March 29, 2005

Flawed Analysis

This home educator is looking at the opportunity cost of lost wages and asking if it is worth it. (Her answer is yes, BTW)

Her analysis is flawed though. First of all, the salary you didn't earn has to be offset by the taxes you didn't pay. So right there the $50K she figures should could earn next year becomes $25K. Then subtract out vehicle wear and tear, maintenance, gas (no small expense at $2 a gallon) work wardrobe, lunches out, etc.

So now her $50K is down to $20K.

After school care - particularly in the early years. Another $5k at a probably unrealistically low $100 per week. So now we are down to $15 per year.

School lunches, new school clothes every year. Missed days because the kids are always sick. Expensive vacations that become "necessary" because of the stress of running a family when neither parent is home, yada yada yada.

You get the point. That second job is not worth nearly what many people think, particularly when there is a good sized spread between the income of the parents.

When we were making the daycare vs SAHM decision (well before we even knew what homeschooling was) I made a detailed spreadsheet and calculated that our net financial benefit of my better half working full time was about $100 per week. She stayed home and I delivered pizza at night to make up the difference.

The necessity of the two income family is a myth in many cases.

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I heard an interview years ago with a woman who had written a book in which she studied this very question. According to her calculations, the first $35k in earnings did not increase the family's lifestyle.

It was amazing all of the things that cost extra by having that second job. Car insurance went up. Food expenses went up because families ate take-out more often (since Mom was too tired to cook).

I wish I had purchased the book at the time; I don't remember the title or her name.

Posted by: Daryl at March 30, 2005 07:23 AM

It's amazing how much money people think they need. We've lived off terrifyingly low amounts of money at times, and we learned lots and had good experiences. Can't convince me to trade all that for a million. Most of all, we know we can do it, so we're not terrified at the possibility of the husband losing his job (for instance). We've already planned for it.

Posted by: Andrea at March 30, 2005 08:14 AM

Every time I talk to my mum about homeschooling, she always says that I won't do it because it would just be so expensive for me to stay home all day.

Then, in the next breath, she complains about how expensive my sibling's private schools fees are: approx $15,000 each (I'm Australian, so its all Aussie dollars). This make $45,000 a year, without factoring in school books, uniforms, extra-curriculars, and after-school care for the youngest. And it doesn't include tax, or gas, or lunches, or any of the other things that are associated with an extra person working. So basically, my dad's salary, and some of my mum's goes just on tax and school fees.

Incidentally, I've already offered to teach the two youngest at home while I'm at uni. I probably would've done it for the paying of my uni fees - which are less than $5,000 per year - and room and board. It would have been a huge saving, merely in financial terms, even if it was just for one year.

I still get paid (by my mum) for tutoring both of my brothers (and probably my sister too) during their holidays.

I really don't see how she can tell me, with a straight face, how it would be so expensive to be a SAHM. I'm still surprised I manage to keep a straight face when she tells me this.

Posted by: Sam(antha) at April 4, 2005 09:39 AM

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