(Closed) We want a baby but have too much debt..

posted 5 years ago in Emotional
Post # 3
Member
1066 posts
Bumble bee

@chubbypanda:  Think about what you want for your baby. Believe me waiting a couple of years until you are in a better position will be better for you both and your lovely new addition. To stop the urge borrow someones elses for babysitting, meet some teenagers,( Don’t let this put you off completely), or get a dog..:)

Post # 4
Member
2295 posts
Buzzing bee
  • Wedding: April 2013

@chubbypanda:  First off, I don’t know much about finances in Australia, so I’m assuming the exchange rate and expenses are roughly equivalent to a city in the US. If I’m off, ignore the rest of this.

You guys earn over $180k a year. I don’t mean to be blunt, but you don’t have a debt problem. You have a spending problem. And I say that as someone who is in the same income range as you, so I understand that not that much comes home after taxes, retirement, expenses, etc.

So you have $40,000 in debt. Let’s set aside the inheretence.

TWO YEARS to pay off that debt? That’s crazy. Let’s say you bring home $90,000 a year. In the US, you’d likely be bringing home a little more than that, but let’s just cut it in half and call it good.

Live on $50,000 and pay off that debt in a year. Or less.

How much is your rent? Do you have a budget where you know where all your money is going? How much “stuff” are you buying each month?

You need to cut your lifestyle WAYYYY back – not to rice and beans, but way below what you’re used to and pay of that debt stat. That inheretence can then be a downpayment on a home. When he gets his bonus, don’t spoil yourselves with a purchase because you think he earned it and it’s a “bonus” – put it to debt. And you’ll be used to living on less which is PERFECT practice for starting a family.

Check out Dave Ramsey. Until you get spending under control, you can’t out-earn your behavior.

$40k in debt is totally managable on $180k in income. It’s easier than the same percent of debt on a lower income because you should have more disposable income.

Post # 5
Member
236 posts
Helper bee
  • Wedding: May 2013

@NAvery:  +100

I completely agree with your post. Living beyond ones means and overspending is differently than a debt problem. You two should be able to pay off the debt sooner than 2 years if you reign in your expenses and pay it down asap.

Then, start building up a savings. If you are planning on bringing a child into this world, it is irresponsible to not have an emergency fund. What if your Darling Husband gets laid off, what will you do then? You should be able to save a considerable amount up within a year or two on that income.

Post # 6
Member
24 posts
Newbee
  • Wedding: July 2012

I agree NAvery… That is a really good income! I live in Australia and my husband and I are on $52K each. We have a $245K mortgage and $17K in personal loans and still have a really good lifestyle without kids for now.

I understand where you’re coming from but if you feel you’re in too much debt now, how will you cope with another person who is dependant on your income. Will you be able not work for a period of time and just live off DH’s income to cover both of your debts as well as the costs of a baby? Are you wanting to own your own home before having children?

$40K of debt can be done in a year on your income, I guess it just depends on what you’d be willing to cut back on

Post # 7
Member
2907 posts
Sugar bee
  • Wedding: June 2013

@chubbypanda:  Remind yourselves that you are doing a wonderful, loving thing for your future children by waiting to have them until you’re in a better place financially! Babies are stressful enough as it is, without worrying about debt or finances, so making sure you’re as settled and debt free as possible will make the whole thing a much better experience. 

Also, remind yourself of all the fun things you can do before kids that might be harder to do later. I’ve had total baby fever since getting engaged a year ago, but now that TTC is less than a year away for me, I’m thinking about all the things I’m going to miss during pregnancy and while raising a child. Like, Fiance and I were reminiscing about our trip to New Orleans, and I realized that if I’m pregnant by this time next year, I won’t be able to drink or eat raw oysters or do most of the things I was hoping to do on our next trip there! And when there are kids in the picture, I probably won’t be able to run out for an impromptu five hour brunch with my girlfriends, or spend an entire day in bed with Fiance watching dumb movies and eating cereal for dinner. Thinking about all the good stuff there is to enjoy about not having kids for the moment makes me glad I’ve slowed my roll a bit. So… Try to make the most out of the next two years. Eat the raw oysters and drink the beer and enjoy some laziness every now and then! Maybe plan a weekend trip somewhere that you would have a hard time enjoying with kids. And remember that you won’t get this time back! 🙂 Enjoy your “just the two of us” time with your husband and your freedom (and your sleep, from what ive heard) while it lasts!

Post # 8
Member
2254 posts
Buzzing bee
  • Wedding: October 2012

OP, I think @NAvery gave you great advice. Focus on paying off the debt within a year if you and your SO really want to progress forward with the plans to have children. Darling Husband and I are putting off having kids for at least 3 more years until he’s done with his program so I definitely know how you feel. However, it will definitely be worth the wait to have the load of financial issues lifted off you before you venture into parenthood.

Post # 9
Member
593 posts
Busy bee
  • Wedding: March 2013

Not to sound rude but how can you not afford a baby?? You make over 180,000 a year. and your debt is really insigicant.. I am not working right now (in school) and my Fiance only makes 40,000 per year, he has 24,000 in loans, I have 29,000 and we are not exactly struggling. No we wouldn’t have a child right now but I feel like once I finish school in May and start working (salary for my field will start out around 45,000) that we could afford to pay our debt and raise a child. But we are very good with the money we do. We still enjoy dinners out and buy things for ourselves occasionally but we do not blow money. We save money everywhere we can.

Post # 10
Member
7753 posts
Bumble Beekeeper
  • Wedding: November 1999

@NAvery:  +1. I am Australian, and we as a couple have never been earning remotely close to 180k, and have 3 kids. I don’t see how you can’t pay off $40k debt when the two of you are bringing in that much money. The only reason I can imagine is you have a huge rent due to living in a very upmarket area. If that’s the case, I suggest moving to a cheaper area.

Or maybe you should draw up a budget and keep tabs on where the money goes.

That said (a) you’re still quite young (I had my first at 29), and (b) there’s a pretty generous family payment setup here in Australia.

Post # 11
Member
2287 posts
Buzzing bee
  • Wedding: Central Park

I agree, that you guys definitely have room to pay off your debt within a year or two. At least 10% of your income should go straight to paying off your debts, starting with the highest APR, or if they’re the same, the lowest balance. Cut up credit cards if they’re an issue. Start budgeting everything. Find a cheaper way to buy groceries. Eat out only once or twice a month. Pack your own lunches. Buy clothing on sale, and only if you really, really need them. If you get your hair done/colored or nails done then try going longer between sessions or DIY if you can.

I don’t know what your cost of living is where you are in Australia but in Florida a 180K income is a LOT and you should definitely be able to pay down your debts within a year or two.

Automatic bank transfers from your checkings to your savings are the best. I just became debt free (except the car loan) after a year of hard budgeting. Make a list of monthly expenses that are mandatory (rent, utilities, groceries, gas, etc) and stuff that you’d hate to live without (eating out for date night, cable, internet) and stuff you like but don’t really need (entertainment, buying lunches, new clothes/shoes, hobbies) and budget for everything.

One of the ways we cut our bills was to get rid of cable television. Now we only use Netflix. We cut cable for about $60/month, and Netflix only costs $8/month.

We also switched from buying name brand food at Publix (nice but expensive grocery) and now buy off-brands at Aldi’s Supermarket and fresh produce/meats at a local grocery/farmer’s market.

We rarely go out to see movies, and we try to catch them at the dollar theater when we do (movies are $1.50 to 2.50 depending on the day). We also only go out to eat twice a month on payday. Everything else is cooked at home. Lunches are packed from leftovers, or we make sandwiches.

You want to have a baby. That’s fantastic! It’s good that you realize that you need to get your debt down first. But you also need savings! Babies cost a LOT. My FH and I are going to want to start having kids in 2-3 years. I’d like to have my auto loan debt down to half and $3,000 in savings before we TTC.

Every time you want to buy something that you don’t really, really need just ask yourself “is this worth delaying having a child for? Do we really need this, or do we just want it?”

Post # 13
Member
1006 posts
Bumble bee
  • Wedding: November 1999

$46k isn’t peanuts :/

Post # 14
Member
2295 posts
Buzzing bee
  • Wedding: April 2013

@chubbypanda:  That’s still less than half of his income, you’re still bringing home over $70k plus him plus yours. My numbers actually work out perfectly with that tax scenario.

It’s great that you’re putting together a new budget. I have found it is KEY to have every dollar accounted for BEFORE the month begins.

Also, if you’re using plastic (credit cards or debit cards), even if you are paying them off every month – be aware that studies show you spend way more when using plastic. I might suggest going to cash for awhile. Most people are really resistant to that suggestion… and let me tell you, it WORKS for most people who have been used to using plastic. You just have to set limits that you can’t take out more cash than your budget says.

I’m from Chicago, which isn’t as expensive as Sydney but IS an expensive major city, so I get the cost of living. It still doesn’t account for where $100k a year is going.

You CAN do this. That debt can be gone next year at this time if you buckle down. Maybe you could set an agreement that when the debt is down to $10k or something you can get pregnant? I personally would want the debt gone and 3 – 5 months of expenses in savings, but I also know Australia has a little different social system that probably provides some level of security so you could start on that sooner.

Here’s one parting thought – and this is from Dave Ramsey. High-income earners tend to try to out-earn their spending/habits. Especially those in sales. Once you make a high income, you feel like you can always just find a way to make more. It truly does not matter how much money you make if you don’t limit your spending to less than that (and substantially less than that if you have debt to pay off). You could make $5 million dollars a year – if you spend what you bring in, you’ll always be broke.

Post # 15
Member
7753 posts
Bumble Beekeeper
  • Wedding: November 1999

@chubbypanda:  On $130k he should be taxed at “$17,550 plus 37c for each $1 over $80,000” ( http://www.ato.gov.au/content/12333.htm ) which means about $36k tax if he earns $130k. Then a bit for Medicare Levy and maybe a penalty if you don’t have private health cover, but I still can’t see how it can be 60k. Why the rest… HECS/HELP debt?

In any case, if the two of you are taking home 120k / year, that’s still 10k/month. Ask yourself (a) how much of that is rent/mortgage and can we reduce it, (b) where does the rest go.

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