Safety nets are sooo overrated

June 13th marked two years of employment with my current company, and my service was rewarded with a handsome raise that I believed would steer Luke and I down the path to Easy Street when it came to keeping one of us at home with Freka after the conclusion of my maternity leave.

Our household has managed on my salary before, back when he first came to Indianapolis and was searching for full-time work, so I assumed it would be easy to do again, plus one, especially since I was bringing in more money. Also, we've always intended to pay off our Cobalt in full before the baby's arrival, padding our budget with an extra $330 a month to absorb food, diapers, and other essential infant needs.

On Monday night, we opened Microsoft Excel for the first time since April to access our spreadsheet template and updated it with the numbers we'll be dealing with come next spring. We accounted for the ninety-five-dollar rent increase, the need for two cell phones instead of one, the absence of the Cobalt payment (and Luke's salary, sob), and factored in my raise. Since my contract with Parents expires at the end of December and there's no guarantee of a renewal, that particular source of income is not part of our postpartum finances.

We designated four hundred dollars a month to be directly deposited in my HSA. We drastically reduced allocations for entertainment and dining out and eliminated the "Gifts" category entirely.

"With all the cuts we're making, I bet we can even afford to sign up at the Y again!" I said, a move we've been seriously considering for the last couple of weeks.

We held our breath and added the totals.

Fortunately, my gut instinct was right. We can afford for one of us to stay home.

Unfortunately, it required whittling down our savings contribution to ninety dollars a month. (Farewell, safety cushion. To know you was to love you.) And it provided tangible proof that, right now, in our current situation, stay-at-home motherhood is not in the cards for me.

The two of us stared and stared at the new financial life glaring at us from the harsh light of the computer screen, me not believing how greedily that spreadsheet had devoured our Cobalt money, Luke not saying a word. Finally we just went out for shakes, because apparently, we better slop 'em up while we can.

I know things aren't as bleak as they seem. I'm extremely thankful we can afford to sock away so much money into our HSA each month; that combined with my employer's modest contributions should prevent us from being blindsided by any spontaneous medical emergencies. That takes a lot of the pressure off our savings, and good thing, too, because there won't be much in it for quite a while.

Also, managing to stay in the black on one income for three people is no small feat. Having anything left over for savings at all when tons of couples entering parenthood are forced to embrace a permanent balance on their credit card puts us on the fast track to success in my eyes. And of course, we both love that we'll be able to have a parent look after our child during the daytime hours and avoid the stress that often accompanies the lives of families with two working parents.

However, just out of curiosity, I placed a call with a local daycare facility yesterday afternoon. It's part of a national chain and happens to be located across the street from the major road that leads to our apartment complex.

How much to enroll an infant? I wanted to know. And what will that figure entitle me to?

The answer: it would take $222 a week (A WEEK) for this place to watch my baby Monday through Friday, from the hours of six-thirty to six. That includes formula during the infant stage and baby food and cereal for later months. And, you know, the promise that someone will change Freka's diaper every couple of hours.

Holy shit is daycare expensive.

But we could do it. If Luke wasn't up for being a stay-at-home dad, we could afford to send Freka to daycare and still have a sizable amount left over for savings. If both of us worked, we could keep that place at the dinner table for our safety net, lavishing him with praise over filet mignon and crumpets or whatever.

It's a lot to think about.

For about a year now, whenever the topic of kids came up, we talked about keeping one of us (originally me) at home. And part of my reasoning was that the benefit of two incomes wouldn't outweigh the drawbacks associated with placing our offspring in somebody else's care. But now, with all the facts and figures before me, it kind of seems like it would. The expense of having a baby isn't automatically forcing my husband out of the work force. We have a choice.

And our choice still stands. I'll bring home the bacon, and Luke will stay home with Freka when the time comes. We are dedicated to giving our preferred family dynamic a try. But if he decides he'd like to go back to work sooner than later? Man, do I have a new appreciation for what daycare could enable us to do.

I'm nervous. I'm scared. I'm excited. I'm terrified.

But it's a small price to pay for motherhood.

On a totally unrelated-yet-not-unrelated-at-all note, any money-saving tricks and tips y'all have shoved up your sleeves would be much appreciated. That Y membership isn't going to renew itself.

In case you're not a long-time reader, it would help you to know we don't have cable, we pay off our Visa bill every month, and though we plan on purchasing a new (used) car for Luke before the end of the year, we'll be paying for that in full.

Comments

[Isabel]

Great post. I find it very interesting to read about how and why people come to the conclusions they do.

It will all work out and it will be awesome.

(You know what part kills me though? The part where you have to justify how you spend your money. I hate that I have that same feeling. Why do we feel we have to do that? Why does the internet make us feel that way? AHHH!!)

[Operation Pink Herring]

My money saving tip: don't get any pets. Or a VW. Both seem to suck money faster than I can earn it.

I love your money-related posts. I love reading about how other (sensible) people manage money. I feel like Joel and I live in a little DINK dream world sometimes. Although we are both born savers, we still spend a lot of money on unecessary fun things, like going out to dinner and going on vacations.

[Katie]

You guys are SO far ahead of many/most couples/parents, especially since you have no credit card debt. So give yourselves a pat on the back!

The value of having Luke be a SAHD cannot be underestimated. I will be taking a maximum of 6 weeks off after this baby comes. But when I go back to work, the baby will stay with Daddy. I am heartbroken that I'm not a SAHM, but the thought of leaving Baby with Daddy is SO much more palatable compared to the thought of sending Baby to daycare. My older two kids go to daycare, but they're not babies - it's totally different for me. I guess if the baby had to go to daycare, I would stomach it. But I am SO glad he'll be with Daddy instead.

Hmm, money saving tricks and tips? I don't know if I really have any. It seems that you and Luke are already on the same page with regards to how you spend your money. That is the best 'trick' out there. Regardless of what happens with your money, at least you (appear to) agree :-)

One thing that could add up quickly is eating out. I always bring a lunch to work. I have worked at this company for over a year, and have only had to go out once or twice because I didn't bring lunch. A can of tuna fish and crackers stashed in the desk could've even prevented those times! Since eating dinner out would be even more expensive, sure to plan meals in advance and get to be good friends with the Crock-Pot :-) I guess that Luke will be in charge of this.

[Lindsey]

I also love your money posts, but I'm so naive to the expenses associated with children, like the high cost just to give birth--like you talked about on your Parents site (see, I am a faithful reader). What I am always curious about though is what salary range you are talking about when you refer to your "bringin' home the bacon, post raise, two-spouse" salary. I'm not saying, tell me how much you make.
That's rude...and nosey...and I'm not trying to be nosey. LOL

My point is, I'm always wishing that I had a reference so that when I'm trying to compare your lifestyle with my own and figure out what I have to "look forward to," that I have some numerical reference. You are my financial planning idol, but I have no idea if your awesome salary is 40K or 100K, you know?

Maybe it's better that it's all ambiguous and perhaps you intentially leave it that way, but I thought I'd offer my constructive criticism, if you can even call it that. ;-)

And anyway, you know you rock.

[Frema]

Lindsey: You're right; I'm ambiguous on purpose because I'm not comfortable posting my salary online. Plus, it's all relative, anyway. We can live on my income as long as we stay in Indianapolis. If we were closer to Chicago, it wouldn't be enough to maintain our current lifestyle *and* provide for a baby.

I will say, though, if I were making a hundred grand a year, we'd have moved into a house instead of a two-bedroom apartment. :)

[Audrey]

They way you and Luke handle your money is what Tim and I aspire to. You're like our financial role models.

We are basically living on one income at the moment (although Tim's very part-time job does bring in enough to pay for [cheap, wal-mart] groceries every month), and it is not a very big income. We're doing well, though, in the grand scheme of things. Sure, money would be way less tight if we didn't need high-speed internet, 2 cell phones, and satellite tv. It would also be less tight if we didn't pay off our credit cards in full every month. But the fact that we can (just barely) afford all of that (even though we're not adding to our savings at all right now) on my little salary makes me positively giddy for this time next year, when Tim will be finished with school and be getting ready to start the new school year with his first teaching job. Because if we're doing as okay as we are now on one salary, we will be doing wonderfully on two salaries. Especially since Tim's starting salary will be almost double my current salary, which means our income will be tripled. I am really excited to re-build our savings and start putting a good chunk of a paycheck into savings each month.

[Marriage-101]

I read the comments hoping I would find some magic answers, but instead realized I'm basically the exact opposite of what you want to do: We own a house (high mortgage payment), we have TWO car payments, a (very large) dog, cable with high-speed Internet, a gym membership, a blockbuster subscription, pet insurance, car insurance, plus countless other expenses that go along with buying a house (furniture, appliances, remodling, decorating) and our family is quite huge so we end up spending a lot on gifts throughout the year. crap. I suck. Use me as an example of What Not to Do, like "What not to Wear" but with money. :)

[Marriage-101]

I should probably add that we DO have a credit card bill, so we are in no way able to survive on one income at this point. Once the cars are paid off, I think it would be doable, but that won't be for another 3 years. Look for me to have a baby around then. ;)

[Stephanie]

Okay, finally commenting even though I think you are the cutest thing and I read both blogs and am always nodding to your posts.

Husband and I wiped out our savings in Jan of this year. In a former job when we lived in Tennessee, I made shitloads of money. It was sales and we rented a house and had one vehicle payment, one student loan and no credit cards. The amount that we saved allowed us to pay entirely for a wedding ourselves and put 10% down on our house all within 6 months of each other.

Now, I work making good money for a 25 year old. 45K is good for the COL here(I don't care if people know, because no one really knows me!!!) but that is a little under half what I made in 2006. Yeah. But I changed career fields and am so so happy about that. The only stresser is that my husband works as a PhD student. That means 12k a year. Yeah. He also consults on the side for close to 400 a month. Seriously, that extra really helps. But we also rarely eat out, have not gone on vacation since our honeymoon, and carry no credit card debt.

We decided to buy since we are going to live here for at least 5 years during his PhD. Plus it is a great time to be a buyer.

We also decided that my husband should get his PhD now at 25 because financially it made sense. We can live on what we make together now while he goes to school and try to save for the eventual children and the fact that my car is a 97 with 148K miles on it. His car will be paid off in one year. We are still trying to put 200/month in savings which should add to our car/emergency fund. We are also trying to do as much as possible to our house so that when we possibly sell in 5 years, we make a big profit.

I guess I think about things this way. You learn to make do with what you have. My parents had little to nothing when we were growing up and I turned out okay. My husband had way less that I even did and he is a 25 year old PhD student getting paid to go to school and well on his way to being highly regarded in his field. Money doesn't make a family love each other. Being together does!

[Susan]

I'm sure you've thought of this but in case others are looking for suggestions....

Don't forget to consider the tax implications of having a little one - that's one extra exemption come tax time and there's the child tax credit so you may be able to withhold less during the year. Also, were you to go the route of daycare, the deductibility of that expense should be figured.

These aren't huge considerations but can definitely have an impact on the bottom line...

[Molly]

I have to say, you guys are light years ahead of where we were when I left the work force. I dare not share the debt we were in at the time, not to mention the lack of savings. Other than the fact that we must have been complete idiots, I can't explain how we had the audacity to think we'd just skim by like that. I'm just glad we did.

Having done this for five years now, we are finally into a good rythm and have learned to practice self-control. My money saving tips include coupon clipping and shopping clearance racks. I heart a good bargain. Also, always pay yourselves first. Decide on a bottom line for what amount of money can be the least that is added to your savings account in any given pay period and stick to it, no matter how small.

[Becca]

It sounds like you guys are doing great! It's wonderful to have two good options for Freka after maternity leave.

Some ways we have saved money (and these won't work for everyone, I realize) have been breastfeeding (formula is like $12 a can which amounts to nearly a dollar a bottle for our guy, or $6 a day), using cloth diapers (which is really only practical if you have your own washer and dryer), and making our own baby food. All of those things have been so much easier than I expected (once we got the hang of it).

We also have our little guy in two different church "Parents Day Out" programs and have created what amounts to part-time daycare. We are both working on our dissertations, so we have flexible schedules and we are only paying about $400 a month for 8:45-2:30 every day.

[Jana]

Random assvice. From what I have heard from HSA'ers (we don't participate, it's not sensible for us right now), if you don't use all the money, at the end of the HSA year, you lose it. So, be careful. Yay for getting cars paid off. We just paid off our second one in a year's time!

[Frema]

Jana: You're thinking of flexible spending accounts, which have stricter limitations and must be emptied at the end of the year. Health savings accounts roll over, and there's no danger of losing that money; I've had mine since 2006, and it works really well for us. Thanks for the concern, though!

[Erika]

#1 thing I hate the most about parenthood: you never know what the right decision is. So we do like John McCain says and make the best decision we can with the information we have and deal with the consequences (sorry, just put down Newsweek). You never know if having a kid is going to work out until you have one, you never know what a child-less life would be like, you never know when is a good time (if ever) for #2, etc. etc.

I'm glad you recognize that you guys are in a good situation. While we have some $ in savings from the sale of our house, over half of our combined LIFE SAVINGS went down the tubes during my 12 week unpaid maternity leave. I don't regret it but I miss that safety cushion (we only touch the savings account for major expenses like home improvement, and it never goes below a certain amount) and I know we can't afford to do that again for #2. We paid off all of our credit cards before Evan was born but we certainly started back up again afterwards. I don't think it's the worst thing in the world as long as you are aware of the status and consequences.

I am shocked that formula and cereal is included in the daycare. As an infant we paid $180/week for in-home daycare and we provided diapers and formula. I recognize that there are major regional differences, because around here a chain daycare would be more expensive. I wonder if breastfed babies get a discount? A big can of formula ran about $25 and lasted about a week or less...so at a minimum we spent $1500 on formula. OUCH.

[eva]

I just got a ton of helpful tips from reading your blog post and all the comments - thanks! For Brad and I, paying Canadian high income taxes means we don't have to specifically save for health care, and that I have a year off for maternity leave, most of which is at 85% of my salary which is great. We both have similar incomes and have a nice fat mortgage but no car payments, and we save towards retirement with every paycheque. Just a pesky balance on my line of credit. My advice: do NOT ever get sucked into the line of credit thing for ANY reason - it's lower interest than a credit card, but because there's no pressure to pay it off, you can ride it for years just making interest payments which really really REALLY adds up...
My other advice: use craigslist for as many baby things as possible. A lot of it isn't even used. My poor offspring will be clad in whatever used onesies I can find, and it just may mean pink or flowered items for it regardless of gender :) All in the interest of counting pennies...so we can keep eating out, because we just aren't that into cooking. And we're selfish that way. Thanks again!

[Angela]

I am so jealous of your solid financial state! My husband and I have good jobs, but are in a huge amount of credit card debt (thanks to years of graduate school, a long distance relationship and a wedding) and have student loan payments each month that are more than our mortgage. Our son is almost 11 months old (time flies so fast, sob!) and we spend $700 a month on daycare for him- money that used to go towards our credit card bills. I am currently in a training program that will allow me to get a job that will double my salary in about a year, so right now we are just treading water and waiting for that day. We have $200 put into savings every month, but that goes to pay car insurance and other taxes/fees that come up every year. If it stays in the checking account, it disappears! We don't contribute to any retirement funds because the interest we would earn is less than the interest we pay on the credit cards, so I would rather use any extra money to pay those down. I fantasize about being able to pay off all of our debt- pretty sad, huh? I think you are doing a wonderful job, and thank yor for sharing your plans with us. Congrats on your daughter-to-be!

[Angela]

Sorry, that should have been "your plans" in my post above.

Also- we use a home daycare, and we have to provide diapers, wipes, formula or breastmilk, and baby food. Now that my son is eating table food, that is provided. We also get a "wish list" of craft items each month, and we try to buy a few things each time.

[PaintingChef]

Um? We switched to that internet phone? And it's like... cheaper?

I'm continually impressed by the dedication you and Luke put towards financial planning. "Budget" is one of those scary words that Patrick throws my way in a menacing tone when he walks in the closet and a shoe falls on his head again. Or when we're having people over for dinner and he makes the mistake of looking at the grocery receipt.

So I bow down to you. And aspire to one day have your level of discipline. As we have realized that we maybe don't have a child because on some level... we just aren't ready yet.

And also? Ask you to please never cross paths with Patrick? Because I've almost got him convinced on the concept of "investment shoes"...

[Carrisa]

Yeah it doesn't really seem like you need advice from us. More like we should be taking it from you.

So do you have an HSA because you don't have health insurance through your work? Cuz that's a lot of money each month for health. (says the woman who has no kids and therefore probably has no clue)

You are smart to have no cable. My cable bill is about $180 a month. Of course we have digital cable, internet, and home phone all through the cable company... but still.. that's a lot of money. Too bad I can't bear to part with it.

Netflix is a great thing to have. Low monthly fee and it can substitue the lack of entertainment outside the house.

Learning how to cook in bulk and freeze it could help save money. But I think it's still important to allow yourself two or three days a month to eat out whether it be lunch or dinner. Just so you don't feel totally deprived.

Oh and Luke could always get one of those at home jobs where he stuff envelopes all day. hehe.

[Frema]

Carrisa: I signed up for my HSA through my employer and pay a normal premium just like everyone else, and it's actually about seven hundred dollars a year cheaper than a PPO. The money we put into the actual account is savings for medical expenses. We've decided to set aside that much per month because with a baby, I know those well-baby visits and regular treatment for illnesses can really add up! Plus, you know, Luke and I still want to maintain our own health.

But we're not bound to that amount. If we find that we have enough in that account to hold us over for a while, we can make changes any time.

[TasterSpoon]

I can't think of anything to add that hasn't already been said. Like everyone, I'm thoroughly impressed with your self-discipline and responsibility, so I just wanted to add that.

That a HSA is cheaper than insurance really chaps me, but that's a separate issue. I consider myself reasonably comfortable, but I was one of those "millions of uninsured" in the two years I spent self-employed, because the premium numbers made my eyeballs pop out. But I wouldn't recommend it to anyone.

It sounds like Luke (aka Mr. Biscuits and Green Beans) is already quite the cook, so I second Carrissa's cook in bulk advice, as well as her don't deprive yourselves advice. Doing things from scratch (i.e. dry beans versus canned beans) is generally cheaper, but is a time trade-off if you can make it. But I don't know if that isn't just nickle-and-dimey stuff. Going vegetarian most days saves a bunch.

Craigs List, Freecycle, yup, yup. (I know a girl who got a baby grand piano through Freecycle.)

Shop for your cell phone plan really aggressively. Like someone said, use VOIP for at home, and if you can cut cell minutes way low, you can get away for like $30 a month.

[Frema]

TasterSpoon: HSA is insurance. It's just a high-deductible plan.

[Rachel]

I have to say that having a daycare that provides formula and baby food is very rare and, perhaps, a plus! Formula is very very expensive. I would guess that the amount of money you might not shell out for formula would be going to the daycare and you'd be even.