My Wife Turned In Her Resignation Letter

Yesterday, my wife turned in her letter of resignation. She will be working until Friday, March 20th.

After that, she will be getting ready to have our first baby, and after the baby is born, she will be staying at home to take care of the baby.

We have been preparing financially for this for quite some time, but it’s still a big and a scary step!

Here are some of the financial preparations we’ve made in the meantime:

  • Talked about it a LONG time ago – We had talked about this even before we got married, and were in agreement that once we started our family, Mrs. Beagle would stay at home. Her job is not that high paying, and this made it easier, because the cost of child care would have made the net take home pay almost nothing.
  • Talked about it again and again – After we found out we were pregnant, and then along the way with the economic downturn, we’ve talked about it again. Even though things aren’t as rosy as they were, we still feel comfortable with the decision.
  • Paid down debt – We’ve focused on paying down debt since getting married in September 2007, and even before. We paid off a car loan, and have paid over one-third of outstanding student loans in a year and a half. It would have been nice to been a little further along (the goal had been for 60% of the student loans to be gone, but we’ll be about 15% short), but we’re still in good shape.
  • Bumped up savings – I’ve leveled out some of our monthly expenses, and also bumped up some savings just so we have a good cushion and have savings for long term purchases, such as home repairs, auto repairs, and replacement automobiles.
  • Saved for baby needs – We had started putting aside money for things that we needed even before trying to get pregnant. So, when it came time for baby furniture, we had some money stashed away. Our parents are generously throwing us showers, so hopefully the cost of actually equipping the baby with everything won’t be too shocking, but I have some money allocated from our upcoming tax refund just in case

One thing I still need to spend some time on is saving for the college education of our baby. We’ve decided that we will start saving once the baby is born, and this will carry through for future babies that we might have as well. I know that we’ll be putting money aside for this purpose, but I need to get my ducks in a row as far as knowing the best 529 plan and how to get started.

Even with that, I think we’re in good shape and we’re looking forward to this next (and many upcoming) chapter.

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Answering A Reader: Our Own Child Care

In a comment to my last post, reader Dog Ate My Finances (love the name, by the way), asked why my wife doesn’t start her own child care to make up for the difference in pay that we’ll be taking once she leaves her job to have our baby.
There are some financial reasons and some non-financial reasons for not doing so. I’ll start with the financial reasons:

  • The local economy in Michigan is not that good. Many parents are pulling their kids out of day care as they are losing their jobs, so the market is very tight. As such, there would be no guarantee that it would even take off.
  • The costs involved are not something we’re interested in. To open a home day care would require significant costs for certification, licensing, as well as changes I’m sure that we’d have to make around the house. Not to mention insurance that would have to be taken out. While I wouldn’t mind someday taking the venture into a start-up, this isn’t a risk that we really want to take.

This leads me to the non-financial reasons of why this idea wouldn’t fly around here. The biggest is that my wife simply has no desire to continue in that role in a long term fashion. Right now, her and I are both excited for her to have the opportunity to focus on our baby.
Her background in college was in Child Development. She had hoped to do something to the level where she could work within a health system or some other parallel position, and work with children who needed special assistance or had developmental needs. She didn’t have her teaching certificate, although this is something that she briefly considered, so classroom instruction was out of the question.
But to get the type of jobs that I described, at least here in Michigan, she would have needed a Masters Degree. She didn’t want to simply accumulate loans, so before she made that jump, she wanted to work for awhile, and see if she even was interested in pursuing that. Which would give her time to pay down some of the student loan debt she accumulated in her undergraduate studies. The job that was most available was working in child care facilities. These decisions were made solely by her as her and i were just dating at the time.
While she enjoys the interactions with children and is great at what she does, the bottom line is that she doesn’t have the passion to commit to it for a career. Now, before anybody says that taking care of our children is parallel, let me just say that there’s a huge difference in taking care of our children versus taking care of somebody else’s. She has a passion and a fire for one and not the other. I’ll let you guess which one!
And, honestly, once we started talking about when we wanted to start our family, we came to the conclusion that the timing wouldn’t make it so that going back for her Master’s was a good idea, at least not yet. Why? Because either way, we wanted my wife to take some time to focus on our family. This was something we discussed before we were even engaged, so we’ve been on the same page with this for a long time. Going back to school now would simply have added debt that we knew we wouldn’t have time to pay off before we started our family.
So, while there are financial reasons involved, the non-financial aspects hopefully fill in the rest of the picture.

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Changes To Benefits For 2009

It’s that time of year where it’s time for open enrollment for medical and other employer sponsored benefits.

My company sold a 51% stake in themselves to a private equity firm, so we changed insurance providers, though they kept benefit offerings along the same line as they did with the old company. Hopefully that carries past 2009 because it seemed to work out well.
Some changes I made in our benefits for next year:

  • Changed to a no-deductible PPO – This past year, our PPO had a deductible of $150 per person for in-network charges. This year I switched to a no-deductible PPO. The zero deductible applies to in-network providers, with the trade off being that the out-of-network provider deductible is significantly higher, as well as the annual ‘out of pocket’ cost have a higher cap. I went through all of our medical bills for 2008 and confirmed that all of our doctors are in-network, and also spent time talking to the hospital that will be doing our delivery to make sure that all aspects of our expected childbirth is covered. They are and were very helpful in answering questions. I think this will be a good trade-off.
  • Added extra life insurance – My employer offers life insurance up to 10-times my salary, and also offers a policy for my wife. With a newborn on the way, this is something I wanted to address. I contacted our normal insurance provider to see what a comparable policy would be, and it was almost three times as expensive, so I’m sticking with the policy from work. The downside, of course, is that the employer policy would go away in the event that something would happen to my job, but I figure that if something were to happen, I would address that when the time came, but will enjoy the savings for now.
  • Contributed to an Health Savings Account – I have never contributed to this, but I wanted to this year since there will be some bills coming with the delivery of our baby as well as costs that are incurred for a newborn. The benefits of this are that it allows us to contribute throughout the year, and also is tax deductible, which reduces the overall cost. The downside is that you have to use all of it in 2009, so if you over-contribute, you could potentially use it. However, I’ve found that there is pretty good flexibility in how you can spend this, in that drugstores will allow you to spend it on many items, including humidifiers, first aid care, off-the-shelf medicines. In other words, the chances are pretty low that this will go to waste, especially in the first year of having a newborn.

The costs aren’t too bad. If I hadn’t added the extra life insurance, the cost per paycheck would actually be about the same as 2008. The extra life insurance will raise it slightly, and of course the HSA contributions will deduct as well, but this will be offset by less recurring monthly expense in money that I personally earmark for medical related expenses. I also calculated what the contributions will be once we have the baby and move to family insurance. This will add an extra $50 or so per paycheck once Baby Beagle comes to the world. I’m going to just start setting that money aside now to ensure that the effects won’t be noticeable once we have to sign up for that coverage.

Luckily, I just got my annual raise so the ‘bottom line’ won’t result in less take home after the contributions. That’s good to know.

Also, I wanted to give a special thanks to ShtinkyKat, a fellow personal finance blogger. She read my earlier post in which I was unsure about the possible out-of-pocket costs for childbirth. She asked a friend who had recently gone through it, and provided some very helpful information which led me to come up with a more firm number for my HSA contributions. Part of the fun of blogging and motivation is building a rapport with fellow bloggers and readers, and it’s nice to know that there are people reading and willing to help. Thanks again!

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Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.