DebtFreeGuru.com's - Tip of the Week - Monday, November 10, 2003

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Plan to Stay At Home With The Kids

 

Two years ago, Katie Lancaster left a $60,000 a year corporate job to stay home with her two daughters.  She wasn't sure that her family could afford to live solely on her husband's income, and as determined as she was to have more time with her children at their northern Minnesota home, she was also concerned that letting go of her hard-earned position could set her career back.

 

But after considering the matter for a year and a half, she and her husband decided to take the risk, figuring the worst that could happen was they'd run out of money and she'd have to return to work.

 

"I can't even describe how frightening it was once we made the decision and I actually left the job," she says.   "I felt like I was jumping off a bridge, but I discovered that the ground actually wasn't that far away."

 

According to Public Agenda, a public opinion research organization, 70 percent of today's parents believe that having one parent minding the home front is the optimal situation, yet two-thirds of the parents surveyed say they believe it's unrealistic in today's society.

 

Many financial planners, as well as parents that are already staying at home with their kids, say that it isn't impossible or as tough as it looks.

 

Planning Ahead
Living on one income is not as difficult as some people think, says Mark Oleson, director of the Financial Counseling Clinic at Iowa State University .  He encourages couples to practice living on one income to prove that it's possible.

 

"If you think of it in terms of lower taxes, and the fact that you might not need a second car and that you won't have child-care expenses, you could discover that it's more realistic than you imagined," says Oleson.

 

Too often, people convince themselves that they can't make it without ever sitting down and taking a hard look at the possibilities.

 

Athens , Ohio , mom Tori Griffith and her husband did exactly that.  After rolling back her work hours in her human resources job to part-time, she still felt that she was spread too thin between her office and her home.  She and her husband began to prepare.

 

"The best thing we were able to do was to begin paying off our debts," she says.  "We practiced living on one salary and put all of the other toward debt."

 

They also got in the habit of paying ahead on the principal of their mortgage and cutting back on personal spending habits.  Other couples have used the same theory and put one spouse's salary toward needs for the baby until its arrival, buying a crib one month, a car seat the next, and so on, rather than racking up a heap of credit card debt right before the birth.

 

Talk With a Professional

The best strategy for a couple planning the solo-income lifestyle is to sit down with a financial planner and get an objective opinion about their current circumstances.

 

Oleson recommends that couples shop around to find a planner that works on a fee-only basis.  Some planners receive sales commissions for life insurance or other products.  It's wiser to find an expert who isn't peddling a product to advise you on life insurance or college savings plans for your growing family.

 

"Couples need to find someone who gets $100 or $150 an hour regardless of whether purchases are made, to make suggestions in their best interests," says Oleson.

 

Talk It Out

Yet no amount of number crunching is going to make a husband and wife automatically comfortable with the decision if other factors aren't taken into account.

 

"I think the most important thing is just to talk about it -- to communicate what they think and feel about it," says Oleson.

 

"It goes both ways.  If I'm the person that's going to continue working, I need to be a little more sympathetic to my spouse who has made the decision to work for the betterment of my child and family.  That person is the one sacrificing and I need to be aware of that.

 

"There is more to it than just what financially makes sense.  There are a lot of issues to sort through.  Planning the finances is what couples think of first and foremost, but if the financially sound answer gives you an ulcer, there is no value in that."

 

Living Simply

Trimming household expenses sounds like a great idea in theory, but anyone who has tried to change spending habits knows that it can be challenging.

 

Many couples start by trimming the basic fat out of their budgets, like deluxe cable and phone services or luxury spending on clothes and trinkets.  Even getting into the habit of going to the library instead of spending money on books or video rentals can save cash.

 

"Often one of the easiest ways to trim costs is to cut back on food expenses," says Oleson.  "When both members of a couple are working, they go out to lunch or dinner because they don't feel like cooking at the end of the day.  Those entertainment and food costs can be enormous.  Once people start to look at those habits, they realize they can save a ton of money just by cooking dinner."

 

Griffith found that she was able to cut her budget substantially without changing the quality of her life.

"We were used to spending money and going out as often as we wanted to," she says.  "I didn't price-compare at the grocery store.  We were spending $450 to $525 a month.  Now we spend about $225 to $250 a month.  I learned how to make pizza, started canning and making my own jelly and jams.  I bake from scratch -- and anything I make, I make for more than one meal."

 

Staying In Touch With Your Career

Many stay-at-home parents do not want their work lives to end with the onset of mother or fatherhood.  Working from home has become an increasingly viable option in recent years.  Parents can also maintain or develop skills though civic and volunteer service to keep that resume brushed up.

 

People who've enjoyed a busy career and success in the workforce can find the transition to staying home all day, every day difficult.

 

"It's important for the non-working spouse to go to a conference now and then to keep current with the latest trends in his or her field.  Or, even spend a night a week out with friends," says Oleson.  "There is value in the stay-at-home spouse being able to maintain his or her identity.  Some people feel they lose some of that just by being cooped up and not having contact with other adults."

 

Some people prefer taking a more disciplined approach to getting back to work.  You may wish to set up a career timeline with firm goals that put you back on the working path in stages as your children grow up.

"You have to know what you want," says Jean Stafford, CEO of Executive Coaching for Women in Great Falls , Va.

 

"The first step is to write out a basic strategic plan -- goals about when you want to be working again.  If you want to work from home, think about what service you have to offer and who the customer would be," suggests Stafford .

 

The workplace itself is changing, says Stafford , so if individuals run their careers as they would a company -- knowing their own value and who might benefit from their skills -- they will be better able to call the shots.

 

Loving the At-Home Life

Then there are those who, after being away from the workplace, don't miss the grind of the corporate world at all.  Lancaster, who now feels satisfied in the business of raising children, admits that it wasn't instantaneous. 

"It took a while for me to decompress," she admits.  "I've used my time in some ways that would probably look good on a resume, but I haven't made it a focal point of my life to stay abreast of things that are happening in my former business world. 

 

"It was definitely a growing process.  I used to be in constant contact with people, but after a few months, you begin to separate your friends from your co-workers.

 

"I find that I now enjoy friendships much more than I did."

DebtFreeGuru.com - Tip of the Week - Monday, November 10, 2003

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