Don’t Feed the Alligators

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Archive for the 'Parenting' Category

Piggy Bank

Creative Commons License photo figure credit: ken +

Reader Jenn asks:

Are you planning to open a second 529 Plan for the new baby or maintain one account for both kids? We opened a 529 when we had kid #1 but when kid #2 came the financial planner we consult with said we can use the same plan for both kids?

Hi, Jenn, thanks for the great question.  Prior to your question I had not ever considered this and had plans to set up separate 529 accounts for each of our little dears.  I did some research on this and found a number of pluses, minuses, and rules that have swayed my ultimate decision:

Rules that seem to apply to this question:

  • “Each beneficiary must have his/her own account. Siblings or cousins can’t share an account. You can, however, roll any remaining portion of an account over to another child once the account’s beneficiary has completed college.” (source)
  • “If the child doesn’t want to go to college, you can roll the account over to another family member.” (source) You can also split the account into multiple beneficiaries.
  • “There are no restrictions on who can open an account for whom. You can open an account for your child, a friend’s child, a relative, the paper boy, or even yourself.” (source)

Advantages of saving separately for each child:

  • In our case, all of the money contributed to the plans, at least for the foreseeable future, will be money that has been given to the kids as birthday, Christmas, and other presents, so it’s more equitable to keep the accounts separate.
  • Individual accounts can be better tailored to the time horizon for each child — different investment choices can be made depending on age.
  • If it applies, you can contribute more in total before incurring the federal gift tax.
  • If you should die, the childrens’ guardian will know exactly what you intended.
  • Some states allow you to take a bigger tax deduction if you save in multiple accounts.

Advantages of saving jointly for more than one child:

  • You can start saving before you ever have kids, reducing the overall amount of saving that you have to do. (See The Beneficiary Loophole.)
  • Some plans charge a maintenance fee for each account.  A $25 annual fee per child would really ding our child’s account.
  • It’s simpler to deal with a single account than many.

One thing that doesn’t seem to matter at all is the amount of interest and compounding.  For the same investment choices, it does not matter whether you have a certain amount of money in one account or 100 accounts. J.D. at Get Rich Slowly demonstrated this recently.

For me, the only genuinely compelling reason to have just one account seems to be the idea that you can save before you have kids, but since we missed that boat already, it doesn’t apply.  So the bottom line is that I will be opening a new account for our new daughter.

I’d like to hear our readers’ thought and comments on this topic!

Dear Daughter #2

photo figure credit: MITBeta

I already outlined a number of lessons learned since the recent birth of daughter #2, and I’d like to share a few more before I get back to more “hard core” personal finance topics.

Having been a parent for 2 years already, I thought I knew a lot about parenting.  I was right — I know a lot about how to take care of a newborn baby.  However, as it turns out I don’t know all that much about raising a 2 year old big sister.  So the next lesson that I would like to share is:

  • Big sister is harder work than the baby

Newborn babies are relatively easy to deal with.  They eat, they sleep, they poop, they burp, not necessarily in that order, but they do a lot of each.  When they cry it’s almost always because of one of those things.  You don’t have to convince them to do any of the above.  You don’t have to tell them why they are doing any of those things.  You don’t have to entertain them or worry that they’re pulling the dog’s tail.

Toddlers, on the other hand, are a different story.  I’ve had many people tell me that having 2 kids is more than double the work of one and that the older child is going to have jealousy issues with the younger one.  Boy, were those both understatements.  Actually, the two of them together haven’t been too bad in terms of work load (maybe ScrapperMom will disagree with me here…), but we totally underestimated how much jealousy there would be by big sister of little sister.

Even after getting Dear Daughter #1 excited about the imminent arrival of DD#2, it has still taken 3 weeks of daily convincing that having a little sister is a good thing.  #1 has had issues with: Mommy holding baby, baby sitting in “DD#1’s chair”, baby eating, baby going into the car seat, etc., etc.  We have finally worked through most of these issues, but in retrospect, I wish there was more we could have done to soften the blow to DD#1. I am very grateful for the thoughtful people who have brought gifts for baby AND big sister.  I would encourage those of you who might be about to have a second child to think long and hard about how it will affect your first child and try to take steps to avoid some of these issues, if that’s even possible.

Another lesson learned:

  • Overconfidence can be a problem

In Part I of this series, I detailed the case of the missing car seat bracket.  The full story is that I couldn’t remember how to put the seat in, and left it for the night before we needed to use it.  I’ve put that car seat in several times, and figured it would be easy, but it’s been over a year since the last time and I was a bit rusty.  This meant that it took me far longer to put in (even once I found the missing bracket) than I expected.

Another example is that when I went to give DD#2 her first bath it didn’t even occur to me that this could be difficult.  I got out the infant bathtub, checked that the sprayer worked, filled the reservoir with warm water, stripped baby girl naked, and then listened to her wail for 5 minutes (it seemed like 20).  I had forgotten that newborns generally can be bathed with just a cloth, and that until their cords fall off, that area should be kept dry.  For the next couple of days I was paranoid that I might have caused an infection at the cord base. To top it all off, when the bath was done we couldn’t even come up with an infant sized towel to wrap her in and wound up using receiving blankets instead. The second bath went a lot more smoothly.

The last lesson that I’ll share in this series is:

  • Don’t overdo it

On the 4th day of DD#2’s life, we completed the following marathon: went for a short visit to ScrappeMom’s cousin who lives almost across the street from the pediatrician’s office, took the girls to see the pediatrician, went to Grammy’s house, went to a wake, went out to dinner, back to Grammy’s to collect DD#1, and then back home.  This was too much to do, even though we weren’t exhausted when we got home.  We had a couple of other days like this, but not as bad, since the arrival of DD#2, but we have finally figured out how to take it a little easier.

I hope these lessons are of value to some reader out there, even if only for the comic value in our follies.  This weekend I will get back to the personal finance talk and to answering some outstanding questions posed by readers.  As always, we’d like to hear your feedback and you can leave your Comments below.

Little Feet

photo figure credit: MITBeta

As I exclaimed here, Daughter #2 was born at home last weekend.  This was a joyous experience for everyone involved, from ScrapperMom herself, to the doting midwives, to ScrapperMom’s parents, to me.  We’ve learned a number of lessons that we will take to heart the next time we have a baby.  Some of these involve the homebirth itself, some relate to parenting in general, some are financial and others aren’t. With that, this post will have its off topic points, but should contain enough finance related bits to keep everyone else interested.

ScrapperMom and I decided early in the pregnancy of Daughter #2 that she would try to give birth at home.  (Please let me know in the comments if you would like to know why we made this decision, and if there’s enough interest I will try to put together a concise, coherent post on the topic.)  Daughter #2 arrived about 9 days earlier than she was expected. Which leads me to lesson 1:

  •  Babies can come at any time. So be prepared.

A number of the problems that we have encountered in the first week of our daughter’s life can be directly attributed to lack of preparedness.

Example 1: ScrapperMom has been cooking extra food at nearly every meal she has prepared in the last month and freezing the extra.  This has left us with a freezer full of food that will help us eat well, frugally, and without much preparation time in the coming weeks.  The problem is that it takes several hours or days to thaw something out to eat.  So during her labor and following the birth, we kept running to the take-out menus to figure out where our next meal was going to come from.  Over $70 was spent, to feed all of the people here, on take-out food on the day our daughter was born.   (Thanks to my parents and in-laws for covering much of this cost.)  My mother-in-law hit upon a great idea the next day when she went out and bought a couple of pounds of cold cuts, rolls, chips, etc. — enough to last a few days and satisfy a number of mouths that came through the house during that time

Example 2: The car seat was not in the car yet.  In my scramble to put the seat in the car before we had to take the baby to the pediatrician’s office, I could not find a metal bracket that was required for the installation.  We have two bases for the car seat, and each has a place to store the missing bracket.  We need the bracket for only one of our cars, yet both of them were missing.  I considered running to Toys R Us to buy a new base for $25.  I figured that I could take the bracket out of the new base until I found one of ours and then return the base for a refund.  This is, perhaps, not the most ethical way to do things, but it was pragmatic.  Eventually I found one of the brackets on the floor of the car that didn’t need it and I was able to install the seat.

Example 3: When giving our daughter her first bath, we could not find the scrubby brush that we used on Daughter #1 at that age.  Nor could we find an infant sized towel.  All of these things were in a closest that ScrapperMom had planned to go through and clean this week, before the baby was due.  Since baby came early, I found myself standing there holding a reasonably clean, wet, crying newborn who I eventually wrapped in a couple of receiving blankets to dry her.

This lesson can be extrapolated to many areas of our lives, especially personal finance. Are you prepared? Do you have an emergency fund? Life insurance? Disability insurance?

Lesson #2:

  • You have to look out for yourself first.

Over the days immediately following the birth, I found myself playing host to everyone from the midwives to family and friends. Because the birth was in our house, I went into host mode. I realized only after the fact that they were all there for us, not the other way around. When people were in our house, I neglected many of the things that I should have been doing: laundry, dishes, toddler naps, doggie care, etc. I should have been more careful about not letting guests interrupt what needed to get done, because this just bunched all of these chores into a shorter period of time later (and left us with a surly 2 year old). Better yet, I should have asked these people to help me get these things done so that I could make sure that we all got enough rest after a busy few days.

We must also look out for ourselves when it comes to personal finance. No one cares more about your money than you do. We must manage our own retirement accounts, we must fund retirement accounts before college funds, we must be responsible for our own finances because no one else is going to do it for us.

I have several more lessons that we have learned that I will share in another post soon. Do you have any experience with home births or comments or questions about ours? We’d like to hear about it in the Comments section below.

Daughter 2Just a quick note to let you all know that Daughter #2 was born on Saturday, January 10, 2009 at home.  She came into the world at 2:52pm weighing 6lbs. even and measuring 18.5″ in length.  She was 9 days early, but mom, baby, and big sister are all doing great.  ScrapperMom had a great birth experience thanks to the help of 3 great midwives and the support of our families.

I’ve learned a lot of lessons about having a second child, some financial, others not so much.  But I hope to share many of these lessons soon when time allows.

If you liked this article, you may be interested in seeing some related articles:

Baby and Big Sister

Creative Commons License photo figure credit: Yogi

As I enter my third trimester of pregnancy it is time to look at the family finances and the implications on our budget of having two children. How much did it actually cost to have our daughter? I think we did well on the financial front and tried to be frugal parents. In fact, we only attributed $818.38 directly to Daughter #1 in her first year. So then the next question is how much will it cost to expand the family? We saw how much it cost to have 2 dogs! Hopefully in the first year the 2nd baby won’t cost nearly so much. At least we have health insurance for the babies!

I read a blog recently and was shocked. Connie says in the post that they had spent $14,000 from conception to birth. I thought this amount was exorbitant. Read the breakdown of costs here. I can’t imagine spending that much on our first child, and I know the second will not cost that much either. Luckily for us we only had to pay one co-pay for all our prenatal care. A lot of the big ticket items are things we got from other people or things we will be reusing for the second baby, including nursery furniture, maternity clothes and diapers (we are using cloth). Diapers alone cost us a total of $156.78, though this doesn’t count the cost of water and soap. However, I know our high efficiency washer and dryer are not that costly to run

Some ways we have cut down on spending will continue with a second child, like using cloth diapers. This will save on the recurring diaper costs most parents face. We are also starting potty training early and have had some great successes. I would really like to only have one child in diapers at a time even if they are cloth! I do intend to breastfeed our next child. Not having to buy formula certainly was helpful in staying on budget. I also made my own baby food from normal foods that I would be buying for us (pureed vegetables, fruits, etc.) I have all the equipment, which was actually a very small to negligible start-up cost, consisting of covered ice cube trays, ziplock bags and a food processor that we already owned.

One huge consideration for us is how 2 children will change the dynamic for me and working from home. I anticipate it being fairly easy in the beginning when the baby will be napping frequently. After that it may be very difficult to line up naps in order to continue to get 2 - 2 1/2 hrs during the day and at first the baby will not have such an early bedtime and may require my attention in the evenings when I get a lot of work done now. There are a few options I can look into. Options like grandparents coming 1 day per week for a few hours to help out or mommy’s helpers. There is also a 9am-1pm nursery school up the street. If I can send my daughter there a few times a week I might be able to work while the baby naps as I did with our first. Of course this hinges on me being able to find hours to work, see my other recent post.

It will definitely be a big change. I suppose we won’t know how it will go until it happens. Until then we will run the budget numbers with and without my full income to see where we stand. I’m guessing we won’t be living on Ramen Noodles either way, but we might be taking some tips from some of the frugal mom bloggers, like “I’m an organzing Junkie” and “Simple Mom” out there and eating some vegetarian meals a few times a week to save money and round out our week of meals with less expensive options!

Let’s hear from our subscribers. If you have more than one child, how do you juggle your responsibilities and how to do you cut costs as your little mouths to feed, cloth and entertain increase?