Two Kids in Daycare - How Did/Do You Afford It???

[crisi]

#1-run numbers to determine if it continues to make sense for both of you to continue working. If each is making 60K as an example, it's closer to 40-45K after tax. 24K of that is childcare, leaving 16-20K as the actual income. Figure in travel costs, eating out, clothing, etc and the true income is even less. This is just an example. One may be able to quit til the kids are in school and work part time on opposite schedules as the other..

As I said above, make sure to look at this from all angles. I would have given up 3% of my salary in a 401k match (at $60k thats $1800 a year). I'd have lost the DCSA - at our income that was worth around $3200 a year. The way our health insurance was structured, it would have cost me close to $3000 a year to be on my husbands health insurance rather than us both carrying our own. And I would have missed two promotions, that was worth $30,000 a year. So quitting in order to save on child care expenses would have been a poor financial decision - just on a year to year basis, it would have meant that in the first year, we'd have spent about another $10k for me to work - daycare, commuting expenses (clothes were a wash and I packed lunch when my kids were little), but today I would have several hundred thousand less in the bank.

 

[Monykalyn]

As I said above, make sure to look at this from all angles. I would have given up 3% of my salary in a 401k match (at $60k thats $1800 a year). I'd have lost the DCSA - at our income that was worth around $3200 a year. The way our health insurance was structured, it would have cost me close to $3000 a year to be on my husbands health insurance rather than us both carrying our own. And I would have missed two promotions, that was worth $30,000 a year. So quitting in order to save on child care expenses would have been a poor financial decision - just on a year to year basis, it would have meant that in the first year, we'd have spent about another $10k for me to work - daycare, commuting expenses (clothes were a wash and I packed lunch when my kids were little), but today I would have several hundred thousand less in the bank.

Not the OP but good points. I was able to part time when my 3rd was born-saving gas, childcare etc while still getting benefits 401kmatch etc)- I also got extra pay for opting it of my employer insurance and not banking ETO. As a result my pay was higher working 3 days a week than many of the full time people.
My employer required 7 years of employment to be "fully vested" in the match program too. No way was I leaving free money on the table

 

[Jaime4004]

DH and I both worked fulltime when #2 was born. I lasted for 8 months. Daycare did eat up a lot of the salary and they were also both sick all the time so one of us often had to stay home. I always dreaded hearing that I had a call from daycare at work, it meant a fever and come pick them up. Besides the usual viruses, they also got fun stuff like whooping cough and rotavirus. I switched to nights and weekends, which wasn't really fun, but the money coming in stayed about the same with the part time work, since we were no longer paying day care.

 

[pookybean]

I saw that your DH likes Pittsburgh sports. If you live in PA (and even if you dont, maybe your state has something similar) and your oldest will be 3 by Sept, look into a Pre-K counts program. It is a state program for FREE preschool. Generally the programs run on a school day/year schedule (Sept - June, Mon - Fri, 8:30 - 2:30). If you need aftercare the cost is usually minimal. A family size of four can make up to $72,900 and still qualify (so it is not head start or just for low income families which is often the assumption). There are strict guidelines that the schools have to follow in order to qualify as a Pre-K Counts program, so the ones that I have seen are really good.

No other advice except it gets better!

 

[DawnM]

I had 2 kids in childcare for a long time. They are 20 months apart. I would say a large portion of my take home went to child care at the time.

You mention moving to a larger house. You really do NOT need it yet. Wait until you don't pay childcare, when the kids are older, and put that $$ towards a new house, before then, don't.

 

[fifthdimensiondweller]

When I sat down and added up all of the extra expenses from having a job, I was PAYING EXTRA to work.

This is us as well. It might have been different for us than the average person because we are only about 2 years out of college and I'm only in an entry level position, but even accounting for a possible promotion here or there for me it wasn't worth it. When our son comes later this year we're using cloth diapers, going down to one car (mostly), hubs will work at home whenever possible, pack his lunch when he does go into the office, and we shop around for things like insurance more than we did before, etc. etc.

i think it's different for everyone but I think you bring up a great point about factoring in the not-so-obvious costs.

 

[#1hoosierfan]

We did not vacation as much. When both kids were in daycare our childcare payment was quite a bit more than our mortgage.

Our house was small for us, but we could not afford to move. As soon as ds1 went to kindergarten and my mom retired to watch ds2, we moved.

 

[runwad]

Oh how I remember those days, very stressful! Always robbing Peter to pay Paul! So glad we are done with that. I worked full time with 2 and only cleared $100/mo after day care :-(. Had a 3rd and went part time; oldest started school, middle one was in preschool and baby was at a home sitter. Still didn't clear a lot of money but I'm so glad I stayed in the work force because even though I still only work part time, I have a good salary I'd never have been able to make part time had I not been working these past 20 years.

We cut back on our 401k %'s and other investments during those years. I used the FSA for daycare expenses. I really watched at the grocery store, we never went out to eat and date nights were once a year on our anniversary. Vacations??, we put a tent in the backyard and slept out. If we did anything it was a free activity.

 

[ruadisneyfan2]

It's been quite a few years, our boys are 20 & 17 now. It was rough but we used home day cares for both kids. Not primarily for lower cost, though that was an added perk, but mostly that they don't close for snow and there's no "turnover" like a public day care. I work in a hospital and need to be there regardless of the weather so I couldn't use a public day care that most likely would close on snow days. They were licensed and paid taxes so we could still claim that $ on our tax return. We paid $135/week for child #1 and $150/week for child #2. Price stayed the same from beginning to end.
Our kids are 3.25 years apart which helped. Factoring in maternity leave, it was only 2 years that we had 2 in day care.

My working expenses were (and still are) unusually low. I wear scrubs and sneakers which at work we joke that it's really only 1 step up from pajamas. Even today they are $27 per set x 5 and they last around 2-3 years. I take a commuter train into Philly which is $5/day, taken out of my pay pretax. So no bridge toll or parking costs. Also because I catch the train close to home (<3 miles each way) my car insurance is rated for "pleasure use" which is the lowest cost it can be. Also because of this, I put very few miles on my car. It's 11 years old and just turned over 53,000 miles.

I guess it depends what type of job you work and what your income is but I could still save 3% for retirement and have enough to pay for day care plus our mortgage. Back then that included an escrow account for property taxes (in NJ that means grab your ankles) and HO insurance. I earned, and still do, more than dh and carried excellent health insurance so if any of us was going to stay home, it wouldn't be me.

Also dh would sometimes get laid off during winter so my job was always the reliable one. The same week we bought our home, ds#1 was born. I was overdue pregnant at settlement. Two weeks later, dh was laid off. I was collecting disability and he was collecting unemployment and we hadn't even made our 1st mortgage payment. Then, again dh was laid off through most of my pregnancy with #2ds. I think at one point we had 2 in day care plus 2 car payments, and a cleaning service. (Only kept that til #2 was 10). We soon figured out that we should only have 1 car payment at a time and would keep each car at least 10 years to make that happen.

We both did, and still do, pack breakfast and lunch from home. Our house is small, probably around 1600 sf. but we make it work.
Maybe for people living in the city you could give up a car to stay home but where we live it would make life miserable. I could walk a mile and still not be outside of our subdivision.

We tried to look at it like a car loan: 5 years and you're done. Then there was before/after school care and day camp once they reached age 5 but that was still way cheaper than day care.
It was stressful but mostly stressed out for time for myself; bills were always paid on time and I spent every minute home with the kids. If we had tried to live on just dh's pay, we would still have been stressed out but financially, with more time than money. I tried to work out a budget to go part time. My work charges a lot more for PTers and IIRC, we would have had about $50/week leftover after just monthly bills were paid. This didn't include all the other miscellaneous things like birthday gifts, hair cuts, Christmas shopping, retirement savings, oil changes, etc. that are not a monthly bill. No way.

I have a coworker who relied heavily on credit cards so that she could be home with her kids while they were little, til her youngest was 10. Now she has a huge debt to pay back and at 50+ hasn't saved a dime for retirement.
I did what I needed to do for peace of mind.
(Still managed to rack up too much cc debt but that was due to lack of discipline. No more of that now. Gone and I'll never do that again.)

Good luck to you in your decision.

 

[AquamarineSteph]

There's some fantastic advice in this thread! The #1 thing that helped us during a tight spot was sitting down and writing out a budge for everything. Groceries. Clothes. Mortgage. Car. Insurance. Cable. We wrote down EVERYTHING, and then compared that to what we had to spend. That way we could see yes, we have to spend X here to no, we could cut back or cut out on Y. No, we weren't able to save much during that period, but we didn't go without, either. The hardest part of making a budget is sticking to it, but we tried to make a game out of sticking to those numbers every, single week.

And the good news is that these are temporary expenses for you. The kids won't be in daycare forever. And then you'll be able to make new budgets, new plans, etc. Good luck!!!

 

[Twilghtsprkle]

As I said above, make sure to look at this from all angles. I would have given up 3% of my salary in a 401k match (at $60k thats $1800 a year). I'd have lost the DCSA - at our income that was worth around $3200 a year. The way our health insurance was structured, it would have cost me close to $3000 a year to be on my husbands health insurance rather than us both carrying our own. And I would have missed two promotions, that was worth $30,000 a year. So quitting in order to save on child care expenses would have been a poor financial decision - just on a year to year basis, it would have meant that in the first year, we'd have spent about another $10k for me to work - daycare, commuting expenses (clothes were a wash and I packed lunch when my kids were little), but today I would have several hundred thousand less in the bank.

I attempted to work part time after my 1st. Unfortunately the supervisor I ended up under didn't understand that I had to leave at 5 to pick up my kid. I had constant 4:30 emergency projects & requests to switch my work days. My husband made more than me and I couldn't ask him to pick up at the last minute

We decided to have me stay at home. For us, it worked out. First couple years was less income, but since the now 2 kids were all my responsibility, he focused on work completely. In the years since i stopped working, he's gotten 2 promotions (he hadn't gotten one in the 10 years prior). Nowadays his yearly bonus is more than I made part time. Those 2 promotions also leveled him up to the executive stock option program.

 

[JediBonas]

I have twins who just turned 5 so we're not that far removed from daycare days. I had the max allowed pulled out of my check for DCSA (I think it was $2k), we did get a discount on the second child but it wasn't much. I also decreased my 401k to only what my employer matched. I also paid for the daycare on a credit card that I got cash back on, so at least some of the money came back (I think it was 2%, not a lot but something at least). We were lucky in the fact that, although daycare was stupidly expensive (NY), it still made sense for me to work and we could afford it without having to really cut back on anything.

 

[crisi]

I attempted to work part time after my 1st. Unfortunately the supervisor I ended up under didn't understand that I had to leave at 5 to pick up my kid. I had constant 4:30 emergency projects & requests to switch my work days. My husband made more than me and I couldn't ask him to pick up at the last minute

We decided to have me stay at home. For us, it worked out. First couple years was less income, but since the now 2 kids were all my responsibility, he focused on work completely. In the years since i stopped working, he's gotten 2 promotions (he hadn't gotten one in the 10 years prior). Nowadays his yearly bonus is more than I made part time. Those 2 promotions also leveled him up to the executive stock option program.

Mine managed to become a VP at a Fortune 500 even with a working wife. Having worked into two six figure salaries enabled us to stash enough away that I semi-retired in my 40s and make more in dividends than I did when my kids were born - plus will put two through college with no student loans. But I did work for an understanding company - and picked a daycare that was open until 6:30. On the other hand, I was often on the phone overseas at 1am.

I think if you WANT to stay home and can make it work financially, you should. But I don't think you should give up a career you want, and waste four years of your college tuition, because there will be a few lean years with daycare. And I don't think anyone should bake the numbers by factoring lunch out every day (really, if money is tight, lunch packs) - and completely ignore that you'll still be eating lunch at home - and feeding your kids an extra two meals that would be covered under daycare. I've seen some amazingly one sided calculations that include gas for work, but disregard preschool costs or activity costs (and very few people don't eventually put their kids in some sort of part time program pre-K).

 

[javeyloveschelsi]

Well, for where we live, we can't afford child care for two. We actually have 4 and while I have a 4 year degree, there is hardly any jobs available and those that are make barely over minimum wage, so I stay home because I wouldn't bring home what I feel is worth being away from my babies. Thankfully, my husband has a decent job that covers our bills, allows us a small amount of savings, and a few "fun" things every now and then. My friends who have 2 or more kids in child care use home care, but also, we live in a small town that doesn't have center, so it is cheaper, but those friends and their spouses work A LOT of hours and/or more than one job right now or their spouse has a job that pays well but takes them out of the area for weeks at a time.

But, my savings suggestion is to wait on getting a bigger house if possible. We only have a 3 bedroom for 6 of us, which means the kids have to share a room. I do have friends who wouldn't dream of making their kids share a room, but it has worked out beautifully for us. Our girls (10 & 6) are best friends and get along really well and our boys (3 & 3 months) do really well, even though the baby is with me the majority of the time. We hope to some year either add on or build a bigger place, but during these years, this is one of the sacrifices we have made in order to make our budget work. We will look into it when I can start working again, but it works while they are little.

 

[tcufrog]

Before you consider part-time at your current job find out how it will affect your pension.

 

[Gracie09]

Have you really thought about all of the expenses you could eliminate by one of you quitting? There are so many costs associated with working that after paying all of them you might not be making as much as you think.
Day Care
Clothes
Gas
Meals out
Insurance
Convenience items
2 cars
Time
What could you do with all of that extra time to save even more out of the budget? Cook from scratch, grow your own food, use cloth diapers, shop garage sales/thrift stores, do your own household repairs, etc.

When I sat down and added up all of the extra expenses from having a job, I was PAYING EXTRA to work. As in, the extra expenses were more than my salary (and it was pretty good) The best thing I ever did was quit my job. 14 years later we are doing great.

You also have to factor in the "costs" of staying home. I stayed home for 5 years with my dds. I not only lost out of salary during that time, but I could only find a position at a much lower level making 30k less than I was making when I left. I lost out on my 403b matching which would have been tens of thousands of dollars. I lost the opportunity to advance in my career.
Do I regret staying home? No, but there are long-term financial and professional consequences to staying home that should be factored into the decision.

 

[Jen and Ashwin]

Before you consider part-time at your current job find out how it will affect your pension.

You also have to factor in the "costs" of staying home. I stayed home for 5 years with my dds. I not only lost out of salary during that time, but I could only find a position at a much lower level making 30k less than I was making when I left. I lost out on my 403b matching which would have been tens of thousands of dollars. I lost the opportunity to advance in my career.
Do I regret staying home? No, but there are long-term financial and professional consequences to staying home that should be factored into the decision.

At no point did OP ask advice regarding whether to leave her current job or not. She stated that she would be staying in her position and asked about ways to financially plan for 2 children in child care under that condition. Sure, staying at home could have financial benefits for some families in the short term, but that wasn't what OP wanted to know. I don't understand why these types of questions always have to devolve into a discussion of staying home versus working. Maybe it is because those that chose to quit working want to have something to add to the conversation? I just wish people would read OPs request before taking the conversation off track.

 

[Gracie09]

At no point did OP ask advice regarding whether to leave her current job or not. She stated that she would be staying in her position and asked about ways to financially plan for 2 children in child care under that condition. Sure, staying at home could have financial benefits for some families in the short term, but that wasn't what OP wanted to know. I don't understand why these types of questions always have to devolve into a discussion of staying home versus working. Maybe it is because those that chose to quit working want to have something to add to the conversation? I just wish people would read OPs request before taking the conversation off track.

I'm confused why you included me in you quote. I was responding to the poster I quoted. Its a discussion board. Like in person, discussions can take turns and go different directions than originally intended by the OP. I just wish people would realize that or why even have a discussion board. It would simply be a question and answer board. And leaving the workforce, even temporarily, is an option. One that the op may not have considered.
How did I deal with 2 kids in daycare? I sucked it up. I knew it was temporary. I also eventually hired a nanny. It was a bit cheaper than daycare but offered flexibility daycare did not. This was after returning to the workforce after leaving when my older daughter was sick.

 

[Jen and Ashwin]

I'm confused why you included me in you quote. I was responding to the poster I quoted. Its a discussion board. Like in person, discussions can take turns and go different directions than originally intended by the OP. I just wish people would realize that or why even have a discussion board. It would simply be a question and answer board. And leaving the workforce, even temporarily, is an option. One that the op may not have considered.
How did I deal with 2 kids in daycare? I sucked it up. I knew it was temporary. I also eventually hired a nanny. It was a bit cheaper than daycare but offered flexibility daycare did not. This was after returning to the workforce after leaving when my older daughter was sick.

I could have quoted a ton of people, I just choose the last two comments that were discussing this issue. Sure, it is an option, but OP specifically stated in her original post that she planned to continue working because it made the most financial sense. To me, this means that she considered the alternative. Otherwise, why would she specifically point that out? It just seems that every time someone asks advice regarding daycare, they just get a long stream of comments about how they should quit their jobs instead. I started a thread a while back when I found out I was expecting and I just got so many unhelpful comments, completely apart from what I was asking. Sure people can go off on tangents, but then other people can also point out how unhelpful those comments are in the context of the original question.

 

[Sagginit]

I am on the baby train. I have a little one who will be 6 months next week and in total I know I think about 12 people (close friends and relatives) who had babies within 1.5 years of me! I stayed at home but most people I know do have both parents working.

My brother and sister in law had twins so they had to get creative as things were much more different than they had planned. Her mother is retired and wanted time with the babies so she takes care of them 2 days a week and they got a nanny 3 days a week. To manage the hours one goes to work before the other and gets out earlier (so dad is home until 8 am and mom is home by 6pm, even with commuting). As others stated they have to worry less about sick days and snow days. I have a few friends who had a sibling or friend who was already a SAHM take on their childcare for a lower cost than daycare or a retired parent (most pay but like $100-$200 a week max). So look into your network because if you can keep the baby who costs more elsewhere you might be able to save that way.

With me home we have been cleaning up or finances the past few months as we had only been married 14 months when the little one arrived. We combined our cell phone bills and got a lower payment, went through our CC cards and narrowed it down to 2-3 in rotation to max our points/incentives, were looking into our cable and internet next. We increased our health insurance coverage to a better plan since the baby was due in late January. That helped cut down our hospital bill and bills on post natal care for me as well as the babies health care even though the monthly cost is more. Right now we are looking at better investing our savings and retirement funds. We have not bought a house or apartment yet so there is a huge savings there as our rent is insanely cheap (got an old landlady who loves us and doesn't want us to leave her house lol).

Food is in fact a savings as with me home. This is in part with better meal planning so look into that. A food diary can help see where you can cut back. Even in an apartment I had a lot in the pantry and freezer that I used up in the past few months and that meant some weeks I was able to skip groceries except for just a handful of items like fruit, bread, and eggs.

If you don't already buy things secondhand it has never been easier to start. Letgo, Poshmark, Thredup, facebook groups, craigslist etc. make it easy for people to sell and for you to buy items. I never felt it was worth it to go to thrift stores before but being able to pick up items via an app makes it easy to save money that way. People love buying baby clothes so I have actually only had to buy maybe 1/4 of his clothes. I would rather have this than toys, trinkets, teddy bears, rattles etc piling up s when asked about gifts we always politely let people know what size he needs and when he will be wearing it (for ex. I told my mother he is good on summer 12m but he does need 18m come fall).

As for vacations we are doing two small road trips since my in laws are here from oversees. We are doing these as cheap as possible. One is DC in a few weeks (most sites are free!!!!) and then we are thinking somewhere else in a 4 hour radius the week after labor day once the peak season is tapering off. Honestly once you have two you might be rethinking vacationing with them anyway. Most people I know stayed home until both were at least 1-2 years old as its hard to travel with two that are tiny