Financing Baby...

heyybritt · January 2020

@shamrocandroll how did you choose this person? Is that different than just a general financial planner? MH has been wanting to handle everything himself but I'm wondering if something like this might be better for us.

shamrocandroll · January 2020

@ruby696 In our case, we got a special free rate for our first year because our advisor was in the process of buying out his retiring partner, and was building a client base by offering his services free for the first year. That was where we did the bulk of the hard work, so I can't tell you how much that would have cost normally. I can tell you that he's used to working with families in debt and therefore has a lot of flexibility for if/how you pay. He's interested in lifetime clients, not just people who pay him once and that's it. We've been able to keep him on a small retainer of a few hundred dollars per year. For that, we get annual reviews with him, 401k account analysis and re-balancing, and he manages our trust and 529 savings accounts. We saved hundreds a month just in the refinance he helped us do alone, so definitely worth it!

shamrocandroll · January 2020

@ruby696 Also, to be clear, I definitely still spend money on unnecessary things, and can always use to improve in that regard, but at least now we can afford the occasional financial slip-up without sending ourselves spiraling into a debt vortex.

rachelg777 · January 2020

@shamrocandroll do you use a fee only financial planner?

ETA nevermind just saw this continued on the next page and you answered.

shamrocandroll · January 2020

@heyybritt I attended a free seminar he did when he was trying to build his initial client base. It was at a local library. They call themselves a family financial solutions company, but I think he'd categorize himself as a financial planner. It's just important to note that this is different than an investment adviser.

pirateduck · January 2020

@ruby696 a finance person once told me "pay yourself first." It was a simple first step for me that stuck with me. Make a savings account, if you can do direct deposit from your paycheck it's even better. Set a percentage and every time you get money, whether it's from a paycheck or from a birthday card from grandmom, put that percentage in your account first. It's your money that you earned. This is not for the phone bill, this is for life, later, whether that's an emergency medical bill, or a car repair, or back to school shopping for the kiddos or vacation, but it creates a fund that will allow you to have money set aside for future expenses without creating credit card debt. Also it forces you to live on a monthly budget that is less than 100% of your paycheck, it forces you to readjust your routine spending possibly. If the money gets direct deposited there instead of your checking account, you never see it and can't make charges against it as easily. Generally a goal of 20% savings each month is a good starting point. If you have debt you are paying down it changes that, you could do 5% savings and 15% towards debt, usually focusing on whatever has the highest interest rate first. It sounded impossible at first to only live on 80% of my income, but you find ways to adjust, and it's soooo nice later when you do need the money for something to know it's there. It saves some serious stress and it saves some serious credit card interest.

m6agua · January 2020

DH and I have been working on trying to get an appointment with our financial planner. Right now he just holds our IRA accounts, we've started the inventory paperwork but have yet to schedule and actual appointment to go over everything and make a plan. I think the initial visit is around $500 and we are supposed to do 2 visits per year or something like that. I'm going to put that on my to do list to set up our appointment.

jkr2019 · January 2020

If you have USAA you can talk to your financial planner as much as you want for free. We talk to ours probably four times per year. I’m guessing Navy Fed may have something similar but we’ve never checked. So you may want to see if your banking institution offers any free programs.

sunshinesea22 · January 2020

@shamrocandroll I never had considered that the “target year funds” might not have an appropriate allocation. I’ve always been in the target funds, so maybe it’s time to switch that up. We were just gifted a small investment account from my dad and the financial adviser is also a financial planner who says he does the budgeting stuff etc. I’ve been meaning to have him take a look at our finances and set us straight. We also need to get “real” life insurance. We both have it through our employers but not enough. Our home and auto insurance agent told me that they advise 5-10x (preferably 8x) your annual income in life insurance and we are no where near that. Idk if this is true or not but something makes me think that you’re not supposed to apply for new life insurance while pregnant. So it’s on my short list to at least get DH set up now and I’ll do mine after baby arrives (and pray for a safe delivery in the mean time).

shamrocandroll · January 2020

@sunshinesea22 I applied for my policy while pregnant. It does get considered a "pre-existing condition" (eyeroll) but as long as you are in otherwise good health, it shouldn't affect your rates too bad. They sent a lady to our house to take our vitals and do a finger prick blood test and then came back to us with our rates. Our planner chose a $1 million policy for me and a 750k for MH and we're locked in for 30 years, I think. Once we get there, we won't need such big policies because we won't have dependents anymore and our expected remaining life won't be as much (depressing, but logical). We pay about $250 per month for both of us. We also recently learned there are policies that exist out there that lock you in for life and you can essentially withdraw from them to help pay for your kids' college, up to $40k per year. Those were a lot more expensive at around $700 per month, but that's because it basically doubles as a college savings fund. We opted for a 529 so that we could pause or make extra payments to it as needed and not be locked into $700/month forever. But it's worth asking about!

catem07 · January 2020

We have a lot less life insurance than @shamrocandroll, but I would encourage everyone to get life insurance that is not connected to their employment. You could get sick, run out of FMLA, be laid off, and have no life insurance anymore. Or change jobs and have a new job that doesn't offer it. I waited until after I had a baby to get it. Unfortunately my rates were higher than my husbands because I've had a few abnormal moles removed...

You can look at policy estimates on policy genius. We pay $33/mo for a $300k policy for me and $300/year for a $400k policy for DH. I think we did 25 years, but maybe 30? Also consider that your kids would inherit your retirement accounts as well, though I'm not sure the tax implications of drawing from that money.

emlettuce · January 2020

@catem07 we also used policy genius and thought they made the whole process very easy. Part of it was getting a physical but a nurse came to our house which was convenient since DS was so small at the time.

pirateduck · January 2020

@catem07 in terms of kids inheriting a 401k, I believe the same rules apply to them as you (unless you do anything special). So there is no penalty if they wait to the appropriate age to withdraw and they have to pay taxes at their current tax rate when they withdraw if you put the money in pretax.

catem07 · January 2020

@pirateduck I wonder what that means if they are like 16 years old? I'll add it to my list to ask our Edward Jones person.

ruby696 · January 2020

I just want too add that if you can't afford a large policy, at the very least you should try to get one big enough to pay off your mortgage and vehicles. That's what MH and I did when we had our first, and there was comfort in knowing that if something happened to either of us, the other would at least be able to pay off the house.

bananapanda · January 2020

@sunshinesea22 I applied for life insurance while pregnant with DD1 with no issues. I think it's very common for a life event such as pregnancy to encourage people to get life insurance so it's expected many pregnant people are applying. I don't really think it affected anything on my application except for making me a few pounds heavier. We have 30 year term policies for both of us as well as small WL policies (maybe $30k each I don't honestly remember). The WL policies are to lock in our rates to make sure we will always have some coverage when we die for any funeral costs etc if for some reason we do not have life insurance through work or anywhere else when that time comes. The term policies are really where the bulk of it is (I think ours are maybe $750k and $500k. Again I don't remember, but I know with our term policies combined with our work policies we should be around $750k-1M each). I think I put aside $150-$200 every month and then pay ours in a lump sum out of this account when it comes due.

catem07 · January 2020

Also SAHMs need life insurance too! Sometimes I feel like because they don't bring in an income they don't think they need it, but your partner will have to pay someone to do a lot of the things you're doing now, so you should factor in the cost of childcare--not just daycare, but before and after care for school-age kids etc.

adventuresawait2 · January 2020

Third the rec on policygenius if you are looking to do life insurance - they made it really easy and advised us the best company to go with in a situation where we knew would could get higher rates for having a parent who passed away young. I also did it while pregnant and it was not an issue.

We also recently got a will through the legal services option at H’s work. They will find you a lawyer to do the will (trust is extra and we did pay for that, but a discounted rate). It gives me some peace of mind to know that with life insurance and will, we are prepared in the event of the worst case scenarios.

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