Finances and babies - do they mix!?!?!

[taralee]

Hello, hubby and I are TTC #1, we are really starting to stress about finances to the point that we are wondering if now is a good time - although I argue that nothing is going to change in the future to make our financial situation better apart from paying off some mortgage. Some people are telling us that having a baby doesnt make a huge impact financially while others are working 24 hours a day. We will need childcare almost from after the first 6 weeks as we cant afford for one of us not to be working and i have always been someone to say that i wouldn't work when i have a baby but i cant see how people can do that nowadays!
anyways - i want to know how people cope and if the child care benefit/rebate helps at all! we are at a loose end here!
thanks

[Phteven]

I think that the older they get the more they cost. Since Yasin was breastfed our main expense looking after him for the first year was nappies. The initial cost of prams, cots etc was quite high but we could have saved alot by getting second hand. Most of his clothes were bought by other people so we didn't have to spend much on clothes - ebay is a great place to find really cheap baby clothes and a few of the girls on BB are great op-shoppers (I never seem to be able to find anything). We also spread our purchases out over the months before he was born so we didn't have to buy everything all at once. Alot of people put one thing in thier trolley every time they go shopping (its a great excuse to hang out in the baby aisle) and by the time thier baby arrives they have enough lotions, powders etc to last for ages. Yasin is over a year old now and I have only just had to start buying toilettries for him. If you have ababy shower you can ask for practical stuff and have a registry.
You can also save by using cloth nappies not disposables.
I think that childcare is quite expensive but you can get some of the cost back at tax time.
If you want to spend a fortune on your baby its quite possible but lots of people manage to get by on a reduced income and are perfectly content. The most important things that you can give your baby are all free. There are oodles of frugal living/parenting sites out there that have great tips on saving money.
Maybe you could trial living on one income for a while and save the other income just to see how you cope (the savings will be handy for baby stuff or you could put it on the mortgage).
I've found that since we had Yasin our lifestyle has become cheaper. We don't eat out so often or go to the cinema etc which saves quite a bit of money.

[*Efjay*]

I would have to agree that the first few years isn't that expensive. I have 2 boys and we are on a low (very low) income and I am happy (most of the time) with what we have. Both were (one still is) breastfed which saves alot. I think it it was worked out that a newborn goes through about $15 a week on formula? Our biggest expense is nappies. I am so sick of buying nappies. Cloth is an option but not one that I am wanting to take, too much work involved!
Childcare is something we have only just started with our oldest. He now goes to preschool 1 day a week and with 100% of the rebate it still costs $17 a day. With out it its $51 a day! A friend of mine is on a much higher income (about 70k a year) and I think gets about 30% rebate on childcare.
I like dach's idea of trying to cope on one income for a bit to see how you go. I personally think that mum should be home with baby full time for at least the forst 6 months if not the the first year, but thats just my opinion and by no means do I jugde anyone who chooses childcare. I just kinda figure why have them if someone else is going to raise them. You miss out on so much.

Be prepared to cut back on a lot of things to make it work, your bills are only as high as you make them.

[ChrissyT]

I too have to go back to work... i have always looked at our priorities and wondered if they are around the wrong way....but we built our beautiful home with pride, and with having babies in mind....but unfotunately this means with a mortgage and my income being a massive chunk of our overall budget.....I will have to go back to work depending on where in the term it is we give birth. Plus I wouldnt want to put that added strain onto an already exhausted/over worked hubby.

If we concieve this month...it wont be the ideal 6 months I was hoping for....but 4 month....i would start the following year off fresh.

[Astrid]

Remeber to check out the various child care options in your area. I would have gone back to work, but there is a 2 year waiting list where I live just for 1 day per week. So best not to assume that you can go back to work after 6 weeks, also depending on how the birth went and how you are coping you may not be physically or mentally capable.

It has impacted us, as we really can not do without a 2nd income, even just a part-time one would help. We had assumed it would take us a year and had planned to save, but we got pregnant quickly and had saved nothing. Also DH still spends like we have 2 incomes.

So I go with the others and suggest the living on 1 income for a while to see how you go and also to save.

Good luck

[*TamaraP*]

I have been told many different things when I started TTC.

- pay off all your debts
- pay off as much of the mortgage as possible

Those were the two things that got us really worried, but then we went and saw our finance consultant.
She may only do finance, but she was really good to listen to.

Work out how long you intend to be off.
I am working for 6months off, but one month before the birth, which is a total of 7 months.

The first month, I am using the rest of my holidays to get a weekly income. That will last with me through to birht.

Once birth has happened, I will lose that weekly income. So this is what she told us to do.

While you are TTC or pregnany, aim to save the money that you will normally get paid in six months. So for us that would mean saving 13,000 in total.

But you get the baby bonus, so we are aiming to save a min 6 grand.
We are putting away 120 away a week at the moment, so in 9 months we will have 4,700 + the grant of 4000 = 8,700.

Its not the full amount that we want, but if worse came to worse and I ended up pregnant this cycle, we would work it out. It may mean I have to go back to work a couple of days a week. It doesn't matter.

Another thing I found, which many people don't do because its "bad karma" is we have brought a lot of our things already.

We know we are going to be a family, through it Natural, IVF or adoption so buying these things doesn't make us sad. It makes us happy.

Another tip, she told me not to stress about puting extra money on your loans. Yes it builds up re-draw, and lowers the interest paid on. But she said use that money to save. Once you go back to work you can start that up again.

I hope I have helped. I was just as worried as you. But once she told us what we had to do we started that week.

We are now happily saving and learning how to live off one wage.

[jaggard]

Don't forget that you may receive fornightly payments from the government as well which may not be much, but it may cover the expense of nappies etc.

We are not on a huge income but DH and I had 2 children 20 months apart, they are still in nappies, we moved out of Sydney with a lower mortgage (was able to do so as DH's work can take him anywhere) Nappies are the biggest expense, but honestly you do not have to put them in Huggies, there are cheaper alternatives.
When is the right time to have a baby, there are a million people asking the same question. My grandmother who had 6 said there is always room for one more and this would have been in an era where she would have never considered working and my grandfather brought home the $$$. Their income would have been small but they made do. If ever we ponder over when is the right time I always think back to how our older generation dealt with. I thought I was pg again last month and even though this is a time where I'd prefer to not have 3 in nappies sitting looking at our budget we could have dealt with it, and as I said we are not on a huge income.

Do you have family near by, maybe mum or a MIL that would like to look after bubs if you went back to work. When we still lived in Sydney I went back to work one day a week and MIL looked after DD on that day. That lasted about 3 months until we left town. I have since stayed at home and created an on line business which I work from home so I am with the children. I do not want to miss them growing up, I am not prepared to leave my kids in the hands of someone else 4-5 days a week. i totally understand that there are people out there that need to do so, but we decided to leave town get a cheaper mortgage and sacifice a few things to be able to afford to do so. We no longer spend money on ourselves for clothes etc, our budget is so down pact, it's been amazing how well we have done.
I went public with DS and didn't pay anything with his pregnancy or birth. With DD I went private and was out of pocket thousands so look at that too, figure out whether it's public or private you want as that may make a difference.

Goodluck with your decision.

[taralee]

i have never liked the idea of leaving baby in care either, but i should point out that i am a preschool teacher in a child care centre so baby would only be 3 doors down from me and dh works shifts so he can look after her (wishful thinking) during the middle of the day and on days off.

[Fee]

Another tip, she told me not to stress about puting extra money on your loans. Yes it builds up re-draw, and lowers the interest paid on. But she said use that money to save. Once you go back to work you can start that up again.

See we're doing this but we are able to take that money back at any time. It's better for us to put this extra money into our mortgage rather than into a savings accounts. I guess it depends on your loan.

[*TamaraP*]

Another tip, she told me not to stress about puting extra money on your loans. Yes it builds up re-draw, and lowers the interest paid on. But she said use that money to save. Once you go back to work you can start that up again.

See we're doing this but we are able to take that money back at any time. It's better for us to put this extra money into our mortgage rather than into a savings accounts. I guess it depends on your loan.

Yeh, but we are getting interest on our money now.. so I guess for us it works out better.

[ChrissyT]

What Tamara is saying, and I saw this on one of those morning shows.... is even tho putting your money onto your mortgage and having it available as 'redraw' sounds good in theory....you have to weigh up where you are going to make more of a savings.

eg.... if I have $3000 available in redraw, then it may save me $150 a month in interest off my mortgage.....BUT.... if I have that same $3000 sitting in an interest earning savings account, then at the end of the month I might have earnt $200 in interest....so I am $50 a month better off by saving the money into a savings account than having it sit in a redraw account.

Banks never do ANYTHING to help the customers....they are encouraging redraw facilities for this reason alone...it is saving the banks from having to pay YOU interest....!!

I think it was Koshy who was talking about this whole redraw/line of credit thing...and apparently the higher your mortgage, the less money you save having your money in a redraw account.

Kind of a thread hijack....sorry :shock:

[Astrid]

Don't forget though that interest earned is taxed. So the $200 in the example would be taxed and may in fact ended up being less than the $150 saved depending on your tax situation. Also extra taxable income can mess with other benefits. Just something else to think about.

[ChrissyT]

Yeah you would need to factor that into the equation, as well as any fees or charges on both accounts....I know some mortgage lenders can charge anywhere up to $50 to redraw money.

[*TamaraP*]

Don't forget though that interest earned is taxed. So the $200 in the example would be taxed and may in fact ended up being less than the $150 saved depending on your tax situation. Also extra taxable income can mess with other benefits. Just something else to think about.

Already thought of that.

Once we are going to have a few accounts floating around. Interest from banks is pretty ****e anyways.
Plus my bro is an accountant, he can fiddle a little...

[Karina]

I have a savings thingo with CBA and they give me 5.4%pa. Its good, but i still get slugged with their stupid $5 per month account keeping fee. Idiots! (the bank, not you people). I dont often put money in there - only really money i get as a gift. Annoying thing is that , yes, youre meant to declare it as income and get taxed on it, though i forgot to last year (they didnt send me a statement, and i didnt even think about it. )

For our debts: We just put as much into our home loan and we now have a big amount in redraw, which we can redraw at any time for no charge. We can also put extra into our home loan and it doesnt cost anything if we can pay it all off early. I like to see round numbers, so if my home loan is some wierd amount, i'll add more in to round it up. We are about 5 years in front on our mortgage payments now - reducing interest and loan term, while we can still redraw the money if we need it.

Anyway, when we have a baby, I am going to ask my boss about me working from home. There are some people in my company who do that, so its worth a try.

Government gives you some money, the baby bonus which is going up to $4000 some time this year( ? ) so that would help with some things. And im sure Family Assistance Office or Centrelink gives you some thing. Probably minimal though.

We are going to get our cot, clothes and some other things from family who have older children, so there wont be an enormous expense there for us. I also dont get paid maternity leave (like 80% of the rest of the country -- I raelly should try and get a job in government, or a bank...) so i'll cash out my annual leave for a bit of extra money.

For us, Childcare in a centre just isnt worth it. Its costs as much as what i earn in a day! Well that is for the centres near where we live and work (I went into one at North Sydney and they said it ranged from $85 - $105 per day depending on chlds age. I was flabergastered. Didnt think it was THAT expensive.) But i looked on council website and Family Day Care costs about $5 per hour though, so I am going to look into that when we get pregnant. It looks more like a baby sitting service, but i figure that my baby doesnt need to be in a classroom so its no real bother.

[Debbie Lee]

Taralee - we too had similar concerns when we were TTC (esp. my DH...urgh, he was annoying!!).
I won't lie... since having Gabby, we have taken a back-step financially. I probably could have gone back to work earlier (I'm only going back one day a week starting this month) but I honestly don't think I would have been emotionally ready before now.
I guess the way I looked at it was that I wanted to have children while I was still young (obviously a very personal choice). Yeah, it's nice to have financial stability etc. etc. BUT, to get there, does it mean you have to put off having children when you really desire to have them??
I'm all for people waiting until they are in a steady financial position (like, you wouldn't want to go and have a baby if your other half was unemployed or not getting regular work).
I think it's possible to make some sacrifices and get through the first few years of having kids. As they get older, it is much easier to get back into work and start building your finances up once again.

That's just my opinion anyway. I'm sure it differs from others.
I grew up living in rental properties with my Mum on a sole-parent pension so we had next to nothing. To me, the fact that we have a mortgage and my DH is earning a good 3 times the amount my Mum received when we were children is enough. Anything on top of that is a bonus. I guess that's why I don't see that missing a few years of savings and luxuries is such a big deal when the reward of having a baby far outweighs having all the mod-cons.

I hope that makes sense and I haven't offended anyone. Like I said, it's my own rationale for having a baby before we were "financially ready".

Edited to say: one thing we did do was go to a mortgage broker to refinance our home loan and that has helped a lot. I think our new home loan is similar to what the others have been talking about. All our income goes on to our home loan. We use a credit card to pay for everything and, once a month, our home loan pays off the balance (this way the money is sitting on our home loan for as long as possible). So far it's working well. We haven't paid much off because of Christmas but I can see how it's going to benefit us in the long-run.

Oh... and we've just started Gabby in Childcare for 1 day a week (Wednesdays). Normally it costs $60 a day but, with the childcare benefit, I think I will only have to pay $10-20 a day which I think is quite fair. I receive about $180 a fortnight for family payments which helps too. I also do a little bit of cash in hand work :-$ and I make sure that gets paid into our bank account so it helps the interest on our home loan. There's lots of little things you can do without having to go back to work full time.

[rarmalb]

Honestly, I think that money and children is all about priorities. We always thought we would pay off our home loan before having children. Then the penny dropped, a light bulb went off, and we decided that NOW was the time to have kids- If we waited a few more years to have the house paid off, then we might be better off financially...but right now is the time we are ready emotionally, and our relationship is ready for them (should we ever fall pregnant). So, now is the time for us to TTC. Having said that though, we have no other financial commitments, and will be able to live on one wage when/if we have children- so we are lucky in that respect.

We decided that FOR US, it was more important to have children when we were younger- and that was a choice that we discussed at length. We talked about being a one-income family, and the impact that staying home for a few years would have on my future job prospects....all those issues that really needed to be talked about.

The decision about WHEN to have children is a VERY personal decision that will vary from couple to couple. Just make sure you sit down and talk about ALL the options, and the impact that this decision will have on you emotionally, physically, and financially.

R

[taralee]

I think the main problem with us is that we can't afford to live on one income - my income goes entirely to pay off the mortgage and we live off dh's income. i'm hoping my sil gets pregnant at the same time as she said she will look after bubby for me
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