Help 2 Engineers Start a Family (It is finally Happening!!)

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Topic Author
DavyJones
Posts: 21
Joined: Sun Jan 30, 2022 8:54 am

Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

Hello Bogleheads!! I have now lurked on this website for about 5 years. I posted 3 years ago when we first started discussing having a kid, but it didn't happen for us. We took some of the advice from last time and have incorporated it thank you very much!! The great news is that we have now recently found out we are pregnant with our first. Due Date in November 2024.

I anticipate having a child will drastically change our lives in many ways, and want to make sure as many things as possible are in order before the baby arrives. I am a big believer in eliminating stress at home, so we can keep the mental capacity to deal with high stress jobs and perform well at work....however I imagine having a baby will add stress at home. I am already stressed about this personally and financially as expenses increase and the baby isn't even here! I don't like the feeling of being stressed at home, so looking to bogleheads for anything I can be doing financially to alleviate that and better prepare for our future. Neither of us intend to take a step back career wise.

Age: 31 (him) 32 (her) MCOL major city in Texas (but getting more expensive!) both engineering upper/mid level managers

Household Base Income: 173k (him) + 235k (her) = 408k/year (both recent large promotions)
Average Household Bonus Income: 52k (him) + 60k (her) + 40k (combo of RSUs and Options refresh per year, 4 year vest) = 152k/year total variable comp. Not guaranteed, both have potential for this to go up and down each year but has been fairly steady.
Total Yearly Comp: 560k

Debt: None other than house (paid off student loans and reasonable car loans by using all bonuses for the first few years)

Retirement Accounts: 565k total

Her 401k: $249,000 total
Large Blend Equity Fund: 25% (.011%)
Equity Growth Fund: 15% (.019%)
Mid Cap Equity: 8% (.019%)
Equity value Fund: 7% (.019%)
Small Cap Equity: 5% (.029%)
Dev & Emrg Mkts: 19% (.078%)
Bond Fund: 11% (.019%)
Foreign Large Blend: 9% (.040%)
Summary: 89% stock, 10% bonds

His 401K: $291,000 total
DODIX Doge and Cox Income -- Bonds : 7% (.42%)
FXAIX Fidelity 500 Index: 45% (.015%)
VMGMX Vanguard Mid Cap Growth: 6% (.070%)
PIUIX Hermes International Equity : 20% (.94%)
Company Stock Via ESOP (employee owned company): 22%
Summary: 71% Equity, 7% Bonds, 22% Employee Stock

His Roth IRA: 15k total
SCHB Schwab US Based Broad Market: 80% (.03%)
SCHF Schwab International Equity: 20% (.06%)

Her Roth IRA: 0k
Trying to convince her that backdoor roth is not illegal ha. She says I can go to jail by myself


Taxable Brokerage: 474K total
SCHB Schwab US Based Broad Market: 80% (.03%)
SCHF Schwab International Equity: 20% (.06%)

Cash:
40k emergency fund
60k additional cash (Don't know why, just helps lower stress when I dont have to think about fixing the car or the AC when it goes out)



Housing:
700k price (bought it for 530k 4 years ago) -- recent comps have it worth 800k but I keep it conservative on my spreadsheet
Mortgage Remaining 387k (refinanced to 2.6% thanks bogle heads refinance thread!)
Great neighborhood near downtown, great public elementary school. Bad public high school. (Unsure about private school, used to not like the idea at all...but we do really like our neighborhood)
We do want to upgrade to a bigger more expensive house when we have kid #2 but that is a few years from now

Current Savings Plan:
(Her)401k max + 4% of salary match
(Him) 401k max + 40-60% match of total contribution depending on year
50K per year to taxable (4k per month)
80% of all bonuses invested in taxable as well. 20% of bonuses spent on vacations/other wants
Any remaining left over each month we also sweep to taxable account

Questions:

1. How do we best prepare for having a child? Financially, career, personally?
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.

2. How to best fund college?
a. Current plan for 529 is to superfund 50k with this year’s bonus and then never contribute again. Should be worth 170k by the time the child
is 18. Anything else we need to pay for will just pay out of taxable. Thoughts?

3. Pros and Cons of Nanny vs. Daycare?
a. We really like the idea of the flexibility with a nanny, we both see co-workers miss a lot of days due to daycare illnesses that having a nanny
would avoid. Plus we like the added flexibility But they are obviously very expensive which I don't like.

4. How do we retire by 53-55?
a. We really like the idea of retiring when we send our second kid to college in 20-22 years at 55 years old. We would like to make it an official goal of ours and start working towards that. Any suggestions? What do we need to do?


5. Any other comments about our financial situation? How can we improve and optimize?
Last edited by DavyJones on Mon Jul 08, 2024 2:55 pm, edited 1 time in total.
jhblegend
Posts: 25
Joined: Tue Apr 30, 2024 8:18 am

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by jhblegend »

DavyJones wrote: Mon Jul 08, 2024 2:22 pm Hello Bogleheads!! I have now lurked on this website for about 5 years. I posted 3 years ago when we first started discussing having a kid, but it didn't happen for us. We took some of the advice from last time and have incorporated it thank you very much!! The great news is that we have now recently found out we are pregnant with our first. Due Date in November 2024.

Retirement Accounts: 565k total

Her 401k: $249,000 total
Large Blend Equity Fund: 25% (.011%)
Equity Growth Fund: 15% (.019%)
Mid Cap Equity: 8% (.019%)
Equity value Fund: 7% (.019%)
Small Cap Equity: 5% (.029%)
Dev & Emrg Mkts: 19% (.078%)
Bond Fund: 11% (.019%)
Foreign Large Blend: 9% (.040%)
Summary: 89% stock, 10% bonds

His 401K: $291,000 total
DODIX Doge and Cox Income -- Bonds : 7% (.42%)
FXAIX Fidelity 500 Index: 45% (.015%)
VMGMX Vanguard Mid Cap Growth: 6% (.070%)
PIUIX Hermes International Equity : 20% (.94%)

Slam this expense ratio to the floor, assuming there are index international equity funds available. IMO, you are both far too young to hold any bonds.

Company Stock Via ESOP (employee owned company): 22%
Summary: 71% Equity, 7% Bonds, 22% Employee Stock

Diversifying away from company stock may be advisable, but agree it is difficult if a. you believe in the company and b. it has performed well recently

Her Roth IRA: 0k
Trying to convince her that backdoor roth is not illegal ha. She says I can go to jail by myself

This is funny :D Perhaps you could have her watch The Money Guys on this topic? I think they do a good job of breaking down how/why it is allowed by virtue of past legislation.

Cash:
40k emergency fund
60k additional cash (Don't know why, just helps lower stress when I dont have to think about fixing the car or the AC when it goes out)

Not a bad thing, as long as those additional funds are earning a competitive APY

3. Pros and Cons of Nanny vs. Daycare?
a. We really like the idea of the flexibility with a nanny, we both see co-workers miss a lot of days due to daycare illnesses that having a nanny
would avoid. Plus we like the added flexibility But they are obviously very expensive which I don't like.

I like this idea, especially when both your incomes relative to the salary of a nanny is low

4. How do we retire by 53-55?
a. We really like the idea of retiring when we send our second kid to college in 20-22 years at 55 years old. We would like to make it an official goal of ours and start working towards that. Any suggestions? What do we need to do?
would avoid. Plus we like the added flexibility But they are obviously very expensive which I don't like.

Because IRA and 401k dollars are generally "locked up" until 59.5, a taxable brokerage will be a necessary bridge account.
Firstly, congrats! Secondly, there is a lot to unpack here. Perhaps the community can pick and choose inquiries to answer ;)
Topic Author
DavyJones
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Joined: Sun Jan 30, 2022 8:54 am

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

Thank you for the response jhblegend. Ha I know a lot of detail... was trying to follow the suggested format.
RetiredAL
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Location: SF Bay Area

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by RetiredAL »

Understand before you get frustrated, that engineering logic will have no relevance with an infant.

It's a discovery process to find what works for both the parents and the baby.
zag00
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by zag00 »

You have an excellent income and a healthy retirement/taxable balance to make this transition quite easy. Babies are cheap for the 1st couple of years IMO especially if no health issues arise. Consider stacking some additional cash while your wife is out on maternity leave.

The price of daycare is definitely astronomical and the cost of a nanny could potentially be justified at your income level. As they get older the social aspect when they are 3yr+ is fun to watch. Kid's will get sick, you have PTO - non issue here IMO.

Your 529 plan is a good one and likely sufficient with some minor additions required - if any.

Figure out your retirement number and work backwards IMO. I imagine you have enough discretionary income to do so.
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

RetiredAL wrote: Mon Jul 08, 2024 3:03 pm Understand before you get frustrated, that engineering logic will have no relevance with an infant.

It's a discovery process to find what works for both the parents and the baby.
haha good advice. Noted.
TBillT
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by TBillT »

We do not know what tax law changes might come down in future years. But on the Company stock in the 401K, there is potentially the NUA option which is attractive if the stock appreciates substantially. The ideas there, keep the lower cost basis stocks as you rebalance.
Dottie57
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Location: Earth Northern Hemisphere

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Dottie57 »

Recency bias =. No bonds in asset allocation.

Have at least 10%. You are young.

10 years before you retire start moving to more bonds.
Hebell
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Location: Madison WI

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Hebell »

Female retired electrical engineer here. In the first four months or so after our daughter was born, I had trouble doing rapid calculations in my head. It was EXTREMELY DISTURBING. Scary even. Almost certainly hormonal. But it all came back. I hated it, as it detracted from an otherwise precious time.
hafjell
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Joined: Tue Nov 10, 2015 7:49 am

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by hafjell »

Hire the nanny. It will give you so much quality of life. You make enough to afford it. You have no idea how hard it's going to. Plan for REALLY hard. You may get lucky with a great sleeper and non-fussy eater. There may be few problems for the first few years. Even if that happens, a nanny will really help you stay focused on work and life. We had no help and are still struggling even though the kids are in school fulltime and healthy.

And a piece of advice which will likely be disagreed with: don't be afraid to buy the bigger house a bit early. We have seen the market and rates run away from us because we bought the perfect house for 2020. We are locked in by rapidly appreciated values / asking prices and the golden rate. I wish we had bought more house earlier. Everyone told us we were being smart at the time...now I realize as your children grow, your house shrinks. This assumes the market is healthy with normal appreciation.
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luminous
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by luminous »

hafjell wrote: Mon Jul 08, 2024 4:07 pm Hire the nanny. It will give you so much quality of life. You make enough to afford it. You have no idea how hard it's going to. Plan for REALLY hard. You may get lucky with a great sleeper and non-fussy eater. There may be few problems for the first few years. Even if that happens, a nanny will really help you stay focused on work and life. We had no help and are still struggling even though the kids are in school fulltime and healthy.
Second this, completely. There is more than just childcare to consider: there is laundry, cooking, cleaning. Depending on the area and the nanny, some will take on some of those tasks. Think of it as an investment in household stress reduction.

I'd also urge you to practice letting go. Let go of long term plans, expectations, assumptions. You are creating new human beings, who knows how your lives will change? You can't deduce these things in advance. My hopes and dreams shifted quite a bit since I had my children, and I love my life. So yes, have plans, be prudent, but be open to change and evolution as well.
67/12/21 US stock/international stock/bonds. Bonds capped at 10x annual spending. Semi-retired as of 2022.
will86
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by will86 »

DavyJones wrote: Mon Jul 08, 2024 3:38 pm
RetiredAL wrote: Mon Jul 08, 2024 3:03 pm Understand before you get frustrated, that engineering logic will have no relevance with an infant.

It's a discovery process to find what works for both the parents and the baby.
haha good advice. Noted.
second that.
this retired engineer often observed when raising a family, that understanding people/family was much more challenging than the engineering occupation
lillypie
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Joined: Fri Jul 09, 2010 8:08 pm

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by lillypie »

Be open to your point of view on work changing. (Female engineer here - Just early retired, but that was always the plan) It doesn't mean it will, but if it does, that is okay. You will have a new priority and that pull is strong! Financially you are already prepared. All that advanced savings gives you options.

We front loaded some in a 529 (somehow nailed the covid drop on accident) Plan the same, cash flow any remaining later.

Nanny will cost more and while definitely more flexible ($$$), they also get sick and miss work or have their own personal vacation days. I think missing some work with a child is unavoidable and definitely can have a stigma. Can either work from home at times to juggle this?

For early retirement you need to set a goal, then a plan and grind it out. It does not mean you have to live on nothing, but you do have to make a savings plan to support the goal. How big is the house? I would not necessarily get a bigger house with bigger cost. But this is another choice you have to plan in. (see above! You may change your mind as you adapt to being parents)

Kids don't have to be expensive and you can still be a great parent. We live in a HCOL area and find all the free fun stuff to do. Libraries are great resources when they get older. I would buy everything used (better yet join your local "buy nothing" group!) ,even a stroller set. They outgrow all that "stuff" fast.
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

zag00 wrote: Mon Jul 08, 2024 3:07 pm You have an excellent income and a healthy retirement/taxable balance to make this transition quite easy. Babies are cheap for the 1st couple of years IMO especially if no health issues arise. Consider stacking some additional cash while your wife is out on maternity leave.

The price of daycare is definitely astronomical and the cost of a nanny could potentially be justified at your income level. As they get older the social aspect when they are 3yr+ is fun to watch. Kid's will get sick, you have PTO - non issue here IMO.

Your 529 plan is a good one and likely sufficient with some minor additions required - if any.

Figure out your retirement number and work backwards IMO. I imagine you have enough discretionary income to do so.
Thank you for the response!
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

TBillT wrote: Mon Jul 08, 2024 3:43 pm We do not know what tax law changes might come down in future years. But on the Company stock in the 401K, there is potentially the NUA option which is attractive if the stock appreciates substantially. The ideas there, keep the lower cost basis stocks as you rebalance.
What is NUA? Haven't heard of that before. I do not like how much company stock is in my 401k either, but it grows every year and gets a match. I have backed it down in my savings and try to do more towards traditional investments in my 401k now to slow it down.

Trying to get it closer to 10% but its going to take a while.
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DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

Hebell wrote: Mon Jul 08, 2024 3:47 pm Female retired electrical engineer here. In the first four months or so after our daughter was born, I had trouble doing rapid calculations in my head. It was EXTREMELY DISTURBING. Scary even. Almost certainly hormonal. But it all came back. I hated it, as it detracted from an otherwise precious time.
haha you just terrified my wife. She's the smartest person I know, so that will be interesting...
er999
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by er999 »

DavyJones wrote: Mon Jul 08, 2024 2:22 pm
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.
My suggestion is to be open to the possibility one of you might want to stay home for awhile.

For college savings I’d get the fidelity 2% cash back card and have it automatically deposited in the 529. My coworker did that at her child’s birth at had $50k in the account just from those contributions plus investment returns at age 18. That would be a nice supplement to your superfunding 529 plan.
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

luminous wrote: Mon Jul 08, 2024 4:32 pm
hafjell wrote: Mon Jul 08, 2024 4:07 pm Hire the nanny. It will give you so much quality of life. You make enough to afford it. You have no idea how hard it's going to. Plan for REALLY hard. You may get lucky with a great sleeper and non-fussy eater. There may be few problems for the first few years. Even if that happens, a nanny will really help you stay focused on work and life. We had no help and are still struggling even though the kids are in school fulltime and healthy.
Second this, completely. There is more than just childcare to consider: there is laundry, cooking, cleaning. Depending on the area and the nanny, some will take on some of those tasks. Think of it as an investment in household stress reduction.

I'd also urge you to practice letting go. Let go of long term plans, expectations, assumptions. You are creating new human beings, who knows how your lives will change? You can't deduce these things in advance. My hopes and dreams shifted quite a bit since I had my children, and I love my life. So yes, have plans, be prudent, but be open to change and evolution as well.
Thank you. Good advice.

We are really struggling with the idea of "lets throw away an additional 20-30k per year" on a nanny. Don't want it to be one of those things that now we can't retire early because we spent that extra money because we couldn't "tough it out" with daycare... a huge majority of Americans "tough it out" with daycare every single day. Don't want to regret not toughing it out. Agreed would be extremely convenient though.
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

lillypie wrote: Mon Jul 08, 2024 4:42 pm Be open to your point of view on work changing. (Female engineer here - Just early retired, but that was always the plan) It doesn't mean it will, but if it does, that is okay. You will have a new priority and that pull is strong! Financially you are already prepared. All that advanced savings gives you options.

We front loaded some in a 529 (somehow nailed the covid drop on accident) Plan the same, cash flow any remaining later.

Nanny will cost more and while definitely more flexible ($$$), they also get sick and miss work or have their own personal vacation days. I think missing some work with a child is unavoidable and definitely can have a stigma. Can either work from home at times to juggle this?

For early retirement you need to set a goal, then a plan and grind it out. It does not mean you have to live on nothing, but you do have to make a savings plan to support the goal. How big is the house? I would not necessarily get a bigger house with bigger cost. But this is another choice you have to plan in. (see above! You may change your mind as you adapt to being parents)

Kids don't have to be expensive and you can still be a great parent. We live in a HCOL area and find all the free fun stuff to do. Libraries are great resources when they get older. I would buy everything used (better yet join your local "buy nothing" group!) ,even a stroller set. They outgrow all that "stuff" fast.
any suggestions on balancing engineering/motherhood/saving enough money to retire early? Sounds like you lived the exact life we want just really scared we are going to up our expenses dramatically to take care of our child in an attempt to protect our career goals and then mess up our personal goals as a couple. -- question from my wife
Last edited by DavyJones on Mon Jul 08, 2024 5:08 pm, edited 1 time in total.
Topic Author
DavyJones
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by DavyJones »

er999 wrote: Mon Jul 08, 2024 4:53 pm
DavyJones wrote: Mon Jul 08, 2024 2:22 pm
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.
My suggestion is to be open to the possibility one of you might want to stay home for awhile.

For college savings I’d get the fidelity 2% cash back card and have it automatically deposited in the 529. My coworker did that at her child’s birth at had $50k in the account just from those contributions plus investment returns at age 18. That would be a nice supplement to your superfunding 529 plan.
Not going to entertain one of us staying home. Both find a lot of fulfillment in our careers (plus the financial opportunity cost). Thank you for your input though.

The credit card idea is an interesting one! Hadn't thought of something like that.
bombcar
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by bombcar »

The hormonal changes aren’t only for the wife let me tell you.

Or at least I like to think so.

Make time for your child. Dedicated, scheduled time that is as important as business meetings or any of the other pressures on us in life.

The children can’t schedule your time and are easy to skipi, but let me tell you they grow up much MUCH faster than all the numbers seem to say …

It’s not throwing away on a nanny. Check how much it will actually cost after all the finances are taken into account and look for assistance both from government (often on taxes) and from companies.

It’s quite likely that $30k a year through starting kindergarten would be worth as much or more than an Ivy League education.

Many people do without, but many people also don’t work when they have small kids (be your own nanny!)

Nanny into daycare is certainly an option but - those first few years are so precious. A nanny would mean junior is always around.

As to balancing the main thing I’d say is be continually open and discussing what you wanted and what you want now and what you’d like later. The more you save the less you spend the more flexible you’ll feel. If you combined pull down $300k and most of that is spoken for you can feel quite trapped. Children change everything and you might be highly surprised to meet yourself a few years from now.

Another thing: babies do NOT understand money or value or much beyond love. Small kids are just as excited going to the local park as they are going to Disneyland - so don’t feel scared to bring them if YOU want to go, but trips may be better saved until they’re older and can appreciate it more.
lillypie
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by lillypie »

any suggestions on balancing engineering/motherhood/saving enough money to retire early? Sounds like you lived the exact life we want just really scared we are going to up our expenses dramatically to take care of our child to project our career goals and then mess up our personal goals as a couple. -- question from my wife
To be honest, I didn't have the desire to climb the ladder and started planning FIRE early when I realized I didn't want to work for "the man" (literally, because they are mostly men). I also had the kiddo later in life (we are one and done by choice) with the nest egg all put in place...but you guys also have a great nest egg already that I am pretty sure exceeds where we were when we had the kid. The balance is hard and the scale will have to tip a direction (example, get nanny that cost more money, but that forces work more away from home (desired career?), work longer for $$). Also, she will bear more of the mental burden of home/kid...it is just what happens to Moms as much as you will try to support. There will be lot's of doctor visits the first year as well as her upcoming medical appts pre-baby. None of this is to scare anyone! Just info that I think you already know that some things may change. As you said, people figure this out everyday and you guys will too. As they say, the days are long and the years are short...it is SOO true...don't miss what really matters. Also Happy Wife Happy Life! HA

PS. The baby brain thing is real and weird! But it will come back.
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TomatoTomahto
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by TomatoTomahto »

bombcar wrote: Mon Jul 08, 2024 5:00 pm It’s not throwing away on a nanny. Check how much it will actually cost after all the finances are taken into account and look for assistance both from government (often on taxes) and from companies.

It’s quite likely that $30k a year through starting kindergarten would be worth as much or more than an Ivy League education.
+1

Arguably what we spent on Montessori was as important as the Ivy League education.
I get the FI part but not the RE part of FIRE.
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TomatoTomahto
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by TomatoTomahto »

DavyJones wrote: Mon Jul 08, 2024 4:57 pm Not going to entertain one of us staying home. Both find a lot of fulfillment in our careers (plus the financial opportunity cost). Thank you for your input though.
We didn’t initially entertain it either. I was a pretty good software developer making middle six digits. Fulfillment and $. But, 9/11 put a kink in our plans. I became a SAHD and loved it; I was a good software developer but, if I say so myself, I was a wonderful father.

ETA: we initially missed my income. It didn’t take long for my wife’s career to make my missing income look like rounding error.
I get the FI part but not the RE part of FIRE.
happy_statistician
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by happy_statistician »

We hired a nanny for our first and it was kind of a pain to manage her availability given sick days, vacation, car troubles, etc. I was very relieved when my daughter started preschool! For my second we did half day of daycare + an au pair. When daycare is closed, it's posted well in advance. Second kid did get sick more but that could also be from his sibling in school. Third is on the way and we have not decided yet! My point is just that you aren't married to any one plan when you set out, and you will need backups and redundancies no matter what you do.

On staying at home, I was also not interested. Although now that my kids are a bit older, there is more appeal and we talk about it sometimes (similar to your family, I am the mom + higher earning partner at this time). So I would just be open to a change of plans in the long term -- kids really do change your priorities!

Good luck!
er999
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by er999 »

I’d suggest the fidelity 2% cash back into a 529. My coworker did that for 18 years and had $50k from that alone.
Coastfical
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Coastfical »

Use all your FMLA and PTO to max time at home with new born. take as much time as you can before going back to work and consider phasing back (half time, Remote work, etc). Back in the bad old days I went back to work at 7 weeks because if I didn’t there was no healthcare or salary for me …world has changed thank goodness!

Do you have ability to contribute to HSA and also use flex spending acct for daycare (once you have kid) If so - max those out and save the HSA for filling gap between early retirement and Medicare.

You can use 529 for pre-university costs (private school) if that is a consideration.

We had nanny that we shared with a neighbor during elementary years - it was the best!
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FoundingFather
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by FoundingFather »

DavyJones wrote: Mon Jul 08, 2024 4:53 pm ...We are really struggling with the idea of "lets throw away an additional 20-30k per year" on a nanny. Don't want it to be one of those things that now we can't retire early...
Everyone is very different, especially when it comes to something as personal and enormous as parenting. I'll give a few thoughts that may not fit you, but just something to consider.

Regarding throwing away 20-30k a year on a nanny and not being able to retire early: You are now responsible for a life! It is a beautiful and a heavy thing. I love having kids (three so far), and it has been the happiest part of my life. However, as a parent, your plans are about to matter as much as nutrition facts on Halloween. Get ready to throw away a lot more than 20-30k a year on lots of stuff for your kid(s)! Your retirement may be delayed. Just accept it. 8-)

I am a pediateic oncologist, so that definitely changes my perspective, but what if your child gets cancer? While you aren't entertaining the idea of one of you staying home, one of you may need to if something like that happens. None of my patients' parents ever had a plan for cancer... or autism... or addiction... but time after time I watched parents make the most beautiful and touching sacrifices for their children. Seeing how deeply most parents love their children is one of the best parts of my job.

My first child had heart issues, and spent the first month of her life in the hospital followed by around 70 visits to the doctor or hospital that first year. Having plans is great, but part of the beauty of children is that they force us to see how wonderful life can be, even if there is some coloring outside the lines.

Also, my understanding of parenting, of being a husband, and of who I am as a person has changed with each child that I have helped to bring into the world. Be kind to yourself if something you used to want (i.e. two parents working, nanny, early retirement, whatever) suddenly doesn't fit the direction your life is going.

I have found that for my wife and I, the best financial moves are the ones that make sure everyone is safe and healthy, and that everyone feels safe and appreciated in your home. A scared spouse, a spouse that is guilty over something with the kids, a spouse feeling unheard by the other will destroy your financial plan more than any financial event ever could.

I am so happy and excited for you!

Founding Father
"I do not think myself equal to the Command I am honored with." -George Washington (excerpt from Journals of the Continental Congress, 16 June 1775)
PowderDay9
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by PowderDay9 »

Regarding the ability to retire in your mid 50s, what are your annual expenses? Your base salaries are over $400k but you're only saving $4k a month in taxable. I can't tell if your expenses are high or if it's based on pre-promotions.

There are plenty of pros and cons to daycare vs nanny. Even ignoring cost, nanny isn't always better. They can be hard to find, need days off, can quit suddenly, have other personal issues, etc. Plus once your baby is about 2, socializing with other kids becomes really important. There's plenty of resources to learn about each option so you can make the right choice for your family.
hafjell
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by hafjell »

DavyJones wrote: Mon Jul 08, 2024 4:53 pmThank you. Good advice.

We are really struggling with the idea of "lets throw away an additional 20-30k per year" on a nanny. Don't want it to be one of those things that now we can't retire early because we spent that extra money because we couldn't "tough it out" with daycare... a huge majority of Americans "tough it out" with daycare every single day. Don't want to regret not toughing it out. Agreed would be extremely convenient though.
It's not a marathon or a gym session. It's not about toughing it out. It's about giving yourself some coverage so you can perform optimally at work and hang on to your tremendous income. And be in a halfway decent mood at home. Even with the nanny you are going to be hugely sleep deprived and stressed. It's not convenience, it's balance. If you can't afford it, of course, millions of Americans do without the support. But you can afford it. This whole guilt trip around money and "toughing it out" misses the point. If you don't like the nanny experience, let her go and do everything yourself. I would release yourself from trying to sort everything before hand. Ftr, my wife and I never took time off and relied on daycare with no family support. A nanny would have been a step up.
snowday2022
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by snowday2022 »

DavyJones wrote: Mon Jul 08, 2024 4:57 pm
er999 wrote: Mon Jul 08, 2024 4:53 pm
DavyJones wrote: Mon Jul 08, 2024 2:22 pm
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.
My suggestion is to be open to the possibility one of you might want to stay home for awhile.

For college savings I’d get the fidelity 2% cash back card and have it automatically deposited in the 529. My coworker did that at her child’s birth at had $50k in the account just from those contributions plus investment returns at age 18. That would be a nice supplement to your superfunding 529 plan.
Not going to entertain one of us staying home. Both find a lot of fulfillment in our careers (plus the financial opportunity cost). Thank you for your input though.

The credit card idea is an interesting one! Hadn't thought of something like that.
It’s hard to reconcile the comment with the desire to retire in early 50s. Having kids will change you in ways you cannot imagine. Dare I say, being a parent is much more fulfilling than one’s job. Too many discover this too late. Congrats and good luck.
bombcar
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by bombcar »

529 is probably not worth it, because you can get much of the tax benefit from solid index funds, and be more flexible. Search for some discussion on it; basically shouldn't be used unless you get a deduction for contributions AND have no other good place to put your giant pile of money.

You will never sleep again, sorry.

You do NOT need the minivan right away, but dang if it ain't nice.

If you go the nanny route be aware that the baby WILL know, love, and recognize the nanny, it's very VERY personal. You can get a decent priced nanny but remember that you're basically (usually) hiring a young woman just out of high school or college and having her learn on the job. This isn't necessarily bad!

Now is the last time you can talk to your spouse! Enjoy it! Also use the time to say goodbye to any friends without kids. I joke, but it's close. How near are grandparents?

Do NOT burn any or all FMLA leave you may get, kids will eat it up in the most amazing ways you've never known possible.

As the husband, learn how to soothe the baby or at least identify what she's mad about. This is invaluable.

Is work-from home an option? It's powerful.

To retire at 55, you need to reduce expenses and increase savings. How that is done is as varied as the families you meet.
Hebell
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Hebell »

There are a lot of glowing comments here about parenthood. But, if you've had a great job, I don't think you should assume you'll find parenthood more fulfilling. You might not, and if that's the case, you're going to have to push yourself through it. You are going to give stuff up to be a good parent. I am not talking about money. I am talking about professional, entrepreneurial or avocational dreams that will be put on hold, most likely forever. And future opportunities that you will forgo.
Dunningedangkruger
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Dunningedangkruger »

1. If not already have wills in place.

2. Get term life insurance. Probably 20 year term. 10x or more to account for salary increase.

3. Make sure all beneficiary information is up to date.

4. Stay out of debt. Invest simply. Don't complicate things.

5. Enjoy your family and friends. Savor the journey.
Wannaretireearly
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Wannaretireearly »

Congrats! It’s an amazing phase of life.
Babies and young kids are the best! (We now having teenagers! SMH)

We lumpsummed into 529. I think it’s a good idea.

Keep your fixed expenses low if possible. Kids get expensive! You don’t want to know what we’re spending a. Private middle school for one and b. College prep ‘stuff’ for the other.

It makes $20k seem like dirt. Spend it wisely on nanny/day care. Worth every penny.

Honestly don’t stop saving in the retirement accounts - max it all incl mega backdoor roth. We found it easier when kids were younger I think. We still save but I don’t see much of my paycheck anymore (before or after it hits the account!)
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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TomatoTomahto
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by TomatoTomahto »

Wannaretireearly wrote: Tue Jul 09, 2024 12:21 am.
Keep your fixed expenses low if possible. Kids get expensive! You don’t want to know what we’re spending a. Private middle school for one and b. College prep ‘stuff’ for the other.

It makes $20k seem like dirt. Spend it wisely on nanny/day care. Worth every penny.
+1

Two engineers presumably didn’t decide to have children expecting it to be a way to jumpstart early retirement. Kids, even “normal” ones, become expensive, but I think you’ll find that your gratifications change.

Pro tip: don’t let them become travel team goalies.
I get the FI part but not the RE part of FIRE.
BattyNatty
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by BattyNatty »

I'm not currently employed as an engineer but used to work as one and think I still have the engineer mindset about a lot of things. One of the things I've noticed is that a lot of other parents I see don't seem to attack the most important issues with their babies with the urgency they should be afforded. By that, I mean 90% of baby troubles boil down to either sleep or food--so work really hard on your approach to those two things!

[Medical advice removed by Moderator Misenplace. See rules#rule-4d]

On the nanny vs. daycare question, I take a contrarian view compared to most of the responses. We went with daycare because it was easier on us. Sure, you have to deal with keeping your kid home when their sick, but to be honest we normally just work from home those days because they'll just sleep/rest most of the day and it's some of the easiest parenting we do. And we avoid all the issues of being an employer--from paperwork to nanny sick days & vacation days to having to find someone to dealing with them being in our house. We love that it's the daycare's problem to find replacements when someone quits and coverage when employees are sick. We also like how much time they get with their peers compared to a typical nanny situation.

Finally, one minor tip that has helped us again and again: anytime you’re googling some pregnancy or baby sickness question, add “NHS” to your search. They have tons of great, straightforward materials that are much more useful than all the WebMD/scammy crap that comes up otherwise.

[Medical advice removed by Moderator Misenplace]
KESP
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by KESP »

DavyJones wrote: Mon Jul 08, 2024 4:53 pm
luminous wrote: Mon Jul 08, 2024 4:32 pm
hafjell wrote: Mon Jul 08, 2024 4:07 pm Hire the nanny. It will give you so much quality of life. You make enough to afford it. You have no idea how hard it's going to. Plan for REALLY hard. You may get lucky with a great sleeper and non-fussy eater. There may be few problems for the first few years. Even if that happens, a nanny will really help you stay focused on work and life. We had no help and are still struggling even though the kids are in school fulltime and healthy.
Second this, completely. There is more than just childcare to consider: there is laundry, cooking, cleaning. Depending on the area and the nanny, some will take on some of those tasks. Think of it as an investment in household stress reduction.

I'd also urge you to practice letting go. Let go of long term plans, expectations, assumptions. You are creating new human beings, who knows how your lives will change? You can't deduce these things in advance. My hopes and dreams shifted quite a bit since I had my children, and I love my life. So yes, have plans, be prudent, but be open to change and evolution as well.
Thank you. Good advice.

We are really struggling with the idea of "lets throw away an additional 20-30k per year" on a nanny. Don't want it to be one of those things that now we can't retire early because we spent that extra money because we couldn't "tough it out" with daycare... a huge majority of Americans "tough it out" with daycare every single day. Don't want to regret not toughing it out. Agreed would be extremely convenient though.
A nanny is not forever, just a few years. My youngest is 32, and I still remember the stress of bringing my kids to daycare every day while trying to get to work on time. The times they would wake up sick and I had an important meeting I had to go to. Because of this, I provide full time care for my granddaughter. You have no idea yet how hard it is to balance work and a baby. Invest in the nanny!!
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Beachey
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Beachey »

Two main thoughts:

1. Figure out the daycare situation now. The cost of a nanny never made sense in our case but if it does and you can find someone you like that may be easier than making sure you make it to daycare by 5 PM or whenever it closes. Our daycare was also the first person we told other than my parents when my wife was pregnant with our second. You likely will want to try and reserve a spot now. We paid to hold the spot even before she was old enough to attend. This was seven years ago. I don't imagine it is easier today.

2. If you want to get the 529 set up now you can make your wife the beneficiary. Once you have a SSN for the baby you can then transfer the funds to the baby's account when convenient. I was in a similar situation with a late-in-the-year baby and I wanted to open the 529 by the end of the year. The first month or so is tough so it was good not to have to worry about it.
yoga
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by yoga »

Two kids and two engineers here.

You won't know how you feel until it happens. I didn't believe this before but it's true. Keep an open mind, your priorities will change, that's a good thing. It's hard and sometimes you'll feel like you are not doing a good job with anything (home, work, kids, etc.). Other times you'll feel like a superhero. Try to enjoy the ride.
lakpr
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by lakpr »

DavyJones wrote: Mon Jul 08, 2024 4:48 pm
TBillT wrote: Mon Jul 08, 2024 3:43 pm We do not know what tax law changes might come down in future years. But on the Company stock in the 401K, there is potentially the NUA option which is attractive if the stock appreciates substantially. The ideas there, keep the lower cost basis stocks as you rebalance.
What is NUA? Haven't heard of that before. I do not like how much company stock is in my 401k either, but it grows every year and gets a match. I have backed it down in my savings and try to do more towards traditional investments in my 401k now to slow it down.

Trying to get it closer to 10% but its going to take a while.
https://www.bogleheads.org/wiki/Net_unr ... preciation
Maverick3320
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Maverick3320 »

DavyJones wrote: Mon Jul 08, 2024 4:53 pm
luminous wrote: Mon Jul 08, 2024 4:32 pm
hafjell wrote: Mon Jul 08, 2024 4:07 pm Hire the nanny. It will give you so much quality of life. You make enough to afford it. You have no idea how hard it's going to. Plan for REALLY hard. You may get lucky with a great sleeper and non-fussy eater. There may be few problems for the first few years. Even if that happens, a nanny will really help you stay focused on work and life. We had no help and are still struggling even though the kids are in school fulltime and healthy.
Second this, completely. There is more than just childcare to consider: there is laundry, cooking, cleaning. Depending on the area and the nanny, some will take on some of those tasks. Think of it as an investment in household stress reduction.

I'd also urge you to practice letting go. Let go of long term plans, expectations, assumptions. You are creating new human beings, who knows how your lives will change? You can't deduce these things in advance. My hopes and dreams shifted quite a bit since I had my children, and I love my life. So yes, have plans, be prudent, but be open to change and evolution as well.
Thank you. Good advice.

We are really struggling with the idea of "lets throw away an additional 20-30k per year" on a nanny. Don't want it to be one of those things that now we can't retire early because we spent that extra money because we couldn't "tough it out" with daycare... a huge majority of Americans "tough it out" with daycare every single day. Don't want to regret not toughing it out. Agreed would be extremely convenient though.
Not sure what you mean by "throwing away an additional 20-30k per year on a nanny". You have three options:

1. Nanny. 20-30k/year.
2. Daycare. Depends on your area, but in my MCOL it's $1600/kid/month. So about the same as a nanny.
3. One of you doesn't work. $150k/year in lost opportunity cost (salary foregone).

You need childcare, even if you work from home a lot. There is simply no way to do actual work and watch an infant.
btenny
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by btenny »

Get a good housekeeper right now that comes once a week. See what you like about his/her service and revise as needed.

Get a outside lawn and yard care person to come every 1-2 weeks as needed. Review service and revise as needed.

Buy furniture and stuff for a baby's room right next to the master suite. Buy a lazy boy rocker for the babys room.

Plan on taking 2-4 months off work when the baby comes. Take 6 months if possible without loosing your job status.

When you go back to work try to get your relatives to do 2-4 days a week baby sitting. Then suppliment this with day care.

If relative help is not available maybe do the nanny thing. BUT be very careful with live in help. There are LOTS of safety issues.......
Teague
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Teague »

From the thread title I was expecting something like:

2024-25 FAMILY PROJECT

Definitions:
FAMILY means family in the commonly accepted sense, (ref. Oxford English Dictionary, 12th ed. )
PARENT, CHILD, HOUSEHOLD, and related terms of art are similarly defined consistent with their common meanings.


1. A family shall be designed, engineered, and constructed according to the following specifications.
1a. The family shall be developed consistent with CGMP, DIN, and IUPAC standards in force at the time of project inception.
1b. The family shall consist of a number of living persons as specified below.

2. PROJECT LEADERS
2a. Two project leaders shall co-equally supervise the 2024-25 Family Project.
2b. Each Project Leader shall hold the title of Parent.

CHILD CONSTRUCTION
3. Each Child shall be created by the following generally accepted order of operations:
3a. When a Mommy Parent and a Daddy Parent love each other very much, they sometimes decide to have a child.
3b. Specialist consultants with expertise in Birds and Bees subject matter shall be employed as necessary and feasible...
Semper Augustus
bonesly
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by bonesly »

DavyJones wrote: Mon Jul 08, 2024 2:22 pm 1. How do we best prepare for having a child? Financially, career, personally?
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.
As engineers, planning is what we like. As a mid-level engineering manager, you should know that there are risks, mitigations, and contingencies tracked for every project plan, so the plan has "built-in" changes. Your life plan will also have built-in changes as you expand your family. The biggest initial part of this is the sleep/eat thing for your baby (see @NattyBatty's insightful post above) and then probably the nanny vs day-care choice.
DavyJones wrote: Mon Jul 08, 2024 2:22 pm 2. How to best fund college?
a. Current plan for 529 is to superfund 50k with this year’s bonus and then never contribute again. Should be worth 170k by the time the child
is 18. Anything else we need to pay for will just pay out of taxable. Thoughts?
529s allow for tax-deferred growth and up to $35K of unused funds can be rolled to a Roth IRA after certain conditions are met, so it's an attractive vehicle for college savings. However, annual college costs are often well in excess of $35K for four years of undergraduate study (barring some kind of full tuition/scholarship that also covers room & board). You can encourage your child to attend college, you can "force" them to go up to a point where they rebel, you can pay for it even if they don't want to be there. I would likely not fund a 529 beyond a projected growth of $35K by the time the child reaches age 18; I'd put the other "college" funds in a Taxable account. Given the shorter time-frame than your retirement, this college fund portfolio would likely include bonds, but bonds in Taxable is not tax-efficient (esp. given that you're likely in a high tax bracket), so the concept of Cash [and Bond] Needs in a Tax-Advantaged Account might be useful (hold the stock portion of your college fund in Taxable and the bond portion in Tax-Deferred, reducing your retirement stocks by the amount of college bonds).
DavyJones wrote: Mon Jul 08, 2024 2:22 pm 3. Pros and Cons of Nanny vs. Daycare?
a. We really like the idea of the flexibility with a nanny, we both see co-workers miss a lot of days due to daycare illnesses that having a nanny
would avoid. Plus we like the added flexibility But they are obviously very expensive which I don't like.
You're engineers... make a list of attributes with ±costs and/or pros/cons, then use a decision logic to suggest a choice (Pugh chart, paired comparison matrix, weighted evaluation table, "dominated" alternatives, analytical hierarchy process, or MaxMin, MaxMax, Hurwicz Criteria).

You're parents... do research on what other parents have done and their assessment of what worked and didn't; see how likely others' experience is likely to match up with your own future experience. Again I think @NattyBatty had a good contrarian experience in favor of daycare, while the majority of responses in this thread seem to be in favor of a nanny. We have a family friend who is a nanny that I would 100% trust if I needed her services. Hiring someone unknown is never going to be 100% trust despite your background investigation of a prospective employee. The trust and all the bad things that can happen with abuse have to be included in your pros/cons like a risk management matrix (likelihood, consequence, mitigation, contingency), except the consequence & contingency isn't just about a project being late or over budget, it's about your child's well being and perhaps even their life or death.
DavyJones wrote: Mon Jul 08, 2024 2:22 pm 4. How do we retire by 53-55?
a. We really like the idea of retiring when we send our second kid to college in 20-22 years at 55 years old. We would like to make it an official goal of ours and start working towards that. Any suggestions? What do we need to do?
You need to project what your future expenses would be in retirement and save up 28.6 times that annual expense amount. For example if you wanted to spend $200K/yr, then that's a value at retirement in today's dollars of $200K x 28.6 = $5.7M, which in future dollars 23 years from now would be $11.3M. Use @KlangFool's formula to estimate your current expenses: Annual Expenses = Gross Income - Taxes (1040, Line 24) - Annual Savings, then adjust that down for things that go away (529 & retirement savings, principal & interest from the mortgage if it's paid off by 55, etc.).

Absent a projection of future expenses, we can say what your current portfolio and savings rate might grow to. Initial balance of $1,039K ($565K Tax-Advantaged + $474K Taxable), contributions of $110K/yr ($23K/yr x 2 to 401K, $7K/yr x 2 to Roth IRA, $50K/yr to Taxable), contributions amounts increase by +3%/yr for raises/inflation, an average expense ratio of 0.10%, and an initial draw of 3.5% (reduced from the 4% Trinity Study rule because retiring early is a 41-year withdrawal phase rather than the study assumption of 30 years). Since you didn't provide an AA plan, I'll assume 90/10 with a glide-path down to 70/30 starting at age 41. Those assumptions (which include convincing your spouse that a Backdoor Roth Contribution is perfectly legal) produce a range of outcomes for balance-at-retirement something like this:

End-Bal Percentile
$7,436.5K 5th
$12,600.4K 25th
$18,945.0K 50th
$28,013.2K 75th
$48,534.8K 95th

At the conservative 5th percentile (only 5% risk of a lower balance at retirement due to bad sequence of returns), that $7.4M balance supports a 3.5% initial draw of $260.3K, which is about $132K in today's purchasing power. At a higher risk 25th percentile (25% chance to not reach this balance), today's purchasing power in year-1 of withdrawal would be $223.5K. Those results are from my Monte Carlo in Excel, which is linked below along with other models I like.

Image

Data and Models I use for Monte Carlo:
NYU Data Set 1928-2017 with Model Fits
Accumulation Monte Carlo <- image above
Withdrawal Monte Carlo

You'll need a MS Excel license; download to your local machine and enable macros (required for the 1,000 random trials and results aggregation).

I'm using my own model as I like to know what's under the hood, but there are other models I like that have public facing website interfaces:
Portfolio Visualizer's Monte Carlo (with distribution modeling rather than the historical returns array; I like this one best),
FiCalc (easy interface, but only historical data array),
TPAW (historical data, but adjusted to avoid limitations of a random index into the historical array),
and many others here seem to like FireCalc (also historical data, but lots more inputs to tailor to your situation).

I don't care for a random index into the historical array of returns, compared to distribution modeling, as noted in this thread HERE.
DavyJones wrote: Mon Jul 08, 2024 2:22 pm 5. Any other comments about our financial situation? How can we improve and optimize?
...
His 401K: $291,000 total
DODIX Doge and Cox Income -- Bonds : 7% (.42%)
FXAIX Fidelity 500 Index: 45% (.015%)
VMGMX Vanguard Mid Cap Growth: 6% (.070%)
PIUIX Hermes International Equity : 20% (.94%)
I'd look for lower cost alternatives (ER < 0.30%) for those two funds in red.
DavyJones wrote: Mon Jul 08, 2024 2:22 pm His Roth IRA: 15k total
SCHB Schwab US Based Broad Market: 80% (.03%)
SCHF Schwab International Equity: 20% (.06%)

Taxable Brokerage: 474K total
SCHB Schwab US Based Broad Market: 80% (.03%)
SCHF Schwab International Equity: 20% (.06%)
Holding the exact same funds (identical ticker symbols) in both Taxable and tax-advantaged (401k or Roth IRA) can inadvertently run afoul of the Wash Sale Rule. For example you sell some Taxable and it happens to be at a loss, then you inadvertently buy the same fund in the Roth IRA (auto contribution or reinvestment of distributions) within ±31 days of the loss sale date, that triggers a wash sale, so the loss is disallowed on your tax return (which can be a nuisance if you were intentionally trying to execute tax loss harvesting). That's easily avoided by changing the Roth IRA funds to something similar but not "substantially identical" per IRS lingo.

Your post also didn't cite a Desired Asset Allocation (AA), but that's the roadmap to your investment plan for each portfolio objective (college fund is one AA while retirement fund is a different AA due to the different time-frame/risk-tolerance for each). If you don't have an AA "roadmap" then read the Wiki topic on Assessing Risk Tolerance, take the Vanguard Investor Questionnaire, tailor the quiz result based on your personal risk-tolerance, then share that result with us. That would let us identify if your current mix of funds is actually on track or if some rebalancing might be in order.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
ThankYouJack
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Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by ThankYouJack »

DavyJones wrote: Mon Jul 08, 2024 4:57 pm
er999 wrote: Mon Jul 08, 2024 4:53 pm
DavyJones wrote: Mon Jul 08, 2024 2:22 pm
a. We both intend to keep working, and we have very demanding jobs. We are pretty nervous about how much a child is going to change our
worlds. But we are excited for it as well.
My suggestion is to be open to the possibility one of you might want to stay home for awhile.

For college savings I’d get the fidelity 2% cash back card and have it automatically deposited in the 529. My coworker did that at her child’s birth at had $50k in the account just from those contributions plus investment returns at age 18. That would be a nice supplement to your superfunding 529 plan.
Not going to entertain one of us staying home. Both find a lot of fulfillment in our careers (plus the financial opportunity cost). Thank you for your input though.
If that's the case why do you want to FIRE? For me, the best time to take time off work / reduce hours was when when my kids are very young. My spouse and I both were able to do this and don't regret it one bit. It won't always be easy spending ample time with an infant, but it's time with your child that you won't get back. Just some food for thought - I personally like part-time work (if possible) with a part-time nanny with a newborn.

I wouldn't get overly concerned about the other details at this point. Just enjoy the little moments, be present and loving parents and you'll do great!
vanuber
Posts: 242
Joined: Mon Nov 18, 2019 4:07 pm

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by vanuber »

TomatoTomahto wrote: Mon Jul 08, 2024 5:31 pm
bombcar wrote: Mon Jul 08, 2024 5:00 pm It’s not throwing away on a nanny. Check how much it will actually cost after all the finances are taken into account and look for assistance both from government (often on taxes) and from companies.

It’s quite likely that $30k a year through starting kindergarten would be worth as much or more than an Ivy League education.
+1

Arguably what we spent on Montessori was as important as the Ivy League education.
+2 They say the first three years are the most formative. Our baby finished his first trip around the sun today. We have far less income than you and have prioritized one-on-one care for our son. My wife also watches him one day a week. Our current cost for childcare is $24K per year.

I will also say that your expectations and priorities will most likely shift after your child is born. Time will become your most precious resource and childcare will become invaluable. I used to regularly work 50-hour weeks and am lucky to get in 40-hours now. Life gets challenging, but the intensive care taking is short lived. We are at a very different place than a year ago.

Congrats on the start of your family. Best wishes for the pregnancy and birth. I hope your baby likes to sleep more than ours does!
nptit
Posts: 105
Joined: Sun Mar 29, 2015 5:51 pm

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by nptit »

Fellow two engineers family here, this is the wife. I am sharing this account with my husband. A few advices:
1) don’t be too stress out regarding upcoming change. Newborn is a lot of work but also the most meaningful work. Follow the flow, set your expectation low, you might get a super good sleeper and eater.
2) be aware of your wife’s hormone change. I had postpartum depression. It is not something I can control. Try to help her as much as you could.
3) you have a good start on NW, like another mom said above, child care could be inexpensive, the best you can invest to them is your time. We were super nervous when the 1st kid came, a lot of planning. Over purchase a lot of unnecessary items. We later learned that all we need is Amazon prime☺️. We buy second hand toys. But stay with high quality stroller, car seat and food. I recently quit my 500K+ job to stay at home with 2 kids under 5. I wish I have done it sooner. My older kid already acts as a grow up. Kid just grows so fast. Nanny situation doesn’t work well for us, it is super hard to hire a responsible nanny. They treat this as a job without future, so they do minimum. Covid is a bless to my family, I worked from home when 1st kiddo came, and switched to a permanent wfh job when 2nd kiddo came.
4) I recommend baby411 and 5 love languages for new parents.
5) you mentioned about FIRE, we were planning for FIRE so hard before, but not so much when kids came. We both agree to can work longer to trade with spending more time with kids when they need us.
Enjoy the change, it is a lot of joy. We are planning for #3
Wannaretireearly
Posts: 5222
Joined: Wed Mar 31, 2010 4:39 pm

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by Wannaretireearly »

There is nothing like kids and their needs to put work in its place.
We were both engineers, I started on the leadership track, not high up at all. Wife took a chill engineering role, feels part time pays about 2/3 a normal salary :) Absolutely no regrets neither of us is career minded. We’ve had a great time bringing up the family including so many trips.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
RetireWhen
Posts: 108
Joined: Wed Apr 20, 2022 11:26 am

Re: Help 2 Engineers Start a Family (It is finally Happening!!)

Post by RetireWhen »

RetiredAL wrote: Mon Jul 08, 2024 3:03 pm Understand before you get frustrated, that engineering logic will have no relevance with an infant.

It's a discovery process to find what works for both the parents and the baby.
Good advice. Take it from another engineer with three adult kids and the first were twins, engineering logic doesn't always help when raising children. Sometimes just the opposite is the best approach.

First and foremost, enjoy the journey, both the ups and downs because those twenty years with them go by oh so fast.
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