Child Care - 2 or More Children and Strategies to Pay

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wilked
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Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Fri May 23, 2014 10:09 am

We have one child at the moment, pay $375/wk for a home daycare (cost is very competitive with all daycares in the area).

This is in Greater Boston area, which is one of the highest in the country, so take that for what it is.

We are starting to think about #2 and day care costs have me worried. Paying $20K out of pocket for one child is enough, I have a hard time multiplying this number by 2. FWIW we do max the $5000 pretax FSA out, so there is some help there, but marginal.

Options to consider:

1) Ask for multi-child discount: Is this common? Anyone have experience with numbers, would you expect a 25% discount, etc?

2) Get a nanny: Do people find a nanny to be cost-competitive when 2 children are involved?

3) Nanny share: Possible, would require coordination, carries risk of 1 of the parties bailing out. Might be worth pursuing.

4) Au-Pair: Seems like a lot of hurdles, and has the potential to be a problem more than a help. Not likely to pursue.

Anyway, I am interested in how others have handled this.

Thanks

linakin
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by linakin » Fri May 23, 2014 10:13 am

I'm assuming you've done the math that it's still worthwhile to keep working and have 2 kids in daycare? Prices aren't as expensive where I'm at, and we use a daycare center, but they give a 10% discount price for the older child, which is the cheaper of the 2 children since you generally pay a little more the younger they are.

Quickfoot
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Quickfoot » Fri May 23, 2014 10:15 am

Kids are expensive, best advice is not to have more kids because daycare is just the start, there's then activities and college and post college expenses. Take a hard look at your income, expenses, and other life goals when considering whether to have another child, it may be that it might not be the right move.

We live in a low cost of living area and paid $1450 a month for 3 kids until they went to school full time and now pay about half that but it's still not fun. The dependent care FSA is a considerable help even though the limit is only 5K. If you proceed to have another child you should get a multi-child discount of 20%-50% depending on the daycare. Be aware infant care is much more expensive than toddler / school age so even with the discount your expenses are likely to increase dramatically.

Most people that hire a nanny do not do it because it is cost effective, they do it because they can afford it and either believe it is higher quality care than regular daycare or have enough excess income that it doesn't matter (some also do it as a status symbol).

Do you have family or friends (maybe a stay at home mom) that would be able to provide care and would like some extra income? That tends to be the most affordable daycare.

wilked
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Fri May 23, 2014 10:24 am

Both my wife and I make approximately the same. With two kids in daycare, childcare expenses would be about 40-60% of one of our take-home pay. Whether that is worth it is debatable... Ideally we find a lower-cost solution

Family members seem to be the best option for help but that doesn't work in our case.

Quickfoot, you really think you can get up to 50% discount for multi-children? That must only be the case if the daycare / caregiver struggles to be at capacity, I would think

flyingbison
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by flyingbison » Fri May 23, 2014 10:27 am

We only have one child, and will not have any more. If we did, I would definitely quit work for a while, because it wouldn't be worth it for me to continue working with 2 kids in full-time daycare.

Another option to consider is to delay child #2 until child #1 will be entering school, so your daycare cost would remain relatively constant, but stretched out over a longer period of time.

Rupert
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Rupert » Fri May 23, 2014 10:27 am

Daycares do generally charge less for older children because state law generally allows a higher student/teacher ratio for toddlers as opposed to infants. I've never heard of a multi-child discount though. Good daycares have such long waiting lists where I live that they can charge whatever they want. There's no incentive to offer discounts, unless maybe it's a church-based nonprofit daycare. I've done nannies, daycare, preschool, and private school. None of it is cheap and the total cost per child increases as they age. I'm sorry to tell you that daycare is the least of your future financial worries.

sunnyday
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by sunnyday » Fri May 23, 2014 10:35 am

1) Ask for multi-child discount: Is this common? Anyone have experience with numbers, would you expect a 25% discount, etc?

I would not expect a 25% discount. 0-10% is more common where I live. Why not ask your current provider and some others?

2) Get a nanny: Do people find a nanny to be cost-competitive when 2 children are involved?
I was paying about $14/hr for my nanny (in comparison daycares are about $1200-$1600 /mo here). There are some additional expenses too that come with a nanny, like taxes, food, paid-time off . I know a lot of people who have found Nanny's using care.com.

3) Nanny share: Possible, would require coordination, carries risk of 1 of the parties bailing out. Might be worth pursuing.

That could be a good option to save money. I looked into that myself with another family but the logistics didn't work out -- we both wanted part time care but different schedules. Care.com doesn't allow you to post jobs for nanny shares, but sittercity.com does.

4) Au-Pair: Seems like a lot of hurdles, and has the potential to be a problem more than a help. Not likely to pursue.

I don't think it would be a problem finding an au-pair as the agencies seem to be quite good. We have friends who used one. However, do you want a teenager living with you and borrowing your car?

Anyway, I am interested in how others have handled this.


We looked into as many day care centers as possible. Our top choice was going to be a church for both the location, schedule flexibility and price (they tend to be much cheaper) but instead of going with a day care we've been fortunate to get a lot of help from grandparents and friends and have hired part time help.

sunnyday
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by sunnyday » Fri May 23, 2014 10:39 am

Rupert wrote:I'm sorry to tell you that daycare is the least of your future financial worries.
Seriously?? The OP is considering paying $40k a year on daycare and that's the least of his worries? What is going to cost more than that for his children that he/she will need to pay? Hopefully college isn't mentioned because parents don't need to pay that and there are things like financial aid.

mmmark
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by mmmark » Fri May 23, 2014 10:47 am

Quickfoot wrote:Kids are expensive, best advice is not to have more kids because daycare is just the start, there's then activities and college and post college expenses. Take a hard look at your income, expenses, and other life goals when considering whether to have another child, it may be that it might not be the right move.
That is comical.

Quickfoot
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Quickfoot » Fri May 23, 2014 10:50 am

Quickfoot, you really think you can get up to 50% discount for multi-children? That must only be the case if the daycare / caregiver struggles to be at capacity, I would think
The relationship with the owner matters as well, my wife has known this particular owner for years. A 25% discount for additional kids is typical here, even for Montessori. In our city it is typically $500 a month for an infant and $400 a month for a potty trained toddler. Our daycare (a step above the area Montessori) is $650 per month per kid for potty trained toddler and $750 for babies.
Last edited by Quickfoot on Fri May 23, 2014 10:57 am, edited 2 times in total.

wilked
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Fri May 23, 2014 10:56 am

I appreciate the well wishes regarding if and when we should have another child. Please trust that I have a strong handle on our finances and am not worried about affording everything - what I am interested in is exploring how to minimize the cost as it would be the highest item on our budget, well above out own housing costs.

Edit to add: my mention of 'worry' in the initial post is with regard to retirement savings, which would necessarily suffer if we have to spend >25% of take home on child care

Rupert
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Rupert » Fri May 23, 2014 11:02 am

sunnyday wrote:
Rupert wrote:I'm sorry to tell you that daycare is the least of your future financial worries.
Seriously?? The OP is considering paying $40k a year on daycare and that's the least of his worries? What is going to cost more than that for his children that he/she will need to pay? Hopefully college isn't mentioned because parents don't need to pay that and there are things like financial aid.
Daycare lasts four years, max, and the cost decreases as the children age. After that, he has at least 14 (maybe 18, maybe 24) years of schooling left, plus piano lessons, plus soccer, plus cars, plus health insurance, plus food, plus . . . you know. You don't think kids are expensive?

sunnyday
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by sunnyday » Fri May 23, 2014 11:28 am

Rupert wrote:
sunnyday wrote:
Rupert wrote:I'm sorry to tell you that daycare is the least of your future financial worries.
Seriously?? The OP is considering paying $40k a year on daycare and that's the least of his worries? What is going to cost more than that for his children that he/she will need to pay? Hopefully college isn't mentioned because parents don't need to pay that and there are things like financial aid.
Daycare lasts four years, max, and the cost decreases as the children age. After that, he has at least 14 (maybe 18, maybe 24) years of schooling left, plus piano lessons, plus soccer, plus cars, plus health insurance, plus food, plus . . . you know. You don't think kids are expensive?
schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)

Rodc
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Rodc » Fri May 23, 2014 12:32 pm

wilked wrote:Both my wife and I make approximately the same. With two kids in daycare, childcare expenses would be about 40-60% of one of our take-home pay. Whether that is worth it is debatable... Ideally we find a lower-cost solution

Family members seem to be the best option for help but that doesn't work in our case.

Quickfoot, you really think you can get up to 50% discount for multi-children? That must only be the case if the daycare / caregiver struggles to be at capacity, I would think

Been there and done that in the same location. Don't recall now the sibling discount but it was nowhere near 50%, maybe 10% on child #2. We used a center after considering all those other options. All involve trade-offs of one sort or another.

No great solutions.
I'm assuming you've done the math that it's still worthwhile to keep working and have 2 kids in daycare?
Having one stay home can work great or horribly. It depends on the person and situation. I have watched this through many friends. Pulling out of work for a number of years to take care of kids is often a lifetime killer of any career so it is not just lost wages for a few years. Then if you can't find a good job when the kids get older what do you do with your time? Sometimes this works out great, sometimes not at all, so this needs to be very carefully thought through considering the particular people and particular situation.

The great thing about kid expenses is they train the parents to live on a very modest percentage of your income (the rest being spent on the kids not the parents) so you don't need a lot of income in retirement to maintain your standard of living. :)
Last edited by Rodc on Fri May 23, 2014 12:38 pm, edited 1 time in total.
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Andyrunner
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Andyrunner » Fri May 23, 2014 12:38 pm

Our daycare in MN is just a bit lower then yours.

Are you looking at an in home or a center for daycare? The prices for in-home tend to be cheaper. (I pay $200 for an infant in-home, centers are $350+)

1) I dont think this is common, at least in my area where supply is low and demand is high
2) Some people do this, I think with it being summer, you can get a college or high school kid. That opens up more options for daycares who close or have limited hours during the summer.
3 & 4) wish I could help but I have no advice here

mitchapalooza
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by mitchapalooza » Fri May 23, 2014 1:10 pm

We have 3 young children within 2 years of each other (including twins) so we went through a similar decision. Ultimately, we chose for my wife to stay home b/c that worked for us but that definitely isn't for everyone. We did consider all of the option you mentioned as well, except a nannie share.

For us the Au Pair seemed awkward but I now people who have gone that route and loved it. I think that is supposedly less expensive than a nannie as well.

At the professional daycare center, they offered us a 10% discount for the additional children (# 2 and #3) but not the first. And I tried to negotiate but they wouldn't budge beyond that.

A nannie would have been about the same as daycare for all 3 and we likely would have chosen a nannie over daycare if for nothing else other than logistics. Trust me, it's a lot less stressful and time consuming to get multiple kids ready for the nannie to show up than it is getting them all dressed, fed, out the door and into day care every morning. To me, if we were both going to keep working, then the opportunity costs of my time also needed to be considered in the total costs of each option. That's something else you may want to consider - just my $0.02.

yolli71
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by yolli71 » Fri May 23, 2014 3:28 pm

wilked wrote:We have one child at the moment, pay $375/wk for a home daycare (cost is very competitive with all daycares in the area).

This is in Greater Boston area, which is one of the highest in the country, so take that for what it is.

We are starting to think about #2 and day care costs have me worried. Paying $20K out of pocket for one child is enough, I have a hard time multiplying this number by 2. FWIW we do max the $5000 pretax FSA out, so there is some help there, but marginal.

Options to consider:

1) Ask for multi-child discount: Is this common? Anyone have experience with numbers, would you expect a 25% discount, etc?

2) Get a nanny: Do people find a nanny to be cost-competitive when 2 children are involved?

3) Nanny share: Possible, would require coordination, carries risk of 1 of the parties bailing out. Might be worth pursuing.

4) Au-Pair: Seems like a lot of hurdles, and has the potential to be a problem more than a help. Not likely to pursue.

Anyway, I am interested in how others have handled this.

Thanks
We have two kids (4 and 2) and they are both in daycare...it's a real killer. We were paying 3k/mo until our daughter turned 2...tuition then dropped to $2,600/mo. We get a sibling discount of 7%. We looked at all the options you listed above. My comments:

1)Yes, but my experience is most facilities only give around 5 - 10%.
2)No, not much difference. Around here in the DC area, you can expect to pay a minimum of $15/hr for a nanny.
3)This seems to be the most cost effective, but I've had a couple of friends get screwed over from the other parties and then had to go scrambling for other solutions.
4)Too many issues...we never seriously looked into this option.

The daycare costs were about 45% of our take home pay at one point...it was stressful. We refinanced our home which really helped, but we basically lived paycheck to paycheck. We did not start maxing out our TSP again until recently. I don't really have any good advice or solutions for you other than it won't last all that long (in the grand scheme of things). I will say that we chose a daycare that was on the higher end in cost simply because it was located in our work building, so while we didn't get any special pricing, it was comforting to my wife to have our kids downstairs. That said, even the dumpy daycare facilities weren't all THAT much cheaper.

I'm looking forward to the point when both my kids are in regular school (3.5 years away).

Beth*
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Beth* » Fri May 23, 2014 3:43 pm

We didn't try to save money while our kids were daycare/pre-school age beyond putting whatever our employers would match into our retirement accounts. There are times in your life when you just don't have a lot of extra money to save. I wouldn't worry about it too much and I certainly would never consider this a reason not to have a second child. When your kids get older you can start saving more money. As long as you don't experience life style creep and decide that because you are no longer paying for daycare you can suddenly start buying fancy cars and taking extravagant vacations you should be fine. Yes, I've seen all the charts that indicate how much further a dollar saved when you are younger goes than a dollar saved when you are older, but one makes trade-offs in life. My kids are out of college, our salaries have gone up over the years, and we are now saving over $100,000 a year of our salary income. If you count the dividends, capital gains, and interest payments we are automatically re-investing we are saving even more. I do not in the least regret having had a second child, even though it meant that we were living paycheck to paycheck for a while.

surfstar
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by surfstar » Fri May 23, 2014 3:53 pm

I'm thinking I should open up a day-care center. If that's where all the Boglehead's money goes, just imagine what the general population must spend on it!

BogleCare (TM) - your ER depends on your kids' ability to behave.

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Watty
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Watty » Fri May 23, 2014 4:50 pm

surfstar wrote:I'm thinking I should open up a day-care center. If that's where all the Boglehead's money goes, just imagine what the general population must spend on it!

BogleCare (TM) - your ER depends on your kids' ability to behave.
That is what my wife did when my son was an infant and toddler. She did day care in our home for one or two kids that were a similar age to my son and between that income and not paying for day care that made her saying at home(which she wanted to do) financially possible.

wilked
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Fri May 23, 2014 9:06 pm

good food for thought, thanks!

twindad57
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by twindad57 » Sat May 24, 2014 8:46 am

We have 2.5 year old twins which were born when I was 40 and wife was 41. We were in process of moving for my job, so my wife left her job at that time. It also meant we lost 45% of our income in making that decision.

At this point I would say it's been difficult in a lot of ways, but still good. My wife liked her work, enjoys being in an office environment, and had a good career. She says being the full time mommy of twins is the hardest job she's ever had. In addition, we now save 15-20% of our income which again is half what it used to be. So, both our savings rate and the actual dollar amount of savings have decreased significantly. Financially, we probably would be ahead if she was working and we paid for childcare for two, but it would be close. For us, we think we made the right decision. And it will probably change in the next 6-12 months as it is about time for the twins to begin some type of formal program.

I guess the takeaway for me is if your finances are in good shape and you already have a good retirement plan/path then try to look at what would be best for you all absent the cost. Yes, if you are used to saving lots for retirement and other things, it hurts a little. On the other hand we know how fortunate we are to have choices now because of earlier decisions we made regarding savings and living below our means. Sounds like you all may be in a similar position.

My wife would say even though it's really tough some days she is thankful to have this time with the kids.

wilked
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Sat May 24, 2014 8:57 am

Twindad, it seems the key is to be sure your PITI is <25% of take home, would you agree? Otherwise I can't see how the numbers work

twindad57
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by twindad57 » Sat May 24, 2014 9:07 am

wilked wrote:Twindad, it seems the key is to be sure your PITI is <25% of take home, would you agree? Otherwise I can't see how the numbers work
I think that's about right although we're slightly above that number. And that has become our 'issue' of late. We live in New Orleans where taxes and insurance are really significant, especially post-Katrina. We are sometimes dipping into 'cash on hand' that would otherwise be going to savings, especially when the annual insurance premiums and taxes come due. Mind you, we are not going into our investment accounts or even our emergency fund, but rather are not adding to those in as large an amount as I think we should.

The internal struggle for me is accepting whether or not it is okay to dip into those funds, given our retirement plan is on track. Of course, you can always save more and the future is uncertain. It is sort of like trying to decide on an asset allocation. What's the right balance between risk and expected return? No one knows for sure.

The other thing, and this is my wife's counter-point, is that this is only for a couple of years. Once they start pre-k or soon thereafter, she can return to work. And, even if she earns only a small % of what she did previously, all the numbers would easily be back in our comfort zone.

twindad57
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by twindad57 » Sat May 24, 2014 9:11 am

I should also mention my screen name is meant to point out I am the father of twins with a goal retirement age of 57. Had I joined this community prior to the children being born my screen name might've been dink50, so they've definitely helped 'adjust' our plans!

ubermax
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by ubermax » Sat May 24, 2014 3:20 pm

Wilked , we're helping our daughter care for twins that are 3 months old who will soon be in daycare also - they're trying to get out of a small apartment and into a house in the greater Boston area and this much we know so far - daycare and house prices are crazy ! - small Capes asking $650,000 and still needing work, cash buyers, bids 50k over asking - Beverly Hills isn't just a California address :happy

I (we) understand and can empathize with you but unfortunately don't have any good suggestions or opinions regards the options that you laid out for yourself .

Good Luck !!!!

Rodc
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Rodc » Sat May 24, 2014 3:53 pm

We have 2.5 year old twins which were born when I was 40 and wife was 41. We were in process of moving for my job, so my wife left her job at that time. It also meant we lost 45% of our income in making that decision.

At this point I would say it's been difficult in a lot of ways, but still good. My wife liked her work, enjoys being in an office environment, and had a good career. She says being the full time mommy of twins is the hardest job she's ever had.
For those of you with young twins I can tell from about this age on it gets easier and easier, at least if they get along. Built in play date every day! Every bit of independence they learn and earn, every bit of learning to play with others, makes the job easier.

Really! Hang in there!
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

SimonJester
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by SimonJester » Sat May 24, 2014 7:06 pm

sunnyday wrote: schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)
ha ha you jest, Schooling even in public school has costs. School supplies, special projects, field trips etc.
Food, well my two just his their teen age years, I can tell you an extra $83 per month or $20.75 a week doesn't cut it. OM gosh they can eat and eat and eat some more.

Lets not even talk about college costs.

My advise, enjoy the younger years, work the finances as they appear. A decision to have another child should not be made solely on a financial matter.

My oldest heads to high school this fall, it has gone by sooo much faster then I could have imagined. :(
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

ThinkingRunner
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by ThinkingRunner » Sat May 24, 2014 9:41 pm

wilked wrote:We have one child at the moment, pay $375/wk for a home daycare (cost is very competitive with all daycares in the area).

This is in Greater Boston area, which is one of the highest in the country, so take that for what it is.

We are starting to think about #2 and day care costs have me worried. Paying $20K out of pocket for one child is enough, I have a hard time multiplying this number by 2. FWIW we do max the $5000 pretax FSA out, so there is some help there, but marginal.

Options to consider:

1) Ask for multi-child discount: Is this common? Anyone have experience with numbers, would you expect a 25% discount, etc?

2) Get a nanny: Do people find a nanny to be cost-competitive when 2 children are involved?

3) Nanny share: Possible, would require coordination, carries risk of 1 of the parties bailing out. Might be worth pursuing.

4) Au-Pair: Seems like a lot of hurdles, and has the potential to be a problem more than a help. Not likely to pursue.

Anyway, I am interested in how others have handled this.

Thanks
We have twins in a high-cost-of-child-care area, and have a nanny. In our calculation, a high quality nanny ($20/hr) is generally more cost-effective than quality day-care centers (e.g. Bright Horizons, etc.). Plus, we were able to stagger our work hours so that the nanny worked only 7 hours a day, which helped keep our costs down. Whereas day-care centers charge $2.3-2.5K/month/child ($4.6-5K/month for twins), we pay our nanny about $3K/month. Home day cares would probably work out about the same, but we did not consider them.

Besides cost, there are other pros and cons to having a nanny.

Pros:

1. Kids stay in a familiar environment. No scrambling to get them ready in the morning, no pick-up stress (centers charge $1/minute you are late). Our nanny is very flexible, and we pay her the same hourly rate for any additional time she puts in.

2. Our kids were down with a cold for a week. With a day care center, we'd have had to take time off and keep them at home, but our nanny was able to care for them, allowing us to go to work.

3. Personalized attention and attachment. Our kids love their nanny and vice-versa. They're really excited to see her every morning.

Cons:

1. Single point of failure. When the nanny is sick, we're scrambling.

2. Lack of interaction with other kids. In my mind, this is not a huge con, especially for young twins. Parallel play is the norm at their age, and they have each other anyway!

3. Nanny taxes, unemployment insurance, etc. Although once you set everything up, it is not a huge issue.

P.S. Some other posters have mentioned that this is just the beginning. However, once in (public) school, I honestly cannot think of any other kid-related expenses (barring college tuition) that would come even remotely close to our child-care costs (nearly $40K/year). Perhaps if we wanted to groom them for the Olympics...
Last edited by ThinkingRunner on Sat May 24, 2014 9:46 pm, edited 1 time in total.

yolli71
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by yolli71 » Sat May 24, 2014 9:43 pm

Rupert wrote:
sunnyday wrote:
Rupert wrote:I'm sorry to tell you that daycare is the least of your future financial worries.
Seriously?? The OP is considering paying $40k a year on daycare and that's the least of his worries? What is going to cost more than that for his children that he/she will need to pay? Hopefully college isn't mentioned because parents don't need to pay that and there are things like financial aid.
Daycare lasts four years, max, and the cost decreases as the children age. After that, he has at least 14 (maybe 18, maybe 24) years of schooling left, plus piano lessons, plus soccer, plus cars, plus health insurance, plus food, plus . . . you know. You don't think kids are expensive?
Maybe I'm not there yet b/c my kids are 4 and 2, but I agree w/ "sunnyday." Yes, there are piano lessons, sports, cars, etc...but as far as I can see, NOTHING compares to paying for daycare (we were paying 3k/mo until very recently). You can't compare costs over 13+ years compared to 4 or 5 years of daycare. Yes, maybe you pay more in the LONG RUN for kids once they're in public school...but the point is that it's a real financial burden to pay for day care during those 4 or 5 years (on a monthly basis)...and that's the issue that the OP was mentioning. So saying that "daycare is the least of your future financial worries" is neither accurate or helpful advice.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by MN Finance » Sat May 24, 2014 10:35 pm

I thought it was both accurate and helpful. You can't really calculate the cost of kids. But I know what it cost us to live before kids and after. We spend 50k/year on kids minimum (not including daycare SAHM).

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by MN Finance » Sat May 24, 2014 10:38 pm

sunnyday wrote:
schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)
Arrogant. Insulting.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by ThinkingRunner » Sat May 24, 2014 10:50 pm

MN Finance wrote:I thought it was both accurate and helpful. You can't really calculate the cost of kids. But I know what it cost us to live before kids and after. We spend 50k/year on kids minimum (not including daycare SAHM).
I realize everyone has different means and priorities, but that seems really high, especially when day care is not included. We spent less than that on two working *adults* before we had kids :) (EDIT: and that is including housing!)

Could you share the number of kids and an approximate breakdown of the 50K you are spending on them every year?
Last edited by ThinkingRunner on Sun May 25, 2014 11:09 am, edited 1 time in total.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by HardKnocker » Sun May 25, 2014 5:44 am

One parent could stay home and take care of the kids.

This is an option also and sometimes less stressful.
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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Professor Emeritus » Sun May 25, 2014 7:14 am

sunnyday wrote:
Rupert wrote:
sunnyday wrote:
Rupert wrote:I'm sorry to tell you that daycare is the least of your future financial worries.
Seriously?? The OP is considering paying $40k a year on daycare and that's the least of his worries? What is going to cost more than that for his children that he/she will need to pay? Hopefully college isn't mentioned because parents don't need to pay that and there are things like financial aid.
Daycare lasts four years, max, and the cost decreases as the children age. After that, he has at least 14 (maybe 18, maybe 24) years of schooling left, plus piano lessons, plus soccer, plus cars, plus health insurance, plus food, plus . . . you know. You don't think kids are expensive?
schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)
My goodness what fantasy world did you children inhabit?
Our kids went to public schools But the cost of public school sports and activities falls on the parents.

When my daughter turned 16 as a junior in high school, she wanted a car. She said I just got a 5 on the AP calculus exam and I was to take differential equations over at the University, but to do that I will need a car

So we bought the car. skip ahead 10 years In the past year she finished the PhD in Molecular biology, had a baby, and won a national team championship in figure skating.

You invest in children.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by dickenjb » Sun May 25, 2014 7:51 am

sunnyday wrote: schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)
Ridiculous on the face of it. I can't decide if you are being serious or just provocative.

Having raised two teenage boys, I can tell you our food bills more than doubled over the base case of just me and my wife.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by dickenjb » Sun May 25, 2014 7:53 am

OP - we did home day care and were pleased with it. We got a small discount for the 2nd child. It was a long time ago but I think we paid $150/week for the first and $125 for the second.

One thing that helped was we did the FSA at my wife's work because she did not hit the FICA max, therefore we saved more doing it there.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by Rodc » Sun May 25, 2014 8:32 am

dickenjb wrote:
sunnyday wrote: schooling left - $0 (public school)
plus piano lessons - $0 (optional or youtube)
plus soccer - $0 (school team)
plus cars - $0 (borrow parents car)
health insurance - $0 (family plans are typically the same cost regardless of number of kids)
food - $0-$1,000 / year difference (depending on whether or not parents will be paying for formula)
Ridiculous on the face of it. I can't decide if you are being serious or just provocative.

Having raised two teenage boys, I can tell you our food bills more than doubled over the base case of just me and my wife.
You got lucky. With two daughters and I, my folks say the food bill dropped in half when I left for college. One eating as much as four. :happy

I have two young male teens and one already is cranking up to be just as bad and the other is not far behind! I am fearful.

My kid cost money for all sorts of reasons, often more than I expected, and longer than I expected, but still rather less than having two in daycare. Daycare was on par with college, more or less.

Cost are of course variable. A potential Olympic gymnast is going to cost a lot more than a bench warmer.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by stoptothink » Sun May 25, 2014 8:40 am

MN Finance wrote: We spend 50k/year on kids minimum (not including daycare SAHM).
Do you have 10 kids or paying for several in college? Not going to detail our costs, but my 2yr old cost us maybe 1/15th of that last year. That being said, we are working on #2 and my wife will stay home at least until the first starts grade school.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by caklim00 » Sun May 25, 2014 2:21 pm

Can one of you go part time? We now have 3 kids 4 years of age or under and wife is now part time to keep her licenses active. We don't use daycare. This also allows us to hover around the 15% to 25% marginal rate area. So, any additional work for her is at 25% marginal rate which is less incentive for her to work.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by MN Finance » Sun May 25, 2014 2:46 pm

Not my thread, but its OT already. The point is that daycare is minor cost, which I agree with... well, not minor, but just one of many costs that add up to a large total.

Unless you have a single 2 year old, nobody with kids can calculate the total cost bottom up. It's a top down look at the total expense changes. YMMV, but every single one of these expenses is very different for us with kids, than it would be without:

- housing: we would not be in this house, nor the one we'll build next (I'd still be in an apartment in the city)
- transportation: we would not drive the cars we drive now
- travel: we spend twice as much going to see family at christmas
- santa: doesnt make his presents in his workshop
- food: 2-3 times as much as no kids
- health insurance: twice as much as no kids
- life insurance: no need w/o kids
- activities: music, sports, camps, etc.
- toys: bikes, skates, balls, bats, hoops, goals, games, screens, etc.

Everything you dont think about is different: As I write this I can see into the mud room. I can count 17 pairs of shoes (just the ones in sight), two soccer bags full of gear, 3 pairs of hockey skates, keys to the minivan, about $75 worth of laundry detergent, 6 baskets of clothes (that aren't mine), a broken skateboard which will need to be replaced, a set of piano workbooks (books cheap, not the lessons), 2 ipads that I've never used, and a list of house projects that need to be done (in the house I wouldn't be living in with no kids).

My spreadsheet tells me we spent 50k living large with no kids, now were tight on 120k. Of course, consumption in this area is voluntary like everything else, so we can lock them in the basement and spend nothing. But if the OP is going to spend 20k on daycare, then they're going to spend plenty more the following decade.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by ThinkingRunner » Sun May 25, 2014 5:53 pm

MN Finance wrote:Not my thread, but its OT already. The point is that daycare is minor cost, which I agree with... well, not minor, but just one of many costs that add up to a large total.

Unless you have a single 2 year old, nobody with kids can calculate the total cost bottom up. It's a top down look at the total expense changes. YMMV, but every single one of these expenses is very different for us with kids, than it would be without:

- housing: we would not be in this house, nor the one we'll build next (I'd still be in an apartment in the city)
- transportation: we would not drive the cars we drive now
- travel: we spend twice as much going to see family at christmas
- santa: doesnt make his presents in his workshop
- food: 2-3 times as much as no kids
- health insurance: twice as much as no kids
- life insurance: no need w/o kids
- activities: music, sports, camps, etc.
- toys: bikes, skates, balls, bats, hoops, goals, games, screens, etc.

Everything you dont think about is different: As I write this I can see into the mud room. I can count 17 pairs of shoes (just the ones in sight), two soccer bags full of gear, 3 pairs of hockey skates, keys to the minivan, about $75 worth of laundry detergent, 6 baskets of clothes (that aren't mine), a broken skateboard which will need to be replaced, a set of piano workbooks (books cheap, not the lessons), 2 ipads that I've never used, and a list of house projects that need to be done (in the house I wouldn't be living in with no kids).

My spreadsheet tells me we spent 50k living large with no kids, now were tight on 120k. Of course, consumption in this area is voluntary like everything else, so we can lock them in the basement and spend nothing. But if the OP is going to spend 20k on daycare, then they're going to spend plenty more the following decade.
I don't think any reasonable upper middle class person would argue that kids are not expensive. What some of us are objecting to is characterization of daycare costs as "minor".

A lot of the expenses you attribute to kids (food, housing, transportation/cars, health insurance, and travel come to mind) above are applicable whether the kids are in daycare or post-daycare. In other words, we are already paying for these items over and above daycare costs.

There may be additional costs associated with activities, camps, field trips, clothes, food, etc. when the kids transition out of daycare and into school. I have a hard time believing that the incremental annualized cost of these items could even remotely approach the cost of daycare (we currently pay $40K/year for two kids). I am referring to annualized cost, not total cost over 13+ years of school.

Writing that $3-4K check for daycare every month in the initial years takes a much bigger ongoing bite than $500 checks every month over 13 school-age years. For some perspective -- our annual daycare costs are double our annual housing costs, and also double the cost of the brand-new vehicle we purchased to accommodate our kids -- so it is definitely not a minor cost even in the long run.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Tue May 27, 2014 5:00 am

ubermax wrote:Wilked , we're helping our daughter care for twins that are 3 months old who will soon be in daycare also - they're trying to get out of a small apartment and into a house in the greater Boston area and this much we know so far - daycare and house prices are crazy ! - small Capes asking $650,000 and still needing work, cash buyers, bids 50k over asking - Beverly Hills isn't just a California address :happy

I (we) understand and can empathize with you but unfortunately don't have any good suggestions or opinions regards the options that you laid out for yourself .

Good Luck !!!!
Thanks! This is our scenario roughly as well, moving from an apt to a house within the next year, planning a second child, and trying to manage the cash flow crunch.

That is great you are able to help them out, I am sure they appreciate it

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by leonidas » Tue May 27, 2014 5:57 am

For my first child, wife stayed home for two years and then Grand Mom lived with us so she looked after him. Second child, wife stayed home for two years and we put him in Daycare for the remainder. It cost 1025/Mo in NJ. In our town we only have 1/2 day kindergarten so we also pay 700/mo for the remainder of the of the day which includes aftercare up to 6pm. This is my last month paying that since he goes to first grade in September. In the summer, we send both kids to camp for 6 weeks at 550/wk for the older and 500/wk for the younger. That totals to something like 11-12k a year for the kids.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by dlprop » Wed Jun 04, 2014 1:46 pm

We are in a similar situation; also in Boston. We pay 400/week for full-time daycare and it was the cheapest we were able to find. You mentioned finding a nanny or a nanny share; I personally don't think that will help with expenses, good nannies cost $20/hr and they charge more if there are more kids so daycare is always going to be more cost-effective (don't forget you'll be paying their social security, medicare, and unemployment benefits). We did the nanny calculation a few times, and for the hours we wanted (9am-6pm) it would never make financial sense. I summarized a few other scenarios though.

Fewer days at daycare:
- We have friends who do 3 days of daycare; mom is able to go part-time and watch their child 2 days/week.
- I am bringing our child down to 3 days per week this summer because my dad is coming for a few months to help.
- If you and your spouse can work 4 days per week and extend hours (block one day per week where you have no meetings), perhaps you could swing 3 days/week at daycare.
- I have also heard of other families in the area that have a SAH friend with kids who watches both couple's kids 2 days a week for less cost than the cost of daycare, and the SAH person only has these "extra" kids a couple of days a week

Pay less for daycare
- Negotiate discount for multiple kids
- Move to the suburbs; doesn't need to be a great school district for the daycare years and cheaper daycare is available the further you go from Boston (this works much better if you have the option to work remotely so you don't have to commute everyday)

We currently have one child, but want more in the near future. Working a few extra years before retirement would be fine. We're still in discussion about timing and all that.

One of our thoughts is that we could move to a lower cost area and rent out our current place in the city (2br). Daycare seems to be cheaper outside of town. We are also able to somewhat work remotely, so that's why we are considering this option. I'm not too keen on this as we like living in the city and my husband rides the T to work, so we just have 1 car for me to drive to work a few days a week. I'm not sure if you could switch to a company that would allow more flexibility; that's what I did recently which is why this a new option.

I was a little surprised at this comment.
MN Finance wrote:My spreadsheet tells me we spent 50k living large with no kids, now were tight on 120k. Of course, consumption in this area is voluntary like everything else, so we can lock them in the basement and spend nothing. But if the OP is going to spend 20k on daycare, then they're going to spend plenty more the following decade.
We spend ~20k/year on daycare and daycare is our single biggest expense (more than housing). Our food expenses stayed the same since we eat out less now. We live in the city and have one car, but many of the families at my child's daycare do not have a car and do just fine. There are so many free fun things to do in the city so we find that we spend very little on entertainment. We also live in a small space, which means we spent much less to furnish our place, and much much less to heat our space, and we don't have space for extraneous big purchases. (My son has fewer toys, but more kids to play with at the playground.) Also, many people are able to make a lot more money working and living in the city than if they were elsewhere. Another cool thing about living in the city is that we have access to plenty of used items on craigslist/parents mailing lists. A bit of a rant, but just because we pay 20k on daycare per year does not mean our spending in other categories is correlated.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by wilked » Wed Jun 04, 2014 8:45 pm

dlprop wrote:We are in a similar situation; also in Boston. We pay 400/week for full-time daycare and it was the cheapest we were able to find. You mentioned finding a nanny or a nanny share; I personally don't think that will help with expenses, good nannies cost $20/hr and they charge more if there are more kids so daycare is always going to be more cost-effective (don't forget you'll be paying their social security, medicare, and unemployment benefits). We did the nanny calculation a few times, and for the hours we wanted (9am-6pm) it would never make financial sense. I summarized a few other scenarios though.

Fewer days at daycare:
- We have friends who do 3 days of daycare; mom is able to go part-time and watch their child 2 days/week.
- I am bringing our child down to 3 days per week this summer because my dad is coming for a few months to help.
- If you and your spouse can work 4 days per week and extend hours (block one day per week where you have no meetings), perhaps you could swing 3 days/week at daycare.
- I have also heard of other families in the area that have a SAH friend with kids who watches both couple's kids 2 days a week for less cost than the cost of daycare, and the SAH person only has these "extra" kids a couple of days a week

Pay less for daycare
- Negotiate discount for multiple kids
- Move to the suburbs; doesn't need to be a great school district for the daycare years and cheaper daycare is available the further you go from Boston (this works much better if you have the option to work remotely so you don't have to commute everyday)

We currently have one child, but want more in the near future. Working a few extra years before retirement would be fine. We're still in discussion about timing and all that.

One of our thoughts is that we could move to a lower cost area and rent out our current place in the city (2br). Daycare seems to be cheaper outside of town. We are also able to somewhat work remotely, so that's why we are considering this option. I'm not too keen on this as we like living in the city and my husband rides the T to work, so we just have 1 car for me to drive to work a few days a week. I'm not sure if you could switch to a company that would allow more flexibility; that's what I did recently which is why this a new option.

I was a little surprised at this comment.
MN Finance wrote:My spreadsheet tells me we spent 50k living large with no kids, now were tight on 120k. Of course, consumption in this area is voluntary like everything else, so we can lock them in the basement and spend nothing. But if the OP is going to spend 20k on daycare, then they're going to spend plenty more the following decade.
We spend ~20k/year on daycare and daycare is our single biggest expense (more than housing). Our food expenses stayed the same since we eat out less now. We live in the city and have one car, but many of the families at my child's daycare do not have a car and do just fine. There are so many free fun things to do in the city so we find that we spend very little on entertainment. We also live in a small space, which means we spent much less to furnish our place, and much much less to heat our space, and we don't have space for extraneous big purchases. (My son has fewer toys, but more kids to play with at the playground.) Also, many people are able to make a lot more money working and living in the city than if they were elsewhere. Another cool thing about living in the city is that we have access to plenty of used items on craigslist/parents mailing lists. A bit of a rant, but just because we pay 20k on daycare per year does not mean our spending in other categories is correlated.
Good points about flexing work hours to save money. We are looking at that now actually.

As for moving to suburb, we are like you - we like access to the city and what it has to offer. TGIF Saturday night dinners do not appeal...

In terms of what we have done, we have tightened our budget for housing (future house purchase), and I think I can shift to 4x10 when we have two kids in daycare. I do think that once we get on the other side of it (i.e. kids in school) we will be in fantastic shape.

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Re: Child Care - 2 or More Children and Strategies to Pay

Post by serbeer » Thu Jun 05, 2014 3:45 pm

We only sent kids to daycare after older one reached 3.5yo. Until then, we had a nanny/babysitter that was working 8 hours a day (we shifted/overlapped my and wife's hours to minimize nanny hours since there is travel to/from work and lunch hours that would add about 1.5/2 hours without such shift). We only added $2 per hour to nanny's pay after the 2nd child was born, and this is quite reasonable IMO. Don't forget young kids sleep 3 or so hours per day after 6 mo, so unless she is doing house shores (would be a separate agreement), more than 1/3 of her time is lunch break.

So with nanny your costs do not double, they more like go up by 15-20%. Though nanny is more expensive than daycare for one kid where I live (may not be true for Boston). When the 1st kid went to daycare, we dropped her wage back by $2. But on the days the kid was sick and had to stay home (happens a LOT the first year in daycare) the wage would be +$2.

Also, we were sending older kid to daycare part-time (3 days a week) the first half-year, and that kept the costs down so that we could continue to keep nanny.

With daycare, we are now getting 10% discount for the 2nd kid. But it still nearly a double of cost for 1 kid. Still more than cost of nanny, by about $300 per month.

Nanny getting sick was a big problem for us, even with family around. Luckily it did not happen often, and we had backup nanny that we could sometimes get. But it is the reverse now with kid being sick being the problem now, since sick kid has to stay home. And with 2 young kids, it happens the whole lot more than it was happening with nanny.

In short, my suggestion is to go with nanny to reduce costs until kids need socialization at 3-4yo.

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