Budget help, AKA when to have 2nd kid

[grey56]

Take home pay to joint account after taxes, 401k, health insurance, and savings: $5200

Monthly Expenses (TOTAL $3907):
Mortgage: $1550
Daycare: $932 (two in daycare is $1770)
Gas: $90
Electric: $90
Cell phones: $130
Cable/Internet: $140
Car insurance: $125
Gas/Oil change: $350
Groceries: $500

Temporary Monthly Expenses (TOTAL $1045):
Car 1: $265 (pay off 12/13)
Car 2: $380 (pay off 6/14)
CC1: $250 (pay off 12/13, 0%)
CC2: $50 (pay off 12/14, 0%)
CC3: $100 (pay off 6/13, 0%)

So we are left with $248 each month. 

Monthly income not included in the $5200 take home pay is:
$550 to joint savings account (efund)
$100 to each of our personal checking accounts for "fun" money ($200 for both)
$100 to "Christmas Fund" aka how we buy presents for holidays/birthdays.
$100 to "House Fund" aka how we buy home improvement type stuff (new oven, replace lightbulbs, etc.)
$200 to LO's college fund.

Once I get my daycare FSA "refund" back (2-3 days!), we will have just over 3 months in our efund.

I have $90K in my 401k (I'm almost 34), DH has $70K in his (he is almost 37).  I make $50K, DH makes $70K.  We have no Roth IRAs yet.  We both get 6% matching.  Both our jobs are very secure.

We do not buy new clothes, get haircuts, etc.  (I work in a lab where I'm covered in PPE, DH works from home in hoodies and jeans.)  LO wears hand-me-downs from our 6 nieces.  We both have very generous parents - my dad spent several weekends helping us lay a new stone patio to save on installation costs, my ILs buy clothes and toys for LO a lot, as examples.  We do not go on vacations but rather spend weekends at DH's BFF's family's vacation home, at my parents' house on Cape Cod, etc. 

So here are my questions:
1. Where are we lacking.
2. Can we afford a second child.
3. If yes, when?
4. What am I missing?

THANK YOU!

[aspentosh]

Am I understanding that you put $550 to joint, $100 to checking, $100 to Christmas etc BEFORE you calculate your take home pay?

Well you need an extra $838 to put your second in daycare, so I would say when you have your "temporary monthly expenses" paid off. That will leave you with $1293 leftover (those expenses plus current extra) which should be enough cushion I think. That is assuming you don't have anymore debt that needs to be repaid.

How old is your LO (I can't see siggies so I apologize if it's there)? The two in daycare will be temporary, so that expense will go down. Unless you're putting them in private school.

[gt7301b]

You need to get rid of the credit cards before you think about having a second child.

[CallingAllAngels]

If you have 3 months in an e-fund, I would direct that $550/month to debt and pay your car and ccs off ASAP. Have you figured when all of your debt would be paid off if you did that?

[lys]

Pay off the one car and the credit cards - then have a 2nd child .  Then do not carry a balance on any credit cards - pay in full each month if you use them.

[Deleted]

I'm with lys on this one.

[hocus]

To really make it work you'll want to pay off at least 3 of the cards completely and preferably 4. You'll also want a little nest egg of $500 to $1000 to get extra stuff for the second kid (car seat, maybe double stroller, clothing if you have a different gender, etc). You'll want more saved if you have to take an unpaid maternity leave. I'd plan on budgeting for keeping your kid in daycare while on leave if you can. This is particularly true if you'd loose your spot if you took your kid out.
 
I'd also plan on an extra $50 a month in baby supplies. My older kid (3 years) is still not potty trained and you might get "lucky" like I have and still have 2 in diapers.  We also still use both cribs. Ikea and walmart have cheap cribs, but it is still someting to consider as an extra up front cost.  I'd also look at your health care plan to confirm that you won't take less home if you add on another kid to your plan. For some people the increase in health care is a wash with decrease in taxes but it isn't always the case.
 
As to your question in your other post: I doesn't really matter when you take the 5K from your daycare account (all at the end, little each month). I plan to take it all out in November/December. Those months look a bit expensive to me so it will be a nice coushion for us. You might want to discontiue monthly college savings and then use the year end windfall for that. It would free up the month each month and if you wanted to put $200 into both accounts you'd need $4800 to do it.

[grey56]

Ok, I like when you all agree, that means fewer decisions for me to stress over.

I calculate our take-home without the money we're putting into savings, etc. b/c I work better with the "out of sight, out of mind" mentality. If needed, I could certainly rearrange those numbers to work better for us.

My LO is 1.5 now. I would like at least 3 years between them, so hypothetical LO#2 would arrive August 2014 or later.

Our cars are 2009 and 2010 and we have no plans to replace them anytime soon. We do the best we can with maintenance. But, that is something to keep in mind. I hadn't really thought about having a car payment again. :-(

We have an Ikea crib that we ideally would like to reuse. We have 2 infant carseats that we'd reuse. My sister has a double stroller that she'd lend us (her LOs are 3yo and 2mo now). The kicker would be if we had a boy, since there are 7 girls so far, and they are all sharing clothes (ages 10, 6, 5, 3, 3, 1.5 [my LO] and 2mo). There are no boys.

I did not at all think about how this would change my health insurance costs. I will definitely look into that.

I guess the concensus is we can do this financially, which is awesome b/c I REALLY want another. I just don't want to sacrifice my LO in the process. I believe that giving her a sibling is worth more than vacations and private school anyway.....I think. It's just a big decision, as I"m sure you all are well aware.

Thank you for the comments.

[Deleted]

I know it's such a cliche on MM but we cut cable six months ago and don't miss it at all. Just another $80 or so to throw at debt could make a big dent after a year.

[aurora]

Jan 25, 2013 10:38:26 GMT -5 grey56 said:

...

Our cars are 2009 and 2010 and we have no plans to replace them anytime soon. We do the best we can with maintenance. But, that is something to keep in mind. I hadn't really thought about having a car payment again.

...

Honestly, I think if you have a 3-month e-fund already and use the extra $550 temporarily to pay down the CCs and at least 1 car within the next year or so you'll be in good shape to plan for a second child in late 2014.  I would, however, start putting the $550 back in savings as soon as you have your debt paid off; with cars from 2009-2010 you won't need a new one for 7-8 years, so you'll be able to save >$40k toward your car fund in that time and have no problem at all paying cash.

[Deleted]

I agree with everyone else on the budget stuff.

Holy smokes, with that many little girls it must be a lot of fun! Cousins are such great built in friends.

[macmars45]

Jan 25, 2013 11:50:49 GMT -5 @cse1960 said:

Remember about copays and deductibles for pregnancy and birth; ours ran 4k per kid, because I got pregnant in August, delivered in June.

H and I were just talking about kids in relation to how much they cost if your pregnancy spans over two calender years. Don't you have to meet the deductible for each calender year?

[grey56]

You guys are great, thinking of things I haven't thought of.

My LO's copays etc. ran us $8K. She was a July baby so I also had deductibles for 2 years. I will choose my insurance better for 2014 b/c I have local friends who paid $0, $250, etc. For EVERYTHING. We get 4 choices for insurance, so hopefully one will be a good option.

My DH works from home so we need the internet and a landline, so we just do a bundle. We have talked about cutting down our TV to a more basic option but we really don't spend anywhere else (don't go to the movies, rarely go out to eat, don't do typical "entertainment" things) so we are ok with it FOR NOW. We shall see how much time we have for TV with two kids, ha!

Once I get the $5K from the daycare FSA, I will pay off 1 car and one CC, then reassess.

You guys are great!

And yes, lots of girls everywhere. My sisters and I joke about our pink dryer lint, since ALL the girly clothes are the same color.

[Deleted]

I agree that you should pay off the credit cards (and never carry balances on them again) and the cars before you have a second child. Once you have your 3 mos of expenses in the e-fund, I would divert that $550/mo that's currently going into the e-fund towards debt payoff (even at low interest rates). Then you'll get the debt paid off faster and go back to saving.

Also, once the debt is gone, I recommend opening and maxing out Roth IRAs at least until you have that daycare cost. Then you could reduce Roth contributions while you're paying for two in daycare if you have to.

[Roc A Bee]

What are you doing with the leftover $245 a month now? I'd throw that at your highest interest rate. Now that you have 3 month efund, I'd probably divide the 550 into savings and debt repayment. I'd probably start TTC in January of next year. Even if you get pregnant right away you will have everything paid off but the $50 cc and that will be paid off just a few months later.

After your debts are paid the $550 would go back to savings, and your current debt payment would go towards daycare and additional kid expenses.

[darthnbjenni]

I'd pinch and pay off the two cards that you'll pay off this year, and try to do it earlier. Then go for it. Baby #2 (or 4 in my case) hasn't really added any extra expenses. My girls got out of diaper as he was born, we used a lot of hand-me-down items, etc. Check and see if your daycare offers a multiple child discount. We get 10% off on our pre-school for the second twin.