Seven Areas of Family Finance

It has been two months since I left my job to become a full-time dad. It feels like the right decision now, but it’s easy to see why people don’t change their situation when they’re unhappy: personal inertia keeps people where they are. Finding a new job in something more appealing takes a lot of work– it could be months before something comes up– and what if the job (gasp!) pays less? It’s amazing that so many people are willing to sell their happiness for a pay bump.

So, yes, I have a sunnier disposition now that I’ve washed my hands of the corporate stink. However, Kathleen and I now have a new challenge: how do we adjust our lives to our new financial situation? We are, as a general rule, not extravagant people. We have saved up enough money to give us a nice runway into our new lives while Kathleen works on growing her business. But it’s not an unlimited supply of cash. For all intents and purposes, we are on a fixed income, so we have to make some practical decisions about how we are going to live, both day-to-day and in the big picture. Here are seven areas of family finance we’re thinking about right now.

1. Health Insurance

Employer-managed health care is stupid and unfair. I think the fear of losing health insurance is a stronger factor keeping people shackled to their desks than salary. It’s not all that hard to make money on your own, but if something terrible happens and you don’t have health insurance, well that can ruin your life on all sides.

My company provided affordable access to gold-plated health insurance, and I walked away from that while Kathleen was pregnant. We have access to COBRA, but that’s extraordinarily expensive. Our only real option is to sign up for insurance through the Affordable Care Act. I honestly have no idea how this will go, though I am curious, and I will be detailing the practical impacts that this decision had on our family.

I’d like to think if we focus on keeping ourselves healthy, this will be less of an issue, but I’m not so naive as to think that everything goes the way you plan. I’m also of the opinion that the political environment is moving away from our current system and toward something more accessible, but that’s more of a hunch than anything else. Could be a decade before see any significant change.

2. Housing

Portland is experiencing out-of-control housing price increases. Luckily, we own our home, so our mortgage means relatively stable housing costs (though mortgage principal is a form of savings). We have a studio apartment in our basement that we rent out, which covers a portion of our mortgage, so our net out-of-pocket housing cost for our house big enough for our family is less than most two-bedroom apartments in Portland.

We’re lucky to be in such a situation, but our housing situation was a major reason I felt comfortable quitting my job.

3. Transportation

We are a two-car family, but both cars are paid off. One is a 2014 Mazda 3 with 20,000 miles, and the other is a 2005 Toyota Corolla with 125,000 miles. There’s no commuting in the family (again: Kathleen works from home), and we have plenty of convenient stores within walking distance (including a grocery store and a hardware store). We also live on a major public transportation corridor, if the mood to take the bus or light rail ever strikes.

There are no plans to buy a new car until the engine falls out the chassis of one of our current vehicles. At the rate we put miles on the cars, Creature may have the chance to learn to drive in the Mazda.

4. Food

Even though I am an advocate for cooking at home for everyone, I still do love to go out. It’s especially tempting in Portland, which the Washington Post recently anointed the best food city in the country. But Kathleen and I have seriously ratcheted back our dining out. We’ve placed a restaurant ban on ourselves for the month of January, which we believe will help reset our habits for the rest of the year (and get us used to the fact that restaurants and babies aren’t always the best combination).

Cooking at home is cheaper, healthier, and there’s a lot of amazing food that comes out of our kitchen, anyway. Cooking at home also scales very easily (we often make enough food for dinner to eat the next day for lunch), so once Creature switches to solid food, it shouldn’t have a significant impact on our grocery bill.

5. Entertainment

Our digital entertainment budget needs to be re-evaluated. Right now, we subscribe to a high-end TV package that probably needs to be scaled down. I’m going to have to do a digital entertainment audit and see where the money is going, and how much use we get out of each service (we subscribe to cable, Netflix, and Amazon Prime). Spending less time in front of the TV is probably not the worst thing for us.

Meanwhile, Kathleen’s business is web-based, so our Internet service is effectively subsidized. 

Other major sources of entertainment:

Movie theaters are going to become distant memories once Creature is born so that expense will drop to zero soon enough.

Kathleen and I are both bookworms, and the library might be my favorite place in the world. I don’t spend a ton of money on books, but I imagine I will be spending a lot more time going to and from the library.

6. Pets

Technically, Creature will be the fourth member of our family. Our dog Stanley made us a starter family back in October of 2013 when we got him as a puppy. We love him with all our heart, but he’s still a line item in our monthly budget. He’s covered by a monthly pet insurance plan, and of course, we have food and general pet care costs. In a year where Stanley doesn’t require an emergency trip to the vet (he has two at this point in his life), Stanley costs us about $40 per month. We can handle an unexpected trip to the vet now and then, provided he doesn’t make it a regular occurrence.

7. Children

I’ll be keeping a close eye on spending during Creature’s first year, excising the frivolous spending, and avoiding the spending traps that a lot of parents get themselves into. Naturally, we need diapers and some things to get the baby comfortable. The good news is we have a slew of parents trying to unload boxes of stuff they no longer need for their children, and Kathleen and I are happy to take all the hand-me-downs people are willing to offer. But I’m going to participate in as little of the Parental Industrial Complex as possible. For instance, why on earth would I buy baby food when I can just puree my own concoctions with the fruits and veggies we buy?

An Ongoing Process

Kathleen and I still have some work to do when it comes to figuring out our monthly expenses. Over the next few weeks, I’m going to conduct a few personal audits to figure out how we can keep our spending in check. It will help build good financial habits in the short term, but it also means we’ll be able to save more for our family’s future as Kathleen’s business grows.

I’ll keep you posted.