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

[WaltsMartini]

For those of you who have two or more kids in daycare now, or have in the past, how did you make it work? What did you cut out/ cut down on?

My husband and I are both professionals with good jobs; it doesn't make financial sense for one of us to stay home (though I have asked for a reduced schedule to have more time at home, and if that pans out we'll still need daycare, but less of it!)

We currently have one child in daycare at about $1,000 a month. With likely putting a second one in full time, I CANNOT make the budget work. Did you temporarily stop saving? Only thing I can think of is temporarily stopping the IRA/529/emergency fund - and vacation savings (is it wrong that this last one makes me the saddest?!)

We are not extravagant. We have one car payment at $290 a month for 3 years (2/12 years to go) as we mostly paid cash for the car; we just paid off my student debt in 2015 (right before baby #1) and my husband's student debt this year; we do not have credit card debt. Our current mortgage is under $1,000 a month, though with needing a bigger house, that will likely increase by $400/$500 a month (another factor giving me heartburn).

Give me hope that there are ways to pare back!!!

 

[LovesTimone]

With your job is it possible to work from home?

While no one wants to pay more for a vehicle, could you refinance it for a lower payment?

Ask about a multiple child discount at day care?

With 2 kids in day care at around 2000.00 a month have you thought about a private sitter or nanny. If you could you might want to go to half days for the preschool part of the day, then have the nanny pickup and watch them at home. My friend found a lady from her church to watch her Grandkids (they live with her), that was looking for some work as a babysitter, she pays her just a bit over 800.00 a month for both kiddo's.

So you might could work it out.... to work from home a couple of days, and then fill in with a nanny.

Then go the possible saving route combining stuff together, phone plans, tv, internet. See if you could can get a package deal for all 3...shop around, Car and homeowners insurance combo.

Take your lunch to work, this is can be a huge saving. Make sure to include drinks, and snacks so you aren't heading to the vending machine. If you both can take your lunch you would be surprised at how much you can save. When I was working I spent around 50.00 a week for lunch, plus a couple of trips to the vending machines. When I started taking my lunch it saved me around 200.00, then I started taking my drinks, and snacks which was about another 10.00 a week. So between 240 to 250 a month. Think if your DH did it to that amount would double.

Meal planning is another way to save. Lets say you grab a 5 pound bag of potatoes, ask yourself what are you going to do with the whole bag, not the 3 or 4 you are going to use for baked potatoes, so plan to use the others....so okay I am going to bake a couple of extras, for my lunch for this week and use the remainer for mashed potatoes. Then use your left over broccoli to go into the lunch potatoes, and maybe some shredded cheese to top it off. Or cook the whole box of pasta and make a pasta salad to take for lunch. Buy using up everything you save money.

Make a list an stick to it, for me that would mean not shopping with the DH or kiddo's.

Wash your own car, I bought DH an pressure washer for Christmas and we do it ourselves.

Use coupon's, not just at the grocery store but whenever and wherever you can. oil changes, meal deals, family fun, etc...

I don't think that you can find it all in one place, so taking a bit here and a bit there and shuffling things around you might be surprised at how much you can save with simple adjustments. For me having a Disney vacation to look forward is important, you might have to wait a little longer between trips, or go for a day or two less, or not stay deluxe but you need and deserve a vacation to relax and connect with your family.

 

[Disneylover99]

I feel your pain....those were the lean years. Luckily we saved a lot before we had kids. We didn't have family/friends to help out with daycare, we couldn't work from home and our hours were not flexible.

We were already savers, so cutting back anywhere really wasn't an option for us. We didn't save. We ate into our savings. Thankfully childcare got cheaper as they got older and then we were back on track.

Hang in there.

 

[Tattylou]

After my 1st son was born, I changed from a position as a clinical director in a large company to working in a part time private group practice. It allowed me flexibility and making my own schedule and less stress.....and 35k less money a year. So, we had to shift the budget a lot.
I don't know how much you're contributing to retirement/529/emergencyfund/vacation, but I would take a look at those and cut them back a lot. Saving a little is still saving and eventually you can add more. We definitely don't save even close to what we used to save. We don't eat out as much or go shopping as much. Vacations are important to us so we definitely still find a way to make those work. As for Disney, that means value resorts for us when we go. I have a little more credit card debt than I used to bc sometimes there are emergencies and the emergency fund isn't what it used to be. This past year they were in 1st and 3rd grade- it was the 1st year they were both in full time school in the day so I did work more hours during the day time and it helped. They're 7 and 9 now.

 

[pinkxray]

Following to see how others do it. We about to test out our budget starting next month. Our 2 year old DS is in daycare at a little over $1000 a month. I am on maternity leave right now but in Aug our DD will be joining him and for a few months we will be paying $550 a week, it drops down to about $500 a week once DS moves up to the preschool room in the fall.

We have run the #s 100 times and think we know how it will go but not looking forward to that cost every week. Like you, it doesn't make sense for either of us to leave our jobs. We also moved into a larger home a few months after getting pregnant that raised our mortgage a few hundred each month. (Yeah, it sucks but we love our house and it is worth it) We also have a 12 year old DD that adds to the expenses. On top of two kids in daycare we will also get to buy braces this year.

Here's how we are handling it.

The biggest change will be really paying attention to where every $ is going. Before DD was born we watched our spending but we had much more "fun" money. Didn't think much about eating out if we wanted. But that has been reduced anyway since DS2 hates sitting down at restaurants.
Before if I saw cute clothes for the kids I would buy them. Now, I am more likely to say no unless we really need it. Does DS really need a $13 Star Wars shirt from Gymboree? Not really, he won't care if I just get him the one on sale at Children's Place for less than $3.

Sorry to say but vacation savings aren't happening right now. For the first year while we adjust to our new budget all extra spending like vacations are out. I'm hoping to get back to Disney in 2019 when the little ones are 4 and 2 but we will see.If we do go it will be the cheapest trip to wow I've ever planned. Before DD was born our traveling was starting to pick up. I got DH to agree to WDW every other year and a cruise on the off years. Um, yeah. Those plans are gone. Now, it will be much cheaper outings. We will most likely go camping or Sesame Place next summer.

We are sill trying to save as much as we can for retirement. 529 savings and college savings are going to take a hit for now. Once DS is out of daycare most of that $ will go towards DD college savings since she will be close to college age. Then once little DD is out of daycare the money from daycare will be thrown towards retirement and college savings (as much as we can anyway)

The hardest part has been dealing with DD's 12 constant request to buy her something everyday but you don't have to deal with that yet.

Good luck! The next few years will be tough but our kids are worth it.

 

[pinkxray]

I just read the post from LovesTimon and there is a lot of great advice in there. One big area we are guilty of spending to much is groceries. I tend to buy a bag of potatoes or a package of meat bc it's on sale but not really have a plan. I usually end up forgetting about it and a lot goes to waste. Since I've been on maternity leave I have really been making sure to use everything I buy instead of letting so much go to waste. It really does make a difference. Last week I decided to clear out the freezer to make a space for freezing breastmilk and I had enough meat/veggies for the whole week. Just needed to pick up some fresh fruit and milk at the store last week.

I don't go back to work until Aug but I will be packing lunch/drinks/and snacks for work. I will also bring my own reusable kcup for coffee instead of buying coffee at the cafe. When I was pregnant I feel so sick the whole time I ended up buying breakfast, lunch and snacks at the cafe everyday at work bc I never knew what would make me sick what day. I was spending like 50-60 a a week for food at work. Those days are over.

 

[BOST99]

We also cut back on our vacation budget and most discretionary spending. We'll be going on our real first vacation this summer (more then a weekend away) since my son was born - so about 1.5 years. My daughter is now in school so we will be able to save a few hundred on this expense.

When I was on maternity leave I also did half days for my oldest to save money. I couldn't drop days (which would have saved more) because that wouldn't guarantee her a spot when I went back FT. Our daycare also had 10% off a second child's tuition. As they get older the weekly amount dropped so that helps. I did also explore a Nanny but for us it was more expensive then two kids in daycare.

If you haven't already, see if you can take advantage of a dependent care FSA. You can only set aside $5,000 but it is pre-tax so you do get some savings there.

 

[stazmatic]

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.

 

[Monykalyn]

Many of my younger friends have quit their job when second comes along due to daycare being more than they were making. We only had our last 2 overlap for a short time in daycare- then we started the middle in a private school a year earlier than she could have in public school(due to birthday) as it was much cheaper than paying for another year of daycare. We ended up liking the school so much she stayed until we moved out of the area. But during that time-NO vacations that weren't to visit family, rare eat out, lots of meal planning/couponing. Still put retirement funds away but college savings were cut back a bit. Lean years-and we managed to put upgrades into the house we bought (which paid dividends when we sold it!). I hated the stress though.

priorities for saving right now are retirement and emergency funds. College can wait. Vacations get any "leftover". This is what our financial advisors always tell us. We even had to stop (about a year) from putting much into retirement fund. But since both DH and I had saved money for the retirement fund from first jobs as teens (and rolled them over as changed jobs- before we even met!) it didn't hurst us as much to put retirement funds on hold for a year.

 

[crisi]

Our son just graduated from high school and our daughter is a Senior this year, so its been a while. But for a while even 18 years ago, it was $1600 a month in daycare.

We didn't really start putting money into 529s until the daycare expenses ended. But since that freed up $1500 a month, we still managed to save sufficiently for college.

We didn't vacation much during those years. Sometimes if there was a bonus at work, we went. And yes, that can be the hardest sacrifice. That's adulting.

We did keep our emergency savings - which gave us a lot of peace of mind during periods of recession when layoffs were looming - we managed to stay employed, but there were a few times it was touch and go We also kept up our retirement savings, as the time value of money calculations there are worth a lot, plus the tax breaks.

If you consider not working, remember to add in the additional costs of not working. I'm semi retired now, and staying home is far from free. I still wear clothes, and since the types of work I do at home (gardening, heavier housework than I ever did when I worked - in the case of someone with young kids - child care) tend to be more physical than the sitting at a computer I did at work, I go through them faster. I still eat. I don't live near public transportation and my husband can work long hours at the other end of town, so I still need a car. Insurance for us is more expensive since my job doesn't cover me and we pay a premium for my husband to cover me. I don't get a 401k match. And I don't get the increased experience - after being semi retired (and when I work, its a different industry than what I did professionally), I'd make a lot less. Long term, it usually isn't a great financial choice if you can cover the daycare expenses - the lost years are really career impacting - it can be a good emotional choice.

If you consider working from home, a lot of companies will not let you have kids at home. Mine wouldn't, nor would my husband's - unless you were working through a sick kid day. Working from home still required day care - and I did see people get fired for violating that policy - too many crying babies during meetings tends to give it away.

Its a few really expensive years - but then you won't see that level of bills again until college (unless you do private schools). Even with my son heading off to school next year, his tuition bill will be less than his daycare bill was 18 years ago (he's doing trade school and living at home, so its pretty cheap). Getting them out of diapers and off formula (because few people can breast feed all the way through daycare/formula years - if you can manage it, that's a money saver) can help a lot. Do watch the kid spending - and watch it once they get out of school as well. They are fine with hand me downs and a few toys (daycare kids get lots of toys at daycare) - you may also discover the wonders of second hand shopping - there can be great clothes for them and you at your local thrift store. Once they get a little older, you don't need to have them do every sport - and park and rec activities can be as worthwhile as a traveling team.

 

[Jen and Ashwin]

I am due in October with our first child. Childcare expenses will be just a little over $1000 per month when I start back in January. We started setting aside $500 per month towards baby expenses and that money will roll over into the child care expenses starting in January. And since the start of the year, we have been making extra payments on my car in order to eliminate that loan completely before January. About 2/3 of that money will then be rolled over into DH's car loan and the other 1/3 will go towards the child care expenses. Finally, we are cutting back on our vacation savings each month by about 1/2 in order to reach the total cost.

We are going to use a dependent care FSA account to help reduce the overall cost of childcare, since not paying taxes on $5000 of our child care expenses will help save a decent amount of money.

Also, the reason we are going to put a lot of extra money towards DH's car loan now is because we anticipate having baby #2 within 2-3 years. By making extra payments towards his car, we can eliminate DH's loan within about 18 months starting in January, so by July 2019 we should no longer have any auto loans. This should free up enough money to cover child care expenses for baby #2. It might seem like we are planning pretty far ahead, but I don't want to be scrambling at the last minute to figure out how to afford child care for two kids. One of the tools that has made this planning much easier is a program called You Need A Budget (ynab.com). It has allowed us to better track our spending and find places to make cuts. If you aren't using budget software, I highly recommend this program. Or find something else that will work for you. But tracking your spending will be one of the most impactful ways to figure out how to save more and spend less.

And our situation is much like yours. We are both professionals with good jobs. I make more than DH, so it would make no sense for me to quit my job. And DH makes much more than child care would cost, even for two kids, so it would make little sense for him to quit either. We eliminated all of our student debt last year. We don't have any credit card debt either. Overall, we are pretty frugal, so finding ways to cut back can be difficult unless we cut back on some of our savings (retirement, extra mortgage payments, vacation fund, etc.).

ETA: 529 savings will probably have to wait until we finish paying off both auto loans. And we will probably ramp that savings up a lot more once baby #1 is finished with day care. I believe we will still have plenty of time to save for these expenses though, so I am not too worried.

 

[danygirl]

When number 2 was a year old we got an au pair. It made life manageable and was waaaay less than standard daycare. We did that for a few years. When number 3 came along one of our au pairs was in the US permanently and was our nanny for a bit, but at that point I started working part time

 

[Dakota731]

What about a home day care? My neighbor only charges $30 a child per day.

 

[WaltsMartini]

Guys, these are GREAT ideas! Here's what I know we can change so far:

Ask about a multiple child discount at day care?

I checked the daycare handbook and there is a $60 reduction in tuition if you add another child. Doesn't sound like a ton but it adds up to $720 a year!

When I was on maternity leave I also did half days for my oldest to save money.

How did I not think of this before?! This will save us $325 a month if we do this! So I can do that while on maternity leave, which means over 3 months saving a total of $975 - woo hoo!

Many of you mentioned cutting back on savings. As I work for state government and we are lucky enough to have a pension plan, I could put the IRA contributions on hold or cut back, which would free up $100 - $200 a month. Ditto with the 529 plan; we are doing a good job with DS right now, but with a new little one, we can put any "gift" money we receive for him/her in the 529, and take a break on contributions until daycare costs go away. This would free up $240 a month.

A number of you mentioned meal planning. I "kind of" do it now - probably 3 weeks out of 4 each month -but if I get DH on board and tell him that Sunday afternoons we need to prep for the week, I think that will reduce a lot of the last minute eating out we do. I also need to get DH on board with packing his lunches. He HATES leftovers, so he often ends up buying his lunch, which costs anywhere from $8 - $12.

And the biggest thing I'm trying to get DH to do - cut the cable cord! He is really clinging to the cable so he can watch Pittsburgh sports (Pirates/Penguins on Root Sports) - if he would agree to get rid of Root we could save almost $100/month!

So just by doing the above, I have "found" $550 - $650, not including the break in daycare costs we'll receive while I'm on maternity leave. Thanks everyone - I no longer feel like we'll be eating Ramen and sitting on milk crates, lol!

And - this:

We didn't vacation much during those years. Sometimes if there was a bonus at work, we went. And yes, that can be the hardest sacrifice. That's adulting.

Sigh - I do need to adult a bit more. Time to suck it up and adult, and Disney will be all the more sweeter when we finally have the money!

 

[kymom99]

I know it was a long time ago but the most I paid for child care was 125 a week for an infant. That was 17 years ago and in a good daycare facility. Guess it matters where you live.

As far as needing a bigger house, I would rethink that right now. We lived over 20 years in a little cape cod. Our housing expenses were very low which allowed us to splurge once in a while. my niece lives in that house now with 2 kids. They make good use of their space and are happy with the relatively low payments

 

[kydisneyfans]

#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.

#2-is it possible to change schedules to not overlap as much, meaning the kids are in daycare for 4 hours instead of 8? Can someone, or both, work from home. I haven't worked in an office since our son was 5, my wife took a small pay cut and a career change to also stay home. It completely eliminated the need for child care at all. The time with your child is something you would never get back.

#3-You must be in a high cost area, the best daycares in my part of the work are in the $160 a week range, $250 for 2 children. Home daycares are about $25-30 a day. I'd look around for cheaper options.

 

[tvguy]

I don't miss those days. My kids are 26 and 30 now, but I remember the money juggling well. Now that the kids are grown, and the house and cars are paid off, and I look at my paycheck today, I wonder how we did pay for child care and other kid expenses.

Some of the things we did at the time:
>Refinanced our mortgage, cut our payment by $300 a month.
> Dropped premium channels from cable TV. $25 a month savings there.
>When DW's tiny 15 year old Mercury Lynx needed $5,000 in repairs, and we clearly a bigger car, we bought a $5,000 used 7 year old Dodge Spirit ex-state car with 31,000 miles on it instead of fixing the old car.
>Dinner out was Dennys not Mortons.
> Instead of spending $3,000 to repaint our house, we used a week of vacation for a staycation and the family repainted the house for $250.

If you have watched Suze Orman or Gail Vox Oxley financial shows on TV, where they go line by line over people's budgets, you see, there are probably hundreds of dollars you spend on things that you consider necessities that are really unnecessary luxuries.

 

[QVCshopper]

After kid 2, I quit my full time job and immediately got a part time night job in my field. That was 11 years ago. We added kid 3 about 5.5 years ago. I work mostly at home but go into work twice a week, I'm currently about 70% full time with paid time off and various benefits, but not healthcare. I'm a full time stay at home mom, no daycare, and my husband takes over when I work. I don't regret the choice at all. We actually don't even live on my income--50% goes right into the 401k and we save the rest for kids college funds and such. It's really set us up pretty good. I definitely recommend reading The Two Income Trap--it has some amazing suggestions and ideas.

 

[yeahdisney]

Lovestimone really has great ideas. I realized I would have two also in diapers at the same time. So I decided to try and was successful; to breast fed them both for their first year. I pumped every time after they ate while off for maternity leave to have a bounty when I went back to work. And I potty trained as soon as I could.
For the first 5 years I worked park time, and every other weekend so DH or SIL had them and I worked second shift, so DH or SIL had them at night. So of course that helped with cost.
No grand vacations while they were small for a few years. And I cut back on retirement funding, I always invested whatever work matched.
Always took meal to work and I still do today.
Didn't go out a ton. Plus DD hated long car rides, she only like them at night when she was fussy. So no drive vacations either.

I think I read in readers digest a women named her kids something like Lexus and Mercedes due to their cost and the fact she wanted that type of car but couldn't afford it because of the cost of the kids
After I stopped paying day care, I kept saving that money. We bought a pool and deck with the saved money. And each year I buy the chemicals and any deck upgrades; new patio set at the end of the year clearances with that money.
And probably like everyone on the budget board I pretty much buy anything I can on sale.

 

[starry_solo]

OP: you mentioned that you work in state government. Have you checked whether your job is willing to let you go part time for a year or two or even more? I'm not sure what you do, but an attorney in my office did that for about 3-4 years when the office was willing to accommodate her (county government) but the office no longer allows it. She had two kids, about 2 years apart, so she went part time after the second child was born. It does mean less benefits, but if your spouse also works in state government, then it might work.

Also, not sure what you are doing health benefits wise, but I know another attorney who used to work in our office cut back on the health insurance since her husband was employed as a school teacher. Our employer gives us the option to waive health insurance, as long as you're covered on another group plan, and then we get a certain amount of money back in our checks (full time employees taking health insurance would normally get about $800/month to pay for health insurance and anything left over would be yours to keep; those who waived would get $500/month, but be required to at least take dental insurance, and anything left over is yours to keep.) So, that might be an option to look at (before they offered that option, she would take the health insurance and they would have double coverage, leaving no co-pays to pay)

Another option, can you look at another day care? And is there a day care that gives a discount for government employees in your area?