Four weeks ago, my wife and I welcomed our first child into the world – a healthy baby boy that, on this blog, we’ll call Financial Cub. I know – big news! I’ve been admittedly slow to share this information since obviously a lot has been going on, but now that it’s been a month, I think it’s time to get this news out into the world.
Looking back at it, our little boy couldn’t have come to us at a better time. It’s hard to think about it, but when our baby was born just a few weeks ago, the world looked very different. The current global pandemic was barely a blip on most of our radar screens. There were no special precautions at the hospital. We had visitors coming and going as they pleased. It’s a testament to the power of exponential growth that things can change so quickly.
In any event, mother and baby are all home safely and our little family is now hunkered down at home waiting until things can hopefully return to normal. Luckily, my wife’s family was able to meet and hold our little one before the epidemic broke out. My family, unfortunately, didn’t get the chance (my mom was originally scheduled to fly out to us in mid-March but had to cancel her flight due to the pandemic; she’s been able to see her grandson via video chat, which is at least better than nothing).
Needless to say, the circumstances we find ourselves in aren’t ideal, but on the bright side, this period of self-quarantine and social distancing is giving us plenty of time to learn more about this new family of ours.
A Moment Of Crisis – But We Were Lucky Too
It started to hit home for us that this pandemic was going to be a big deal about a week after we got home. Our governor issued a stay-at-home order about 10 days into the pandemic and as a result, our new baby has really only spent time with his parents during the entire course of his life. I worry that he’ll be scared of strangers in the future since there’s no telling when he’ll be able to start interacting with other people.
Our household income has also taken a big hit as a direct result of the pandemic. My wife had to close her practice in mid-March and it’ll likely stay closed for quite some time. That means she’s bringing in no income until she can reopen. If there’s any silver lining here, it’s that she was already going to be on maternity leave for the next few months, so if she’s closing her practice, now is probably a better time than any other to be closed.
On my end, blog income is down since advertisers are cutting back on their marketing budgets. That means my ad revenue and affiliate revenue are down (most bloggers are feeling this pinch right now).
My side hustle income is also down. I stopped doing Airbnb because of the baby, although I wouldn’t be doing it right now anyway due to the Coronavirus. My dogsitting income from Rover is now non-existent since people aren’t traveling right now and don’t need dogsitters. I can still make money doing food deliveries and grocery deliveries, but I have been shying away from these side hustles just because there’s some risk involved, although I still do them occasionally (for folks out there that are ordering food, seriously tip your delivery people because they are doing a lot of work for you).
With all that said, I think we’re still pretty lucky all things considered. Our baby was born in the first week of March, which meant that the birthing experience was ultimately fairly normal (or as normal as having a baby can be). If he’d been born just a week or two later, things would have likely looked very different. We’re extremely thankful that we didn’t have to worry about a raging pandemic while my wife was giving birth.
The decreased income also hasn’t been a problem for us due to some accidental planning that worked out well. I’ve kept a massive $42,000 emergency fund for some time due to my goal of maxing out my 5% interest savings accounts.
We also ended up with a large stockpile of cash in anticipation of our baby – and having that cash really gives us a lot of security right now. We ended up with all of this cash because, for the past year, we’ve opted to pay minimum payments on my wife’s student loans and put all of the excess payments that we would have made into a savings account. The idea was that by doing this, we could have the money on hand in case we had unforeseen issues with our baby. And if we didn’t need the money, we could take it and pay off the student loans with one click.
Right now, we’re probably going to continue to hoard this cash just because so much is up in the air.
Costs That We’re Thinking About At The Moment
As everyone likely knows, kids aren’t cheap. Here are some of the costs – direct and indirect – that my wife and I are thinking about right now:
Immediate Birth Costs. One of the strange things about medical care in the United States is that there’s no easy way to figure out how much it costs to actually have a baby. Other than checking to make sure that our hospital was in-network for our insurance, we honestly didn’t even have a ballpark of what the actual birth would cost. We recently received a few bills from the hospital and it looks like after insurance, we’ll be paying somewhere between $3,000 to $5,000 to have our baby. I have no idea whether this is reasonable or not. In any event, we’ll be using a credit card to pay this bill, so we’ll at least get some money back via the points we earn from credit cards. (I recently opened up another Chase Ink Preferred specifically for this purpose.)
Health Insurance. We have to add our baby to our health insurance plans. Since my wife and I both have our own businesses, we’re fully on the hook for this cost. I have an HDHP that I pay for through the state exchange (which gives me access to an HSA). My wife gets her health insurance from the group plan that she has with her practice. We’ve made the decision to put our baby on my wife’s health insurance since she has the better health insurance plan. I don’t know what this will cost yet.
Daycare Costs. It’s hard to even think about daycare at this point, but it’s something that we’ve had planned since my wife got pregnant last year. Our initial plan was to have our son attend daycare three days a week, with my wife and I each working four days a week and alternating taking care of our son on our off days. Daycare costs $1,404 per month, so this is not a cheap expense. In fact, once daycare starts, that will become our highest monthly expense – higher than our mortgage even. We had daycare scheduled to start at the end of May/beginning of June and we’re going to have to pay if we want to keep our spot, even if we decide to hold off on sending him to daycare until the pandemic passes.
College Costs. I set up a 529 plan for myself five years ago and have been putting money into it in order to get a state tax deduction. Our state lets us deduct up to $3,000 for 529 contributions, so we’ll continue to put $250 per month into the 529 in order to take advantage of this deduction. I use the New York 529 plan since I think it’s the best 529 plan (my state gives us a tax deduction if you contribute to any 529, not just our state 529 plan). This cost will have to increase at some point in order to fully fund future college costs, but for now, we’re just aiming to put $3,000 per year in order to take advantage of the state tax deduction.
Less Time Working. This is more of an indirect cost, but having a baby will obviously impact both me and my wife’s ability to make more money. With kids, we’ll necessarily have to work less, which will likely mean we earn less. It’s a trade-off we’re willing to make, but it is a trade-off nonetheless.
Excited About The Future
There’s a lot of doom and gloom out there with the ways things look, and even though I tend to be an optimist, I can’t seem to stop myself from reading all of the doomsday stuff that’s out there on the internet. It can scare you into thinking that the world is over.
The interesting thing, however, is that when you have a baby, the only assumption that you can work on is your belief that the world will get better. And it seems like every single time, the world absolutely does get better. Say what you will about the world we live in now, but it’s better than the world we lived in years ago.
I was listening to the Micromobility podcast a few weeks ago and the host of that podcast made an interesting point about what happens after big, societal changing events. Interestingly, instead of destroying the world, it often seems like great, productive things come out of it.
The endless Napoleonic Wars of the early 1800s led to the Industrial Revolution. World War 1 and the Spanish Flu led to the Roaring Twenties. The Great Depression and World War 2 led to the prosperity of the 1950s. Even the Black Death of the 1300s ultimately set the stage for the Renaissance.
I’ve got a lot of faith in people to improve, create, and innovate and we’re going to learn and create new things out of this crisis that we’re going through right now.
With a new baby in our lives, we’ll be doing the same thing – learning, improving, and hopefully making ourselves and the world a little better for this new life that is now in our hands. Things aren’t the most ideal right now. But I think the future is looking bright.