Can mom afford to work only part-time?

derose_family.top.jpg By Beth Braverman, staff reporter


(MONEY Magazine) -- Shawn and Mary Kate DeRose live comfortably on a combined $133,000 income. They pay their debts, save for retirement, even have room to splurge on dinners out and high-end gym memberships.

But the birth of their second child, Regan, in May has Mary Kate, 33, a literacy coach for a school district, thinking of dialing back to part-time work. "In a perfect world, I'd be able to spend more time with my girls," she says.

chart_derose_bring_debt_down.gif

Her employer will let her go half-time for half pay: $32,600. But is that enough -- along with the $78,000 that Shawn, 33, earns as an assistant principal -- to support their lifestyle?

With a $3,600 monthly debt load that includes payments on a mortgage, home-equity loan, auto loan, and credit cards, their budget will be tight, warns Alexandria, Va., financial planner Tim Wesling.

They'd need to cut debt by $500 a month and other expenses by $1,300, he says. That's more than the DeRoses had bargained for.

"We really have to think about it," says Mary Kate.

Their Goals

1. Meet current expenses on a smaller monthly income: $8,600 rather than $11,000.

2. Keep saving enough for retirement. Right now they have $7,500 in cash, $38,500 in retirement funds and $2,100 in college savings accounts.

What They Must Do

1. Cut the debt. The DeRoses are paying 7.8% on a $63,000 home-equity loan. They could refinance and shave more than 2 percentage points off that rate, reducing their minimum payment by $200 a month. Wesling also wants them to nix the $300 a month they put on credit cards (for meals out, clothes, and the like).

2. Take the ax to expenses. The couple will save $500 a month on day care, but that still leaves them with $800 to cut. They might get rid of their older car and reduce costs across their budget to do it.

3. Keep saving. Shawn should continue stashing 10% of his income for retirement even as the couple trims elsewhere. As he gets raises, he should direct the cash to retirement and the home-equity loan.  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.