Author Topic: Reader Case Study - Financial planning for adoption (and debt freedom)  (Read 4258 times)

WhoaMama

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Hi everyone,

First-time poster, long-time reader. I can't wrap my head around our financials and need outside perspective.

Income:
DH (35 y/o) - $70,000 gross, $50,000 net after 401K, health ins, taxes, etc.
Me (33 y/o) - $10,000 gross - I'm a SAHM to our 3 year old daughter, but freelance on the side.
Total: $80,000 gross, $55,000 net

Current expenses: We're still trying to work out a budget but this is our starting point.

Mortgage - $900 PITI
Student loan - $130
SUV loan - $270 DH adamantly wants to keep this vehicle for its 4 wheel drive (we live in a rural part of the Midwest). I wouldn't mind getting rid of it though, it'll just be a tough sell to get DH on board.
Electricity - $130
Propane - $150
Auto Insurance - $83
Life Insurance - $52
Security system - $44 DH works odd hours so I'd like to keep this if at all possible. We've had some threats made against us from family members no longer in our lives, so the system makes us feel more secure.
Cells - $160 under contract til June 2016 unless we can get someone to take it over
Internet - $60
Fuel - $250
Groceries - $400
Medications - $30
Entertainment - $50
Cable - $45
Daughter's gymnastics - $30
Total: $2784

Expected ER expenses: We adopted our daughter 3 years ago via private adoption. Since we were able to find a birthmom on our own (she was a friend of a friend), then the adoption only cost about $10,000. We would like to adopt again and have, so far, been unsuccessful at finding a birthmom on our own.

To adopt through an agency, we're looking at a minimum of $25,000, possibly up to $35,000 depending on specific circumstances related to the birthmom. Without going into too much detail, I am unable to have children due to health conditions. Adoption is our only option at this point to grow our family. Foster to adopt is not on our hearts at this time - it takes special people to go down that road.

Besides the adoption expenses, I'm always concerned about medical costs for treatment of my health conditions. For the past decade, we've spent anywhere from $3,000 to $10,000 OOP each year for medical - I've had several surgeries. And ironically, that's with really good insurance.

Total: $25,000 adoption plus $5,000 medical

Assets

Truck: $2,000
SUV: $18,000
Home: $180,000
401K: $25,000
Stock: $5,500
Savings: $10,000
Total: $240,500

Liabilities:

SUV: $14,000, 1.99%
Student loan: $13,000, 3.5%
Home: $148,000, 28 yrs left on 30 yr loan @ 3.625%
Total: $175,000

Specific questions:

I'm too emotionally tied to our financial situation and can't make clear decisions. We'd like advice on:

1. Making a plan to cash flow the adoption, ideally within the next 1-2 years.
2. Killing the remaining consumer debt - student loan and car - in that same amount of time.
3. Long-term, setting us up for early retirement. It seems so far off at this point, especially with the mortgage still hanging over our heads and the adoption costs.

Please ask for any clarification. And thanks so much for helping me figure this out!


« Last Edit: February 25, 2015, 01:40:24 PM by WhoaMama »

sandandsun

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #1 on: February 25, 2015, 12:57:14 PM »
Didn't read all the budget details, but I just want to comment on the adoption costs.  Considered this very thing a few years back (paid about 8k toward it that we never got back) and ultimately decided to go with our state foster to adopt system because the projected total costs keep creeping up (40k+)... I am sure there are exceptions, but almost everyone I have talked to who has done a private adoption says it costs way more than anticipated...
its not for everyone, but you could check w your state system, do the training, get approved and wait for two years on a list all while still saving for a private adoption.  In our state at least, we could specify what situations we would consider, which determines length of time you wait.  So, say you only want healthy infant 0-2 years... sure, you'll be waiting a while- but with no cost involved, what do you have to lose?  Willing to accept children 3 and up- the wait is weeks to months where we live...
good luck- I know it an emotional rollercoaster, but don't risk your financial goals at all costs...

Hannah

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #2 on: February 25, 2015, 01:04:18 PM »
Having a goal is absolutely going to make the difference in your case, and an absolutely worthwhile goal too :)

Based on your post I'm going to briefly assume that your priorities are as follows:

1. Adopt (Cost $25K)
2. Eliminate Debt ($27K)
3. Invest aggressively to achieve Financial Independence ($1M)

The great news is that you are coming up with $21K per year that can be devoted to your goals or $16K if you pay $5K OOP this year. So given a three year timeline, you can achieve your first 2 goals without even trying. Seriously, just don't change you're lifestyle and you've done it.

That being said, you have a car problem. You have two gas guzzling vehicles, one of which is financed, and you're family is the size that really might require only one fuel efficient vehicle.

Feel free to pick and choose, but I would say your best bet is to cut expenses by selling the SUV- These are the effects I can see:

Eliminate Security System: Save $44
Cut Cell Phones to Republic Wireless or Ting: Save $120
Cut Cable: Save $45
Sell your SUV and get a more efficient car (nobody needs two big cars, and as a bonus you'll spend less on gas too): Savings $270 per month On Car payment
+ $25 on Gas
Consider Selling the Truck and buy a more efficient car with cash equivalent: Savings $25 on Gas

(use your stocks or savings to buy a replacement for SUV)

Total effect of simple changes are: $529 per month or over $6K in extra savings per year, and as an added bonus you've gotten rid of half of your consumer debt immediately. By the end of the year, you will have the money to adopt (without touching your current assets other than what was required to buy a replacement vehicle), and you will have the debt eliminated 6 months later.

Also, I'm not sure what state you are adopting from, but domestic Public Adoption is an option in some states (like Minnesota), and the cost of adoption is covered by the state.
 

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #3 on: February 25, 2015, 01:05:13 PM »
@sandandsun:

Can you tell me the general region where you live? Just curious. I am in the Midwest and have been told by the local foster system that they never have newborns become available for adoption. They told me it's usually kids 8 y/o and older.

When I called them, the lady told me if I "wanted an infant, then I should just go to Catholic Charities." Yeeaaahhh, she wasn't nice about it at all and I hung up the phone crying.

I'll say that I'm not 100% opposed to going through the system.

The other dynamic we have going is feeling like which is more important - money or our family? I literally feel like we have to choose between FIRE and adopting again. I'm just emotional and it's tough to make decisions that way.

sandandsun

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #4 on: February 25, 2015, 01:13:28 PM »
@sandandsun:

Can you tell me the general region where you live? Just curious. I am in the Midwest and have been told by the local foster system that they never have newborns become available for adoption. They told me it's usually kids 8 y/o and older.

When I called them, the lady told me if I "wanted an infant, then I should just go to Catholic Charities." Yeeaaahhh, she wasn't nice about it at all and I hung up the phone crying.

I'll say that I'm not 100% opposed to going through the system.

The other dynamic we have going is feeling like which is more important - money or our family? I literally feel like we have to choose between FIRE and adopting again. I'm just emotional and it's tough to make decisions that way.

Southeast... maybe that makes a difference, but I would say to talk with someone else before you give up...
the thing is, many of the concerns with children from foster care (damaged, too much contact w birth family) can be overblown (not always)... and private adoption of infants is no guarantee that you wont have those same problems (just google adoption and attachment issues)... 
ultimately, y'all need to decide what is right for you- I would just say don't write off an option just because the first person you talked to was bitchy...

the training was mind-numbing, the system is understaffed, we often got less than helpful (and sometimes flat out incorrect info) but I would say in retrospect it was the correct decision for us.  40k - or even 30k- was just not something we were willing to do even though we could have.  The (possible) difference in outcomes did not warrant that type of outlay... 

ask about fostering only children that are 'likely' to be available for adoption- there is no guarantee, but they can usually say w 90% certainty when a kid is going to be available (parents waiting to have rights terminated for obvious reasons etc.).  you need to find someone in your system who has the time to really help you.  About 25% of the people we worked with over the 2 years were helpful and professional and cared about what they did.  find one of those...

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #5 on: February 25, 2015, 01:27:50 PM »
@sandandsun

Thanks for reminding not to give up so easily. Getting to the stage of parenthood has been an uphill battle and I, momentarily, lost perspective. I actually just emailed a friend from high school who is fostering to adopt (in the finalization stages now) in the same county we live in. I'm calling her this evening to ask her advice about the local system. She's adopting two toddlers.

FarmerPete

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #6 on: February 25, 2015, 01:29:39 PM »
What about international adoption?  Is that any cheaper?  The wife and I had talked about adoption before.  We had a lot of problems/delays before we had our son.  I always assumed that going the international route would potentially save some money.  I'm not expecting cheap, but maybe $20k vs $30-40k.

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #7 on: February 25, 2015, 01:34:55 PM »
@Hannah

Thank you! I feel 1000X better after reading your response. I wasn't seeing the light at the end of the tunnel.

Getting rid of the SUV will be tricky. I've mentioned it to DH before, noting that it would kill about half of our consumer debt. He was pretty adamant against it. He wants us to have a 4 wheel drive vehicle (live in a rural part of the Midwest) and says we'll keep it til the wheels fall off. He works an off shift and drives the SUV all the time, as do I, so getting rid of the truck shouldn't be that big of a deal. We should be fine with only one vehicle. I can't drive the truck anyways since it's a stick.

I'll work on that with him. It'll be tough.

I'll update some other info in the original post too.


WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #8 on: February 25, 2015, 01:37:17 PM »
What about international adoption?  Is that any cheaper?  The wife and I had talked about adoption before.  We had a lot of problems/delays before we had our son.  I always assumed that going the international route would potentially save some money.  I'm not expecting cheap, but maybe $20k vs $30-40k.

Hi FarmerPete! Thanks for weighing in. Int'l adoption runs roughly $30K + depending on which country you choose. Unfortunately, it's not any cheaper. It's really frustrating that adoption has become such a business :(

FarmerPete

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #9 on: February 25, 2015, 02:48:30 PM »
Who better to fleece for income than frustrated people who want children, but most likely can't do it themselves....Yeah, I agree that it's a shame.  It would be one thing if all of that went to paying for medical expenses, but most of it never reaches the birth mother.

A couple who are friends of my wife have adopted 4 kids from the same birth mother.  She keeps cranking out kids and the state keeps taking them away.  Since they have so many kids, they get called directly when another one enters the system.  They are now considered "family" to some extent and are first choice for placement.  They said it's difficult, because while they want to provide a home for the sibling of their kids, they really wish they had the freedom to appoint other couples who want children as the receivers of the child.  Having 4 kids is enough for them, but it breaks their heart to think where the child will end up if they turn the offer down.  Unfortunately, having the rights to be asked first doesn't translate into having legal guardianship of the kid, and it's pretty much a "You can have the kid or we'll go to our waiting list".

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #10 on: February 25, 2015, 02:58:18 PM »
Totally agree FarmerPete. I've had some agencies break down the costs and about 1/3 goes towards "advertising" to birthmoms. It's a really convoluted cycle, which would take a complete overhaul to fix.

We're on the fence about what to do. We don't want to financially ruin ourselves, but the desire to parent more little ones remains.

Sounds like it's a bit of a double-edged sword for the family you know. It would be really hard to turn away another kidlet, you'd hate to separate them. My sister did foster to adopt out West and she said the system is much easier to navigate there than it is here in the Midwest. They terminate parental rights faster there she said, and bio parents don't get as many chances. She was also approached about adopting a sibling from the same birthmom, but they didn't proceed as the medical background was too intense. They weren't the right family to take on the situation. 

justajane

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #11 on: February 25, 2015, 02:58:28 PM »
I know several people who have fostered and eventually adopted babies 6 weeks and younger, but they had a rough start, i.e. drugs in their system at birth. I live in a Midwestern city.

sandandsun

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #12 on: February 25, 2015, 04:52:16 PM »
Just hang in there, it will work out!  And I really believe you can have some great options with foster to adopt if you are patient and honest about what situations will work for you (i.e. don't agree to take on situations you cant handle just to improve your chances of speeding up the process).  Foster care system is desperate for decent families, but stay firm in what you can handle and it will work out.  You don't need to spend 30k to be a parent again, Just be patient and work within your system.  It will be frustrating but you aren't in a position to pay for a private adoption right now anyway, so nothing to lose by starting the process w your state.
I will also emphasize that it isn't just folks who cant afford private adoption who are refusing to go that route.  We could have afforded it.  We have friends who are doctors who could have afforded it, but both of our families (independently, we only met during the fostering process) reached the same conclusion that we didn't want to feed that business model.  Deciding factor for me was when I did a little research and learned the president of the private agency we were working with took a salary of 280k a few years back.  She doesn't need our money on top of that...

vivian

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #13 on: February 25, 2015, 07:36:06 PM »
We are in very similar situations! We have a 3 yo (adopted) and are currently trying to adopt again. We actually had a match fall through a few months ago. In addition to the emotional pain, we also lost nearly $8K in the process. I agree that the private adoption process needs many reforms.

If I were in your situation, I would prioritize as follows: adequate emergency fund, adoption, debt payoff. The good news is that it seems your current savings is 3 months of expenses. Given your health issues, I would increase that savings by $5000 to add even more cushion that you said you need. (We currently have two online savings accounts, one with our designated emergency fund and one with our designated adoption funds.) The other good news is that your current spending and expenses seems to indicate that you can save that in 3-4 months, even if you make no changes. I know first hand how emotional this process is, so it is hard to put off saving for the adoption for another few months. But, the months will go by quickly and you have to think of the child you already have!

I would actually plan for up to $35K in adoption expenses. Hopefully you will spend less, but there will be unexpected things that come up. Also, you can start with a smaller budget once you have $15,000 or so saved, and then keep increasing it as you save more. Also, remember that not all expenses are due at once. Some expenses are due at match, some at birth, so that could give you an additional few months to save.

One expense item I wanted to mention is the security system. You might want to look into SimplySafe, which I believe has a lower monthly cost. I don't have any personal experience with security systems, but have heard a lot of good things about it.

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #14 on: February 25, 2015, 09:05:58 PM »
I know several people who have fostered and eventually adopted babies 6 weeks and younger, but they had a rough start, i.e. drugs in their system at birth. I live in a Midwestern city.

I'm going to PM you justajane.

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #15 on: February 25, 2015, 09:12:03 PM »
Just hang in there, it will work out!  And I really believe you can have some great options with foster to adopt if you are patient and honest about what situations will work for you (i.e. don't agree to take on situations you cant handle just to improve your chances of speeding up the process).  Foster care system is desperate for decent families, but stay firm in what you can handle and it will work out.  You don't need to spend 30k to be a parent again, Just be patient and work within your system.  It will be frustrating but you aren't in a position to pay for a private adoption right now anyway, so nothing to lose by starting the process w your state.
I will also emphasize that it isn't just folks who cant afford private adoption who are refusing to go that route.  We could have afforded it.  We have friends who are doctors who could have afforded it, but both of our families (independently, we only met during the fostering process) reached the same conclusion that we didn't want to feed that business model.  Deciding factor for me was when I did a little research and learned the president of the private agency we were working with took a salary of 280k a few years back.  She doesn't need our money on top of that...

That's crazy about the salary! I'm going to do a little digging on my end too and see what I can find out about salaries around here.

Good for you for not contributing to the business model. That's how I was when we first started looking at adoption 4 years ago. I said I wouldn't buy into that for ethical and moral reasons. And then we had a birthmom situation fall right into our laps, so we went for it and just had to pay the legals.

I had a good chat with my friend from school and then talked to DH and we're leaning towards getting certified for foster and foster to adopt and then going from there. Thanks again for the encouragement :)

WhoaMama

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #16 on: February 25, 2015, 09:24:38 PM »
We are in very similar situations! We have a 3 yo (adopted) and are currently trying to adopt again. We actually had a match fall through a few months ago. In addition to the emotional pain, we also lost nearly $8K in the process. I agree that the private adoption process needs many reforms.

If I were in your situation, I would prioritize as follows: adequate emergency fund, adoption, debt payoff. The good news is that it seems your current savings is 3 months of expenses. Given your health issues, I would increase that savings by $5000 to add even more cushion that you said you need. (We currently have two online savings accounts, one with our designated emergency fund and one with our designated adoption funds.) The other good news is that your current spending and expenses seems to indicate that you can save that in 3-4 months, even if you make no changes. I know first hand how emotional this process is, so it is hard to put off saving for the adoption for another few months. But, the months will go by quickly and you have to think of the child you already have!

I would actually plan for up to $35K in adoption expenses. Hopefully you will spend less, but there will be unexpected things that come up. Also, you can start with a smaller budget once you have $15,000 or so saved, and then keep increasing it as you save more. Also, remember that not all expenses are due at once. Some expenses are due at match, some at birth, so that could give you an additional few months to save.

One expense item I wanted to mention is the security system. You might want to look into SimplySafe, which I believe has a lower monthly cost. I don't have any personal experience with security systems, but have heard a lot of good things about it.

Hi Vivian,

I'm sorry to hear about the failed adoption. It's one hell of a roller coaster ride.

DH and I hashed it out a bit more tonight. We're leaning towards getting certified for foster and foster to adopt, while continuing to save up funds. We don't want to make decisions based on emotions (really hard to do in this case!), so this way we can at least feel like we're making progress. If we decide to adopt, then we'll have the money set aside. And if we find foster/foster to adopt is a good fit for us, then we'll have cash to throw at debt.

In the interim, we may be able to find a birthmom on our own again too, which would largely negate the cost issue.

Thanks for the heads up on the security system. I'll definitely look into that. If you ever need to vent about the process, feel free to PM me :)

Stachetastic

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Re: Reader Case Study - Financial planning for adoption (and debt freedom)
« Reply #17 on: February 26, 2015, 09:46:09 AM »
I don't have too much more to add, but just wanted to chime in and say I live in the Midwest, and worked in child welfare for 12 years, licensing foster/adoptive homes and placing children. I recently left the field, but I'm happy to answer any questions you may have. Many people have the same concerns you do regarding the system. It certainly has its (many) faults, but it is a means to grow your family without spending a dime. If you pursue the public system, I would encourage you to be very clear about what type of children you are willing to take placement of, and stress you'd only wish to take the ones who are likely to be adopted. If your local agency does not respond well to that, find one that does.