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Want to have a baby, worried about $
Hi there! My husband and I got married last November. We bought a new home together about 14 months ago and we are emotionally ready to start a family together. Financially, I'm not so sure. I'll paint a picture of our finances, show you our budget and see what you guys think. We want to start trying to conceive in January 2014, only if we're financially ready.
I make $43K/year and my husband makes $45k. We have about $3,000 in credit card debt that will be paid off by December of this year. We have $2,500 in savings right now and have made a commitment to put at least $500 in savings each month no matter what. My husband also has 3 student loans that I can't remember the exact amount right now, but it's in the $50K ballpark.
While I'm pretty comfortable with our budget right now, what worries me is AFTER we have the baby. Since DH and I make about the same amount of money, one of us quitting our job to stay at home seems pretty devastating to our budget. Cutting our income in half seems impossible. I know daycare is also very expensive. Any advice? I've posted our August budget below:
My Income: $2569.72 (paydays 8/9 and 8/23)
DH Income: $2752.50 (paydays 7/31 and 8/15)
Total income in August: $5322.22
NECESSARY BILLS
Fitness Connection: $19.95 (due 1st )
My Dr?s Appt: $60.00 (due 1st)
DirecTv: $97.94 (due 2nd)
School Loans: $171.38 ($60 due 2nd, $66.85 due 9th, $44.53 due 12th)
Verizon: $209.11 (due 3rd)
Health Insurance: $148.70 (due 6th)
First Financial Credit Card: $250 (due 11th)
Toyota Camry: $310.00 ($155 due 12th, $155 due 26th)
Mortgage: $1,035.01 (due before the 15th)
Netflix: $8.53 (due 16th)
Alarm System: $40.98 (due 19th)
Duke Energy: $156.30 (due 20th)
PSNC Heat: $10.00 (due 22nd)
Discover: $250 (due 22nd)
Allstate Car Insurance: $73.90 (due 23rd)
Time Warner Cable: $49.24 (due 23rd)
Nissan Xterra: $190.00 (due 25th)
TOTAL NECESSARY BILLS: $3,081.04
Deposit Into Savings: $650.00 (Make transfer on 8/23/13)
Beach Trip Savings: $100 (Take out in cash on 8/23/13)
Anniversary Savings: $100 (Make transfer on 8/23/13)
CONTROLLABLE SPENDING: $1370
Gas: $450
Groceries: $350
Alcohol: $60
Dining Out: $150
Fun Spending: $100
Hair Cut: $20
Yard/Garage Work: $75
Draft Party: $100
Durham Bulls: $15
Running Gear: $20
Housewarming Gift: $15
Bridal Shower Gift: $15
Re: Want to have a baby, worried about $
The biggest glaring thing to me is that you have DirectTV, Verizon, TimeWarner Cable AND Netflix? If you are trying to cut down your budget to save, I would recommend reducing some if not all of these. If Verizon is just a cell phone bill, that is still really high for just two people.
Within all of the controllable spending, there is definitely room for improvement if you really want to get into savings mode. You could cut down on going out to eat, and you could probably cut down on groceries a bit.
The good news is that you definitely have quite a bit of wiggle room in your budget when you do have a child, but I would definitely recommend having more in savings and cutting down on all of your debt, starting with the credit cards.
Oh yeah, to clarify - Our Verizon bill is so high due to 3 cell phones, 2 personal, 1 work. We get $100 credit from DH's job each month for his work phone, which is included in his income. Time Warner is our wireless internet provider and we've tried cheaper providers, but were very unsatisfied with our internet connection. I agree that having both DirecTv and Netflix is overkill. However, we are in a 3 year contract with DirecTv - just started our 2nd year. I haven't looked into the cancellation fees, but it could be worth it!
Have you looked into daycare costs in your area yet? The ballpark for my city is ~40K/year for an infant. That would make you working pointless, but you can't afford to pay your bills on one income.
Do you have SAHM friends with small kids who could watch your kid too for less than a daycare center? Do you have retired parents who want to watch your babies for free? Is moving close to a set of parents an option (to get the daycare help)?
On paper you don't look like you could pay for a kid right now, but that's just a cursory glance.
I haven't looked into daycare costs. $40k is terrifying! My mom lives about 35 minutes away, is retired, and says she would be willing to babysit one day a week, so there's one day accounted for! I suppose I need to talk to my bosses as well. I'm a legal assistant and a lot of my work could be done outside of the office. Perhaps working a day or 2 a week from home could be an option.
Another variable to consider is your age. If you're young, then waiting until you feel more comfortable financially may make more sense. If you're a little older, the decision gets more difficult and it might make more sense to just get started. I've seen a lot of women I know wait a little too long, and have to go through a lot of heartache and great expense to have a child. Of course that's not the end of the world, just something to consider as you weigh your options.
I don't think there's ever a 100% convenient time to have a baby. There's always something that you could improve if you wait a little longer. I'm not totally thrilled with my situation either. We both have steady jobs and good incomes, but we live in a rent-controlled one bedroom apartment in a ridiculously expensive area where rents have doubled in the past 2 years, so we're kinda stuck there until the baby becomes a toddler. Home ownership is impossible here as you can't get a decent home for less than a million. But I knew that having children was something that I really wanted to do, and I really didn't want to wait too long and have to worry about my fertility, especially as I want more than one. So, we made the decision to just go for it, which works for us.
In the end you have to do what feels right for you, and whatever you decide, things have a way of working out. Everyone I know who has kids has said that the money part is hard, but you just find ways to adapt and somehow you find the money for the things that are important. I guess I'll find out if that's true in a few months when my baby arrives!Look into daycare costs. My LO goes to daycare 5 days a week and our total cost will be a little over $10k a year for his school. It really varies in every area.
Also, look into what each daycare's part time policy is. Some places only have a three or a five day option so it might not save you any money to have your mom watch the baby one day a week.
As far as working from home, I wouldn't even try to do that while the baby is home with me. You won't get anything done. Besides, some places require you to have daycare arrangements for your kids on the days that you work from home. So don't count that as a day were you won't need coverage.
I can tell you from experience though that you will find a way to get your child what he/she needs. There will never be a perfect financial time to have a baby. You will have to make some sacrifices - like your gym membership, your beach or anniversary fund, going out, running gear, etc. I do think that you would be able to handle it if you cut back on some unneccessary spending.
Thanks for all the advice ladies. I just looked into childcare costs in my area - it is about $15k/year, which seems like nothing compared to the $40k previously mentioned!
And we would certainly have our spending priorities changed around when it comes to our controllable spending. I'm sure running gear and baseball game funds will turn into diaper and wipes funds right away.
My parents always managed to live on one income when I was growing up and there is a lot of pressure on us to do it the same way. While I'd love to stay at home, it just doesn't seem to be an option for us quite yet.
And we are young - we're both 26, but we have both wanted to have children for SO long. It's kind of killing us even waiting this long.
Yeah, childcare for me when I paid the most was $175/week - $9,100/year. Now I'm paying $212 for 2 kids/week, totaling $11,050/year, tax deductible. I don't really have a lot of advise, but I got pregnant unexpectedly when I was 23 making $40k and DH was making $43k. We have made it work and gotten promotions over time, etc. It has been 3 years since then. We had no debt except for cars that we paid off in 2 years. Now we are debt free but the house. I am SURE you can make it work because you seem super organized and ready. Remember, once you are pregnant, you have 8-9 months to REALLY prepare and save.
Have you seen my monkey?
At the daycares close to me, the savings for 4 days a week vs 5 days was minimal, just because it's unlikely they'll get someone to fill that one spot one day a week. However, daycare's are cootie factories, and Abigail was sick all the time when she first started daycare. If your mom can help when baby is sick, that will help immensely with potential loss of income from you having to take time off.
Have you seen my monkey?
Yep, look into daycare costs. In our area, 3 years and over are $200/wk (and I know it's more expensive for younger kids but no idea what the rate was).
Are you stuck with Verizon? DH has T-Mobile and we pay about $70/mo for his, as soon as his contract is over we're going to try Straight Talk ($30/mo for 1000 minutes and 30MB data, 1000 messages or $45/mo for unlimited everything).
We just cancelled cable, only local channels for this family now.
We also don't have a car payment, try getting those down or gone (even if it means selling them for cheaper reliable cars). Would you be willing to get rid of a car completely (would save on the payment, maintenance, gas, and insurance)? We were a one car family until I was pg with my twins and we loved it. Only reason we're not a 1 car family now is DH's car is too small to safely fit 3 kids, and our van was a gift (yes, we've been very blessed).
Are you in a contract with your alarm company? I have to think that the biggest deterrent would be the sound as opposed to the monitoring (and a robber wouldn't know that you didn't have monitoring anyway).
Get those credit cards out of the way.
DH and I live on his income alone ($54k/year) and we have 3 kids. I'm not saying our decision is right for everyone, for us it's a higher priority for me to stay home than for us to go out. We don't go out (rarely) and we don't really have "fun money". This is not to add fuel the SAHM/WM fire, it's just what's best for OUR family. We both made the decision before we ever married that I would stay home. Until our twins were born we lived in a tiny 2BR 1BA 864 sqft house. We would've stayed there had we just had #2, and the kids would've shared a room, DS1's room was only 11x9 so not big enough for 3 kids. We moved further from the city to be able to afford a house that was better for our family size. Again, our priorities aren't better or worse than another family's, but you do what you have to do to make the things important to you possible (if sending our kids to private school, going out, taking family vacations was more important to us than me staying home then I'd work, those things are not really on our radar, we don't miss any of that).
I am in the same boat! I really want to start for kids, but I want to have been married for a bit longer, and have our finances in a better place. For us, daycare will be around $800 a month for 1 infant, so I know I will have to work. I've already let our parents know (who were both stay at home moms) that this is a different day in age, and I will not be able to stay at home, so you better not judge me unless you want to give me money to survive every month!
As for your budget, I'd look into getting rid of cable (unless the cancellation is crazy high). Or if you stay with cable, get rid of Netflix. Cut down on your monthly spending of going out for fun stuff, out to eat.. eat at home more to save on groceries. Do you need to be saving $200 a month for trips? Maybe you just put that to your credit card and save trips for another time when you can afford it.
You are young though, I'm going on 30 and DH is going on 32 so you don't have as much pressure at your age as you do mine! I know it's killing you to wait, but maybe wait another year until your debt is gone and you've plumped up your savings. Kids can be SO expensive- you never know if something will go wrong and you'll get crazy medical bills, just furnishing a nursery and buying everything is very expensive as well. So really think about it! Good luck!
From the sounds of it you live in NC, which is a fairly inexpensive place to live. Based on the child care expenses, I think that's a fair comment, plus knowing the cost of things around the country.
You should have at least a year's expenses in the bank before having your child. You already have a home so anything that goes wrong with it is YOUR expense. Same with cars. And stuff always goes wrong, LOL.
I had my first child at 31, second at 39. They were/are both healthy, now adults. I raised them alone until marrying in August 2011. I have had this home since 1994, paying the mortgage and all the expenses myself. I still do, because my husband has a home underwater, but that's another story, LOL.
However, I had a retired mother who lived 8 miles away and came to watch each of them for the first 2 years of their lives for free. This was her commitment to me and them. In hindsight, other than the gift of life she gave me, this was the greatest gift. When I did have to pay for daycare, it was manageable both times.
My opinion is that based on your expenses/budget now, if you made this decision in the next several months you'd have to return to work. Your net income is probably about 40-60% more than the cost of daycare. If you can work part time and reduce the cost of daycare you are also reducing your income.
You are REALLY young in the "child bearing" scope of things. Save your money. Personally, while having a first anniversary trip and things like that are nice, those are savings you could put toward a "baby fund". Because trust me, in the entire scope of your life you are going to have so many unknown expenses that you never saved up for, having the money is more important.
Good luck with your plans!