We’re super excited to announce that we’re in the midst of a major life change in our household.
Within the last couple weeks, my wife has officially changed her job status from full-time employee to per diem status, which is essentially very part time work.
As you’d expect, going from a full-time W-2 job with benefits to a per diem position where she only has to work two 12 hour shifts per four week period is a huge financial change.
Here’s why we made the change, how we explored whether it was possible and what it means for our finances and Money Manifesto going forward.
Why My Wife Wanted To Change To Per Diem Status
My wife felt like she was missing out on seeing our son grow up, so we wanted to find a way to have her stay home more.
Before the change, my wife was working three 12 hour night shifts at the hospital each week.
Unfortunately, working nights causes chaos when it comes to schedules. It actually resulted in her pretty much being unavailable for four days straight other than about an hour each day.
In the end, switching to per diem status seemed like the best option. Here’s how we came to that decision.
How We Explored The Potential Change
Once we decided we wanted to find a way for my wife to stay home more we started exploring all of our options. We needed to find a way to make enough money to support our family and pay for the services we needed.
We were fairly confident that if we could just figure out a way to be covered for our healthcare expenses, we could make the rest of our finances work, at least temporarily, on the reduced income.
Health Insurance Was A Major Sticking Point
We knew the biggest sticking point would be health insurance. Because I’m self-employed, I don’t have access to employer sponsored healthcare so our initial thought was to look for a part-time nursing job that offered health insurance.
After looking for months, we couldn’t find anything that would be a good fit. So, on a whim, I decided to look into our health insurance options which were basically alternatives that didn’t come from an employer.
Unfortunately, insurance through the affordable care act was outrageous.
The cheapest policy for our family was $700 per month with something like a $14,000 deductible before it paid a dime. The most reasonable option would be $1,100 per month with “only” a $4,000 deductible.
This seemed completely outrageous so we started looking into other options which eventually led us to Liberty Healthshare.
While I won’t get into the details here, after much investigation Liberty Healthshare looked like it would work for our family. If you want to learn more about our decision to use Liberty Healthshare, check out our detailed story here. (Coming Soon!)
What Going Per Diem Means For Our Finances
Anytime you cut back from 36 hours each week at work to a much smaller number of hours, your finances are going to take a hit. Luckily, as an accountant in my previous career, I love analyzing these situations like these with spreadsheets.
So, that’s exactly what we did. I made a spreadsheet that showed projected income based on my wife’s new proposed work schedule and added in the other major financial changes that would happen.
We reduced my wife’s income from 12 shifts to just four shifts per four week pay period.
Luckily, she can work as few as two shifts per pay period or as many as she wants based on her hospital’s needs which gives us flexibility should we need it.
We removed the costs of her health insurance through work, added in the cost of Liberty Healthshare and accounted for the slightly higher pay per diem workers get since they no longer have access to benefits.
I ran a new analysis of how much we’d pay in taxes to see how her lower income would affect how much tax we have to pay each year, too. Thankfully, we saved a bit of money there due to the lower income.
Our initial analysis showed it simply wouldn’t work out based on our current spending and saving levels, so we dug a bit deeper to see what options we had.
While we spend more money than we have to in areas of our life that we value, we didn’t really see any fat we wanted to cut from our budget. If things got desperate, there were things we could cut, but we don’t have to resort to that level yet.
To prevent this, we set aside some money to cover any months where our expenses exceed our available income while going through the transition period.
However, we did find one area that we could temporarily cut back in even though it went against everything I thought I believed in as a personal finance blogger.
We Are Putting Retirement Savings On Hold (Temporarily)
It pains me to say we’ve decided to put our retirement savings on hold, at least temporarily.
Based on our calculations, if we don’t save for retirement at all and my wife works four shifts per four week period, I need to earn $5,100 per month from my online income activities to break even.
Due to the fact that we’ve aggressively been saving for retirement, we’re ahead of the game based on our retirement goals.
After our son starts school, the plan is for my wife to go back to work full-time so at most we’d be delaying saving for retirement for four years.
Again, I broke out a spreadsheet to see what impact that would have on our retirement goals.
We would have to retire a couple years later, but honestly that isn’t the end of the world for us to essentially get a mini-retirement now. This is especially true when you realize you can’t get back the years of early childhood.
Plus, our retirement plans currently do not include us earning any income at all in retirement. However, I have a feeling we’ll be making at least a little money on the side that would allow us to retire a bit earlier.
What It Means For Money Manifesto And My Online Income
The other great thing about my wife moving to a very part time schedule is the fact that I’ll now have the opportunity to spend more time building Money Manifesto and my business if we decide that’s what we want.
With the additional time, I have no doubt that in the long run I can earn more than $5,100 per month from my business. Anything we make above the $5,100 per month can be put toward our retirement savings.
Of course, there will be good months and bad months, but overall I definitely think I can hit and exceed my $5,100 per month income target.
I’ll be updating my target on my monthly income reports starting in my June 2018 income report when these changes will really take affect.
If my business really takes off, we might actually end up saving more for retirement this way than we would have with my wife working her job full-time.
We’re Excited For The Future
After all of this analysis, we pulled the trigger within the last couple weeks and my wife now works very part time at her job.
We’re super excited for the future and the journey we’ll be headed on even if it means we temporarily have to delay saving for retirement.
What questions do you have about how we analyzed our options prior to making the decision? Do you have any questions about how we pulled it off that I didn’t address? Let me know in the comments and I’ll be happy to answer your questions!