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How bad is bad?
So backstory: DH is currently finishing his residency and will continue on to fellowship, I am at the last year of my PhD. While I do not have any student loans (I managed to get a scholarship), DH has huge medschool loans. On top of that, he has under 20K of CC debt (long story, but just to point out is was 75% from family/medical emergencies and 25% from overspending during medschool). I, on the other hand, have about 3K of CC debt from emergencies, etc. We also have two car loans. We are not living paycheck-to-paycheck (by this I mean we do not spend more than we make and are not making any more debt) but we are however only making a little more than the minimum of CC payment each month. And very little into savings. This should change by a lot when he gets paid more in fellowship (july) and when I get a bit more by 2012.
Since hanging out on the Nest and mainly the Money Matters board. I have gotten the impression that technically based on MM standards we cannot have a baby until CC is paid off, we have a house and 6 months of living expenses as an E-fund. I know that situation is ideal but how bad is bad? We were planning on TTC 2 yrs from now. I only started feeling guilty about this from reading off other people's posts. We may or may not pay off all CC debt by the time we have a baby (I would prioritize saving first and CC 2nd). But I am almost positive, we will not have 6 months of living expenses (in savings) AND pay off CC debt at the same time in 2 years! I am turning 32 this year and really do not want to wait toooo long. Am I wrong to feel bad about our situation and bring a baby into a world of debt? Sometimes I can't help blaming myself for getting a Phd instead of going out early into the real word and making money! I have to post-doc for 2-3 more years and get paid just a bit more than my grad scholarship. Funny, I am married a doctor and I will soon have a PhD, I think we are going to be poor for the next 5 years!
Can we make it?
Re: How bad is bad?
I have a feeling that with 6 months of living expenses saved, you likely are in a lot better shape than many other people.
We are TTC and planning to buy a house very soon, so we'll be bringing a baby into a boat-load of debt. I don't think that will make us bad parents though!
We live in Canada, so we don't have to worry about any medical expenses, but keep in mind that you don't have to have the best of everything for baby. There are a lot of really expensive and really unnecessary baby items on the market.
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TTC Since January 2011 - We have bad spermI completely agree with this statement. I think having a good savings and a plan to get out of the debt is what you need before you TTC. Especially since you will both be going into careers that will pay you more soon. Do what is going to be comfortable for you financially. Everyone's situation is different.
One thing to consider: there isn't ever the "perfect" time to have a baby. People have babies in "non-optimal circumstances" (by the definition on the Money Matters board) all the time.
In your shoes (from what you described), I'd want to do the following:
Finish PhD program
Pay down >50% of the CC debt
Have 3-4 months of emergency fund
There is NO reason you need to buy a house to have a baby. You'd probably want to be a bit conservative with the baby stuff you'd buy (i.e.: don't buy out every single item in Babies 'r Use - just buy the stuff you really need; 1 stroller will do instead of 2+ that some parents buy. Buy stuff like cribs from women whose infants are now toddlers so you don't have to pay full retail price), as this will help keep from accumulating more debt.
I'm 30, and I don't want to wait too much longer to have kids (I'd like to TTC within 2 years, and second one 2 years after that); I personally have more concerns about the risks later of having a "geriatric pregnancy" that I would of having all the financial ducks in a row that the MM board suggests.
I have lurked and actually posted quite a few times on MM and while I feel that some of what they said can be interpreted for each individual case, I also feel like they bring up valid points.
I agree, I think that have 6-months e-fund is spectucalar. However, depending what you need for 1-month, I think that starting in July, I would take 3-mo worth of money from your e-fund and use towards the highest interest rate CC debt.
But I do think it's important to consider all of the additional costs of an infant. Will you both be working? If so-consider child care costs, if not-consider how your finances will be affected by removing one income.
I know it also dependings on your cost of living, but I thought we'd be in good shape having an extra $1k per month after our bills and necessities, and basically after posting about our situation on MM, I feel like that's not nearly enough.
Better safe than sorry? (But at the same time, you're a different age so that's something to take into consideration)
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I may have not been clear but we have very little savings, not even close to a month of living expenses. Right now we are saving for a move in June (about 2 1/2 monsth worth of rent plus moving cost). However in July, we should have about $1,000 excess each month to pay towards debt and build savings. Granted no emergencies occur. This amount should increase by as much as $800 when I post-doc. Once the baby is here, for about 10-12 months most of that extra money goes to day care until DH is done with fellowship and the whole mortgage, big medschool loan repayment starts. But then we would be making more (a lot more I hope).
Thank you for the response. I agree that everyone is different. And having problems from pregnancy is in fact not worth waiting trying to get into an financially ideal situation.
So true!!!
My personal opinion (bear in mind I teach Economics, so I also read a LOT of budget things) is that provided you have a plan to pay for your debts, which it sounds like you do, and are able to pay the additional costs of having a child (ie day care) then you can TTC. As you said when you are looking to start both your incomes will increase.
DH and I have a good bit of credit card debt, I have 20K in student loans and we just bought a house...
DH wants a house before we TTC, I have baby fever NOW....I work a job that isnt giving me what I need but its breaking even with bills till I get the big kid masters job hopefully.
I have school loans that I just started paying (only masters and its 31,000ish) he ha leftover school loans and no idea what he wants to do with his life and a crapton of debt
Taking each day......and hoping between my bc and his medical issue we could be a statistic? UGH :P
AND you sound more ready than alot of people I know who have children, prepare as much as you want and feel you need to and relax and have fun
Getting fit for IVF!
OP- what are you thoughts now? Just curious?
I agree with what a lot of the girls are saying. If you have a do-able plan for your debts and an honest budget figured out that you can follow, then you can make it work.
I totally agree with Ashlee. I think sometimes we plan on things in the future but aren't practical about them until they happen and you have to just go with it.
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I think we will go through with the plan to TTC. Actually I was off on the count, we plan the baby to be here in 2 yrs + 2-3 months (or at least try to) so we will be TTC before 2 yrs. Overall, I think we will be okay financially, though not ideal. Our plan is to pay off the CC by at least 50% and have at least 3-5K in savings before the baby is here. We are not too worried about medical expenses as we both get pretty good coverage with his work. We may not have 6 months of emergency fund (no house since we will be moving after 3 yrs) but I think we won't starve or be in a bad situation to take care of a baby.
With my age, I really wanted to go through with it (I want one at end of my 33rd and another at 35/36ish). I guess I just needed the encouragement that we are not being irresponsible.