Budgeting and Babies Thread, March

WinchesterGirl · March 2019

Babies cost money. But it can be a lot, or a lot less! What is your strategy for handling the changes a baby brings to your financial life? Personal finance is just that, personal! Every family approaches things in their own way and has their own means. Let's keep this thread positive and a safe space to discuss finances to support the new baby.

This will be a monthly thread to talk babies & finance/budgeting.

Some topic ideas (but feel free to discuss anything finance related):
- new budget categories
- areas you are cutting back
- loss of income/new income streams
- medical expenses

And special for January: Are/did you get a tax refund this year? If so, are you using any of if for the baby?

Allycat11 · March 2019

We actually really lucked out and got our biggest refund ever (shocking as I am self employed). It hit our bank account today and we are planning to play catch up on some things...last year was rough with DDs medical issues, I had to leave 1 of my WAHM jobs to care for her, the engine blew on our good vehicle, etc... We need to order a few fairly inexpensive furtniture things like a bed and dresser for DS's big boy room and a new desk for me that will fit in our living room. A few years ago our a/c died and we have just been toughing it out because we barely need it where we live but if we have enough leftover that is on the want list right now.

Also, financially irresponsible side of me. Today I have an OB appt and there are 2 baby/kids boutiques that I love nearby. I am planning to go shopping at them and buy several things without beating myself up over the cost. Thankfully we are team green or I would come home with alllll the overpriced baby clothes for B3.

And general buget talking - I save money on raising kids by not paying full price for much of anything. There are always sales on most things you need to purchase clothes, gear, toys, etc... I just make sure to almost exclusively shop sales.

ETA: I know getting a big refund is actually not the best way to handle your money as you are basically giving the government an interest free loan. We owed the previous yesr and made some adjustments, plus there were changes to our financial situation during the year and we did not anticipate getting this much back.

Avrilmai · March 2019

We/I haven't filed our return for 2018 yet. Trying to decide if I want to do it myself or utilize a CPA (all the medical expenses last year!). I'm hoping that we either break even or get a bit of a refund. In past years we have owed because I had a second job as a contract employee, but I stopped doing that before we started IVF.

DH took a new job last year and it was a bit of a pay cut, but the trade-off was worth it for his mental health. He also works from home now, so that saves on fuel costs and "eating out" and his new company offers paid paternity leave.

I do have a question for you ladies, any suggestions on interest earning accounts for saving for baby? We have an interest earning checking account that actually earns more than a savings acct, but has anyone done a 6 month CD or other higher-interest acct in the short-term?

bluebonnet15 · March 2019

@Allycat11 is exactly right: a refund is an interest free loan to the govt! We try to get close to even, and I’m fine owing a little. But, this year MH switched jobs and ended up paying too much into SS, so we’re getting a refund. It will go into our savings account, as we hope to purchase a new, larger home next year.

It appears that the number i had I had in mind for daycare monthly expense is lower than what it will actually be, as I ruled out a daycare that’s further away last night. I just can’t do a 20+ min each way extra trip to get her to daycare. My time is worth the extra $200ish closer daycare cost (we live in central Austin). I’m trying to keep in mind that costs go down as they get older...

We’re in the process of selling our townhome that’s vacant, so I’m waiting to start my budget spreadsheet until expenses associated with it are off the books.

sourlemon · March 2019

@Avrilmai it depends on why you are saving right now. Are you saving in order to buy stuff over the next few months (nursery furniture, baby supplies, etc.) or are you saving to eventually put it in a college fund?

If you are going to spending it over the next 5 months, I'd recommend just using a high interest savings fund or money market account if you have the minimum funds needed to make it work it. If you dont plan to touch the money until after the kid is born, and just plan to put it away in a college fund of some sort, I'd recommend a CD. Even if it goes a month or two past your due date, you can then convert it to a college fund.

We use quite a variety of methods. Things over 6 months get a CD. Long term things get a CD ladder where one 12mo CD matures every 3 months (it takes a while to set up but is nice once in place) then if its not needed, it rolls to a new 12 month CD. We have a starting point saved up for this baby's 529 fund. It is currently in a CD maturing this month, but Ill open a new CD for 6 months. Once that matures, a 529 will be opened. But we also have some just in cash (savings acct) to use to buy the big things.

wanderlustsoul · March 2019

We’re just trying to stick to our budget categories for once. Also buy 1-2 baby things a month to spread it out. We did the stroller for March.

I will get a tax refund once I file my taxes but our taxes for Canada work differently than the states. Since I quit my job in August and I paid taxes as if I was working for the whole year, I get back from that plus I was a student September-December and paid $18,000 in tuition so I get additional money back. It should be (fingers crossed) a large amount to cover some serious baby stuff.

sourlemon · March 2019

We had a weird tax year last year due to DH's dad passing away and his retirement fund automatically paid out to us. It counted as income and even withholding a bunch, we still owed more on it. However, due to our adjustments that we made, we will actually be getting a refund this year of about 1K-1500...still waiting for our final paperwork. It would have gone straight into our "savings" (combo of investments, CDs, MMA, and savings accts), but yesterday was a doozy. One dog spent $300 at the vet and another needs a canine tooth pulled (she broke it during a seizure and the root is exposed) which will cost about 1K. So ta-da, tax refund already allocated.

As far as baby stuff goes, not much will be changing for the budget since we already have 2. We hope that my 2 year old is potty trained by the time this one is born, and my 4 year old starts kindergarten 2 weeks before my due date, so daycare wont be increasing and hopefully diapers will just be constant.

We have to buy some boy clothes, but plan to see all my girl clothes right after this one is born, so the costs should balance out. I buy mostly used baby clothes and only splurge on a few outfits for each size.

One area that might increase, sooner rather than later, is house cleaning. DH has convinced me its time to start getting quotes for someone to come in every 2 weeks and do the big cleaning. We used to have it done but quit almost 3 years ago because I was able to keep up with everything. But the last year I've gotten bad about it and its only going to get harder the farther along I am, then with 3 kids.

bluebonnet15 · March 2019

@sourlemon Having our house cleaned is a luxury that prevents so many arguments between MH and I. Worth every penny for me!

@Avrilmai I actually hadn’t thought of “starting” LO’s 529 with a 6 mo CD. That’s a great idea.

Twinkiedoll · March 2019

@heml same here re the cleaning person. It avoids so much resentment that I build towards DH because he is a bit of a slob (and this is an improvement from when I first started dating him so it's not like he's not trying).

mrosek91 · March 2019

So our tax story is fun this year... In 2017 DH got paid as a consultant, and had to pay estimated taxes. He was told starting in January 2018 he would be paid as a part time employee (so no benefits, but yes withholding.) That lasted all of 2 months, and then they said, never mind we're going back to paying you as a consultant. We calculated my withholding based on his withholding, and forgot to adjust when he went back to estimated taxes, so we will be getting a refund. But IRS is doing this fun new thing this year where instead of getting a refund, you can put it towards your next estimated taxes payment, so we're doing that.
As far as budgeting goes, every year we sit down and look at our income and expenditures, and adjust as needed, we usually try to do it in January or February, but we're running late this year... We know changes will be needed since the preschool we're sending to is closing, and the one we choose instead is more expensive, and we'll have 2 there instead of 1, plus the nanny...
But maybe we'll figure it out in time for me to report back on the April budgeting thread.

mrosek91 · March 2019

I do have to say I am jealous of all you ladies with a cleaning lady. DH is very frugal, and insists we don't need one. Our nanny is great and does do a lot of housework (vacuuming, the boy's laundry, dishes) even though it isn't technically part of her job. The only thing is she's not allowed in the Master Suite, so our room, bathroom and laundry seems to never get clean. But he's probably right, that we don't need someone just for that...

olivemomma · March 2019

We had really complicated taxes this year so had to hire a pretty pricey CPA. Our return was almost 100 pages! And for the first year ever we owe a decent chunk of money. Boo. We deposit monthly into a 529 for each kid and will add one for this little babe as soon as they are born. Our extra money goes to fund our IRAs, invest in the stock market, and pay down grad school loans.
@Avrilmai do you use Vanguard? Even their basic brokerage account accrues interest at a pretty good rate and there is no minimum or time restriction. You can move the money easily between your bank account and online account and then invest into a well rounded portfolio as you feel comfortable.

WinchesterGirl · March 2019

@Avrilmai We have a savings with CapOne 360 as they had the highest interest on a money market account when we were shopping for a high yield savings. I believe it's 2%? But a CD ladder as @sourlemon described is a very good option if you are sure you won't need an early withdrawal.

@heml good luck with your sale!

@sourlemon If you can swing it, the house cleaning is AMAZING. We used to do it as DINKs and it was the best choice. One day we will again!

@mrosek91 It is hard to get withholdings right when your job keeps changing things! It sounds like you guys made the best of it.

@olivemomma 100 pages is insane! Thank God for CPAs.

As for us, we did get a decent return, and just put it all straight to our emergency fund. We had a large capital expenditure for one of our rentals which wiped our savings lower than we like, so our priorities are not quite focused on baby just yet:

1. Refill EF.
2. Keep up with all incoming medical Bill's, OB portion prepayments, and saving for OOP Max.
3. Anniversary trip
4. Doula fee $1,100
5. Other baby gear/ wants
6. Home improvements we'd like to complete pre-baby

I'm also impressed so many of you are jump starting the 529! I thought we were doing well just getting it started before DS turned 1.

Avrilmai · March 2019

@olivemomma I don't, but I will look into it. thanks!

@sourlemon the CD ladder is an interesting option. I will look into that as well. Thanks!

peachy0709 · March 2019

So DH would absolutely agree with @heml on the "interest free loan" thing, but I will say, our first real "adult" year after DH finished graduate school and we had two incomes, we did not withhold properly and had to pay the government $7,000 and I don't CARE that they are just holding my money, I will never be on that side of a tax refund AGAIN!

For budgeting, we're doing okay. I just switched jobs and my new insurance is pretty good and my HSA between my contribution + my employers will cover my entire deductible. We're doing some projects around the house because need to move (our little starter home was perfect for a family of 3, has been okay for a family of 4, will be literally impossible with a family of 5 + my parents regularly staying with us). The costs are off-set by our refund, which was lower than previous years, but still substantial to handle the painting and other small handyman projects we need to complete.

I've made it a goal to make a good amount of money off "side hustles," like Ebates, Ibotta and consignment. I've made $30 to date, which isn't a ton obviously, but I think as I get better will be a nice supplement. I sent several of my daughter's nice dresses to Bagsy (GREAT consignment shop, and a pleasure to work with, too) since I won't be passing DD2's dresses to a new baby girl!

grangerhp37 · March 2019

I love this thread!

1. We have a pretty solid emergency savings, but I’d like to build it up to 12 months worth of essential expenses. We’re on track to have that saved by the time baby is here, at about 8 months worth now.
2. No debt other than our mortgage. That was our goal while TTC to accomplish before we have a baby, we completed that in October.
3. We just reserved our spot for daycare starting January 2020, so we have a good estimate of what daycare costs will be. We can put up to $5k in an FSA to use towards childcare, and we don’t currently use an FSA so we will need to figure that out next month when open enrollment comes around.
4. Planning to start a 529 when baby is here. We will hopefully put in some $ every month, and any family members that offer to contribute could do so for birthdays/ Christmas/ etc. My IL’s have already mentioned wanting to contribute to an education fund.
5. Our budget has been pretty consistent for a few years. The biggest change will be daycare, which will come out of our transfer to savings (currently a lot extra per month) and extra spending money.

One thing I’m not sure how to plan for is childbirth/hospital costs. We upgraded to the Gucci health insurance plan last year, and from what I can find our costs should be pretty low (since our premiums are high), around a few hundred. So far I’ve paid $0 for prenatal care, including NIPT and NT scan (under 35). But I’ve heard many stories of people getting large unexpected bills, so I wonder if we need to plan for our Max OOP just in case. Our emergency savings would cover it, but I’d like to have extra money set aside so we wouldn’t have to touch our emergency savings.

Has anyone reached out to their hospital to get an estimated cost? Any advice from STM’s for how to get an idea?

sourlemon · March 2019

@dogmomma096 I'd recommend reaching out to your insurance. The hospital really doesn't know how every insurance plan does things. One thing to ask the hospital would be if ALL the doctors are in network and if lab work is processed in house or sent out.

With dd1, the hospital was completely in network and all the doctors were. So the insurance answered the question for us on what our OOP would be. However, both dd and I needed blood work sent out because the hospital didn't have the right equipment. They sent it to a place that was out of network and almost a year after the birth we got the very unexpected bill. We didn't know it happened even so we're quite shocked.

Dd2 everything was by the book and we payed exactly what insurance said. No surprise bills. But we were prepared for one just in case.

thirdtimesacharm2019 · March 2019

@dogmomma096 I would agree that reaching out to your insurance is a good first step, but without the actual codes that will be billed they may not be much help. If you have a common health plan you may get better results with your OB or hospital directly, as others are incurring similar charges.

It will also vary greatly on any unexpected events (hopefully you don’t have any), like c-section or extended hospital stay for you or baby. DS2 was in special care for five days, with a $17K bill, which ultimately had to be written off because the hospital billed the insurance incorrectly and refused to fix it. It was a hot mess, and we wonder why health care costs are so high! But that would have likely caused an OPP max for us (and my husband worked for a major insurance carrier at the time, so we had excellent coverage).

I would take whatever estimated you can piece together and double it. Better to be over prepared in this case.

WinchesterGirl · March 2019

@dogmomma096 This will definitely vary by who your insurance company is, but we have BCBS and they have a cost estimator on their participant website. With my first I was able to actually compare 3 local hospitals expected OOP for both vaginal and C/S delivery. Additionally, pre-registering with the hospital usually occurs later on, but when I did that I was able to ask if they had an estimated OOP for me with my insurance and I believe they were pretty close.

aecm · March 2019

@dogmomma096 It is SO hard to predict delivery costs. We have a high deductible plan (everything is covered after we pay $8k OOP, but thankfully my husband’s work start’s reimbursing everything after $4k...it’s just a lot of paperwork), so we plan on hitting that deductible in the years I give birth. If the hospital bills don’t get us there, all the subsequent pediatrician visits certainly will.

My one big piece of advice is to make sure you go through all the bills carefully. I delegate this to DH 🤣. DD arrived via emergency C-section, and b/c she was in distress she got a full NICU team in the OR. The hospital and all my physicians were in-network...apparently one of the nurse practitioners who looked her over was out of network. So there was a big charge for this one provider (who we never met, never talked to, didn’t even know she existed) that we were initially told had to be paid for OOP and didn’t even go towards our giant deductible. DH talked to billing and ended up getting the charge removed...so also don’t just automatically agree to pay anything that seems odd.

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