Starting a 529 Plan
After considering how to be financially ready for a baby, I decided that now would be a good time to start a 529 plan. While some people may be in hysterics over the declining stock market, I see it as an opportunity. By starting to contribute to a 529 plan now, we will be able to buy stocks at discount prices and hopefully enjoy the eventual rise. And since we don't even have a child yet, we have plenty of time to wait for the stock market to rebound.
Opening the account was much easier than I expected. First I started at the CNN Money Guide for 529s. This site gives you the link to your state's 529 Program. Once on my state's site all I needed to do is open an account under my own name and social security number. There is no fee or penalty to transfer the account to another person's name, so when we do eventually have a child, we will transfer the plan. You can read this article to see Why you should start a 529 Plan for an unbord child.
Now all that is left is to make an initial deposit into the account and set up an automated deposit of a relatively small about each month. Since we are starting so early, we can deposit small amounts each month and allow the compounding interest to work it's magic. And now that I've taken one small, baby-step toward being finacially ready, I am starting to feel better.
Financially Ready for Baby?
As I look through our mid and long term goals, the thoughts of a baby are now looming closer on the radar. And even though I thought I was doing well financially, with the thought of a baby on the horizon, I suddenly realize I need to completely re-vamp my goals, pay off everything within sight, and solve all the world's problems before I can introduce offspring into the world. I suppose it is normal to feel the need for everything to be absolutely, over-the-top perfect for your future baby, am I right?
Before I was content with having credit cards paid off, a nice savings, and slowly paying off other debt like low interest student loans and car loans. And the mortgage? Oh, I can pay that off eventually. But put baby into the equation and it ALL must be paid of NOW, not tomorrow, not next week, NOW I say!
So I began making my little list of goals and putting a timeline to them. But no matter how I finagle it, I am not happy. I want to have no remote possibility of slight financial stress that future baby could be exposed to. I don't want to fight with my husband over it, I don't want baby to ever feel the pressure of financial tension, and I want diamond encrusted toys for said baby! In short, I want more than could ever be attained while still fertile, and worse I seek a perfection that even an old, infertile millionaire cannot attain.
Now that I have my piles of scrap paper with charts and numbers and calculations that prove I am a crazed, delusional, perfectionist incapable of attaining my overly ambitious goals...I have come to phase two: acceptance of my inevitable failure at reaching my goals and wallowing in self-loathe at this fact. Hopefully tomorrow I will move onto phase three: slapping myself silly then coming up with a humanly feasible plan that leaves us in a "good" financial place instead of a "perfect" one.
Any advice from parents? How were you able to feel financially ready for a baby? Or am I crazy to think there is such a thing?
An Emergency Fund
Or should I say, an end-of-days fund. My husband believes an emergency fund means enough money completely liquid to live on for years after a nuclear bomb wipes out half the world. What he doesn't realize is that his precious e-fund will merely be fancy wallpaper or firewood at that point. He reminds me of my grandmother who kept her money in a band-aid tin hidden in her headboard. At least she had the excuse that she lived through the great depression and understood the fickleness of the economy.
So what is his excuse? Well, he went through his own little great depression. After graduating college he tried to find a job during a slow job market and it took him years to get a college-level job. During the 2 years after he graduated he was without a job for long periods and experienced first hand the torture called "job search." This torturous activity scarred him for life and now he is constantly afraid he will loose his job and never find another one, although he is very good at what he does.
While his fear is on the extreme side...It is not unfounded and can be somewhat useful during times like these. Because of his fear we have saved up enough money to pay for 100% of our expenses for 8 months if we both simultaneous and tragically lost our jobs. If only one of us lost our job, we could live for 20 months on the fund worst case scenario. So although I make fun of his dooms-day mentality toward finances, I must admit it makes me feel safe and worry-free to have an end-of-days fund.
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