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Question: Tammy on Facebook asks Dave at what Baby Step should a parent consider staying at home with the kids? Dave says it isn't at a particular Baby Step but rather when you can afford it.
Answer: It's not at a Baby Step. It's when you can afford to do it. Let me help you with that. Obviously if you're out of debt, it's easier to afford to do it. After Baby Step 2 or Baby Step 3 even, with your emergency fund in place, it's a lot easier. But the big question is this: How much is it really going to cost you to be at home in terms of lost income?
You have to make over about $25,000 a year to even break even in the workplace if you're paying daycare. By the time you pay daycare, extra wear and tear on the car, gasoline in the car to drive to work, different kinds of clothing—more professional clothing in most cases that are more expensive—more cleaning, more fatigue food because you're not at home to cook, you're not cooking from scratch so your grocery bill is higher—usually because it takes longer to cook from scratch normally—and on and on and on. The costs associated with you being in the workplace all added up is about $25,000 a year, give or take. That's what you've got to look at. If you make $50,000, you're netting $25,000 and that's nice. If you make $100,000, you're netting $75,000, give or take. That's what you're facing.
There are other issues like is your health insurance for your family through the wife's company or through the husband's company? You've got to deal with that one, right? The benefits that will be lost when she comes home. You just have to do some math. A good rule of thumb—a good way to try something if you want to stay home is to basically say we're going to use her check to pay the daycare bill and her car gasoline. We're going to put the rest of it in a side account and not touch it. We're going to use his check to live on. Pay the lights, the mortgage, get out of debt, whatever our goals are. If you can bank her entire check not counting the daycare bill and her car gasoline, then you can live on his income. That's a good way to test it, and you'll be ready to do that.
Here's the other thing you can look at. I can't tell you how many times this has happened. I mean literally hundreds—maybe even thousands—of times in 20 years of financial counseling. We sit down and look at everything and go, "You know, we're really close. We could do it. We're only about $400 off." We look down the page, and right there on the page is a $375 car payment on her car. So she's working when she wanted to be home as a full-time mom. Her goal was to be home as a full-time mom, and she's basically working to pay for a car. Sell the car. Don't trade your kids for a car. Go home. Sell the car. Get you a beater. Then save and move into a better car over time, but dump the van. It's a car. You can live without the car. It's possible.
That's the kind of stuff you've got to look at to decide if you can "afford to be at home." Not every lady wants to be at home full time with the kids. I get that. That's fine. I've got no issue with that. We decided that that's what Sharon wanted to do, and so we fought for all these years until we didn't have to fight anymore against the budget to make it work so she could do that. In our case, in our lives, it was a great investment. It was a great decision. It certainly had an influence in our kids' lives. It certainly impacted all of those things.
I don't know if there is a higher calling on the planet than motherhood. That may be the highest calling on the planet. Don't let anyone act like you're somehow substandard, because there a lot of ladies with Ph.D.s who decide to be full-time moms. Hopefully, you don't have student loan debt associated with that Ph.D. when you do that, but there's no higher calling. But there's nothing wrong with wanting to be in the workplace either. Or if you make enough money and you just choose to work, that doesn't make you a bad mom or a bad dad either.
The point is if that is your goal, sit down and do the math to hit your goal just like if your goal was to go snow skiing this winter. You better start saving some money and have a game plan to get there. That's all we're saying.