Finances thread

AL_TwinCities · December 2015

Saving for maternity leave and/or baby's first year? Planning to not go back to work and figuring out the finances of bring a SAHM? This is the place to ask financial questions!

AL_TwinCities · December 2015

My maternity leave will be mostly unpaid. 5 weeks at 70% of my pay, and 7 weeks unpaid (or I can take vacation for some of it). I am trying to decide whether to pay down as much debt as possible between now and my EDD, or saving every penny to try to make up my lost salary. We typically don't save aside from retirement and my HSA, and we usually need my paycheck to pay all our bills, though we are on an extreme debt paydown plan now. What would you do?

WinchesterGirl · December 2015

@AL_TwinCities We are Dave Ramsey fans, and he recommends saving the whole pregnancy instead of paying down debt, as you never know what expenses you may have. Since you know you're going to have 7 weeks unpaid, at least you have a set goal. If you wanted, you could maybe modify that, and save the salary amount, then go back to paying off all debt until the baby is born?

We have decided that I am not going back to work at my office job after the baby is born. So what I'm trying to figure out is: what the budget will be post-baby, and what can I do ahead of time to make the transition easier finance-wise?

AL_TwinCities · December 2015

Thank you @WinchesterGirl - I like David Ramsey's advice. I think I'd be most comfortable with that, and looking at tackling the debt after we have the lost salary saved up.

If I were you, I'd draw up a budget for expenses and income after you stop working. You may see some savings in gas, parking, work clothes, maybe lunch if you eat out now, etc. Make sure you have enough space for savings and a buffer for the unexpected expenses so you don't have to use credit (that's how we got into this debt in the first place!). To ease the transition, I'd save as much as possible and pay off any revolving debt you have. If you have less bills to worry about and a nice rainy day fund, it will not be as scary going down to one income.

Kristin712 · December 2015

@AL_TwinCities That's a tough decision! I think if i were you, I would stop overpaying on your debt payments right now and save up enough money to cover your regular monthly expenses for the full duration of your maternity leave. After that, I would begin paying more toward debt.

I was struggling with whether I should pay off my car now or continue as scheduled for the remaining 20 months. In the end, I decided that it makes more sense to stick with the monthly payments. While paying it off would relieve financial stress during my leave (DH's salary would then be able to cover all of our expenses), we would have no money in the bank in case of emergency before/during/immediately after maternity leave. So, we are going to make sure we have enough money in savings to cover my missing salary for 12 weeks.

@WinchesterGirl I would begin cutting expenses and attempting to live on DH's salary right now while yours goes into savings. This may not be possible since your work-related expenses (gas, lunch money, dry cleaning) may require some of your salary at this time, but I would try to do it as closely as possible.

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