How far would you go to get what you really want? From 2 incomes to 1

[amldaley]

I really want to be a SAHM. I am burnt out big time at work. There a million things I want to do as a SAHM. But we have been living on two incomes for so long and we have had some financial issues that mean we really need to keep two incomes or make a DRASTIC change.

I am thinking of short selling our house. DH has to find out if he will be able to maintain his clearence with this on our credit. But we just want a small life and more financial stability. I am tired of being stretched thin on money and on time.

How far would yo go to get what you really want? Would you short sell? What would you be willing to give up to be able to live how you want to live?

If you have gone from 2 incomes to 1 or faced a major financial and lifestyle shift, please share your experiece and advice!

[maestramommy]

A couple of things confuse me. If you're both working, why are you so stretched thin on money? Is it because of childcare? I know when we decided I would be a SAHM one of the reasons was because 50% of my salary would be paying for full time childcare, and that was with ONE child. By now I would be paying to work.

I'm not familiar with short sale, but if you sell your house were you planning to downsize, or rent?

We did go from 2 incomes to 1, but I was a teacher so Dh made so much more than me we didn't feel much a difference in lifestyle. Only in how much we were saving. We did however, deliberately trim down our lifestyle for several months after economic meltdown, because we were afraid dh might be laid off from his brand new job, and we wanted to save as much as possible. It didn't happen but it was an interesting exercise. Basically we cut down discretionary spending to just about nothing. I didn't buy a stitch of clothing for the kids that they didn't absolutely need at the time, we stopped eating out altogether, and I started baking and making all of our snacks from scratch. We also held off on any home improvements, and didn't travel.

I realize though, that for many people, these cuts are more fat than anything else, and might not get at the heart of what you're asking.

[amldaley]

A couple of things confuse me. If you're both working, why are you so stretched thin on money? Is it because of childcare? I know when we decided I would be a SAHM one of the reasons was because 50% of my salary would be paying for full time childcare, and that was with ONE child. By now I would be paying to work.

I'm not familiar with short sale, but if you sell your house were you planning to downsize, or rent?

We did go from 2 incomes to 1, but I was a teacher so Dh made so much more than me we didn't feel much a difference in lifestyle. Only in how much we were saving. We did however, deliberately trim down our lifestyle for several months after economic meltdown, because we were afraid dh might be laid off from his brand new job, and we wanted to save as much as possible. It didn't happen but it was an interesting exercise. Basically we cut down discretionary spending to just about nothing. I didn't buy a stitch of clothing for the kids that they didn't absolutely need at the time, we stopped eating out altogether, and I started baking and making all of our snacks from scratch. We also held off on any home improvements, and didn't travel.

I realize though, that for many people, these cuts are more fat than anything else, and might not get at the heart of what you're asking.

We racked up significant debt between a business I sold at a loss and financed the buyer and then he skipped town and debt based on the idea that we would have two incomes and be able to pay to down and debt based on the idea that we did not originally plan on having kids and a mountain of student loans and a house we should not have bought in the first place (more house than we want or need).

We do fine on a month to month basis but have nothing really to show for it at the end of the month. We need to make significant changes. We already don't travel like we did years ago. I have not been home since Dec 2006 (3000 miles). We need to trim more than fat or excess. We need a total overhaul.

[kdeunc]

:hug: I am sorry that you are stressed right now. Unfortunately I don't think it is as simple as deciding to do a short sell. The bank has to agree to take less and I can't imagine them doing that without you being behind, close to foreclosure, etc. I would carefully look into it but maybe there are some other ways you could cut back before having to take that drastic action. Money worries stink! (spoken from someone who has been out of work for over a year!:( )

[boolady]

We racked up significant debt between a business I sold at a loss and financed the buyer and then he skipped town and debt based on the idea that we would have two incomes and be able to pay to down and debt based on the idea that we did not originally plan on having kids and a mountain of student loans and a house we should not have bought in the first place (more house than we want or need).

We do fine on a month to month basis but have nothing really to show for it at the end of the month. We need to make significant changes. We already don't travel like we did years ago. I have not been home since Dec 2006 (3000 miles). We need to trim more than fat or excess. We need a total overhaul.

Given all of this, I would figure out how to do a total overhaul first, and get rid of some of your existing debt, then work on your goal of SAH. It sounds like just short selling isn't going to take care of everything, and I personally would be really hesitant to rush into going down to 1 income with all of this other debt. I doing your total overhaul first, including getting advice from a financial planner, would be the way to go, with the goal of being able to quit your job in x number of years. I just don't think being home while having to stress about every last dime and debt and bill is going to be what you would want being at home to be.

[mikala]

Would it have to be a short sale? Any chance you can sell it through the normal process to preserve your credit and possibly get more for it?

I agree with some of the others that it would be a good idea to trial some of the cost-saving measures that would allow you to stay home. I realize some of them might not be feasible while you're still working since you still have to pay for childcare, etc. but you could work on your food budget, any discretionary spending, re-finance debt to a lower interest rate, etc. Are there any other things you could do to bring in cash on the side while you're a SAHM?

Could you make a series of changes instead of one huge one to help yourselves adjust to each step? Work on the biggest chunk of your cash flow, then your housing, then work on your job, etc. so you can change course if things aren't going quite as expected?

I'd also fully research your housing options for once you sell your house to make sure your budget is realistic and make sure that you could still rent with reduced credit if you go the short sale route.

Are you using something like Mint to watch your money now? If not, it might be a good time to do so.

[sunshine873]

I think it's a personal decision. It sounds like you're motivated to cut back and like the idea of a simpler lifestyle. However, I would be really hesitant to short-sell a house if not necessary. Your credit rating is such a big deal (especially since your DH has a clearance - as you said.) Can you just be really aggressive in selling it & hang on until then?

[eh613c]

Three years ago I was working full time and DH was making 20% more than I was. Before getting married we knew that if we were to have kids, I would stay home with them. Shortly after getting married, I got pregnant and worked until I was 35 weeks. During the time I was pregnant, I saved the money I earned at work. After DS1 was born, we bought a house (peak of market). We had to buy at that time because I was still technically employed. Had we waited until I left work, we wouldn't have been able to qualify for a bigger loan. We bought a house that DH can handle on his own income.

Since then we've cut back on long vacations, shopping for clothes and eating out. We tend to keep what we have longer (e.g. cell phones, computers, cars, etc). We do one house project a year (to maintain the house). When I do the groceries, I buy everything on sale. We get hand me down clothing for DS1. If they are still in good condition after DS1 outgrows them, DS2 will wear them. I've cut back going to the salon, getting my eyebrows threaded and bikini wax. I only go window shopping most of the time. I wait for end of season sale for next year's season.

The lifestyle we have now is totally different from what we had before kids. However, we know that this is only for a short time. I do plan on going back to work part time after DS2 is in school. It's hard right now, but we're hanging in there.

[amldaley]

Would it have to be a short sale? Any chance you can sell it through the normal process to preserve your credit and possibly get more for it?.

Not in this market. We had a CMA done. We are upside down 40-50k.

If we short sell and go in to a rental, we can save about $800 month. Taking DD out of daycare saves us $600. That's 50% of my net monthly income right there. Our rental market is wide open here. There are rentals all over the place with so many military members forced to move due to orders and unable to sell their homes.

We are meeting with a financial planner next week.

We don't have enough out of budget income to increase our monthly payments towards debt enough to be able to pay them down quickly.

[TwinFoxes]

To short sell, won't you have to convince your bank that you can't make payments? They don't just let you short sell, right? I've even heard that they won't let you do it if you're current in your payments, you'd have to skip payments. It just seems like a bad idea, especially considering your DH's job. You're basically breaching a contract. I only vaguely know how security clearances work, but that just seems like it might cause trouble.

To answer your question, I wouldn't do it.

ETA: Would it be possible to get a consolidation loan through your credit union? Those rates are usually lower, you could transfer your credit card debt.

[Trigglet]

We're thinking of doing the same thing. We have so little equity in the house that it's either going to cost us to unload it, or we'll have to rent it out, or perhaps just mail the keys to the bank!! And I have no idea how long it will take to sell - apparently in our area things are staying on the market for an average of 160 days, but our house is in a not-great area, so who knows? We bought at the very end of 2008.

My DH is very unhappy in his job (godawful colleagues, pitiful pay, no appreciation etc etc) and I am working part time. We both want to have more time to write, take DS to kindy, walk the dogs etc etc etc. We are seriously considering moving back to the UK where we have a 450sqft apartment in the middle of a wonderful city. It would be the three of us, plus our two dogs in a 4th floor walk-up, one bedroom apartment, but walking distance to everything you could want. I desperately miss city living, and at the moment the only thing stopping us is WTH to do with our current house.

We don't care about our credit scores, so that's not what's stopping us doing a short sale/deed-in-lieu but I don't want the bank pursuing us for the difference between the sale price and our loan balance (which I understand is a possibility). So, you'd need to make sure that a short sale (or whatever) was going to give you the clean break you want.

I totally feel your pain, and really understand that desire for 'smaller', simpler living. We have dug ourselves out of mountains of debt TWICE (and only through benefitting from selling a house at the peak of the market, and then DH inheriting some money from his late mother). I am done with being drawn into wanting 'stuff'. It's all just so much BS, and I just want a quieter, closer, more fulfilling family life.

I really hope you get the information and help you need to make whatever changes make sense for you and your family. :hug:

[crl]

I agree that you likely can not do a short sale as the bank won't approve it while you are still able to pay. But since you asked, we did dramatically lower our income.

We cut our monthly income in half. Dh and I had made essentially the same salary as each other for years. I planned to go part time when ds came home (adopted from China) but dh was in a billet (USMC) where he was working eighty to a hundred hours a week with a 2 plus hour round trip commute (I worked in the opposite direction and we owned so not doable to cut the commute). DS just desperately needed a parent around virtually all the time and I couldn't negotiate a true part time schedule. So I quit.

We did okay on money until dh got out of the Marine Corps and did two judicial clerkships, one in San Francisco, at low pay for the cache on his resume. Thankfully we sold our first place at a nice profit before the housing bubble burst, allowing us to pay off our student loans--our only outstanding debt besides one car payment--and bank a nice amount. We dipped into that savings to make it through the second clerkship.

Since then dh has been making substantially more money, but also working insane hours. We have been trying hard to save and hope to make some changes that will allow dh to take a lower paying job with fewer hours while I continue to stay at home for another four years until our youngest is in K.

I admit we took a real leap for me to quit and we were fortunate that it has worked out okay so far. I do worry about having just one job supporting us in this economy and I worry that when I am ready to go back to work I won't be able to find anything. At all.

Is it possible for you to make a plan to get where you want to be or at least closer? Maybe you can work full time for another year, while saving, and then go part time, for example?

Catherine

[AnnieW625]

I would not short sale in your situation, I would look for another job/career you can lateral into (or take a small pay cut to start) that makes you happy. I personally think that while being a SAHM for some might be the answer to all of their problems there will be a huge adjustment period esp. if you are used to a certain lifestyle and that can backfire.

Here is my criteria for me to be a SAHM:

DH needs to be able to find a job that pays him a total of what we both make, period esp. if we are staying in Southern California. This is very unlikely to happen. He'd also have to make a little bit of extra money so I can put it into a retirement account for myself. As much as I would love to be a SAHM at this point in my life it's not something that I would do. I am a 3rd of the way into potentially a 30 yr. career, I have a pension, and as long as I have 20 yrs. of service when I turn 50 yrs. old I have lifetime medical benefits, which basically means that as long as I am in California I will be a state employee. I would entertain the idea of working part time, but there are no part time job availabilities in my agency.

I would personally not short sale my house just so I could be a SAHM, it's probably more of a pride thing, but it's also just not something I am comfortable doing. Now if a job transfer came up and we had to short sale then that's a different story, but still something I would try to avoid.

In reality though the only way I'd ever become a SAHM is if we moved out of state to a really low COL area and we could take DH's current income with us, and honestly I'd probably go back to school and get an advanced degree and start a new career.

[BabyBearsMom]

I'm going to apologize in advance, because this is one of my *things* that really gets me going. I am a firm believer that when you enter into a contract, and agree that you are going to do something that you do it. Now I am not saying pay your mortgage and let your children starve, but if you are able to do it without your children starving to death you should pay your mortgage. It is the responsible, adult thing to do. Millions of people bought their houses at the peek of the market and every single one of those people wishes that they didn't have to pay so much for their house. But if every one of those people just short saled their house or walked away, it would cause economic chaos. You knew what you were getting into when you bought your house and you made decisions that have brought you to the place you are now, and I'm sorry, but I think that is your bed and you have to lay in it. You decision to short sale your house affects a lot of other people. I know it is easy to think of it as just jipping a faceless bank, but think of the impact it will have on the home values for all of your neighbors. The people who won't be able to get loans because you didn't fully repay your loan. The people who own stock in the bank who will lose money as a result of your action. I could go on and on, but I am going to stop because I am trying to be polite and not say all of the things that I am really thinking.

[Trigglet]

I'm going to apologize in advance, because this is one of my *things* that really gets me going. I am a firm believer that when you enter into a contract, and agree that you are going to do something that you do it. Now I am not saying pay your mortgage and let your children starve, but if you are able to do it without your children starving to death you should pay your mortgage. It is the responsible, adult thing to do. Millions of people bought their houses at the peek of the market and every single one of those people wishes that they didn't have to pay so much for their house. But if every one of those people just short saled their house or walked away, it would cause economic chaos. You knew what you were getting into when you bought your house and you made decisions that have brought you to the place you are now, and I'm sorry, but I think that is your bed and you have to lay in it. You decision to short sale your house affects a lot of other people. I know it is easy to think of it as just jipping a faceless bank, but think of the impact it will have on the home values for all of your neighbors. The people who won't be able to get loans because you didn't fully repay your loan. The people who own stock in the bank who will lose money as a result of your action. I could go on and on, but I am going to stop because I am trying to be polite and not say all of the things that I am really thinking.

Nonsense. Banks and companies frequently break contracts when it suits them to do so. And just what responsibility does OP have to her neighbours or investors in her bank? Individuals stay in disadvantageous situations through misplaced feelings of guilt and shame. Where are those feelings when it comes to the banks that created and then destroyed house values? Nowhere to be seen.

[AnnieW625]

I'm going to apologize in advance, because this is one of my *things* that really gets me going. I am a firm believer that when you enter into a contract, and agree that you are going to do something that you do it. Now I am not saying pay your mortgage and let your children starve, but if you are able to do it without your children starving to death you should pay your mortgage. It is the responsible, adult thing to do. Millions of people bought their houses at the peek of the market and every single one of those people wishes that they didn't have to pay so much for their house. But if every one of those people just short saled their house or walked away, it would cause economic chaos. You knew what you were getting into when you bought your house and you made decisions that have brought you to the place you are now, and I'm sorry, but I think that is your bed and you have to lay in it. You decision to short sale your house affects a lot of other people. I know it is easy to think of it as just jipping a faceless bank, but think of the impact it will have on the home values for all of your neighbors. The people who won't be able to get loans because you didn't fully repay your loan. The people who own stock in the bank who will lose money as a result of your action. I could go on and on, but I am going to stop because I am trying to be polite and not say all of the things that I am really thinking.

:yeahthat: and this is coming from someone who has three houses on my block either in short sale or foreclosure. Don't forget about your neighbors. One just sold for appx. $210,000 less than it sold for 4/1/2 yrs. ago, and it's bigger than mine so my equity which is non existent anyways just got a whole lot worse. My next door neighbors inherited a house from the husband's parents, he is an attorney in his own practice, and she works for a airplane company with a slight future she may not have a job, they were in their mid 50s and had no dependents. They decided to short sale and now the house is also for sale for $200K less than what they bought it for in July, 2005. Another house on my street has been in foreclosure since April I think and I have no clue what that one will go for but it's really disheartening because again that family made good money were in their mid to late 50s and had a few college aged kids living with them but were essentially empty nesters and they paid $209K for the house in 1999.

[lmh2402]

i agree with pp - i would not short-sale and i'm not sure you even would be able to

what about renting your house out? would you be able to rent it to cover your mortgage?

if if you rented it at a slight loss, if you were able to make up the difference, plus rent a smaller place for much less, you still would be able to save, right?

[BabyBearsMom]

Nonsense. Banks and companies frequently break contracts when it suits them to do so. And just what responsibility does OP have to her neighbours or investors in her bank? Individuals stay in disadvantageous situations through misplaced feelings of guilt and shame. Where are those feelings when it comes to the banks that created and then destroyed house values? Nowhere to be seen.

I'm not sure I follow your logic. Just because banks and companies do bad things doesn't make it okay for me to do it too. It is still wrong. Lots of companies throw sewage into waterways, that doesn't mean I am going to decide that I am going to start littering and stop recycling.

If people break their word all the time, we may as well get rid of any system of credit (mortgage, credit cards etc.) because someone's word and signature is worth nothing if we as a society can't trust in it. The bank doesn't force people to take out loans, people make their own choices. If people don't want to pay the mortgage, they shouldn't buy the house.

[Trigglet]

I'm not saying that just because big companies behave badly then we should - I'm saying that in certain circumstances (and I think this counts as one of those) we should examine carefully the reasons behind our reluctance to 'walk out' on these kind of commitments. All a mortgage contract says (usually) is that if you stop paying then they have the right to foreclose. All you are doing in those circumstances is invoking that clause of the contract you signed.
And the point about the current circumstances is that through no fault of her own, OP's house is now worth far less than any remotely pessimistic person could have predicted, and really why should individual families carry the can in that way when it was Wall Street that screwed them without a second thought?

I find it bewildering that people are so forgiving and accommodating of money-making corporations' shenanigans, because we are guilted into feeling that raising suspicion about them is somehow (whisper it) socialist. My point is that our reluctance to do these type of things is a result of misplaced guilt and shame about the very idea of being seen to renege on your commitments. A purely rational view of the situation might well conclude that walking away from an underwater house is precisely the best thing for a particular individual and their family. I don't see a particularly strong moral argument in favour of staying in a financial situation that makes a person unhappy and stressed. Who's totting up the brownie points, anyway?

[WatchingThemGrow]

I dunno. It's hard to decide to quit your job and be a SAHM. When I stopped working to have DD, I thought, "Ok, we'll see how this goes this year." And, we dipped into the money DH got from selling his house for a used CRV (my convertible VW was not very Snugride compatible) then after baby #2 and 3 came along, we did the same for a van. Now, we've piddled that money away on a roof, a parking pad, tree work, etc. And our family has grown to need more room. Our house feels (well, IS) pretty small for the 5 of us to live here very comfortably. I don't mean just comfortably, either. Like, we have daily issues that we or our stuff don't fit and it hurts us emotionally and sometimes physically. We step on stuff, kids, bump into walls walking around kids and their stuff, and we just don't really have the ability to get into the kind of house we would like because I have no income. My license expired, so there will be some makeup time to get that renewed when I do need to go back.

Small and simple may not be as freeing as you envision. I bought a raincoat (cause you saw my 15 year old one has holes in it) with a coupon on LLB last night and worried about that $$ all night, thinking it was too much (under $60) but my friends who are working think nothing of a $60 dinner each week.

Can you do part-time?

[BabyBearsMom]

I'm not saying that just because big companies behave badly then we should - I'm saying that in certain circumstances (and I think this counts as one of those) we should examine carefully the reasons behind our reluctance to 'walk out' on these kind of commitments. All a mortgage contract says (usually) is that if you stop paying then they have the right to foreclose. All you are doing in those circumstances is invoking that clause of the contract you signed.
And the point about the current circumstances is that through no fault of her own, OP's house is now worth far less than any remotely pessimistic person could have predicted, and really why should individual families carry the can in that way when it was Wall Street that screwed them without a second thought?

I find it bewildering that people are so forgiving and accommodating of money-making corporations' shenanigans, because we are guilted into feeling that raising suspicion about them is somehow (whisper it) socialist. My point is that our reluctance to do these type of things is a result of misplaced guilt and shame about the very idea of being seen to renege on your commitments. A purely rational view of the situation might well conclude that walking away from an underwater house is precisely the best thing for a particular individual and their family. I don't see a particularly strong moral argument in favour of staying in a financial situation that makes a person unhappy and stressed. Who's totting up the brownie points, anyway?

Hey, I have no problems calling out corporations on bad behavior and most people who know me would tell you that I am pretty border-line socialist on many many issues. I just will never say that because a company does a bad thing, you should do it too. Also, when you buy a house, there is always a risk that the value could tank, that is the risk of any investment. The fact is, we are an economy that is completely built on credit. When you sign a credit card slip, you are promising to pay. If we start down a path, where people just don't pay when it doesn't suit them, we need to leave a society that is built on credit and go back to bartering. We all have things in our life that give us stress and make us unhappy, no one is perfect. But running away from your problems and leaving someone else holding the bag is not a solution for adults.

[ThreeofUs]

Well, we dropped my income because one of us had to be home with DS1. So I'd plan for, save up the money, and take smart steps to get to this goal.

[Trigglet]

Hey, I have no problems calling out corporations on bad behavior and most people who know me would tell you that I am pretty border-line socialist on many many issues. I just will never say that because a company does a bad thing, you should do it too. Also, when you buy a house, there is always a risk that the value could tank, that is the risk of any investment. The fact is, we are an economy that is completely built on credit. When you sign a credit card slip, you are promising to pay. If we start down a path, where people just don't pay when it doesn't suit them, we need to leave a society that is built on credit and go back to bartering. We all have things in our life that give us stress and make us unhappy, no one is perfect. But running away from your problems and leaving someone else holding the bag is not a solution for adults.

Sure, I agree that society only really works if we can rely on each others' word/contract or whatever, I'm just saying that I think we consider a foreclosure/short sale as somehow a moral issue, when really it's just one party to a contract invoking a clause in that contract. I don't see it as the same thing as entirely failing to pay back an unsecured loan (which you might see as effectively the same thing as stealing), but rather that a secured loan (like a mortgage) precisely has protections for the lender built into it. There's nothing that says the borrower has to take on all the risk of falling house prices is there? That's what PMI is for, after all. The banks protect themselves every way they can.

[cuca_]

The bank doesn't force people to take out loans, people make their own choices. If people don't want to pay the mortgage, they shouldn't buy the house.

I think this is an oversimplification of the situation. The banks are not an innocent bystander in the current mortgages crisis. They engaged in many predatory practices while aggressively selling these mortgages. A large number of the mortgages were to high-risk borrowers, and the terms of these loans were very risky. So while they did not necessarily force anyone to take on a mortgage, I bet in many instances they were very persuasive and reassuring despite the risky terms.

[BabyBearsMom]

I think this is an oversimplification of the situation. The banks are not an innocent bystander in the current mortgages crisis. They engaged in many predatory practices while aggressively selling these mortgages. A large number of the mortgages were to high-risk borrowers, and the terms of these loans were very risky. So while they did not necessarily force anyone to take on a mortgage, I bet in many instances they were very persuasive and reassuring despite the risky terms.

Agreed, but that isn't what happened to OP as far as I can tell. She has not claimed to be the victim or predatory lending practices. She is currently, perfectly capable of repaying her loan. It would be one thing if she had gotten herself into a prohibitively expensive interest only loan that she hadn't understood when she signed the paper work. But what OP is saying is that she made an educated choice to purchase her house, knowing the cost of said house and the monthly mortgage payment. Since making that decision, she has decided that she wants to SAH and if she SAH she cannot afford her mortgage and wants to leave the bank with the short stick.

[crl]

I think this is an oversimplification of the situation. The banks are not an innocent bystander in the current mortgages crisis. They engaged in many predatory practices while aggressively selling these mortgages. A large number of the mortgages were to high-risk borrowers, and the terms of these loans were very risky. So while they did not necessarily force anyone to take on a mortgage, I bet in many instances they were very persuasive and reassuring despite the risky terms.


I think it is pretty clear at this point that banks, etc engaged in very shady behavior and contributed significantly to the housing run up. I agree that I don't see walking away from a house as necessarily a moral failing. But unless the OP is in a non recourse state and meets the legal requirements to walk away, I am not sure she will be able to do a short sale, etc.

I also think there are other considerations, including her dh's security clearances and her ability to return to work someday.

Catherine

[crl]

Agreed, but that isn't what happened to OP as far as I can tell. She has not claimed to be the victim or predatory lending practices. She is currently, perfectly capable of repaying her loan. It would be one thing if she had gotten herself into a prohibitively expensive interest only loan that she hadn't understood when she signed the paper work. But what OP is saying is that she made an educated choice to purchase her house, knowing the cost of said house and the monthly mortgage payment. Since making that decision, she has decided that she wants to SAH and if she SAH she cannot afford her mortgage and wants to leave the bank with the short stick.

Eh, but the banks contributed to her situation where she is now underwater because of the unrealistic price run up, whether they engaged in predatory lending practices with her or not.

Catherine

[KrisM]

We were pretty sure I'd stay home with kids when we got married, so we never lived on 2 incomes. However, it sure made it easy to save money since we didn't spend mine and we had equal salaries :). Now, saving is much more difficult, especially after a bigger house and more kids. Plus, DH didn't get a raise in 2007, 2008, took a 10% cut in 2009, got that 10% back in 2010 and finally got a very small raise in 2011. So, while costs have gone up, our income has not.

My 2 income friends take many more vacations that we do. I'd never consider flying anywhere because there is no way I'd spend $1000 just to get 5 of us there and that's cheap! We camp. We stay with relatives. That's it.

I cut coupons and shop sales. My kids wear all used clothes. I enjoy those things and would miss them if I were working full time and wouldn't have time to do them.

We rarely eat out for meals. And, when we do it's on free kids nights at places like Applebee's.

So, yeah, there is a big difference in most people's lifestyles it seems. But, I am happy being home and don't miss those things too much.

Figure out how much you'd take home on just DH's salary. Your federal taxes will change, so take that into account. Even though I'd make about what DH makes if I had kept working, the first 40% would go to taxes, then a bunch to 401k, daycare, other expenses and wouldn't leave me with much really. Try to figure out what you'd actually see from his checks. It might be a lot more than you see now.

ETA: (got distracted by kids :) ). I do not think I would short sale my house just to stay home. I agree with it being a contract I signed to pay that amount back to the bank. Morally, if I could make the payments, I would. Obviously, if a job loss happened and it's make the mortgage or feed the kids, I feed the kids. Or if a job transfer happened and I had to move to a new location, I'd short sale. But, just because I changed my mind on living there? No I wouldn't. If I buy a new car and take out a loan and the car goes down in value, I do not think I should short sale and walk away from the difference.

[GvilleGirl]

Eh, but the banks contributed to her situation where she is now underwater because of the unrealistic price run up, whether they engaged in predatory lending practices with her or not.

Catherine

Or her neighbors decided to short sell their houses because they wanted to SAH. I don't think you can blame just the banks or the people. Both parties are to blame.

Before I did anything I would test living on one budget for 6 months. I find that it easy to resist splurges for a month or two, but living on one budget is really giving up almost all splurges (or so I find). I also feel that the dynamics of your marriage change and so do expectations. I wish now that I still was working and have actually looked, but it is hard to get back in.

I also find it more stressful being a SAHM in this economy. Getting back into the workforce can be more difficult.

[amldaley]

Just providing some back ground here but won't go to the extent of quoting each post I am answering...

1) DH and I will be moving sometime between 18 months - 30 months from now due to military retirement/transition to civilian sector. The CMA came back so dismal and due to current building boom in my part of the county, the realtor does not believe we will regain anywhere close to the $40k-$50k we are upside down by. We have already tried to rent it for almost $400 less than our mortgage payment and were unsuccessful. We will have to sell in 18-30 months anyway, at a loss. We do not want to maintain a rental from thousands of miles away at a financial deficit.

2) I MIGHT be able to go part time after Baby 2 is born. However, my job field is downsizing. I will be out of a job in less than 4 years - probably around 2 years. There are no comparable jobs in the civilian sector.

3) We considered short selling now so that we have the next 18-30 months to work on repairing our credit before DH retires. Our next door neighbors already did a short sale of sorts, or really the federal govt did it for them. She got a job transfer and the Fed bought her house from her and then sold it at grossly below market value. This is one of the reasons our CMA is so low. There is already a foreclousre on my street. Those people did not consider our resale value when they did that so I am not sure where my obligation is to protect it for them.

4) This is not just about wanting to be a SAHM. DD has had a number of health issues including being diagnosed with absence seizures. It has become very difficult to keep a normal, professional position taking so much time off for both her issues and mine. That is certainly something we could never have ever foreseen.

5) I have a friend who specializes in short sales and she has done a couple successfully without having to have the owners default on the loan. The process takes months but it can work. We have to prove that we have a pending financial loss and lifestyle change and why.

6) I would ideally like to work part time but the problem is child care for DC2. We live in a county with less than 50% of the child care spaces needed for children 0-12 months and no infant drop in care. So I would have to do a full time daycare position for DC2 whether I am using it or not. I might be able to do my current job part time and there is another job I have been invited to apply for that is part time. I have no family here, so no family child care option.

Thanks for all your feedback. I was not actually asking "should I short sale". I was more seeking information and ideas on how people successfully went from 2 incomes to 1 because of shifting priorities or other contingencies.

[KrisM]

I think that's a valid reason to short sale now rather than later. Makes sense to me.

I still would try to do as much of the salary transition now as you can. I know people say that the house is the killer and knocking out other expenses just doesn't matter enough. But, if you're taking care of the house by short saling, then I'd start on the other expenses. Cable, land line, dining out, groceries, nails, massages, vacations, etc. Make a budget and see where the money goes and figure out what can be cut. Don't make it so tight it's not realistic, or you won't stick to it. But, realize that things will be tighter.

When your DH retires, will his income be about the same? Will you move to a lower COL?

[infomama]

I haven't read through the thread but I know the first thing I would do is sit down with pen and paper. Write out our expenses vs. DH's income. That would give me a nice baseline. If you use Quicken or the like...even better at getting accurate figures. I would say do a trial period if you can (before you give up your job)....live on only his income and bank yours. Get the feel of it. I hope you can make this work for you guys. I dream of being a SAHM.

[amldaley]

When your DH retires, will his income be about the same? Will you move to a lower COL?

Almost undoubtedly a higher COL area. We are hoping for Denver where, while higher COL, housing seems to be more affordable or comparable. Otherwise we will be in DC, Baltimore. Seattle or Boston. We are not adverse to living in a small place if it means we can achieve what we want to acheive lifestyle wise. He will hopefully make more than he makes now. If not right out of the gate, he will shortly after when he finishes his degree. We do have the potential for him to actually make more than he makes now. But it won't be where we live now.

We don't take vacations. I have not been home since 2006. We have been once to see his family, just earlier this spring.

I haven't had my nails done since 2007 and only get professional pedicures 1-2 times per year. I have not had one this year at all.

We eat out occassionaly so we will be nipping that. And downsizing cable plan. Not ditching our land line. We live in a storm prone area and I have a child with health issues. A land line could = a life line for us.

We do not spend alot monthly on things that can be curbed or cut out - we just have a tremendous amount of debt.

[kijip]

I would think that if a bankruptcy or short sale would hurt his security clearance that lots of debt would hurt it more.

I would seriously consider every option you have, including short sale and/or bankruptcy especially if you will be out of work in a short time. The job market's long term prospects are not good. I think a lot of us will be living on a lot less for a long time regardless of if we like it or not.

The contract for a mortgage is that you make the payments or you lose the house to the bank. Not that you make those payments despite any ability whatsoever to do so. It honestly sounds like if you don't shortsale or foreclose now (after leaving your job) than you will be in that position within three years anyways. Your family's long term stability and financial health will be worse if you wait.

That said, I am neither a lawyer or a security expert. So I would not proceed until you know the professional ramifications.

[niccig]

We do not spend alot monthly on things that can be curbed or cut out - we just have a tremendous amount of debt.

You don't give amounts, and I'm not asking, but even if you do downsize the house, have you worked out how long it will take to pay back the debt? I wonder if you might still need to work with the smaller housing costs, to really chip away at the debt. Otherwise you could downsize be making some headway with the debt, but it could still be years and years until you're clear? All the reading I've done on paying down debt is to cut spending and maximize income.

Your work sounds like it will be ending, is there any chance to make sideways moves into something more secure?

I hear you on the childcare issue, it's one of the reason why I stopped working when DS was born. I never considered the long term financial impact of me becoming a SAHM. I only considered the immediate how much is childcare, how much would we get afterwards, the difficult of juggling.
I did not factor in loss of retirement benefits for nearly 7 years so far - that's a lot of $$$ that isn't in any retirement account. I also missed out on any promotions so if I was to go back in same field, I'm at a level I was at 7 years ago and not a higher level with more pay. Again, a lot of $$$ that is not in our accounts. I'm not sure what your retirement options are, but it is something to consider how becoming a SAHM will affect your retirement (I'm going to have to work a lot longer to make up for what I've missed out on.)

We're also looking ahead to DH's work arc, which isn't looking so rosy with all the pay cuts he's had to take. I am back in school to retrain and one of the motivating reasons is to have a 2nd income for when DH's work has the conversation they had with an older colleague - he isn't bringing in the work he used to, so he has to take a 20% pay cut to keep his job. This will be my DH one day, but the difference is I should be working to soften that blow.

I hope you get some great advice from the financial planner. We too made some financial decisions that have come back to bite us, the question is how do we get out from that and not make them worse I YKWIM?

Good luck, I hope you can find a way out.

[crl]

Will your dh's future civilian jobs require security clearances? And how would a bankruptcy affect his job prospects?

We successfully went from two incomes to one primarily because we had virtually no debt after we sold our first house. I think it would have been very hard for us to do while paying off debt. I am sorry because I don't think that experience helps you much, but that's was our experience.

Catherine

[KrisM]

Can you short term go to a lower COL area after retirement so you can pay off the debt? Or is bankruptcy an option after retirement?


Are you able to meet all your obligations currently for debt repayment? You said your net is about $2800/month and you'd save $1400 by short-selling the house and pulling out of daycare. Since the tax brackets are marginal, you'll likely pay much lower taxes with only one income. Figure this out because it might turn out that instead of $1400 short, you're only $200 short. I have friends that are 2 income families and both make about what DH makes. They also have 3 kids and they itemize on taxes (we don't). They pay nearly 3 times as much federal tax as we do. If I were to go back to work, a huge amount would go straight to taxes.

If you're only a couple hundred short, you could probably find something to bring that home without working full time.

Other things to figure out - depending on what you do, you might spend a lot less on clothes as a SAHM. I spend maybe $50/year. I also am able to shop thrift stores and mom2mom sales for the kids and spend about $300/year on 3 kids worth of clothes. I am home, so I make dinner and lunches most days. DH doesn't eat out and the kids rarely buy lunch at school. You say there isn't much to cut back on, but consider what might be able to be changed if you aren't working. Convenience things.

[amldaley]

Can you short term go to a lower COL area after retirement so you can pay off the debt? Or is bankruptcy an option after retirement?


Are you able to meet all your obligations currently for debt repayment? You said your net is about $2800/month and you'd save $1400 by short-selling the house and pulling out of daycare. Since the tax brackets are marginal, you'll likely pay much lower taxes with only one income. Figure this out because it might turn out that instead of $1400 short, you're only $200 short. I have friends that are 2 income families and both make about what DH makes. They also have 3 kids and they itemize on taxes (we don't). They pay nearly 3 times as much federal tax as we do. If I were to go back to work, a huge amount would go straight to taxes.

If you're only a couple hundred short, you could probably find something to bring that home without working full time.

Other things to figure out - depending on what you do, you might spend a lot less on clothes as a SAHM. I spend maybe $50/year. I also am able to shop thrift stores and mom2mom sales for the kids and spend about $300/year on 3 kids worth of clothes. I am home, so I make dinner and lunches most days. DH doesn't eat out and the kids rarely buy lunch at school. You say there isn't much to cut back on, but consider what might be able to be changed if you aren't working. Convenience things.

These are great points - THANK YOU. We have a meeting with a financial planner/counselor next week and then I think, depending on how that goes, I may need to talk to tax accountant to see what the impact would be. Yes, the goal is to be able pay down our other debts quickly by using the excess we would be saving on housing and daycare (and yes, you are right...clothes for work, the seemingly endless "work lunches" which I hate but have to attend, etc). We could also then sell DH's truck which is paif off and throw that $4000 or so at debt and be a one car family for awhile.

Finding out about his clearance is the first priority. He wants to wait to do all the financial counseling etc first, then he will call to find out about his clearance. If done properly, it should be ok. We shall see! Obviously, if that is affected in too negative a way, we won't/can't do it at all.

[Jen841]

I would work on cutting expenses, but not short selling. I would work to plan on being a SAHM, not just do it. Talk to a professional. My SIL worked with a financial planner to 'plan her retirment/being a SAHM'.

I am a planner. I work. We maintain a lifestyle we are comfortable with and save where our planner says we should. Yes I would like to be a SAHM but the safely blanket of 2 incomes is important to me. My kids are happy and in safe places and are SUPER social.

[hillview]

We sold at a loss. It was about 100k. We did it for a few reasons, we didn't think we would recover the (turns out we sold JUST in time before the total crash); the condo fees were killing us; we needed a place for us plus my parents (my mom's health was failing). SO yes I think there are reasons why one would do this. That said, DH and I both have high pay jobs so the hit was felt for about a year and then we were ok (the loss was off set by renting and not paying condo fees). We purchased a place about 20% less than the condo that has no condo fees and both our salaries went up and we are housing my parents who watch the boys after school (and we pay them about 75% of what I'd pay a nanny and they cover any time we need). We also purchased a place that we could make work with one salary if one of us lost a job for a year or 2.

HTH -- know it is not identical to your situation.

If it were me I might consider this
- sell at a loss
- work for 6 months and try to survive ONLY on DH salary, if that works,
- go to part time

I know it isn't a quick solution and may not work for a number of reasons but just an idea. GOOD LUCK!
/hillary

[amldaley]

If it were me I might consider this
- sell at a loss
- work for 6 months and try to survive ONLY on DH salary, if that works,
- go to part time

I know it isn't a quick solution and may not work for a number of reasons but just an idea. GOOD LUCK!
/hillary

That is what we would do ideally. For us it would be sell at a loss, work until Feb, be a SAHM for at least 1 year and then if DH retires in March 2013, I would wait until we move to work PT, if he stays here through 2014, I would go back to work PT.

[amldaley]

I did not factor in loss of retirement benefits for nearly 7 years so far - that's a lot of $$$ that isn't in any retirement account. I also missed out on any promotions so if I was to go back in same field, I'm at a level I was at 7 years ago and not a higher level with more pay. Again, a lot of $$$ that is not in our accounts. I'm not sure what your retirement options are, but it is something to consider how becoming a SAHM will affect your retirement (I'm going to have to work a lot longer to make up for what I've missed out on.)



Good luck, I hope you can find a way out.

That is a good point. We have DH's retirement sewn up (military pension and he is already over 20 so we are not at risk of losing that as others are) but we have not really been putting anything else aside because all our money goes to paying off debt right now. I contribute to my employers retirement fund but minimal. Job one is to get teh debt paid down so we can even consider a 401k etc. But you are right - I had not thought of the long term aspect.

[GvilleGirl]

One thing to also consider is the transition from military to civil. Will his job be as secure? When my husband was out of work it was very scary since there was no income at all. Luckily we had enough savings to ride it out, but things go down hill a lot faster.

I also wonder if the lender will let you since you said that you do "fine month to month but have nothing at the end to show for it". Also I believe NC is one of the states that they can still get payment for the loss so you still might have to pay the 40-50k you are under.

[arivecchi]

If it were me I might consider this
- sell at a loss
- work for 6 months and try to survive ONLY on DH salary, if that works,
- go to part time:yeahthat:

I would recommend you not leave your job unless you are 100% sure you could live without it. I also agree with niccig that there are many "hidden" costs to leaving a career. In my line of work, it is pretty much impossible to return once you leave, so I would worry about that quite a bit - especially in this craptastic economy.

Regarding the short sale, you do not need to stop paying to qualify. You can get a short sale approved if you meet your bank's guidelines for a short sale (which should include loss of income, loss of employment, excessive debt, etc).

Do what you have to do to get your family to a better place. Banks cut their losses too - all the time. There is no shame in taking stock and figuring out what is best for you.

Some people have no idea how badly it sucks to live under financial stress and, IMHO, no one should really judge until they have walked a mile in your shoes. $hi! happens. All the time. No one is immune.

Many hugs and best of luck.

[luckytwenty]

I'd first try living for at least six months on as close to your "SAHM budget" as possible, minus only the childcare. See how that goes and see whether you really want to live on so much less.

I'd run some financial projections to figure out how you'll save for retirement, college and anything else big you hope to pay for in the future.

You also need to consider that leaving the workplace affects your future earnings. When and if you decide to go back to work, you will have lost time. In almost every industry, trends change and new skills are required from year to year. If you want to go back to work in 10, 15 years from now, you'd likely be starting somewhat lower than where you are now, and it might be hard to find work, depending on the economy.

I was feeling VERY burned out after my first three months as a working mom of three, between the commuting and the pumping and the stress of work/kids. I took a week off, stopped pumping and got DH to take on more of the commuting, and had a long talk with my boss (who continues to have unrealistic expectations of me and is not a working mother herself, but I digress.) I set some boundaries she's abided by. I feel a lot better about work now.

[egoldber]

You also need to consider that leaving the workplace affects your future earnings. When and if you decide to go back to work, you will have lost time. In almost every industry, trends change and new skills are required from year to year. If you want to go back to work in 10, 15 years from now, you'd likely be starting somewhat lower than where you are now, and it might be hard to find work, depending on the economy.

This is very true. And while I do not at all regret being a SAHM while I did, the truth is that I let my skills stagnate and I will take me a very long time to approach the career level I left at. I was senior management when I left and I am a mid level professional now. I am actually really OK with that :) and I am mainly working for the benefits. But I also had a large amount of savings, retirement and 401K before I left, so I am not feeling the hit as much as I would if I had left the workforce earlier.

And while I do not like the stress that comes with being a working mom, I do like working. I like having a space to go to. I like having kid free time to focus on things totally not kid related. I feel interesting at parties again or at least as interesting as a statistician can ever be LOL! ;) I like feeling like I have skills and professional accomplishments again.

If it were me, I would consider carefully how you can remove some of the stress from your life and cut back on expenses. Being a SAHM can be very rewarding, but I know that DH found it VERY stressful to be the sole income earner. We feel much more stable and financially protected now. Living on a reduced income can be incredibly stressful on a marriage.

I am now looking for a position where I can telework and/or work part time. My current organization does not support that, so I am looking around at other places that do.

[MoJo]

I don't know how much this applies, but we went from 1 (me, pre-kids), to 2 (up until JellyBean was born), then almost back to 1, then back to 1 1/2 this month.

I don't regret the time with the kids at all, but financially & relationally, I have some pretty big regrets.

1) I didn't realize how much pressure being (almost) the sole breadwinner would put on DH, and how that would translate to increased stress & decreased happiness for him. And then he also felt guilty over not providing enough for X,Y, or Z.

2) I (as the person who handles the finances, regardless of who earns the money) didn't put the brakes on DH's spending hard enough and fast enough. He kept spending like I was working half time, when I was only working 2-4 hours per week. . . and now we have several thousands of dollars of credit card debt (and nothing to show for it) that we didn't have.

3) I didn't consider how much money would be needed for basic maintenance. We knew when I cut my hours drastically that there wouldn't be much extra, but there isn't enough to fix the drains that are plugged, or the toilet that won't flush, or the tire that went flat, or the computer that is acting up. That's one of my biggest short-term motivators to increase my hours.

All that being said. . . I loved being mostly a SAHM. And I strongly dislike needing to work twice as many hours because half of my money is going to daycare. And I know I couldn't do what you're doing, working full time, often with DH gone, while pregnant and with a child with health issues. I'd be literally sick.

In my case, there's a better chance that DH will lose his job and not find another than that he will ever earn much more than he does now. In your case, I'm still not sure how your not working would help with your mountain of debt, but I can see that perhaps your working isn't helping much by the time you pay for childcare (especially for two) and that if it's not helping, you might as well stay home like you want.

I really hope you're able to make something work out!

[gatorsmom]

I think this is an oversimplification of the situation. The banks are not an innocent bystander in the current mortgages crisis. They engaged in many predatory practices while aggressively selling these mortgages. A large number of the mortgages were to high-risk borrowers, and the terms of these loans were very risky. So while they did not necessarily force anyone to take on a mortgage, I bet in many instances they were very persuasive and reassuring despite the risky terms.


Sure there were some banks engaging in shady business dealings. What they did wasn't right. But does that then excuse anyone from breaking their contract? Can I just decide not to pay my mortgages even though I have the means to pay them? Imho, no, I would be engaging in the same kind of shady business practices as those banks. At what point do we all stop blaming each other for everything that is wrong and using other's poor actions to justify our own?

To the OP, have you thought about working part time? If your current company won't let you go part time, have you thought about working somewhere else part time? Or, maybe you are just really unhappy with your current job/career and need something else that stimulates you? If there are projects at home you want to get done, have you thought about setting up a plan and setting a goal for yourself and your DH to get them done? Maybe you would feel better about working full time if you knew that you were making progress at home despite working out of the home.