Holy Crap!, my wife is pregnant and life is about to change BIG TIME!
My head is spinning, primal hunter/gatherer instincts are setting in. Find food and water, secure shelter, wrestle beasts, protect the family! Time to review our behavior and make some financial changes ASAP…
Immediate thoughts in my head:
- Batten down the hatches
- Hoist the main sail
- Build cash reserves and liquidity
- Cancel all excess spending
- Kill cable TV and renegotiate cell phone contracts
- Stop going out to eat 5 nights a week damn it!
- Cancel gym membership to decrease costs but get yourself in fighting shape for Christ’s sake! Run in the cold and snow if necessary. You can’t carry a kid around if you have no endurance!
OK, let’s slow down and take inventory using a checklist:
Job – check, job security – questionable at best;
Passive income from investing - good, security – medium
Side project income – blogs, advertising and other – low but growing slowly, security – at this point I am not even sure, I would estimate – low
Health insurance: check, decent coverage, but deductibles are a little high in my opinion
Flexible Spending Account: check, covers all health insurance deductibles and will reduce my taxable income
Life insurance: check, policies for both myself and wife
Disability: check, through my job
Long-term care: check, through my job, pays 60% of pay if something happens
Will & estate plan: no, need to work on this
Review living situation: in progress, we live in a 1-bedroom apartment, clearly that is not going to cut it anymore.
Establish 529 College savings plan: no, need to do this.
Max-out 2011 retirement contributions: partially; my 401k is maxed-out, but the wife’s individual 401k contributions are in progress, we need to max-out here contributions and match.
Evaulate expenses: no, need to get on this focus and on our entertainment budget which seems to be our weakness
Increase savings rate: check, but I think we could probably increase savings by another 5% of after-tax income; will consider this one
I think is a pretty good list to get started, but I am sure I am missing something.
What steps did you take when you learned that you were expecting your first child? How did you go about re-prioritizing your expenses and spending to build up savings? Did you end up relaxing your budget to purchase important items, insurance or financial contracts as part of your preparation? Will I need a spreadsheet just to calculate the astronomical cost of diapers over time?
Would love to hear from my readers on this one…
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