Firebird
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Post by Firebird on May 17, 2011 18:10:51 GMT -5
Lots of threads lately with heated discussions on the SAHP versus working parent thing. I'm sure there are a lot of people out there who would LIKE to stay home (or have their spouse stay home) but don't because they can't afford it.
So I'm curious. If you're a dual-income household with children but would like to have one of you SAHP (or you used to be and now you have a spouse staying home), what's the "magic number" you have/had in mind that one of you needs to be making? Do you see it as being yourself or your partner making that much? Any other major financial milestones you feel you need to hit before you take the plunge?
I'd really like to stay home or have DF stay home with our kids one day, but I'm fine with both of us working until the following minimum conditions are met:
-$100,000 salary for the person who's planning to continue working -12 month EF -No non-mortgage debt -20% retirement savings with plenty of room left in the budget for short-term savings.
I would also like us to have purchased our home, so that we don't have to worry about saving for a down payment on a single income (or if we had the DP saved independent of our EF, that would be fine too).
How about you?
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Sum Dum Gai
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Post by Sum Dum Gai on May 17, 2011 18:17:55 GMT -5
We've been doing it since I was an E1 in the military without a penny to my name. It's a lot more comfortable with a $100k salary though.
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Post by debtheaven on May 17, 2011 18:54:41 GMT -5
I can't address the figures, but I think this is a really loaded issue. Not for the reasons it usually is on YM (ie guy working hard, gal staying home and eating bonbons LOL. Yes, maybe even taking care of a kid or two or three. But you know what I mean.)
But rather because sitting here at 51, I truly believe that you can't know what life has in store for you, and you just don't know how taking time off will impact your career / future.
So I've come up with an admittedly very imperfect response. If you think it is probable that you will eventually NEED to go back to work at some point, I think it is wiser to be a SAHP for a shorter period of time, and / or to work part time.
Just my two cents, worth exactly what you paid for it LOL.
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Firebird
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Post by Firebird on May 17, 2011 18:57:11 GMT -5
So I've come up with an admittedly imperfect response. If you think it is even probable that you may need to work, I think it is better to either take a shorter period of time off not working, or work part time for a longer period. Care to expand on this? I think you're definitely on to something, but I'd like to hear more of your thoughts before I decide on my own what they might have been
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thyme4change
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Post by thyme4change on May 17, 2011 19:00:50 GMT -5
I think our number is already met and exceeded - but we work for other reasons. If we had enough for either of us to retire, I suspect one of us would. But it would mean we would have to have enough income to cover 50 - 60 years at our current income at a reasonable withdraw rate - so millions.
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CCL
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Post by CCL on May 17, 2011 19:01:49 GMT -5
My opinion, based on experience, is you should concentrate more on lowering your spending, not raising your income. Few people will ever have enough.
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Post by debtheaven on May 17, 2011 19:04:39 GMT -5
Firebird, some people have incredibly prestigious degrees, they get a job, work for a year or two or three, then become a SAHP because they can afford to. My niece did this. Her husband is incredibly wealthy. And he's a great guy. But she can literally work four to six hours a week, she refuses. It drive me (and her mom, my sister, who paid for most of her DD's education) crazy. If not working goes on for too long, if something changes with the breadwinner's position, in my observation, it becomes much harder for the other spouse to get back into the work force. Speaking personally, my ex married me because he liked the fact that I was educated and independent and wanted to work. Until we got married. I insisted on working, but I was happy to work part time (70-80%). Working PT put me on the "mommy track". To me that was a financial risk, I took it, I don't regret it. I'm sure I could have gone much further in my career had I stayed in the US, but for the point of this discussion, that's neither here nor there. So given my situation, I insisted on working, but I was happy to work PT. By the time I married DH, we had four kids between us. I would have LOVED to stop working. But we couldn't afford that, so I continued to work PT. Sometimes I got very bitter and twisted about it. Last year I switched careers and got a good job. Then my school decided to close down. This year I got an even better job. IMO (and maybe I'm wrong) there is no way I'd even been considered for either of those jobs if I had entirely stopped working for more than a couple of years. Also (since I know things are harsher in the US than in Europe), I don't see anywhere on a resume or CV that you have to state whether or not you've been working full time or part time. So even if you are working PT, you won't have the "blanks" that you do when you don't work at all. To me there is a big difference between taking a few years off, and a few decades. Since my kids range from 13 (as of today ) and 24, I have friends of different ages. The ones who stayed home for 15 years and then decided to go back to work? Guess what, they're still SAHMs, like it or not. Nothing is perfect but I still think that working PT is a good compromise.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on May 17, 2011 19:08:27 GMT -5
I have been thinking about this more and more as I have gotten older. I don't have kids yet and hopefully will in the next 5 years. I thought for the last 10 years that I would go insane as a SAHP and I probably would. My DF makes ~$95k a year and my career projections would put me at $100k after completing school. My career is more flexible though so I hope that I can work PT and take care of the house/kids while he keeps his job (He is salaried... If he wants to stay at home and work PT, I have no issue with that. In his field it would be harder to find a job that would pay you that much hourly. I am going into health care so they like folks who want to work PT and fill in for others at night/weekends/etc). We live in a very HCOLA but I think that with him working at $95k and me PT at ~$40k (A little less than half of FT wages), it would be enough to live a very comfortable life style and meet our needs. It would enable us to avoid the huge daycare costs that are prevalent out here.
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Firebird
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Post by Firebird on May 17, 2011 19:09:05 GMT -5
I think our number is already met and exceeded - but we work for other reasons. If we had enough for either of us to retire, I suspect one of us would. But it would mean we would have to have enough income to cover 50 - 60 years at our current income at a reasonable withdraw rate - so millions.
So you equate being a SAHP to retiring? I suppose that's kind of how I look at it too, in a way. But I don't think most people equate the two. Or maybe they do.
My opinion, based on experience, is you should concentrate more on lowering your spending, not raising your income. Few people will ever have enough.
I think our goals are pretty reasonable. Once well established in our careers, DF and I both have the potential to make my goal salary on our own (together we're at $110k gross at the moment). We're about a year away from being debt-free, and our EF should be there by then as well. The house might take longer - perhaps four or five years. But that's okay, since we don't even have any kids yet.
And I'm prepared to make some sacrifices when/if one of us stays at home, but I don't want to live a radically different lifestyle than we do now. For example, I'm completely prepared to slash our dining-out budget to $100 or less and eat all of our meals at home - but I also want us to have the budgetary freedom for occasional one-off dinners that cost $100 or more by themselves. If that makes sense.
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Firebird
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Post by Firebird on May 17, 2011 19:11:21 GMT -5
debtheaven, I agree with your entire post. Very well said *karmalizes*
If possible, I'd prefer to work at home with the aid of a nanny rather than quit working entirely. That way I'm near my kids if they need me, I can have lunch with them, etc. but I still have a career. (Since I plan to enter into a consulting career, I think this is feasible for me at some point.)
That, to me, would be a very good compromise. I'm fairly risk-averse. I don't know that I can ever get totally comfortable just *not* working. I'd feel better about DF doing it, to be completely honest, because he wouldn't instantly get mommy-tracked and I most likely would.
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azphx1972
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Post by azphx1972 on May 17, 2011 19:12:37 GMT -5
I truly believe that you can't know what life has in store for you, and you just don't know how taking time off will impact your career / future. I was thinking more along the lines of divorce. I think there have been plenty of SAHM who have had to return to the work force after divorce, and it can be a struggle if they haven't been professionally employed for years or decades.
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whoisjohngalt
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Post by whoisjohngalt on May 17, 2011 19:13:24 GMT -5
The numbers itself are not as important, IMHO, as other things, especially since it will vary greatly on COLs The ONLY reason I was OK to stop working was bc I knew for a fact, that if had to I could go back to work anytime. I have a profession, I have a pretty good resume and yes, I might not be able to go to the same salary that I had, but if my DH left me or became unemployed. I could support myself and bambinos. That was the only thing that gave me enough comfort to stop working. That and if we were independently wealthy, of course Lena
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Firebird
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Post by Firebird on May 17, 2011 19:14:11 GMT -5
I managed to save us more money than I ever made while I was working and my husband liked having me home. He went to work and I took care of everything else.
My mom is like that. With her last job, she was netting something pathetic like $8/hr after taxes, transportation, work costs, food, etc. She was able to save more than that by staying home. So it really wasn't worth it for her to work (financially anyway).
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on May 17, 2011 19:14:52 GMT -5
We made the decision to have me quit my job and stay home for a variety of non-economic reasons, so we really didn't have it all nice and organized and planned out. I quit, and we adjusted our lifestyle and finances accordingly, which we were able to do because we were reasonably conservative with our financial decisions before I quit.
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Firebird
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Post by Firebird on May 17, 2011 19:20:43 GMT -5
We made the decision to have me quit my job and stay home for a variety of non-economic reasons, so we really didn't have it all nice and organized and planned out. I quit, and we adjusted our lifestyle and finances accordingly, which we were able to do because we were reasonably conservative with our financial decisions before I quit.
Totally reasonable way to do it also. You can either decide to do it and just find ways to make it work, or you can do it only if x, y and z fall into place.
In our case, I want to do it the latter way right now. I might feel differently once we have kids and decide that it's a priority so we just need to figure out how to make it work. Right now, as an abstract concept, it's a "this would be nice to do if we can afford it" thing for me, not a priority.
Full disclosure: Part of the reason for this is that my mom wants to watch our kids, when we have them. She's the best nanny I could ever find, probably better than I would be myself. So while I plan to pay her for this, I don't need to worry about finding a good daycare provider. If I did, that would likely change the equation for me.
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Post by stl76 on May 17, 2011 19:23:46 GMT -5
There is no amount of money that my spouse would make that would convince me to stay at home and there is no amount of money that I would make for me to agree to a stay at home spouse. I'd rather have both of us work and retire early together (within a few years of each other).
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Havoc
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Post by Havoc on May 17, 2011 19:28:24 GMT -5
We are sort of living that situation now. When our children were first born, we were living in a HCOLA. I had a very good job, making well over 120k with OT and bonuses thrown in, my wife worked but was able to take six months off after the birth of each child, and then only worked PT to keep up in her field. It was our plan to move to a LCOLA and raise our children in an area more like where we grew up as kids, and be in a position to spend more time with them. We've done that, and currently my wife works FT so we get income and health insurance while I am home with the kids, working on the farm that we have moved to and trying to get us a little more self-sufficient (and decreasing our food bill in the process).
So our numbers are: $50k income 12 month EF Additional "capital expenditures" account that was pre-funded for anticipated big-ticket expenses over the next few years No non-mortgage debt (except a 0% car loan that is paid off at the end of this year) 10% salary contribution to retirement
We've planned and prepared for this for years - but it is still a little tough psychologically to give up your job in what is referred to by the financial experts as one's "peak earning years", especially knowing that I will never get close to where I was salary-wise, even if (or rather, especially if) I get a job around this area. There are a lot of non-financial factors, though, and it has been worth it from a family perspective thus far.
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dancinmama
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Post by dancinmama on May 17, 2011 19:35:42 GMT -5
I became a SAHM in 1987. It meant that our income was cut in half from $80K/yr. to $40K/yr. We had prepared in every way we could think of:
1) We had purchased a home with 20% down in 1985.
2) We had a $25K emergency fund.
3) DH was making maximum contributions to his 401k and we already had over $20K saved toward retirement.
4) We had no credit card debt (never did).
5) We had two cars that we purchased with cash.
People may have called me naive, but I never even thought about the possibility of divorce. Later we laughed about it, DH saying that he couldn't afford to get rid of me. ;D
I did go back to work part-time for a short period of time when DS first went to school - more out of boredom than anything else and definitely not because the money was good. Taxes ate up most of what I made, but net did cover DS's private school tuition and a little extra. I worked that job for 2 1/2 years and didn't work outside the home after that.
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Firebird
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Post by Firebird on May 17, 2011 19:41:03 GMT -5
Havoc, that sounds like the kind of situation we'll be in a few years down the line. DF and I don't like this area - we want to move to a LCOLA to raise our kids. So buying our house is probably going to coincide with a salary dip anyway. I'm glad it's been worth it for you so far
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Firebird
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Post by Firebird on May 17, 2011 19:41:38 GMT -5
Another thing that affected us along the lines of never knowing what life will throw at you was the fact that our son was a pretty sickly child. Try finding someone to babysit a one-year-old with seizures. No one was willing to take him, not even family. When I was working, I missed a lot of days due to hospitalizations and doctor visits.
Sorry to hear that, CCL. How's your son doing now?
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Firebird
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Post by Firebird on May 17, 2011 19:43:12 GMT -5
I did go back to work part-time for a short period of time when DS first went to school - more out of boredom than anything else and definitely not because the money was good. Taxes ate up most of what I made, but net did cover DS's private school tuition and a little extra. I worked that job for 2 1/2 years and didn't work outside the home after that. Dancin, it sounds like you guys did it right. I think your level of preparedness would work for me, because anything beyond that strikes me as kind of excessive. If SAHP is important to you, then at some point you just need to make the leap. Kind of like having kids in the first place. Right?
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muttleynfelix
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Post by muttleynfelix on May 17, 2011 19:46:51 GMT -5
DH was laid off and recovering from surgery and could not meet the physical requirements of the job offers he got while recovering. Once he recovered, those offers were no longer available. He had the opportunity to buy some equipment to do some very limited part time consulting. My salary did not quite cover our bills at the time, but I got a raise, I became pregnant, I got another raise. We had about 7 months living expenses saved up. Once the dust settled from having DS (unpaid maternity leave and high deductible insurance plan), we still have about 5 months of expenses saved.
Retirement isn't as big or a deal since I'll still be working once DH retires or he doesn't have to go back to work at all (he's 46). I don't care. I get retirement contributions from my employer that have ranged anywhere from 5 to 10% of my salary depending on the type of year we have (also saving in a ROTH IRA). My job is pretty stable. The company hit a really rough path this winter and I was unemployed 2 days a week. We were still able to cover expenses on my salary at home. Things are looking back up. DH is willing to take any job necessary if need be. We have a plan when times get rough and we're both willing to do what it takes.
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Miss Tequila
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Post by Miss Tequila on May 17, 2011 19:49:19 GMT -5
I can easily afford to be a SAHM but I will never put my financial security in someone else's hands. My mom was a SAHM and life was great until she divorced my dad when I was 9. I went from a middle class lifestyle to government housing, foodstamps and free cheese. Yes, I have an Accounting degree but if I were to drop out of the workforce for several years I would be no more employable than a kid right out of college..probably less so with the way accounting standards change. And I couldn't survive on the $43K starting salary the recent college grads make (and I live in a very LCOLA). I would also never support my husband...if my ass is getting to work so is his (he would never, ever consider allowing me to support him so that isn't even a discussion).
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Deleted
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Post by Deleted on May 17, 2011 20:28:22 GMT -5
It is safer financially to have 2 people making $100,000 each versus one making $200,000. So in this example, the magic number would be $250,000/yr to allow the other to SAH
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dancinmama
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Post by dancinmama on May 17, 2011 20:35:16 GMT -5
I did go back to work part-time for a short period of time when DS first went to school - more out of boredom than anything else and definitely not because the money was good. Taxes ate up most of what I made, but net did cover DS's private school tuition and a little extra. I worked that job for 2 1/2 years and didn't work outside the home after that. Dancin, it sounds like you guys did it right. I think your level of preparedness would work for me, because anything beyond that strikes me as kind of excessive. If SAHP is important to you, then at some point you just need to make the leap. Kind of like having kids in the first place. Right? Actually, we hadn't even decided to have a child until we had been married for about (6) years. I didn't work my way through college for my MRS and I had an amazing career that was very rewarding. I enjoyed DS immensely, but the whole suzi homemaker thing kind of drove me nuts. I challenged myself to run our household like a business. It wasn't quite the same as working on the space shuttle program, but it helped my head A LOT to know that I was no longer a total financial "liablity".
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formerexpat
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Post by formerexpat on May 17, 2011 20:41:56 GMT -5
I wouldn't necessarily agree with this statement. I can be placed very quickly in another position. Two $100k'ers - probably not.
$100k'ers are right around that middle management level that is getting laid off right now in companies across the nation and having a tough time finding employment.
When your burn rate is $150k a year, that's pretty tough to handle. Even making $75k a year will cut your savings in half from what it used to be.
Single income families, I would think, are much more conservative financially to begin with - for the most part.
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midjd
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Post by midjd on May 17, 2011 20:42:50 GMT -5
Right now I am the sole wage earner and DH is in school (no kids). I'd say that we'd need a good source of passive income before I'd be comfortable with this as a long term plan. Things are doable on my salary alone, but it's not something I'd want to continue indefinitely, especially with kids. I didn't realize how much pressure it would be to be the only source of HH income! Luckily DH graduates in a year
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Havoc
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Post by Havoc on May 17, 2011 20:49:57 GMT -5
muttleynfelix and misstequila, I think that your contrasting posts illustrate a very important factor in making a SAHP situation work. The spousal units really have to be able to work well as a team, share a common end goal and be willing to sacrifice some of their personal priorities in order to achieve their main goal. DW's main objective was to have 2.5 kids (rounded up!), a dog, a car and a minivan, and dinner as a family every night in a house with a white picket fence. My main goal was to become financially independent. We are a little closer to hers than mine, but we have both made a lot of adjustments along the way to get to where we are now. When we were first married, DW was a bit like cawiau's wife - not in that she had expensive tastes, but in that she had very little concept of financial control (ie, if she needed/wanted something, she would charge it, and as long as she could make minimum payments, debt wasn't a problem). She found out that she could scale back her work hours to 32 hrs/wk and still get benes of a FT, so that is what she did, not really considering that it meant her pay was 20% less... Now, 15 years later, she still isn't as financially tuned in as I am, but she is very anti-debt, very frugal with re: to spending money, and is working like a fiend... prolly feeling pressure being the "breadwinner" and also b/c the peer group she is in at work is very work-motivated. As for me - I found a career that I was good at right out of college. It paid off our school debt, funded our real estate purchases and certainly covered our lifestyle expenses including, as I mentioned earlier, having DW either not work or work very PT once we started having children. My big changes started about seven years ago - once we started having kids. It is hard to be a father when you aren't around, and my job sucked up days, nights, a lot of weekends and a good share of holidays. First two children were NICU babies, with the second having mild CP and issues with seizures. When our third child was about a year old, she called out "da-da" whenever the phone rang - I did some calculations and realized that I had only spent about 10 complete days with her during her first year of life. It wasn't a very inspiring feeling, and was one of the last straws that made us pull the trigger on downsizing and going to SAHP...
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giramomma
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Post by giramomma on May 17, 2011 21:32:48 GMT -5
Well, we gross about 60K a year. We don't have a 12 month EF, because we have multiple streams of revenue. It's unlikely that we would loose 4 different streams of revenue at once. I find that I just pick a number for the EF. If we had to, we could tap our other savings accounts (car replacement, short-medium term savings accounts). If we did that, we could make it a year with loosing all our income sources.
We left college with no debt, and we have plenty of savings.
We also bought our house, but that wouldn't be a requirement for us.
For us, it wasn't a matter of taking the plunge. I knew I wanted to marry someone who valued the SAHP lifestyle. Fortunately, my husband felt the same while we were dating. When we were engaged, we made financial decisions that allowed us to have that eventual lifestyle. For us, planning early was key.
We live in a medium COLA. Prices for consumer goods are OK, but big ticket items, like daycare rival what you'd find on the coasts. Infant inhome daycare runs 1K a month, in a center, infant daycare runs 1300.
Since my husband is the primary caregiver, I don't worry about providing for my family since I'm doing it anyway. Our division of labor works for our family, and we are not fussy about traditional gender roles.
We also aren't career oriented folks either. I work, do a good job, and take pride in that. But, building a career for myself has never really interested me. I'm much more interested in what my money allows me to do.
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Post by Deleted on May 17, 2011 22:23:44 GMT -5
I wouldn't necessarily agree with this statement. I can be placed very quickly in another position. Two $100k'ers - probably not. $100k'ers are right around that middle management level that is getting laid off right now in companies across the nation and having a tough time finding employment. When your burn rate is $150k a year, that's pretty tough to handle. Even making $75k a year will cut your savings in half from what it used to be. Single income families, I would think, are much more conservative financially to begin with - for the most part. You assumed both will lose their jobs at the same time which is not an assumption I was willing to make. Having 2 incomes provides some protection. 100k's are IT people with say 10 years experience - who have survived very well in this recession.. 100k's are engineers in the energy industry.. etc.. I think you looked at my comment through your own narrow view of the world. Plus, these were just numbers. Take the percentages and apply them down the scale.
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