Stay Home with the Kid or Work…Or Do Both?

Two years ago I became a parent about ten weeks earlier than I should have. After five air ambulance transfers, four hospitals, and two rounds of neurosurgery and sixty seven days later we got our baby home. Needless to say, my wife had a very strong desire to stay home with our baby to ensure his development was progressing normally for the next several years. I agreed, but we needed to make it work with the budget after the maturity leave money ran out.

I worked it out that we could exist on my income alone, but there would be no extras (ie: no vacation money, Boxing Day shopping, or us covering the bill at a family supper out). So I gave the wife the news and offered her a challenge. “You have to earn some kind of an income while you stay home. I don’t care how much it is, just something.”

So she went to work during her maturity leave and got a home based daycare up and running in our house. The cash flow is tiny, but when you consider the cost savings on work clothes, commuting, paying for daycare and the tax write off of a home based business it does make sense for us.

Here’s a brief example:

After tax and expenses daycare income to house $240/month
Work clothes savings $50/month
Commuting savings $57/month (bus pass)
Daycare savings $600/month (local child care rate)
Daycare portion of house bills $150/month

Total savings/income to the house $1097/month

Strangely enough that was about what she was taking home prior to going on maturity leave. So I suggest that if your one of you is earning less than $30K/year and have at least one child that you look into the idea of one of staying home with a small business. You might just find that you can have your cake and eat it too.

This post is now part of Carnival of Personal Finance #77 over at Money and Values.

The Emotional Part of Paying Off Debt

I recent had a conversation with a friend who had a nice problem. He had a big cheque coming to him for retro pay for a raise that he got. The amount was several thousand dollars and he had decided to pay off some debt (Great idea!). The question was which debt would he pay off first. He has a car loan for about $20K (5.9%), the mortgage for over $100K (6%) or a student loan at $5K (8.5%). He was concerned about paying off the student loan since he can use the interest as a tax deduction.

My personal thought was screw the tax write off and get rid of that student loan because the satisfaction of finally paying off your loan is a great emotional high which can be used to inspire you get rid of more debt. I think people tend to get so tied up in the numbers that they forget that money is a very emotional topic.

So next time you get a windfall, try to remember that some emotion in your money decisions can be a good thing.

About Me

I’m a chemical engineer in my late twenties working for a consulting firm in Regina, SK. I enjoy reading, writing and saving money. After being the unoffical ‘money guy’ in my family for years I decided it was time to share some of my thoughts with others as I try to save enough cash to retire when I turn 45.

A blog about early retirement and happiness