Baby Talk

My husband and I were talking last night about the loss of income we’ll have to deal with if we have a baby.  There’s really no getting around this problem.  You either have to pay for childcare or cut back on work time.  I have friends who use free grandparent daycare, but that’s not available for us and we wouldn’t feel right about it even if it were.  Our parents have already done their work of child-rearing.  Now they should just get to enjoy their grandkids without having to be responsible for them on a regular basis. 

Neither of us wants to use daycare, so that’s not an option we’re even discussing.  Plus, it’s not as if daycare is free anyway.  Right now, my husband works full time at our insurance agency, and I work part time at the agency and part time at the library.  In total, we each work about 45 hours a week.  It’s comfortable for us, we enjoy our jobs, and our total annual income after business expenses is about $70,000.  We put about $1000/month into savings and retirement plans, and use the rest to pay our mortgage (including additional principal every month) and our day-to-day expenses.  Over the last few years, we’ve also been putting a lot of money towards debt-repayment from our business start-up expenses.  We had a total of about $40,000 in start-up expenses and debt that we incurred while we were making almost no money (a painful side-effect of getting into a commission-based industry).  The total debt it now down to $1000.  It’s on a zero-percent interest credit card and will be gone by the end of August.  We’ve slowed down on our debt repayment now that the only debt it at zero-percent interest, since it now makes more sense to put extra money towards our HELOC (8.35%) or our main mortgage (6%) or into our ING account (4.5%) or our IRAs instead of paying off a debt on which we pay no interest (actually we pay interest on the one purchase we’re required to make each month to keep the 0% offer – last month it was 78 cents).  But however you look at it, we will be debt free except for our mortgage by the end of the summer.  Since debt repayment has been a big chunk of our monthly expenses for the last few years, it stands to reason that our available cash flow will be higher once the debt is gone.  We have not changed our lifestyle much since we got most of the debt paid off.  We’re still almost as frugal as we were when we had $40,000 in debt hanging around our necks. 

Of all our options once we have a child, the one that makes most sense is for me to quit my job at the library.  Then we would be back to just having the insurance agency, and each of us would work part-time and care for the baby part-time.  We’ve gotten the agency to a level of efficiency that really doesn’t require two people working full-time.  We know that we might be pulling some late nights catching up on e-mail after the baby is asleep (and before the 2am feeding call), but we know that we can manage to keep the agency running smoothly if both of us are here full time.  If I were to keep my job at the library, it would leave several big chunks of time during the week when my husband would be home alone with the baby and the insurance agency.  The baby would have to be priority, and that would mean that the agency would be completely unstaffed at times.  At least if we’re both here full-time, there would always be someone in the office. 

This year, I’ll make about $20,000 at the library.  On the surface, it seems like a big hit for our finances to give that up, but it won’t be as bad as it seems.  I put 30% of my pay into a 457 account.  Once you take off that and all the other withholdings, I only go home with about $880/month.  We’ve been paying far more than that on debt repayment just about every month for the last three years.  So if you erase the debt and take $880/month away from our take-home pay, we still come out ahead.  Of course, I would no longer be getting $500/month stashed away in my 457 plan, which would just have to be one of the trade-offs for having a baby.  We would continue to fund our IRAs, and I would put myself on the substitute list at the library, which would bring in about $3000/year (nearly enough to fully fund my Roth!).  We’ll be using cloth diapers that we wash at home, breast-feeding, and getting most of our baby stuff second-hand (and babies really don’t need much stuff).  Our health insurance premiums will increase by about $70/month, but that should be outweighed by the tax break we get for having a child.  We’ll open a 529 plan, but we plan to put a max of $50/month into it, because we do not feel that it’s necessary or beneficial for parents to fully fund their children’s college education (that’s what summer jobs and scholarships are for).

We’re getting closer to feeling like we’re ready to add to our family.  We moved in together in the summer of 2001, and we’ve had plenty of time to work out any kinks in our relationship.  We’ve nearly paid off all our debt other than our mortgage.  We’re settled in a home we love, we have a business that we’ve nurtured into something really good, and we have a decent start on our retirement savings.  I’ll be 29 next month, and my husband is 31.  We’ve had lots of time to think about this.  We know that there will be bumps in the road.  But hey, we’re mountain bikers – we prefer bumps in the road.  We’ve got the financial parts figured out as much as we can.  Of course there are tons of things that could go wrong and make all of our planning moot.  But if all those factors were always taken into consideration, no one would ever have kids.  So eventually there comes a point when you just have to know that you’ve planned as much as you can.  We’re getting near to that point. 

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