The Decision to Stay at Home

As soon as we found out we were expecting, the very next conversation my husband and I had was how we planned to raise our child. Was I going to stay home or go back to work? (Note: it's not that we automatically jumped to me staying at home because I was a woman...my husband makes considerably more than I do, so it makes the most financial sense).

After looking at the costs of daycare and calculating what pay I would take home after childcare was paid for, I would net less than $500 every month. From that, subtract a car payment and weekly fillups at the pump, and I'm barely making enough to go to the grocery store twice a month. It didn't seem worth it to me when I feel like we can budget better in other places. We made the decision for me to stay home.

So how did we do this, and how will we survive in the future?

1) Practiced with one paycheck. My husband and I thought this might be a possibility when we found out I was pregnant, so we practiced living on one income. My entire paycheck for 10 months went into savings. Not only did we get the hang of what it would be like living on a single salary, but we bumped up our emergency fund, created a medical savings account, started a savings account for our daughter, and even fully funded a future vacation (Maui in November!). It took a little getting used

2) We are a one car family now. Even though my husband's main mode of transportation is the bus, he had an SUV that barely had any miles and came with a large car payment. My small commuter car wasn't conducive to our new lifestyle with baby and all the stuff that goes with her. So we traded both in for a Subaru Outback! Not only does this cut our car payments in half, but it decreases auto insurance, service and maintenance, and all of the other expenses that creep up when you have a car.

3) Cutting other incidental costs. Some spending naturally goes down when you have a baby - entertainment (unless you want to pay a babysitter, and then the cost doubles!), nice meals out, shopping for yourself. We're taking a hard look at cutting cable (mentioned here), and being smarter about every day choices.

I have no doubt that it's a little more unstable only having one income, particularly in this still shaky economy. But I think we're prepared for most worst-case scenarios. The only thing that is difficult about this for me is not being able to contribute to my retirement fund for a few years and getting used to not having my own spending money.

One interesting tidbit from Salary.com - the stay-at-home mom's regular duties add up to being worth over $115,000 a year! While you get no vacation days or pension plan, the benefits are pretty hard to top.

Any other families who grappled with this decision? What did you ultimately decide and why? Does anyone else have other suggestions or tips?