Nonetheless, with a tuition bill dangling over head and a bill that will go up another 25% next year if we continue in the same direction, the nagging question 'could I be doing better' does rear it's head. And this morning, it reared its head. I have an ability to estimate such a scenario without a calculator, but this morning I pulled up a spreadsheet, did some research, and used my handy dandy software to figure out how much more we could be netting if I grossed a little over [x.5] times what I'm grossing now with a full time position in an office that would, sadly, be a bit of a drive from where we are thanks to traffic. I'm not quite sure I could gross that from the start, but I appreciate my husband's belief that I could get there pretty quickly. So I ran with it.
I set up a spreadsheet to compare the current scenario of self-employment and a small W-2 here or there to full time employment. I plugged in the new tax scenario. Then I subtracted out a minimal amount of cost we'd need in terms of childcare--I compared a [legal] nanny scenario with no other childcare for the older ones (rare in my neck of the woods) vs. combination day care scenario piecing together camps, after-care, and full time day care. Minimal means that we would still need to switch hit around here to fill in for teacher in-service days, etc.
Then I subtracted another $1200 in increased costs for the year which is low balling it to the max. But I figured that I've settled into some fairly good patterns that I wouldn't need to resort to pizza regularly. Nonetheless, a regular commute would eat up gas and I'd probably need to spend a little more on clothing. But, our utility cost would a bit less.
After all of this, I came to a nice bottom line figure, added back a percent of the the costs I can take as business expenses that I'd absorb anyhow (e.g., a percentage of home insurance, water, electric, home repairs for the whole of the house), and I came to the downright depressing discovery that even surprised me after the serious low balling of increased expenses (notice, there is not a penny in here for cleaning help and I'd be putting in 50+ hours a week pre-Pesach).
My scenario is mine alone and I'm glad I took the time to plug in my numbers because I appreciate clarity more than anything. After comparing working part time for me vs. working full time for someone else, you might be curious what the bottom line is. While I won't lay out my personal scenario, I will give you the bottom line current benefit of working full time vs. continuing piece together an income the way I've been blessed to piece one together:
$1328.70
A few dinners out and a few times with a cleaning crew and poof, gone!
My husband is in disbelief, despite reviewing my figures and spreadsheet. I'm just downright frustrated because even when I eliminate the full time day care, there isn't a single middle school tuition left.
We are a bit shell shocked over here, so excuse the lack of conclusion. But please do share how you weight one working scenario vs. another. Thanks.
----------------------------------------------------------------------------------------------
Note: The potential of 401k match would be there in a salaried position. But I've found match is no longer what it is. That would push things a bit higher up. But, if I set up a SEP plan, I could nearly offset the difference in benefit anyways. The real financial advantage of working full time for me has a rather large time frame. But, there are so many family demands that it takes a skilled tightrope walker and a crystal ball to weight it all.
29 comments:
The truth is, a lot of what you wrote is over my head. But I understand the bottom line.
So what are the ramifications? Are you saying that your current work at home model will not support the tuition hikes? What will you do in that case? Please elaborate.
Over here in homeschool land it is patently obvious that I "make" way more money staying home to be mommy and morah than if I ever went out to work.
One benefit of working in a corporate job is the potential for pay increases (both merit based, and cost of living) in year 2 or 3 etc.
Your first year may just break even, but what about your 5th?
Does your current situation have the equivalent of year over year “salary increases”?
Anon 1:08 raises a good point - did you do the math for the long-term -- what would the difference be over your working life? Considering that most people in your age group will need to work till 70, a long-term perspective is important. Ageism is alive and well. Waiting to try and get back into the working for someone else job market until the kids are all in high-school or older can have serious ramifications due to ageism by employers. That might not be as big an issue for you due to your self-employment/consulting work and your field, but it could be a factor. If you have any hopes of, for example, making partner at an accounting firm or getting an upper -level in-house position, the age at which you re-enter the employed work force can make a big difference. Also, I've known many people who learned the hard way that it is very helpful for there to be two spouses employed with access to group health and disability insurance.
If going back to work for someone-else isn't a good option, can you increase your work at home business? You would still avoid the communting time and expense and keep the home office deductions, but probably would net a ton more even if you paid for some after-school childcare or some household cleaning help since presumably you would be making much more than the $15.00/hour or so that you would pay for childcare and cleaning help.
I agree with Shoshana that if your concern is covering tuition, homeschooling makes way more sense.
What about the intangible benefits of working - socializing with other intelligent adults and making professional connections that will help you make even more money in the future?
There is a reason I don't do too many "personal" posts :) . I did this one because
1) I find the math interesting and understanding this type of math is a bit of a skill of its own (mostly non-marketable according to a Partner in a firm I'm friendly with who has done the math only to find the client is mad at the result!)
2) There are so many factors involved in choosing a working situation that works and it is really walking a balance beam. And with the pressure of tuition there is a lot less room for error or trying to predict the future.
---------------------------------
Shoshana, it is pretty much impossible for us to continue to make more tuition increases on the cash of annual income alone regardless of what I do as a second income earner who is a decent worker but has never been a "hot shot". The entire "system" is a disaster and we all know it.
Homeschooling is always on my radar, but right now it isn't a good choice for us, and I do hope that will change (who doesn't like choices?). I am hoping those issues iron themselves out. . .
One benefit of working in a corporate job is the potential for pay increases (both merit based, and cost of living) in year 2 or 3 etc.
This is the conventional wisdom, but it doesn't hold true particularly true, especially if you are not at the disposal of the employer, can't travel regularly, work less than full time, or are "Mommy tracked". Furthermore, going to work vs. self-employment is a risk of sorts since all your eggs must be put in the basket of employment. If only life was so cut and dry and predictable, right?
What about the intangible benefits of working - socializing with other intelligent adults and making professional connections that will help you make even more money in the future?
Happens often enough and now that I have something to say for myself, I try to take on new work that puts me into contact with new professionals or new opportunities.
If going back to work for someone-else isn't a good option, can you increase your work at home business?
Of course, if Hashem wills it :) I'm always looking to increase clientele. Clearly, given the $1300 figure, a client or a few more clients (or, even back up babysitting for a few days here or there) will flip the math without even needing to put in full time hours.
The non-benefits/disadvantages of working:
People depend on me and I'm "sandwiched" on both sides and think that I will have even increased responsibility in coming years.
My kids.. . . . . .yes, I'm still old fashioned enough/unenlightened enough/etc to think that my kids benefit from being cared for by me.
Don't underestimate the toll (no pun intended) of a long commute. It can be rather wearying. It takes a lot of energy to be able to fight traffic for an hour and then, once you get home, cook dinner, do homework, bedtime routines, etc.
Also, factor in more time in the morning to pack lunch for yourself in addition to the kids and DH, and, at least for me getting myself presentable enough for work can be time consuming - shining shoes, ironing the shirt, finding hose without a run, makeup,etc. You can prepare week's worth of clothes on a Sunday, but that is time away from everything else you have to do on Sunday when you aren't home during the week to do errands, shopping and all the miscellaneous household chores, not to mention having some family time in addition to Shabbat at home family time. Its certainly doable - millions of full-time working parents do it, but energy and organization (which it sounds like you have) are key.
Anon,
You are kind. But the last time I did it (missed traffic for the most part because of the massive hours I worked) I had no kids and at the end of the day I came home and took a nap.
My organization skills are way up since then. But I don't think I have it in me to commute, work, and then actually sit down and help with the kids achieve academically. . . ultimately still my job even if I'm paying for school.
Millions do it, but the toll is incredible! And many of our women do it and still make Shabbat, etc.
After my calculation I think I do have some of the best of both worlds and a little $$ to show for it. That nagging voice sometimes does show up. At least at the end of the day I know what I'm pulling in :)
Have you investigated what your skills are worth in the marketplace? Maybe much more than you think. Then your calculation would be off, and you'd actually have hard decisions to make.
Yes. I've had interviews here and there. The part time ones in small little offices simply can't compensate to make up for the commute. The full time one in a mid-size firm would require me to start at the bottom (not a problem, I don't have an ego issue) and I'd take a hit. Occasionally, I run into something interesting that I'm very well suited for, but the schedule coordination is too difficult. I keep pursing things like this when they come about.
Readers: I'd like to hear more about how you balance things and how working has paid off or not, etc?
Just wondering, would any of those potential jobs let you telecommute? I know lots of women holding professional positions (i.e. accounts, lawyers, insurance adjustors) who work full time but are permitted to work from home a few days a week or even most of the time. That saves a lot on commuting time and expense. They also work flexible hours - i.e. 9-4then 8-10, for example, with the flexibility to run out during the day for a school play or a child's docotr's appointment. These days clients/customers generally don't care if you are home or in the office as long as the work gets done and you are accessible. With call forwarding, email, blackberries, scanners, paperless offices, etc. it is quite doable, although some face time with clients and colleagues (and bosses) is still important. Some companies even prefer it since it saves them on office space -- there are shared work spaces in the office and conference rooms for the telecommuters to use when they come in, but not a full-time office or cubicle.
You're probably better off raising your rates 20%, losing 20% of your work, coming out even, then hustling/networking to replace the clients that disappeared.
But rarely is one better of working a W-2 job than building a private practice. The tax benefits of being self employed/S-corp'd are huge. Especially in the world of public accounting.
Contract work, telecommute work. I run that search and, in fact, I'm running another search now. Just sent out a resume for something else in fact..
Al: What makes you think that SL, as good as she is, would only lose 20% of her business if she raised her rates by 20%? You don't know what she is currently charging and how that compares with the competition or who her client base is. Maybe SL doesn't want to gouge long term customers or burn bridges.
Market can only take some much. Today I applied for one contract job that is offering more than I can charge others. There are a ton of small clientele jobs out there advertising that want a fairly substantial skill set (read: one that requires a bit of expertise and experience) and are offering next to nothing. . . and by nothing I mean that you might be better off working at Trader Joe's. . . and you won't be asked to produce a report that is needed NOW because someone was unprepared and that someone might drop you like a hot potato even if it is their own darn fault!
For some clients, I only will clock in a single hour some months. For other clients I might clock in 30 a month. I think that if I were to raise my rate, I'd threaten the clients that I do more regular work, so the calculation doesn't quite hold when there is a big variance.
I have a client that I offered a set monthly rate for after seeing their budget even though I'm eating the time this month because they have some other more skilled work that will pay more and hopefully get my name out there and that work offers a ice lump sum and would cost 3 times more in every firm I know of.
Like I'm recognizing in my post, 2nd income earners face a challenging set of circumstances. I'd like to hear from my readers about how they balance these things.
SL,
Balancing work and family life is extremely challenging in today's day in age. My wife and I are only starting to recognize this with the birth of our son at the end of last year. It seems that most jobs nowadays require long hours at the office and fairly long commutes - my wife and I happen to be blessed that at least that adds up to nice salaries (we have many friends who work the same long hours for a fraction of what we earn).
My wife and I waited a few years to have kids and that gave her an opportunity to work full-time, long hours at her job and build up a good reputation. She was offered part-time after maternity leave at 80% pay - "part-time" though is 9-5 M-Th with possible work in the evening and Fridays off (unless emergency pops up). Right now it works, but it's probably not sustainable much longer. The good thing is she's home in the evenings to care for him before he goes to sleep. But it's tiring managing both.
The problem is given what she earns and the good arrangement she has now, it's likely a more local job will require working M-F and pay less than she's earning part-time at her current job (or, a "real" part-time job won't offer enough money). Not sure what we'll do when the time comes to make a decision. It will likely depend on the job's attitude when we have #2.
I will say though that we wouldn't kill ourselves at our jobs just to pay for yeshiva tuition. We'll work hard to build up savings, pay our mortgage, build retirement funds, build college funds, and also to have nice "extras", but we won't kill ourselves to pay the amount of tuition that's likely for the number of kids we hope to have. I can't see the point in killing ourselves working to send to yeshiva when that means not being able to spend any time with them. As is my wife spends about 2 hours with our son before his bed-time and I can spend a bit of time in the morning (I get home when he's already asleep). There's only so much you can "make up for" over Shabbat and Sunday. I have fond memories of family dinners and lots of time spent as a family and I wouldn't deprive my kids of that to pay for ridiculously expensive yeshivas.
I don't know what will happen long-term and it's still far off, but that's how I see things now.
On a personal note, I would just tell you that trying to keep up with tuition is a game you're going to lose. It's very tough for income to match increases and the personal cost of getting that extra income is likely not worth it. I would take a strong look at the sacrifices you're making and you're asking your family make for the sacred cow that is yeshiva. As a reader, it seems you already sacrifice an awful lot and it seems like you're going down a path that will end badly. If you know you can't afford it long-term is it really worth it to do financial and personal damage for another year?
Anon 5:55,
A flip comment, SL knows her client base better than I do. Maybe she'd lose 50%, maybe only 10%, I do know that changing accountants is a SERIOUS pain in the neck... hence firms that lowball bids to get the work and then jack it up in future years, especially since SL isn't a Tax accountant, doing more financial projections, etc., those people are annoying to find. Maybe she'd lose more, maybe she'd lose less, but people in service industries tend to have more wiggle room than they think.
OTOH, if she were to change her pricing based on a flip comment by me in her blog, than she's not good, but that's not the case. I just think she's probably underestimating how much people value her and could probably push price increases, even if they whined and she lost some long time clients.
JS--Mazal tov!
Im a full time working mom- 8 AM to 5 PM with a 1.5 hr commute each way. DH and I had kids very young, which definitely took their toll on our careers. DH has the "fast lane" career, but we both work in the professional world. In the beginning, my salary did not pay much more than the childcare + commuting costs. I may have actually come out behind at one point. But now, my salary covers both kids tuitions, the babysitter, commuter costs and then some. Additionally, being in the professional world actually gave me the credibiltiy to do some side consulting for exra cash on the weekends.
I'm constantly trying to compensate for not being a SAHM, and do feel guilty when there are things I cant do for them, but I find that our kids are just as secure and just as loved. They also are probably a little more appreciative of the time we give them-> as we are of the time we get to spend with them.
The women I know who work full-time without losing their minds have supportive husbands and children AND extended family to back them up for childcare for the youngsters and Shabbos/Yom Tov meals. It gets old hiring out or asking favors for every blessed thing you need done in your home that you can't get to.
Right now you have a lot of flexibility to be there for your kids when they need you. You probably don't realize how much you make use of that until you lose it.
Unless you have very good support, or you really really need that money, I doubt $1300/month is worth the toll it could take.
All that being said -- can you try it for 6 months and see how it goes? If possible, wait until after Yom Tov to try it. You can always quit if it turns out not to be worth it, right?
The professional women I know who really make it in their profession (to the extent that's measured by making partner, getting a high-level management executive position, etc.) and thereby earn the big bucks while also being moms and still keeping their sanity have all done it by having a live-in nanny and other household help (i.e. cleaners, yard help) and paying more to live somewhere with a shorter commute OR by dad being a SAHD or working a job that is strictly 9-5 and is willing and able to do a lot on the homefront.
anon426,
I think SL's point was that the $1300 extra was for the entire YEAR. Not $1300 extra per month.
I remember when I was "going back to work" after being "home with the kids" for many years, I was devastated when I realized that the differential after all childcare and work related expenses and 401(k) deductions was $15,000 (which didn't seem like enough for going from completely not working to working full time). It's now five years later, and the differential is now A LOT MORE than $15K (a promotion, raises and reduced need for childcare all made a big difference).
I would not focus on the $1300 figure, since it's likely to increase; remember that you will need less childcare as the kids get bigger. But SL seems to have a good thing going with her part-time business and seems to genuinely enjoy working from home (which I would not enjoy so much).
But don't discount inertia and the fact that "going back to work" seems overwhelming, when it can be done. There will be a lot of bumps as one makes the transition, but think about where you want to be financially, professionally, and personally 5, 10, 15 years from now.
If you enjoy working from home and running a business (and especially if you are good at it), take that into account too.
You definitely need to take a long-term view of things. That doesn't mean you necessarily jump into the W-2 workforce, but it's not as simple as saying "Well, it's only a $1300 increase for a lot more stress in my life."
You need to take into account promotions and raises. You need to take into account changing family needs as kids get older or as you have more children. You need to take into account whether you can gain experience while working for others that can translate into earning more if you went back to be being solo or if you moonlight for clients.
It's not as simple as X+Y=Z. There's a tendency to try to boil things down into numbers, to reduce everything into a mathematical formula. It's not so simple. I think that can be a starting point, but it can't be the end of the conversation. $1300 in year 1 can turn into $50k in year 10.
My mother left an entry-level job with a very small salary when she started having kids. She stopped working until my youngest sibling was old enough for school. She went back part-time and then full-time by starting work earlier so she could leave earlier (and meet us coming off the bus). Fast forward about 20 years and my mom is now a supervisor over several offices, earns a nice salary, and has great benefits.
My mom is not an ambitious businesswoman, but she's a hard worker and that has paid off in spades. She went back to work initially solely because the few extra thousand dollars she brought in "net" really made a difference to the family's bottom line (my dad was laid off several times in the beginning of his career). It turned into a very nice career that markedly changed their lifestyle in recent years.
Point is, take a long-term view and realize you never know where things will ultimately end up.
However, again, I don't think I would base any decisions on whether your salary will allow you to afford full tuition at yeshiva. It's a losing prospect and it's an awful way to make this kind of important decision.
anon426. . . that's annually, not monthly. If I were to spend anymore than $100 a month more in there here and now, the balance would shift.
At least for me, if I were to take a position at a firm or in the government, I'd have to drop all, or almost all, of my private engagements. So there is very little room for experimentation. In fact, some of my clientele and inquiries comes from someone who had to drop work to go to a firm.
Like many others, I have almost no family help or backup. . . in fact, it is the opposite, I'm normally the one giving a hand or pinch hitting for a friend with no backup.
I probably will return to work someday for other experiences that I have an interest in, whether or not there is payoff or not. I like new experiences and new challenges.
The numbers will never be accurate, but after a morning like this morning, that voice is a bit quieter. I have deadlines, but I also have flexibility. My bottom line (in the present) is just about the same part-time as full time. I'm learning new things and developing new skills. And I can spend more time with my kids and help others who need to make a living!
I hope others will contribute their experiences.
I wouldn't hold your breath on getting raises of any kind over the next 5 years. Wages have been stagnant vis-a-vis inflation since the 70s but the deflationary portion of this crisis looks to be winding down. Higher inflation is next - and there won't be any raises in this economy to cover it.
Ahava - what you say is generally true, but is not true for all professionals/occupations. There are some areas where you can still move up the pay scale pretty quickly, particularly during the first 10 years out of school. For example, a law school grad from a top school will likely double his/her earnings in the first ten years (assuming a private sector job). If you are a teacher or secretary or factory worker, your wages won't double. While you are correct that wages have been stagnant, that is much, much more so for lower and middle income earners. Hence the growing economic disparity in this country.
I'm surprised that you can work 30 hours a week with no childcare.
There are definitely a lot of costs and stresses to working out of the home, and so far I've found it worth my while both financially and emotionally to put up with a not very well paid from-home job with not-so-nice bosses rather than look for something else. I think I'd need a 30% raise to break even moving to working out of the home, and 50% to make it worth my while.
But I do need to pay for some childcare even for my from-home job.
It's pretty different where I live, I'm guessing daycare is cheaper here. And my kids want to be out of the house from a young-ish age. So it's not like, "is it worth it to hire a babysitter for 22 shekels an hour in order to earn 40," more like, "since 3-year-old will be in daycare anyway, is it worth it to send the 1-year-old to daycare for 5 shekels an hour in order to earn 40."
ora-
Thanks for your personal assessment. I like hearing other's experiences.
I sometimes manage 30 hrs a week, but I probably average half that and I have some quiet periods when there is just not much to do. Just wanted to be clear. If I was putting in tht time regularly, I'd get a babysitter for the youngest. Also, on Sundays my husband can help w/the kids where needed.
I will say that while I don't normally put it a ton of time a week, I do regularly put in time and I find that with the right set up and some practice, kids can play quietly and "work" too.
I do have weeks where there is just a ton to do quickly. Usually happens when someone has figured out they need paid professional help NOW. Hard to predict whe such an acct will land on my lap, so I can't quite prepare.
Anon: In our area, for example, we know of people with accounting degrees and experience who have moved here from elsewhere and can't find a job at all. There are plenty of accountants amoung the Federation's members and they are cutting back hours as much as possible and not paying overtime - and there are no raises on the horizon. As more small businesses fail, the need for accountants grows less. Perhaps your area is still doing relatively well, but here even doctors are having their pay and hours cut. My daughter just graduated from medical school this summer and still has no job, either. Her husband is an accountant and he had to take a position far below what he wanted (due to student loans, of course) out of state - Texas, actually. "Professional" degrees don't appear to have any more job security or pay raises than everybody else. I'm the bookkeeper for the local Federation office, so I know people's incomes, even professionals, has decreased not increased. Seventy one members (formerly contributors) couldn't give anything at all in 2010. I know because I finished running the numbers for JFNA today.
Post a Comment