The Logistics of Losing My Income


19 Comments
Logistics

Thanks so much for all the kind words regarding my decision to quit! You guys give the best Internet high fives ever. Seriously, it really meant a lot and pretty much made my day month. Now that it’s actually happening (4 days left and counting!), Johnny and I have some loose ends we need to tie up. Aside from the obvious — that we’ll have one less income — here are a few other things we need to consider, too.

Decide what to do with my 403b

My employer’s 403b plan vested at 25% each year, and since I’ve been with the company over 4 years, I’m 100% vested. Woo! I don’t know how long I’ll be able to keep the money with my employer, but we’ll either convert it to a traditional IRA or Roth IRA — keeping in mind that we’ll have to pay taxes if we put it in a Roth.

Get on Johnny’s insurance

We haven’t calculated how much Johnny’s insurance is going to cost compared to mine, but we’re guesstimating that it will be close to half the price, which is great in some ways. The only problem is that his insurance won’t be quite as robust as mine currently is. Since we’re young and healthy, though, we’ll probably still end up saving money. My only concern is that their maternity coverage isn’t that great, and a future pregnancy could cost us a hefty chunk of money. Luckily, I do have supplemental insurance through Aflac (which paid out $4,100 after we had Sal). Having Sally cost us $0, so we were able to pocket the payout. Next time around, it might just go toward paying bills, which is fine.

Recalculate our budget

Obviously, there won’t be as much money coming in, so we’re going to be a bit more purposeful with our spending and cut back where we can. Our savings will drop a good bit (booo!), so we might not spend as much on vacation or clothing and we’ll also recalculate our church tithes. We’ll share our updated budget soon!

Reevaluate our goals

We made some specific financial goals for 2014. One of our New Year’s resolutions was to save 50% of our net income. Well, there’s a good chance that won’t be happening now. But we will still be saving every month, and luckily we’ve squirreled away a good chunk of savings. We also don’t have any specific plans for home buying or second-car buying anytime soon, so our slower savings rate should be just fine and dandy.

So those, my friends, are the logistics of our new life that Johnny and I are still figuring out. The funny thing is that while I know everything’s about to change, I’m still so entrenched with my hectic work schedule that it’s kind of hard to believe. I’ll keep you all updated on how full-time SAHM-hood is going in a couple of weeks. For now, we’re still eating frozen chimichangas :).

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19 Comments

  • Reply Brian April 30, 2014 at 7:42 am

    I would roll it over to a traditional IRA first… you can always do a ROTH conversion in chunks later based on how your taxes look that way you won’t have to take the possible huge tax hit all at once.

    • Reply Joanna May 5, 2014 at 12:54 am

      Good point. Thanks for the tip, Brian!

  • Reply Cate M. April 30, 2014 at 9:17 am

    I am so envious! I desperately wish there were a way that my husband and I could make it work so that I could stay home with my boys (2-1/2 and 6 mos.) at least part-time. Unfortunately we are slaves to the student loan payment gods and will be for quite some time :(
    Good luck and enjoy every second of it!

    • Reply Amy May 2, 2014 at 11:19 am

      Cate if you have any of the following federal student loans you may be eligible for Income Based Repayment.. It might allow for you to stay home part-time.

      Direct Subsidized Loans
      Direct Unsubsidized Loans
      Direct PLUS Loans made to graduate or professional students
      Direct Consolidation Loans without underlying PLUS loans made to parents
      Subsidized Federal Stafford Loans
      Unsubsidized Federal Stafford Loans
      FFEL PLUS Loans made to graduate or professional students
      FFEL Consolidation Loans without underlying PLUS loans made to parents

    • Reply Joanna May 5, 2014 at 1:01 am

      I hear ya, sister. It’s such a tough balance. Sending good karma and well wishes your way for you to find whatever time possible to be home!

  • Reply Wade April 30, 2014 at 10:27 am

    In a similar situation I rolled my 401k to Vanguard.com. 403B is similar, just for different organization.

    Vanguard specializes in super low cost funds..

    So it would be a “Rollover IRA”. You can easily transfer it to Vanguard or another low cost investment house. Watch out for fees.

    This has been my area of study for the last 6 months.

    http://www.bogleheads.org is an excellent resource. They focus on 1) low cost 2) simplicity 3) stay the course.

    Search for “3 Fund portfolio” I am following a similar pattern. This same strategy can be used for taxable, Roth IRA $ etc.

    Good luck!

    • Reply Joanna May 5, 2014 at 1:05 am

      Thanks for the info, Wade! You’ve given me a good list of reading material for my first few days of unemployment freedom :).

  • Reply Kassandra April 30, 2014 at 12:47 pm

    It appears you’ve covered the most important bases. Looking forward to hearing about your SAHM experiences as time goes on and how you’re adjusting from not working full-time too!

    • Reply Joanna May 5, 2014 at 1:05 am

      Thanks, I’m excited to see how it goes, too! :)

  • Reply Nichole @Budget Loving Military Wife April 30, 2014 at 4:14 pm

    We transitioned to one income exactly a year ago from tomorrow (May 1st). Of course there was growing pains, but we save SOO much more now that I stay at home. Cooking things from scratch, homemade cleaners, looking for the best deals, reduction in car expenses and all other work expenses. As stated above, you can roll over to an IRA and then roll it into a Roth IRA a little at a time once you have a better handle on your one-income finances and your tax bracket. This is what our financial advisor recommended to us! Best wishes and enjoy your time as a SAHM! :)

    • Reply Joanna May 5, 2014 at 1:07 am

      Thanks, Nichole! Glad to hear the one-income life is working for you guys! I’m really hoping we find more areas to save now that I’ll have a little more time to find deals, cook, etc!

  • Reply Jess May 1, 2014 at 4:50 pm

    Over all, it seems like you made a great choice. Sure, there will be some adjusting and belt tightening, but you should feel proud that due to your decisions thus far, you were able to take this step. Had you not budgeted for the past few years, you may have not been in such a good financial position.

    • Reply Joanna May 5, 2014 at 1:08 am

      Thanks for the kind words, Jess!!

  • Reply Michelle May 1, 2014 at 11:20 pm

    I’m still completely fascinated by the AFLAC coverage. I need to re-read that post!

    • Reply Joanna May 5, 2014 at 1:12 am

      It was a pretty a-mazing post-baby payout! I would recommend it to everyone!

  • Reply Terri May 2, 2014 at 8:36 am

    High five, Joanna! Enjoy your future SAHM v. WAHM status. I found it financially logical as well as personally rewarding to not work for pay when my children were small, too. I would like to encourage you to continue to network, freelance, and make contacts as well as protect your image as a worker. I am sure you plan to, but I made the mistake of not doing enough when I stayed home for 10 years, and I did find it difficult to return to work full time when I wanted to. Of course, it was just bad luck/timing that my youngest child started kindergarten in the fall of 2008, the beginning of the worst downturn since the Great Depression, and I hope and doubt that your return will not accompany such a dismal economic outlook. Still, as my husband’s income grew and we became more and more comfortable financially while I was at home, I freely admit that it was a little too easy to become more involved in interesting and valuable volunteer work and learning new things that did not relate to my paid work experience rather than sticking with staying involved in my former line of work, and I caution to be careful to protect your professional reputation. A renaissance woman is fascinating at a dinner party, but it does not help you find a job in a specific field. Good luck and enjoy your family.

    • Reply Joanna May 5, 2014 at 1:22 am

      Thanks for the great words of wisdom, Terri! I hope to keep writing and editing on a freelance-basis so I can work full time again someday, but I’m sure it will be a bit of a juggling act!

  • Reply Amy May 2, 2014 at 11:23 am

    Congratulations on your decision to become a SAHM. I left the full-time work force 6 years ago, I’ve been able to adjunct 3 semesters since then to keep my toes in academia. It was an adjustment at first just getting used to being home. We found we were able to save way more than we thought we could after going from a 2 income family to a 1 income family.

    • Reply Joanna May 5, 2014 at 1:25 am

      Thanks, Amy! It sounds like you’ve been able to strike a nice balance with being at home, while keeping yourself relevant with your career. Glad to hear other people who have found ways to make one income work! :)

      And thanks for sharing that awesome student loan info above!

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