Author Topic: New Dad and I'M LOST and NEED Guidance  (Read 2949 times)

W3sierra

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New Dad and I'M LOST and NEED Guidance
« on: August 01, 2016, 09:40:18 PM »
Hello ! First and foremost, i would like to say im so glad i found this forum. I was reading Septembers issue of Bicycling Magazine and discovered an article interviewing MMM. Im looking for guidance of any type. My daughter is due in a month and I am financially in trouble ! I recently moved into California with my girlfriend and her father. Her family also helped me aquire a decent paying job. Everything is slowly falling into place but the problem is I don't know how to spend my money. Currently, I've been using the 50-30-20 method. Currently, I do not pay rent but we are looking into moving into a bigger home enough for my daughter to grow up in. So what I am asking is, how do I invest my paychecks into smart, money-growing, techniques? I do not know much about stock investments and how those work. So any type of advice or being sent a link to a website will be great.
« Last Edit: August 01, 2016, 09:59:02 PM by W3sierra »

dilinger

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #1 on: August 01, 2016, 09:59:15 PM »
First of all, deal with any debt you have:
http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Then look into investing:
http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

There's plenty more info out there, but that's the basics.  I personally do 60% VTSAX (mostly US stocks), 30% VTIAX (international stocks), and 10% VBTLX (bonds) for diversification, but the key is figuring out what your risk tolerance is (bonds vs stocks), going with index funds, leaving them alone despite market crashes, and just keep growing the number you have (through dividend investments and saving your paychecks).

Pretty simple.  Sign up for a Vanguard account, link it to a bank account, and away you go.  Once you've got that all set and you've got a nice 'stache growing, figure out what you want to do for housing (rent vs own).  That's a much longer discussion. :)

kitkat

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #2 on: August 01, 2016, 10:12:25 PM »
Congratulations -- You got this!

In addition to what stocks/funds you invest in, it is important to understand the different types of accounts you can be using. Does your job have a 401k or similar? Do you have a traditional or Roth IRA started? These accounts should be fully utilized before you open fully taxable brokerage accounts. That being said, make understand you understand the withdrawal rules so that you will be able to access your money when you need it (for a home down payment, for example). Many of these tax-advantaged accounts have special withdrawal exceptions or loan programs that allow you to get the money out for a home.

Doubleh

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #3 on: August 02, 2016, 02:13:00 AM »
Congratulations, my second daughter just arrived and my elder has turned three. Fatherhood is an amazing adventure. I second the advice to clear any debts, and I would also say to build a decent emergency fund before getting too worried about investing beyond employer matches. Investing in stocks, bonds etc is for money you won't need to access for the next 5 years or so. Not trying to put you off that, it's critical to achieving early retirement, and you can get onto it as soon as you have a cash buffer behind you.

Some people on here are not big on emergency funds - mainly because once you have good equity in your own home and a decent portfolio the need is much diminished. But what I hear from your post is that your life is in flux and you are feeling overwhelmed. A decent buffer of say 6 months of expenses held in an fdic insured bank account will go a long way to helping you feel comfortable at an uncertain time, and will provide robustness to deal with any curveballs life throws. Sure 6 months expenses probably sounds like a huge amount now but start with one month and build it up as you go.

Turning to your direct question of how to spend your money - the best advice is to try not to! The 50-30-20 rule is better than most people manage, but most here are trying to save much more than 20% of their income. See 20% savings as a minimum, not a maximum.

Lastly lots of people go crazy with spending when they have kids. Truth is it turns out you don't need half of what people and magazines say you do. Of the things you do need you can probably get a load as hand me downs through family and friends networks, and much of the remainder can be got free or cheaply via freecycle, thrift stores, eBay or Craigslist. Babies don't use things long enough to wear them out and often get so many toys and clothes that half of the, never even get used!

CowboyAndIndian

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #4 on: August 02, 2016, 07:23:47 AM »
First of all, put together a case study. The forum readers are smart and very helpful. They will help you fix your finances and teach you how to invest.

Here is the post that tells you how to: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/


Currently, I do not pay rent but we are looking into moving into a bigger home enough for my daughter to grow up in.

Also a small baby does not need any extra space. The money you save would help in paying down your debts.

Simpli-Fi

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #5 on: August 03, 2016, 02:34:12 PM »
My daughter is 2 ans number 2 is on the way.  Long time reader and first time poster.  Ive just relocated and began a new job as well.  I have two mortgages, one credit card (0% until early 2017), been dreaming of retiring at 47 since I began work in 2002, however didnt realize this type of community existed until about 1.5 year ago.

10 years to go...i feel like we are in this together!!

Money Badger

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #6 on: August 04, 2016, 09:28:32 PM »
To the OP, congratulations!   Truly, parenting means you'll always be blessed and a bit stressed! :)     I'm sending my first daughter to college next week and my youngest is in high school so advice from the other side of the "go-go" years of parenting...

You have at least 4, maybe 5 years to even worry about inflating lifestyle for the child.   The nesting instinct of the mother (or you) is strong, but the reality is the child will want more attention and time, than anything.

Saving the paychecks means reducing cost of living first of all.

Avoid the "monster SUV/mini-van".   It's a huge, depreciating, gas guzzling waste.    A good, safe hatch back or small SUV will carry 5 easily enough.   

Take family up on the offer to stay in their basement or close by at least.   Grand parents as "your village" raising the child is tremendous.   I didn't think so at the time either, but mother nature soon proved the value of the grand parent(s).   Develop that relationship, and do what you have to set limits as well / keep your space as a family.   Could be with local travel/camping trips and other hobbies that are cheap but give space.

Save for the home, but consider it may be a home in a lower cost of living city when the time comes.   

The rest of MMM is a great resource for other savings ideas.   Use it.

As for the "how to grow net worth", think about the investment world as the thing you do once all debt is paid, the net cash flow is positive EVERY pay period and you have 6 months saved in cash or otherwise liquid.    At this stage, just avoiding debt and managing your living costs is a struggle enough.    Then follow the playbook for investing in growth funds and let time do the work for you.  The get rich quick methods require travel, major risk of your personal net worth or leverage from investors or a bank (e.g, real estate investment) or just plain luck on a job choice that goes IPO or otherwise hits the jackpot for you.   

Follow these and other solid ideas on the MMM forums, enjoy this time and be blissfully happy.

FIstateofmind

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #7 on: August 05, 2016, 12:41:38 AM »
posting to follow (sorry for laziness)

meerkat

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #8 on: August 05, 2016, 07:22:43 AM »
Seconding the recommendation to do a case study.

Also, when you're trying to figure out how much to save for your emergency fund by doing x times your annual expenses, just use your historical data on what your monthly expenses are (as best as you can, anyway, since you've had some changes recently with your job and living situation) and then six or nine months for now you can recalculate what your monthly expenses are since those numbers will probably be a bit different.

Congratulations!

MWOverlander

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #9 on: August 17, 2016, 01:04:08 PM »
I agree with most statements here.  As a father with a new 9 week old at home, babies truly do not take any extra space.  We have an entire nursery setup (11'x10' room with closet) that hasn't even been used yet as our little one is staying in a pack and play crib in our room.

Waterbug

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Re: New Dad and I'M LOST and NEED Guidance
« Reply #10 on: August 17, 2016, 01:29:42 PM »
First of all, deal with any debt you have:
http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency

I second this! If you have any debt, get rid of that first. You will feel so much better when you do!