32 y.o./married/1 kid - any young single income families out there?

[RainBox89]

32/married/1 kid: any young, single-income families out there?

Hi all,

I'm surprised I only found this site earlier this week, as I've been a Boglehead reader and lurker for years. Interesting that I've only now stumbled upon you all, but glad to be here.

Here are my family's details:

I'm 32, married, and have a 2 year old daughter. Wife is 33. Combined income is roughly $134k - I work full time (~$89k) and my wife is part-time (~$45k). Live in a relatively LCOL (North Carolina). We're currently maxing my 401K out which also has a 8% company match, as well as maxing out both of our Roth IRAs. We currently aren't contributing anything to my wife's 457B. The savings mentioned above is roughly 28% of our total income, and I'm happy with that amount.

Retirement
Wife's 457B: $45,700
Wife's Roth IRA: $55,800
My Roth IRA: $76,000
My 401K: $157,000
Wife has a small pension through work, currently valued at ~$38k. I'm not sure what the monthly payout of that would be later on.

Education funds for child
529 (just started earlier this year): $3,700

Emergency fund/cash
$100K. I've kept this up high bc we're most likely looking at having another kid in the next year or so, and want to have some padding. Especially if my wife stops work entirely.

House:
~320K value, owe ~150k (Just refinanced into a 30 yr @ 2.82%). House is only ~1,600 sqft and is just the right size for now. I have no plans for a larger or more expensive house. Total PITI each month is ~$925 or so.

Largest Expenses
Daycare, at just over $15k/year. Yikes.

Debts:
Just our mortgage (details above)

Net Worth (As Calculated by PersonalCapital)
$670K

Things that might change/My big concerns:
We are considering having a second child. This is a high likelihood in the next year or so. If we do, my wife would like to stay home until both kids were in school. So, 5 years give or take. I expect my salary to go up over the next few years, but not drastically. I've always just assumed a 3% COL increase into my planning, to be safe.

My biggest fear is that a second child will be unmanageable financially. Would love to hear from other parents who are in a similar income scenario and how you make things work, what the biggest challenges are, etc. Fire away with any questions or areas where I may need to provide more info - thanks!

 

[JDARNELL]

Welcome to the board! I suspect many through time have had feelings of future kids not being financially manageable but somehow they came along anyway and people were fine. Your off to a great start and from what info you have provided you seem to have a good grasp on finances. Have the kid and enjoy! It will all work out.

 

[aaronc879]

A second kid is certainly not unmanageable on a $90K salary in a moderate COL area. You may not be able to max out your 401K and ROTH but you should be able to get the match at least and cover all your families expenses.

 

[1242Vintage]

Your financial picture is much better than ours was when our second and then third child came along and we live in a high cost state. Don’t over think it ... enjoy.

You’ll figure out how to prioritize your growing families needs within your income so that everyone is taken care of. That’s one of many skills that parents are good at.

 

[Figaro]

I was about your age when we had our first. Spouse worked odd hours on a WFH arrangement w/ work and we had a hard time getting things together. Then spouse was laid off. And it was actually a good thing for our family. Lower stress on a daily basis. (Didn't have to worry about child care and pickup, rushing for dinners).

Income went up the next few years and spouse has still been the primary stay at home since.

You may find that your expenses actually go down overall with one of you at home. (Besides the day care costs).

Something that I've observed is that not all folks are cut out to be stay at home. (Might work better for introverts than extroverts perhaps). So be sure it's the right scenario from that perspective.

Wish you guys the best!

 

[RainBox89]

Thanks so much to each of you for the kind words and prompt replies.

Yes, spouse and I agree that, while her 1/2 time job has been really flexible (she can WFH some as well), it is still requiring:
- daycare costs
- added stress of too many little/disjoint responsibilities through the day (watch the child all day, work a little bit while child is sleeping, pretend to get some housekeeping done, forget to eat lunch!)
- added taxes - if my wife were stay home entirely, we'd drop pretty easily from 22% down to 12% bracket.

And yes, there other little things that chip away at the budget too. I have my wife and daughter on my health insurance, and we pay a spousal surcharge of $1,200/year, since my wife "technically" has coverage through her employer (for part-time employees, its very expensive).

My wife isn't 100% confident about whether she'll want to stay in the SAHM role. But, she's a nurse and educator by trade and we live in the Triangle of NC between 5-6 different healthcare systems. I'm confident she can get back into a working career if she wants to, and would love to give her the opportunity to spend these early years with the kiddos.

 

[DrRoy]

Generally the second child is a smaller hit to the $. You already have some of the things that you need and just get more use out of them, especially if your house is already big enough. Some clothes can be shared or reused. Other expenses are double, such as food, activities, and education. Really though, if you want a second, have a second and it will work out.

 

[NgineER]

I was 32 when I had my first, 34 with second, 38 with third and 41 with fourth. My wife was home with the first one for two years and then worked three days a week after the second for three years, only during the academic year. It allowed us to squirrel away some money, but our stress level was much higher.
We relocated to be closer to family while expecting our third. At that point DW became a SAHM and we love the reduction in stress. I have almost doubled my income from my first child over the last thirteen years.

Expenditures dropped once we were single income. I think some of the stress reducing luxuries were no longer necessary as our stress level dropped.

In my experience, your kids will cost them as much as you allow them to. It is up to you what you focus your efforts on.

You can make it work on one salary, make an effort to be focused at work and get promoted. In my experience I never get much more than the annual 2% salary increases, but with promotions (10% salary bumps) or job changes (25% the one time switched) you can make the income dial move.

Try to stay maxing out like you have and cut back if necessary and enjoy the larger family. It seemed like less effort for us once you had a kid paired up with a playmate.

 

[Love This Community]

Welcome RainBox89. You’re doing great and have a solid handle on your finances (both inflow and outflow).

We were in a similar situation 10 years ago. DW stopped working when we had our first child. Couple of years later, we had our second child. We were on single income from 2006 to 2012 making less than 85K in MCOL. Wife went back to work and earns more that I do ( even after taking a 6 year break). I couldn’t have even guessed 8 years back where we are today. Snowballing effect / compounding is a wonderful thing.

Things will fall in place. If you guys are even thinking of having a second child ( which you’re), just go for it.

 

[pacergal]

Figure out your budget on your salary alone.
I bet if you subtract daycare, wifes work expenses, add back the insurance $1200 and taxes, you may well be surprised how far your income will go. Plus the decrease stress is a game changer.
If you really desire a second child and your wife wants to be SAH, you can make it work.

 

[livingalmostlarge]

We have always been mostly single income from 2010 when we had DK1. When we did this DH made $143k (probably $160k because of 401k) but it was a HCOLA. He had just gotten a raise to make up what I made. Anyway we were fine. We kept on saving. Had DK2 in 2012. He quit in 2015 and switched careers and we lived with $0 income for a year. We lived off our savings. Had he continued working we might have had more, but he considers it sabbatical now or retire 1 year earlier. He chose sabbatical.

Anyway he got another job and we kept on savings. I work part time once kids went back but I stopped last summer during covid. Anyway I am not sure I will ever work full time and the kids are 11 and 8. I like being there for them.

Will we retire early? We are 41 and 43. We live in a pretty expensive place. We actually have enough to FIRE now, "just" enough. If we had worked 1 year we'd definitely be done but he'd still be working anyway. DH keeps saying 2034 after DK2 is done with college. But instead DH decided to quit and do a startup with a severe paycut, because we have such a cushion that we can afford to save a smaller amount and still RE at 55 or even at ~45 to be honest. So now we are probably living on our "retirement" budget. So it's entirely possible to FIRE and be comfortable on one income.

Personally I feel when you live on 1 income life is slower and less stressful. That couples with kids have more flexibility. You learn to prioritize and live on less. Make harder choices. You also are used to living on less because you live on less the entire time you are growing your portfolio which needs to be smaller because you live on less. One choice we've made is we drive cars that are used or old. Sounds ridiculous but most of our collegues, neighbors, friends drive teslas, benz, bmw, audi, etc. We drive a subaru and toyota minian bought used. Before that we drove a corolla and focus for a decade plus each. I seriously get laughed at for driving a minivan. Practical and most expensive car I every bought $28k. But when most people I know trade in their $80k cars every couple of years? Lease or just buy a different car? Trust me it's a choice of why I don't want to work to afford a nicer car. If i did work full time I would probably bet that I would buy a super nice, expensive car. Second point? We don't travel first class and stay at 4 star hotels club level. We barely like to spend $200 on a hotel room because it's just a room. $500-1000/night hotels? Not our thing. Kids clothes? Used from consignment store and target. My kids don't wear lulu lemon, patagonia, north face. Third kindle fires for our kids ever 3-4 years $50. Not ipads or iphones. Small things like that add up when you keep on spending. New cell phone annually $1000 (mine are $100-200 older androids). So just choices that make our lifestyle a bit cheaper but still nice, at least I think so.

I'm also not someone who is "lean" or barista fire. Our number is a very comfortable number and it's FAT. It's living in very expensive home and paying for everything for the kiddos. I plan on paying for college, house down payment, car, etc. So it's not like we are living bare bones or not budgeting for giving our kids what we never got. I mean i set aside about $40k already per kid in taxable accounts and I grow and harvest and file taxes so they will have something after college, not counting their college funds. So while I do think we live on less than people who both work, our number still isn't lean nor should it necessarily be just because you have 1 income. You decide what is important.

 

[RainBox89]

Can't thank you all enough for the encouragement and for sharing your own stories. Its very easy to get lost among the high-earners and/or DINKs on these types of forums who have nothing but disposable income to throw at their retirement - nothing wrong with that of course, more power to them. But sometimes its hard to envision ER while growing a family. Best wished to all.