What was your financial situation before having first child?

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dsmil
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What was your financial situation before having first child?

Post by dsmil »

My wife and I are due to have our first child next month. I feel like I've been obsessing over money lately even though we're in decent shape financially. I'd like to see how you fellow Bogleheads we're doing before taking the jump into parenthood.

Our situation is that we are in our mid-upper 20's, household income in the mid 100's, own a home, no consumer debt, a lot of student loans, have a 6 month emergency fund, and have saved 12-15% of income towards retirement for 3 years. After the baby is born, our retirement savings rate should stay at 12-15% but we won't likely have additional monthly savings until our $1,500 per month student loans come off the books in a few years. We plan on avoiding daycare by having my wife switch to working part-time, some help from the mother-in-law, and some telecommuting from me.

What was your financial situation like before having your first child? We're you also obsessing about money? Did things go better or worse than planned in the first year?

Thanks
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CMartel2
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Re: What was your financial situation before having first ch

Post by CMartel2 »

Unemployed. Age 30. 132k in student loans. 10k in personal loans. Negative net worth. Car with 140k miles. Married and took on the care of two wonderful stepkids, both of whom shortly thereafter needed braces and some medical care. Sometimes that's just life.

I started residency a few weeks later at 48k per year. My wife found a job for a bit less than 30k.

God has since blessed us, but we've got a long way to go. Don't obsess too much. Life is too precious for that, especially with a newborn. Just be consistent, be practical and have a good plan. Find a nice kid's consignment shop and the link to Craigslist.
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noyopacific
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Re: What was your financial situation before having first ch

Post by noyopacific »

Our financial situation was similar to yours. We were 36 & 43. No debt except for a mortgage. We never obsessed about money. We saved 15% or perhaps a bit more. I may be slightly obsessive about the subject of investing but have never been an active trader. My wife is an active partner in investment decisions. We are both frugal by nature but not obsessively so. Things went better than we had expected or even imagined. (Our kid turned 22 last month.)
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HIinvestor
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Re: What was your financial situation before having first ch

Post by HIinvestor »

When we had our first child, we both had full-time jobs. We were renting an apartment and saving our money. H had 2 rentals that he purchased as a bacehlor that had negative cash flow every month that consumed what was left of his paycheck (after we paid our basic living expenses) with the shortfall between the mortgage, association dues and rental income.

I took 3 months of maternity leave and then returned to work for 6 weeks before resigning to raise our child. We sold the rentals and used the equity to make a big down payment & buy a place that we wanted to live in but couldn't afford, so we rented it out. The tenants lost their job just before the lease ended, so they left and we moved from the apartment to the house. Finances were tight with just H's income, but we were able to make things work out, fortunately. No regrets!
JLJL
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Re: What was your financial situation before having first ch

Post by JLJL »

dsmil,

Congratulations on your growing family and good luck with the coming months. You are in for some fun!

We had our first child in 2008, both in our late 20s.

I was not obsessing about money, and thankfully so, as our home and retirement accounts were tanking. We had purchased a home in SoCal in 2007, so by late 2008 we were far worse off than the previous year, as were so many others. Fortunately as I said I was not obsessing about these things, focusing on work (also fortunate to have steady work) and our new surroundings and our pending new arrival.

Looking back, we probably had gone from mid-high 5 figures down to low-mid 5 figures in our ~90/10 target fund at Vanguard. I didn't make any changes to that except to keep adding to it blindly. Our home equity went from mid-5 figures to negative mid-high 5 figures during this time. The fliars that the agents kept sliding under our front door showing comps and short sales didn't particularly help.

Cash: not much. We were pretty house poor.

Student Loans: perhaps $25K combined from undergrad, and around this time my wife and I both started considering grad school which we jumped into in 2009.

We wouldn't have had any revolving debt at that time, and we tried to keep other expenses low.

It was certainly a bad time for us relative to finances, but I can say that calmness under pressure (ok, naivete and lack of a better option) helped us stay the course. Retirement accounts doubled, and again, and again, and again in this great run in the last 6 years or so while we kept contributing. Housing came back and we unloaded ours last year at about 10% more than we paid (but having dumped loads into it in interest, tax, insurance during those years). Student loans are gone, with graduate credentials. I started in on the Bogleheads guide more than a year ago, and now I'm obsessed. Maybe that will make things worse :) .

It is smart to obsess about these things. I think you'll soon become distracted, so I wouldn't worry too much about it! In many ways our situation was similar to yours. Job security really saw us through.

Side note, we have 2 kids, and while I know kids are expensive, we hadn't experienced an enormous financial burden or impact to our finances when they were little. You'll find while some costs go up, others go down. Care is obviously the most costly if you give up income or pay for care. Going in, my wife wasn't working due to our relo, so she just stayed home until child was about 2, at which time we went with daycare and she went back to work.
Robert44
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Re: What was your financial situation before having first ch

Post by Robert44 »

I got married at 31, wife 23. We had no debt and no savings. Rented a small ranch house from an uncle for a song. Had our first child 10 months later. She quit work after having the first child.
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market timer
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Re: What was your financial situation before having first ch

Post by market timer »

We waited until our mid-30s, so we had a chance to establish our careers. Now DW is the boss and can work when she wants, usually 3-4 days a week. I saved up enough to support a modest lifestyle on passive income, and left my job shortly after my son was born. Now looking at doing something more entrepreneurial with my time. DW's retired parents live nearby and have been incredibly supportive. I stressed out about money a great deal before my son was born, but after years of "living like a student," even having roommates while earning over $200K/year, have now reached a point where I'm quite confident in our finances.
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Re: What was your financial situation before having first ch

Post by nanoanalyzer »

With a mid-100s income, you are among the highest 0.1% of earners in the world. I think you'll be okay. Could be a lot worse off than part of an American family above poverty.

Anyway, we were just crossing over 0 net worth the same month we met Nanoanalyzer Jr. Still a couple dozen k of student loans, a bit of car to go as well, but plenty of income and job security to absorb the bumps in expenses (which have been relatively small so far). No problems at all providing food, water, shelter, and healthcare.

Try to remember the simple things. The money will fade into the background.
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in_reality
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Re: What was your financial situation before having first ch

Post by in_reality »

Wife had finished her MBA and was gainfully employed with years of savings. I was coming out of graduate school with $30k in debt.

She said the "clock is ticking - I am running out of time". So after knowing each other for all of about a year ... take a chance on life ... why not...

Money has been a non-issue but as for differences in child rearing ...wow... being from different cultures I guess it's too be expected.

If two people are committed to having a family, more money can always buy you conveniences, but it's the love that will make or break you.
HIinvestor
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Re: What was your financial situation before having first ch

Post by HIinvestor »

Agree with others that you and your spouse having combined income in the mid $100Ks is much better off than 95-99% of people in the US. You are in good shape, even if you may need to tweak things and make some adjustments with additional costs of childcare or one of you reducing hours to help care for baby.
GoldenFinch
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Re: What was your financial situation before having first ch

Post by GoldenFinch »

Paying off the house is the one thing I wish we had done sooner.
Last edited by GoldenFinch on Sun Feb 22, 2015 1:49 pm, edited 1 time in total.
Gropes & Ray
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Re: What was your financial situation before having first ch

Post by Gropes & Ray »

First one due in Sept. We're currently doing really well because we always tried to treat my wife's income as extra for savings or home improvements. It's after she stops working that I'm more concerned about. We've had some lifestyle creep where we got used to some luxuries we won't be able to keep. But, it's things like my weekly sushi binge, eating lunch out every day, or buying a new purse every 6 weeks that have to go. So we'll be fine, but I do worry about successfully making the adjustment.
Postmon
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Re: What was your financial situation before having first ch

Post by Postmon »

Biggest surprise was our savings rate and pattern. We had an automatic investment program and planned to cut back on the monthly contribution level. Well, we had to discontinue it given the "variable-ness" of the additional expenses. Changed to contributing to savings whenever there was a surplus in the checking account.
mw1739
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Re: What was your financial situation before having first ch

Post by mw1739 »

When we had our first nearly three years ago, my wife came up with the idea that we needed $50,000 in cash (probably 1 yr expenses at that time) before she wanted to get pregnant. When we had our second last fall, she was more concerned with spending that money to finish some home renovations.

P.S. Dont plan on babysitting while you're telecommuting. When they're a newborn they need fairly constant attention. By the time they're a toddler they want constant attention.
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Re: What was your financial situation before having first ch

Post by XtremeSki2001 »

We were pretty much like you and only a few years ahead in the growing family department. We've dipped into the emergency fund a few times to repair our home, but found ways to replenish it (through tax returns, bonuses, etc.). We didn't notice a sizable financial impact for each of our boys - we do diapers / wipes from Costco and my wife breastfed both, which certainly saved $. The biggest impact was my wife and I decided to she would be a SAHM. We made several purchases assuming she'd remain employed, but we've managed to do it. Like you, we don't have extra to save each month, but we often question why we "need" the extra savings. Normally we figure out we want the extra money to do unnecessary updates to our home, go on vacations, etc. At the end of the day, we simply decided having kids and having my wife a SAHM was more important than a few extra dollars.

Best of luck and congratulations!
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Re: What was your financial situation before having first ch

Post by Toons »

20 years old and broke :happy
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JDCarpenter
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Re: What was your financial situation before having first ch

Post by JDCarpenter »

We had our first in DW's third year of residency (and the second in the fourth). Even though we'd been married five years, we were pretty much just starting on our financial journey because we'd gotten hitched in grad school. Adjusting for inflation, our income was in the same ballpark as yours (I was big law associate with lots of travel). Didn't have knowledge of "emergency fund" and had baby IRAs with no other plans available to us. Owned a small house, and, after adjusting for inflation, low six figures in student loans.

So, negative net worth, good cash flow, high potential, with crappy hours. Glad we did it early rather than waiting for the finances/time to be "right." We were looking out 20 years and wanted all the kids on their own when we were still in our early fifties. There is no perfect time, but it tends to work out for nearly everyone. :-)
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jfssail
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Re: What was your financial situation before having first ch

Post by jfssail »

Both of us were 25 and I was in the second year of 2 years in the Army, Every body served 2 years back then, 1957.
Pay was $98/Mo. Had a 1947 Plymouth, cost me $300 in 1954.The Army charged me $3.75 for the child, meals for 3 days.
No student debt then. That was when you could work your way thru 4 years of College. My, have times changed
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pennstater2005
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Re: What was your financial situation before having first ch

Post by pennstater2005 »

Toons wrote:20 years old and broke :happy
32 years old and broke :D
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Bill M
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Re: What was your financial situation before having first ch

Post by Bill M »

This was back in late 1970s, the years of very high inflation. We were late 20s, income as a first-year Professor was $4k/yr, trying to start a consulting business (as all Professors had to do then to get above water), no home, no mortgage. At the time I often pointed out that there was very little difference between "self-employed" and "un-employed". By the time first child was born, I had given up on professoring and gone to industry, and the numbers/prospects were much better.
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mmmodem
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Re: What was your financial situation before having first ch

Post by mmmodem »

jfssail wrote:That was when you could work your way thru 4 years of College. My, have times changed
You can still do that. I graduated in 2007 from state college with no debt. Went to community college while working part time. Because community college is cheap, I was able to save up money to pay tuition for when I transferred as well. I found a paid internship in state college. Sure, I lived at home rent free but I think most parents would be okay with an adult child living at home with free room and board if they pay their own way through college. I now work with peers with fancy college degrees and double digit student loans. Last I checked state college still cheap.

Anyway DW and I were making $150k a year when 1st child arrived. We were both driving old paid for cars and just purchased a tiny 2 bed 1 bath home. The home was our only debt. Everything I looked up said you can't just will a child into existence. It may happen in 9 months or it may take 2 years or more. You may even need to adopt. Therefore, we didn't get into debt to buy an SUV, we continued with our college clunkers. We bought a home that turned out too small for our growing family. But while we were childless we saved up an incredible amount of money. When child 2 was in the oven, traded up for a 3 bed home for just a little more monthly mortgage because we had saved up so much money and had some equity on the first home. We're still looking for that SUV or minivan but I'll rather Tetris our stuff into the hatchback for now so that I can pay cash for the SUV later.
Elena78
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Re: What was your financial situation before having first ch

Post by Elena78 »

We have a two year old so it wasn't that long ago for us. From my perspective, you are doing fine.

We were/are in a similar boat. We make over $100,000, we have a mortgage and student loan debt but no other debt, we have a solid emergency fund, and we are contributing well to retirement. We pay a lot for a great daycare so we aren't saving as much as we'd like now but our income continues to go up and at some point our kids will be in school and not need daycare (or as much of it).

Some financial stuff will come up but it probably won't be anything you can't handle. A few examples for us:
I breastfed but couldn't pump enough for daycare - our guy was diary and soy sensitive so we had to pay a lot for hypoallergenic formula that tasted terrible and he wasted a lot of anyway.
Our little guy was not a great sleeper and out of desperation we found ourselves buying contraptions like a swing and rock and play, different kinds of swaddles, to try to resolve the problem. I think some kids are just bad sleeper and over time they get better and there isn't a ton you can do about it. You think you are set with everything before the baby comes but you end up buying "stuff" to solve problems.
Books - man I have a weakness for children's books and my son loves books. I have been forcing myself to use the library and I try to buy used but sometimes I just want a brand new version of a book we both love.
Car upgrade - My husband and I were both driving ten year old cars that we had done a good job maintaining. We didn't expect to upgrade one of them so soon but when we had a series of road trips coming up we gave in and bought a newer but used SUV with 17,000 miles on it. We shopped for several months and got a great deal and it doesn't have any bells and whistles but we weren't expecting that expense.
Benefits increase - my husband works for a company with top of the line benefits at very reasonable prices. That being said, we upgraded them. For example, he can pay $4 per month to have disability at 80% of his salary instead of %67 if it's ever needed, and we did that. We went from the HMO health insurance to PPO, increased our life insurance, etc. Our benefits upgrading cost us about $50/month. It's not a lot but with the other expenses above, it was just another thing on top.

Hope this helps!
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Re: What was your financial situation before having first ch

Post by Elena78 »

mw1739 wrote:When we had our first nearly three years ago, my wife came up with the idea that we needed $50,000 in cash (probably 1 yr expenses at that time) before she wanted to get pregnant. When we had our second last fall, she was more concerned with spending that money to finish some home renovations.

P.S. Dont plan on babysitting while you're telecommuting. When they're a newborn they need fairly constant attention. By the time they're a toddler they want constant attention.
Agreed. I mostly work from home and cannot do ANYTHING with a toddler at home. He is in full-time daycare.
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Re: What was your financial situation before having first ch

Post by Ron »

I was enlisted military (E4) making $306.60/month with a separate housing allowance of around $100/month when our son was born in 1970, or around $2500/month, $30k/year in todays pay. We lived in a rented trailer (mobile home, in Florida) and had no more than a few hundred $'s in savings.

My wife did not work due to pregnancy difficulties and upon the birth of our (disabled) son, there was little chance that she would be doing so in the immediate future.

Easy? Certainly not, neither financially nor emotionally. But then again, that's life. Like the Beatles song says, you don't always get what you want, but if you try sometime, you just might find you get what you need :? ...

- Ron
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Re: What was your financial situation before having first ch

Post by Frugal Disciple »

Elena78 wrote:
mw1739 wrote:When we had our first nearly three years ago, my wife came up with the idea that we needed $50,000 in cash (probably 1 yr expenses at that time) before she wanted to get pregnant. When we had our second last fall, she was more concerned with spending that money to finish some home renovations.

P.S. Dont plan on babysitting while you're telecommuting. When they're a newborn they need fairly constant attention. By the time they're a toddler they want constant attention.
Agreed. I mostly work from home and cannot do ANYTHING with a toddler at home. He is in full-time daycare.
+1 We just had our first in August and unless your job allows you to go extended periods of time "hands free" it will be extremely difficult caring for a newborn while working.

I would say that I was a little more focused on finances than Mrs. FD leading up to the birth. Our priority was paying off all debt prior to the due date, which we did.

The biggest financial surprise that we have had so far is that our saving rate has actually increased a little mainly because we are staying at home a lot more than we used to. I'm sure this will not be sustainable as she gets older, but we are enjoying it while it lasts.
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Re: What was your financial situation before having first ch

Post by Johno »

First, 27 yrs old with pretty good job (~82k/yr in today's dollars) though only one income and job tied to a project with a finite end date, and planning to return to school anyway. Second, after returning to school, unemployed grad school student with two kids in diapers. Since you asked, I do think somebody in your position would be obsessing to delay having a kid based on your current financial situation as you've described it. Kid costs eventually escalate dramatically, but that's also the unknown future as far as your financial situation.
keystone
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Re: What was your financial situation before having first ch

Post by keystone »

dsmil wrote:
What was your financial situation like before having your first child? We're you also obsessing about money? Did things go better or worse than planned in the first year?
My wife and I just had our first child last year, I was 39 and she was 37. I really wanted to put off having a child as long as feasible because of the finances. We live in a HCOL and we knew we'd be facing daycare costs in the range of $350-$400/week minimum. When I first found out about the pregnancy, I crunched the numbers to see if we'd be able to continue maxing our retirement accounts while paying for costs of raising a child. Yes I worried about it, obsessed a little, but all of my calculations made it seem like things would work out ok.

I would say that things went worse the first year than what I had planned. While I knew about daycare costs, I really didn't have an understanding of everything else that might come along the way. We had medical bills approaching four figures, nothing terrible but their were some unexpected hospital visits that resulted in coinsurance payments. I also didn't accurately gauge the other baby expenses that came along the way - formula, renting a pump, diapers and all kinds of accessories beyond my imagination.

Despite all of that, having the child has been great and we have zero regrets.

Oh yeah, add me to the list of people who can't comprehend telecommuting and caring for a baby or toddler at the same time! :happy
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Re: What was your financial situation before having first ch

Post by Rodc »

Well first came a step-child and later two bio kids. Which count as first child?

Early middle age either way. Both well established in career. Savings well underway. Home with modest mortgage.

None of that really came into play as far as timing. There is no perfect time. Younger has some definite advantages. Older has some definite advantages.

Best of luck with the new little one.
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Re: What was your financial situation before having first ch

Post by Beth* »

Congratulations!

Virtually no one can "afford" to have a child in today's world, but we muddle through. I don't think there is a right time to have children.

We were both in graduate school and had a negative net worth (student loans). We were renting an apartment. We muddled through with some help from generous people who gave us hand-me-down equipment and clothes. I don't regret it for a minute.
111
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Re: What was your financial situation before having first ch

Post by 111 »

TL/DR I was worse off than you financially and didn't worry too much about money. First year was pretty easy. After that, and with support from my parents, I quit my job in a gamble to finish my degree and get a better job and ended up getting very lucky and being way better off. Way-too-in-depth version starts below.

__________________

I was about 32 and making about 35-40k/yr working in a factory. I have no idea what was in my retirement accounts at that, but I'll guess maybe 20-30k. My only major debt was my mortgage.

I wasn't too worried about money, but starting a family did provide me a little motivation/ambition where I never really had much on my own. I had started going back to school a few years previously just before getting married (age 29). It took about 3 years to finish my associate's degree (IT) doing online courses through the local community college. That's because I didn't want to go into debt, so I just took the number of credits annually to maximize the tuition reimbursement I could get through work and not pay out of pocket.

After she was born, I decided to try and finish my bachelor's (Network Security and Forensics) and I did take out student loans (about 16k total). I kept working in the factory for a year while taking classes, doing both full time (and with an hour commute to/from the school.) That first year was day classes, so I had to changed my job to get on 2nd shift. After that, the 2nd year was night classes, but getting from 2nd to 1st shift is nearly impossible, so I had to quit.

It was a bit of a gamble, but I sold my condo and my parents let us move back in with them. This was pretty much necessary not only for monetary reasons, but because my wife didn't drive, had a 1yo baby at home with her, and with the new job I found (finally at least related to IT, but as a temp on a help desk, so paying only about $20k/yr) I was commuting an hr to work in the morning, working all day, driving about 45min. to school, and then taking something like 3-4hrs of classes at night before starting the hour commute back home. So, I was essentially home only about 5hrs/night while I slept and showered and rarely saw any of the rest of the family except on weekends. It was very difficult, so I'm glad I only had to do it for 9 months or so. I don't know if it was related to the stress or just general bad health of eating fast food all the time while doing this, but I ended up having to have my gall bladder removed. This was actually right before or between temp jobs, so I didn't have any insurance and it almost cost me $20k. Luckily, because I was a full time student my state's medicare type plan kicked in and paid for the majority of it.

I finished my degree and got hired on at the same company full time and we moved out of my parents and got an apt closer to the job. They were cool enough to hire me full time even though they knew I was in the process of looking for a higher level job and had a few pending offers. I applied for pretty much every single entry-level IT job on USAJobs.gov for like 3 months with almost zero response. A few months later I got a package in the mail inviting me to Washington, DC to take the Oral Assessment to become an Information Management Specialist in the Foreign Service. I really didn't even remember applying for it as I applied for so many jobs that I almost got robotic at it and quit paying attention to them for longer than it took to complete the application. So, I did the assessment and passed. Had to do medical and security clearances and wait for those. Probably 8 months after that interview I finally got to start orientation.

My salary almost tripled from what I was making at the help desk and my bills pretty much dropped to zero as housing is pretty much provided while in training or when posted overseas. So, by the time I finished training I had paid off the credit card debt that I'd accrued in the gaps between the temp jobs after the slight profit from the condo sale ran out. Then all I had was student loans which were paid off the next two years thanks to the State Dept's Student Loan Repayment Plan.

Now my daughter is 7yo and financially we are in a much better situation now than before. I'd say I obsess more about money now than I did then. I guess it's harder to obsess about it when you don't have much. :) Just make sure you enjoy each stage as they grow because you don't even realize how fast they change. Good luck! :beer
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Re: What was your financial situation before having first ch

Post by reggiesimpson »

It was improving in leaps and bounds because I worked 7 days a week so I wouldn't have the stress of not having enough money to pay all the bills associated with having and raising children.
Sounds to me like you will be fine.
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BL
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Re: What was your financial situation before having first ch

Post by BL »

pennstater2005 wrote:
Toons wrote:20 years old and broke :happy
32 years old and broke :D
21, 24 years old and broke, living in a minute trailer house on campus.
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Re: What was your financial situation before having first ch

Post by peterp »

nanoanalyzer wrote:With a mid-100s income, you are among the highest 0.1% of earners in the world. I think you'll be okay. :wink:
Try to remember the simple things. The money will fade into the background.
+1
I'm 40 with 8 kids ... still nowhere close to mid-100's income ... yet I feel we have what we need and more. Bunk beds, older cars, ... sure, but new home designed/built by us a few yrs ago with large family spaces and small bedrooms (but splurged on an exercise room).

Plan to payoff mortgage around time 3rd child enters college. Can cash flow state college tuition/books if need be. Am teaching kids to earn / save their own money for housing, etc.

Money is all about personal priorities. Kids don't cost much. College is the next bubble.
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Re: What was your financial situation before having first ch

Post by GoldenFinch »

peterp wrote:
nanoanalyzer wrote:With a mid-100s income, you are among the highest 0.1% of earners in the world. I think you'll be okay. :wink:
Try to remember the simple things. The money will fade into the background.
+1
I'm 40 with 8 kids ... still nowhere close to mid-100's income ... yet I feel we have what we need and more. Bunk beds, older cars, ... sure, but new home designed/built by us a few yrs ago with large family spaces and small bedrooms (but splurged on an exercise room).

Plan to payoff mortgage around time 3rd child enters college. Can cash flow state college tuition/books if need be. Am teaching kids to earn / save their own money for housing, etc.

Money is all about personal priorities. Kids don't cost much. College is the next bubble.
I completely agree with your last line. I think the part about college being the next bubble is so true! I am waiting for the implosion. There has to be a threshold where even people who can easily write a check for 63k a year just say "no thanks" and choose something less expensive. I personally am rebelling. I will happily pay for in-state college for my kids, but anywhere else and they will have to have a giant scholarship. In fact, I think there is a song about going to state universities sung by Frank Sinatra that goes something like, "If I can make it there, I can make it anywhere. It's up to you State U, State ...."
stoptothink
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Joined: Fri Dec 31, 2010 9:53 am

Re: What was your financial situation before having first ch

Post by stoptothink »

jfssail wrote: That was when you could work your way thru 4 years of College. My, have times changed
I finished working my way through 11yrs of university education just 2yrs ago, not a penny from my parents or a single loan. Have another (younger) sibling who did the same, except they stopped at an MS last year. It was difficult, but it is not impossible, even now.

I was 31, my wife had a daughter from her first marriage. I had just completed my PhD, zero debt, low 6-figures in retirement, was making a decent living for a single professional adult, and saving about half of my take home. Now at 33 my wife is pregnant with #2, not much has changed except my salary is barely decent for a growing family, we have had to cut back savings, and are now considering buying a home because the ~700^ft apartment might be getting a little small and I doubt our daughter wants to share her room too long with her new baby brother.
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