Author Topic: Introduction- 29 year old w/ second kid on the way  (Read 4363 times)

essjay43

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Introduction- 29 year old w/ second kid on the way
« on: July 31, 2013, 07:23:58 AM »
I'm 29 and live in the suburbs west of Boston. I have been reading MMM for the past year or so and have been implementing piecemeal changes to my current situation. I'm also reading "Your Money or Your Life" and have been trying to get buy in from my wife to adopt some of the strategies outlined in the book. Here's a quick summary of my financial situation:

House: 2 Family. Valued at 250k. Owe 197k at 3.625%. $750 for rent in downstairs unit. Currently needs a lot of repairs- upstairs boiler (Steam) has a leaking core and porch is rotting.

Savings: 5k in a Roth IRA. 11k in 401k. 25k in Savings Account.

Debt: Zero in credit card debt. 92k in student loan debt. Interest varies between 3.375 and 5.125.

Expenses: Cell phones- 115/month. My employer contributes $50. Cable- 110- 40 tenant contribution= 70.

Transportation: 2 cars. Both paid off and reliable- 2005 Hyundai Sonata and 2007 Hyundai Elantra.

Jobs: I've got a 45k base salary + commissions (pretty consistent at 40k/yr). I commute 28 miles to work. Wife is at 55k and works 8 miles away. It would be great to move closer to my job, but my wife is a teacher and moving school to school is difficult. On top of that, our current town has great schools and is close to the commuter rail to Boston.

So here's the tough part: My wife and I are expecting our second child in February and we will be losing her salary for a good amount of time. She wants to take 2 years off to stay home with the child and I support that. After the cost of child care, take home $$ and the stress associated with her working is not worth the effort. We currently pay $800 per month for our first child.

We need to fix our heating system and make some major updates to the house. Luckily, we would quality for up to 1900 in rebates and a 0% loan as part of our state's energy efficiency program. It would be ideal to move to a small one family home, but this is being put on hold until my wife goes back to work.

Also, we are looking at buying a larger car. We do a lot of road trips to visit family (free vacations) so a dog (lab) and 2 kids and all the gear just isn't working out w/ the Hyundais.
« Last Edit: July 31, 2013, 08:00:09 AM by essjay43 »

chicagomeg

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #1 on: July 31, 2013, 07:38:47 AM »
I'm not familiar with how teaching jobs work. You say you can't move because of her job, but then go on to say she's taking two years off to be a SAHM. Do they hold a position for her in that district while she's out or will she have to apply all over again when she goes back? If that's the case, I'd look at moving now. Or, could you find another job that lets you take advantage of the commuter rail to Boston? You're probably paying a housing premium to live near it but it sounds like you're not taking advantage of it.

When you say "bigger car", what do you mean? Are we talking a RAV4 or an Explorer? Just about everything is bigger than your two cars.

essjay43

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #2 on: July 31, 2013, 07:53:32 AM »
Yeah. The car situation is definitely not ideal. I'd like to get a minivan, but it's amazing what they want used for dependable models like the Odyssey or Sienna.

As for my wife, they will hold her job for up to 2 years. And moving from district to district or state to state is very difficult. There's a few factors: teachers are unionized so their salary is based on steps. It's more cost efficient for towns to hire new teachers rather than hire experienced teachers. Second, it's very competitive and "political." In my hometown in RI, there were 800 applicants for 2 positions. Needless to say, a lot depends on who you know. Also, a lot rides on seniority. You can spend 6 years in college (hence our school loans) to get a Masters in education to start at 40k per year and get laid off for the first 5 years. Once you get higher on the list, the chances of layoffs are reduced. So when you move to a new school, you start from scratch.

As for my job, I would rather not commute to Boston. The commute would be an hour plus on the train and I would have to start from zero for commissions.
« Last Edit: July 31, 2013, 08:14:16 AM by essjay43 »

meadow lark

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #3 on: July 31, 2013, 08:20:38 AM »
This may be more trouble than it is worth, but one thing that occurred to me is that you could for the next 2 years rent out your house and rent a place near your job to live.  Or buy one that will eventually become a rental when you move back in 2 years to your original house.  Of course there are many good reasons not to do this, but if it did make sense, how nice would it be for everyone in your family if your commute was significantly shorter.

chicagomeg

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #4 on: July 31, 2013, 08:21:56 AM »
Have you checked out the Mazda 5 "microvan"?

essjay43

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #5 on: July 31, 2013, 08:58:09 AM »
Thanks for the suggestion Meadow Lark. I never even thought of that. There's a bunch of colleges in Providence (where I work), so I might be able to pick up a single family cheap.

As for the Mazda5, it's just a little too tiny. Last thing I want to do is pick up a van and then have to get another one.

avonlea

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #6 on: July 31, 2013, 10:38:48 AM »
Also, we are looking at buying a larger car. We do a lot of road trips to visit family (free vacations) so a dog (lab) and 2 kids and all the gear just isn't working out w/ the Hyundais.

I do not own a pet, so please take my suggestion with a grain of salt.  Could you hire someone to dog sit for you while you are on your road trips? I am not sure how much it would cost, but buying a new car so that the dog can come on the journey might end up being more expensive.  As an even cheaper alternative, could you find a friend who would be interested in doing a pet sitting swap?

WageSlave

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #7 on: July 31, 2013, 12:41:47 PM »
House: 2 Family. Valued at 250k. Owe 197k at 3.625%. $750 for rent in downstairs unit. Currently needs a lot of repairs- upstairs boiler (Steam) has a leaking core and porch is rotting.

I suspect that if you submitted this to MMM himself, he'd encourage you to fix these things on your own.  Is it possible to find a non-leaking or refurbished boiler on Craigslist?  Can the existing one be repaired?  I would think a porch would be a relatively easy thing to DIY.  If you have vacation time at work, you could do it then.  If you're doing to DIY, though, definitely do it before the baby arrives, as your time budget will shrink dramatically.

Savings: 5k in a Roth IRA. 11k in 401k. 25k in Savings Account.
Debt: Zero in credit card debt. 92k in student loan debt. Interest varies between 3.375 and 5.125.

What do others think?  3% debt is probably worth paying only the minimum on, but when it creeps up towards 5%, is that an emergency?

Expenses: Cell phones- 115/month. My employer contributes $50. Cable- 110- 40 tenant contribution= 70.

Presumably since your employer partially pays for your cellphone, it's a vital part of your job.  So you want top-notch reliability.  Still, you might be able to save with a MVNP (mobile virtual network provider) that uses your existing carrier's network.

Again presuming what MMM himself would say, cable is simply not allowed (unless your tenant pays for all of it).  Maybe if you have zero debts and are quite a ways towards FI.  But not any time prior.  Not to mention: I just had my second child in May, and we simply don't have time for TV.

Also, we are looking at buying a larger car. We do a lot of road trips to visit family (free vacations) so a dog (lab) and 2 kids and all the gear just isn't working out w/ the Hyundais.

How often do you take these trips?  They're not really "free"---you have to pay for the transportation (your car in this case).  Have you calculated the per-mile cost of your cars?  That will tell you what these vacations really cost.  If you have to buy a bigger car, they will cost still more.  If these trips are infrequent enough, maybe it's cheaper to rent the larger vehicle as-needed?  Are you going to become a three car family?  Or replace an existing car with the bigger one?  If you replace an existing car, now your second car cost has gone even higher, as the newer/bigger vehicle will cost more to operate and maintain (not to mention the cost to purchase it).

Is it possible to trade one of your cars for a more space-efficient hatchback?  Then use the car for people and dogs, and use a roof rack or some other means to haul all your "stuff"?

How long are these trips?  My wife and I are from the same hometown, which is about three hours away by car.  We also took a lot of "mini" vacations home to see our family... until our second daughter was born.  She screams bloody murder (nonstop) whenever she's in the car, so we haven't made that trip since her birth.  Every kid is different, but if your second hates riding in the car as much as my second, trust me, you won't want to drive with the whole family unless absolutely necessary.

As for my job, I would rather not commute to Boston. The commute would be an hour plus on the train and I would have to start from zero for commissions.

Why would the train have you "statring from zero for commissions?"

Not to be a smart-ass, you posted that one of the perks of your current house is its proximity to the commuter rail.  But if you're not going to use it, then that perk is nullified.

If your wife is going to quit working for two years, you could conceivably become a one car family.  Ideally, you'd take the train to work or carpool or similar, leaving the car at home for your wife.  But even if you took the car to work, you could plan family trips accordingly around your work schedule.

I think you could benefit from a rigorous cost-benefit analysis of several "what if" scenarios.  Two years is a fairly long time.  What if your wife decides after two years that spending time with your kids is much more fulfilling than teaching, and she doesn't want to go back at all?  If there's a decent chance of that, you should move closer to your job right now.

Let's say she does go back to work.  Presumably you'll have child-care expenses for two kids, almost year-round (except summers, I assume).  Now what is the cost of paying for that child care plus your long commute?  In other words, what if you moved close enough to work to drive the commute cost down significantly (walk, bike, public transit, very short drive)?  What is your net income in this case versus paying for all that childcare plus your long commute?  What if you moved closer to your work and while your wife tries to get another teaching job, she either works part time or does some other no-degree-required job?

How old is your firstborn?  Just a personal anecdote: my wife has been, and remains, a SAHM since our firstborn.  Despite this, after our second was born, we put the first in part-time day care.  This is arguably very anti-Mustachian, but it's for my wife's sanity and by implication, the sanity of everyone in the house.  Our first child was an "easy" baby.  The second has been a "hard" baby.  Lots of fuss: rarely sleeps during the day while her two-year-old sister screams (non-sleeping is a negative feedback loop for babies), is on meds for acid reflux (spits up often), cries if not held (with both hands, doesn't like the sling) and bounced all day... in short, she's a tremendous amount of work by herself.  Throw in a toddler into the mix and I'm surprised my wife hasn't lost it yet.  (If our families were closer, we could probably do without the day care.)

sassy1234

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #8 on: August 01, 2013, 01:01:44 PM »
If I could be a stay at home mom (can't as I am the bread winner), I would take in an extra child during the week or maybe even 1 or 2 days a week.  It is good money and nanny are in demand. 

MrsPete

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Re: Introduction- 29 year old w/ second kid on the way
« Reply #9 on: August 01, 2013, 07:05:12 PM »
Thoughts on your situation -- incidentally, I am also a teacher:

- I think it's a good idea for your wife to take the two years off after your second child is born.  $800/month x 2 children is a huge amount to pay, not even including the stress.  She can have her job "held for her" for that length of time.  I suggest she definitely return after that time frame is up.  You live in an area of the country where it is very difficult to get a teaching job, and with a lapse of two years, it could literally be years 'til she could find another permanent job.  She should be SURE that her teaching license doesn't expire during that time, and she should keep in touch with her school and her department friends so she can feel comfortable when it's time to transition back into work. 

- You say the baby's coming in February.  This means your wife won't complete a school year.  How does the two years work?  Does this mean she's expected to return to work in February two years from now . . . or does she have enough sick days saved up to carry her to the end of the school year, then her two years would be the two following school years?  She needs to go to her district office, and she needs to have a straight answer in writing.  IF she has the option of using sick days, then two full years, she should do that -- it'll get you off the hook for summer day care.  One problem teachers have frequently is that we're required to pay for day care during the summer, even though we're not bringing in a paycheck . . . or "lose our spot" for the following year.   

- Daycare for a toddler is less expensive than daycare for an infant, so two years from now you'll be able to pay less, and that'll make a big difference in your overall budget. 

- Your house, however, sounds like a ticking time bomb, and what were you thinking taking out so much student debt?  The reality is that your wife needs to bring in some income while she's at home with the kids.   Licensed teachers can often get work tutoring, which is something she can do in the evenings /weekends when you're home with the kids.  In my area, tutoring tends to be $25/hour.  Alternately, she could keep a couple kids after school.  For someone who wants to bring in a bit of income, this is a great deal:  After school costs about 1/2 as much as full-time day care, but she still has her mornings "free" with just your own kids, allowing her time for doctor's appointments, trips to the grocery store, etc.  As a licensed teacher, she will be very attractive to parents because she can see the kids off the bus, then she can supervise their homework.  Plenty of parents would pay a premium price to avoid homework with their school kids in the evening. 

- Don't touch the savings.  When the heat MUST BE FIXED NOW, you'll need that money. 

- I'm tempted to say that you should become a one-car family.  No other single choice will save you as much as ditching one car, and, yes, you can do it.  However, two years isn't a very long time, and when she returns to work, you'd probably be forced to buy a car at that point.  Even though the cars are paid for, they cost you plenty:  Insurance, tags, gas and maintenance.  You could consider living as a one-car family, even though you'd still own the second car.  You could turn in the tags and cancel the insurance on one car; just keep it parked in the garage and drive it around the block once a week to keep things lubricated. 

- As for buying a larger vehicle, I'd say NO.  A larger vehicle would be a nice luxury, but you're about to chop your income in half for two years, you're about to begin supporting another human being, and your house is likely to need work.  This is NOT the time to indulge in luxuries.  If you feel that you must-must-must have a debt-laden mom-mobile, at least wait 'til the new baby comes and see how it goes with the small cars. 

- With two small children, I suspect you won't be doing as much traveling in the near future anyway; two children are much more work than one because you can't tag-team them.  Regardless, you can do a car trip with either of the vehicles you mentioned.  We do car trips all the time in a car similar to the ones you described -- and we have teens, who might not need strollers any more, but are physically larger and carry many more clothes! 

- You definitely need to investigate using the commuter train.  While I don't understand the details, it sounds to me like you could use that hour to work, which would be highly efficient. 

   

 

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