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WWYD: Maternity leave $$ analysis

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  • WWYD: Maternity leave $$ analysis

    Hello! Long-time lurker here, hoping some of my colleagues are open to group chatting finance/longer maternity leave considerations. I'm going to borrow a few Boglehead tips because I'm thinking through both timeline and cash flow while setting up for work negotiations.

    Background:
    Full time mom doc, partner at home with #1, expecting #2 before end of year.
    5-10 years out from residency, mid-30's, low to mid COL area, net worth ballpark 600k, leans heavily tax-advantaged.
    Current salary $280-320k depending on bonuses. Quite large academic employment setting with more flex than a smaller private group would have. Fairly captive but some flexibility to pursue non-clinical side hustles.
    Stable emergency fund @ 6 months, have slowly been growing it from prior 3 month fund.
    Yearly tax-advantaged savings rate runs about 20% currently though has been higher when available (defined benefit, 457) . Always max out 401k, Roth, HSA; some solo 401k with spotty/low-yield side hustles. Several 529 contributions but have not superfunded.
    Yearly non-tax-advantaged savings rate more variable: usually 60k-80k/year but we are not 100% Mustachian, have bought 2 new cars (one necessary, the other... we probably could have pulled another 100k miles on the 200k Honda Civic but felt we were at the right place/time to buy the fancy SUV with cash) as well as land with intent to build. Have moved several times including cross-country, last job had unpaid maternity leave. Counting cars, moves, baby, & land, I would say we average a big/really big expense about every year right now.
    Loans: $10k left on a 36 month 0.9% car lease, $150k on a larger land purchase at about 4.8% interest with best refi option right now around 4.25%, $2-3k closing costs, saves $15k over the life of the loan & drops monthly loan payments by about $100/month. No credit card debt. Deferred plans to build given material cost!
    Monthly/yearly expenses run around 10k right now, overweighted toward rent (2k), car (1k), land (2k), with additional leaning toward very good, very healthy food & enough take-out to support sanity (for us, that is about 1x/week but often 2 meals per purchase).
    First maternity leave was about 3 months, totally unpaid, cost us over $100k including lost wages. I did not think that kid #1 was ready for me to go back to work until around 4.5-5 months, but the kid seems to have survived. Initial baby COVID risks seem to drop around 6 months, but that's a long time to be at home in US culture.
    Current time/cash flow analysis says I can follow OB team recommendations to drop clinical work at 37 weeks & fill in from banked/overtime hours; still have some banked hours for a little extra time; and afford to take 6 months non-clinical maternity leave. Calculations ignore emergency fund, possible bonus, and any potential side hustle income. I might go totally nuts, or 300% Mustachian, or build a really awesome side hustle in the time.

    Notes:
    I respect that there is world-wide variation in maternity leave & support, and that a lot of women in this country go back to work at 2 weeks post-partum without any pre-leave.
    We have a long-standing, ongoing conversation about big purchases & big purchase planning. Yep, we bought a new car with cash after living like a resident for only a few years. It was a good teamwork decision, and I don't regret that. I'd rather have bought the second CPO & with cash, but it wasn't the right time from a cash flow & relational perspective.
    Maternity leave costs a lot. A lot.

    Questions & Decision points:
    We're thinking that cash flow stands as priority #1 right now until we see how the year actually goes, hold off on aggressively paying down the car at 0.9% given that the land is a higher APR, still overall historically low, and protect our cash balance.
    Would you refi the land? The immediate cost/benefit analysis is not great in the short-term; it's a 15k savings in the long-term. We are thinking we will wait till fall or next spring & deal with cost/time when ready.
    Would you pay down the car loan? We gain a little if we compare the 0.9% APR to 0.5% savings rate, drop our current cash, and improve cash flow the rest of the year. OTOH, we would be paying down a low-interest loan vs the higher land loan, which decreases the psychological benefit of eliminating a loan.
    If you were aiming for a 6 month maternity leave with some interest in flexible return to clinical work options, how would you structure it & negotiate? The verbal departmental policy is that anybody can take as much unpaid leave as desired, but of course nobody really does. I'm thinking 6 weeks paid maternity leave initially. Then balance unpaid leave vs prn status (plan around any key non-clinical deadlines, budget, overtime remaining, flexibility to return to clinical work at 4-5 months, boredom, improved covid, more data re covid, etc).



  • #2
    Lots of info here but I'm not totally sure what your goals are. If you want to improve monthly cash flow, pay off the lease ( will you then own the car, or just not have to make payments for 10 months? I'm confused there) and refinance the land loan, assuming you will actually build on it someday.

    If you want to increase savings, stop contributing to the taxable and divert to your EF until baby comes.

    I don't know how your department is but I got a 12 week paid maternity leave and then came back 7 hours a week (0.25 fte) for like 9 months. They sorta pushed back on that and I said I would consider increasing my time after 6 months but ultimately did not and actually took longer to scale back to my usual 0.75 fte than I had planned. It was fine. I admit I still checked epic on my leave and called/emailed my patients back and only had a few that wanted to even see another provider while I was out, so I made it as easy as possible on my colleagues. And when I returned I did more work from home but only had 7 hours of patients scheduled each week. But I was at home the rest of the time and that trade off was worth it to me. So hopefully you've made your value known, that certainly makes the negotiating easier. Good luck!

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    • #3
      I'd refinance the land of you get to have a smaller payment each month for cash flow. Tricky. What portion of your maternity leave is paid in your current gig?

      Comment


      • #4
        I don’t understand paying off a .9% loan when cash flow is critical. They have loaned you $$ at only .9% and you cannot get that savings rate anywhere right now. The fact that you have the loan is immaterial - you have to work with what you have at this point. Does your partner have the ability to bring in any income or is s/he the SAHP?

        When do you plan to build on your land? Is it essentially an investment property right now?

        Skip the 529s for the immediate future.

        I would say to hoard cash, don’t pay down debt aggressively, live lean during the 6-mo maternity leave. Is there no family member who would jump at the chance to earn 3% on a loan (secured with the land) instead of the negligible earnings available in a MM/CD right now?

        Hard to be more specific w/o a plan that lays out your long-term goals, priorities, and resources. I am giving general recommendations; to be clear, I am not your financial planner.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Thank you all, that settles the car loan question! (it's a loan, not a lease) We had talked about eliminating the car loan during its last 6-12 months, but paying it down has never been superior to laddered CDs at >1%.

          Full pay maternity leave: 6 weeks. Anything else is unpaid.
          My partner is 100% SAHP but is developing some interest in re-entering part-time work during maternity leave.

          We will talk about reaching out to a family member. We asked the family member most likely to help when we secured the land, and had a rather disheartening response. If we did a refi to 4.25 + an extra partial down payment @ 3% family rate, that might improve the short-term and long-term costs enough to make it worthwhile. Thanks for that idea, Johanna.
          Yes, the land has turned into an investment property. We would still like to build, but may chuckle a little if we make major changes to our house design whenever the time is right to review & build.

          We are in the midst of revising our longer-term goals, and there is a much longer discussion there with variable relationship frustrations and growth. I would see a long maternity leave as a great opportunity to reset, live lean, diversify our economic base, and refocus priorities. Obviously one of our decisions is that we are willing to spend/lose income in ways that reflect our personal preferences and long-term goals, but may not be entirely "frugal" in the bigger picture analysis. We'll run into that all over again if/when we build a house!!!

          Comment


          • #6
            Congrats on the baby! Any chance of doing telemedicine for a bit? I have been home since March doing 100 percent telemedicine. My kids are older but if this had been available when they were babies it would have been great. It has been wonderful being home with them as they are doing school virtually at this point. Not sure if it is an option in your specialty. Just a thought.

            Comment


            • #7
              Thanks! My remote telemedicine options are fairly limited unless I change jobs/go prn. They would fall under my work non-compete. I might be able to get into telemedicine at work, but they run telemedicine out of the hospital/clinic instead of remotely.

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              • #8
                I second telemed job, growing field, you will like not going to clinic and flexibility with 2 little ones at home.
                Cant make all the money in the world and time with little ones at home. In 3rd trimester can apply for short term disability and stay home getting ready fir baby. As much as your are planning now and thinking of financial goals, all this will change once reality of raising 2 kids occurs. I say reducing time at work, even if this is lower income is worth it when you have more time at home (this goes for husband as well).

                btw veterans affairs now has 12 week paid maternity/paternity leave (but need to work there for at least 12months).

                Out of advanced countries only in America do we make it this hard for families to have kids (your employer can care less about you, and the previous one with no maternity leave cared even less).
                so dont worry about quitting current job and going telemed.

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                • #9
                  Reading this post kind of makes me cringe.

                  For some things in life, there is no price tag. You can't have it all.

                  Take a deep breath.

                  I can assure you that kid#2 will not be like kid#1.

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                  • #10
                    Originally posted by resident_1 View Post
                    I second telemed job, growing field, you will like not going to clinic and flexibility with 2 little ones at home.
                    Cant make all the money in the world and time with little ones at home. In 3rd trimester can apply for short term disability and stay home getting ready fir baby. As much as your are planning now and thinking of financial goals, all this will change once reality of raising 2 kids occurs. I say reducing time at work, even if this is lower income is worth it when you have more time at home (this goes for husband as well).

                    btw veterans affairs now has 12 week paid maternity/paternity leave (but need to work there for at least 12months).

                    Out of advanced countries only in America do we make it this hard for families to have kids (your employer can care less about you, and the previous one with no maternity leave cared even less).
                    so dont worry about quitting current job and going telemed.
                    Someday, I would like to return to the VA if it it isn't horrible due to staffing problems. Last time I was prn there, the 50% crew were working about 120% and hating life.

                    I am chewing on the telemedicine idea. The whole "quit & start a new career" thing feels quite big in the midst of a pandemic with overall decreased job security, lower overall volumes, etc. But then again, maybe we dig up the garden & transplant it / ourselves to my parent's for a major financial change. They would sure love that. 😊 Or maybe I just go part-time for a while after leave & see how things go.

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                    • #11
                      Originally posted by goatmom View Post
                      Congrats on the baby! Any chance of doing telemedicine for a bit? I have been home since March doing 100 percent telemedicine. My kids are older but if this had been available when they were babies it would have been great. It has been wonderful being home with them as they are doing school virtually at this point. Not sure if it is an option in your specialty. Just a thought.
                      Thanks Can I pm you? The forum message center isn't letting me send you a pm.

                      Comment


                      • #12
                        Took 5 weeks as a resident after an unplanned c/s. That was not good.
                        Took 10 weeks as an attending with 2 more weeks part time (c/s x 2). WAAAY better.

                        I advise all of my residents, friends, students, anyone who asks- do whatever you can to take the longer leave. It's time you'll never, ever get back and if you are breastfeeding it's a boon to be home for that long to establish.

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