Peach Fuzz on the way! Finance adjusting tips

[CityStache12]

Hey all,

So just found out my wife and I have a little one on the way. Our first and we're very excited. : )

We've been sort of mustache-light for a couple of years now (e.g. max 401k, cord cut). Our goal is less early retirement and more just shrewd saving as much as we can in NYC. We're not hardcore but we're conscious.

I was looking for some feedback about how to adjust finances and other tips in preparing for the kiddo.

A big point is that we're in the house-buying market and we've got savings of about $120k that will go into some combo of down payment and renovations. So although we make good money, most of our savings is earmarked for house stuff.

We're both 30 years old. At the moment we don't pay rent due to a fortunate family situation.

Combined annual gross salary: approx. $190k

Retirement savings (in 401Ks, IRAs and Roths): $100k

Current savings rate: about 37% of monthly income

Savings breakdown:
Currently I'm maxing my 401k annually. My wife is only matching to the 4% her company provides. The other big chunk of our savings has been a monthly contribution of $2k to the "house" fund mentioned above.

I don't have specific questions, exactly. We live well above our means at the moment and still manage to save at the 37% rate. That said, with a monthly take-home net pay of approx. $8000, we could probably stand to rearrange things a bit with a baby due in the summer.

Any tips or suggestions? Things that worked for you? Suggestions for articles to read or other things to check out?

Thanks!

[Travis]

Don't go nuts buying top of the line or expensive baby stuff.  That goes for clothes, toys, and to a degree even furniture.  Babies become toddlers very quickly and they don't require "designer" anything that they're going to grow out of, not need, or not appreciate you spent a small fortune on it.

[marty998]

Don't go nuts buying top of the line or expensive baby stuff.  That goes for clothes, toys, and to a degree even furniture.  Babies become toddlers very quickly and they don't require "designer" anything that they're going to grow out of, vomit all over, not need, or not appreciate you spent a small fortune on it.

Added to emphasise the point being made :D

Use the time now to build a cash buffer to ease the cost of childcare in future. I'm assuming you will drop to one income for a while, so it may not be as easy to put money away when the baby is around and there's less coming in the door, especially since your current savings rate is 37% of $190k.

[minority_finance_mo]

Daycare is also crazy expensive in NY from what I hear, so maybe start shopping around and seeing if you can find a deal there. You'll be able to deduct those expenses from your taxes (not sure if there's a cutoff income for this...), so that's a positive. Congrats on the news!

[CityStache12]

Thanks, all! Any other tips? I'm wondering whether to cut back my currently maxed 401k contributions a bit to have a little extra money around, especially once we start having to buy things for baby in a couple of months.

With $100k in retirement already banked at age 30, I feel pretty good about the retirement start we're off to. Would you agree?

[Seattle Carter]

I'm 39 and have 2 kids, one who's almost 7. So I'm about 7 years ahead of you. I agree with what everyone else said: don't buy a bunch of fancy new stuff. You will be donating it to Goodwill in a year or two, I promise you. I'm actual surprised that you're wife isn't maxing out her 401k and that you're thinking of cutting back on yours. I think the best way to stop yourself from spending you'll regret later is to "pay yourself first" and max out all your pre tax options.