A question for all my moms who stopped working to stay at home.
I'm thinking of staying home to be bring more structure and mommy time for my 2 kids. I'm looking in to cashing in my 401k. It's not alot but it might be a good start to a emergency fund. Has anyone done that? Is it worth being taxed on it? My husband does not want me to do it, but I think it will help us in long run.
Thanks for all the advice! I have a lot to think about!
I resigned from my job in August, which has been great except I wish we saved and practiced living on one salary!
I would just hold onto the 401 K until you NEED it...maybe you will be able to just let it grow a while longer!!
Congratulations on deciding to stay home with your children...I think being a Mom is one of the most important jobs we could ever aspire to!!
And be sure that you do what I have done for the last 40 years...I let my husband know how eternally GRATEFUL I am that he was able to provide for us so that I could stay at home with our children!!
I haven't ever cashed in a 401k but I can tell you what I have done yo allow myself to be a SAHM...
I applied at my local grocery store (it's less than 3 blocks from my house, I can walk in the summer time) and got a job being a baker in the bakery department. I work from 4am-8am 2-3x a week (Mon.-Fri) and then I work 1 day on the weekend from 5am-12:30pm. It is NOT a lot of hours but it is enough to pay for our groceries every week + I get the employee discount, which rocks! I am able to go to work, then be home and get my kids ready for school/preschool before Daddy has to leave for work. Right now this fits our family perfectly because I have a son in 1st grade and a son in preschool from 9-11:30am (this is when I rest with my 2 year old), I know that the hours seem crappy but I am a morning person and it works for me!
Just an idea...
Good Luck with whatever you decide!
Don't cash in your 401K, there are plenty of other ways to build an emergency fund....maybe you should build up your emergency fund before you quit your job
In general, cashing in a 401K is not a good idea - the tax penalties are quite high.
I would try just living on your husband's income for the next 6 months. Take all the money you earn and put it into savings. Do not touch a penny of it. That can be your emergency fund if you do decide to stay home. Then see how well you guys do paying the bills and making ends meet on your husband's income alone.
I'm not a SAHM, and I'm not even sure why I opened this question.
A 401k is not a savings account and can not simply be cashed in. You have to qualify to take it out. In addition to the normal income taxes you'll have to pay a 20% penalty. Anyone with any financial background will tell you NO NO NO NO. It's a really stupid idea.
If you're looking to be a SAHM from a financial stand point, take a look at your current budget and make the necessary adjustments. Take away your income, decrease your transporation expense to and from work, any day care expenses keeping in mind the tax benefit you receive, and adjust for the additional utilities.
Also, do you have at least 4 months of expenses saved up just in case something happens with hubby's income?
I'm with your husband on this one. I don't think you should use your 401(k) as an emergency fund. If you wanted to suspend contributions to your 401(k) so you can start building an emergency fund that would make sense to me. Sorry.
Don't cash it in unless you have a true financial emergency and have exhausted other sources. In fact, taking out some loans is cheaper than the penalties you will pay. Besides, it is a one time source, so if you plan on being a SAHM for a while, you need to live within the bounds of a single income.
I wouldn't cash in on the 401k, I'd spend less... or start saving what you make now and quit in 6 months, but still spend less. maybe hubby can increase HIS hours a bit?
I posted a similar post as this one about 10 months ago... I made my dream come true around June of last year. I LOVE being a SAHM. Its awesome. I totally recommend it. My husband increased his hours, and I'm trying to use my hobby (painting) as another form of income, because I didn't cash-in on anything like a 401k...
Its great, its fun- and I'm no longer upset about not being at home either organizing, teaching my toddlers, or just being with my kids in general... one less stress!
Why would you cash in it before an emergency? It should be a last resort given the penalties. I agree with other posters to establish a bit of an emergency before you quit your job.
Cashing in the 401k I have been told by a lot of ppl that it is not worth it at all. But staying at home with your kids I think is great. I never imagined being a sahm and I am so glad I did! Well I was kind of forced to but I'm glad I stuck with it! If you can, if you have a hobby that can make you some cash, you could do that while staying at home and put it all in savings :) GOODLUCK
DO NOT CASH IN YOUR 401K!! Do a roll over into something like an Ameritrade account - when it is a direct roll over then there are no tax implications. Keep it there until (IF!!) there is an emergency. Do not cash it out.
I think your husband is right.
Really, I am just writing to say congratulations! It will be wonderful for your children.
Also, I really believe that God provides for us and leads us to do His will, so if you are feeling you ought to be at home, then you probably should be, and God will provide.
I would wait until retirement age - you will need it then. Cash it out if you have NO OTHER choice.
GOod luck!
