Monday, July 28, 2008

Fuzzy Math

This week is a sad week. As I mentioned before, after much consideration, I have decided to end my business partnership with the New Yorker. On Wednesday we meet with the tax consultant to draw up the final papers. This decision was not made because of my relationship with the New Yorker, nor was it because the company was not doing well. Rather it came because of a disturbing letter, which brought a financial house of cards down on my head.

Shortly after giving birth, I received a letter from the Deutsche Rentenversicherungbund (the German state pension plan) congratulating me on having a baby, and oh by the way, during your maternity leave the state will pay for my monthly state pension taxes. I found this a little odd. In Germany the vast majority of individuals pay into the state pension fund via taxes and their employer. However, as a self-employed person I was told that I was exempt from this. (I bet you already know where this story is going . . .)

A few weeks later, the state sent me another letter informing that I had not paid into the system. However, they needed to audit whether or not I owed anything and would I please fill out the enclosed “survey” about my work experience in Germany as well as my income tax records. At this point I had been home with my baby for only a few weeks and was pretty much brain dead. The German and I attempted to get a hold of our tax consultant, but to no avail. We did the best we could and sent off the answers to the state.

A few months later we got the bad news. I owed over 6000 Euro in back pension taxes. It turns out that there are a certain class of self employed individuals that are not protected from the system; teachers are among them. The German and I immediately contacted our tax consultant. He admitted that he dropped the ball. Teachers slip through the cracks because of a law dating back to 1906 or something. 1906?!? Seriously, Germany still had a Kaiser then. Turns out that I could have avoided all of this if my company had employed a part time secretary, which our consultant also failed to tell us about.

Because of my new baby and the new realization that I have to pay more taxes, I began to look at the math of working. Let me give you an example.

Let’s say that I teach a training seminar from 8am to 3pm. This is 8 teaching hours, for which I might get about 160 Euro total.

Now let’s add up the costs.
Taxes: 32 Euro
Childcare: 45 Euro
Gas/Transportation: 5 Euro
Total costs: 82 Euro
Actual income earned: 78 Euro

When you consider that I would have to be away from the Dude for about 9 hours (not including the prep time for the class or grading papers), I would only be making about 8.67 Euro an hour. I had to ask myself, isn’t being away from the Dude worth more than 78 Euro?

Essentially, I am staying home now because it just does not add up to work full time. The only way to get around this problem it to get a job with a company or at a public school, where I get paid more and they pay part of my pension taxes for me.

I mentioned to a friend of mine, who is also a successful businessman, that I might look into jobs at companies. Although he was encouraging, he looked at me and asked, “But how will you be able to juggle everything; husband, child, house, job?” Companies might now want to hire a woman with a baby.

Then I got pissed. Is this a question a man would ever have to answer?

Part of me has been very depressed about this lately. I love the Dude more than words can say, but I have had to change my career twice in three years because of my other life choices (i.e. marriage, moving to Germany, having a baby). I take stock of my education (10 years, a PhD, at least $40,000 in tuition) and I wonder if it was all worth it. Did I really do all of that to become a Hausfrau?

When I expressed my disappointment to my MIL and asked her what my education got me, she said, “A house, a husband, a child!!” Yeah, I did not need to spend 10 years at university to have a baby. When I began my education, I had many dreams and aspirations. None of those hopes had anything to do with a husband and children. Am I supposed to just hang up these dreams because I had a baby? Where is my working life going to take me next?

After the Dude was born, I could not imagine working again. When I left for an English lesson I would call at least twice to see if he was okay. Now, when I get into the car, I put on my sunglasses and turn up the music and actually enjoy the time away; the time to be Claire BC (before Christopher). But now fuzzy math has got me in a corner, and I don’t know how to get out of it.

20 comments:

Maria said...

Oh lady. I feel you in more ways that I could ever write here, and I know we are not alone! Hugs!

Rositta said...

I'm actually shocked that this attitude still exists, truly. I know that during my early working life it was prevalent but I truly thought we'd put that to rest. I hope for your own sake you find a way out of this dilemma. I've just recently had a bad experience with the German autocrats; 14 months after my Mom's death, they want money back. I pretty much told them to stuff it but I guess if you live in Germany it's not so easy to do that...ciao

J.Hager said...

Claire, for as long as I’ve known you, which I guess actually only amounts to 4 years of high school, you’ve always done what you wanted and when you couldn’t, you found a way to do it anyway. Just like that year I was railroaded out of speech & debate, I couldn’t participate in tournaments as a member of the school, but I found a way to do it as an independent. Some people didn’t like it, but who cares? I didn’t and now no body gives a $hit. You were an independent. That Claire was going places after school! And you did! I’m sure you met a few obstacles along the way and I’m sure you plowed through them or at least went around them.

This 6000 Euro that you find yourself owing because of a poor tax consultant; I’m sure they’re not going to ask for it all up front, but can arrange a payment plan of sorts. Jeremy and Diane usually have to do that every year. NYC taxes suck! Anyway, the 6000 Euro is just paper, don’t give it anymore respect than that. The state wants it so bad and you don’t have it, they’ll work with you so that they CAN get it.

No one should ever give up on their dreams, especially because of family. Family is supposed to be the support structure for those dreams! You have a husband who loves you. He knows your dreams and will help you to quire them. You now have an adorable son. Your baby is apart of YOUR life. You take him along for the ride, that’s what strollers are for. You don’t stop YOUR life as though he were an anchor.

There’s a couple here who are both working actors. They also run their own theater company. They just had a baby recently, and they also just put up a stage adaptation of “Dog Day Afternoon” in which they both star in; Jeremy too by the way. This is no small feat. They love their baby very very much, but they don’t stop their lives and become “Leave it to Beaver”. They became Husband, Wife, and Baby who hold rehearsals in their apartment basement. Lol

You have a husband, a baby, and a house. (The house is just a shelter that your home fits in.) We’re taught through example that those are the things one should strive for to make their lives complete. People in Summerville get those things in their early to mid twenties! But then what? That’s it? I’m 27 years old and now I have to work a 9-5 job or be a house wife for the rest of my life? Baring any accidents or the occasional alien abduction that’s another 60 or so years! Shoot me now. What are you gonna stop? Of course not. You’re Claire and now you’ve got back up! (enter The German and The Dude)

This early-mid life crisis, I’m finding common in our generation, is just the latest obstacle that fell out of the sky landing in your way. What you have to do now, is figure out how to get through it, over it, under it, or around it to get to your dream. And you will, because you’re Claire. And Clair doesn’t give a $hit what her neighbor thinks. I know I don’t. :)

jen said...

i have a great tax man. he'll consult for you even though he's down here in hesse. seriously. get a new guy.

pyjamamel said...

I've just read your recent experience- and felt I just had to leave a comment - to share your outrage!

There are many things I adore about living in Germany, but the prevailing, state sanctioned attitude to mothers (or even woman of childbearing age!) in the workplace is not one of them.

The whole KKK expectation that exists here (Kirche, Kueche, kinder) never fails to astound me. The lack of flexible,part-time career options, (the questions that do get asked in the interviews), the lack of affordable childcare options,the widespread assumption that being a mother (& "good haus frau")should be enough, are almost laughable by most modern western standards. But they certainly aren't funny when you have to live with them.

What also amazes me is the number of educated woman I've met here who seem quite content to 'resign'from their career aspirations and take up the mantel of 'Uebermutter'. (This, I find a truly baffling phenomenom.)

I am, by the same token, not surprised by the reports that claim an expected 25% of young educated german woman will most likely never have children, choosing a career instead. (I was raised in NZ & Australia with an assumption that both were possible. Difficult yes, but possible!)

Obviously there are execptions here, and I do also know of quite a few German woman who do intend to/or have returned to the job market - but the costs (financial and social) here seem very high in comparison to most other developed nations.

Sorry for my rant here, (not the nicest way to drop by and say hello!) & I'm sure it is of no help to you at all:), but at least don't feel alone in your outrage!

wishing you all the best,

Mel

Dr. J said...

I must admit I'm slightly confused. Not so much by the extra tax (yep, been caught out by that kind of stuff myself) or the MIL attitude (which you do get here, especially from the older generations). I'm confused by your maths. Surely the 45€ for childcare should only be 22.50€, the other half coming from your husbands salary. Nor do I see reckoned in there anything for what you do get out of it - identity, sense of worth, enjoyment. Nor do I see anywhere where you've calculated in what you'll be doing once the early child age is over. I would have thought this to be a temporary stage, one that may not be so financially successful, but will one day be over. Why are you giving up your business for something (full-time childcare) that isn't permanent?

I must admit that I get upset that women calculate childcare etc costs only out of their own income. Shouldn't we be adding the two parents income together and dividing by two, rather than saying "Well I earn that much less so my job is worth that much less and I should just stay home".

Claire said...

Maria: Thanks for the hugs! You have been juggling both for awhile now and I can tell it is hard but I wish you all the best. Hugs back!

Rositta: Yeah, it is a little hard to tell them to shove it when you live hear. I picture it in my head all the time though! LOL!

Jen: Oh, we are looking for a new one alright! We even asked a lawyer if the tax consultant could be held responsible because he failed to tell us this. Unfortunately we cannot prove "harm."

Mel: The Germans talk a good game about women's rights sometimes, but the reality is much different, especially in the countryside where I live. Ironically, all the women in my mommy-and-me group were hoping that I find something as they want to work as well!

Dr. J: You are right about the cost of childcare being divided. However, my husband's income pays our fixed costs (i.e. my mortgage which is killing me) and other living expenses (i.e. food). After paying everything there is almost nothing left over so my paycheck has to cover childcare. You are right that personal fulfillment is a big bounus that should be added into the math. But like the "D / duty" in rational choice voting calculus, you have something like (personal fulfillment / guilt of leaving a child), that part of the equation is small. Geez, I am such a geeky ex-grad student! LOL!

John: My love! You make me sound like a superhero! Thanks for the encouragement. Should I tell you my secret dream: to write a novel. I actually have three outlined in my head. If I actually do it, your production company could make it into a move ;-)

Dr. J said...

I'm not being very good at being clear at the moment (I blame the heat). More than those points about fulfilment, I did actually want to address how most stay-at-home mums and their partners tend to view the combined income. If your husband earns, say 50K, then shouldn't it be reckoned out as you each earn 25K? If you work for 10K on top then you each earn 30K. Just because your job pays less it should not be considered less worthwhile, and while I understand (admittedly only intellectually right now) that leaving child vs. joy of work is a tough place to be emotionally it really IS a temporary situation. Surely you knew that when deciding to start a family. Daycare is expensive, but so is having to fit them the latest trends for school, so is sending them to Uni.. so are you going to calculate all of those costs just from your income and then decide not to work at all? Isn't a combined income of 60K (with my above example) better than an income of 50K and your frustration? Why are you really giving it up now? You were so gungho about it all through the pregnancy, I just don't understand why you're allowing yourself to be pidgeon-holed into this role when you seem to be angry at it.

Rabble Rouser said...

Oh Claire I’m really sorry that your accountant dropped the ball so thoroughly! Do you have any type of recourse? I know when my taxes get done if there is a glaring mistake made on their part that they assume liability. Any chance you got a similar promise?

My grandmother always told me growing up that you can have it all but probably not at the same time. It used to make me angry this notion that women have to choose between a family and a career but the older I get the more I see where she is coming from. It is certainly possible to do both but not without dealing with tons of societal induced guilt. And then I look at my aunt who works 12 hour days and has missed first steps, birthday parties and other milestones and I wonder if it is worth it. I think the bottom line is that every woman has to make the decision for herself and it doesn’t really matter what other people-even a well meaning mother-in-law, have to say about it.

And I have to second the notion that people our age seem to be in a weird sort of pre-midlife crisis. Maybe it is all because we have been educated so much that everything we do not related to that education can feel like a waste. I often think that the job I have now is not what I should be doing but financial realities make it hard to leave. In any case, I know that you will figure it out. You’re too smart not to!

Carol said...

Claire,

I'm 51 with an expensive master's degree from Stanford and a fabulous career, but you know what my best years were? The seven (VERY SHORT) years that I spent at home with my kids. There's no more rewarding, harder, or crappier paying job in the world and I wish I hadn't fretted so much about "what am I DOING?" at the time. I wish I'd just enjoyed it, knowing that I could always go back to work (and did), but I could never have my kids' childhoods back.

Love,

Carol

J.Hager said...

YAY! Exclusive rights to option Claire's books first for feature film adaptation! If your dream is to write 3 novels, then I think you're pretty much set. Once you get your debt taken care of, and a leash on the dude, so he can wander around outside in the front yard, you'll have the place to yourself to write. You have an easy dream! :) Oh and I think Carol is right too. You do have the rest of your life for writing. My mom even started on a book of her own while we were in high school.

PapaScott said...

The whole German attitude about women and work is one of the worst things about Germany. Half the talent in this country is going to waste! In my marriage, it was clear early one that my wife was the one with more talent and ambition and the better chance of career success. Thankfully that career was with an American company here, and after a year of maternity leave, they not just restored her position, they promoted her. The experience of motherhood and balancing her work and family life made her a better manager. And her work made her a better mother.

That put me in the position of calculating whether it was worth the bother to work. Between the costs of commuting, child care, and tax class 5, I barely came out ahead. In the end, it was important for me to have my career, even part-time, as something I had achieved on my own, and for our Christopher to have contact with other children at day-care instead spending the whole day at home with me. I of course had no social pressure to stay at home. No one was calling me a "Rabenvater" for choosing to work.

I doubt if German society is going to change in our lifetime. Maybe with a some creativity and a lot of luck you can find a way to fulfill yourself both professionally and as a mother here in Germany. I certainly hope that you can.

G in Berlin said...
This comment has been removed by the author.
G in Berlin said...

I don't understand a lot of the comments on this post.I find Germany to be extremely family, parent and woman friendly compared to the USA, even to NYS which at least has health care for under-18s. It has problems: racism, ageism, sexism, but at least the country is a humanist one and the tax code is family oriented to the extreme.
In NY, I paid 1200 for my older and could expect to pay 1500 for my baby (per month) when I went back to work when she was 3 mo. That was after 3 mo totally unpaid federally allowed maternity leave (that is, my large employer was not allowed to fire me for taking 3 months unpaid leave).
Here, my brother-in-law in NRW, takes 3 years, the first 14 months paid (I believe 60% salary to a generous max) to take care of his kids (it's more than 3, because they have 2) while his wife continues to work as she has better hours and benefits (home by 2 for lunch!). Meanwhile, they receive 154 euros per child and a bonus for 1 year of (I think 100 euros- you can look it up) for having 2 kids under 4. The maximum paid for kita (if you top the income charts) is 254 euros per month for a full 9 hour day. That includes oldest to youngest.

Btw, I have 2 Masters and a BS and I feel pretty happy doing what I want, whether working or not.

I am also an accountant, and by my book, you have been harmed: to the tune of the 6000 euro you needn't have paid if you had hired a 400 euro or less part time secretary. So, in the US, you would have a suit. I think you do here as well, and that's what his malpractice/ negligence/professional insurance is for.
In Berlin, every non-expat woman I know works. Most took off the three years federally allowed and are grateful for it. I would have been, in the States.
And whoever said that you need to save for University, etc., seems not to note: health insurance in Germany is practically free (the cost is negligible and tied to income with a cap), university, through the doctoral, medical, juris is practically free (what, 500 E after 5 years or so?), the pension plan is defined and state guaranteed, children are subsidized and childcare/schools are state subsidized and controlled/inspected.
The US has none of this, and my taxes were as high. the only annoyance here is that our 401k is not consideered a deductible expense because it is not impossible to withdraw from, as is a state pension plan.

I can spend a lot of time talking about the things that make me crazy here- and the casual racism tops thelist- but the freedom of mothers and the State's help to families, is just amazing.

Claire said...

Thanks for the comments! Seems I should talk family and politics more often!

Just to clarify things a bit:

The expensive part of working (i.e. the taxes) is because I am self-employed / freelancer. We are trying to get around that. I am most certainly not giving up. I am just frustrated that I have to start another job/career. Seriously, doing it every two/three years gets old after awhile.

I have not stopped working completely. I still teach English nights because I want to, regardless if it is "worth it." The German is very supportive of this.

Daycare in Berlin, Duesseldorf, Hamburg, etc. is not the same as in the countryside. It is not just the cost, it is the availability. There are two "Kita" here. They have up to a year waiting list.

My husband cannot take Elternzeit. 60% of his income would not pay our mortgage. We need 100% of his income to survive the month.

Dr. J said...

Claire, is your calculation in the original post including income tax? Because 32€ on 160€ earned is only 20% tax, which really is average for everyone, not just self-employed teachers. If you're tax splitting (which I imagine you are) then what looks bad on paper for you per hour actually works out really well as a couple per year (and goes back to my inital argument for calculating income as a family rather than an individual). Also, the transportation costs are tax-deductible (as is a home office).
I still don't logically "get" why you have thrown in this business based just on taxes.

Claire said...

No, that is not income tax. It is only Deutsche Rentenversicherung, which self-employed teachers are required to pay. If you know someone who is a teacher and they are not paying it, it is illegal. My calculations don't even include income taxes, nor other costs such as health insurance (I was insured with my husband) because I "make too much money."

Those additional costs, plus all of the other work that goes into a business (i.e. billing, bookkeeping, account aquisition, advertising, reqruiting teachers, visiting customers, organizing new classes, developing syllabuses) is not paid.

Furthermore, there are personal issues at stake; stuff that I don't go into on this blog because it involves other people and I want to respect their privacy.

I wouldn't "thrown" in the company just because of taxes. This has been an agonizing decision, and the fuzzy math is just a part of it.

G in Berlin said...

Claire- are you aware that whatever your income before the birth that you are also entitled to an elterngeld equivalent, which should bump your income at least a little? Also, I understand that you have waiting lists for kitas. Are you on them? Have you pled your case? Have you asked the government for help- whatever amt handles this- and talked about how you would lose your business without? How about your in-laws? My SAHD brother-in-law had my parent's in law helping him every day just because he could- most German families I know have a mom-in-law watching the kids part of the time (and, btw, most American families too- we were unfortunate). With all the horrible customer service I find in Germany, I find that the people in charge of kids are human beings and go well out of the way to help.

For instance, integration courses provide childcare where two women need it- have you checked into being able to teach them? I know you teach- I am not certain that's a possibility for you... etc.

I would also say: you are young, Stop worrying. Take some time and do what you want when you want. If you are torn, realize that you don't need to be. Unless you are partner/high career track you can live your life as you choose. And certainly I understand that your husband can't take 12 months off- mine couldn't. But I took 7 months, unpaid, when I earned more than 50% of our income and that income was necessary for our mtg- we had savings and dealt. Your conflict is making us write in because we think that it is caused by money and the reality is that it isn't:it's internal, which is fine and normal. And you need to understand: it's ok to want to stay home and be a mom. Not a WOHM, a SAHM. It's ok if you want to do it for a while, and it's ok if you want to do it forever.

Dr. J said...

Well that's understandable then - personal issues playing a role. I think I was rather upset that you had done it because I've seen other women really negate their own careers for childcare and not been happy about it, and it read to me as if you were blaming it all on taxes and a mother-unfriendly country.

If you'd like to put my response in context of where I am (which obviously heavily influences my opinion): I'm a PhD and am currently setting up my own business (not in my field of training). I'm paying taxes, doing bookkeeping etc etc, working and currently earn ~300€ a month (BEFORE costs). I'm doing this because I'm planning for the future to be better once out of this startup phase. Incidentally, because my husband is privately insured, we're hit an extra 294€ a month for my healthcare. So my business costs currently are a negative on our overall income, I don't even make it into the mindestlohn category. It's hard, it's depressing at times and I often feel like I'm banging my head against a wall.

Carrie said...

Claire-

I think the tax consultant really should share in that bill...something similar happened to my mother but her bill was $11k.

I really try to be understanding and I really try to remind myself that things are different in Germany. BUT, there are plenty of women who balance and juggle all things they want to do. Ie- motherhood, family, career, etc. Now I don't have the baby thing going on, so I am hesistant to say this and I really want you to remind me of this when I'm in your shoes...

You are not the the "happy stay at home mommy" type. You will always wonder why the hell you got your PhD "for this" and you will end up resenting those perks you have gotten out of your education. (And those perks are the husband and baby.) It really worries me when you talk about giving up things that are important to you because the MIL made some comment or it's the accepted custom in Germany. Do not give up "you" to make other people more comfortable. The German fell in love with the ball buster, do everything and more gal...if he wanted to have the typical German chic he would would have married one.

I think you and I are a lot alike in many ways- and I know it would kill me to have to give up my business. I totally understand that money thing, but I also know that you will come up with something that works out for you. If that means some PT work until the baby goes to school, then do it, but don't pull yourself out completely...too hard to go back and not worth the mental stress of "giving it up".

You know I am always there for you...even across an ocean.

ZLAM-

Carrie