Author Topic: When can we afford the luxury of children?  (Read 32469 times)

Mgmny

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When can we afford the luxury of children?
« on: December 21, 2016, 07:30:13 AM »
Hello! Longtime reader, pseudo mustachian (I try, but usually fail. I think i've got the big stuff down though), first time poster. I have a case study for all you wise mustachians!

Life Situation: Married, I'm 26, my wife 22. In the suburbs of Minneapolis. Our 1-year anniversary is coming up soon. 

Gross Salary/Wages: $165k-ish (wife: 60k, me: $55/hour - probably work around 2000ish hours this year)

Pre-tax deductions: 401k: $9,000 annually (15% of wife's pay, my employer doesn't offer a 401k somehow).  Health insurance: $4,000

Other Ordinary Income: None

Qualified Dividends & Long Term Capital Gains: not significant

Rental Income, Actual Expenses, and Depreciation: None

Adjusted Gross Income: $150k

Taxes: Federal, state/local, and FICA: Federal: $25,380, Minnesota: $8,916, SS: $7347, Medicare: $2204

Current expenses:
Mortgage: $1013 P&I, $320 T&I (both monthly), $80 PMI, extra principle payment: $1600 (monthly)
Utilities: $250/month (electricity, gas, water, garbage)
"Her" budget: $650 / month (shopping, gifts, restaurants, hobbies, hair, nails, lunch with friends, home decor)
"His"Budget: $150 / month (shopping, gifts, restaurants, car maintenance)
Cell Phone: $35
Gym Membership: $19 (don't get mad!!! this honestly almost pays for itself. I swim every weekday morning, use their showers, their soap, their sinks, their shaving equipment, hairspray, mouthwash. It comes to less than 1 dollar a visit)
Car insurance: $55 / month
Gas: $55 / month
Target: $200 a month (toiletries, household cleaning, makeup, some food)
Grocery: $250 (we eat like kings - ALDI is the greatest thing known to man)

Netflix: $12 / month
Spotify: $16
Amazon Prime: $8.50
Taxable WealthFront accounts: $1950 / month
Emergency/Savings account: $693 / month (this will probably drop off soon-ish. Currently have $12,000 in a 1% savings account through discover bank - we expect our 6 month true "emergency" to be about $13,500. But, we use this account for unexpected purchases as well (e.g. new water heater (september), dishwasher (november), etc.)).
Roth IRA: $900/ month (for both of us)
Vacation fund: whatever is left

Assets:
Home Value  (Zillow): $240,000
Roth IRA: $30k
Traditional IRA: $9.5k
Taxable WealthFront Accounts: $8k
401k: $2k
Emergency Fund: $12k


Liabilities: Home Mortgage: $197,000

Specific Question(s):  When can we have children, responsibly?
My wife wants to quit working when we have a child. She really wants a child, but she also wants a bigger house to raise the family in. At the neighborhood we're looking at, that could mean a 500-600k house (which is crazy, i know). I told her that if we want all these things, we need to wait like 10 years before children, so we can amass more wealth to be closer to FI. She was thinking more like 2 years to start trying (she'll be 24, me 28), and have a child in about 3 years. We've talked about getting a dog to push off the need for a child right away, but that's just another expense that pushes our FI goals further down the road.

Thanks for your help and analysis! I really appreciate it!
« Last Edit: December 21, 2016, 09:12:11 AM by Mgmny »

MrsDinero

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Re: When can we afford the luxury of children?
« Reply #1 on: December 21, 2016, 07:42:18 AM »
You two make really good money, don't seem to have a lot of debt but very little savings.  I'm wondering if the two of you are spending more than you realize.

Your personal monthly spending is $1350.  Some of the things listed should not be included in your personal expenses, such as groceries, car insurance/maintenance, dining out (unless you are dining out individually).

I think the first thing to do is to get a handle on what you are really spending.  This "who knows" category doesn't fly on the MMM forums.  You have to know.  Create a budget category for everything and total up the expenses.  You should also create a case study for this.

Off hand I think it is doable in about 3-5 years IF the two of can save 50-70% of your income between now and then, but I also think the two of you are spending more than you realize.


KCM5

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Re: When can we afford the luxury of children?
« Reply #2 on: December 21, 2016, 07:54:21 AM »
Do you really think you need a half a million dollar house in the MSP suburbs to raise a family? Really?

The key to saving a lot of money is keeping the big expenses down. One of the largest expenses you have is housing. I'd really rethink your housing wants if your wife wants to quit working and you want to add more expenses (children) to your budgets.

Although, you can look at it this way: every year your wife works before quitting to stay home gives you about $35k. So if you guys wait 10 years you'd have an extra $350k to work with.

I wouldn't suggest waiting 10 years though - for some reason I think people who really, really want children and are in a place to have them should probably start trying sooner rather than later. Fertility matters, and having a lot of time available to get things working is valuable.

nessness

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Re: When can we afford the luxury of children?
« Reply #3 on: December 21, 2016, 07:55:18 AM »
You guys could have kids right now without it being "irresponsible" - you have a high income and no non-mortgage debt, which is better than the vast majority of new parents. It will, of course, significantly lengthen your time to FI, but that's a separate conversation you should have with your wife, since it's mostly a matter of life goals and priorities.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #4 on: December 21, 2016, 07:57:07 AM »
You two make really good money, don't seem to have a lot of debt but very little savings.  I'm wondering if the two of you are spending more than you realize.

Your personal monthly spending is $1350.  Some of the things listed should not be included in your personal expenses, such as groceries, car insurance/maintenance, dining out (unless you are dining out individually).

I think the first thing to do is to get a handle on what you are really spending.  This "who knows" category doesn't fly on the MMM forums.  You have to know.  Create a budget category for everything and total up the expenses.  You should also create a case study for this.

Off hand I think it is doable in about 3-5 years IF the two of can save 50-70% of your income between now and then, but I also think the two of you are spending more than you realize.

I agree that we are probably spending too much, but at the end of the month, we put about $6200 towards our net worth, which is incredibly substantial. When we talk about spending less on frivolous things like "eating out" (also, in regards to the restaurant budget: we have separate budgets for this so we can go on "dates" and I can pay for her, or she can take me on a date and pay for me, etc,), we inevitably say, "Wow, we are making $165k a year, have no debt except our mortgage, and we're spending less than $1500 of it on ourselves. That's only $20,000 of our total $165,000. Do we really want to reduce our "luxury/frivolous" spending down even more??"

I know the answer should be: "Yes, we should, we will reach FI faster." But it's hard to argue that case when 20/165 = 13% of our income...

Mgmny

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Re: When can we afford the luxury of children?
« Reply #5 on: December 21, 2016, 08:04:53 AM »
Do you really think you need a half a million dollar house in the MSP suburbs to raise a family? Really?

The key to saving a lot of money is keeping the big expenses down. One of the largest expenses you have is housing. I'd really rethink your housing wants if your wife wants to quit working and you want to add more expenses (children) to your budgets.

Although, you can look at it this way: every year your wife works before quitting to stay home gives you about $35k. So if you guys wait 10 years you'd have an extra $350k to work with.

I wouldn't suggest waiting 10 years though - for some reason I think people who really, really want children and are in a place to have them should probably start trying sooner rather than later. Fertility matters, and having a lot of time available to get things working is valuable.

Thanks KCM5! I agree that 500k on a house is a lot. A consideration that went into this is: Our parents live about 60 minutes from each other, and we would like to be around the mid-point between them when we start planning a family. When we look in that area, and we consider the "best" school districts, the houses go from 500-1mil, so 500k is on the cheaper side.

I've talked to my wife about finding a less expensive area to live in, and the jury is out. It's hard to say, "Well, we don't want to give our children the best chance to succeed, so we'll pick a worse school district for them."

I know probably 90% of children outcomes are from parenting, but schools are important too... I feel like I'm sounding ridiculous and selfish, but these are honestly the conversations we have.

MayDay

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Re: When can we afford the luxury of children?
« Reply #6 on: December 21, 2016, 08:13:32 AM »
If you want to give specific suburbs, I can opine.

You need to remember 2 main things:

1. Even the "bad" schools in the cities are phenomenal.

2. You really don't want your kid going to Edina/Wayzata/etc. Run away from that peer group.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #7 on: December 21, 2016, 08:14:03 AM »
You guys could have kids right now without it being "irresponsible" - you have a high income and no non-mortgage debt, which is better than the vast majority of new parents. It will, of course, significantly lengthen your time to FI, but that's a separate conversation you should have with your wife, since it's mostly a matter of life goals and priorities.

That's true, but if my wife stops working, and we decide to cash in our $40k of home equity and turn it into a $500k house, our situation goes to: $460k liability on a 100k income. Things would turn upside in a second.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #8 on: December 21, 2016, 08:16:06 AM »
If you want to give specific suburbs, I can opine.

You need to remember 2 main things:

1. Even the "bad" schools in the cities are phenomenal.

2. You really don't want your kid going to Edina/Wayzata/etc. Run away from that peer group.

1. You might be right. I went to Park Center (Brooklyn Park), and I turned out OK!

2. Her family lives across the border in WI, so we were looking at Mahtomedi district. Do they have the same, "rich kid syndrome" that Edina/Wayzata has?

Psychstache

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Re: When can we afford the luxury of children?
« Reply #9 on: December 21, 2016, 08:22:15 AM »
Do you really think you need a half a million dollar house in the MSP suburbs to raise a family? Really?

The key to saving a lot of money is keeping the big expenses down. One of the largest expenses you have is housing. I'd really rethink your housing wants if your wife wants to quit working and you want to add more expenses (children) to your budgets.

Although, you can look at it this way: every year your wife works before quitting to stay home gives you about $35k. So if you guys wait 10 years you'd have an extra $350k to work with.

I wouldn't suggest waiting 10 years though - for some reason I think people who really, really want children and are in a place to have them should probably start trying sooner rather than later. Fertility matters, and having a lot of time available to get things working is valuable.

Thanks KCM5! I agree that 500k on a house is a lot. A consideration that went into this is: Our parents live about 60 minutes from each other, and we would like to be around the mid-point between them when we start planning a family. When we look in that area, and we consider the "best" school districts, the houses go from 500-1mil, so 500k is on the cheaper side.

I've talked to my wife about finding a less expensive area to live in, and the jury is out. It's hard to say, "Well, we don't want to give our children the best chance to succeed, so we'll pick a worse school district for them."

I know probably 90% of children outcomes are from parenting, but schools are important too... I feel like I'm sounding ridiculous and selfish, but these are honestly the conversations we have.
As someone who has spent their adult life working in the public school system and knowing lots of people who have worked for all kinds of districts all over the US, I would say that quality of school district is important, but it is diminishing returns and the curve starts lower than you think.

You certainly need to clear a basic threshold of having adequate facilities (not falling apart and filed with asbestos) and having the community/schools as physically safe, but a child's outcomes at a 'good' and 'great' district will be pretty much the same and truly depend on what you do at home for them.

Also, I hope you are using more than online ratings and fellow parent perceptions to define the 'best' district, because that is usually just a proxy for 'this district is primarily upper class white families'.

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neil

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Re: When can we afford the luxury of children?
« Reply #10 on: December 21, 2016, 08:25:48 AM »
Budgeting is required because you have to in order to rein in your natural impulses.  Accumulating net worth is hard to make tangible in your mind when there are real objects, meals and experiences to experience and obtain.  When you do the budget, you can really sit down and evaluate both your values and your goals and you tailor your budget to meet those.  Businesses are otherwise very talented at getting you to part with your money on things that don't provide any positive return on your life, but you are likely to engage in them without some kind of imposed limitation.  As a high income family, it does give you the flexibility to not worry about a six-month auto insurance premium or the mortgage check when it comes, but the things you value probably don't change much simply because your salary is double the average person. 

For the record, it is ok to value eating out.  What is not ok is ignoring the fact that the money could go to other goals.  You mention three big ones (moving up in house, going to one income with a child, and financial security) and you have limited resources.  Most people throw the goal of FI out the window because it is the most expensive to pull off (with ER looking scary, if you read any financial news) and simply live paycheck to paycheck until they are in their 60s and they have no choice.  You really have to actively take yourself down this road because few people are likely to support you in your life.

I don't really think there is a good time to have a child.  It's very hard to get FI before getting "old".  Women feel their biological limits better than men do, with good reasons - and you'll also be older parents as they grow up (unless maybe this is the norm now).  If you want children, it's better to align them to life goals.  The finances are almost always going to be "wrong".  Do you want to travel before?  Live somewhere else first?  How old do you want to be when the child is 5, 10, 15, and what do you want to be able to do with them?  There will always be some personal circumstance or emergency that will make it feel like it is the wrong time.  While you might feel "two years" is a bit arbitrary, I am sure she has good reasons.

MayDay

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Re: When can we afford the luxury of children?
« Reply #11 on: December 21, 2016, 08:27:44 AM »
If you want to give specific suburbs, I can opine.

You need to remember 2 main things:

1. Even the "bad" schools in the cities are phenomenal.

2. You really don't want your kid going to Edina/Wayzata/etc. Run away from that peer group.

1. You might be right. I went to Park Center (Brooklyn Park), and I turned out OK!

2. Her family lives across the border in WI, so we were looking at Mahtomedi district. Do they have the same, "rich kid syndrome" that Edina/Wayzata has?

Not quite as bad. But if (all) houses in the district cost 500k plus in MN, your kids' peers all have parents with those kinds of incomes. There isn't exactly going to be a lot of diversity.

Whoch brings me to, I am surprised houses in Mahtomedi have gotten that expensive. How big a house are we talking? And how many kids?

Sounds like your wife might be able to pick two out of 3: fancy big house, stay at home, or kids soon. 

KCM5

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Re: When can we afford the luxury of children?
« Reply #12 on: December 21, 2016, 08:28:12 AM »
I'm confused. Mahtomedi is not a super expensive place. Take a look at this:

http://www.zillow.com/homedetails/125-Park-Ave-Saint-Paul-MN-55115/2267255_zpid/

This one's not as cute but has a garage:
http://www.zillow.com/homedetails/86-Glenmar-Ave-Saint-Paul-MN-55115/2267788_zpid/

Are you looking at new construction? Don't convince yourself that you need to spend half a million dollars on a house.


Mgmny

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Re: When can we afford the luxury of children?
« Reply #13 on: December 21, 2016, 08:29:41 AM »

As someone who has spent their adult life working in the public school system and knowing lots of people who have worked for all kinds of districts all over the US, I would say that quality of school district is important, but it is diminishing returns and the curve starts lower than you think.

You certainly need to clear a basic threshold of having adequate facilities (not falling apart and filed with asbestos) and having the community/schools as physically safe, but a child's outcomes at a 'good' and 'great' district will be pretty much the same and truly depend on what you do at home for them.

Also, I hope you are using more than online ratings and fellow parent perceptions to define the 'best' district, because that is usually just a proxy for 'this district is primarily upper class white families'.

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That makes sense. Thanks Psychstache! We should probably re-evaluate where we want to live.

For the bolded part: What do you suggest? We aren't parents yet (as evidenced by this thread), so how do we pick? I just use the online ratings to get an idea of the district. What should I be doing better?

MrsDinero

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Re: When can we afford the luxury of children?
« Reply #14 on: December 21, 2016, 08:36:25 AM »
You two make really good money, don't seem to have a lot of debt but very little savings.  I'm wondering if the two of you are spending more than you realize.

Your personal monthly spending is $1350.  Some of the things listed should not be included in your personal expenses, such as groceries, car insurance/maintenance, dining out (unless you are dining out individually).

I think the first thing to do is to get a handle on what you are really spending.  This "who knows" category doesn't fly on the MMM forums.  You have to know.  Create a budget category for everything and total up the expenses.  You should also create a case study for this.

Off hand I think it is doable in about 3-5 years IF the two of can save 50-70% of your income between now and then, but I also think the two of you are spending more than you realize.

I agree that we are probably spending too much, but at the end of the month, we put about $6200 towards our net worth, which is incredibly substantial. When we talk about spending less on frivolous things like "eating out" (also, in regards to the restaurant budget: we have separate budgets for this so we can go on "dates" and I can pay for her, or she can take me on a date and pay for me, etc,), we inevitably say, "Wow, we are making $165k a year, have no debt except our mortgage, and we're spending less than $1500 of it on ourselves. That's only $20,000 of our total $165,000. Do we really want to reduce our "luxury/frivolous" spending down even more??"

I know the answer should be: "Yes, we should, we will reach FI faster." But it's hard to argue that case when 20/165 = 13% of our income...

If you are planning to spend minimum $500k on a house then you need minimum $100k (20% down), your current savings rate is $31200, if you are TRULY putting away $6200/month (but "who knows") then you should be able to save $100k for your downpayment in 16 months, which is not far from now, however that leaves you with a $400k mortgage (with no more savings) and that you would have to afford on your salary alone.  While you make good money now, you have to keep in mind, income is NEVER guaranteed. 

You also mentioned that the area you are looking at is $500k-$1mil.  Chances are (going by your current tastes) once you start looking at houses you will find the $500k don't meet you needs and you will most likely want a house in the average range.

Since you mentioned school in another post, it is entirely possible for you to stay exactly where are now and send 2 kids to an expensive private ($20k a year) school for K-12 for less money then moving to a $500k house.

One exercise you and your wife can take on is to live on your paycheck alone.  Put 100% of hers into savings and live off your budget on your paycheck.

You justify your personal spending by saying it is less than $1500 month and yes you are right that is a "small" amount, however I make almost as much as your combined income and spend way less on personal stuff, maybe $400 on a very high gift giving month, but most of the times it is zero.  Yes my husband and I still go on date nights.
« Last Edit: December 21, 2016, 08:38:34 AM by MrsDinero »

Mgmny

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Re: When can we afford the luxury of children?
« Reply #15 on: December 21, 2016, 08:36:28 AM »
I'm confused. Mahtomedi is not a super expensive place. Take a look at this:

http://www.zillow.com/homedetails/125-Park-Ave-Saint-Paul-MN-55115/2267255_zpid/

This one's not as cute but has a garage:
http://www.zillow.com/homedetails/86-Glenmar-Ave-Saint-Paul-MN-55115/2267788_zpid/

Are you looking at new construction? Don't convince yourself that you need to spend half a million dollars on a house.

Garages are good in Minnesota. We are not looking at new construction, but not super huge fans of houses on top of each other either (very un-mustachian, i know!). I think our zillow search included: 3 bed, 3 bath, mahtomedi school district, and 0.5 acre lot, there really wasn't much in the way below 400k.

Fishindude

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Re: When can we afford the luxury of children?
« Reply #16 on: December 21, 2016, 08:40:22 AM »
Have children while you are young, so they are out of the house before you get too old.
Forget about the financial aspects, you will be fine.

Prairie Stash

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Re: When can we afford the luxury of children?
« Reply #17 on: December 21, 2016, 08:47:02 AM »
How many children would you like to have? Do a timeline that's optimistic,

6 months of trying
10 months pregnancy
6 months before fertility resumes
6 months trying
10 months pregnancy

That's 38 months (3 years for two kids, add 2 years/kid), and that's if everything goes according to plan. Toss in a miscarriage, 30% chance within the first trimester, and you have a 6 month delay. Low fertility where you take a year or more of trying because you're busy with work at the wrong times cold cause delays. Maybe you want to space your kids out more, not everyone likes the back to back pregnancies plus child raising, many mothers hate being 8 months pregnant with a one year old baby.

How old do you want to be when you finish having children? Then plan on contingencies and you'll have a date that you need to start by. You can always work longer, there's a do-over if you mess up your earnings, you can't go back in time to have children.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #18 on: December 21, 2016, 08:51:46 AM »

If you are planning to spend minimum $500k on a house then you need minimum $100k (20% down), your current savings rate is $31200, if you are TRULY putting away $6200/month (but "who knows") then you should be able to save $100k for your downpayment in 16 months, which is not far from now, however that leaves you with a $400k mortgage (with no more savings) and that you would have to afford on your salary alone.  While you make good money now, you have to keep in mind, income is NEVER guaranteed. 

You also mentioned that the area you are looking at is $500k-$1mil.  Chances are (going by your current tastes) once you start looking at houses you will find the $500k don't meet you needs and you will most likely want a house in the average range.

Since you mentioned school in another post, it is entirely possible for you to stay exactly where are now and send 2 kids to an expensive private ($20k a year) school for K-12 for less money then moving to a $500k house.

One exercise you and your wife can take on is to live on your paycheck alone.  Put 100% of hers into savings and live off your budget on your paycheck.

You justify your personal spending by saying it is less than $1500 month and yes you are right that is a "small" amount, however I make almost as much as your combined income and spend way less on personal stuff, maybe $400 on a very high gift giving month, but most of the times it is zero.  Yes my husband and I still go on date nights.


The $6200 is all automated, so we are absolutely saving that much each month (between 401k, extra mortgage principle, roth ira, and taxable investment accounts).

Wanting a bigger house down the line is for sure a subconscious effect that we will need to keep in mind. We are very happy with our house right now (3 bed, 2 bath), and don't really feel the need to updgrade for the two of us right now, but our peer group either lives in similar houses, or the vast majority of them rent apartments, so this could change.

The private school option doesn't make sense to me. Sending 2 kids through private school at say, 30k a year for 10 years would be the same as just buying the $500k house, plus less of the hassles of the private school, AND we get to keep the house, not the education.

We COULD try living off just my salary, but idk what that would accomplish. My wife brings home about $2500ish per month, and we're already saving $6000 a month, or about 3500 MORE than she makes. I'm not sure what pretending to live off my income would necessarily accomplish?


MayDay

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Re: When can we afford the luxury of children?
« Reply #19 on: December 21, 2016, 08:53:23 AM »
Would WBL work?

Be careful about moving to such a far out suburb. I'd take Roseville any day if you want proximity to Wisconsin. (I don't know for sure about Roseville but we had 0.4 acres in SAV). You lose a job and can only find one in the southern burbs, that commute is going to blow.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #20 on: December 21, 2016, 08:57:00 AM »
How many children would you like to have? Do a timeline that's optimistic,

6 months of trying
10 months pregnancy
6 months before fertility resumes
6 months trying
10 months pregnancy

That's 38 months (3 years for two kids, add 2 years/kid), and that's if everything goes according to plan. Toss in a miscarriage, 30% chance within the first trimester, and you have a 6 month delay. Low fertility where you take a year or more of trying because you're busy with work at the wrong times cold cause delays. Maybe you want to space your kids out more, not everyone likes the back to back pregnancies plus child raising, many mothers hate being 8 months pregnant with a one year old baby.

How old do you want to be when you finish having children? Then plan on contingencies and you'll have a date that you need to start by. You can always work longer, there's a do-over if you mess up your earnings, you can't go back in time to have children.

Well, this is a sobering post, but thank you! We're planning on 2 kids.

Is there any benefit to going to get screened before having children to see if there is any potential for infertility problems? Things I read online say that you shouldn't go in (in our age range) unless we've tried for like a year unsuccessfully.

If we (or at least me - the man?) go into a clinic today, it would potentially allow us to know a better idea of our "time range" for fertility? I don't hear of anyone doing this, so maybe I'm just crazy to plan this much?

KCM5

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Re: When can we afford the luxury of children?
« Reply #21 on: December 21, 2016, 08:58:31 AM »
I'm confused. Mahtomedi is not a super expensive place. Take a look at this:

http://www.zillow.com/homedetails/125-Park-Ave-Saint-Paul-MN-55115/2267255_zpid/

This one's not as cute but has a garage:
http://www.zillow.com/homedetails/86-Glenmar-Ave-Saint-Paul-MN-55115/2267788_zpid/

Are you looking at new construction? Don't convince yourself that you need to spend half a million dollars on a house.

Garages are good in Minnesota. We are not looking at new construction, but not super huge fans of houses on top of each other either (very un-mustachian, i know!). I think our zillow search included: 3 bed, 3 bath, mahtomedi school district, and 0.5 acre lot, there really wasn't much in the way below 400k.

Here's the thing: it's okay that you want a house like that. But know that you're making that choice consciously. It's not - we need to spend $500k to get into the school district that we want. Reality: we're choosing to spend $500k on specific luxuries as well as the choice school district. That $200k could go towards retirement savings. But you're choosing to spend in on a house and work an extra couple-four years for the house (not including the increased operating costs).

Mgmny

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Re: When can we afford the luxury of children?
« Reply #22 on: December 21, 2016, 08:58:47 AM »
Have children while you are young, so they are out of the house before you get too old.
Forget about the financial aspects, you will be fine.

I wish that were true! What about the house, FI/RE?!?  This is the MMM forum - we can't forget the financial aspects!

I feel like with us being relatively young, DINK, we have a great opportunity to really build our 'stach so we have less worry in the future...

Mgmny

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Re: When can we afford the luxury of children?
« Reply #23 on: December 21, 2016, 09:06:34 AM »

Here's the thing: it's okay that you want a house like that. But know that you're making that choice consciously. It's not - we need to spend $500k to get into the school district that we want. Reality: we're choosing to spend $500k on specific luxuries as well as the choice school district. That $200k could go towards retirement savings. But you're choosing to spend in on a house and work an extra couple-four years for the house (not including the increased operating costs).

You're right... I think i/we are being caught up in the "we make a TON of money, so we SHOULD have "nice" things." And income in no way means wealth, which is why we are putting away $6000 a month with no auto payments, no CC debt, no school loans, etc.

I should be more realistic!

Prairie Stash

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Re: When can we afford the luxury of children?
« Reply #24 on: December 21, 2016, 09:23:08 AM »
Have children while you are young, so they are out of the house before you get too old.
Forget about the financial aspects, you will be fine.

I wish that were true! What about the house, FI/RE?!?  This is the MMM forum - we can't forget the financial aspects!

I feel like with us being relatively young, DINK, we have a great opportunity to really build our 'stach so we have less worry in the future...

At best you have a year before you stop being DINK's. Then you drop your wife's income but expenses don't rise much. Do the spreadsheet of expenses/income and run the projections. How much delay would 2 kids make on your FIRE plans assuming a child was born 18 months from today?

Buying a bigger house will cost more/year in ongoing expenses than the cost of raising a child, other than daycare (SAHP, hopefully you don't pay daycare). Even delaying it a few years can have a huge impact, why not wait till the kid is 1 year old before moving? That way if you have delays your stash gets large, if you have kids then you have that to look forward to. Either way you're winning at something, the worst response is to buy a bigger house before the child is born, that's a terrible plan for financial success.

nessness

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Re: When can we afford the luxury of children?
« Reply #25 on: December 21, 2016, 09:25:29 AM »
You guys could have kids right now without it being "irresponsible" - you have a high income and no non-mortgage debt, which is better than the vast majority of new parents. It will, of course, significantly lengthen your time to FI, but that's a separate conversation you should have with your wife, since it's mostly a matter of life goals and priorities.

That's true, but if my wife stops working, and we decide to cash in our $40k of home equity and turn it into a $500k house, our situation goes to: $460k liability on a 100k income. Things would turn upside in a second.
True - I was looking at the house as a want and not a need. That would be a good place to start the conversation with your wife - decide the maximum mortgage you would be comfortable with on your salary. Then your options are (1) delay having kids until you can save the necessary amount to put toward the house at your current savings rate, (2) cut your expenses to save that amount faster, (3) buy a less expensive house, or (4) have a kid while living in your current home. Which of those options is most appealing to you? To her?

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Re: When can we afford the luxury of children?
« Reply #26 on: December 21, 2016, 09:32:22 AM »

We COULD try living off just my salary, but idk what that would accomplish. My wife brings home about $2500ish per month, and we're already saving $6000 a month, or about 3500 MORE than she makes. I'm not sure what pretending to live off my income would necessarily accomplish?
It would accomplish you and your wife getting used to not relying on her income.  You said she wants to quit working when the baby comes along, so her income is going away. 

When her income goes away your savings rate is reduced and that monthly "because we can" spending goes away.  By adjusting to only your  income right now, allows you to save her money (increasing  your savings/net worth), figure our to how continue your savings rate on your income alone (to plan for when she quits working), but also get used to a baby budget.  It is much easier to adjust now than when your wife is 9 months pregnant and you haven't changed your habits. 

As far as your actual question when can  you financially afford a child, the reality is right now.  right now you can afford a child.  I had my first child when I was making less than $26k a year and we were fine. 

pbkmaine

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Re: When can we afford the luxury of children?
« Reply #27 on: December 21, 2016, 09:46:15 AM »
First off, you do not need to worry about schools for six or seven years minimum. Put it to your wife this way: if you stay where you are, you can start making babies right now. If you move to a fancy house you won't even need for the greater part of a decade, you will have to wait. Which would she prefer?

My parents were raised in small 3-bedroom 1-bath 1000sf row houses in cities, and raised their three children in one. They were horrified by the modern trend of having to have a fancy house to bring a tiny baby home to. As am I.

englishteacheralex

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Re: When can we afford the luxury of children?
« Reply #28 on: December 21, 2016, 10:16:50 AM »
The entire way of framing the question makes it hard to answer. It echoes one of my least favorite trends in American culture: the idea that having children is an optional, horribly expensive, and faintly narcissistic hobby only to be pursued if it can be done at a top level of consumption.

Instead of a natural and fundamental part of the human experience that most people through the course of human history have participated in.

I posit that having children is not a luxury. It's just part of the life cycle. It's not necessary to fret endlessly about "doing it right", which leads to neurosis through all stages of parenting.

Because of modern medicine, we have the advantage of being able to plan the timing of a family--fine. There are certain conditions that, once met, do make parenting easier and more responsible. The bar is far lower than most people think, in my opinion. Kids are very resilient and their values tend to be much more intuitive and basic than the values of adults. As a career school teacher, my observation is that what kids need to thrive most of all is a stable, predictable family life. Money is a part of that (hard on kids to be in a situation of scarcity), but after a certain point, it just becomes gravy.

You and your wife are very young--there is some wiggle room in the having kids timeline for you. I wish I could have had kids earlier--I didn't meet/marry my husband until I was 34. We had our first child a month before our first anniversary. Our second is due on Saturday. A friend of mine asked last weekend me how I knew I was "ready" for the second. Ready? I was not ready for the first, and I won't be ready for the second. It's a huge tornado through your life to have children. But I see it as part of being human, and I know I don't want to be having children any later than I had to due to circumstances.

Anyway, although I wouldn't recommend putting off children until your mid thirties, it HAS been helpful to have them at a time when we were both very stable in our careers and finances. But I don't think that's a must. And keep in mind that "stable" for us is a combined income of lower than you guys, and an 850 square foot condo that we own in a school district that is just ok. Gasp--and we still had kids!

When it comes to family planning, I like the advice I see here of thinking out a realistic timeline of when you want to be dealing with tiny children and when you want to be finished with parenting. Keep in mind that the pregnancy/childbirth/newborn/toddler stage is the most physically exhausting, and that the longer you wait the harder it is on your wife. I am generally envious of my friends who had children a decade before me; it seems like it was a lot easier for them to bounce back.

As for the money piece--much more negotiable than you make it sound. And to make it take such a high priority suggests a misunderstanding of what kids truly need to thrive.

Spudd

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Re: When can we afford the luxury of children?
« Reply #29 on: December 21, 2016, 10:18:10 AM »
Garages are good in Minnesota. We are not looking at new construction, but not super huge fans of houses on top of each other either (very un-mustachian, i know!). I think our zillow search included: 3 bed, 3 bath, mahtomedi school district, and 0.5 acre lot, there really wasn't much in the way below 400k.

Here you go:
http://www.zillow.com/homedetails/383-Arcwood-Rd-Saint-Paul-MN-55115/2272729_zpid/

Or this one, I *love* the kitchen:
http://www.zillow.com/homedetails/1260-Hallam-Ave-N-Saint-Paul-MN-55115/2255261_zpid/

ImCheap

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Re: When can we afford the luxury of children?
« Reply #30 on: December 21, 2016, 10:28:26 AM »
We live in the Mpls Burbs in little house on a couple of acres (we are still in our "starter home"), with kids now in college. We waited to have kids until we were late 20's. My spouse stayed home when the kids were young, worked the same hours through all the school years, summer off etc.  Our housing cost is 1/2 what you are looking at, $250,000 can get a decent place yet in the Midwest.

Bringing home about 1/2 you do we were able to enjoy a paid for home prior to 40, raise what we think are decent well adjusted kids who were able to enjoy many sports and activities. Our savings did suffer a bit during those years (10-15%), now save around 40%, and able to toss some cash at college. Our public school was/is fantastic (its not the Edina's School's either).

Now with all the above said, I can still recall the conversation you are having now. We asked the same questions, can one of us stay home with the kids, in the end it came down to, lets try and the worst that can happen will have to go back to work. You can learn to live within your means quickly if you have/want to.

I was blessed with a dad who taught me the importance of learning how to fix and work on our own stuff, I can't put a number on how much that has saved us but it has to a be huge number. Well maybe not that much I seem to have tool fetish! 

LadyMuMu

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Re: When can we afford the luxury of children?
« Reply #31 on: December 21, 2016, 10:38:37 AM »
My blanket advice to anyone wanting to stay home with kids is to live on one salary until the kids come along. It is a lot more painful to give up coffees, manicures, double process hair styles, music collections, etc. than to simply live without them in the first place. You guys make bank. You can have kids whenever you want but stop thinking you need to spend your way to get there (ie big house). Even if you got preggo tonight, if you lived on only your salary and banked the rest, you'd be in better shape than you would be inching along for a few years and saving for a big house. Oh, and cut out the Target habit. Nothing there that is essential that you can't get at Aldi and you don't have to walk past this season's throw pillows to do it.

ImCheap

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Re: When can we afford the luxury of children?
« Reply #32 on: December 21, 2016, 10:40:54 AM »
I forgot to add in my prior post, you have some time yet for kids, more so your wife does given the age difference. Its a really give and take on when to have kids, personally I think 25-26 is good time to have kids, that puts you out 3-4 years.

Watchmaker

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Re: When can we afford the luxury of children?
« Reply #33 on: December 21, 2016, 10:45:27 AM »
The entire way of framing the question makes it hard to answer. It echoes one of my least favorite trends in American culture: the idea that having children is an optional,

You surely don't believe it's not optional (as in, compulsory).

horribly expensive,

I agree that parenthood doesn't need to be as expensive as some people make it, but on a forum where we debate cost/benefits of $5 monthly expenditures, surely parenthood is fair game.

faintly narcissistic hobby

As long as we can agree it's also not a universally saintly and selfless action.


Instead of a natural and fundamental part of the human experience that most people through the course of human history have participated in.

Sorry to digress, but I wonder what the historic rate of childlessness have been like?  Clearly there has always been a significant minority in any culture that didn't have children (infertile, spinster aunts, "bachelor" uncles, etc).  I'm fairly certain the childlessness rate has gone up with the availability of birth control (suggesting perhaps that historically more people were having kids than wanted to have kids).

Our second is due on Saturday.

Congratulations!

Poundwise

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Re: When can we afford the luxury of children?
« Reply #34 on: December 21, 2016, 10:56:13 AM »
Quote
Sounds like your wife might be able to pick two out of 3: fancy big house, stay at home, or kids soon. 

I think MayDay has it right. 

The answer to your question really depends on the future lifestyle you choose with your kids, of course.
- multifamily housing/small house/big house?
- small yard/big yard?
- cheap/expensive neighborhood?
- childcare/parent at home? For how long?
- public/parochial/private school?
- what kind of enrichment activities for kids (i.e. sports or arts lessons)?
- what kind of family vacations? how much will it cost to visit family? (don't underestimate the costs of flying 4 people vs 2 people cross country)
- aiming for college? what kind? will you pay?

There's a Mustachian answer to all those questions, of course, but you have to decide whether you're willing to make those choices. 

Some personal anecdotes on why one might choose different answers to the above questions. My family (two kids at that time) used to live in an apartment  in the inner city. It was inexpensive, but stressful.  We were surrounded by unhappy, struggling people. We had to worry about downstairs neighbors all the time, and for the kids to get exercise, I had to take them to the playground, which got pretty tedious after 8 years.  It was cheaper than living in a house, but we're so much happier now that we have our own property... when the kids start bouncing off the walls, I can kick them outside and continue cooking dinner.   Moving to a fancier neighborhood has its downsides beyond cost: the commute for my husband is longer, though he can work on the train.  It means that we often have to manage our kids' envy of their peers, and there's more pressure to spend on fancy activities and lessons. On the other hand there's less conflict with our family values than there was previously in our old neighborhood, where a lot of the parents lived poorly (i.e. did not value education, did not form stable families, and still spent beyond their means). If we had had just one child, it would have been cheaper to stay in the old neighborhood and pay for private middle school to avoid behavioral issues (drugs, bullying, early sexualization) at the local public middle school, and then apply for competitive public high schools. With respect to academics, I find that the education that my kids received at the city elementary schools was perfectly sufficient relative to the high-rated suburban school... no trouble at all keeping up after the move.

 I felt that staying at home was a necessity in our old neighborhood, so that I could volunteer at the school and supplement my kids' education at home. It's more of a luxury in our new neighborhood.

In trying to decide which neighborhood to live in, it might help if you know families with kids living nearby. Get a sense of how they live and privately guesstimate how much it costs to live that way. Decide if you would like to live that way, or whether you can get what you need a different way.

meandmyfamily

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Re: When can we afford the luxury of children?
« Reply #35 on: December 21, 2016, 11:12:39 AM »
I am a SAHM to 4 kids whose household income is similar to what yours would be without your spouse working.  I would say have kids now but DON'T upgrade the home and cut extra spending WAY back to maybe $50 a month per adult for extras.  That said I really love being home with my kids and a bigger house doesn't change that at all.  We can do so much more with our current home.  We put our extra money into classes for the kids and trips.  It comes down to what do you value the most.  We are in a top school district for our state but we homeschool.  Really sit down and see what your values are.  It took me a bit to realize we couldn't have it all but I am very content.  I had my first kid at 25 and thought it was a great age!  Good luck!

NextTime

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Re: When can we afford the luxury of children?
« Reply #36 on: December 21, 2016, 11:41:49 AM »
COL is a crazy thing. Never ceases to amaze me how much houses cost in different areas of the country.

Here's what 560k gets you in my town:

http://www.zillow.com/homes/for_sale/113179908_zpid/400000-_price/1545-_mp/featured_sort/39.015349,-95.741858,38.958641,-95.834126_rect/13_zm/

Mr. Green

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Re: When can we afford the luxury of children?
« Reply #37 on: December 21, 2016, 12:02:36 PM »
You guys could have kids right now without it being "irresponsible" - you have a high income and no non-mortgage debt, which is better than the vast majority of new parents. It will, of course, significantly lengthen your time to FI, but that's a separate conversation you should have with your wife, since it's mostly a matter of life goals and priorities.

That's true, but if my wife stops working, and we decide to cash in our $40k of home equity and turn it into a $500k house, our situation goes to: $460k liability on a 100k income. Things would turn upside in a second.
Worth noting is that you likely don't have 40k in equity. People almost always subtract the mortgage balance from the house value and forget the fact that you're going to pay 5% of the house value to a realtor when you sell, unless you FSBO. So 240k - 12k = 228k. 228k - 197k = 31k equity. It's not a huge difference but it's still 10 grand.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #38 on: December 21, 2016, 01:04:27 PM »
True - I was looking at the house as a want and not a need. That would be a good place to start the conversation with your wife - decide the maximum mortgage you would be comfortable with on your salary. Then your options are (1) delay having kids until you can save the necessary amount to put toward the house at your current savings rate, (2) cut your expenses to save that amount faster, (3) buy a less expensive house, or (4) have a kid while living in your current home. Which of those options is most appealing to you? To her?

I'm not sure if i want to go the "maximum mortgage" route - i'm not super thrilled with 30 (or even 15!) years of locked in payments. Right now i'm on track to complete my current mortgage in about 8 years.

Your options are good though. I think we're in option (1) which is why i'm here looking for advice! Thanks nessness!

Mgmny

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Re: When can we afford the luxury of children?
« Reply #39 on: December 21, 2016, 01:07:34 PM »

We COULD try living off just my salary, but idk what that would accomplish. My wife brings home about $2500ish per month, and we're already saving $6000 a month, or about 3500 MORE than she makes. I'm not sure what pretending to live off my income would necessarily accomplish?
It would accomplish you and your wife getting used to not relying on her income.  You said she wants to quit working when the baby comes along, so her income is going away. 

When her income goes away your savings rate is reduced and that monthly "because we can" spending goes away.  By adjusting to only your  income right now, allows you to save her money (increasing  your savings/net worth), figure our to how continue your savings rate on your income alone (to plan for when she quits working), but also get used to a baby budget.  It is much easier to adjust now than when your wife is 9 months pregnant and you haven't changed your habits. 

As far as your actual question when can  you financially afford a child, the reality is right now.  right now you can afford a child.  I had my first child when I was making less than $26k a year and we were fine.

I see what you're saying - adjust the extra mortgage payments, Roth IRA, 401k etc payments in addition to living on just my salary - i understand what  you mean now!

I appreciate you reminding me how fortunate we are right now though.. My wife and I are incredibly blessed, and I hope I'm not coming across as "complaining." I just want to make sure i make the right decisions financially and personally for us!

Mgmny

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Re: When can we afford the luxury of children?
« Reply #40 on: December 21, 2016, 01:11:04 PM »
First off, you do not need to worry about schools for six or seven years minimum. Put it to your wife this way: if you stay where you are, you can start making babies right now. If you move to a fancy house you won't even need for the greater part of a decade, you will have to wait. Which would she prefer?

My parents were raised in small 3-bedroom 1-bath 1000sf row houses in cities, and raised their three children in one. They were horrified by the modern trend of having to have a fancy house to bring a tiny baby home to. As am I.

Good point. Our house right now is a split level, and my wife isn't fan of putting a baby or small toddler in the basement (2 bedrooms upstairs, 1 down). That said, we could easily have a baby in our room, and a infant/toddler in the room across the hall.

My dad grew up in a 2 br house with 8. his parents, 2 brothers, 2 sisters, and his grandfather. His parents and grandfather shared a room, he shared a room with his 2 brothers, and his sisters literally slept on their covered porch in front of the house. I can't imagine....

Mgmny

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Re: When can we afford the luxury of children?
« Reply #41 on: December 21, 2016, 01:19:08 PM »
The entire way of framing the question makes it hard to answer. It echoes one of my least favorite trends in American culture: the idea that having children is an optional, horribly expensive, and faintly narcissistic hobby only to be pursued if it can be done at a top level of consumption.

Instead of a natural and fundamental part of the human experience that most people through the course of human history have participated in.

I posit that having children is not a luxury. It's just part of the life cycle. It's not necessary to fret endlessly about "doing it right", which leads to neurosis through all stages of parenting.

Because of modern medicine, we have the advantage of being able to plan the timing of a family--fine. There are certain conditions that, once met, do make parenting easier and more responsible. The bar is far lower than most people think, in my opinion. Kids are very resilient and their values tend to be much more intuitive and basic than the values of adults. As a career school teacher, my observation is that what kids need to thrive most of all is a stable, predictable family life. Money is a part of that (hard on kids to be in a situation of scarcity), but after a certain point, it just becomes gravy.

You and your wife are very young--there is some wiggle room in the having kids timeline for you. I wish I could have had kids earlier--I didn't meet/marry my husband until I was 34. We had our first child a month before our first anniversary. Our second is due on Saturday. A friend of mine asked last weekend me how I knew I was "ready" for the second. Ready? I was not ready for the first, and I won't be ready for the second. It's a huge tornado through your life to have children. But I see it as part of being human, and I know I don't want to be having children any later than I had to due to circumstances.

Anyway, although I wouldn't recommend putting off children until your mid thirties, it HAS been helpful to have them at a time when we were both very stable in our careers and finances. But I don't think that's a must. And keep in mind that "stable" for us is a combined income of lower than you guys, and an 850 square foot condo that we own in a school district that is just ok. Gasp--and we still had kids!

When it comes to family planning, I like the advice I see here of thinking out a realistic timeline of when you want to be dealing with tiny children and when you want to be finished with parenting. Keep in mind that the pregnancy/childbirth/newborn/toddler stage is the most physically exhausting, and that the longer you wait the harder it is on your wife. I am generally envious of my friends who had children a decade before me; it seems like it was a lot easier for them to bounce back.

As for the money piece--much more negotiable than you make it sound. And to make it take such a high priority suggests a misunderstanding of what kids truly need to thrive.

Thanks englishteacheralex (Alex is my wife's name!)! I'm not trying to come across narcissistic, elitist, or anything like that. I've never had children before, and therefore I've never been a parent. I genuinely don't know what it means to be a parent, but i image that having a good upbringing includes some degree of financial independence or stability in the family home. That's why i'm reaching out to this forum.

I guess i do believe that in general childbearing is optional, but my wife and I have chose to have children. We're not trying to pursue the highest degree of consumption, as we are debt-averse, but I do want to make sure I can provide adequately for them.

I guess in my mind i think like this, "If i have the ability to provide my children with the absolute best upbringing possible, why wouldn't i?" This includes a nice, spacious home, money for sports/activities, family vacations. It's also why my wife and I are dieting more deliberately and increasing our fitness regimes - so that we can provide our future children with the best possible outcomes. I'm not a parent, so i don't know, but i feel like this should be admirable, not narcissistic?

Mgmny

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Re: When can we afford the luxury of children?
« Reply #42 on: December 21, 2016, 01:21:32 PM »
Would WBL work?

Be careful about moving to such a far out suburb. I'd take Roseville any day if you want proximity to Wisconsin. (I don't know for sure about Roseville but we had 0.4 acres in SAV). You lose a job and can only find one in the southern burbs, that commute is going to blow.

Yeah - we should look there too. A bit "urban," but could possibly find something in that area (her current job is in roseville, actually). We generally just used a "how far can i travel?" map tool to see the distances between our parents, and used zillow to find houses in the area, and then evaluated based on school district and lot size. My brother lives on the hill in Duluth where the houses are literally stacked ontop of each other, and we would really prefer the luxury (not need!) of having a bit more privacy.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #43 on: December 21, 2016, 01:23:23 PM »
Garages are good in Minnesota. We are not looking at new construction, but not super huge fans of houses on top of each other either (very un-mustachian, i know!). I think our zillow search included: 3 bed, 3 bath, mahtomedi school district, and 0.5 acre lot, there really wasn't much in the way below 400k.

Here you go:
http://www.zillow.com/homedetails/383-Arcwood-Rd-Saint-Paul-MN-55115/2272729_zpid/

Or this one, I *love* the kitchen:
http://www.zillow.com/homedetails/1260-Hallam-Ave-N-Saint-Paul-MN-55115/2255261_zpid/

This is good. Thank you. I think we should probably just reel in my expectations a bit (or examine our priorities).

Mgmny

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Re: When can we afford the luxury of children?
« Reply #44 on: December 21, 2016, 01:27:20 PM »
We live in the Mpls Burbs in little house on a couple of acres (we are still in our "starter home"), with kids now in college. We waited to have kids until we were late 20's. My spouse stayed home when the kids were young, worked the same hours through all the school years, summer off etc.  Our housing cost is 1/2 what you are looking at, $250,000 can get a decent place yet in the Midwest.

Bringing home about 1/2 you do we were able to enjoy a paid for home prior to 40, raise what we think are decent well adjusted kids who were able to enjoy many sports and activities. Our savings did suffer a bit during those years (10-15%), now save around 40%, and able to toss some cash at college. Our public school was/is fantastic (its not the Edina's School's either).

Now with all the above said, I can still recall the conversation you are having now. We asked the same questions, can one of us stay home with the kids, in the end it came down to, lets try and the worst that can happen will have to go back to work. You can learn to live within your means quickly if you have/want to.

I was blessed with a dad who taught me the importance of learning how to fix and work on our own stuff, I can't put a number on how much that has saved us but it has to a be huge number. Well maybe not that much I seem to have tool fetish!

Thanks ImCheap. My dad taught me the importance of fixing everyone ourselves too. It drives me crazy that people pay money to have their oil changed, etc.

What suburb do you live in? I would think I'd be hard-pressed to find a house with a couple acres around here for $250k!

How is your FIRE goals? You said your savings dipped to 10-15% during those years, are you able to retire early?

Watchmaker

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Re: When can we afford the luxury of children?
« Reply #45 on: December 21, 2016, 01:29:05 PM »
Garages are good in Minnesota. We are not looking at new construction, but not super huge fans of houses on top of each other either (very un-mustachian, i know!). I think our zillow search included: 3 bed, 3 bath, mahtomedi school district, and 0.5 acre lot, there really wasn't much in the way below 400k.

I think you'll have a lot more options if you relax your search criteria a bit.  0.5 acres is a pretty big lot, and 2 bathrooms rather than 3 would hardly be roughing it.  I see 15 properties in Mahtomedi that meet the new criteria and are less than 400k:

http://www.realtor.com/realestateandhomes-search/Mahtomedi_MN/beds-3/baths-2/price-na-400000

Nothing wrong with wanting 0.5 acres, just know that you're trading off something else (having kids now, wife working, retirement date) for that.  Decide what your priorities are.
« Last Edit: December 21, 2016, 02:10:22 PM by Watchmaker »

Mgmny

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Re: When can we afford the luxury of children?
« Reply #46 on: December 21, 2016, 01:32:09 PM »
My blanket advice to anyone wanting to stay home with kids is to live on one salary until the kids come along. It is a lot more painful to give up coffees, manicures, double process hair styles, music collections, etc. than to simply live without them in the first place. You guys make bank. You can have kids whenever you want but stop thinking you need to spend your way to get there (ie big house). Even if you got preggo tonight, if you lived on only your salary and banked the rest, you'd be in better shape than you would be inching along for a few years and saving for a big house. Oh, and cut out the Target habit. Nothing there that is essential that you can't get at Aldi and you don't have to walk past this season's throw pillows to do it.

Would you advocate that we just put all her salary toward a 401k (well, up to 30% legally, i guess)? I mean, depending on how you look at our spending, you could say we are already living on just my salary.

If you advocate taking out the $2500ish that she brings home right now per month, what should i do with it? We're already contributing to our stash at a rate higher than she makes.

I feel like if we had kids, we would just reduce the amount we are putting in our Roths, taxable accounts, and extra mortgage payments.

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Re: When can we afford the luxury of children?
« Reply #47 on: December 21, 2016, 01:32:35 PM »
Consider whether you would really be happier with a half acre or more. My parents, who also live in the MSP suburbs, have something like a third of an acre, and it's overkill. Most of their land isn't even used for anything! The front yard: purely decorative. Nobody ever spends any time there, except to mow the lawn. The back yard has a big vegetable garden and a fire pit, which are nice, but there's also a lot more empty space that isn't used for anything. The parts of their land that they actually use could easily fit on a lot half the size.

And when you have such super-low-density housing, the geometry of the situation means that when everything uses more land, the number of people and places you can get to in a certain distance are much lower. That means you'll be driving your car pretty much everywhere. Essentially nothing is in walking distance.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #48 on: December 21, 2016, 01:40:23 PM »
Quote
Sounds like your wife might be able to pick two out of 3: fancy big house, stay at home, or kids soon. 

I think MayDay has it right. 

The answer to your question really depends on the future lifestyle you choose with your kids, of course.
- multifamily housing/small house/big house?
- small yard/big yard?
- cheap/expensive neighborhood?
- childcare/parent at home? For how long?
- public/parochial/private school?
- what kind of enrichment activities for kids (i.e. sports or arts lessons)?
- what kind of family vacations? how much will it cost to visit family? (don't underestimate the costs of flying 4 people vs 2 people cross country)
- aiming for college? what kind? will you pay?

There's a Mustachian answer to all those questions, of course, but you have to decide whether you're willing to make those choices. 

Some personal anecdotes on why one might choose different answers to the above questions. My family (two kids at that time) used to live in an apartment  in the inner city. It was inexpensive, but stressful.  We were surrounded by unhappy, struggling people. We had to worry about downstairs neighbors all the time, and for the kids to get exercise, I had to take them to the playground, which got pretty tedious after 8 years.  It was cheaper than living in a house, but we're so much happier now that we have our own property... when the kids start bouncing off the walls, I can kick them outside and continue cooking dinner.   Moving to a fancier neighborhood has its downsides beyond cost: the commute for my husband is longer, though he can work on the train.  It means that we often have to manage our kids' envy of their peers, and there's more pressure to spend on fancy activities and lessons. On the other hand there's less conflict with our family values than there was previously in our old neighborhood, where a lot of the parents lived poorly (i.e. did not value education, did not form stable families, and still spent beyond their means). If we had had just one child, it would have been cheaper to stay in the old neighborhood and pay for private middle school to avoid behavioral issues (drugs, bullying, early sexualization) at the local public middle school, and then apply for competitive public high schools. With respect to academics, I find that the education that my kids received at the city elementary schools was perfectly sufficient relative to the high-rated suburban school... no trouble at all keeping up after the move.

 I felt that staying at home was a necessity in our old neighborhood, so that I could volunteer at the school and supplement my kids' education at home. It's more of a luxury in our new neighborhood.

In trying to decide which neighborhood to live in, it might help if you know families with kids living nearby. Get a sense of how they live and privately guesstimate how much it costs to live that way. Decide if you would like to live that way, or whether you can get what you need a different way.

Really great advice. I sent your list of questions to my wife so we can discuss them. We've actually talked about multi-generational living, but i'm not sure how much either of us wants either of our in-laws to live with us.

The neighborhood information is good too. We'll have to do more digging on that front. I think I read in "The Millionaire Next Door" how incredibly important the neighborhood is for spending habits. Does anyone have a resource to see like, "average year of car driven" or net worth vs. home value, etc? There has got to be a google on this?

The best I have is the NYT "Mapping America" (http://www.nytimes.com/projects/census/2010/explorer.html) and the info in that, while useful, is less about spending, and more about demographics.

Mgmny

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Re: When can we afford the luxury of children?
« Reply #49 on: December 21, 2016, 01:45:34 PM »
I am a SAHM to 4 kids whose household income is similar to what yours would be without your spouse working.  I would say have kids now but DON'T upgrade the home and cut extra spending WAY back to maybe $50 a month per adult for extras.  That said I really love being home with my kids and a bigger house doesn't change that at all.  We can do so much more with our current home.  We put our extra money into classes for the kids and trips.  It comes down to what do you value the most.  We are in a top school district for our state but we homeschool.  Really sit down and see what your values are.  It took me a bit to realize we couldn't have it all but I am very content.  I had my first kid at 25 and thought it was a great age!  Good luck!

My wife and I briefly talked about homeschooling, but neither of us is up to it.

Something I haven't mentioned, but is part of the move equation is that my wife's parents live about 55 minutes from us across the border into WI. It was probably a mistake to buy the house we did, but too late! When you are 22 years old, I guess you don't really realize how important your parents/family is, and I think the 55 minute drive to see them a few times a month is more taxing than just texting her mom and saying, "Hey wanna come over for dinner in 20 minutes?"

We've tried to mitigate this a bit by having more regular interactions with her parents, and that's working for the most part, but she is concerned when we have children that she'll want her mom around more.