Author Topic: Each kid adds 10 years to FIRE  (Read 25422 times)

VaCPA

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Each kid adds 10 years to FIRE
« on: April 07, 2016, 01:52:28 PM »
I came up with this super complicated algorithm which approximated how long a child delays early retirement. It was immaculate unfortunately my dog ate the napkin the calculation was on before I had time to put it into an excel spreadsheet. Anyways, it basically said each kid added 10 years. Since I have 3 kids I will never retire early but I will hang around here to live vicariously through you guys.

Kids definitely put a damper on frugal living. Most of the financial blogs I read where the person is operating his financials with razor sharp efficiency doesn't involve multiple kids it seems like. Years ago I occasionally read one called the financial samurai. He had some good ideas but clearly had no kids with how much he saved and possibly not even a spouse. It's a challenge with multiple kids in the mix and we'll definitely get to retirement with a smaller nut but we will still get there. We're maxing our 401k contributions and have decent sized balances, and I'm going to try to start backdooring money into a Roth each year now. 529s could use some major love but there just isn't enough to go around right now. How are you guys with large families doing?
« Last Edit: April 07, 2016, 01:55:34 PM by anorman79 »

arebelspy

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Re: Each kid adds 10 years to FIRE
« Reply #1 on: April 07, 2016, 02:57:10 PM »
So... confused...



What if I FIRE'd first, then have kids?

What about MMM, who retired at 30 with a kid?

What about Root of Good, who has 3 kids and retired at age 33?  (His wife kept working for two more years because she wanted to, but both are now retired, mid-30s.)  Would he have FIRE'd at age 3 if he didn't have those three kids delaying him by 30 years?

:D
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La Bibliotecaria Feroz

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Re: Each kid adds 10 years to FIRE
« Reply #2 on: April 07, 2016, 03:05:47 PM »
This is so wildly variable. I have two kids. Are they adding 20 years to FIRE? Well, maybe, because I had them during my working years, and that's where the costs (daycare, lost salary) come in. On the other hand, I have taken time off to care for them, which is like enjoying the RE part early!

I wouldn't say they "put a damper on frugal living." I mean, they cost money, sure. Frugal groceries for four are more than frugal groceries for two. I'm still living frugally.

And the second kid is definitely NOT twice as expensive as the first kid. For one thing, he can wear his brother's old clothes (if they're not destroyed), ride his old bike, etc. And since I had them back-to-back, my baby-care years were compressed; less time out of work. Even daycare gives you a discount on the second kid. (Sometimes a big one: the hourly one I use charged $7.50 an hour for one kid or $11 for two.) The first kid was the big financial hit. Second kid is a financial footnote.

Besides... so what? If you want kids, have 'em. You'll be glad you did even if you do work more years. If you don't want kids, don't have 'em.

forummm

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Re: Each kid adds 10 years to FIRE
« Reply #3 on: April 07, 2016, 03:09:26 PM »
I took it as a joke.

sol

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Re: Each kid adds 10 years to FIRE
« Reply #4 on: April 07, 2016, 03:14:39 PM »
I think it's more like one year. Maybe two if you spend lavishly on them.

If it were ten years per kid, I would have been able to retire decades before I started working.  (Three kids, expecting to work a total of ten years in my career.)

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #5 on: April 07, 2016, 03:24:08 PM »
I took it as a joke.

Well at least one person on this board has a sense of humor. Yeah the 10 years was a joke(I don't have an algorithm). The kids draining my budget is no joke however. It's not so much lavish spending, it's things like food and daycare and eventually college that are very unlavish and necessary. But hey they keep me on my toes so it's all worth it.

PhysicianOnFIRE

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Re: Each kid adds 10 years to FIRE
« Reply #6 on: April 07, 2016, 03:39:58 PM »
If you're buying into the annual nonsense that comes out, saying each kid costs $270,000 by age 18, it's a bunch of rubbish.

Be like Flava Flav.  Don't...don't...don't don't dont... Don't believe the hype!

2 kids, FI last year @ 39 after 9 very good years in the workforce post-residency.


VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #7 on: April 07, 2016, 03:45:13 PM »
If you're buying into the annual nonsense that comes out, saying each kid costs $270,000 by age 18, it's a bunch of rubbish.

Be like Flava Flav.  Don't...don't...don't don't dont... Don't believe the hype!

2 kids, FI last year @ 39 after 9 very good years in the workforce post-residency.

Yeah I don't know how accurate those huge numbers are they throw around but I know kids cost a lot, in particular the daycare. Luckily I'll only have 2 of the 3 in daycare at one time but that's a $2,500/month bill which isn't going away anytime soon. Crushing. We still max out our 401ks and put some extra away on top of that. Congrats to you for getting there so quickly, impressive. I'm 37 and if I can feel comfortable enough at 50-55 to think about retirement I'll consider it a huge win. We shall see
« Last Edit: April 07, 2016, 03:46:53 PM by anorman79 »

zolotiyeruki

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Re: Each kid adds 10 years to FIRE
« Reply #8 on: April 07, 2016, 04:02:08 PM »
Well, if that's anywhere near accurate, then if DW and I didn't have any kids, we'd be on track to retire at the grand old age of negative 9 years old. :D

cchrissyy

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Re: Each kid adds 10 years to FIRE
« Reply #9 on: April 07, 2016, 04:49:49 PM »
Yeah! This is exactly why I had to work nonstop until I was 4 years old

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #10 on: April 07, 2016, 05:09:02 PM »
Yeah! This is exactly why I had to work nonstop until I was 4 years old

Those numbers don't work

GrOW

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Re: Each kid adds 10 years to FIRE
« Reply #11 on: April 07, 2016, 05:41:29 PM »
Kids create new reasons, or excuses, for excessive optional spending. They also add new ways that family and friends can pressure you into spending. Obviously, a majority of it is optional.

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #12 on: April 07, 2016, 09:18:49 PM »
Kids create new reasons, or excuses, for excessive optional spending. They also add new ways that family and friends can pressure you into spending. Obviously, a majority of it is optional.

True, it's easy for unnecessary spending w kids. But even if you limit your spending to just necessities the cost is huge. Just child care & food(produce is expensive!) costs are staggering
« Last Edit: April 07, 2016, 09:27:20 PM by anorman79 »

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #13 on: April 07, 2016, 09:25:27 PM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life. 

arebelspy

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Re: Each kid adds 10 years to FIRE
« Reply #14 on: April 08, 2016, 12:22:18 AM »
And if you're paying $2500/mo for childcare, but it still makes sense for the second SO (the lower earning one, whichever that is) to be working, you must be making bank (and the other SO must be making even more).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Cyaphas

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Re: Each kid adds 10 years to FIRE
« Reply #15 on: April 08, 2016, 12:32:17 AM »
I think children are a lot less expensive than people make them out to be. But if I had to throw a number on it, taking the average household income into account 51,939, I'd say it adds maybe 2 years tops.

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #16 on: April 08, 2016, 04:55:53 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

Paul der Krake

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Re: Each kid adds 10 years to FIRE
« Reply #17 on: April 08, 2016, 05:36:31 AM »
$1,000 tax credit, $4,000 exemption, so a sweet $2,000 at the 25% bracket for one. Better rates for the ACA plans. Those are not insignificant savings.

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #18 on: April 08, 2016, 05:37:57 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

yeah price = quality NOT cmon man thats like the premise of this entire site.  you can find good quality in home care on CL if you take the time to interview mulitple people and call references.  you litterally just said you could cut you spending by almost 12k per year. Yet these kids are delaying your retirement by 10 years each.  No YOU are.

justajane

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Re: Each kid adds 10 years to FIRE
« Reply #19 on: April 08, 2016, 06:14:45 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

yeah price = quality NOT cmon man thats like the premise of this entire site.  you can find good quality in home care on CL if you take the time to interview mulitple people and call references.  you litterally just said you could cut you spending by almost 12k per year. Yet these kids are delaying your retirement by 10 years each.  No YOU are.

Where do you live boarder42? Daycare expenses vary wildly depending upon where you live. I agree with the OP. I tried to find home care on CL and didn't get a good feeling. We went with a formal facility for part-time care, which costs more. $300 a month for 15 hours.

We have three kids and are doing just fine with retirement savings, BTW. Just maxxed out our 2016 Roths this week.

Limit your kids formal clubs and sports. That goes a long way. Most families I know do baseball, basketball, and soccer for their boys. It's both the cost and the time that it takes. We do one a year, although we're having to rethink that considering our eldest might need more physical activity.

Don't feel obligated to provide your kid with expensive experiences or vacations.

We also still have a small house, despite the fact that we have a "large" family (although not historically large). I don't know. No doubt kids cost money, but I just don't think about them as obstacles delaying our retirement. They are here. They cost money. Just like with myself, I find ways to minimize the cost of things they need and constantly evaluate what I think they "need."

ender

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Re: Each kid adds 10 years to FIRE
« Reply #20 on: April 08, 2016, 06:15:14 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

What to you both make?

Have you done any scenario analysis as to whether or not the both spouses working makes financial sense?

Have you actually tracked what your kids add in terms of monthly expenses?

This sure reads like hyperbole based on the numbers you are throwing around here.

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #21 on: April 08, 2016, 06:34:11 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

yeah price = quality NOT cmon man thats like the premise of this entire site.  you can find good quality in home care on CL if you take the time to interview mulitple people and call references.  you litterally just said you could cut you spending by almost 12k per year. Yet these kids are delaying your retirement by 10 years each.  No YOU are.

Where do you live boarder42? Daycare expenses vary wildly depending upon where you live. I agree with the OP. I tried to find home care on CL and didn't get a good feeling. We went with a formal facility for part-time care, which costs more. $300 a month for 15 hours.

We have three kids and are doing just fine with retirement savings, BTW. Just maxxed out our 2016 Roths this week.

Limit your kids formal clubs and sports. That goes a long way. Most families I know do baseball, basketball, and soccer for their boys. It's both the cost and the time that it takes. We do one a year, although we're having to rethink that considering our eldest might need more physical activity.

Don't feel obligated to provide your kid with expensive experiences or vacations.

We also still have a small house, despite the fact that we have a "large" family (although not historically large). I don't know. No doubt kids cost money, but I just don't think about them as obstacles delaying our retirement. They are here. They cost money. Just like with myself, I find ways to minimize the cost of things they need and constantly evaluate what I think they "need."

i live in the midwest.  so maybe he should be looking to relocate his family if its really adding 10 years and he is paying those gross amounts for childcare.  or he just needs to stop being a complainy pants.  top of the line daycare at my work (where you're paying extra for convience) for an infant is 318 a week.  for older kids its around 200 or less.  and its all STEM focused childcare for the older kids. 

the whole premise of the post from this new guy is 99% complainypants.  you can make these statements about anything. 

"i cant retire early b/c i'm spending a billlion dollars on this healthy food i HAVE to eat and no i cant change it b/c i HAVE to eat this special diet and there is no way i can cut costs"
"i live up north where it snows so i HAVE to HAVE a large truck with mud tires to get around in the winter"

etc.

your life is choices OP is making the choice to do something and then blaming their retirement timeline on it.  Based on their childcare decisions i would guess that they have a lot more lifestyle creep in other areas.

Chris22

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Re: Each kid adds 10 years to FIRE
« Reply #22 on: April 08, 2016, 06:55:55 AM »
Daycare at a licensed place in Chicagoland is probably $1200-1500+ for an infant, and goes down about $100/yr (Edit: month) as the child ages.  You can go in-home of course, but you then run the risk of many other things, including being at the mercy of an individual (who sometimes gets sick, takes vacation, etc) versus a company where they will always have adequate coverage.  I've also seen a lot of personality type disputes with individuals (my SIL has a nanny who gives a lot of pushback on changes to schedule, etc) versus everything I do with a company is a "business transaction" and there's less emotion.  Many of the people I know who use in-home daycare are teachers, as in-home seems to be more in line with the shorter, more structured workday and regularly scheduled breaks.  We need the flexibility of a place that's open more hours (daughter's current school is 730AM to 6PM for aftercare) not because we use all of the hours, but because sometimes we have early meetings and drop her off right at opening and sometimes we need to stay late and pick her up right at close, and often those demands are sudden (find out at 4PM about an 8AM meeting the next day) and that doesn't work as well when dealing with a single individual. 

So yeah, I dunno about the 10 years, but $2500/mo for 2 kids is not a shocking number by any means.  And, as discussed in another thread, even if it is borderline on whether or not one parent still works, you must take into account the ease of entering the workforce after an extended absence, and the loss of compounding raises, etc.  My mother stayed home with us kids, and while I know she doesn't regret it, she never was able to get a job in her chosen field again when she wanted to return to the workforce, and it took a long time (over a year) before she could get a (professional) job at all.  It's not at all as simple as saying "I pay $2500/mo, I only make $3000/mo, this is silly", the effect of not working can last much much longer.
« Last Edit: April 08, 2016, 08:00:35 AM by Chris22 »

forummm

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Re: Each kid adds 10 years to FIRE
« Reply #23 on: April 08, 2016, 07:00:52 AM »
$1,000 tax credit, $4,000 exemption, so a sweet $2,000 at the 25% bracket for one. Better rates for the ACA plans. Those are not insignificant savings.

Also the income from their child labor. Mine's too young to have developed too many marketable skills. But since he's perhaps the most adorable baby ever known to man, he could probably bring in some bank as a baby model. But I'm not sure I want to subject him to the negatives of that injury. Once he's learned how to do more with his fingers than put them in his mouth, I'll set him on to app development.

forummm

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Re: Each kid adds 10 years to FIRE
« Reply #24 on: April 08, 2016, 07:03:33 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life. 

I was working in SF about 10 years ago and the rate for daycare in the first floor of the office building was $2k/month. I wonder if it's $3k or $4k now.

Paul der Krake

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Re: Each kid adds 10 years to FIRE
« Reply #25 on: April 08, 2016, 07:04:27 AM »
$1,000 tax credit, $4,000 exemption, so a sweet $2,000 at the 25% bracket for one. Better rates for the ACA plans. Those are not insignificant savings.

Also the income from their child labor. Mine's too young to have developed too many marketable skills. But since he's perhaps the most adorable baby ever known to man, he could probably bring in some bank as a baby model. But I'm not sure I want to subject him to the negatives of that injury. Once he's learned how to do more with his fingers than put them in his mouth, I'll set him on to app development.
The sooner he has earned income, the sooner you get to fill up another IRA! Genius.

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #26 on: April 08, 2016, 07:48:25 AM »
$1,000 tax credit, $4,000 exemption, so a sweet $2,000 at the 25% bracket for one. Better rates for the ACA plans. Those are not insignificant savings.

Also the income from their child labor. Mine's too young to have developed too many marketable skills. But since he's perhaps the most adorable baby ever known to man, he could probably bring in some bank as a baby model. But I'm not sure I want to subject him to the negatives of that injury. Once he's learned how to do more with his fingers than put them in his mouth, I'll set him on to app development.
The sooner he has earned income, the sooner you get to fill up another IRA! Genius.

speaking of this - my wife is a photographer could we "pay" our baby to be a model for her marketing material and then fund an IRA for our kid?

MoonShadow

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Re: Each kid adds 10 years to FIRE
« Reply #27 on: April 08, 2016, 07:51:24 AM »
I have 5 kids, so if 10 years each were remotely accurate, I'm screwed.

Tabaxus

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Re: Each kid adds 10 years to FIRE
« Reply #28 on: April 08, 2016, 08:25:56 AM »
And if you're paying $2500/mo for childcare, but it still makes sense for the second SO (the lower earning one, whichever that is) to be working, you must be making bank (and the other SO must be making even more).

Or the SO doesn't want to give up their career for a temporary situation, because contrary to what people seem to believe around here, there are a ton of professions that you're locked out of if you take an extended sabbatical of this nature.  That's the situation spouse and I would be in if we end up with kids, unfortunately.  Spouse would love to take a few years to raise kids if we had them, but spouse would probably not be able to break back in.

I'm in the same situation--and also primary breadwinner, so it doesn't make a lot of sense for me to walk away.

So, unfortunately, we'll have to face down these childcare expenses if we decide to have a kid.  (Delaying until FIRE isn't really an option either--we're old enough that we need to pull the trigger on kids before we'll be FIREd.)

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #29 on: April 08, 2016, 10:54:53 AM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

yeah price = quality NOT cmon man thats like the premise of this entire site.  you can find good quality in home care on CL if you take the time to interview mulitple people and call references.  you litterally just said you could cut you spending by almost 12k per year. Yet these kids are delaying your retirement by 10 years each.  No YOU are.

The 10 years per kid was a joke. Do you still not get that? I thought my anecdote about writing the algorithm on a napkin and then my dog eating it made that pretty clear. Or the part where I said I was joking in post #5.

And I'm not going to find my kids daycare on craigslist. A lot of the really cheap in-home daycares are unlicensed too. There are things that you can go rock bottom on price with and not notice much difference in quality, and there are some things you can't. You'll understand when you have kids. As much as you think I'm spending I know people who spend significantly more.
« Last Edit: April 08, 2016, 10:59:39 AM by anorman79 »

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #30 on: April 08, 2016, 12:04:45 PM »
Dude you're paying 2500 a month for childcare. I hope they are feeding your children caviar with gold spoons. Even at the high end you should be around 400 per week. You're using your kids as a complainy pants excuse to not optimize that part of your life.

Caviar?? I think you misread my post. The $2500 is for two kids. It may be a little less, I just threw out a round number. That's pretty standard in my area. Daycare ranges from 800/mo per kid for unlicensed in-home to $2000+ if you want to get really fancy. So we're actually on the lower end. Btw daycare isn't like IRAs, you don't just pick the lowest possible cost assuming they're all identical and produce identical results.

Anyways not complaining. My kids are awesome and I knew what I was getting into. We're doing great just wanted to elicit some discussion from other people with large families about how they are doing saving for retirement while dealing w the high costs of raising kids. I'm new but I thought that was what this section of the forum was for.

yeah price = quality NOT cmon man thats like the premise of this entire site.  you can find good quality in home care on CL if you take the time to interview mulitple people and call references.  you litterally just said you could cut you spending by almost 12k per year. Yet these kids are delaying your retirement by 10 years each.  No YOU are.

The 10 years per kid was a joke. Do you still not get that? I thought my anecdote about writing the algorithm on a napkin and then my dog eating it made that pretty clear. Or the part where I said I was joking in post #5.

And I'm not going to find my kids daycare on craigslist. A lot of the really cheap in-home daycares are unlicensed too. There are things that you can go rock bottom on price with and not notice much difference in quality, and there are some things you can't. You'll understand when you have kids. As much as you think I'm spending I know people who spend significantly more.

i know people who buy a new car every year, i know people who go out to eat every night/day/morning,  congrats on knowing that someone spends more and choosing not to optimize. this isnt a blog/forum about knowing people who spend more than you, its about optimizing your spending and your lifestyle.

aFrugalFather

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Re: Each kid adds 10 years to FIRE
« Reply #31 on: April 08, 2016, 12:21:18 PM »
$2,500 a month sounds crazy to me.  My best friend had two kids in an excellent pre-school coop for $190 a month for both of them last year.  They volunteer a few hours for one day a week which is great for bonding with their kids and also its a great school and community.  This is one of the most expensive areas in the country (Bay Area California) so I cannot fathom people spending so much...  But if you see other people spending that it can be easy to be lulled into complacency.

neo von retorch

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Re: Each kid adds 10 years to FIRE
« Reply #32 on: April 08, 2016, 12:25:52 PM »
If it's a joke, maybe don't defend the position?

Let's do that napkin math! We'll start with some assumptions, make sure the math checks out, and then we can address any assumptions that may need questioned.

Income: $100,000
Expenses: $40,000
Kid Expenses: $30,000 ($2,500 per month)

Without kids, savings are 60% and it takes 16.7 years to retire. With kids, savings are 30% it takes 58.3 years to retire! It looks like kids add a lot more than 10 years to your working career. What can we work on to make this better?

Chris22

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Re: Each kid adds 10 years to FIRE
« Reply #33 on: April 08, 2016, 12:34:26 PM »
$2,500 a month sounds crazy to me.  My best friend had two kids in an excellent pre-school coop for $190 a month for both of them last year.  They volunteer a few hours for one day a week which is great for bonding with their kids and also its a great school and community.  This is one of the most expensive areas in the country (Bay Area California) so I cannot fathom people spending so much...  But if you see other people spending that it can be easy to be lulled into complacency.

$190 for 2 kids for 5 day a week preschool is crazy cheap.  I'm paying $865/mo for 1 kid in Chicagoland (not including before/after care, school itself is 8:15-2:15).  Infant care is way more expensive.

mashrach

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Re: Each kid adds 10 years to FIRE
« Reply #34 on: April 08, 2016, 12:51:14 PM »
People advocating for finding all day day care on CL do not have kids. I know the 10 years was a joke but they do add time. If you had a good accumulation phase pre-kids it will be a lot easier, if you're like me and the kids weren't um..planned out so well then it takes a long time to catch up. Decisions like 'should I increase my 401K by $X a month or allow my son to take piano lesson's/gymnastics/travel soccer/have a phone/get braces...?' are common. And yeah when they're really young you either lose a full salary or pay for daycare.

boarder42

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Each kid adds 10 years to FIRE
« Reply #35 on: April 08, 2016, 12:58:57 PM »
People advocating for finding all day day care on CL do not have kids. I know the 10 years was a joke but they do add time. If you had a good accumulation phase pre-kids it will be a lot easier, if you're like me and the kids weren't um..planned out so well then it takes a long time to catch up. Decisions like 'should I increase my 401K by $X a month or allow my son to take piano lesson's/gymnastics/travel soccer/have a phone/get braces...?' are common. And yeah when they're really young you either lose a full salary or pay for daycare.

i have 5 different friends who all found their daycare on CL.  you're just lazy, does it take more work, yes, you have to interview people and call references and shop and find someone you like.

MOD EDIT: Forum rule #1.
« Last Edit: April 08, 2016, 01:01:31 PM by arebelspy »

KCM5

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Re: Each kid adds 10 years to FIRE
« Reply #36 on: April 08, 2016, 01:10:29 PM »
If it's a joke, maybe don't defend the position?

Let's do that napkin math! We'll start with some assumptions, make sure the math checks out, and then we can address any assumptions that may need questioned.

Income: $100,000
Expenses: $40,000
Kid Expenses: $30,000 ($2,500 per month)

Without kids, savings are 60% and it takes 16.7 years to retire. With kids, savings are 30% it takes 58.3 years to retire! It looks like kids add a lot more than 10 years to your working career. What can we work on to make this better?

Well, the kid expenses only last 7 years or so, then go way down (no more day care - 7 years to assume 2 kids 2 years apart). If your numbers example is post tax, then with my fuzzy math they're saving 43% ($30,0000 savings, $40,000 living expenses) for a working career of 22 years. And they will save more when the kids go to school.

So excluding college kids add about 6 years - seems legit.

I have a kid. She's worth working an extra 6 years.

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #37 on: April 08, 2016, 01:11:00 PM »
If it's a joke, maybe don't defend the position?

Let's do that napkin math! We'll start with some assumptions, make sure the math checks out, and then we can address any assumptions that may need questioned.

Income: $100,000
Expenses: $40,000
Kid Expenses: $30,000 ($2,500 per month)

Without kids, savings are 60% and it takes 16.7 years to retire. With kids, savings are 30% it takes 58.3 years to retire! It looks like kids add a lot more than 10 years to your working career. What can we work on to make this better?

I don't even know what you think I'm defending. The only reason I started this thread was to discuss how other people with large families are doing savings for retirement. We're doing fine, despite the high costs of raising kids. I made a joke about doing a calculation on a napkin which my dog ate, and it got people all worked up for some reason. 

Like mashrach said, people advocating for finding dirt cheap childcare on craigslist don't have kids. Clearly

justajane

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Re: Each kid adds 10 years to FIRE
« Reply #38 on: April 08, 2016, 01:22:52 PM »
On Craigslist, I tried to find someone to custom build me a medicine cabinet for my bathroom. I googled the names of the first two people who e-mailed me back. The results for both of them gave me a mug shot, one taken three days earlier. No, I'm not trying to imply that everyone on Craigslist is a criminal. But it's a funny anecdote. You gotta admit.

I'm sure someone somewhere has found a wonderful in-home daycare facility on Craigslist. But no, I wouldn't look there necessarily. I would be more likely to ask around and go on a personal recommendation.

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #39 on: April 08, 2016, 01:25:43 PM »
If it'll make you guys feel better and stop arguing with me about how much my daycare costs, it actually be a little cheaper than $2500. I threw out a round number in my OP but might be a little less like $2300. Bottom of the barrel in-home daycare(possibly unlicensed) would still run us $1600/month for 2 kids in our area. We want them in their preschool program because they learn things, and it has a good structured program, rather than just sitting around someones house all day. So it's well worth the extra money to us. I'll reiterate that daycares aren't like IRAs. There are big differences between the lowest cost option and options that cost more. People with kids understand that.

mashrach

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Re: Each kid adds 10 years to FIRE
« Reply #40 on: April 08, 2016, 01:48:48 PM »
People advocating for finding all day day care on CL do not have kids. I know the 10 years was a joke but they do add time. If you had a good accumulation phase pre-kids it will be a lot easier, if you're like me and the kids weren't um..planned out so well then it takes a long time to catch up. Decisions like 'should I increase my 401K by $X a month or allow my son to take piano lesson's/gymnastics/travel soccer/have a phone/get braces...?' are common. And yeah when they're really young you either lose a full salary or pay for daycare.

i have 5 different friends who all found their daycare on CL.  you're just lazy, does it take more work, yes, you have to interview people and call references and shop and find someone you like.

MOD EDIT: Forum rule #1.

You might be right, I might be lazy and I'm glad your friends found good childcare on CL although I've never heard a conversation go anything like this:
A: Hey I need to find someone to take care of my infant all day long.
B: Have you tried CraigsList?

I do have good luck with used furniture on there though.

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #41 on: April 08, 2016, 01:50:17 PM »
if that was your goal your post should have been titled "raising three kids and trying to FIRE how are you guys doing? "

you get more positive responses than throwing out insane numbers.

It would be like me starting a post.  "I just blew up my engine in my boat - how do you guys survive spending 6k on engine swaps?"  - not a good thought for this forum.  we all have things we're willing to spend money on.  yours is gold spoon caviar daycare, mine's a boat.

boarder42

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Re: Each kid adds 10 years to FIRE
« Reply #42 on: April 08, 2016, 01:52:46 PM »
People advocating for finding all day day care on CL do not have kids. I know the 10 years was a joke but they do add time. If you had a good accumulation phase pre-kids it will be a lot easier, if you're like me and the kids weren't um..planned out so well then it takes a long time to catch up. Decisions like 'should I increase my 401K by $X a month or allow my son to take piano lesson's/gymnastics/travel soccer/have a phone/get braces...?' are common. And yeah when they're really young you either lose a full salary or pay for daycare.

i have 5 different friends who all found their daycare on CL.  you're just lazy, does it take more work, yes, you have to interview people and call references and shop and find someone you like.

MOD EDIT: Forum rule #1.

You might be right, I might be lazy and I'm glad your friends found good childcare on CL although I've never heard a conversation go anything like this:
A: Hey I need to find someone to take care of my infant all day long.
B: Have you tried CraigsList?

I do have good luck with used furniture on there though.

if i ask around to 90% of my friends/coworkers since i'm in a white collar work place about any one of a number of things you could spend your money on the answer wont be the best value for your dollar.  I have had coworkers laugh when i tell them the temperature of my house.  or that my car has 213k miles on it.  so yeah you're right if you dont have a lot of frugal friends they too will scoff at the idea of CL for daycare just as many scoff at that idea when even buying furniture. 
« Last Edit: April 08, 2016, 01:54:41 PM by boarder42 »

Cassie

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Re: Each kid adds 10 years to FIRE
« Reply #43 on: April 08, 2016, 02:02:13 PM »
My Dad had a saying-"Do you want to have kids or do you want to have $-you can't have both."  He was being funny/silly obviously just like the OP was.

forummm

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Re: Each kid adds 10 years to FIRE
« Reply #44 on: April 08, 2016, 02:05:03 PM »
$1,000 tax credit, $4,000 exemption, so a sweet $2,000 at the 25% bracket for one. Better rates for the ACA plans. Those are not insignificant savings.

Also the income from their child labor. Mine's too young to have developed too many marketable skills. But since he's perhaps the most adorable baby ever known to man, he could probably bring in some bank as a baby model. But I'm not sure I want to subject him to the negatives of that injury. Once he's learned how to do more with his fingers than put them in his mouth, I'll set him on to app development.
The sooner he has earned income, the sooner you get to fill up another IRA! Genius.

speaking of this - my wife is a photographer could we "pay" our baby to be a model for her marketing material and then fund an IRA for our kid?

Yes, with caveats. One being payroll taxes if you pay the kid more than a few hundred bucks. There was a thread on here about that with lots of details, perhaps in Mini Mustaches. MDM was a contributor.

Paul der Krake

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Re: Each kid adds 10 years to FIRE
« Reply #45 on: April 08, 2016, 02:06:02 PM »
What's the big deal with using an unlicensed daycare person? Do you require the grand parents to go through training before watching the kids too?

justajane

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Re: Each kid adds 10 years to FIRE
« Reply #46 on: April 08, 2016, 02:13:09 PM »
What's the big deal with using an unlicensed daycare person? Do you require the grand parents to go through training before watching the kids too?

No, but presumably you know and trust your family implicitly, else I would also suggest you don't have them watch your children for extended periods of time.

In-home daycares have some of the highest SIDS rates. I personally chose a church facility because I like the checks and balances. My kid is never alone with one caregiver. The director is always walking between the rooms.  I didn't want a stranger watching my kid by herself (or himself, although I've never had a daycare worker who is male). Plus, licensed facilities are inspected yearly and have to (in theory) abide by all the most recent safety guidelines.

VaCPA

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Re: Each kid adds 10 years to FIRE
« Reply #47 on: April 08, 2016, 02:19:04 PM »
What's the big deal with using an unlicensed daycare person? Do you require the grand parents to go through training before watching the kids too?

No, but presumably you know and trust your family implicitly, else I would also suggest you don't have them watch your children for extended periods of time.

In-home daycares have some of the highest SIDS rates. I personally chose a church facility because I like the checks and balances. My kid is never alone with one caregiver. The director is always walking between the rooms.  I didn't want a stranger watching my kid by herself (or himself, although I've never had a daycare worker who is male). Plus, licensed facilities are inspected yearly and have to (in theory) abide by all the most recent safety guidelines.

Good points. Another negative with in-home daycares is because there's often one person running it like you said, if that one person gets sick you're screwed and have nowhere for your kid to go. A facility has many workers so can deal with an illness of one. We actually use a church based preschool program ourselves. We found them to be more affordable than other preschools while still offering really good structured programs.

Cassie

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Re: Each kid adds 10 years to FIRE
« Reply #48 on: April 08, 2016, 02:22:15 PM »
I would only use unlicensed if I knew the person well otherwise you are taking a risk. Even  people that use in-home nannies with good references have set up cameras and found some of them to be abusing their kids.  There is no amount of $ that you can say is more important then your child's life.

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Re: Each kid adds 10 years to FIRE
« Reply #49 on: April 08, 2016, 02:42:50 PM »
I pay $206 per kid for weekly daycare, they're in there for 40-45 hours a week, but they have an educational routine. No TV, tablets, iPads to keep them busy. More like the 3R program. This August my older one will go into their VPK (Voluntary Pre-Kindergarten) program, and then be ready for public elementary school (K-5). We're paying $4.57-$5.15 per hour for each kid. This enables my wife to have a fulltime job making $70K+Bonus.
We've paid off their college tuition early through the Florida Pre-Paid program.
Apart from daycare, they don't cost much in terms of food and clothing, except for diapers and wipes. The younger one is potty training now.
If we didn't have kids, I'd FIRE in 3-5 years. Now I'm looking at 15-17 years, only because I love my job and workplace, and don't want to sit at home when my kids are in school.