Since Kara was born, it's harder not to think about taking better care of our finances. Luke and I are doing OK so far; I've been depositing money into my company's 401(k) for the last three years (hooray for full vestment on company matches), so at least we've gotten started on retirement, and we finally have adequate life insurance, thus enabling us to buy a home, pay for Kara's education, and snag a hottie gold-digger in the event of the other's death instead of shacking up in a cardboard box on an Interstate exit ramp. We also paid off the Cobalt so that the only debt we owe is to dear old Sallie Mae and padded our savings account to cover my twelve-week maternity leave. An unexpected holiday bonus left us better off than we expected, and the majority of it still sits in the bank, earning a meager amount in interest, taunting us, practically begging us to hand it over to the nearest car dealer and finally put Luke's 1991 Chevy Lumina to rest.
And if we didn't have Kara, that's probably what we would do.
But now we are parents. Now we have more incentive to consider the long-term consequences of our decisions, and truth be told, we have a lot of financial ground to cover before we can invest in something as frivolous as a car.
Problem is, it's hard to know where to start.
The choices are numerous. We could save the money and put it towards a down payment on a house, except we're not sure if we want to lay down roots in Indianapolis just yet. We could funnel it into a Roth IRA for Luke, who still has no retirement account to speak of despite his ability to withdraw funds a good six years before me. We could begin a college savings plan for Kara, even though she'll have scholarships, loans, and work study at her disposal and the quality of our golden years will depend on what we had the good sense to sock away. We could add short-term disability to my life insurance policy so I can enjoy a lengthy PAID maternity leave with baby number two, but I still harbor wild dreams of becoming a stay-at-home mom before then and wonder if the added expense would be worth it. Then there's still the matter of creating our will, which doesn't affect our cash flow now but could if Luke and I both died tomorrow (the last thing I want is to see Kara's inheritance eaten up by court fees for years and years), and emergency cash fund? Ha! Where do you think the money for all this crap is coming from?
Each path is a worthy option. We just don't have the means to cover them all.
Right now, our gut's telling us to go for the Roth and take advantage of compounding interest while we're still young. Liken it to being in a plane crash and putting on your oxygen mask before tending to somebody else's--you're no good to anyone if you haven't taken care of yourself. Once we're on track with our retirement goals, we'll be in a better position to help our kids with school, weddings, down payments, and any other big-ticket items on their plates, though we have no plans to pay for any of those things in full. A couple of loans never hurt anyone, and while I don't want to see my children drown in six-figure debt, I also don't want to instill in them a lofty sense of entitlement held by the majority of our millenials these days. Most importantly, I want them to sleep easy as adults with the knowledge that their father and I worked hard to make sure they're not stuck with our Shady Pines membership.
It took some convincing, but Kara eventually came around.
I appreciate your reasoning, but all this money talk hurts my tiny fontanelle.
No Mustang for my sixteenth birthday? You bastards!
Who are you guys kidding? These chubby cheeks will have you eating crow all the way to the bank. I'll snag that car by kindergarten.
I love your money posts. They are always inspiring. It's so tempting to DO something with that extra money before it gets dwindled away at Olive Garden. We have our tax refund and our "economic stimulus" money coming and we, also, are trying to choose the most honorable avenue. But I need a new kitchen floor!
Good lord, but Kara is cute. And expressive. And she looks just like you! That must make Luke's days much more enjoyable.
Posted by: Erika | March 12, 2008 at 08:42 AM
That dimple on her right cheek just slays me. Too cute!
We're dealing with many of the same issues currently, and it is hard to decide. I told my husband I'd like him to contribute to an IRA, and the other stuff will fall into place eventually. Even though an apartment isn't our dream home, we have a roof over our heads for now and a retirement account will help go towards having a roof over our heads when we retire. It's tough though, because all of the other options are reasonable too. Good luck in making your decisions!
Posted by: Jessie | March 12, 2008 at 09:07 AM
I was nodding right through your post with you, and am so jealous of how on track you are. I won't even utter the words, If We Could Only Sell That Damn House. (I did.) Kevin and I decided to sock money away in a Roth this year, though I'm getting a little nervous on whether we'll be able to follow through with it now that we have a surprise baby coming, a surprise car to buy, and are still paying, surprise, two mortgages.
We've still got nine months left in the year, though, and that's a positive.
Posted by: Molly | March 12, 2008 at 09:08 AM
Oh wait -- also, I was laughing out loud with your picture commentary!! I love it!!
Posted by: Molly | March 12, 2008 at 09:09 AM
I know I'm the VERY LAST PERSON ON EARTH from whom anyone should take financial assvice, but we just opened an ING Direct Savings Account with Henry's money (kid's barely two and has more money than us!). Rather than earning a crappy interest rate at the back, it's earning around 3% in interest until we decide what to do with this cash.
I also love your money posts, they are so ORGANIZED! *sigh*
Posted by: Liz | March 12, 2008 at 09:24 AM
I'd love for you to do a financial makeover on me, but I'd be SO EMBARRASSED about what we have and make.
The only point I would like to make about Luke's car- is it still reliable? Reason I ask- DH and I just came to agreement- the person who has the baby gets the "good" car. We have a '94 Taurus and an '05 Mazda 6. (At least, we did... stupid drunk neighbor! see my site :( ) If, heaven forbid, something happens to the Lumina, what is your contingency plan? I ask because you are much better at this than I, and it's a situation we're facing as well.
Posted by: Professor Art Nerd | March 12, 2008 at 10:39 AM
Professor Art Nerd: I drive a 2005 Cobalt to work every day (aka the "good" car) because I'm not used to all the nuances of the Lumina and oftentimes Luke won't ever leave the house. If the Lumina craps out, we've talked about Luke driving me to work on the days he'd want the car. A pain in the ass, definitely, but the most affordable option right now.
However, to ensure Kara's safety in BOTH vehicles, we bought the Chicco Key Fit 30. According to the inspectors we met with, it's the only infant car seat to pass every crash test. Works for us!
Posted by: Frema | March 12, 2008 at 10:48 AM
I, too, love your money posts. But I love those photo captions even more. No mustang for my 16th birthday??
I vividly remember thinking how UNFAIR LIFE IS when all my friends got cars from their parents and I was stuck buying a crappy 12-year old Jetta with my hard-earned cash. But I really feel that it taught me to be financially responsible, and I'm in much better money shape than most of my friends now. There's no way I'm buying my future children a car. Sorry, kiddos! Unless I win the lottery. Then, maybe I'll share.
Posted by: Operation Pink Herring | March 12, 2008 at 10:55 AM
OMG The first smile picture! UGH- *grabs ovary*.
Our thinking around here is very similiar, I mean Mike is driving a 94 Saturn and ho-boy do we want to replace it but she's still running and until she kicks the bucket we are keeping it.
Since we already have a house we have gone with the savings account for Nate. My 401K stauts is pretty good so we are just letting it do its thing.
It is the ideal time for you guys to buy a house, if you were to make that decision. Not having a house to sell and the market's condition you could get something much better than you may think you can afford.
Posted by: Christina | March 12, 2008 at 10:56 AM
That dimple? To die for!! Oh my gosh! You're so screwed, you're totally buying her a car. and maybe a pony!
We did our will a couple years ago, and while I was pretty blah about the whole thing, once it was done? HUGE relief. I think you can buy software & do it yourself for a very reasonable cost. Although we did it the expensive, pay a lawyer way.
Posted by: Michelle Z | March 12, 2008 at 10:59 AM
Your blog reminds me of playboy, I want to say I come here to read the articles, but really, we all know I come just for the adorable pictures of the cutest haired little girl I've ever seen!
Posted by: misguided mommy | March 12, 2008 at 11:25 AM
Christina: I know! If only we were in a position to capitalize on the real estate market right now. But the last thing we want to do is buy something, score a job that can move us closer to our families (our ultimate goal), and lose all that money. Or worse yet, have to turn down the job because our house won't sell.
Pink Herring: My parents actually did buy me my first car when I was a sophomore in college: an Oldsmobile Cutlass that was already ten years old! I wouldn't mind helping my kids get a beater like that. But nothing brand-new or fancy.
Posted by: Frema | March 12, 2008 at 11:48 AM
Delurking to 1) say you have a very cute kiddo :) and 2) I recommend getting Dave Ramsey's 'Total Money Makeover' book. He's on the radio and has a bunch of books...which is why I gave my husband the 'look' when he came home with it....but it totally works and it gives you an idea where to start your saving and where to go from there. I highly recommend it....we were able to do some serious savings on some very sad salaries (without eating ramen). Hope it helps!
Posted by: Abby | March 12, 2008 at 11:54 AM
Real estate is always the way to go. In 2 years you will get your money back and not to mention the great write off at tax time. The market will be stronger in 2 years. My 2nd choice would be a roth ira. The roth will also be great way to save for Kata too.
p.s. what a cutie
Posted by: auntie betty | March 12, 2008 at 01:20 PM
You guys are so awesome (in all ways, but I was thinking financially). Most Americans are buried in debt. We are. I calculated yesterday that if we had no debt, we could EASILY live on my husband's $12/hour job. Yes, we'd be stuck in our crappy 750 sq. ft. apartment, but it would be possible. But no, we have (what feels like) billions of dollars of debt. Sigh. Your responsibility is inspiring. It is rare to find that in a person, but even more rare to find two married people who feel the same way!
Posted by: Katie | March 12, 2008 at 01:56 PM
I loved the picture commentary!!
I think that you and Luke are making very good decision where money is concerned. The fact that you contribute to your 401k is awesome and something that alot of people our age don't take advantage of.
Something you could do is not fully fund a Roth for Luke right now. Put some money in, and maybe take some and put it into some kind of cash account that is earning decent interest. That way, if something were to happen to Luke's car, you would have some saved. And, with the market being so volatile right now, interest rates may go up.
Posted by: Rachel | March 12, 2008 at 02:59 PM
Just like everyone else, I love your money posts. Sounds like you guys are on your way to being totally "set". And that, my friend, is a good feeling.
We save and sock away all that we can right now. While we don't have a lot of "cash", we have money in good places...like savings, and CDs, and (of course) real estate. We've hoping that with our third house (hold me!) one of us we'll be able to quit their job. It's a hard road now, but it will be good in the long run.
I know I've told you before, but we also put "$1 a day" into an account for Babboo, plus we double that amount on his birthday. It's a plan we came up with before he was born. We're not sure what the "restrictions" for using the money will be...college, travel, car, but he'll have to make some choices to "earn" it.
Recently we also started using the "Keep the Change" program at our bank in a separate "Disneyland account" for the kid, as well as putting all of our change into the account. We'll use that money to go to Disneyland as a family. It will take a while to get enough money-but we figure it's will be a good lesson for him as he gets older.
Anyway...keep these money posts coming.
Posted by: Isabel | March 12, 2008 at 04:48 PM
Very fine money thoughts. You have it very much together.
Posted by: daddy d | March 12, 2008 at 09:09 PM