Evaluating the Cost of Working

I started my firm in 2009 as a side business and didn’t take it “full time” until August 2011.

I had been working full-time at a third-party administrator of retirement plans while preparing tax returns on the side at night and on weekends during tax season.

But my heart was in taxes. I know that sounds weird, but it’s true. And, I’ve always been the independent sort, so I was chafing at the bit to take my side business full-time.

Unfortunately, it seemed impossible to do financially. I was working full-time in West Des Moines (about 30 miles away from my house, one-way) and it was decent, stable employment. It seemed crazy to think I could just quit that job to prepare tax returns.

That’s when my wife and I started evaluating the cost of me commuting to work every day.

The Cost of Commuting

My wife was due to give birth to our second child in early August of 2011. In the spring of 2011, we started looking at our financial situation and how much it was going to cost to send two kids to daycare.

The analysis was eye-opening.

Sending two young kids to daycare was going to cost more than $13,000/year. That was more than half of my after-tax take-home pay from my day job.

We started analyzing the following costs:

  • Sending two kids to daycare full-time

  • The monthly payment on my car

  • Seemingly incessant stops at the gas station to fill up my car

  • Wear and tear on the car

  • The intangible cost of my time, spending nearly 6 hours a week driving in a car to and from my day job

  • Income taxes and FICA taxes on my wages

What we found was, the difference between me staying home with the kids (thus eliminating all of the above costs) and me continuing to work was: $200/month.

I could stay home with the kids, contribute $2,400 a year to our family’s bottom line from my side business, and we’d be in the exact same financial situation as we would be in if I continued to work at my day job.

It was a simple decision.

I quit my day job, and have been part accountant, part stay-at-home dad for the last two years.

Not for Everyone

I was shocked when we did the financial analysis. I didn’t expect the numbers to turn out the way they did. I had no idea how much it was costing for me to work. I’m certain that some families are losing money by having both spouses commute to jobs.

But quitting to stay home with kids is not for everyone. Nor is quitting to start a business. And certainly doing both is only for a few hardy souls.

It’s not easy. Running after two kids (now ages 5 and 2) is hard enough. Add in the fact that I have a growing business to manage (I have branched out of “just” preparing tax returns to now offering public accounting services) and it’s extra challenging.

When clients call during the day, they’ll often hear kids running around in the background.

I get up early, stay up late and use weekends to get work done in peace and quiet.

I’m fortunate that my wife has always made more money than me, and she’s always brought home the health insurance. Otherwise, our experiment into me staying home with kids and building a business would never have worked.

It was two years ago today — August 26, 2011 — that I quit my day job, and while it’s been challenging, I certainly wouldn’t trade the way things are now for the way things were.

I’ll be writing more in the months to come about my experiences building a business from scratch.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”

7 Responses to “Evaluating the Cost of Working”

  1. Dave Fazio EA August 26, 2013 at 6:49 am #

    It seems “great minds” think alike Jason. My wife reminded me last weekend that it was 10 years ago on August 15, 2003 that I left my full-time job as a Controller of a small manufacturing firm, pulled the 2 kids out of daycare (5 and 6 at the time) and turned my nights/weekend tax service into full-time and serving as the primary caregiver, cook and cleaner.

    Health insurance has always been a huge consideration. Even though my business has expanded enough to support the whole family now (my wife is an Accountant too), a decent family plan in MA is easily $24,000. That’s tough to swallow when she pays about $5,000 in premiums through her employer’s plan.

    • Jason Dinesen August 26, 2013 at 8:15 am #

      Dave – great minds do think alike! You are right about the health insurance. I am blessed to have a wife who has a stable job with great benefits.

  2. The Finance Writer August 28, 2013 at 3:57 pm #

    Three factors were in your favor, Jason.
    1. You have excellent analytical skills.
    2. Your wife is a saint.
    3. You sharpened your tax skills by passing the Enrolled Agent exam.

    • Jason Dinesen August 28, 2013 at 4:14 pm #

      I do love crunching numbers, that’s for sure! And yes, my wife is a saint. A saint who has a job with an excellent health insurance package!

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