A $235,000 Decision

Michael and his wife just had a baby. They aren't sure if his wife should stay home or return to work. They're also considering a refinance. Dave doesn't see why they can't do both.

QUESTION: Michael in San Francisco and his wife just had a baby, and about a month ago they became debt free. They aren’t sure if his wife should stay home or return to work. She makes $235,000 a year while Michael makes about $150,000 a year. They owe $400,000 on the house, and it’s worth $625,000. They’re also considering a refinance. Dave doesn’t see why they can’t do both.

ANSWER: All of these things together make a lot of sense. For her to come home is a fine idea. It’s a $235,000 decision. That’s a big decision. I believe in Mom being home if that’s what Mom wants to do. I’ve got to tell you: that one takes my breath away though. Wow. That’s a lot. I’m okay though if that’s what you guys want to do. You’ve just got to be able to live on $150,000 and pay your bills. Pretty simple. And I think you can.