When we made the decision to have kids, we knew that it would be a huge financial undertaking. We live in a high cost of living urban area where you generally need two incomes to survive. I thought we were doing OK until a discussion on a blog got me thinking. Then recently, a friend confided to me that her family was in a huge financial crisis. They are not spendthrifts and I’m pretty sure that her husband makes the same or slightly less than I do. While we’re not stressing over finances (yet?), our incomes and expenses are similar enough to make me nervous.
My friend and her husband went through a long period of under-employment just as they started a family. Even if you don’t go for designer maternity clothes or a fancy nursery, having kids will stretch anyone’s budget. They moved to another city to escape a high cost of living area but this move meant a greater distance from family and friends. She also quit her job to stay home and is pretty adamant about not returning to work. I am pretty sure that they started relying on credit cards to make ends meet.
Once the husband found a job, their situation stabilized. However, they had zero savings, credit card debt and her student loan debt in addition to regular living expenses. In situations like this, one major car repair or unexpected medical expense became a major set-back.
In contrast, we’ve generally made better choices and have been luckier than my friend in terms of finances. Neither of us have student loans. We did not start a family until we had substantial savings. I continued working after having kids. We can also rely on family for some much-needed help with childcare.
I guess I’m worried because there are two ways of viewing our different financial outlooks. Either the oilandgarlic household is doing OK because of a combination of smart choices and luck (no student loans, no periods of under-employment or unemployment, outbidded on overpriced homes during the real estate bubble) OR it’s all an illusion because kid-related expenses are only beginning to catch up to us. In other words, my friend’s current situation is a crystal ball into our future.
Despite getting off to a better start, I worry about increasing childrearing costs, higher medical premiums and general cost of living increases in gas, clothing, and food. Other new expenses are avoidable but are saving our sanity, like gardeners, cleaning help and a part-time nanny. Very soon, I will have to crunch some numbers to see if our expenses are exceeding our incomes or if it’s more in my head. I do know for sure that we can’t save much right now and I wonder if this is how it started for my friend until it snowballed into credit card debt and desperation.
Do you ever feel like you’re one mis-step away from disaster? Do you live on one income, just in case?
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Has A Comment Ever Changed Your Final Decision?
When you blog regularly, it’s common to ask readers for advice for everything from financial to purchases to travel decisions. Is crowdsourcing the term? I’m too lazy to look it up.
The reason I’m asking is that I am tempted to ask for advice from time to time. I hesitate only because I wonder if I or anyone ever follows advice from their readers. Oftentimes it seems like the person receives a lot of good advice but makes the opposite decision, or actually has their mind made up anyway. I believe there’s science behind this, too, called “confirmation bias” (scholars, correct me if I’m wrong!). From my understanding, this means in general people simply pay more attention to views that confirm their own beliefs. Example: If you think all Asians are good at math, you will notice if an Asian person wins a Nobel prize for mathematics. If you have an Asian friend who is bad at math, you’ll assume that’s an exception to the rule. I’m sure there are many more and better examples of this in the political arena, of which I stay far away from!
I still remember a debt-blogger who asked readers if she and her husband should join her family on a “once-in-a-lifetime” trip to Europe. They did not have ailing relatives. Everyone else in her family was financially stable but did not have enough to subsidize her tickets/travel expenses. They would probably have to spend on higher-end hotels than if they had gone on their own. I would say that the answers were sort of split. Many people said “go for it” which in my mind is very easy to do when it’s not your money! A lot of people also advised her not to do it until you’re out of debt. I felt that those who were against it made better arguments. After all she had racked up debt due to lifestyle choices, not education loans or medical debt. To me, they had spent to enjoy their early 20s and should pay for it before going into debt for another fun adventure. This is tough for me to say because I love traveling and I also believe travel is worth the money; however, paying off a trip for years didn’t make sense even to me. Of course you could say that she followed the advice since most people said to “go”; however it was pretty clear that she had made up her mind before even asking the question.
As for me, my question would have been about whether moving to another rental house that is out of our real budget range but closer to my work is worth the trade-off (the classic time vs. money). I haven’t written about the move yet because I’m tired and a bit embarrassed by my/our bad financial decision-making skills. If I had asked, I’m sure I would have gotten good advice and I’m pretty sure I wouldn’t have listened either. Maybe someone would have suggested a compromise that would save time and also reduce the hit on our budget. However, we made the decision based on “wants”. We wanted to save time, but also wanted a larger house with a yard. We didn’t want to share walls. In other words, I didn’t think that the best arguments in the world probably would have swayed me. Of course two years down the line I might regret this move! Once I’m recovered from moving, I may write more about it.
Have you ever asked readers for advice and actually read a comment or comments that truly affected your final decision? I’m especially interested if you changed your mind on BIG decisions, like a job choice, moving, finance etc…
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Posted in Advice, random thoughts, travel
Tagged advice, blog, blog commenting, blogger, confirmation bias, decision making, finances, house, moving, readers, renting, travel