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The 2-Income Trap

February 8th, 2007 at 04:53 pm

Came across a really good site.

http://www.hughchou.org/calc/

Anyway, I came across this site while still perusing the pay mortgage vs. invest conundrum. The funny thing is the more I look the more I See pay pay pay. Quite interesting. But like I said I have a long while before I will have money to pay mortgage or invest so whatever. LOL. I tried working on a spreadsheet but got a headache. Very complicated. Plus I didn't have all day.

BUT perusing this super cool site I found a link I had seen before and lost. A VERY excellent 2-income calculator.

http://www.hughchou.org/calc/dappen.cgi

I think overall it is a little biased in that it does not consider all the stress of staying home all day and watching kids (which can make you shop more too). & also does not calculate the longer-term affects of taking a big career break!!! But overall I think it is a really good calculator for anyone on the fence of staying home, or planning for the future. I like it because the taxes are reflected pretty accurately, which is BIG and often overlooked. & then all the other little things that can really add up.

Anyway, when I do the calculator with taxes and daycare alone it isn't very pretty - add all the incidentals and we are clearly in the red. Or we could focus on trying to bring home some extra income, even have one of us work minimum wage nights and weekends, would be better off. But that is 2 kids in a very high COL area with a spouse whose earning potential is $30k-$40k. Eh, just so not worth it no matter how you slice it.

& I know plenty of people who are way ahead on 2-incomes and like it like that (generally 2-high wage earners. Way better of financially working often times).

But I am happy I found the calculator and could share. IF you are on the fence or not sure, could help.

4 Responses to “The 2-Income Trap”

  1. monkeymama Says:

    Well I tried to fix my typos and it won't let me - bummer...

  2. jersey jen Says:

    oh yeah, i used some of the calculator tools on the site before. i just noticed that there are *many* more tools available. i guess nowadays, you need 3 incomes to survive . . .

  3. threebeansalad Says:

    "also does not calculate the longer-term affects of taking a big career break". Hmm, that's a MAJOR oversight. There's a been a lot of research indicating that women who leave the workforce have a very difficult time getting back on the trajectory they were on before leaving.

  4. monkeymama Says:

    It is.

    But I think overall is many people want to stay home and feel they can't. & they overlook a lot of the expenses of working. & this calcultaor points out a lot. This is all stuff we were well aware of before having kids and made it very easy to forego a 2nd income. But most people don't *get* all this off the bat.

    I think most people feel being home with their kids is more important that where it puts them financially. Most of the moms I know intend to stay home a few years and never go back anyway. & even more (including my husband) take the time to break into a more rewarding career anyway.

    Most parents start out wanting to be home for a few years and it ends up being a lifelong career raising their children. Their career would get sidetracked most likely no matter what. I am one of only a handful of moms I have EVER come across who enjoys working and rather not be home. Most rather be home and either figure out how and are happy, or can't figure it our and are miserable. & this calculator is another tool to see a way to be home. Well if only I had a dollar for every women who told me "I wish I could be home with my kids." So I think a calculator like this is invaluable. I have convinced quite a few friends that they could indeed stay home by going over the tax ramifications and expenses of a 2nd income. You do not know how many friends I have who were shocked to find they make more than us on 2-income but take home far less than us at the end of the day once you consider all the expenses above. So I think it is an excellent tool and an important way to look at things.


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