Wow, red flags all over the place with Family #1, especially from your other post with the transition needs and now finding out she is pregnant. Sadly, we do have to look out for ourselves and the family that wants 4 days/week, is not quite so needy and demanding and is not pregnant would be the logical choice for you. The families have to do what is best for their needs, but so do we!

As far as talking to the woman on the phone, just be honest and straightforward that you have been considering the two families and have made your choice now and it was a mistake to accept her deposit so you are returning it. It's your business decision and she may even be relieved.