Disclaimer: I have some non standard biases that come from a very atypical history. Both of my children started out life in an orphanage and I honestly, sincerely, firmly believe that living in the orphanage for their first 4-6 months did them no harm - none that I can detect, and maybe even a little good. (It was a lovely orphanage, as orphanages go.) Perhaps because he'd spent his first 6 months in a very crowded (but happy) environment, my older son's first day of daycare (age 9 months) was the happiest I'd ever seen him. I originally planned to stay home when we had two but I ended up working part time to keep them in daycare part time.

My children are now in middle school, oldest starts high school next year. Great kids, happy, responsible, and well adjusted; at least up to this point it is hard to imagine how they could be turning out better. Both are popular and high achieving in school. The things that I believe have been the most important influences are 1) we live in a town with a very good school system, 2) Montessori preschool is awesome, and 3) we live well within our means - small house and yard (maybe too small now), respectable savings, no financial stress.

This is certainly not to say that they might not be turning out equally well if I'd been an SAHM for a year or 3 when they were little. I'm an SAHM now - I have been for several years. But I think it is more important now. Toddlers are happier with more adults to love, but adolescents really need a watchful parent; they don't accept guidance and direction from anyone else.

Obviously I can't tell you what is best for you. It partly depends on how bad your current schools and neighborhood are, and how much room you have to cut back on spending. $50K of expenses on a $50-55K salary is cutting it much too close, in fact you're under water if that's pretax.