Kids?

[VK25]

Hello,

I'm posting here because I'm interested in getting some impartial opinions regarding whether or not my wife and I are financially prepared for kids. One side of me thinks that we are, but the other side of me questions whether or not we are.

We're 25/26 years old and our combined income is roughly $75,000/yr before taxes.

Our car payments total $500 a month.

We own a home (1500 sq feet) and the mortgage/taxes/insurance cost $1,200 a month.

Car insurance, cell phone payments, and utilities total about $450 a month.

The big ticket item is that we have (combined) $1,000 a month in student loan payments.

No other debts. Our cash savings (not retirement funds) total about $4,000.

We're thinking about starting a family next year, but I'm concerned that our debt situation is going to make it difficult for us to raise a family. What are your thoughts?

[YLTL_Dan]

My wife and I are 29/30 and were in a similar position as you financially when we were your age. We've waited to have kids - not because we didn't feel comfortable financially - but because we aren't ready yet.

That being said, if you guys are really ready to have kids, I'd try to do a little clean up first. If I were you, I'd get rid of at least one car payment (buy a cheap car) and then try to save some more cash. I'd want a much bigger emergency fund than that... so many unexpected expenses can come with a kid.

Also, will your wife go back to work? If not, how much income will you lose? My strategy would be to start living now on one salary and saving the other... and once you do that you know you'll be able to support your family financially and you should have some more debt paid off / money saved.

[MonkeyMama]

I agree with the last comment. We had kids at OP's age, but with a huge cash cushion and no non-mortgage debts. Even so, can be difficult financially.

I'd at the least get the car loan paid off and build up some more cash savings.

Even if you have no intention for one of you to stay home with the kids, it is a good thing to plan for. You have time. There is always pregnancy complications, bed rest, and most people don't have a clue until the baby is born. (Most women will want to stay home - though they didn't think they would). So I think it is wise to think along those lines, even if your initial reaction is "Why would we do that??"

While young and childless I'd work at least 2 jobs each to get the debt cleaned up. Your future self and children will thank you profusely. You have the free time, energy flexibility, now.

[snshijuptr]

Having just had a baby, the biggest expense is childcare. Either a parent staying home with the baby or the baby's daycare. My advice is to start living as if you are on one income or are paying for daycare(which is $1400/month in my area). This money can go to paying down your debts, building up your emergency fund to 6 months of expenses (plus I liked to add $10K for the Baby), and then paying medical expenses. This will also help you think about your plans for after baby is born.

Just remember that you can easily reduce the ridiculous costs of consumer-driven parenthood by having a natural birth, breastfeeding, cloth diapering, and rejecting newborn toys or as a friend calls it "the circle of neglect" (the baby entertainers). Babies need food, sleep, and most importantly to be held and loved so remember that most of the purchases are for the parent's sake.

[lhkorn99]

It isn't just a financial decision - I think having kids at your age has its benefits - you have the energy to play with them, and you will hopefully live a long life together with them. It sounds like you are responsible with money, and I bet if you did have kids, somehow things would work out - like you would cut expenses you didn't need, or find a way to increase your income. I say go for it!

[Justin Pierce]

If possible try to make ends meet and finish paying your debts so that when you start a family it will no longer give you more problems to deal with...