An Ethical Dilemma – Choosing Foreclosure to be a SAHM

by Ryan Guina

When my wife and I found out we were expecting our first child, we had to make the decision millions of people face every year – should they be a stay at home mom, or a working mom? The linked article discusses our situation and how we chose to handle it. Since then, the article has received well over a 100 comments and questions from people who face the same major decision. There are comments from people of various backgrounds and situations. Recently, one comment deserved more attention than it would receive in the comments section of the site.

Should you be a SAHM if it means foreclosure?

The following comment outlines one woman’s desire to be a stay at home mom and the financial ramifications it could have on her family:

My husband and I have always valued the idea of one of us being home with our baby girl. I work from home and bring in about half of our income. Our problem is, after a year of keeping up my home business and taking care of my 15-month-old’s needs, I’m quickly becoming aware of the fact that I can’t do it all. We are currently processing the idea of my quitting my work for the next few years so I can fully focus on being a well-balanced stay at home mom. Because right now our lives are anything BUT balanced with me trying to juggle working at home while at the same time caring for a toddler’s needs.

The implications of my quitting work are far reaching though. Not only will I need to learn how to manage our household on a VERY tight budget (like I said, I bring in half our income right now), but we would also have to default on our mortgage and either do a foreclosure or short sale. Ethically speaking, I have always firmly believed in NOT waking away from this financial commitment. But at the same time, I just can’t keep up this unrealistic schedule I’m currently in. My family is suffering. I guess I’m looking for input and thoughts. My family’s health is more important than a stupid house, right? My credit is perfect and will be tanked because of this decision. I hate that thought. But being able to raise my daughter and not send her off to daycare is such a huge value of mine. Plus, if I send her to daycare I would essentially be working just to PAY for daycare, and that defeats the whole purpose. Is short-selling my home just totally wrong, since quitting my job is in fact a choice? Or is it the right choice because my family should come first?

The effects of foreclosure on your finances

This is not an easy situation to be in, but it is, as the reader mentioned, a choice and an ethical dilemma. Walking away from your mortgage is not a decision to take lightly. In addition to the ethical aspects of the situation, walking away from your mortgage will affect your credit score for a long time, making it more difficult to be approved for lines of credit in the future.

To top it off, the new FICO 8 Mortgage Score could make it more difficult for you to be approved for credit in the future because the FICO 8 credit score takes mortgage payments and related history into account.

What you can do to avoid foreclosure

Before quitting your job and giving up your house to foreclosure, try to take a few days or weeks to get some outside perspective on your situation. By this I mean consult with family, friends, a member of your church, a financial advisor, or someone else who can give you a different perspective.

Consider day care, even if it is only part time. Another option is to place your child in day care on a short term basis. Even one or two days a week could make a huge difference and help you more effectively run your home business. It’s hard to run your business while trying to devote your attention to your child and your company.

Streamline your business processes. Take a few hours to examine how your business works and try to find places where you can increase productivity and cut waste. The Pareto Principle, or 80/20 rule, can be applied to many situations, including your finances, career, and home business. Focus on the tasks and customers which generate the most revenue and find ways to reduce or eliminate those tasks and customers which don’t bring in a substantial amount of revenue (yes, sometimes it is worth ditching clients or customers). Scaling down your business to focus on only a few of your better clients could substantially reduce your time requirements while allowing you to maintain the majority of your income, a win-win situation.

Reorganize your household schedule. Have a long talk with your husband about what you both can do to make this situation more feasible. For example, can you work on your home business for a few hours in the evening while he watches your daughter? Can you split chores another way to give you more time for work? Can you have half an afternoon, or even a full day on the weekend to devote completely to business activities? Can either one of you work evenings while the other watches your daughter?

Get your financial house in order. Eliminate as many monthly bills as possible. Try to reduce your spending in as many ways as you can – I’m talking about getting extreme if you need to. Cut the cord and drop cable TV, sell a second car if you have one, look for new insurance carriers, sell things on Craigslist or Ebay, have a giant yard sale and get rid of everything you absolutely don’t need, drop subscriptions or any other recurring bills that you can. You can also consider consolidating your debt in order to reduce interest rates to make the monthly payments more affordable. The key is to reduce your fixed expenses so you can more easily get by with less money each month.

Finally, remember that you are not alone. Being a stay at home mom is tough – especially when you are trying to juggle a business. Try to find ways to get out and meet with other people, even if it means giving up a few work hours each week. The change of scenery and human interaction will re-energize you and help keep you excited to be a SAHM, and to continue with your home business.

Published or updated February 28, 2011.
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{ 6 comments… read them below or add one }

1 Dave

Been there … doing that. My wife and I have recently chosen “family should come first”, before the mortgage”. Both of us were raised with working parents and have always vowed to be there for our children (meaning at or near the home), especially when they are very young. It has been an emotional roller-coaster, full of big life-style changes (short sale and all), but in the end, we believe this is best for our family.


2 Ryan

Thanks for sharing your perspective, Dave. I can’t begin to place myself in your shoes, or in the shoes of the woman who wrote the comment that inspired this article. But I can relate to the belief that quality of life is more important than money. My wife and I experienced this when she gave up a much higher paying job so we could spend more time together, and eventually when we had our first child, she gave up that job as well so she could be a SAHM. The sacrifice was worth it for us.

The best advice I have for dealing with a planned decrease in income is to take it slowly and look at all possible scenarios before leaping. Then you just need to have faith in your decision and go from there.

Thanks again for sharing, and best of luck with this life change, and more importantly, best of luck with your little one. Babies are the greatest gift of all!


3 Melyssa

I was a stay at home mom for a little over a year.

After being with my son for 3 months after he was born, I returned to work. But my heart wasn’t there. Even my coworkers felt that I wasn’t ‘all there’ . After working for 6 weeks (so I didn’t have to repay any medical coverage during my maternity leave), I quit.

We cut down a lot of expenses. My hubby took on another job working an additional 32hrs a week. A total of 72hrs a week! He would only come home on the weekends, but he loved the fact that I was at home. During that time I tried some of those MLM ‘scams’, but they didn’t work for me. I’m not a recruiter. After working 2 jobs for 9 or so months, the hubby was drained. It wasn’t healthy for him as he was only sleeping 5hrs a night.

After being home with my son for a year I knew it was time for me to go back to work to spare my hubby. He was only 30, but the two jobs and lack of sleep aged him. We didn’t want to lose our home. Especially when rent was just as much as our mortgage. But now my son is in school, so a FT stay at home parent is no longer a concern of ours.


4 Ryan

Thanks for sharing your story, Melyssa. You and your husband made some huge sacrifices for your family, and I’m sure it wasn’t easy. I’m glad to hear things are looking up now!


5 Chris @ MyMoneyMess

Depending on where this mom lives, a short sale may not be all that unusual. The main thing would be to put the house up for sale and keep the mortgage current until it sells. In places like California where it seems like almost everyone is under water on their mortgages short sales happen for all kinds of reasons.

I’m sure that if she were offered exactly what she owed to sell her house, she would take it. However, if the house isn’t worth that much, she’s not likely to get that kind of offer.

My suggestion would be to put the house up for sale and cope with work until it sells. Then reduce or shut down the business.


6 Robin

Absolutely not coming at this question from a judgmental you-made-a-commitment-and-now-you’re-stuck-with-it position with respect to the mortgage. I don’t believe that at all. When it’s financially in your family’s best interest to default, I have no quarrel with that action. But that doesn’t seem to be the case here.

What I see is an emotional argument based on a brief moment in time. At 15 months, the child’s need for parental attention is high. But the picture improves at 24 months, is better yet at 36 months, and so on. With an established work-at-home business, this mother is well positioned to serve both her family’s values and financial best interests and ethics by toughing it out for a year or two. A difficult stretch is nothing in the grand scheme of things, and is a minor matter compared to the long-term consequences of a default.

Of course if the family plans to to add another child or two to the mix, the dynamic changes. But that choice wouldn’t seem to be consistent with the commenter’s values. If it’s family first, then that means meeting the emotional and financial needs of the family you already have.


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