracts to start 3 months postpartum. That would give you almost a year from now to figure out some options for work and childcare and you would know you had some income streams coming in that might alleviate some anxiety about finances.

If the HELOC is an option now, it will still be an option in a year. I would exhaust all my other options before going into debt because you still have the student loans to pay back.

I know you don’t want to, but I would strongly encourage you to drop the preschool and move to a more affordable house before taking out a heloc. Just because debt is so readily available nowadays does not mean it’s a good idea. I think we live in a world now where people don’t respect debt as much as they should because all the sudden everyone drives an expensive car and has a huge house and goes on vacations. We intentionally bought a house we could easily afford on just one salary even though it really pissed off the bank. And thank god we did because after #2 arrived and we had to hire a nanny our expenses went way up, but we’re still comfortable. Just something to think about.

I agree with most other commenters- switch to public pre K, try to work as much as possible before your baby is born but don’t take on additional debt ! You may find yourself in a hole that you can’t dig yourself out off. If you can’t afford to stay home, you can’t afford to stay home. Also think about future lost income if you stop working. This home credit line sounds like a quick fix with dangerous consequences down the line .

@Modern Daisy: I respect your opinion and admire your restraint in buying such an affordable house! We generally live a pretty minimalist lifestyle, but our house is the biggest exception to that. When I lost contracts in December, I was proud we were able to continue paying all of our bills with a bit of a cushion, though ideally we would have more savings in order to get through situations like this.

I just wanted to add that I have taken a year off with both my kids and each time it was largely unpaid. Fundamentally we did it by buying a house we could afford on 1 income and paying down a lot of debt before our first child was born, but even then we did the same things I detailed above during each pregnancy. I filled my deep freezer with a zillion meals, we menu planned based on sales and cooked simple cheap meals at home, I stocked up on diapers and wipes and toiletries using extreme coupon deals every few weeks, we reused just about everything from our first baby, and I just slashed costs as much as possible. We have not had cable in 5 years, we rebid our insurance policies every year and we actually paid off one set of 6 figure law school loans (we have two sets!) while I was pregnant with DS2. At one point I made my own dishwashing detergent and laundry soap.

My husband works a full time job as a college professor which gives us benefits and he runs his own business as well. And at different times he has taken on a third income stream. We use Dave Ramsey’s method of a zero based cash paper budget that we agree to every month based on the prior month’s earnings since my husband’s income can vary and we just stick to it. I buy my boys clothes new but buy them by stacking coupon codes from Kohl’s or Target a few times a year and usually get them basics for $3-4 bucks each.

Instead of being stressed about money my husband is constantly amazed by how low our expenses are after each kid because we literally did not need toiletries, diapers, dinners, or almost anything for months.

You can do it. It’s super hard work, but you can do it.

I guess I’m in the minority here but I don’t think a heloc is that bad of an idea. The equity is your money. Why not use it for something that means so much as staying home with your babies obviously does to you? Of course, you can also cut back in other ways to help out. This is a tough subject and I’m glad you posted about it. I hope you’ll update us on whatever you end up deciding to do. Good luck to you!

Having zero experience in financial planning, can I point out that you have respectively disagreed with everyone who has countered you HELOC plan? Perhaps you have already decided
I agree with previous posters- my dad died suddenly, leaving my mom high and dry and I would never take on debt to have a kid with the erroneous assumption I could deal with it later.

Mrs Candy Cane, I just want to encourage you to stay in the house/area you and your family love if you can possibly do so. When you are at home full-time with little people, it is tremendously important to like your ‘workspace’ and the surrounding community. I am about to embark on my second year-long maternity leave (unpaid) and I can testify that not liking the district I live in makes everything SO MUCH harder. When you are tired and sleep deprived and keen to talk to an adult, anything that is hard for you to put up with is a million times worse, and being comfortable in your smaller and larger space cannot be underestimated.

@Mrs. Cotton Candy: I completely get where you are coming from. Your kids are only little once and you will not be able to get this time back. I work part time but being home during this time in my kid’s lives is very important to me.

Having some debt isn’t the end of the world. I’m sure that you have looked over all of your options and are making the best choice for you and your family.

This may not work for your situation at all, but what about going back to work part-time in a different field? If you have any experience at all, serving is a great, very part time, work at night, partner works during the day way to make some extra cash that might just be enough to cross the budget divide. I know the only way our life works is for me to have my flexible serving gig, a job that I don’t take home in the slightest that is able to be opposite from my spouse, but still pays quite well. Just another alternative that may be possible to look into. Good luck!

Saving for college and retirement is crazy if you have tons of debt and are about to get more. That home equity line of credit sounds risky. We are big Dave Ramsey finance fans and I’d encourage you to read some of his stuff!! We are almost debt free and I only work 1 day a week. It has changed our lives for the better. Best of luck to you and your family

I’d personally treat your unpaid leave just as any other job loss.. Cut back where you can, reduce retirement and loan payments to the minimum and live lean for a bit. However, I can understand wanting to maintain a standard of living that you know you’ll get back to eventually (but I’d definitely have a deadline in place for when you go back to work before taking on debt to sustain an indeterminable amount of time off).

In a sense, we had to make this decision with our first child. DH was still in school, so I was the only income. I’d always envisioned staying at home, but in the end decided to go back to work. Yes, we could have taken out student loans and cut back everywhere, but DH had been in school for a long time and I wasn’t sure we could really set an end date to that (a program switch later, it turns out I was right and we still don’t really have an end date). Now we’re having our second child and are cutting our retirement contributions to just the company match while we pay double daycare and tuition out of pocket. But it makes me feel better that we chose not to take out student loans.

Also, it sounds like you’re treating the HELOC as a form of emergency fund and some people do that just fine. It is just a matter of running the numbers and priorities. Interest paid isn’t the devil, you’re just paying a fee for the convenience of having more liquid money. We’ll probably take out an auto loan for our next car despite having enough saved to pay cash. I want that liquidity as a security buffer at a time we’ll be switching jobs and moving.

Thank you for posting and for putting yourself and your financial situation out there. Not easy. My spouse and I have been having similar conversations around how we could make it work for one of us to stay at home, something that I’ve wanted to try since our second child came along 2+ years ago. This is mostly because we feel like our work/home balance is off. We still both work full-time and are trying to plan for the future and maybe that will mean I will one day be able to stay home. Do whatever is best for your family – it sounds like you’re pretty set on giving SAHM a try – but also don’t think of any decision as so absolute. Maybe a couple months into staying at home you won’t want to do it and maybe in a few years it would be easier and better financially for you to stay at home. Good luck!

Good luck with your decision, and thanks for putting yourself out there. I’m a SAHM, who left a lucrative career. If our focus was to maximize our finances, then of course, not the best decision. We don’t have as much money at the end of the month, not saving as much, I don’t treat myself to as many nice things, no fancy vacations, etc. However, the trade off has been entirely worth it for us. On the whole we’re so much happier/less stressed, the household runs better, and I relish being able to experience so much of my kids’ day to day life. I’m so glad we made the leap. Having enough money to meet your needs is important, but I don’t really miss the extras that much. If you want to SAH, give it a try. Nothing’s set in stone, and ignore the naysayers. Good luck!!

I have been a sahm (then ft woh now pt who but as an independent contractor) and the lack of benefits (retirement savings in particular) stresses me out. I would really not want to go further into debt to be a sahm but maybe my view is changed because I actually like working as well. Sorry if I am missing something but what about a loan just to pay someone to cover maternity leave?

Personally, I would never go into debt to have a SAHP. There are true emergencies that could come up. Living on that razor thin of an edge would give me hives. What happens if something expensive on your house suddenly breaks? And it could be difficult to secure work after you decide to return to the workforce with a long gap.

I would think taking a 3-6 month leave and leverage some of the advice above would make much more sense.

I finally had a chance to sit down and talk with my husband about your fascinating post. He’s a financial professional. Anyway, after giving him all the details you shared with us in the post and comments he mentioned two things that made me go “hmm.”

First, have you considered an unsecured loan- one that is not tied to an asset? Apparently, if all other options were out of the window and we needed money that is what we would do that since at least two financial institutions we currently have relationships with offer that up all the time. Second, do you plan to pay back the HELOC? He mentioned this given that your CPA mom said it was a good idea and that flagged other after-the-fact options in his mind.

All that said he he doesn’t see this as anything different than us or anyone with FML trying to figure out if they can afford the unpaid or reduced salary portion of mat leave.

@Mrs. Lemon-Lime: I appreciate you taking to time to talk this over with your husband! To answer your questions, yes we have considered other types of loans, and are still doing research to figure out if this is the right option for us. The reason my mom thinks a HELOC or home equity loan is a good idea is because the interest paid will be tax deductible. Yes, we plan to pay back the HELOC if we end up taking it out.