Zetta's Striving to Get Rich Slow

It's no surprise that all of our investment accounts have been hit hard by the recent stock market plunge. This morning I decided to bite the bullet and see how bad the fallout was. It turns out I'm no longer a millionaire -- net worth is down to $840k. All things considered, I can't complain -- it was just fun to call myself a millionaire while it lasted. I am confident the stock market will recover over the next few years and we will be in good shape for retirement 20 years from now. I guess my new goal can be to reach $1M net worth again by the age of 40.

Jim_Ohio had a very interesting post about whether high-income earners (above the ROTH limit) should direct money toward a taxable account or a non-deductible IRA. In the comments he asked me a series of questions, so I thought I'd blog a bit about our situation, and maybe if I'm lucky Jim will stop by and give me his take.

Currently DH makes about $130k. I have the choice to work or not -- currently I'm contracting 20 hr/wk and expect to gross about $60k. We'll probably have about $35k in deductions, plus $10k in exemptions. Last year we had $9k in dividends and $23k in capital gains.

Our tax situation this year will be very different from last year, since I only worked for 5 months and didn't start with as many hours. Last year, our AGI was $169k, my business income was $23k, our taxable income was $124k. I'm guessing our marginal tax bracket was 25%, but our effective tax rate was 10.5% federal and 9% state.

1) How much are you investing each year? In the taxable account?
$15,500 to DH's 401k
$13k to DH's ESPP
$4k to DH's traditional IRA
$4k to my traditional IRA
No new money to my taxable account.

The IRA contributions will likely come from selling existing taxable mutual funds rather than new income.

2) how many years to retirement? Is early retirement a desire?
We are almost 38 now, so theoretically 27 years. I'd like the option of retiring at 60, so 22 years.

3) is mortgage paid off? Is their any reason to NOT pay the mortgage off?
The mortgage is a 10-1 ARM that is fixed at 5.125% until 2012. I think it's more advantageous for us to have the mortgage deduction and invest in the stock market instead of paying it off. Also, there is a fair chance that we will want to move to a better school district in 3-5 years time.

4) What choices are available for health care (HSA?), child care (child care account available?) and other less used deductions.
DH has excellent medical coverage, completely employer-funded, so no HSA.
We're currently taking advantage of the FSA health deduction, although I've been burned with it in the past. The dependent care deduction is tricky -- currently the part-time nanny prefers to be on a cash basis. To use the deduction we'd have to set up tax withholding, etc.

Here's our current strategy:

I wait until TurboTax tells me whether we qualify to contribute to a ROTH or not. We qualified for a partial contribution the year that I was not working, or I could take a deduction on a spousal IRA.

When we don't qualify for ROTH, we contribute $4k each to non-deductible IRA.

Now that I have business income, I sell stock in my taxable account to make the maximum contribution to the SEP-IRA to reduce the taxable business income.

One wrinkle -- it's quite possible that we will be in a higher tax bracket in retirement than we are now. I've been playing with the retirement calculators at http://www.hughchou.org/calc/index.html#RET. Our current retirent accounts total $339k, and current taxable accounts total $357k. I asked for $200k income and assumed 10% return. If we save all that for retirement, and don't contribute another dime, the calculator says we're "set for life". If I just look at the retirement balance, and assume we add $24k to it each year, and assume a 10% return, we're still good for a $200k (current dollar) income.

So what do you think, Jim? Am I better off to leave that $8k each year in the taxable account, or move it over to the IRA?

I just enabled this blog for RSS feed. Feeds are great because you can see at a glance who has added a new entry you might like to read.

Here's how to do it in case anyone else would like to set it up for their blog:

From your blog page, Click on Control Panel, then Widgets, then Feedburner.

Click "create a FeedBurner feed"

Copy the last part of the feed address into the box in step 2. (I missed this step the first time through.)

Click Save

Click Activate

Go back to your blog's main page. In the sidebar should be an orange button labelled XML.

I'm sure I'm making our money management more complicated than it needs to be. About twice a month I sit down for an hour or so to get the budget caught up to our spending. We're pretty comfortable financially so I don't have to keep as close an eye on the day-to-day spending as many do, but I like to have a rough idea of where we are so I can pull back the discretionary spending before it gets too out of line. Unfortunately this month I've made a large purchase which, although I know we have the money to cover it, is throwing my accounting system for a loop.

The problem is that I've got the cash money (non-investment) divided up into so many accounts (3 checking, 2 savings, 1 money market), and the budget divided into so many catagories (10 master catagories, 46 line items) that it sometimes gets tricky to confirm that the budget and the total amount of money is in sync. I'm in the process of consolidating the checking and savings accounts, so that should help matters significantly. On the budget I really like having the granularity of all the line items (for instance separate lines for phone, electricity, water rather than a single line for utilities), so I don't think I will change that much.

I use YNAB as my budgeting tool, and while on the whole I highly recommend it, you can't verify at a glance that the register and budget are in sync. They are disconned by design (which is helpful for people snowballing a large cc debt), but if you're not careful the amounts in the budget and the register can get out of sync. I finally set up a spreadsheet where I list all my account balances, add up the budget numbers and calculate the difference. The large purchase is throwing everything off because it ought to be paid for by money that is currently outside the budget software. According to the software I have used up all my primary income for August and am $3k overdrawn.

Currently we have $38k cash in hand, and a $17k credit card bill to pay in full this month ($13k due to the large purchase.) We normally have $10-$12k coming in each month. I need about $7k/mo to cover normal montly outflows. I save $835/mo toward semi-annual purchases, and set aside 40% of my contracting income each month toward taxes.

Currently my budget includes the following balances that absolutely need to stay in savings:
Taxes: $9k
Semi-annual bills: $5k
House/car repair reserve: $1k

I also have $9k earmarked toward near-term goals -- vacation, Christmas, updating the wills.

$4k of cash needs to go to last month's credit card bill, and we will spend our usual $7k this month.

I still haven't decided exactly where the money for $13k purchase is coming from. The original plan was to sell stock from my taxable investment account (currently $350k). But the market's been down and I've been debating about trying to cash-flow it instead, repaying my cash accounts when the market is a little more favorable. DH's ESPP just made a purchase, and the stock is currently on the high side, so another option would be to sell, which would bring in $12k. I don't track the investment account or the ESPP in the budget, so either way would represent an inflow.

I think I have enough on hand to be safe paying the cc bill out of current cash, but I haven't figured out how to represent paying it and then paying the budget back. Loose ends like this really bug me!

When I was working full-time I always had life insurance through my job benefits. I don't remember if I took the basic 2x or 3x salary or bumped it up enough to cover the mortgage. When I became a SAHM that of course ended.

DH has insurance for 3x salary through work, and also a group term policy through IEEE (a professional organization for engineers.) The IEEE insurance is a great bargain, only $77 every six months for $500k coverage.

DH originally felt funny about taking insurance out on me, because he felt he'd be able to provide for our son on his own with no problem. Then we attended a will and trust seminar where they made the point that if both parents die you should leave enough insurance to pay for the guardian to raise your kids, and that provided a rationale he felt good about.

So I've had adding spousal insurance on the to do list for a long time now. IEEE actually called one day and instead of blowing off the salesperson like I would normally do I asked for a quote. Since I'm working again (software contracting), I could join IEEE myself and take out an individual policy, or go on my husband's policy as a spouse, so I asked her to quote it both ways. She said she'd never been asked that before. It turned out that it was about $15-$20 cheaper to be a spouse, plus I wouldn't have to pay dues (although I might rejoin someday anyway if I decide to use the club for networking purposes.)

I think my policy is about $67 every six months for $500k coverage -- what a no-brainer! I should've taken care of this years ago.

So if DH dies, there's enough to pay off the house and income replacement for 4 years, and if I die he can pay off the house and have an extra 2 years of my current income. Plus of course we'd inherit each other's IRA accounts. $2M (half from insurance, half from our current net worth) should be plenty to raise our son if we both die.

I really should get a quote on long-term disability insurance as well. I think DH has 66% replacement coverage through work. Not sure if I am able to get it while working as a contractor.

Books I've found useful, and the main topic covered. I've placed them in the order I would recommend reading them. You can click on my Booknotes catagory to read my summaries of numbers 1, 2, and 7.

1. All Your Worth (getting your basic financial picture in order so you have money available to invest)
2. The Complete Idiot's Guide to Getting Rich (helps with goal setting)
3. Bogleheads Guide to Investing (explains mutual funds and the indexing strategy)
4.

http://investingessentials.blogspot.com/ An online book abpuy impkementing the Bogleheads strategy,
5. The Intelligent Asset Allocator (how to structure your portfolio)
6. Morningstar Guide to Mutual Funds (how to analyze and pick funds)
7. Common Sense on Mutual Funds by John C. Bogle (highly technical analysis of index investing)

This has been on my "to do" list since paying estimated taxes in mid-June, and I finally had the time and inclination to sit down and make an attept at it. I'm still in the process of figuring out exactly what to look at in these quarterly reviews. As usual, I find that I end up spending the majority of the time creating a new spreadsheet and manually typing in details that I later decide aren't really what I should be looking at.

I've been slowly making my way through Morningstar Guide to Mutual Funds, and taking notes on each chapter. I find it to be far better than the "learning" information on the website, which seems to be generic handwaving.

So in an attempt to understand what I currently own, I created a spreadsheet wtih the following columns (picked from my notes from the book):

* fund
* symbol
* account
* style
* stars
* sectors
* % assets in top 10
* asset allocation
* benchmark
* trailing annualized return (3, 5, 10 year)
* benchmark return
* 3 yr standard deviation
* expense ratio

Then I looked up each fund I own and copied the info. Putting in the sectors and the returns took the bulk of the time -- what a lot of typing! Not sure this was worth the effort. I noticed a little bit of duplication -- two large-value, and two world large-value funds -- but the holding in the second fund in each case were fairly small.

The only conclusion I came to was that, yes, American Funds has low expense ratios.

Next I made another worksheet for the current hodlings:

* fund
* symbol
* account
* shares
* current value
* amount invested
* amount withdrawn

My basis info isn't available on my brokerage website, probably because the funds were originally purchased directly from American Funds rather than through the brokerage. I later transfered them to the brokerage so everything would be on one statement. I need to call my broker and see whether the basis info can be obtained and added, or if I need to go back through 15-20 years of statements to figure out the basis for each fund.


Finally I went to Morningstar and used instant x-ray to get an overview of the whole portfolio (including DH's funds). The asset allocation is currently:
Cash 9.47
US Stocks 35.93
Foreign Stocks 43.51
Bonds 10.57
Other: 0.53

Next time, I'd like to work out a way to streamline transferring the current holding numbers from the brokerage to the x-ray tool.

I'm considering eventually putting a 5-10% stake into REITs, but that's another learning curve in itself! My thinking is that real estate is an asset class that moves independently of the stock market, and the current bust may make the next few years a good time to invest.

The stock style is currently
size:value/blend/growth
large: 24/29/23
mid: 6/4/7
small: 2/2/3

Going forward I think I want to add more small- and mid-cap exposure.

The Stock Sector percentages were mostly close to the numbers for the S%P 500. Nothing struck me as terribly high, although I have no real opinions on which sectors should be 5%, 10%, or 15%.

World Regions:
US & Canada: 48.44%
Europe: 27.84%
Japan: 2.39%
Latin America: 2.82%
Asia & Australia: 14.45%
Other (Africa): 4.06%

Average Mutual Fund Expense Ratio: 0.68%

Stock Stats (ratio to S&P 500):
Price/Prospective Earnings: 13.27 (0.99)
Price/Book Ratio: 2.10 (0.91)
Return on Assets: 8.80 (1.03)
Return on Equity: 21.35 (1.00)
Projected EPS Growth - 5 yr% 13.00 (1.14)
Yield % 2.71 (1.25)
Avg Market Cap ($mil): 24,233 (0.49)

I'm not sure what to make of the Stock Stats section, but it seems to me to indicate that most stats are on par or a little better than the S&P 500.

DS turns 3 at the end of September, and I'm trying to decide between two preschools.

The first preschool is run by a local church. It's $221/mo for two mornings a week (3 hours each). I also work from home in the afternoons, and hire a nanny to babysit 20 hr/wk at $12/hr. (DS sleeps during half that time, but I need the coverage for days when I go into the office.) So my total cost per month is $1181. He's currently in the two-year-old class there, and I love the teacher. Because of his late birthday and reserved personality, he would stay with that teacher for another semester.

The preschool down the street, where DH can drop him off on the way to work, is $1000/mo. It's a full-time school that is open from 8-6 -- learning activites in the morning, lunch, 2 hour nap, and free playtime in the afternoon. DS would probably stay from 9 until nap is over at 3, so about 30 hr/wk.

I'm having a hard time deciding. The school down the street is cheaper and more convenient, and I think the learning part of the programs is similar. The other big advantage is that when I need to go into the office for a day and work until 6, there's no extra charge, where it's $12/hr if my nanny stays late.

The advantages of the current situation is that I get to spend 3 mornings a week with my son, and when the nanny is taking care of him I can hear them playing. He always stops by my office for a kiss before going down for a nap.

With the school down the street I'd spend about the same amount of time alone with him in the afternoon, say from 3-6. But somehow morning time is so much better than afternoon time!

On the other hand, at 3 perhaps more time with other kids would be better than time alone with a nanny.

If we go to the new school, I've been thinking about keeping him home 3 mornings a week, and leaving him there later in the afternoon. So the schedule might be 9 - 4 MW and 12-4 on TThF. The problem is I don't know if the director will be accomodating if I have my son skip so much of the academic portion -- she doesn't seem to be very flexible and could very well tell us to take him to another school instead. She's also set a July 7 start date, so that kills part of the summer for swim lessons, etc. (There are only 8 spots total for kids born Sep-Dec '05, and of course a waiting list, so it's pretty easy for her to tell us to take a walk.)

There are 2 other daycares that would be reasonable to consider, but I haven't checked them out yet, and so would probably end up on a waiting list.

It's a tough decision -- my heart says stay with the current setup, my head says the new school makes more sense financially and schedule-wise. I'm sure my son would thrive at either school.

When I had my son, I quit my job as a software engineer. I considered it a sabbatical rather than a career change to permanent SAHM, and knew I would eventually go back to work. When DS was 20 months, I found a contracting company that enables me to work at home 20 hr/wk. I thought this contest entry might be useful to people who have a real choice about working or staying home, and realize that not everyone can afford to do so.

1. It's worth taking some time off.
I thoroughly enjoyed the two years completely focused on my boy and would recommend it to anyone. It's a short enough time to not completely set your career back to ground zero, but gives you time to watch and enjoy the day by day changes that your child goes through in the years when they're changing the fastest. I like to think of it this way -- if someone offered you a once in a lifetime chance to quit your job and travel around the world for a year, would you do it?

2. Join a playgroup ASAP.
I waited until my son was 3 months old before joining a playgroup. If I'd known what a lifesaver it is, I would've forced myself to get out there sooner. Just having the chance to get out of the house and chat with other moms is a lifesaver when you are a SAHM.


3. You can keep the cleaning lady.
Before I decided to stay home, my biggest dread was the drudgery of housework. I had this notion that a SAHM was REQUIRED to do the cooking and cleaning. It was the least appealing thing about the job description. I planned to keep our cleaning lady for the first 3 months and then take over these duties. As the deadline approached, it occurred to me that if I could find room elsewhere in the budget, it was really my choice as to whether to spend the money on cleaning or on other things. Don't let preconceived notions of what you "should" do box you into a corner.

4. Have faith in your ability to restart your career.
The scare-mongerers out there like to make a big deal about the number of elderly women in poverty, and what happens if you get divorced. I truly believe that if you keep your time out to just 2 or 3 years at a stretch, it's not such a big deal to find work again.

5. Network, Network, Network
The best thing I did was to continue to go out to lunch with old coworkers. It directly led me to the part-time job I now enjoy. (My mother was available to babysit, but if necessary, find another mom to trade time with.)

6. There will be regrets.
Another woman at my old job became pregnant a few months after I left. She decided to continue working, and is now director of software. There are days that I think with regret that that could've been me, and I doubt I will be the one to break any glass ceilings in the future. For every decision there is a trade-off -- something lost, something gained. Make peace with that beforehand.

7. Try harder for part-time or a job share before you leave. Now that I know how much I like working part time, I wish I'd pushed harder for staying at my last job, in a part-time capacity. I'll never know what would have happened if I'd found a job-share partner and really made a case for how it would work. On the other hand, I really loved having no other pull on my attention during the first year, so I guess what I really wanted was a LONG maternity leave and then a job share!

8. 30 months is ideal developmentally. I started working when my son was about 22 months, but if I had to do it over, I'd wait until he was 30 months old. I just see such a difference in his interaction with other kids and lessening of separation anxiety at this stage that I would recommend it as a better age.

9. Nannies come from Craig's List. If you work part-time, a nanny that comes to your home costs about the same as part-time daycare and offers you a lot more flexibility. Craig's List is THE place for nannies/babysitters and families needing childcare to meet each other. You can post to find someone whose schedule suits yours. You can find college students, a SAHM who wants to care for a second child, or a nanny who works part-time for another family and wants to pick up more hours.

10. Working 5 half-days is better than 3 full days I work 5 half-days, where a coworker with two preschoolers works 3 full days. We put in the same number of hours each week(usually between 18-22), but it seems that I'm able to respond to emails and meetings a lot easier than she is. I also feel fresher working a shorter stretch at a time. It seems easier on my son to have more a more consistent schedule day-to-day as well. Of course, it does make a difference to be working from home, as commuting is not a factor.

Broken Arrow expressed some concern about my 44% international exposure:

Yikes... perhaps you have higher tolerance than I have, but I feel like the international is actually... too high!

Everybody is going international... and well, yes, that's understandable.... However, what exactly is international anyway? Is fund diversification really going to spread out the risk enough for us to simply invest in it and feel safe?

I currently use a full-service broker and the vast majority of my money is in American Funds. I was a bit concerned the first time I saw how high the international was, but my broker explained that with Amerian, most of the "international" companies are really big multi-nationals, which includes companies that were founded in the US, but register overseas. If you look at the breakdown by nation the majority is in US, Europe, or Japan. He felt that the international component was about right.

I wouldn't say that I'm a savvy investor. I've got a big portfolio because I stashed 10-15% in my 401k the first 12 years that I worked as a software engineer, and because I made a $150k profit on a townhouse I bought, and decided to invest it instead of rolling it into our second house. I've basically followed the advice of my broker, and the townhouse profit has almost doubled in 6 years time, so he's done pretty well by me so far.

I had a big wake-up call when I read The Complete Idiot's Guide to Getting Rich, and realized that I'm entering a growth phase where how I manage my investments is becoming more important than how much I contribute each year. For instance, last year my dividends and capital gains were about $30k, where maxing out 401k and ROTH would only be about $23k.

So I'm trying to get to the point where I actually understand what is going on rather than passively following the broker's advice. At the same time, I'm reluctant to change anything (and potentially screw it up) before I feel I have a deeper understanding.

My dad, who was an investment broker for many years, believes that American is one of the best at protecting your money -- losing less in the down years than the other families. I'm in no position to judge.

Spud told me how to fix up the asset allocation in Quicken by manually entering the percentages. I figured them out the best I could from the morningstar datasheets, then looked at the result for our total portfolio:

Bonds: 5.5%
Large Cap: 29.6%
Small cap: 5.2%
International: 36.7%
Other: 3.5%
Cash 16.5%
No Asset Class: 2.7%

The international seemed low to me, so I gave in and typed all the fund names and balances into Morningstar's instant x-ray:
Cash 18.73
U.S. Stocks 30.78
Foreign Stocks 44.07
Bonds 5.73
Other 0.70
Not Classified 0.00

I guess it's not too much different, but it doesn't give me a warm fuzzy feeling, and I wouldn't want to be rebalancing based on the Quicken stats. I didn't realize until now that x-ray didn't give a breakdown between large and small caps.

Part of the cash position is our emergency fund. I'm considering increasing our bond position to 10%, based on what I learned from The Intelligent Asset Allocator. Given the size of our portfolio and the fact that we're still 20+ years away from retirement I don't feel the need to have any more than that in bonds. I'm also thinking about investing maybe 5-10% in a REIT after the banking mess is well and truly sorted out.

I started a new method for organizing my short-term financial paperwork (utility bills, bank statements, cc statements, medical and insurance statements, etc.) a year ago, and I must say that I've been quite pleased with the result. Although I pay most of my bills through my bank, I'm not keen to go completely paperless with these statements because you have to keep track of so many websites, usernames, and passwords.

I like using an accordian file for these short-term statements that you only need to keep for a year or so. At one point my DH convinced me to try hanging folders, but it was inconvenient having the file cabinet upstairs in the office so the filing always stacked up until it was a real chore. My accordian file sits on a side table in our dining area.

Anyway, back when I used to file things completely by catagory, I never seemed to have enough tabs and there was always a lot of digging to find a particular bill I needed.

Here's my little change in strategy that has made a big difference. Instead of having tabs for electricity, water, phone, etc., I have four tabs labelled, "Utilities Jan-Mar", "Utilities Apr-Jun", etc. When opening my mail, it's a lot quicker to open all the envelopes at once, throw out the junk, and put all the statements into the current slot at once. If I ever need to look for a past statement, I generally know which quarter I need to look in, and since the bills look different from each other, I can quickly find the month I'm looking for. I have a rolling year's worth of statements -- when April 2008 got here, I take all the old 2007 statements out of the old Apr-Jun slot and shred them.

It's worked so well for utilities that I'm now going to extend it to bank and credit card statements. So my 13 tabs will now be:

Util Jan-Mar
Util Apr-Jun
Util Jul-Sep
Util Oct-Dec
Bank/CC Jan-Mar
Bank/CC Apr-Jun
Bank/CC Jul-Sep
Bank/CC Oct-Dec
Insurance
Medical
Paystubs
Taxes (for goodwill receipts, property tax statements, etc.)

For receipts, I throw the receipt for any big ticket item (say over $200) in a photo box. Not sure what I'll do when it gets full. I don't keep minor receipts from eating out, groceries, Target, etc., unless there is a big likelihood of needing to return something.

I've decided to start a second accordian file for paper statements for my investments. So far it's only got four tabs, and I'm not sure what else will go in there:
Trade Confirm
Brokerage 1
529
Social Security

Also a third file for business:
Receipts for deductable expenses
Business license, etc
Business checking statements

So I sat down to take a stab at doing my quarterly investment review, and quickly realized I didn't know what to look at and analyze! So I decided to start with asset allocation. I was expecting to see something similar to Morningstar's x-ray, but instead the pie chart shows the following:

4% Domestic bonds
22% Large Cap stocks
3% Small Cap stocks
24% International stocks
33% Other asset classes
9% Cash
4% No asset class

What the heck is this "other asset classes"? I drilled down to see the 6 mutual funds listed under this catagory, and of these, my largest holding is American Capital Income Builder (CAIBX). According to Morningstar, this fund is currently 65% stock, 20% bond, 13% cash, and only 1% other. So unless they're counting "giant" market capitalization as different from "large" cap stock, I don't know where Quicken is coming from. American Funds SmallCap World (SMCWX) lists very little "giant" but a lot of "medium" -- is this also counted in "other"?

Not very useful at all.

Great news! DH's company does semi-annual reviews, and he just got a 2% raise and an $8k bonus! Bonuses usually get 50% of the tax taken out upfront for some reason, and many companies then also take out 401k and ESPP contributions as well, so we'll probably only see about $3k of it immediately.

We originally started talking about what we should spend the bonus on, but then I suggested we just put it into DH's stock investing fund. Somehow it's not as satisfying as a splurge, but DH went along with the idea.

Then I suggested he increase his 401k by 2%. I think this will put him at a rate to max the 401k. We need the tax deduction, and his company matches all the way to $15,500, so it's a really good use of the money.

I sent off our estimated tax payments last week, and checked my YTD earnings. I was pleased to see that I've been projecting I'll make $60k this year, and for the first quarter I grossed $15,155, right on track.

I resolved this year to take a look at how our investments are doing quarterly, so since it's April 15, it's time to fire up Quicken and see where things stand.

I've been doing software contracting since last August, 20 hours a week, for a small firm that in turn gets contracts from larger engineering companies in the area. I've been thinking about whether I should regard this as a job, a career, or a business.

Currently, I'd say it's really just a job. I've been on a single project the whole time, and it looks like it will last another 3-4 months. The company has 3 active contracts currently, and the president keeps us up to date on other possibilities that come and go. Hopefully when this project is done there will be another one they can use me on, but there are no guarantees.

I'm hoping to get pregnant and take a year or two off with our second child, but mother nature is taking her sweet time, so I'm kind of in a holding pattern. It makes it difficult to plan much beyond the immediate future.

Could I turn this job into a career with this company? Possibly. I like working from home and setting my own hours, and I can see this would be a good situation when the kid(s) are in elementary school. The downside is that the work itself isn't the most interesting -- mostly telecommunications and defense. I'm currently adding a new extension to a 10 year old protocol, on a piece of legacy equipment that is getting a new board to extend its life. Not exactly cutting-edge stuff.

For this to truly be my own business, I'd need to be like the president of the company -- going out and finding the contracts. He's been in the industry here for probably 20 or 25 years, and seems to know a lot of people. My contacts are more limited -- I can count maybe 7 or 8 companies where my old coworkers have landed. Perhaps once I got a couple of contracts I could make a name for myself and widen that circle, but it does seem that might be difficult to do on a part-time basis.

If I were to go back to full-time work a few years from now, I don't think I'd be happy to stay a programmer. I was pretty sick of coding before, and was trying to figure out how to become a project manager, a software group manager, or a software architect. (I actually did land a job as a project lead/software manager a month before I became pregnant the first time, but chose to become a SAHM because the software director said that doing it part-time was not an option. I decided I'd rather not work than do coding part time or have the stress of a 50 hr/wk job while caring for a newborn.) It's still a puzzle to me how to make that transition happen -- and an even greater difficulty (perhaps impossible) to do it while working on a part-time basis.

Sometimes I toy with the idea of going back for a PhD, just to get into more interesting work, but I am reluctant to ask my DH to support me for 4-6 years of school when I could be bringing a substantial income into the family. (A PhD in software would be unlikely to boost my earning capacity much beyond current levels.) Perhaps the answer is to find a job or contract with a company making a product I find more appealing. It would be cool to work on assistive devices for the handicapped, for instance.

It's a bit frustrating, having these long-range thoughts, but watching time ticking away as I wait for shorter-term plans to come to fruition. The time I want to devote to my children definitely has priority for me.

I'm happy to report another item checked off the TO DO list! DH has invested his IRA rollover money!

Between us, DH and I have worked for 9 different companies in the last 5 years -- that's a lot even considering the high-tech field we're in! I've been pretty good about making sure our 401k's were rolled over into IRA's but not so good about investing the money afterward. Part of the problem was that for a long time DH and I couldn't seem to talk about investing strategy without getting into an argument.

Finally I came to my senses and proposed to DH that he invest his IRA as he saw fit. With the stock market tanking the last few months it seemed a really good time to move money out of cash and into some mutual funds. Things got rolling when I proposed we sit down side by side one Saturday afternoon, separately researching mutual funds on our individual laptops.

I was mainly going through the exercise of using Morningstar to analyze and actually pick a fund on my own. (I think I detailed what a miserable failure that was in an earlier post.) DH, on the other hand, successfully managed to pick out 5 funds he wanted to invest in. He had about $75k to work with, and put about $15k into each.

He's gone a lot more aggressive and international than I would have -- Vanguard International Value, T. Rowe Price funds for Latin American, Southeast Asia, and Africa & Middle East, and Fidelity Southeast Asia. It's a lot of foreign exposure, but should be balanced out by the large amount of American large-cap and balanced funds that I hold in my accounts. Although my portfolio is 50% international, I've been told it's primarily made up of multi-national companies that are really American in nature.

We still have about $15k in my accounts that need investing. I'm considering waiting for the subprime mess to be straightened out, then buying a REIT that specializes in commercial property. I like the idea of having a stake in another asset class. The downside is that I don't know much about REIT's and so will need to get some education on them.

I also gave DH the green light to invest $10k in a stock he thought was a good buy. The purchase was made from his taxable stock account, which has been doubling as our emergency fund. He sold it a couple of weeks later and made a $1k profit. He also sold his employee stock-purchase shares for another $1k profit.

So all in all we're making good progress.

I finally puchased Quicken Home & Business, with the plan of using it to analyze my investments. I won't track budget and spending in it, for that I use YNAB. I was debating about spending the extra $20 to get Home & Business instead of Premier, then realized that if I use it to track invoices I can writeoff the cost of the software as a business expense.

Anyway, I've got all our brokerage accounts set up, and entered "placeholder" values for the basis information -- there's no way I'm going to go back and enter 25 years worth of transactions! (My dad started my first mutual fund when I was 12, and I've still got it today!) I was disappointed that I had to enter that manually -- probably some deficiency in what the brokerage provides to Quicken, as they do show my basis in my statements.

Quicken does show a pie chart for my current asset allocation, which is good. However, I'm thinking I would like to invest maybe 5-10% in REIT's after the lending crisis settles down, and I don't see a way to list a REIT as a separate asset class. (My thinking is that REIT's represent an asset class that may not have close correlation with stocks.)

I also noticed that although the stock purchased through my husband's ESPP was deposited into its own account at Etrade, I can't seem to access that account from Quicken. So there's $8k of stock that isn't showing up.

The other area where I'm disappointed is the performance analysis. The "Average Annual Return" list for my mutual funds appears to be my personal return since I downloaded everything in Feb -- and everything shows N/A* (*Placeholder entries used for missing transactions.) I can't seem to get it to look up and display the published 3,5, and 10 year stats for all the funds I own. I wanted to be able to pull all those and look at them in a single table.

I've tried to set up a portfolio view on Morningstar's site, and use x-ray on it, but I can't seem to save it and end up having to reenter everything every time. My hope was that Quicken would solve this for me.

So far I don't really see how Quicken is going to be of any help in monitoring my investments.

As I was tracking our budget in YNAB, I grew concerned that we seemed to be spending all of the $2,000 net that I'm bringing in each month. We hope to have another child, and I plan to stay home full time again for a year or two, so it's important to me that the extra money goes to things that can be cut out later.

It was really bothering me -- why wasn't there a big surplus in the budget -- until I realized that because my income looked pretty steady we decided to increase my husband's 401k contribution from 6% to 10%, and to contibute another 10% to the employee stock purchase plan (which if you sell the shares immediately is a guaranteed 15% return.)

So about $1600 is really going to savings, and the other $400+ is funding vacations, trips to visit family overseas, and the ever-present Misc line of the budget.

Since my husband and I are both in a highly-paid profession (engineering), when we are both working we get hit at taxtime by the marriage penalty and the phaseout rules. I took some time off to be a SAHM during 2006 and half of 2007, then started doing contracting for 20 hours a week. I thought it would be really interesting to see the impact that the second income had on our taxes this year, so I saved a "what if" file in TurboTax and deleted all my business income.

I worked for 6 months, and earned $23,735. I can shelter $4363 of this in a SEP-IRA.

Our AGI increased by $17,477, our deductions decreased by $240, our federal tax increased by $7,877, and our state tax increased by $1625. This makes the marginal tax rate on my income 41%. The other big impact is that we are no longer eligible to contribute to the ROTH IRA.

I paid $1963 to a babysitter for 3 months at 10 hr/wk. (I increased her hours to 20 hr/wk in January).

So altogether our net income from my working was $12,030 -- an extra $2,000 per month. Let me tell you, an extra $2k makes the budget feel a lot looser!

Thought this post of mine on the investing forum would be interesting to keep around in my blog. Sorry if you've been following the thread and this is a repeat.

I'm a mutual fund gal, buy and hold (to a fault), very long-term (>10 years) focused. (I say "to a fault" because when I first started working, I bought about $6k of AT&T stock through an ESPP, and held on to it while it divested into Lucent, Comcast, and a few other stocks. At one time my Lucent stock was worth over $40k, and I held it all the way up and all the way down and finally sold at a loss a few years later. If that's not buy and hold to a fault, I don't know what is! I concluded that until I'm willing to pay more attention, I should not own individual stocks!)


My DH feels I've been holding him back from investing in individual stocks. At times he has mentioned he wants to put $10k or $50k into a single stock, and by the time I've gotten over the shock of the dollar amount he says the buying opportunity has passed. The argument we have is entirely predictable -- he says $10k, I ask how about $2k, I ask if he's timing the market, he tells me how he lost money by holding a certain stock too long because I kept talking about buy and hold. He doesn't end up buying the stock (even though I would've been ok with investing a smaller amount) and we're both frustrated.

The answer, I think, is to have an account that is dedicated to stock trading, and to agree that he can invest it any way he wants. Would $20k be a reasonable starting amount for such an account? Our overall picture is $395k in retirement accounts, $375 in taxable mutual funds, $9k in ESPP stock, $17k in money market, and $20k in checking/savings. We're 37 years old. I estimate the emergency fund needs to be in the range of $13k to $26k, and we contribute 12% to 401k. We've agreed in principal to each manage our own retirement funds, although we're trying to consult each other before making any major moves.

This is so frustrating. I'm an engineer. I've always been good at math. For my degree, I had to take two semesters of calculus, differential equations, and a real bear of a class called Engineering Mathematics (Bessel polynomials, anyone?). I got A's in the first three and a B+ in the last one. So I am not math-phobic by any means.

But I just can't get my head around the process of analyzing the numbers associated with mutual funds. This is not math, folks, it's business, and I hate it. I sit there and look at total returns and expense ratio and loads and my attention just seems to slide off the screen.

DH and I sat down today to look at mutual funds. Both our IRA's have some cash that needs to be invested -- about $70k in his (from rollovers), and about $15k in mine. We've had a lot of difficulty in the past whenever we talk about investing, so it was real progress just to be sitting side by side, not really talking, but each looking at mutual funds on our separate laptops.

So I pull up the Etrade Mutual Fund Screener and start entering criteria. I decide to try to look for a no-load domestic mid-cap fund with an expense ratio under 1%. (Why do I choose this? Because a year ago my full-service broker mentioned that I don't really have much mid-cap in my portfolio, and that would be one area I could consider adding.) This narrows the field down to 25 funds. But how do I know that this selection will give me the best quality? Maybe it would be better to limit the search by capitalization instead? I see some companies I've heard of, like Fidelity, and other I haven't, like FPA.

I click on the Performace tab. Look at Fidelity Value (FDVLX), just to pick one. The manager's been there 12 years, which I like and the name isn't as specialized as something like Fidelity Select Chemicals. Etrade has tagged it "all-star", but Morningstar only gives it 3 stars.

Returns are:
1yr 3yr 5yr 10yr inception
-6.41% +8.80% +16.41% +9.51% +13.75%

So if I believe Bogle that funds generally "return to the mean", is this fund on its way up or down? Beats me. The 3yr is under 10%, the 5yr is over, and the 10yr is close. The negative 1yr return doesn't bother me -- stocks have been down lately, maybe it's bargain time?

Expense ratio is 0.70% for both gross and net. Some on the page are as low as 0.50%, others as high as 0.90%. Is this significant, or is anything under 1.00% good? Is 1.00% the magic number, or is it 1.50% or 2.00%? I don't know.

I click on the risk tab. 4 more columns of numbers. I can't remember the difference between the different risk measures, and whether higher or lower numbers are better. I don't feel like looking it up again. Even if I knew what the numbers meant, I don't know the range of numbers for a given parameter that would be acceptable to me.

I click on the link to look at the fund's page. Top 5 holdings are Owen's-Illinois, Xerox, Avon, Agilent, and Eastman Kodak. I know Agilent was spun off from HP, or was it Motorola, and Kodak isn't a player in the digital camera realm, but are they good companies to invest in? Who knows? I'm buying mutual funds because I don't want to analyze stocks!

Let's look at the chart comparing it to a benchmark. From 1998 to 2005 it essentially tracked "Mid-Cap Value" (I need to look up what that is again to confirm that it is a mid-cap benchmark as the name implies), and then in the last 3 years it's been maybe $2k higher. I vaguely try to remember whether it's Fidelity or Vanguard that is the king of index funds. The arguements I've heard (was it from sweeps?) for managed funds have swayed me toward them over index funds, although I couldn't for the life of me tell you what they were.

It's paralysis by analysis. I know enough to know that I don't have an intuitive feel for what I'm looking at. If I were to pick this fund, so far the real reason for my choice seems to be that I recognize the company (Fidelity), they chose a simple name (Value), the manager has been there 12 years, and the returns since inception are good. Is this rational?

By this time my eyes are glazing over, and I've only looked at one fund!

I think this is why so many people default to picking index funds or ones Etrade or Morningstar has tagged as "all-star". It's certainly why I've stuck with a full service broker so far. Maybe I could've gotten a better return picking my own no-load funds, but maybe my paralysis would've made me too conservative, who knows?

DH wants to use Etrade and pick his own funds in his retirement accounts. I'd like to understand enough to have an intelligent conversation with him about the funds he picks. And I'd like to be able to have an intelligent conversation with my full-service broker about the funds he recommends.

I'd like to feel confident enough to make a decision about how to invest my money.

After over a year of having this list in my summary, I've finally checked off one item!

Financial To Do
[ ] update wills
[ ] invest IRA rollover money
[x] stock basis into Quicken
[ ] annual review with broker
[ ] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k to 529 plan

I finally bought the latest Quicken, downloaded all our investment info, and manually plugged in the basis for my mutual funds. Not sure why the basis didn't download as I was setting it up, but no matter. Now at least going forward I can try and use Quicken's analysis tools to look at the portfolio. (I tried using the Morningstar x-ray tools, but couldn't get it to save properly.) My goal is to review it quarterly, using the estimated tax deadline as a prompt.

Currently we have 10 different mutual funds, all American Funds, in 3 accounts with a full-service broker (taxable, my IRA, and my ROTH), and then 3 more accounds with a lot of cash in Etrade (taxable, DH's IRA, DH's ROTH), DH's current 401k, and I'll soon open a SEP-IRA.

Then we have 5 bank accounts -- checking, savings, and business with Wells Fargo, and checking and savings with Etrade. It's too much, really. I moved most of our checking/savings money to Etrade last summer, but haven't finished the process of cleaning up the old accounts.

I've decided to manage our budget and checking/savings accounts exclusively with YNAB, and only keep investment info in Quicken. I've been using YNAB for about 6 months now and am very pleased with it.

DH did a bunch of 401k rollovers into his IRA, but hasn't invested the money yet. Hopefully we can find the time to make some decisions on that money soon! It would be nice if that were the next box to get checked off...

Good news after our first pass through TurboTax. I had feared we were in big trouble after under-withholding CA state tax, and did what I could by sending in a big check for estimated state taxes on Jan 17. Right now it looks like we will owe about $1000 in federal taxes, and will get a rebate from the state for about $1200. The penality was only $36.

I've got some stock basis to figure out, and also need to open a SEP-IRA, so the news may get better yet.

It was kind of interesting to do a what-if to see what would've happened if I hadn't started consulting. We would've had very large refunds -- $6,600 federal and $3,300 state.

Aaaargh! As the self-nominated family CFO (chief financial officer), I handle all the bills, do the taxes, keep an eye on investments, and create and monitor the budget. I don't mind the work of these things, as I like to know where everything stands. But I've made a couple big slip-ups in the last few months that have me very aggravated with myself.

I normally use the billpay feature on the BofA website to pay our credit card in full from our checking account. Somehow in December I missed the bill notice and got hit with a $39 late fee. Luckily I happened to download transactions that week and caught it just two days late. Not sure if there will be a finance charge since the bill was paid in full.

Now this month, I set up the bill to be paid on time, but it came out of the wrong checking account (I switched from Wells Fargo to Etrade a few months ago, and have just a nominal sum in the old accounts.) It's been resubmitted twice, for a total of $46 in fees so far. Got to call and straighten that out tomorrow.

The fees won't cause us any hardship, but I hate paying money for nothing.

The big one, of course, is not catching that the state withholdings coming out of my husband's paycheck weren't large enough. Then I missed the deadline for sending the 4th quarter estimate tax payment. So we're going to have some sort of penalty to pay. Aaargh.

My husband would be willing to help more with the bill paying, etc., but I suspect there would just be more confusion over who had done what.

Fiancial Goals for 2008

Overall Goals
[ ] Needs/Wants/Savings at 50/30/20%
[ ] Target Portfolio Goal $4.3 million
[ ] Target Annual Savings $13,200

These targets come from the books All Your Worth and The Complete Idiot's Guide to Getting Rich.

Investing:
[ ] DH's 401k at 10% (12% stretch goal)
[ ] Max out IRAs ($10k)
[ ] Non-retirement contribution $3k
[ ] Net worth increase by $40k
[ ] Portfolio return of 12%

We've recently increased DH's 401k from 6% to 10%. Once that's comfortable we'll try for 12%. His employer has a match all the way up to the max contribution ($15,500)!

Short-Term Goals:
[ ] Taxes due ($10k)
[ ] Will and Trust ($2000)
[ ] Overseas airfare to visit family ($4500)

(So far I have $9500 set aside for the taxes, and $1500 for the wills.)

To Do List:
[ ] update W-4 (federal and state)
[ ] update wills and trust
[ ] invest IRA rollover money
[ ] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k from taxable account to 529 plan

Notes
To set up the Target Portfolio Goal, I used this calculator:

http://www.hughchou.org/calc/retire.cgi. The assumptions I put in are an annual income of $150k, retire at age 60, live for 40 years, 3% inflation, and 10% portfolio return.

To calculate the Target Annual Savings, I used the PMT function in excel, with rate=10%, nper=23 (num years), pv= -364,000 (present retirement accounts), fv=4,300,000 (portfolio goal). Note you need to set the PV to a negative number and the FV to a positive value. The result will be a negative number, which is how much you need to contribute ($13,200 in my case.)

It's getting close to the end of the year, so I'm inclined to look at what I've done vs what I planned to do at the beginning of the year.

Here's the to-do list that I put in my profile:
[ ] update wills
[ ] invest IRA rollover money
[ ] stock basis into Quicken
[X] annual review with broker
[ ] review life and disability insurance
[X] review phone & cell phone plans
[ ] earthquake/disaster box
[X] replace Mvelopes software

As you can see, I have made very little progress on some very important items. I did review the phone and cell phone plans, and replaced Mvelopes with YNAB, but these items were arguably the least important on the list. I had the annual review with the broker in March, but didn't act on his suggestions. (I wanted to go over them privately with DH first, but life got busy...) We still need to update the wills, invest over $80k of money that is sitting in cash within our IRA's, and add life insurance on me.

Our home value has dropped between $25-$50k, according to www.zillow.com, putting it about $675 with the remodelling.

The biggest change this year is that I started working part-time in July. My gross for the six months was $24k, and I spent about $2k on the babysitter. It will be interesting to see what the effective tax rate (given the second-earner penalty) turns out to be on this money. Regardless, it's worth it to keep my skills current and preserve my future earning potential. It's amazing how much breathing room $2k a month gives to the budget (I've been setting aside 40% for the taxman.) At one point I was lying awake at night debating how to best squeeze $150 out of the budget, now I can make that in a few hours work. It's easier to fund vacations and the occasional splurge. We've increased DH's 401k contribution to 10% (his company gives a match!), and should also be able to fully fund our IRA's in 2008. (We probably won't qualify for ROTH IRA's anymore.) I just ran some numbers, and our new "All Your Worth" balance of needs/wants/savings should be about 49/33/18, which I'm pleased about. (I'm also enjoying the mental break. Caring for a toddler means you never get to concentrate for more that 5-10 minutes at a stretch!)

I haven't done a detailed analysis of our investments yet, but our net worth is still hovering around $1.05 M, despite the decline in home value.

I've just run some numbers through a tax forecaster spreadsheet that comes with YNAB Pro. Our federal withholding will hit 115% of last year's tax (as planned), but something got messed up with the state withholding and it's only 50% of last year's. I'll have to make an estimated payment in January and hope to minimize any penalities. Right now we expect to owe $10k. I've got $8k set aside, and so will devote my first few paychecks to the remainder. Obviously I haven't been tracking this as closely as I should -- it may be time to consider hiring an accountant. I've been trying to avoid paying quarterly estimated taxes by setting up the withholdings correctly, but it might be a good thing to do them to force me to review our investments and tax situation regularly.

My biggest disappointment for the year is that I don't feel any more able to look at a list of funds in Morningstar and decide which one to invest in. My self-education campaign ran out of steam around March or April. I'm getting to the point where it's at least as important to maximize my investments as it is to keep my spending in check.

And it's now me! (See my previous post about the prevalent attitude that "there's no such thing as a part-time engineer".)

I've been away from the SavingAdvice site for awhile, and don't expect to have much time to post in the near future, but wanted to share my good news all the same.

A couple of months after I started contemplating looking for part-time work, one of my former employers (I left the company in 2001) shut down the R&D group and laid off a bunch of people. There were a bunch of emails about getting together for lunch on a regular basis, and in one of these a former coworker with preschool-aged children mentioned that she had found a part-time position with a consulting firm. She'd been working part-time at the old company for about a year, so I asked her if she'd be willing to get together for lunch or a playdate and talk about what working part-time was really like.

It turned out the consulting firm was looking for more people, and she offered to forward my resume. I landed an interview and a job! It's a small firm, with 3 full-time people and 3 part-time. Having the part-time people helps them balance out the workload. No benefits -- I'm technically a subcontractor.

I've been working 10-15 hr/wk, from home on my laptop while my son naps, and go in to the office one evening a week for a group meeting. I've just been given the go-ahead to increase to 20-25 hr/wk, and am interviewing for someone to babysit 2 hr/day while I work upstairs.

In 2 months I've made $5k. I set aside 40% for taxes and FICA, and the rest will give a nice boost to our travel fund. More importantly, I'm keeping my resume and skills fresh, which will help preserve my future earning potential. I can see this job evolving over the years so that I can be home when my son gets home from school in the afternoons.

My last blog entry about my career was a long one -- I need to learn to edit my writing to a more blog-friendly length! Anyway, one of the things I have been surfing a lot lately are a few sites where people are trying to get a mother's movement started. It's trying to take up where the last wave of feminism left off -- changing society to better support the needs of all mothers, whether SAHM or working part or full time, and their children.

The site

www.momsrising.org has a lot of interesting content and some good blogs, but the forum is non-functional which leaves me to wonder whether there's really much momentum there yet.

Sometimes I think about getting involved in the movement, if there really is one. It would be pretty easy to start a "playgroup" to find other women in my city who are interested in becoming active (there is a great organization here that facilitates the formation of playgroups that I could tap into) but I don't know that I am really up for being the leader. If I'm able to start a consulting career like I hope then I won't have as much free time to devote to being politically active. I've also considered starting a playgroup for scientists and engineers to network. We've got 2 scientists in my current playgroup who tried to return work after their babies were born but quit because their managers were just too unaccomodating.

So is anyone here involved in the mother's movement? What organization(s) or web forums would you recommend that I check out?

Lately I've been thinking a lot about my career, and what to do next.

The first 12 years of my career, I worked as an embedded software engineer in small-ish companines (50-150 people). ("Embedded" in my case means programming in non-Windows, non-PC applications. Over the years, I've worked on the specialized kinds of equipment that provide DSL, cable-phones, and voice-over-IP. More recently, I've had experience with video from UAV aircraft and a consumer video capture and playback product.) I've always gravitated toward the non-technical aspects of getting a product designed and built -- being a team leader, creating and tracking schedules, prioritizing bugs, reporting status to upper management, interviewing for open positions and getting new people up to speed, etc. I'm also really good at systems-level design, where you understand the product as a whole, and you define how to break it into smaller pieces that individuals will work on. To be honest I'm bored with the mechanics of writing and debugging programs and if I never had to write another line of code I wouldn't mind a bit.

I've been promoted to first-level manager twice -- the first time I quit after six months and took a non-management job in another company. I was frustrated that after finally becoming a manager I wasn't given any real power to improve the way we developed products, and I had also come to the conclusion that the marketing and sales groups weren't working and the CEO wasn't going to be able to fix them. That was a big mistake -- I should've gotten more time under my belt and then looked for a management job at another company. The second time, four years later, a management job landed in my lap via a headhunter. I didn't officially have the manager title, but the actual work was a combination of system architect and first-level software manager. It came pretty close to being my dream job. Three weeks after starting, I got pregnant. I had to laugh at the timing -- we had a very difficult time getting pregnant, and while surgery to fix the root cause had been done, we were told there was only a 50% success rate of becoming pregnant on our own within 18 months. Mentally, I was expecting to spend another year doing infertility treatments and then a couple of years trying to adopt.

I had nine months to decide what to do once the baby came. The choices I saw open to me were: 1) juggle 50-hour to 60-hour weeks and a newborn in daycare, 2) negotiate a part-time position but go back to being a non-management software engineer (basically doing coding and debugging), 3) quit and become a SAHM. I asked my director if there were any way he would agree to my being a part-time manager, and he said no. I suppose I could've looked harder for someone to join me in a job-share, but frankly I didn't know where to find a partner, and it would be a tough sell given that I was so new to the company.

Choice #1, while best for my career, basically sucked. I didn't want the double-dose of stress associated with an intense project and a new baby. I wasn't keen on full-time day care (although I don't have a problem with part-time daycare), and wanted to have enough time and energy to enjoy my baby.

Choice #2 sounds like a good compromise in theory -- keep your skills up but with less stress. If I wasn't so sick of programming itself I might've gone this route. However, in the past I've observed that the part timers get the bottom of the barrel in terms of assignments. Engineering companies tend to push and push their salaried engineers for more and more hours, so the part-timer is the one who ends up working 40 hours instead of 60. It seems to be hard for many managers to divy up projects in a way that makes sense for using a part-time person, and my husband reports that he often hears people joke that, "there's no such thing as a part-time engineer." It's ironic, because every time I tell someone I'm a software engineer, they immediately say how great that I'll be able to do that from home, but in reality it's difficult to find an employer who is willing to let you work that way. Generally part-time work is mainly available by working full-time, becoming very valued, handing in your resignation, and then being persuaded to stay on part-time by a manager who doesn't want to let you go. You can't go on monster.com and find a job listing that specifies 20 hours per week from home!

So I chose door #3 and quit. I've been at home for 22 months now. I've really enjoyed the time with my son, hanging out with the other moms at playgroup, going on mom hikes with our baby backpacks and jogging strollers, but I'm starting to get restless. I find myself spending too much time surfing the web during naptime, pulling weeds while my son plays outside, and doing more cleaning and organizing than is really necessary when he plays inside. (I do play with him part of the time as well, but I believe it's important for children to be able to amuse themselves instead of being dependent on Mom for entertainment.) I'm also very aware of the reality that every year that I stay home makes it much more difficult for me to get rehired as a software engineer, and makes my future re-starting salary lower and lower. If I'm out more than 2-3 years, I will have to spend thousands of dollars taking courses for technology certifications or a masters degree to convince hiring managers that I'm serious about working and my skills are fresh.

So I've decided the time has come for me to attempt to create a part-time consulting career for myself. Here's my dream: start by taking on small projects that I can do at home, at a level of 10-15 hours per week. (I may have to increase this to 20 hours in order to get work.) I'll work when DS is napping, and probably also hire a babysitter to come to our house for 1-2 hours a day. My mom lives nearby and is available to babysit for the odd morning or afternoon that I need to go to an in-person meeting, but babysitting every day would be a bit too much to ask of her. Do this for anywhere from 9 to 18 months, until baby #2 comes along or DS is ready for preschool. (It's not too surprising that we're having difficulties again.) Quit working, and enjoy baby #2 full-time for 12-18 months. Resume consulting at 10-15 hours until #2 is in preschool, then increase to 20-25 hours. Once both kids are in elementary school, increase to 30-35 hours from home, so that I am home and free when they get home from school.

As for the content of my work, I'd dearly love to be able to use my system-level skills. The reality is that I will need to start with whatever programming work I can get, and as I make a name for myself I hope to be able to steer toward work that is more and more interesting.

So far, I have a lead on some work on equipment that is used for scientific research -- a friend was kind enough to post my resume at the academic institute where he works. I've talked with the manager of the project twice -- he said my embedded experience was hard to find, and didn't reject my 10-15 hour level out of hand, so I'm hopeful something will come of it. He said it will be at least another couple of weeks before they start planning the next project, so it may be awhile before I know for sure.

In the meantime, I need to start contacting old coworkers to let them know I'm available for contract work. I need to work on my sales pitch and on defining the types of services I can provide at the 10-15 hour level. I may also take some online classes to add marketable skills to my resume, and to test-drive the logistics of working from home.

Wish me luck!

Just got the bill from my ER visit. I was very curious how high it would be since I had both a cat scan and an ultrasound. Here's the breakdown:

CT scan: 4,199
urgent care: 780 (I'm guessing this is the ER doctor's fee)
imaging services: 1,302 (ultrasound)
laboratory: 580 (bloodwork)
pharmacy: 0.26
supplies/devices: 85
treatment/observation room: 60
Total: 6,934.26
Insurance payments: -3,368.89
Copay: $10
Patient responsiblity: $690.91

My health plan says I have to pay 10% of any emergency room visit or hospitalization -- very interesting to find out that this is 10% of the bill the hospital issues rather than 10% of the amount the insurance company has negotiated with the hospital. Looks like the insurance company has negotiated about a 50% discount.

Thank goodness I have insurance -- without it this would be a very major blow. Or what if I had a high-deductible plan with an HSA? This one visit could easily wipe out any savings I had built up. I'm trying to picture myself saying to the ER doctor, "A CT scan is really expensive, do we really have to check for appendicitis? Let's just do an ultrasound first to see if something else is causing the pain."