Marriage & Children

Financially Ill-Prepared Parents

Your top (financial) priority is your nuclear family.

I cannot overemphasize this enough. Please do not jeopardize the financial health of your nuclear family (your spouse + kids) or else you'll be that parent asking your kids for money. It's cyclic, so breaking that cycle by prioritizing your family's financial health is the first step in ending that cycle. If you decide that you are willing and able to help those outside of your family, you have to get your affairs in order first. It's that airplane analogy of putting on your oxygen mask first.

If you and your spouse agree to help, set some guidelines and boundaries

One of the terms and conditions should be complete transparency into their finances. You should be able to see how they are spending their money . You should have access to their credit card statements, bank statements, and other financial documents. I strongly recommend not giving them cash. Pay for things directly. For example, pay the bank directly for their mortgage or have groceries delivered. Helping financially irresponsible parents can wreak havoc on a marriage. This is definitely a topic to discuss with your partner before getting engaged. Remember – you made a vow with your spouse, not your parents.

Do not enable financially ill-prepared parents

It is very important that you do NOT give them straight cash or enable any poor financial behavior. It is akin to giving cash to a drug addict–they will just buy more drugs. In the case of your parents, getting cash from you will only help them in the short term. Eventually, they will run out and make their next financial mistake. This is the concept of economic outpatient care discussed in the Millionaire Next Door. Basically, when people get money freely, they often do not spend it wisely. Ironically, it's the folks that don't get money so easily that often do better in life. This situation can easily be reversed–having adult children who are fiscally irresponsible. All the more reason to start their financial education early.

You may be able to get a tax break by supporting your parents

Your parent does not have to live with you to be claimed as your dependent. Generally, if your parent’s taxable income is less than his/her personal exemption ($4,050 in 2017) and you provide more than half of your parent’s support, you can claim your parent.

Other requirements are:

  • Your parent must be a citizen of the U.S., Mexico, or Canada, and
  • Your parent cannot file a joint income tax return unless s/he has no income

On the other hand, if your parent lives with you and you pay for adult day care services while you work, you may qualify for the Child and Dependent Care Credit of up to $600 per person. If your parent qualifies as your dependent, you can deduct expenses you pay for their medical expenses, also. But let’s not kid ourselves – if you are a doctor reading this article, it’s likely that you’re going to get very little deduction for your dependents or for any medical expenses you pay because you earn too much! Financially Ill-Prepared Parents

You may be legally required to support your parents

This may come as a surprise to you but there is something called Filial Law in 29 states. Traditionally not enforced, it may be on the rise due to rising costs of long term care. A landmark case in Pennsylvania in 2012 set the tone when a nursing home successfully sued a son for his mother's care after she fled the country. Some states impose criminal penalties, or as in the case above, financial penalties. All states require that the court find that the parent is indigent or unable to financially provide for his/her support. The two main defenses against filial law are your financial circumstances and if there is evidence of parental neglect, abuse, or abandonment. Different laws define these terms differently. This is a law that we should all keep our eye on as the cost of long term care rises. Unfortunately (fortunately?), most of my readers won't be considered financially incompetent. If there is any concern you may need to foot the bill for an aging parent, definitely let your financial adviser (FA) know so they can help build scenarios and a plan for this.

Your parent might be suffering from abuse, even though s/he’s perfectly healthy

According to Nolo.com, the fastest growing form of elder abuse is financial fraud. If the fact that your formerly financially-secure parent is running out of money seems “off”, it is possible that a scammer has become involved. Read this article. If you don’t live nearby, your parent’s FA might be the best source of information you can have. (Note – a FA or CPA must get permission to report to another family member if we believe the client is being scammed. Client information is confidential, even to family members. Some FAs include a clause in their agreements for clients to list who we can contact if we notice unusual withdrawals.) If you don’t see your parent(s) often, consider talking to them and their FA to see if you can get written permission to share information.

Final Thoughts on Helping Financially Ill-Prepared Parents

Lots of things to consider here! Again, this is a difficult and emotionally charged topic. Take your time and know the laws that may apply to you. You may want to consult with an attorney that specializes in elder law for help when dealing with financially ill-prepared parents. The following books may help:

(These are affiliate links and I get a commission, at no extra cost to you.)

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The Romance of Pre-Marital Financial Planning

NY Times questions to answer before marriage. First, congratulations on meeting someone special. Feels great, doesn't it? Now, wouldn't you want to make sure you have the best possible chance of making it? Well, I'm no John Gottman and I can't predict the likelihood your marriage will succeed, but I do know that some pre-marital financial planning can go a long way to ensure a happy marriage.

Remember, marriage is a legal contract and you are uniting assets, not just families. That means that you need pre-marital financial planning. Yes, even if you're in love. Truly.

I suspect many people avoid this topic for a number of reasons. It's not “romantic.” Or it doesn't feel that way at first.

I actually think it is romantic to talk finances. You are establishing a deeper layer of trust that happens when you fully disclose finances to each other. By making financial goals together as a couple, you envision the future together.

Let's talk about something truly unromantic. Imagine being that woman or man who is ill-prepared to deal with the financial consequences if things go south. Being stuck in a marriage where one party is spending everything, leaving the other to salvage whatever money is left. Perhaps, it even comes down to one person hiding assets. That is truly unromantic.

I will not be discussing prenups (but if you need a refresher, click here!) in this post, but these discussions are the foundation of creating one.

Question 2 of the aforementioned NY Times Questions is the focus:

Do we have a clear idea of each other’s financial obligations and goals, and do our ideas about spending and saving mesh?

Let's break it down further:

1. Money history

What did money mean to you growing up? 

If you don't know how your partner grew up financially, this is a good time to find out. For example – did they ever have to worry about whether there was enough money for dinner? What money lessons, if any did they learn growing up? This is also a good time to start learning about each other's parents' and other family member finances that can affect you. This will be further delved into below.

2. Income

How much do you earn? Is this job stable? What are you career goals?

3. Financial obligations: Liabilities and Debt

Do you have debt – how much and what kind? How do you feel about having debt (debt tolerance)? What is your credit score? Have you ever filed for bankruptcy? If one of you owns a business – find out if you/your partner can be personally liable if sued. What are the business' assets and liabilities? If this is a second marriage and/or if there are children from a previous marriage or relationship:

Do you pay alimony? How much is left?

Do you pay child support? How much? When does this obligation end?

What is your financial obligation for funding their college and more? 

If there is an ex-wife/husband: Any concerns that s/he will ask for more financial support?

I strongly recommend reading their divorce decree and parenting agreement.

4. Assets

Do you own property? What retirement and other accounts do you have and what are the current balances? How much do you contribute to these accounts yearly? What is your net worth?

5. Spending

How do you decide to make a large purchase? Do you budget? Do you have credit card debt?

6. Goals

What are your financial goals and by when? 

This is a good time to really find out if you and your partner have even thought about “retirement” goals, or as I prefer to call it reaching financial independence.

7. Practical matters going forward

How will we handle finances together? Joint and/or separate checking accounts? Over what amount should we discuss making a large purchase? Will we jointly own future purchases of homes and other investments? How are we going to handle pre-marital assets and liabilities? Will they be jointly shared or remain separate?

8. Finances of parents

Are our parents (insert siblings and other potential family members here) financially stable? Is there a possibility they may need our help in the future? How do we feel about that?

As if it wasn't enough to discuss each other's finances, you need to know what the financial state of their parents and siblings are. This is semi-addressed in question 11 of the NY Times questions:

Do we value and respect each other’s parents, and is either of us concerned about whether the parents will interfere with the relationship?

Financially ill-prepared parents and family members are common. Not being on the same page on this topic can wreck havoc on a marriage. It's tough to be prepared for this, but having a conversation in advance can help.

So, did my partner and I go through a checklist? Not this systematically, but, I did ask him most of the above questions before we got engaged. I am fully aware of his assets and liabilities. I have read his divorce decree and parenting agreement. We did all of this to make sure that our relationship is on the same financial page.

Continuing Your Pre-Martial Financial Planning

If you're a female breadwinner, I highly suggest this book. You can also work with different counselors or therapists. Some people think that having an outside perspective can keep the emotions at bay, allowing you to better focus on your goals and dreams. No matter how you proceed with your pre-marital financial planning, it is important to start conversations and ask questions now. You might not think it's romantic, but it's a great way to say how much you love your partner.

What do you think? Comment below.  ]]>

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Interviews with Real Female Physicians – Amanda

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially!  So let's introduce our next woman physician rockstar – Amanda.

Tell us about yourself:

I am a soon-to-be 40 year old Pediatric Emergency Medicine physician. I've been married for 6 years with one little girl. I am from California and my husband is from Puerto Rico. We met in medical school and after being together for 7 years, we finally got married. We waited on having kids to be “ready”, and that was a mistake because it was harder than we thought to have a baby. We spent a lot of time dealing with infertility issues. Thankfully, we had pretty good IVF coverage so while we had to pay some of it out of pocket, we were definitely lucky and it didn’t financially ruin us. We trained on both coasts and finally settled in Phoenix, AZ just last year. We had been in NYC for several years and were happy to finally leave for a better quality of life. Our hobbies, like most people, are traveling. I personally like shopping and reading when I’m not so tired! I definitely feel like I picked the right specialty. I love the kids and never know what my shift is going to bring. There’s A LOT to be said about doing shift work and leaving your work at the hospital. My advice would be to do what you love and get paid for it. I have been an attending since 2012, and my husband, a cardiothoracic surgeon, since 2016.

Did you graduate with student loans? How much & what are the interest rates?

I was lucky enough to receive full tuition reimbursement from USC for 4 years of undergrad and 1.5 yr of grad school since my mother worked there. I graduated with around 250k in debt between graduate school and medical school – a combination of federal and private loans. The private loans were at an interest rate of 7%, and those were paid off in full (approx 80k) as a gift from my mother. The remaining – I have been chiseling at it and am finally under the 100k mark at a rate of 2.1275%. My husband graduated with no loans – all paid in full by his parents. We are very lucky because our loan situation is a best case scenario compared to what other physicians face.

How fast (or not) are you paying them off?

Given my interest rate, I am taking my time paying back the loans. We would like to purchase a house in the next few years, so all of our ‘extra’ cash is going towards that. My husband is more debt averse than I am, but between the CFP and myself, we have convinced him that rushing to pay off the student loan is not financially advantageous. I am set to pay them off in 2037, however as my husband reaches his financial peak in the next few years, I anticipate being able to pay them off much sooner.

Financial aspects of kids 

When did you have them?  

We had our baby girl in 2016. We hope to have another, but we are not sure that will happen given my age. I also have no desire to pursue infertility treatments again, given how unsuccessful they were, and now we have a HDHP which has no infertility coverage.

Are you planning to fund their college expenses?

This is where my husband and I disagree. He wants to fully fund and I’m ok with her taking out some loans. We currently have 2 529s, a UTMA and a Coverdell ESA. There is a possibility of me joining a employer who will fund 75% of her tuition if she goes to an AZ state school. This is 17 years away, so really hard to know if AZ will be our ‘forever’ place.

What are your child care expenses?

We have a nanny and pay her $2600 monthly. I know of too many daycare nightmares and just didn’t feel comfortable with it.

Financial aspects of marriage

Are you married?

Yes we are married.

Did you get a prenuptial or postnuptial agreement?

No – we talked about it but essentially came into the marriage with nothing on both of our ends.

Do you and your husband agree on finances?

For the most part yes. We agree on needing to discuss big purchases and the need to save. (In my mind, for retirement and in his, for our daughter’s education). My husband however is less worried about having enough for retirement. He believes in enjoying his life now because you never know what is going to happen. I however tend to plan for the long-term. This is why we have a CFP because we aren’t always on the same page.

Have you experienced a financial catastrophe?

Thankfully, no.

General Finances

What’s your FI (financial independence) number? 

We haven’t decided at this time.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

I handle the $$ and we have a CFP.

What is your net worth?  

We are net positive several 100k – our only debt is my loan which is now under 6 figures. This however will change once we purchase a home.

How are you saving for FI/retirement?

We currently have 2 x 401(k)s and 2 x Roth IRAs. Previously, we had 403(b) and a 457(b). We just learned about Roth IRAs last year. We are investing only in equities with very low or no fee index funds.

One thing you wish you knew:

In the medical profession, we take an oath to do no harm. We take our profession very seriously and we make personal sacrifices to help others. We take this for granted and assume that other professionals have the same work ethic and integrity. This is how we get taken advantage of – our financial naïveté coupled with our assumption that other people are honest and have our best interest in mind.

Do you have insurance?

Yes, we have disability, life, auto and umbrella insurance.

What does FI/retirement mean to you? What does it look like?

Freedom and peace of mind. Being able to help our daughter without a second thought.

Do you give to charity? If so, where and why?

We are working on this. My husband would rather give to his immediate family or people that he personally knows who need help than a random charity where those who need it may only see a fraction of the donation.

Any parting words of wisdom?

Don’t assume the same level of competence, honesty and ethics from someone giving you financial advice that you exhibit in your profession.

And … that's a wrap! If you're interested in doing this please send me an email – I'd love to hear from you!

I love that Amanda and her husband use a CFP to help mediate their financial differences. This is definitely one of the big reasons to work with one.]]>

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Interviews with Real Female Physicians – Liz

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially!  So let's introduce our next woman physician rockstar – Liz.

Tell us about yourself:

Hi. I’m Liz. I’m an academic attending neonatologist 2 years out of fellowship training and I practice in Cincinnati, OH. 70% of my time is devoted to research. My pay is around the 25-30th percentile of other academic jobs in the area. I am married to a wonderful stay-at home-dad (SAHD) husband and we have a 3-year-old daughter with some special needs. I am happy with my specialty because I love my job, but it’s frustrating to get paid less than what most physicians make. Especially as the sole income earner. I’m doing better than general pediatricians, but I’m taking frequent call and dealing with very stressful situations. My colleagues in PICU are paid more and the discrepancy between my pay and adult intensivists is wide. If I had to do it all over again I would have gone into anesthesia or dermatology. I had the grades, board scores, etc, but neonatology had stolen my heart, so I’m in it until I burn out.

Did you graduate with student loans? 

I graduated with $250,000 off student loans, most at 6.8% interest rate, that were in forbearance all through training. I do not recommend this. I didn’t know about PSLF until late in fellowship, and that was a terrible mistake. My husband also has about $60,000 in loans that are below 3%. I went to a public medical school specifically to save money. My parents were unable to contribute a dime to college or med school, so that influenced my decision. I had a great education and then went to top places for residency and fellowship. I have fully paid off my loans after a windfall I got after being hit by a car. I do not ever recommend this. I’m heading to a total knee replacement next month. But at least there’s a little silver lining. My husband’s loans are at such a low interest rate that we are slowly paying it off.

Financial aspects of kids 

When did you have them? Are you planning to fund their college expenses? What are your child care expenses?

We have one, and had a lot of difficulty having her, so I am not sure if two is in the future. I do not plan on making their 529s a priority until we are in a better situation with our finances. I did not have any money given to me for my college and I feel like it built a strong work ethic and I had no sense of entitlement. My husband became a SAHD shortly after my daughter was born, so the net cost of that is about $10,000 per year after accounting for lost income and not having to do day care. I had my heart set on public school because both my husband and I are products of public school, but with my daughter’s special needs, I’m not sure what we will do.

Financial aspects of marriage

Are you married? Did you get a prenuptial or postnuptial agreement? Do you and your husband agree on finances?

We are married, no prenup, and we agree mostly on finances and my husband stays at home. He had always wanted to do this and I am mostly happy with this arrangement. Therefore I am the sole breadwinner and it has caused no issues. My husband is the manliest man I know, but also one of the biggest male feminists I’ve met.

Have you experienced a financial catastrophe?

None except we both grew up relatively poor. We were extremely poor until just recently as my husband lost his job several times as I moved across the country to do training.

General Finances

What’s your FI (financial independence) number? 

Our FI number is around 2.5-3 million. We think living off of $100,000 per year is reasonable, which is how we reached that number. I will retire around 65, but probably won’t quit entirely for a few more years after.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

I mostly handle the finances. We have a great fee-only FA we found through the WCI list. She shares our same philosophies about passive investment with index funds. My partner and I both agree on this.

What is your net worth?  

Probably around -$200,000 at this point, mostly due to mortgage debt.

How are you saving for FI/retirement?

We are maxing out my 403(b) and 457(b) at $18,000 per account. My work also puts 10% of my total salary into a separate retirement account. I’m using my HSA as a stealth IRA. We have one Roth IRA we’ve funded for one year. We also put part of our e-fund in a taxable account with a more conservative mix of index funds including bonds, international stocks, and total market funds.

Biggest financial failure:

Not knowing about PSLF.

One thing you wish you knew: 

Get disability insurance as soon as humanly possible.

St. Lucia

Do you have insurance?

Due to my car accident issues and other health problems, I don’t qualify for any worthwhile disability insurance policies. I have ok long-term disability through work, but it’s only own occupation for 5 years. Still better than nothing. I’ve never had to use it. No life insurance yet, we do have a $1M umbrella policy.

What does FI/retirement mean to you? What does it look like?

FI/retirement means being able to work only when I want to. I’m pretty sure I’ll want to stop all clinical activities once I reach FI.

Do you give to charity? If so, where and why?

I donate monthly to Planned Parenthood and give intermittent donations to social causes I find important.

Any parting words of wisdom?

Get disability insurance as soon as possible, talk about financial goals with your partner before you get married, get a fee-only FA, use an HSA as a stealth IRA.

And finally, where can people connect with you?

You can find me on Twitter as @LizEnlowMD or Facebook Elizabeth Marie.

And … that's a wrap! If you're interested in doing this please send me an email – I'd love to hear from you!

I hope you enjoyed reading Liz' story. Her story is not only inspiring but shows that FI is possible even when life throws some unexpected wrenches along the way.]]>

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Estate Plan Basics – Death Planning Part 1

Eggy on the way, we've had to do some estate planning. I'll be honest: I found trying to understand and interpret estate planning and legalese way more challenging than learning personal finance. If you feel the same way, then you'll want to stay tuned for my series on estate planning in “plain English” starting with this post. Today, I'm going to discuss the estate plan basics and define some basic terms you need to become familiar with.

The Vocabulary of Estate Plan Basics

Below, you will find some of the most frequently used terms in estate planning. In addition to breaking them down in simplified English, there are also helpful links for additional reading.

Know Your Situation

Before we dive into the estate plan basics, the first thing you need to do is take inventory of yourself. Specifically, you need to understand your personal situation. Who exactly are you looking to protect? Someone who is single is going to have a very different estate plan than someone who is married with a blended family.

Let's start with me for an example. Our situation is more complicated than the common “(first) marriage with kids” scenario, meaning first marriage, no prior divorce and all the kids are theirs.

Our situation: We are not married. I've never been married. M has been married before and has a son from that marriage. Eggy will be our first child together. We do plan on getting married, just not in the near future.

We just finished drafting wills, power of attorney, living wills and healthcare proxies with a lawyer in NY. Please note and keep in mind that estate laws are state specific and some or all documents will need to be updated/redone if you move states and as your reach life milestones.

Last Will & Testament

All couples with minor children need a Last Will & Testament or Will. Why? Because in the Will you name a guardian in the (highly) unlikely event both you and your spouse pass before your kid(s) are adults. Otherwise the court makes that decision for you!

So, if you don't have a Will (and both spouses each need their own wills, they generally mirror each other), then you are basically saying you're OK with having the court decide guardianship for your minor children. I am pretty sure you wouldn't be OK with this.

You can also name a backup guardian in case the first named guardian cannot carry out the duties.

Executor

Your executor is also named in your Will. That is the person who will carry out the wishes of your Will. If you're single (kids or not), you'll want a Will unless you have little to no assets or only assets that bypass probate (discussed below).

Intestate

If you die without a Will, this is called intestate, and your “stuff” will be divided up according to state law.

Probate

Most Wills will needs to go through probateProbate is the name of the legal process for settling a testator's (the deceased) estate.

The probate process involves a probate court, your named executor and a lawyer.

A lot of things do not need to go through probate, however. You may have heard that it is “good” to avoid probate. Probated wills incur costs against the estate – court fees, lawyer fees, executor fees (if applicable) and time.

Every state's probate process is different so you'll want to become familiar with the general probate process in your state. Retirement accounts (401(k)s, 403(b)s, IRAs, Roth IRAs, etc) DO NOT go through probate unless no beneficiary has been named. The same is true for bank accounts and life insurance proceeds.

Beneficiaries

Definitely make sure you have named your beneficiaries correctly. This is not as straightforward as it sounds.

For 99.9% of us, our spouse will be the primary beneficiary for all of these. In fact, if your spouse is not the primary beneficiary of your 401(k) (or a similar work qualified retirement plan), then you need notarized permission from your spouse to do so.

Let's say you have 2 children named Amy and Tom for the next example. The secondary or contingency beneficiary is logically 50/50 split between your two children.

Let's go a bit further and say Amy has 1 child and Tom has 2 children.

If, at the time of your death, Amy has passed as well, then guess what? All of it goes to Tom and Amy's child is effectively cut out of the estate. This is probably not what was intended. The intention was for Amy's share to pass on to her kid.

Per Stirpes

In order to do this, you need to name Amy and Tom and add the phrase per stirpes after their names. Per stirpes means that items are distributed to each family branch. Some states do this slightly differently so be sure to understand your state law on this.

Final Thoughts on Estate Plan Basics

Hopefully, the first post in this estate plan series took out some of the guesswork behind vocabulary that is often used with estate plan basics.

A much needed addition to the official documents is a “crib sheet” for your loved ones such as In Case of Emergency binder.  In the meantime, check out this great book on estate planning:

[ Disclaimer: Please note that some of the links above are affiliate links. This means that I may receive a commission if you purchase through one of my links. I highly recommend all of the products & services because they are companies that I have found to be helpful and trustworthy. I use many of these products & services myself. ]

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Introducing Eggy

M and I are pleased to announce that we are expecting a baby boy this fall. We have nicknamed him “Eggy” – it means baby in Korean. As you know, you cannot exactly plan when you become pregnant. Honestly, we were not sure if things would happen au naturel due to my age so IVF was a possibility. Luckily my current job includes 3 cycles of IVF as a benefit but it is still not 100% covered. I know many ladies who have spent a small fortune on getting pregnant. So here are a few things I have learned, financially, about trying to get pregnant and trying to plan for leave and childcare:

  1. Insurance coverage: Make sure you know what your insurance plan will cover and not cover and what deductible you'll need to meet, if any. Even if your insurance says “maternity is covered,” it may not cover all the tests. My costs: $40 (co-pay for the first visit only) is what my total out of pocket costs will be, including the delivery. This assumes I use an ob-gyn within my health system (I am) and that I deliver at one of their hospitals (I plan to).
  2. Maternity Leave: Think about how long you'll want to take for leave and what leave, if any, will be paid. This is a highly personal decision, but I have yet to meet someone who said they took too much time off. Unfortunately, paid maternity leave is not the norm in the U.S. If you have unpaid leave  at least you'll have approximately 9 months to save up for this. My leave: I get 6 weeks paid leave (at my base salary) or 8 weeks (c-section). I can also use unused vacation. I will have at least 2-3 weeks of unused vacation to get to at least 8 weeks paid. I am taking at least 3 months off. So that means at least 1 month unpaid, possibly more. Since I only really need ~60% of my take home base salary, this won't be a huge burden on us and we will have more than enough saved to cover this unpaid time.
  3. Maternity clothes: Unless you only wear stretchy pants and dresses, you'll need at least a few staples. I do wear scrubs a few times a week to work so I did not have to buy a whole new work wardrobe. Gap Maternity is pretty inexpensive and I was able to use a 20-40% off coupon when ordering online. It also helps that it'll be mostly warm weather during my pregnancy so I can keep wearing dresses.
  4. Baby stuff: I am totally cool with second-hand everything. And due to space limitations of an NYC apartment, we definitely do not want too much “stuff.” Between a baby shower, a very excited grandmother-to-be, M's sister's hand me downs – we should have most of the basics for almost free. I have even scored a free Mamaroo and Ergo carrier already. I won't be shopping at baby boutiques for clothes.
  5. Post-partum help: If you don't have family around you may want to look into outsourcing certain things (clean and cook, etc) so you can focus on mothering. Baby nurses and night nannies are common in NYC – definitely a luxury – but a savior when you're sleep-deprived. Post-partum doulas are also a great idea, especially for first time moms, to show you the ropes, help you ease into breastfeeding (most are breastfeeding certified counselors), and help you take care of you while you recover from delivery. The U.S. is a bit strange in that moms are expected to recover and go back to work ASAP. Too bad there aren't any post-partum spas here like Korea. My plans: M will take 2 weeks off to help. I'm planning on hiring a post-partum doula for a few sessions for the above reasons. After 2 weeks, I'll be with my mom for a few weeks – letting her carry out a Korean tradition of taking care of a new mom. Slightly modified as I'll be able to shower :).
  6. Childcare: This blog is geared towards female professionals, so most of us probably won't be stay at home moms. I'd be lying if I said I wasn't worried about the cost of childcare! The going rate in my neighborhood is ~ $17/hr for a nanny. At this time, I prefer having a nanny for the first 6-12 months after I return to work. The convenience of someone coming to us vs. one of us packing up the baby and walking to a daycare (at least a 10-15 min walk – won't be fun during winter). Also, babies and kids often get sick in daycare and although M's work is more flexible, we don't want to deal with that. Right now, we are planning to have a nanny for 40 hours a week over 4 days and my mom for 1 day a week and for backup. We are *gulp* preparing to spend at least $3,000 a month in childcare. Unfortunately, daycare isn't much cheaper and with the convenience and flexibility of a nanny, this was a no brainer for us. After 6 months or so, we will reassess.
  7. Saving for college: It's never too early to start saving for a little one's college. You may recall that I started a 529 last year in anticipation of starting a family. I get a small state tax break for funding one so it was a no brainer to get started.
What does all of the above mean for our finances overall? We have been working on downsizing our budget over the past several months. The main impact this will have on us is that I will need to put extra payments towards loans on hold. Thankfully, I refinanced most of my loans to a low fixed rate for a 5 year term and will likely pay them off in 5 years and not less. I'm ok with that. We'll still continue to max out our tax-advantaged retirement accounts and should still be on target with our financial plan. I found this book really helpful in creating my Eggy registry: Any other financial considerations for a mom-to-be? Comment below.]]>

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"I promise to always keep our net worth positive …"

Apologies for the hiatus. I was in Hawaii for CME and play. I also got engaged! The above quote is what M said to me (after he promised some other important things like love and happiness).

There are 3 major things in life to insure against – death, disability, and divorce a.k.a. (term) life insurance, disability insurance, and the pre-nuptial agreement AND making sure you and your partner are compatible, especially when it comes to money.  Everyone agrees on the first two, but so many neglect the last. People simply think they won't get divorced – it's everyone else. Unfortunately, statistics show otherwise.

The internet has several articles on the leading causes of divorce, but let's look at this one from the Huffington Post. Finances is #7, but #4 “Not having a shared vision of success” includes financial goals too. In any case, I think everyone can agree that being on the same page money-wise is an area that couples need to agree on.

Love feels great, but ultimately a successful marriage is based on much more than that. The NY Times' questions to ask before marrying has finances as the second question:

“Do we have a clear idea of each other’s financial obligations and goals, and do our ideas about spending and saving mesh?”

Around the third month of dating M I asked him how much money he had saved for retirement and what debt he had. I divulged mine as well. We talked about our shared goals like to work in jobs we enjoy, take two big trips a year, live partially abroad in the future, etc. In fact, we drew up an IPS or Investment Policy Statement. OK, I drafted it and he approved it :).

And, I'll let you take a look at our first draft from a few months ago as an example. This document was the culmination of M and I discussing our goals as a couple. We have also discussed how we feel about financial obligations to our parents should that arise.

We recently hired a financial advisor in prep for combining our finances. I realize most of the finance blogs out there promote DIY and I was more than comfortable doing that for myself. I felt more was at stake with managing our finances. I'm also no spring chicken so we don't have much wiggle room for big mistakes – we have ambitious financial goals.

By the way, we did all of the questions in that NY Times article.

And finally, we have discussed the terms of a pre-nuptial agreement, stay tuned for that.

What do you think? How financially compatible are you with your partner? What questions did you wish you asked?

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