[BBKT]

Hi All,
I'm almost 28 and hubby (29) and I have been married almost 10 years. We've finally set a time to start trying to get pregnant and have our first child. Hubby is deployed right now and we've decided to start trying as soon as he gets back in June. My worry is that our finances won't be up to scratch enough to be able to afford my maternity leave (I'd like to take between 3-6 months off from work, or until hubby deploys again) and all the expenses associated with raising a child. We have friends who have a child and they are drowning in credit card debt. They are extremely impulsive and spend money like like crazy. I don't want to be like that when we have our baby!

I currently work at a restaurant with a meager income and absolutely no benefits. Luckily, my husband is in the military so all of our medical care is through the base hospital and there no costs to us for anything. No co-pays, no insurance payments. I also have life insurance ($100,000) through the military. I know I need more than that once we have a baby, and it's on my to-do list. I also buy individual accident (for me), cancer (me and hubby), and hospital indemnity (for me) insurance through AFLAC. It's an extra expense every month, but I like that even going to the hospital to have a baby counts as a claim, so I'll get a payout check when I do. Plus any children are covered automatically, so if we have a preemie or our baby needs to be hospitalized, AFLAC with cover us and we won't even have to pay the hospital costs because we're military. I really think I'm getting the better end of this deal.

We have about $6,800 of credit card debt at 0% that will be paid off by August. We've worked our butts off to pay down our credit card debt from about $30,000 three years ago. We were spending like freely and not thinking about all our different cards until I came across an episode of Suze's show on MSNBC in Aug 2008 (yes, right before the big collapse). I took a look at our finances as a result of that show and discovered that we were spending ourselves into a huge hole and headed for disaster. Suze's show really saved us and we agreed never to use our credit cards again. It was tough, but we made a lot of sacrifices. Hubby got a part time job and has deployed twice since then. His deployments, while emotionally difficult, have been a financial blessing because our expenses greatly dropped (I'm a bit of a shut in) and our income increase slightly (tax free zones and combat pay). We have $8,500 in savings (I know we need much more than that, and I'm working on it), plus about $1700 in long term CDs, and our next debt challenge after the last card will be my husband's car loan ($13,000 left on that). The big, huge debt hanging over our heads is our student loans. Between my husband's schooling and mine, plus a bad business investment in which we took out a private student loan, we are slowly paying down about $88,000 in student loans (combination of federal and private). Yikes, that's going to take us a while, but we've come to terms with it. We are paying extra to them each month and are set to have them all paid off at different times within the next 17 years. They are all between 3-4.5%.

We own two houses. Yes, two. We bought our first house, then couldn't sell it because the market was going downhill. So we bought another house when we had to PCS (move to another base) and we hired a property manager to rent out our first house. I really feel it was a GREAT DECISION on our part, because the rent almost covers the mortage payment, shy about $100 a month. We are in these houses for the long haul, so we see it as an investment. Our property manager is AMAZING and our renters are another military family. I do worry about them having to PCS, so I'd really like to stock more money in savings to cover the whole mortgage payment in case we have to go a long period of time without renters.

While hubby is deployed, I'm able to put about $1000 a month into savings. When he's home, I'm able to put about $500 a month in savings. We will also have our tax refund coming in March ($3500 or so) and hubby's extra combat pay when we returns ($2500). Since our credit card is at 0% (thank you balance transfer!), I'm paying to minimum on it now and putting all extra money into savings, with the intention of paying it off completely out of savings in August.

From my constant budget working, reworking, and analysis, I figure I'll need an income of $500 on my end each month I want to take of maternity leave. Hubby's income is pretty set and my income finishes covering all the expenses and extra month to savings and debt. So if I want to take a full 6 months, I'll need an extra $3000 in savings to use only for my leave. That's with me not working at all. I would definitely need to go back to work, so the next challenge would be what to do about daycare. That's where I see our true expense and I just don't know what we'll do. When Hubby is deployed, the military has a subsidy program that will give me a huge discount on child care while I'm working.

As for other expenses, I think I've got those covered for the first couple years. I plan on breastfeeding and making our own baby food (I have a Beaba Babycook and several babyfood cookbooks). I also plan on using cloth diapers and already have a stash of everything we'll need from birth to potty training, and I've even made my own custom diapers. I've been planning for a baby for the last five years, so I've been slowly buying baby items and furnature. I have just about everything we'll need except a travel system, which my parents will by us. Yes, I know people usually get much of what they need from baby showers, but I don't have many friends and my family is 2500 miles away. I'm counting on myself for this.

So what other expenses haven't I considered? What else should I think about and what should my financial goals be in the next few years? Should I continue to pay extra on the student loans, or should I take that extra money and put it towards savings for now? There's just so much to think about and I really want to be as prepared as possible!!!!

Thanks so much for this site. I've been searching everywhere for good parenting financial advice, but it's such a "taboo" topic!

[Katy]

Congratulations on the baby! My advice to you is to put as much into savings as you can right now. After the cost of daycare you might not be able to afford to go back to work (daycare costs are one of the reasons I don't work). And try your best not to get a case of "stroller envy", I am really bad with this; I want all the latest and greatest for my kids and it can get you into trouble! But best of luck to you and your husband, congratulations!!

[smartstep]

Congratulations on being active in preparations for having a baby! Just because you are thinking about it will help you tremendously in preparing for it. Kids are such a blessing and yes expensive! This is what I would recommend:

First, don't worry about how your friends are doing unless they are getting it right. Worry only about you and your hubby.

Second, I would put as much as you can into savings first before paying off more debt. This will build you an emergency fund and money to live on while you are at home. I would try to save the $3000 that you think you will need for expenses, plus maybe another $3000 for emergencies. Once you hit those numbers, start throwing everything you can to the debt. The less you have in monthly payments the easier it is to meet your obligations. Maybe you can do this by picking up another job while your husband is away. You may also want to consider looking for jobs that you do get more income and some benefits.

Third, I personally would cancel the accident and cancer insurance. The insurance you have through the military will cover you if you get hurt in an accident or get cancer. Extra insurance for specific problems for the most part is not necessary.

Finally, I would not worry about child care and the such until you have a baby. If you are not even trying till June and you actually manage to get pregnant the first time, you are still looking at over a year away from the baby even being born and close to two years before daycare is needed. A lot can happen between now and then, instead conserve your energy to focus on cleaning up your finances now.

Good Luck, If you have any questions, please feel free to drop me a note!
Andrea

[Susan Todd]

It sounds as though you've done a lot of planning in terms of having the baby and at least getting a lot of the basic financial necessities taken care of. My question to you is what happens if your husband gets back and gets PCS'ed? I'm assuming your current BAH is covering your mortgage for the moment and your other house payment is being covered (mostly) by your tenant. So that would mean that if you got PCS'ed you would have two mortgages plus wherever you end up living after the move to think about...

[vitavie]

Factoring finances into having a child can make you feel like a horrible person, but sometimes that's just the reality of life (and no matter how you slice it, kids are expensive!) I meet with several clients each year who specifically want an answer to this question. I don't tell them what to do, but instead just lay out for them what the impact a child will have on their finances. Even having done this for numerous clients, I'm still shocked by the cost of my own two children, but I of course wouldn't trade the parenting experience for anything!

One of our planners wrote this article on The Financial Implications of Having a Second Child. It's the most popular page on our Web site and I hope it's helpful for you, too.

Kristin Harad, CFP
VitaVie Financial Planning

[crybaby]

Do you see yourself having more then one child? Is that child going to be attending the local public school? Will you be able to be a SAHM if your child is born with special needs? What if you have something come up for yourself healthwise due to the pregnancy where you will need help caring for the child because you aren't back on your feet? I have 4 children, one was developmentally delayed, another born with orthopedic related birth defects not detected during pregnancy. My 4th has asthma and needs $$ meds not covered by our excellent insurance. Another child was gifted and started college at 16 yrs so not enough time for $$$ to be put away for his educational needs as the same time as paying for Speech and OT services. With one of my deliverys- ruptured uterus, tears, vaginal varicose veins, section that reopened and needs scar tisue removed etc.. it took 6 months for me to be able to regain my health in order to do the day to day tasks around the house, we paid for childcare & a housekeeper through that time as well as our grocery bill was much more due to needing packaged meals. I guess what I am trying to point out is that you are assuming you will have a child that will be able to use your local daycare & that you will be able to go back to work. Price special needs care and factor that. If you go on bedrest through your pregnancy as many women do, your plan won't work.

My answer would depend on what type of family lifestyle you are planning for. It's not just the financial impact, but the time involved needed to invest in your child if they are anything but average needs. We've relocated 5 times through having our family and the impact that has financially is much more with even one child. Not trying to be a downer but the truth is if you are only having one child or two, IME wait another 2/3 years to start that family.

[BBKT]

Great responses! Keep them coming!

Here's some more about our situation:

We won't be eligible for a PCS for 4 more years. If we do PCS then, we would try to rent our house out just like what we are doing with our first house. If we can't, we would sell it and the military has a Homeowners Assistance program to cover the balance of a mortgage if we have to sell it for less than what we owe.

I've been thinking about getting a second job. I don't want to find a new main job altogether, but I have been thinking about getting a second one just to help build our emergency fund faster. Have other people gotten second jobs to help? What have you all done?

I've been thinking about canceling the cancer insurance, but I really want to keep the accident insurance. This type of insurance does not pay doctors or hospitals for medical expenses. It literally pay ME (sends me a check) to cover my own expenses should something happen to me. Since hubby and I are both still young, the chances of either of us getting cancer now is slim.

"Stroller Envy"- LOL! Glad there's a term for that! That's why I've been slowly buying things over the last few years to spread the expenses out. I've been taking my time and trying to find deals and get things second-hand. Trying to avoid buying all the "latest and greatest" of everything. I have gone a little overboard when it comes to cloth diapers. I've spent about $500 on everything, but I've justified it to myself by saying it's still less than what I would spend if we used disposables. I cut myself off though after spending $50 on flannel fabric when I decided to make my own. After all that, I had enough fabric to make 60 diapers. Yep, I now have 60 homemade cloth diapers, on top of a huge stash of all-in-ones, prefolds, pockets, covers, and two "complete diapering kits" that I bought over the last two years. I'm cutting myself off of everything now. My family has been informed of my plans to procreate and they've started sending me things. I'm getting my "baby stuff shopping fix" everytime my mom sends me a package in the mail. LOL- saves me money!

Yep, we are only planning on have one or two children. We would like to space them out by several years. We have decided that now is the perfect time and we will not wait a few more years. We've already put it off a few years and the timing it just too perfect right now between hubby's deployments (he will deploy again in Dec 2012, so its like the stars are aligning- LOL).

As for having a complicated pregnancy or a child with special needs- I don't think those worries should ever be a deterant. Yes, there is a chance I will have a difficult pregnancy and/or a child with special needs. Everyone runs that risk. However, I fully understand those risks and am willing to confront them if they arise. The fear of the small possibility of those risks are not enough to make me want to wait to have a baby. Those issues will still be around in a few more years and in fact, the risk factors actually increase as a woman ages.

[Susan Todd]

I'm a military veteran and also a military spouse so I can definitely understand how your "timing" is. It sounds as if you have spent a lot of time figuring things out. I have a pretty good understanding of the benefits as well and you've definitely mentioned some things I was unaware of. I asked about the PCS and two houses because I myself owned a house near a post that I ended up renting out when I ETS'ed. I always rented to military and I went through about 4 tenants in 18 months (I think) and it was a nightmare. I guess it depends on the quality and stability of your tenants.

I personally would recommend that if you are to get a second job, to do it NOW for a short time until your husband gets back. I'm not sure how long his deployments are but, especially with knowing him next deployment date, you should take advantage of that time that you do have together. I understand you have a desire to save up as much money as possible, so I guess it's a matter of your priorities. There's many people that have no plans or financial resources to have a baby and still end up finding a way to pull it off. It's not exactly the best solution, but do what you can do for now and if something comes up later on, I'm sure you'll find a way to deal with it.

I reached a conclusion that my kids have about 50 shirts each and maybe 10 pairs of pants or so....for each size up to 5T, and not much less than that for the next two sizes. How did this happen?! Lol. I always bought everything on sale but there's something about having kids that makes you think, "But it's so cute!!!". Stick to what you're doing. You may need to use that strategy with friends and family too. If you've planned as well as you say, you may not need much in terms of "gifts". Instead of having everyone give you tons of clothes or other things you really don't NEED, perhaps you could tell them you're all set for now but you could definitely use the cash for future kid expenses or possibly a savings account for your child. You would just need to find a nice way to say, "I just want your money" lol.

Lastly, if you're planning on paying off your credit card anyways...why wait to pay it off in full? Just to keep extra cash on hand until then? I wouldn't worry about rushing to pay off the student loans unless you really feel that you have the extra money. As long as your loan rates are fixed, you're not going to get a better rate than that...

Good luck!

[smartstep]

Have you thought about selling your homemade cloth diapers? If they are a bit different and unique you might have something. Start at a local craft fair or fund raising boutique. This is an extra gig you could still do when you have little ones!