How do people afford kids?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again, my mortgage is actually more like 30% take home after taxes, maxing retirement, healthcare, and our car payment (I forgot it automatically goes into a separate credit union account). We barely take any deductions, so we'll be getting around 12k back on taxes this year, so this also lowers our take home pay. We have a 3 bedroom house, outside the beltway in NoVa, that is about 30-40 min. to both our jobs. We stretched a bit to be in a good school district because that was really important to us.

I wasn't trying to stir a debate about my housing. I truly just wanted helpful advice/perspective from other families in the area who make it work with a middle class income.

I love the ideas about toys off Craigslist, signing up for a babysitting sharing service, bulking up on diapers when they are on sale, etc. Also, a lot of PPs have pointed out that weekend activities change once you have kids. I imagine we'll be spending more time at home, ordering pizza, going to the park, etc. as opposed to going to concerts and trying new restaurants. In-home daycare might be worth researching for us or perhaps daycare in the burbs will be cheaper than what my friends closer-in pay.

I'm glad to know there are others out there who make things work in order to have kids!

Well, for one thing, change your withholdings! Combine that with the extra dependent deduction ($3950x28%=~1100) and childcare related credits/deductions ($600-1400 depending on whether you have access to a dependent care fsa) and you're looking at an extra $1200 a month. That will make a pretty big dent in your daycare bill without any daily lifestyle changes.

You'd have an extra $1000 a month that way which will go a long way to helping with daycare.

OP here -- wow that is great to know about the childcare tax credits/deductions. I knew they existed in theory, but I didn't realize it was worth that much. This is the type of advice that is really helpful on a finance forum because I don't really want to go around asking friends about their taxes. An extra grand or so would provide a lot of wiggle room toward childcare.

I want to be sure my post was clear (because I kind of screwed it up). The childcare deductions are worth about $200 a month. The $1000 a month is related to you overpaying your taxes.

The IRS has a calculator that can help you set up your tax withholdings so that you are basically even come tax day.

[Anonymous]

Anonymous wrote:OP, others have said it already but consider moving elsewhere. We couldn't afford kids in DC despite making a combined $120k. Even then, we'd be scraping by and it wouldn't be the lifestyle I wanted. We moved to Atlanta and have ZERO regrets. We have a big house here, a yard, I'll be able to stay home...granted it's not nearly as interesting of a place to live but you have to sacrifice somewhere.

But didn't you take a huge paycut to move to Atlanta?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again, my mortgage is actually more like 30% take home after taxes, maxing retirement, healthcare, and our car payment (I forgot it automatically goes into a separate credit union account). We barely take any deductions, so we'll be getting around 12k back on taxes this year, so this also lowers our take home pay. We have a 3 bedroom house, outside the beltway in NoVa, that is about 30-40 min. to both our jobs. We stretched a bit to be in a good school district because that was really important to us.

I wasn't trying to stir a debate about my housing. I truly just wanted helpful advice/perspective from other families in the area who make it work with a middle class income.

I love the ideas about toys off Craigslist, signing up for a babysitting sharing service, bulking up on diapers when they are on sale, etc. Also, a lot of PPs have pointed out that weekend activities change once you have kids. I imagine we'll be spending more time at home, ordering pizza, going to the park, etc. as opposed to going to concerts and trying new restaurants. In-home daycare might be worth researching for us or perhaps daycare in the burbs will be cheaper than what my friends closer-in pay.

I'm glad to know there are others out there who make things work in order to have kids!

Well, for one thing, change your withholdings! Combine that with the extra dependent deduction ($3950x28%=~1100) and childcare related credits/deductions ($600-1400 depending on whether you have access to a dependent care fsa) and you're looking at an extra $1200 a month. That will make a pretty big dent in your daycare bill without any daily lifestyle changes.

You'd have an extra $1000 a month that way which will go a long way to helping with daycare.

OP here -- wow that is great to know about the childcare tax credits/deductions. I knew they existed in theory, but I didn't realize it was worth that much. This is the type of advice that is really helpful on a finance forum because I don't really want to go around asking friends about their taxes. An extra grand or so would provide a lot of wiggle room toward childcare.

Don't you have parents to give you financial advice?

[Anonymous]

A note to the Original Poster:
Treat yourself to a paid financial advisor.
The advisor can help you on how much you should be saving for retirement (you are not saving enough right now); how much you should be withholding; help you create a budget; prioritize savings (6 months emergency cash followed by getting rid of debt)

They can also help advise you on being smart on insurance - do you have enough life insurance? or long term disability insurance?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, others have said it already but consider moving elsewhere. We couldn't afford kids in DC despite making a combined $120k. Even then, we'd be scraping by and it wouldn't be the lifestyle I wanted. We moved to Atlanta and have ZERO regrets. We have a big house here, a yard, I'll be able to stay home...granted it's not nearly as interesting of a place to live but you have to sacrifice somewhere.

But didn't you take a huge paycut to move to Atlanta?

Another poster here. I did NOT take a pay cut to move from NY to DC and it has been great. Many times when you DO take a pay cut it is worth it. Our mortgage is less than our rent was in NY and we save over 1k in taxes a month. On top of that we don't pay to garage our car.

You have to take into account the standard of living, not just cost. Fee in atlanta would rent a studio with no laundry or AC. You just don't live like that. Whereas I have friends making 300 plus in NY who do. There are indeed very stark differences between cities and you can get ahead by moving somewhere else. There are many things to consider.

[Anonymous]

Anonymous wrote:A note to the Original Poster:
Treat yourself to a paid financial advisor.
The advisor can help you on how much you should be saving for retirement (you are not saving enough right now); how much you should be withholding; help you create a budget; prioritize savings (6 months emergency cash followed by getting rid of debt)

They can also help advise you on being smart on insurance - do you have enough life insurance? or long term disability insurance?

A financial advisor is probably a really great idea now that we are in our 30s and settled down -- I used my parent's advisor to buy some stocks in the past, but never really sat down with one of my own. I'm a fed and max out TSP, have a FERS pension, and decent life insurance (although DH and I will probably up our policies once we have kids). I think our goal is also going to be to increase our liquid savings since we have a lot tied up in our house, investments, etc.

[Anonymous]

You sacrifice, just like all my friends did when they had kids. You tighten the purse strings and try to prepare by living on one salary and save save save. Once you have kids, buy used everything for them .( not car seats!)

The money going into your mortgage is very high. Have you considered moving to a cheaper home out in the burbs?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, others have said it already but consider moving elsewhere. We couldn't afford kids in DC despite making a combined $120k. Even then, we'd be scraping by and it wouldn't be the lifestyle I wanted. We moved to Atlanta and have ZERO regrets. We have a big house here, a yard, I'll be able to stay home...granted it's not nearly as interesting of a place to live but you have to sacrifice somewhere.

But didn't you take a huge paycut to move to Atlanta?

Well my husband ended up making more money - but I took a pay cut. It's not a huge deal though because the cost of living is so much lower here. This certainly isn't the case for everyone but it did work out for the best at least in our case.

[Anonymous]

Anonymous wrote:This is why people who have kids stop eating lunch in restaurants, stop getting highlights, wear shoes longer than they did before, stop buying one another lavish holiday gifts. you sacrifice. sucks but that's what it is.

That about sums it up for us. You can make it work - there are a lot of things that you think you "need" that you don't need.

[Anonymous]

RedTailHawk wrote:

Anonymous wrote:Here's 185 dwellings for sale in Montgomery County for $175k or less. All have at least 2 bedrooms.
http://www.zillow.com/homes/for_sale/Montgomery-County-MD/pmf,pf_pt/house,condo,apartment,duplex,mobile,townhouse_type/2975_rid/2-_beds/0-175000_price/0-654_mp/days_sort/39.403305,-76.768684,38.876601,-77.661324_rect/10_zm/

.

I know they come up in the Zillow search criteria but if you actually read the listings you will see that many of those properties are rentals. e.g. the first one I see (Mannakee St) is listed as For Sale By Owner for 3 bed/3 bath at $6000. but then the text makes clear that it is a rental listing for $1300. month. The 2nd one is listed at $10,000. but the text makes clear it is a rental for $1500./month. The 3rd is really a sales listing but it is for a Leisure World condo so not an option for young families.

Yes there are lower priced places available but not as many as Zillow says there are.

Hmm, did you resort the linked list or something? The first one on the linked list is - http://www.zillow.com/homedetails/3803-Ski-Lodge-Dr-APT-203-Burtonsville-MD-20866/37147831_zpid
Which is a 2 bedroom, 2 bath condo listed for 148k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

A lot of us do it by not living on the East Coast anymore. We live in a flyover state and our enjoying our time here.

Here, our 5 bedroom, 3 bath home with lake rights cost us about $250k. We have two boats and are eying a camper as well as a vacation home in Florida. Only one of us works full time to maintain this lifestyle. In fact, one of us has been able to be home based since our kids were born.

Jobs are iffy there, you are playing roulette with your family's life

Talk about hyperbole. Jobs are iffy everywhere. And the city we live near is big enough to have lots of opportunities -- it's one of the drivers of the American economy. We were just going through our retirement numbers, and we are right on track to have a comfortable retirement in about a dozen years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hah... I was literally just texting the wife about this cause I paid our credit card bill for this month.

Thanks for scheduling a payment on Oct 27, 2014, with Online Banking. Here are your payment details:

Payment amount:
$11356.09

Payment date:
Oct 31, 2014

If you see an error with this scheduled payment, just sign in to Online Banking—we’re here to help you 24 hours a day, 7 days a week.

....

WHERE DOES IT ALL GO !?!

Did you have special expenses this month? Or is this the norm? How many kids do you have? Just asking because our CC bill is about 1000 dollars a month with one child.

Its not typical, I was just laughing/commiserating with the thread. We usually spend about $4,000 a month on our CC's with two kids, but we put most everything on them religiously: groceries, dinner out, auto payments for our internet, cell phone, tv, food at the office, gas for the cars, diapers, etc. I can't fathom how we'd do it for $1,000 a month - we spend that on groceries alone a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is why people who have kids stop eating lunch in restaurants, stop getting highlights, wear shoes longer than they did before, stop buying one another lavish holiday gifts. you sacrifice. sucks but that's what it is.

That about sums it up for us. You can make it work - there are a lot of things that you think you "need" that you don't need.

THIS.

[Anonymous]

We have an infant in a NAEYC-accredited center in DC that is $1300/month. We have started cooking way more because it's a hassle to go out to eat, and that helps a lot.

I highly recommend joining listservs and scouring Craigslist to get baby items secondhand. You don't need a brand new bouncer, swing, Bumbo, Exersaucer, high chair, play mat, etc. You'll only use lots of these contraptions for a few months.

For baby clothes, we shop sales and Marshall's/Target ONLY. There was a Macy's sale a few weeks ago where 3-piece outfits (onesie, pants, jacket) originally $30 were $11.99, so we stocked up.

We try to ask ourselves what we really need (vs. want) and don't buy it until we need it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Well, you don't need $2k per month on care. You can find that for less.

We bought a really small TH so we could stay at 1/4 gross, now with salary increases it is 1/4 take home. I regret often that we don't have a SF and a yard, or even a bit bigger TH but can't leave and really, I have a roof over my head so, I try to focus on that.

We don't eat anywhere fancy, cook most nights and bring lunch. We still struggle with giving up delivery and do spend to have Friday Night pizza or Chinese or Italian. I try to push for pizza since it's cheaper.

Haircuts at $50 every three months are a splurge.

Stagger kids so only have one in care at a time.

Savings are meager, sad, but enough to cover larger house needs/ emergencies (havoc, water heater, random ER other visits post copay, etc). I feel really bad reading here, so I try not to. 401k is decent, though, a bright light.

I'd like to go on a vacation. Once the second is in elem that will happen.

We are cutting cable tv to bring the bill down $50 a month.

Library not bookstores.

I buy clothes and shoes only if necessary. Same with DH.

This is not the middle class American dream

Agree. I am a PP and agree that this is not the kind of life most people aspire to. It's the nature of this area - the cost of living is so insanely high here.

Um, I grew up solidly middle class in the 70s, and this is definitely what it looked like. The problem is that we are all started dreaming about an upper class lifestyle.