Sunday, September 04, 2011
Maximizing Resources: Full Time, Part Time, No Time?
Every once in a while the time comes to re-evaluate if we are maximizing our resources. With a lot of juggling and support from my family, I've managed to carve out a second income with little out of pocket expense, but plenty of expense to reduce what is actually taxable thanks to a home office, depreciable computer equipment I'd probably own anyways, and mileage for miles I'd probably drive anyways. Oh, and no child care costs (unless we count the $2 I paid my 10 year old neighbor to play mother's helper one Friday afternoon when I fell behind on Shabbat prep after billing out some 30 hours of work in a week).
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:
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.