Just found out we're pregnant. What should I do now before the baby arrives?

[billchrz]

We just found out today that my wife is pregnant and due in November

I'm wondering what I should start doing now to prepare in terms of taxes, savings, college, etc.

We make just about 100k and will pay off our last debt next Friday when my bonus arrives. From there we will be able to add about $1000 - $1300 per month to our emergency fund which would fully fund it to 5-6 months expenses by the end of the year.

I currently contribute 10% to my 401k and my company gives me an additional 9% of my salary towards the 401k.

Can I open a 529 before the baby is born? Is there something better that I should do?

[sweeps]

Congratulations!

You can open a 529 for yourself, and then change the beneficiary to your child once he or she is born and has a SSN.

I would definitely build up your emergency funds. I would also check out your health insurance and life insurance policies to make sure they are up to snuff.

Most importantly I would plan a long vacation as you're not going to get much free time the first year or so. Similarly, work on completing any projects around the house (including a nursery).

[noppenbd]

Originally Posted by billchrz

I'm wondering what I should start doing now to prepare in terms of taxes, savings, college, etc.

Congrats! My wife is due in August with our 2nd, so I am right there with you!

In terms of taxes, you will get an extra exemption plus the child tax credit on your 09 taxes. Depending on your current tax bracket, that will probably mean an extra $1700-2000 a year for you. So I would immediately adjust your W4s to withhold $2000 less for the remainder of the year. If you are paid every 2 weeks you have 21 paychecks left this year, so that is almost $100 a paycheck that can go towards your EF now. If you already get a big refund you could adjust it further to reduce the refund size. You may also get a state tax break.

I would also look into how much your pregnancy is going to cost in terms of medical bills. Hopefully the hospital stay is covered 100% but it never hurts to check.

Take a look at the maternity period (if your wife will be working after the baby comes) and whether she will be paid during maternity. My wife gets 6 weeks under her short term disability (@ 60% of normal pay), and the rest will be taken as paid leave, and then unpaid leave.

If you will be needing day care you can start to investigate that now. Some of the higher end day care places have long waiting lists (6-9mos) where I live.

Good luck!

[jIM_Ohio]

The 529 should not be a huge priority.

Here is my checklist

1) 6 month EF
2a) what is your occupation- might call for a 12 or 24 month EF
2b) keep retirement at 15% or more of income
3) adjust withholdings now (you get credit for having kid(s) all year, even if they were only here for 1 month of 2009.
4) pay off mortgage before child 1 goes to college
5) 529 once all of the above are met

My big one is pay off your mortgage before you pay off child's college. If you looked at your annual mortgage payment, is that enough to pay cash for child's college? Is it close?

[sweeps]

The education fund is certainly not as high a funding priority as your retirement fund, however I think it's important to have a 529 (or similar account such as a Coverdell ESA) open with some funding going to it. You will likely get cash gifts for your son/daughter that you'll want to stash in there. Also grandparents or other family members may want to help by putting funds in it too.

[cashqueen]

Something else on a smaller scale..look out for good deals on diapers/wipes BEFORE baby comes and stock up whenever you see a good price. That way you'll have them on hand before you 'have' to buy them and possibly have to pay full price.

[zetta]

Ask friends with kids where the best kids resale shops are -- some even carry maternity clothes!

Check out these books from the library:
Baby Bargains, 8th Edition: Secrets to Saving 20% to 50% on Baby Furniture, Gear, Clothes, Toys, Maternity Wear and Much, Much More! by Denise Fields

Girlfriends' Guide to Baby Gear (Girlfriends' Guides) by Vicki Iovine and Peg Rosen

Go dancing, eat out at your favorite restaurants, see a movie in the theater. Babies can be pretty good in restaurants for about the first 6 months, if you time it so they're sleeping in the carrier. After that, eating out becomes much more challenging.

[zetta]

You might also consider updating your wills now rather than waiting until after the baby is born. (My son is 3 and we still haven't gotten around to it...)

[MonkeyMama]

I would just work on the emergency fund. You can always shift some to a 529 (or retirement) later. For one, pregnancy increases risk of medical bills (mom and baby). Also, preparing for unexpected bed rest or inability or unwillingness to return to work too soon. (Though no issue with the contributing 10% to retirement - your current plan seems fine).

When we had our first child we had about one year's expenses in the bank, and were hoping for much more than that (but my spouse was laid off when I became pregnant and never found work - so 9 months less than we expected in the bank). We sat on the cash until we had our children and made it through the first year healthy and everything. Didn't touch it much with the first child; used much with the second child (was harder to return to work - PPD issues and such). A little extreme, but I was the mother and sole breadwinner so I Felt we needed a much bigger cushion. On the flip side, I know too many moms who were set on working until they had their child - then never returned to work. & probably about as many just about ruined by bed rest and/or medical bills.

But you are entering a big unknown time period, and so cash really is best. If you don't touch it, then hey, you have a great start to the college fund. You can contribute to a 529 any time pretty much.

[billchrz]

Here is some more information after reading some of the answers and questions.

I work in the IT field for a pharmaceutical company that just had it's most profitable year ever and is expecting even better results with the launch of a new product this year. While I'll never say never, layoffs aren't a concern right now and I just got a pretty healthy bonus and raise.

My wife is on permanent social security disability and has been for over a year so we will not have any daycare expenses.

My medical insurance is excellent and will cover 100% of the hospital stay.

I think my plan will be the following:

1. Emergency Fund of 6 months as planned (completed by 12/09)
2. Increase 401k contributions from 10% to 15% immediately.
3. Change W4 immediately.
4. Open 529 in my name in case grandparents/family wants to contribute.

[TBH]

billchrz, I think your plan sounds fantastic.

Congratulations!

[Thriftina]

Originally Posted by cashqueen

Something else on a smaller scale..look out for good deals on diapers/wipes BEFORE baby comes and stock up whenever you see a good price. That way you'll have them on hand before you 'have' to buy them and possibly have to pay full price.

Better yet, request mainly diapers and wipes for your baby shower

[mommyof4]

Congrats! (No advice, just had to say it, though).

[jIM_Ohio]

Originally Posted by billchrz

Here is some more information after reading some of the answers and questions.

I work in the IT field for a pharmaceutical company that just had it's most profitable year ever and is expecting even better results with the launch of a new product this year. While I'll never say never, layoffs aren't a concern right now and I just got a pretty healthy bonus and raise.

My wife is on permanent social security disability and has been for over a year so we will not have any daycare expenses.

My medical insurance is excellent and will cover 100% of the hospital stay.

I think my plan will be the following:

1. Emergency Fund of 6 months as planned (completed by 12/09)
2. Increase 401k contributions from 10% to 15% immediately.
3. Change W4 immediately.
4. Open 529 in my name in case grandparents/family wants to contribute.

good ideas