During dinner last week my wife said: “You know, I’m due in a month.”
I wondered what she was getting at…
“We haven’t even started her room yet,” she said.
This was true.
For our first daughter’s room, we spent hours planning and days renovating. Electricians were called. Baseboard was painted. Somehow we got the idea into our heads that some well-placed stuffed animals, fresh paint and recessed lighting would ward off the stress of having a baby.
We now know how foolish that was, and this time we have no plan. I guess you could say we’re more relaxed.
For parents of a 13-month old who are expecting again, and who think a lot about saving money, we have very few baby items on our budget. Here are our expenses for last month:
|Items||Monthly||% of total|
|Baby (daycare, etc)||$1,247.00||14%|
|Dental & Vision||$64.48||1%|
|Video & Music||$40.00||0%|
These numbers are pretty high for two reasons. You can see on the first line that we’re aggressively saving for a new car to avoid taking a loan. We need a new car to fit two car seats in there.
Second, we treat investments as an expense. This is part of a “pay ourselves first” approach to retirement savings. Anything extra also goes into emergency savings or investments. Because of this, our expenses match our income to the penny. In our system, there is no such thing as leftover money.
Take away car savings and investments and we’re left with $5,783.93 in family operating expenses. Note that a lot of spending is actually transfers to individual, specific savings accounts for things like home repairs and vacations. By using these accounts, we can spread costs out over longer periods of time; i.e. home repairs can be big hit, but they don’t hurt as much if you put a little aside for them.
This was supposed to be the paragraph where I worry about how our second child will blow up our budget. But looking at the numbers, I feel strangely calm.
The fact is, a lot of the hard stuff is behind us. My wife and I have overcome a laundry list of middle-class money problems – underwater mortgages, student loans, a financially catastrophic divorce – to land in a stable place.
We have no debt other than our mortgage, and we’re investing quite a bit into our retirement funds. When money really was tight, worry pushed us to build systems to keep life in order.
But what happens when the worry disappears? Even as we’ve gotten our heads above water, we’ve tried to keep that “nose to the grindstone” feeling to stay on track with our budget.
But it’s hard to fake pressure that doesn’t exist. Next year, with two children in daycare, we could still conceivably invest $30,000. Are we even middle class any more? I’m not sure. If we keep investing at this pace, we’ll be able to retire early.
The alternative is to throw caution to the wind, upgrade our lifestyles and lavish our children with expensive toys… I already feel pressure to upgrade daycare centers and look into more expensive (read “better”) school districts. If we raise our burn rate, and shrink our savings cushion, a sudden job loss or a medical problem could knock us back to the starting line.
For the first time in a long time, I’m not worried about money. And that worries me.
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