Graduated Learning: Life after College

I got my degree, I got a job…now what?

The Cost of Having Children April 7, 2019

Filed under: baby,Personal Finance — Stephanie @ 8:45 pm
Tags: , ,

Every once in a while I come across an article talking about the cost of having children. Many posts try to advise you on ways to save.

Get clothes second-hand!

Use cloth diapers!

Don’t buy many toys! Just give them a cardboard box to play with!

I get it. We try to save on lots of kid expenses, too.

We’re fortunate to have very generous family and friends who love spoiling the kids with lots of new clothes, books, and toys. And especially with our second kid, we’ve gotten lots of hand me downs from his older cousin. We go to the library a lot, too, to find new books to read.

But when it comes to having kids, there are so many other costs to consider.

I’ve discussed before how we’ve decided to send our kids to daycare full-time while my husband and I both work. Overall, we still come out ahead, but this year alone we’ll be spending over $45k for our two kids to be in daycare. We’re lucky that we both have well-paying jobs that make this the more obvious choice for us. So many parents have a much harder time coming to a decision of how they’ll deal with child care, if they find the cost of childcare too overwhelming. Stay at home parent? Alternating shifts so someone is always home with the kids? Having grandparent or other relatives help out? A combination of every option?

On top of that, let’s add medical costs: Add in the costs of labor and delivery (and prenatal care that may not be part of your health insurance plans) plus the kid’s medical needs and health insurance premiums.

You’ve got to keep them fed! Starting out with formula and/or breastfeeding (which is only “free” if you consider the nursing/pumping mother’s time to be worthless) then healthy foods as the kids get older. (Though luckily there are programs like SNAP and WIC for lower-income folks to at least help keep them fed).

Some people can still live in the same place that they did before they have kids, but many families find they need to move after having kids, either due to lack of room, to be in a safer neighborhood or better school district, or need to be closer to work/daycare to make sure they’re spending less time commuting and more time with their kids.

And even if you get hand me down or second-hand items for clothes, books, toys, furniture, etc. you still will need to buy some items new: car seats and other safety gear are not something to take a chance on used. It’s possible the car seat has been recalled, and even if it hasn’t been, car seats have a finite life due to degradation of the plastic and other components over time.

Last year, I sparked quite an interesting conversation with this tweet:

I got so many responses, some sharing that their careers shifted significantly after kids, some for better, some for worse. Others said having kids had no impact on their careers. Alyssa at Mixed Up Money wrote a whole blog post inspired by my question.

And then Bridget chimed in with her own experience, and I felt that her response aligned closely with what I wanted to say. While she is a single mom and I’m married, we still had similar experiences of having to opt out of longer hours, business trips, networking opportunities, etc just because it’s so hard to navigate the childcare situation (and the utter exhaustion of parenting). While I’m able to trade-off on daycare drop offs and pickups, it’s more difficult when my husband has his own business trips and meetings to attend as well.

So, add to this discussion the idea of opportunity cost: are you working less, missing out on potential promotions and career paths due to having kids? You may be completely fine with this, but it’s something else to consider.  Right now, I’m working part-time with flexible hours, which really helps with my work life balance, but also means I can’t always get as much done as my colleagues can.  And I took 12 weeks of partially paid maternity leave for both babies.  So overall this means less time at work, less money earned, and potentially fewer growth opportunities.

I’m not trying to be negative about all this, or try to convince anyone not to have kids. I absolutely adore my kids, and all of these “costs” are totally worth it for me. If people want to have kids, they should!

But I get tired of people claiming that kids are cheap because they don’t buy a lot of “stuff” for them. Or fail to include the costs of childcare (or dropping out of the workforce to care for the kids full-time). And like I talked about in my latte factor post, the big expenses like healthcare and housing are still unavoidable and going up.

Kids are only inexpensive if you don’t include all of the expensive things.

I realize how much of my observations may come from a place of privilege: we make good money so daycare (even at high prices) makes obvious sense. And some families have no choice but to make certain difficult decisions about kids, childcare, housing, and other things because they don’t have the financial wiggle room that we do.  And I know people have found so many creative ways to make it work, and I’m glad that they have.  But it’s not always easy.

Also, my observations are based on the United States, where certain policies (or lack thereof) for (paid) parental leave, healthcare, and childcare have a big impact compared to other countries with a much more comprehensive safety net.

Society needs people to have kids.  They’re our future teachers, healthcare workers, mechanics, leaders, scientists, cooks, and cleaners. And our future taxpayers. Hopefully some reforms will come that make having kids less of a financial burden for so many people.

How have having kids impacted you financially?  What changes have you made to make it all work?


My thoughts on The Latte Factor February 19, 2019

Filed under: Personal Finance — Stephanie @ 2:59 pm
Tags: , ,

By now, you’ve probably heard of the personal finance idea of The Latte Factor. It’s the idea that your small expenses add up over time, and instead of spending your money on daily fancy coffees (or other splurges), you could be saving (and investing) that money and come out much richer.

I’ve seen this theory used as a way to shame people (“you’re poor because you buy yourself a treat/lack willpower”) and it frustrates and angers me. As Helaine Olen discussed in her book, Pound Foolish (and in plenty of other places like her blog post here), the real expenses keeping many of us from building wealth aren’t the $3 coffees, but the $300 doctor appointments or the $3000 monthly rent or mortgage payments. The huge cost of education, housing, childcare, and healthcare are almost unavoidable (and seemingly always increasing, and increasing faster than wages are growing).

I’ve also seen plenty of people take the positive spin: that cutting out an expense (of something they don’t need anyway) can help them reach a goal for something they really do want.

I’m somewhat in both schools of thought at the moment. As I discussed in my previous post, our monthly expenses are quite high. We’re paying a lot on our mortgage every month, and even more on childcare! So, cutting out a small daily luxury (or a larger luxury or two) seems insignificant by comparison.

But I also mentioned in that post how I am going to look for ways to save money, including trying to buy fewer lunches at the cafeteria.

And guess what? I did! My new rule for myself is that I can buy lunch once a week (which gives me wiggle room) but that the rest of the week I’m bringing leftovers or sandwiches. I’m not just saving on lunches, but I’m also earning a bit more money this way. Eating lunch I brought from home is quicker since I don’t have to go all the way to the cafeteria and then wait for my food to be prepared. So I’m able to get back to work sooner, and with my current schedule, that means I’m back “on the clock” earning money and getting things done!

How do the “savings” look? Assuming a lunch in the cafeteria is $9, and if I were to buy every day for 50 weeks every year (assuming holidays/and some full days off), bringing lunch every day instead I’d save $2,250 a year. Which is pretty great! But I’m also still spending on lunch foods to bring in, just not as much.

It still seems like a great amount…until I realize that’s less than one month of childcare (cost for both kids combined). Yeah. Ouch.

Still. I like doing it. I like knowing I can just eat quickly and get back to work. I like being able to control something, even if it’s small compared to everything else. It’s the same reason I get a big rush out of using cash back websites or coupons at my favorite stores, even if it saves me “only” a few dollars. It feels good.

I know I’m fortunate enough that I don’t have to count every penny. And I do like the idea of finding ways to save money. The concept is fine for encouraging people to think about a new way to save. I just don’t like when it’s used as a way to blame and shame people.

How do you feel about the latte factor? Have you changed your spending habits? What did that change in consumption do for you?


Net Worth Holding Steady February 7, 2019

Filed under: Personal Finance — Stephanie @ 9:13 pm

Okay, so my last blog post where I said it was okay for me to spend money because what’s the point of saving money if you never spend it?

Well, I feel a little bit sheepish about it now. Why? I finally looked at how our net worth changed over 2018.

I used to do yearly updates on my net worth, but then I got married and we combined our finances and I didn’t feel like it made as much sense to share it. Well, I decided to check again.

I didn’t have exact numbers handy from last year (since I only just decided I should do a comparison to last year). So I logged into our joint Mint account (does anyone still use Mint? I’m too lazy to try out something new). And looked at what our assets and debts were at the end of last year and compared them to 12 months later.

And…they’re not great. Well, actually, it’s better to say, they look great at a glance, but compared to last year, they look not so impressive. Because we pretty much held our net worth steady (it grew by about $10k).

$10k growth over a year is also nothing to sneeze at when you’re just starting out. Or if you don’t have a high income. Back before marriage + kids + house, I was increasing my net worth by $40k, $50k, or $60k.   But expenses now have had a significant impact.

So, by comparison, this smaller increase for a family with two incomes later in our careers should mean we should be growing our net worth even more.

But we didn’t. Ready for my reasons (excuses?)?

  • The stock market has been all over the place. I saw a lot of folks talk about how their portfolio dropped a lot due to recent stock market losses. So even though we maxed out our Roth IRAs and contributed to our 401ks (including getting our matches) our retirement portfolios didn’t do so well.
  • Our house lost value. Honestly, I include the house value (as estimated by Zillow) on my net worth as counter to our mortgage, but since we’re not planning on selling it any time soon, I’m not too worried.
  • Speaking of our mortgage, one of our major expenses every month is our mortgage payment. Between the cost of the house itself (principal and interest) plus our high property taxes, we spend a lot every month.
  • I made less than my full salary. I’m lucky enough to have a flexible schedule at work, so between my doctor appointments before the baby was born, the extra time needed each day for pumping after the baby was born, plus the general chaos of being a working mom, I don’t get my 40 hours of work a week. So, I get paid less (for working less). In addition to my schedule, I was also on maternity leave for 12 weeks, which was only partially paid.
  • Healthcare. Having a baby is expensive, even with health insurance. We easily hit the family deductible in our High Deductible Health Plan, then had other medical expenses beyond that for the whole family.
  • Daycare. We paid for a full year for my daughter and 5 months for my son. We spent about $36k on childcare in 2018.

How do we expect to do in 2019?

  • The stock market is still uncertain. But we’re in it for the long haul and actually in the process of rebalancing our portfolios, so we’ll see how it goes
  • Home value? Another one we’re not sure about (but not significant unless we wanted to sell it)
  • We still will be paying down our mortgage at the same rate
  • We should have a higher income this year. Between a raise for my husband, and me working more hours, we should be making more. No maternity leave, plus once my baby turns a year old he can start drinking cows milk so I won’t have to pump at work anymore. With my daughter, I ended up fully weaned from the pump by 13 months.
  • We hope to have much lower healthcare expenses this year, but will still be maxing out our HSA contribution.
  • Daycare will cost us even more this year with two kids in full-time care all year. Luckily when the baby moves to the toddler room his “tuition” will drop somewhat but we’ll still be paying around $45k in 2019 for childcare.
  • Going to try to look at other ways to save money. While we’re stuck with some large fixed expenses every month, there are still some things we could cut down, like lunches out and lowering our cable bill.

So, a lot of unknowns in terms of how our investments will look at the end of this year, with an increase in income but also an increase in childcare expenses. But we knew that daycare would be a lot, and we’re grateful that we have this care and can (sort of) afford it for the next few years until the kids start going to the public school.

We also realize that personal finances don’t always go on a straight path. Everyone encounters ups and downs, whether due to luck or conscious decisions. Having kids was important to us, and we wouldn’t trade them for anything. So these next few years of high expenses are worth it to us (and one of us staying home with the kids would cost us more, especially in the long run, and we find tremendous value in having them go to daycare).

How did your net worth fare this past year? Were you hit hard by the stock market mess? Any unexpected changes (big money or life wins/losses)? If you wrote about your net worth recently, feel free to share a link to it in the comments.


A Happier Perspective on Our Current Finances December 30, 2018

Filed under: Personal Finance — Stephanie @ 8:33 pm

As always, Penny has written another amazing post that I was so grateful to read. I highly recommend you read it, but to summarize, she came to the realization that her finances were good enough that she doesn’t need to worry all the time about an extra expense. She realized this all when she splurged on some fancy chocolate at the grocery store.

This was an excellent post to read after I shared my own thoughts on our current financial state in my most recent blog post. Like Penny, we are not officially FI (Financially Independent), but we’re doing well with good salaries and lots of savings. However, my post took on a more negative tone, focusing on what I might be doing wrong rather than what I’m doing right. I felt bad for not being on a real aggressive FIRE path, since these days every article I see seems to be about FIRE.

I also had a similar epiphany to Penny the other day. I shared it in a tweet:

I had started doing some Christmas shopping and hadn’t been really paying attention to what I’d been spending. I usually have a budget in my head for spending on my parents, sisters, brothers-in-law, and my nephew (though it’s just a ballpark figure). But when it came to spending on my husband and kids, I just kept adding things to my cart (both online and in stores). Granted, part of it was me getting lured in by the sales (I’ve written before about my inability to resist Kohl’s sales). And I couldn’t help but grab small gifts for my daughter at the dollar store (she loves stickers!) So I had not thought about how much I was spending, I was more focused on what things I wanted to get for people. And this “not paying attention” happens and is feasible when you’re fortunate enough to have this kind of wiggle room in your budget. Yes, our expenses are still huge (mortgage and childcare) but since we’ve been saving aggressively for at least a decade, and we have good jobs, if we spend some savings once in a while, we’re going to still be okay.

I came to another realization the other day: our aggressive saving (and keeping expenses low) for a decade is what enabled us to feel comfortable right now. We’re like the FIRE folks, except instead of early retirement, our saving habits allowed us to be okay with the huge childcare expenses we’re dealing with early on.  Childcare is temporary, and we know we can get back to a higher savings rate after they start school.

Have you ever read something that helped you gain a better perspective on your life?  I’m so glad there are folks out there writing such insightful posts so I can think about things in a different way.


Aimless personal finance November 30, 2018

Filed under: Personal Finance — Stephanie @ 8:26 pm

I’ve been seeing a lot of talk these days about FIRE (Financial Independence/Retire Early). I’d followed folks like Our Next Life for awhile. Then there was the controversial interview from Afford Anything with Suze Orman. And most recently some other personal finance pals Liz and Stephonee were featured in a story about FIRE. And reading that last article made me realize something: I’ve never actually considered FIRE as something I would do. I always assumed I’d follow the “standard” path of working my whole life and then retiring in my 60s.

To be honest, I haven’t really thought about any money related goals in a while. Ten years ago, I talked about how I felt like I just save for the sake of saving. We used savings for our big life changes (getting married, buying a house) and, for now, that savings is sitting there as a big emergency fund. And we did start 529 accounts for our kids, and have been putting a little bit in there.

But right now, I feel like I don’t really have any financial goals or plans besides “keep growing net worth”. And even then, I’m not being super aggressive or focused on it. Just putting money in our retirement accounts, paying our bills.  I haven’t been trying to do anything different or save or pay off a certain amount.

As I mentioned in my review of The Index Card, I feel like I got all of the early personal finance tasks figured out (start automating savings, pay off debts, etc) but now that those initial things are figured out, I feel a little lost.  I feel like I don’t know what I’m supposed to with our money to make sure it’s growing “enough”.

It doesn’t help that our net worth is stagnating now that we have two kids in full time childcare. I know that in a few years we’re going to feel so much richer when the kids start going to public school. But for now, even with good incomes, our monthly expenses are pretty high when you combine our mortgage and childcare payments.

I guess when I started on my personal finance path the unspoken goal was financial independence but I didn’t really realize it. My first step was getting a handle on what debts and assets I had. Then I had to figure out what to do with it. All I cared about initially was a positive net worth. Then I hit that goal and kept going. I read an article that lists the many steps to true Financial Independence. According to that article, we’re only at Stage 2, Stability, since we still have debts (our mortgage). So, it looks like we still have a long way to go before we reach financial independence. We make good money but like I said before, our high monthly expenses mean we’re not saving nearly as much of our income as we used to before becoming parents and homeowners.

So where am I going from here? I’m trying to figure out what we need to do to grow our wealth and limit expenses where possible. Trying to do #1GoodMoneyThing to improve my finances. My main need is to learn what to do with the money we already have saved: what’s the best way to invest without too much risk? That emergency fund I mentioned earlier? It’s all in cash (in a savings account). Even as I’ve heard countless people saying most of it should go into low cost index funds. But my fear was that it would lose money right when we might need it for a big repair or other emergency (yes I know, we’re “losing money to inflation” but I still feel better knowing the amount isn’t dropping).

I don’t think we are going to be part of the FIRE community. We enjoy our work, and still don’t have the amount of money to “live off of”. But we do like the idea of Financial Independence (the FI of FIRE). Knowing we’re secure financially is good for peace of mind.

So: help me! What resources have you looked to to get a better understanding of moving beyond the original personal finance steps? How did you learn about investing? How do you get past the mental hurdles standing in your way of making the right financial decisions for your family?

What goals did you set for your financial life? And how are you reaching those goals?


Announcing The Middletons! October 22, 2018

Filed under: Personal Finance — Stephanie @ 8:50 pm

Logo for The Middletons

I was excited to hear about the new website, The Middletons. It’s a go-to site for personal finance content for folks with mild-to-moderate incomes!  You’ll find the best articles, podcasts, and other resources for the middle class.

But one big question being asked: what makes someone “middle class”? Everyone seems to have their own definition. I listened to @stephonee from Poorer Than You (and one of the creators of The Middletons) in her interview on a recent podcast from His and Her FI and she said that one definition that they’re going by as a “middleton” is 2/3rds to 2x of median income.

This got me thinking: am I middle class? Are the Money Middletons for me?

I think when I first got out of college in 2006, I sat nicely in their key demographic. I was a SINK (Single Income No Kids). My starting salary at the startup was $55k. I was starting out with debt (student loans) and no real savings and needed to find out how to pay off those debts and start saving.

If you’ve followed my blog for awhile, you know that I started exploring all the things one “should” do when trying to balance a middle class income with daily financial needs/wants and obligations while also planning for the future.

12+ years later, I’m fortunate enough to be in a much different place. I’m married with two kids and my husband and I have both increased our salary through hard work. And over the years we’ve managed to save a lot of money and pay off a lot of debt (my student loans are gone, and my husband just has a tiny bit left). Our expenses are much higher now (mortgage and childcare) compared to the super cheap rent we had when we lived with a bunch of roommates.

But weirdly, I feel like my mindset is still a lot like what it was back when I started out.  I still worry about having enough money, I still look for ways to save money on my day-to-day expenses and bigger purchases.  And I want to make sure I’m making the right financial choices.  But I acknowledge that I’m lucky enough to have a higher income (and more savings) than a lot of other folks.  Plus I still feel a bit lost about what I’m supposed to be doing NEXT.

I’m looking forward to seeing all the content that The Middletons will be sharing!  I hope you’ll check it out, too!

What would you consider to be middle class?  Do you think you’re in that group?


Reading Books: The Index Card October 8, 2018

Filed under: Books,Personal Finance — Stephanie @ 9:57 pm
Tags: ,

(Disclosure:  The Amazon links to books in this post are Amazon affiliate links.  You can read more about this on my Disclosures page)

I’d been meaning to check out The Index Card: Why Personal Finance Doesn’t Have to Be Complicated for quite some time. I’d heard about it awhile back from a bunch of different sources (most likely a Marketplace podcast). I really enjoyed Helaine Olen’s book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, about the personal finance industry, so I wanted to check out this book she co-wrote with Harold Pollack.

I really liked the way the book walked you through steps to get your finances in order and on the right track.  The book was inspired by the realization that most money advice could fit all on one index card.  You can see the original photo of the index card here.

If the entire premise is that all you need to do is follow everything on the index card, how is there an entire book?

Each chapter goes into detail about each piece of advice. There are anecdotes from the authors about why each step is so important (or what happens if you don’t follow the advice!) Each new chapter builds on what you (hopefully) started in your own life from the previous chapter.

They cite lots of references and provide some good resources where you can find even more information.

I read this as an ebook I got from the library. Which made me realize that ebooks should have a way to share updates alongside the original text. Besides urls that might change or disappear, there are facts and recommendations that change. For example, they mention the myRA as an option for saving for retirement. But the government decided to phase out this option.

I highly recommend reading this book! Whether you’re just starting out and trying to figure out how to get a handle on your personal finances, or if you have been focusing on your finances for a while and just want a refresher (and to make sure you’re not forgetting something!), you should check out this book!  As someone who has been thinking about personal finance for over a decade, I found this book really helpful for reminding me why I started on this path in the first place.

Now I’m looking for a good follow-up book to read: what do you do after you’ve gotten your finances started on the right track? Share your suggestions in the comments!

This book is one of many personal finance books that were recommended recently on Marketplace.  Definitely check those out, too!


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