# The Maternity Leave Challenge!!



## thebomb (Feb 3, 2012)

Alright all you CMF folks I am pregnant. Kinda scary/sad/messed up that I am telling a group of anonymous forum folk before my family, but hey- I dont want to lose out on 12 wks of advice for financial planning! I spent the better part of the last week of Dec going through all my expenses in great detail in order to come up with a very aggresive saving plan for 2013 and then alas- I found out I was pregnant. Couple things I am focusing on over the next nine months are;
* save 1500 monthly specifically towards a mat leave income fund (in addition to EI)
* continue to pay 1500 towards my HELOC (balance of 20k) - this is my only debt
* continue to make 200 a month in additional mortgage payments
* cut discretionary spending ( I am not a splurger but I historically have not tracked/agonized over every penny spent). I will now be tracking pennies and have for the last 4 weeks. Its amazing what you can save when you are acutely aware of your spending. 
* plan for my responsible baby suppplies budget and by responsible I mean I dont think that my kid needs to have a 2k stroller or designer baby clothes.
* determine how my husband and I will split our time off. I am the main breadwinner and even though we live well below our means with minimal debt, my time off will still hit our pocket book/lifestyle and secretly I want him to spend some time off with our kid- I think it would be a good experience! Not so secretly I think a whole year off as a women can be a career killer. 
* Overall I want to have financial peace during my time off. 
I would like to hear your experiences and perhaps offer some feedback on my plan above. Did you take too much time off/not enough/regrets (financial or otherwise), etc. Do I save more and pay down HELOC less aggresively? Also the list above only focuses on my income. 

Thanks everyone.


----------



## andrewf (Mar 1, 2010)

Why not pay $3k/month toward HELOC until it is paid off then save for mat leave? The interest avoided has a higher rate of return than cash sitting in a savings account. You can also readvance later on if you need to supplement your income. In the mean time you will have saved the interest expense (about $50 per month currently).

Congrats, btw!


----------



## Sampson (Apr 3, 2009)

congrats!

my wife is currently 4 months into her 2nd mat leave in 2.5 years. we were very conservative with amount we saved (oversaved) and with our budget. We planned for monthly shortfalls, but ended up with a few hundred surplus/month in both instances. The extra savings provide a lot of reassurance. we reduced the amount of savings over than period, but have never failed to maximize all the registered accounts.

Save hard now, then make sure to create an accurate budget that you revise often during the first few months. If necessary, slow down the extra payments on the debt, make sure to plan for RESPs, childcare, and generally, the extra spending on clothes, diapers, food etc. These items will be new for your balance sheet, and never go away.

Make sure you have enough savings to carry you through the entire year or more. I know you write you don't even want/plan to take the full year, but you can never predict how you will feel after the first moment your baby stares you in the eyes and blinks a few times. Your heart will melt over and over again.

congrats and good luck!


----------



## Four Pillars (Apr 5, 2009)

Congrats! Any chance you are married to SilentWonder?

http://canadianmoneyforum.com/showt...bs-parental-leave-and-doubling-up-of-pensions



You are fine on the savings front - no advice there.

I wrote an extensive series on baby expenses which might be worth checking out:

http://www.moneysmartsblog.com/baby-expenses-series/

This one is my favourite:

http://www.moneysmartsblog.com/mistakes-for-new-parents-to-avoid-baby-expenses-iii/

If I can sum up my baby expense advice, it would be to treat it like a new business and don't buy anything until you need it.

You might also want to look at your life insurance coverage.


----------



## Pennypincher (Dec 3, 2012)

Hey, congratulations and all the best with your pregnancy. I have two young children myself. It sounds a bit cliche, but many people including myself who were on maternity/paternity leave spent money because we needed something to do. Especially when the baby is very young. We travelled more because we had more time to do so. We bought more because shopping at the mall in the winter was something to do. So just be aware...  You know better than to go into debt for those things, so as long as you don't get into debt, you will be fine.

The maternity leave itself isn't really what costs the family, it's the cost of childcare once you are back at work. Just from my personal experience: before kids, I made up to $58,000/year and I was ok with that. I eventually climbed up to $80,000 at the same job between maternity leaves and then I basically lost my job to downsizing when the kids were 2 and 4. I was paying for two kids in daycare at $2,500/month. When I went on the job hunt again, I felt very constrained to find a job that paid $80,000. I had many job interviews at levels that paid probably $75,000 but they demanded a lot of my time - overtime, expected to take calls on the blackberry after hours, travel... I couldn't do that kind of job with two kids in daycare and having to pick them up by 4:45pm. I ended up getting a job that didn't require too much overtime, but I now work from 6:30am to 4:00pm and I don't make $80,000 anymore. This kind of job instability can happen to anyone... BUT when it happens to you when you have one or two young children, you really have to measure your pay versus your daycare costs and it makes you feel stuck in a job or industry that might not be a good life work balance for your family. I generally feel that one of the spouses ( and in your case it sounds like your husband ), has to have a more flexible job for when the child is sick, daycare situations arise... etc... Some people seem to be able to do it, but we are finding it really hard and I am considering quitting because the income I make isn't making it worthwhile. 

I just wanted to point out that kids change your career objectives and options for at least one of the spouses. You have to have a good understanding of your partner and each other's expectations and try hard to think about what things will be like 5 years down the road and prepare for many different scenarios. Insurance is a good suggestion as mentioned by a PP. If you or your husband get sick, who will pay for your extra expenses etc...


----------



## kcowan (Jul 1, 2010)

I think you need to establish a plan for teh responsibilities for you and your SO in regards to the baby and the household. Now is the best time to get him involved with baby duties. And to take on some added household duties.

Also treat this as a learning experience for when you might change jobs in the future. Don't expect to get your old desk back!


----------



## realist (Apr 8, 2011)

I don't have kids but can speak from observation and lessons from others: 
- I agree with Four Pillars, "don't buy anything until you need it". I have watched friends spend a ton on fancy baby clothes for the child to grow into only to be given a ton of clothing as gifts/hand me downs.
- Don't turn up your nose at hand me downs! Spending a bundle on clothes that your kids will wear for a year tops is not smart.
- Take it easy on toy purchases, same reasons as clothing. There is a point at which you are buying stuff for you and not the kids, though it sounds like you are aware of that.
- Maybe not right away, but schedule kid free date nights, and nights for you and your husband to have a night alone. These are sanity preservation measures!

Personally I would agree with the advice to pay down the HELOC faster rather than the "Mat leave fund" - you can always borrow from the HELOC again down the road i you need to, and the faster its paid off the less interest you will be paying. (That is obviously dependent on what rates you are paying where)

Can you do mortgage pre-payments? Maybe hold off on the additional mortgage payments and do a lump sum after you determine your expenses more closely?

Good luck, and congratulations!


----------



## humble_pie (Jun 7, 2009)

bomb this is wonderful news, mille félicitations ! 

if you've already started to watch the budget, your money life should not change hugely over the next 20 months. I'm assuming both you & your husband can easily stay home with the newborn, in rotation, for at least 6 months each. Six months is not actually a lot of time, it'll fly by.

during 2013, before the baby is born, andrew's suggestion is spot on. He says Pay off the Heloc asap. Myself, i don't see the need for a maternity income fund, surely you can manage on your husband's income for 6 or 8 short months. You've also told us about your residential rental property or properties, so probably there'll be income from these as well.

babies don't cost all that much during their first year of life if both parents take parental leave. It's really after the newborn era, when day care begins & later on schools, sports & summer camps, that the costs of raising children quickly escalate.

back to the newborn era, cloth-diapering saves both $$ & the enviro if the parents do the laundering at home.

look for friends & relatives who will share clothes & equipment. I once set out to "sell" a baby carriage that had only served one child. The carriage was immaculate. The young couple who came to see it were expecting their first. They were so sweet, so young, so serious. I couldn't take their $$ so i ended up giving the carriage to them. They did seem surprised. But lots of relatives had given me lots & lots of things.

a bloggiste in my city writes that the tradition in her portuguese neighbourhood is for residents to press upon any pregnant woman or young mother any & all of their children's outgrown things still in good condition. Typically these are exchanges between strangers. Her 2-year-old daughter's snowsuit arrived - in perfect condition - in a plastic bag tied to the doorknob of her front door !


----------



## thebomb (Feb 3, 2012)

$2500 for daycare?? Holy crap thats alot!!
......and no Four Pillars I am most certainly not silentwonders fruit bearing wife with good hips. Thanks for the links on babycosts, will look at those shortly. 
As for getting my desk back, I will admit I will be pissed if I lose my corner office!!! I still cant believe the day care costs....


----------



## Toronto.gal (Jan 8, 2010)

thebomb said:


> I am most certainly not silentwonders fruit bearing wife with *good hips*.


But you're still 'thebomb'!

Don't forget the $2,500 mentioned above was for 2 children [are you having twins?]. 

Congrats!


----------



## MoneyGal (Apr 24, 2009)

I wish people would quote daycare costs in after-tax terms (not that PennyPincher did or did not, I don't know). 

Daycare costs are deductible up to a max of $7K per child under the age of 7, just like an RRSP contribution would be. 

Now, if you are paying $1500/month for daycare costs (not unreasonable for a toddler spot in Toronto, but not the cheapest option) you obviously won't be able to deduct the entire cost. 

However, the "true" cost will be $[up to $7 in daycare costs]*(1-MTR) = after-tax costs or, if you are spending more than $7K per year, the true cost will be [$7K in daycare costs]*(1-MTR) + daycare costs in excess of $7K = total after-tax costs.


----------



## Ihatetaxes (May 5, 2010)

MoneyGal said:


> I wish people would quote daycare costs in after-tax terms (not that PennyPincher did or did not, I don't know).
> 
> Daycare costs are deductible up to a max of $7K per child under the age of 7, just like an RRSP contribution would be.
> 
> ...



Hmmm... we've spent between $31,754 and $35,388 yearly over the past four years for our two kids and I don't jump up and down about the wonderful $7k/kid tax deduction (that has to come off the parent with the lower income).


----------



## MoneyGal (Apr 24, 2009)

I hear you. But the reality is that the face cost is not the after-tax cost. For a parent in the 34% tax bracket that $7K expenditure is reduced by almost $3000, giving you an out of pocket cost of $4620. Plus the lowered net income increases your CCTB, if you are entitled to it.


----------



## thebomb (Feb 3, 2012)

Thx MGal, didnt know about the deduction. I guess I should look into all these childcare/baby bonus type things...


----------



## Pennypincher (Dec 3, 2012)

If you live in the GTA, Montreal, Vancouver, Calgary or Edmonton, (I am probably missing others) be prepared to pay $1,300 or so, for full time daycare for an infant under 18 months. No joke. When you have two kids, it becomes $2,500.


----------



## Pennypincher (Dec 3, 2012)

Ihatetaxes said: "Hmmm... we've spent between $31,754 and $35,388 yearly over the past four years for our two kids and I don't jump up and down about the wonderful $7k/kid tax deduction (that has to come off the parent with the lower income)."


Amen to that. Frankly, the deduction does $h1t all. And thanks Stephen Harper for the $100/month childcare "subsidy". It pays for a day and a half of daycare! And... it's taxable income. Woot woot!?


----------



## Pennypincher (Dec 3, 2012)

I highly doubt anyone who qualifies for CCTB can afford $1,500 daycare. I wouldn't be able to afford my two kids it if my income was less than $65,000.


----------



## MoneyGal (Apr 24, 2009)

Well...Just for the sake of argument, let's assume you make $65K gross, live in Ontario, have a spouse making exactly the same amount, and have two kids under the age of 7 for whom you are (1) receiving UCCB income and (2) deducting a total of $14K in child care expenses each year (from one spouse, as in this scenario there is no "lower-income earning" spouse). (And let's assume NO other deductions or credits.)

You'd get about $90/month in CTTB, actually. As this is non-taxable income, it would take a raise of just shy of $1500/year to produce the same after-tax income each month.


----------



## thebomb (Feb 3, 2012)

well my parents dont yet know about the pregnancy but they were over last night and we were asking hypothetical questions about daycare and though I knew they would be willing to watch my kids I didnt think they would want to do so full time. Surprisingly they really do. So lets assume they do- do I still get the credit? I plan on paying them. Secondly- what does formula and diapers costs on average monthly?? Any help would be great.


----------



## MoneyGal (Apr 24, 2009)

If you pay them, you can claim the credit. You will need to supply the SIN of the person you are paying, and CRA will match the SIN of the person you identify against his/her tax return. So claim it if you pay it, and don't claim it if you don't. 

As for diapers and formula - I am sure someone else can answer; I didn't use formula and cloth-diapered my kids.


----------



## Plugging Along (Jan 3, 2011)

Congrats on the baby. I have been meaning to respond. In terms of some costs and frugality tips, I will throw in mine. 

Diapers - Average about $700 - $900 year. 
Watch for sales, Costco, Superstore, and Walmart are the cheapest for the biggest boxes. Superstore will allow you to combine their store coupon with manufactuer coupons, so if you get one on sale, with their store coupon and call the manufactuer, its not too bad. The other thing is if there is a REALLY good sale, stock up as much as you have room and can afford. You can always bring back the diapers to the store for the larger size if they grow out of them. I actually bought 80 bags of diapers on a huge case lot sale in the beginning and kept trading them up until my youngest was out of diapers. I spent under $800 for the whole time my daughter was in diapers. 

With the exception of the newborn size, or size 1 (the smaller ones), it is cheaper per diaper to keep your baby in the smaller size because you get more per box. There is quite a size range for the weights. I would use the bigger diapers at night time, as they hold more, and you don't want them leaking, and smaller size for the day.

I also started 'Elimination Communication' training when my babies were little, not because of being frugal, but rather I think changing diapers is gross. I had both of them going on the toilet for the solids by 1 year old, and both were out of diapers before two in the daytime. Another reason we saved a lot of money.

For formula - if you can, I strongly recommend breast feeding. It's much better for the babies, and after the initial learning (which was hard), it's actually quite a bit easier. My friends who formula feed would spend about $80 a week, I think on formula. Again, you can get a lot of coupons. We did a combination of breastfeeding and formula (due to medical reasons). 

Other tips:
Make your own wipes! This was the little gem I learned from my second. You can google it. I think we only ended up using one Costco box of wipes for number 2, when I used to use one every couple of month for the first. So saving about $20 - $30 a month.
Make your baby food, much better, and cheaper. 
If you are buying clothes, once you get the sizing figured out, then buy at the end of the season. I still buy their winter coats on boxing day for the following year. This year I picked next years jacket for $13 new, reg $70. You can do this for most things.


----------



## GoldStone (Mar 6, 2011)

Plugging Along said:


> For formula - if you can, I strongly recommend breast feeding. It's much better for the babies


:encouragement: :encouragement: :encouragement:


----------



## thebomb (Feb 3, 2012)

Well, all is well. The little guy is 10 wks old. I'm on budget, (actually i built an overage in the budget and actually have a fair amount of money left over each month). I cannot underestimate the peace of mind that comes with not worrying about money when on maternity leave. Now if I could just get some sleep!


----------



## Toronto.gal (Jan 8, 2010)

thebomb said:


> all is well. The little guy is 10 wks old..Now if I could just get some sleep!


Many congrats on your newest pride & joy!

I know what you mean about sleep, but hopefully the lil guy will adjust in another month or so. 

Enjoy motherhood & cherish every second as babies grow too fast!


----------



## humble_pie (Jun 7, 2009)

a pre-Christmas baby! thankx for telling us! 

mille félicitations!


----------



## Cal (Jun 17, 2009)

My wife and I are expecting late April...first child, so we have been asking alot of the same questions, thanks for starting the thread.

Does anyone know if the child care tax is applicable to expenses for a in or out home nanny as well?

We have seen day care costs as high as $2100 a month per infant to as low as $1200....guess which one my child will be attending. lol. Planning on roughly $2000-$2500 for 2 kids (when that day comes) as well.

Good advice above, we are planning to get as many things used as possible and will do craigslist searches prior to buying anything.


----------



## liquidfinance (Jan 28, 2011)

We get diapers and wipes from Costco. My wife breast feeds and we make our own food now he is going onto solids. With the exception of rice cereal and rusks. 

The child care costs are but we have found d plentgy for around d $40 a day. It looks like my wife may be axle to work from home as well which will help greatly. 

Walmart is great for clothes but we have been given a lot so spent very little in any case. 

I budgeted $300 a month and coming in well under at the moment. Any surplus s at year end will go into his resp.


----------



## northernguy (Oct 19, 2013)

About to have our third and if I have any advice for the new parents out there, it's not to buy much of the stuff people say you need (change tables, diaper genies, oodles of clothes, etc) and buy everything you can used. You can get huge sales on diapers, formula and wipes and often can find coupons/deals from the websites of the companies who make them. We always found that the pampers brand was the only one that worked for our kids, but we were able to get them for a better price than the generics by watching for the walmart anniversary sale, sales at loblaws, etc. We'd buy 10 cases of different sizes and trade them in later if we had too many of one size. The savings can be as much as $10 a case or more, so well worth it. This time around, we're close to the US border, so I might explore that as an option too.


----------



## Cdnwife (Sep 10, 2013)

Daycare will depend on where you are and whether you are looking for home or group daycare. In Vancouver the lowest we found for a home daycare was $1100 and up to $1350 for my 1 yr old. If you go nanny, you are looking at even more than that. We contemplated a nanny share and our portion was going to be $1600/mo after you calculate the hourly rate, CPP and Ei contribution from the employer. Most nannies worth their salt go for north of $14-$15 per hour. Definitely found that life was more expensive after going back to work.


----------



## Berubeland (Sep 6, 2009)

Being a mom or a dad is both the most wonderful and horrible thing that will happen to you. They will melt your heart with their smiles and their laughter, and you will also end up in bathroom stall with a child yelling "My poo won't come out" over and over in a loud voice. There is both the unforgettable scent of baby neck and projectile vomiting in your future. Your heart will burst with joy and break with pain. 

My son is autistic so my life is particularly blessed by the complete dissonance of having a kid that can read at 2.5 years old but didn't get toilet trained until 5. Math skills off the charts combined with a complete lack of physical coordination. Every night of the week, there is some kind of class be it Tae Kwon Do, or ballet, or swimming or minecraft. You will admit your complete failure as a parent when you fall short and wonder how you can deal with it for one more second. Then you will dig deep, grow yourself as a person and do your best one more time. 

I love my son more than my own life, more than the sun and the stars. I am so lucky and you will be too. You have embarked on a great adventure and journey. Happy trails


----------



## mbmb (Oct 17, 2012)

I had to take a 1/2 hour pay cut per day in order to make it on time for daycare since my employer didn't want to accommodate different working hours, but rather give me the option to leave early without pay. Since my son will need before and after school starting with next year I look at the financial inconvenience in a positive way though: between me and my husband we can work the hours in such way to skip before school, so I consider the cost for before school to make up for the pay cut from my salary. On the other hand I gain more time due to the less traffic on the roads.
It would have been nicer to have the extra cash for investing, but things do not go always the way we plan. 

One recommendation, depending where you leave, if you target a good school with long wait lists for the daycare/before-after school, put your name on the list now.


----------



## Cal (Jun 17, 2009)

http://www.squawkfox.com/2012/10/05/newborn-essentials-checklist/

Frugal Newborn Essentials Checklist


----------



## Ponderling (Mar 1, 2013)

First son was born while we were living overseas on a temp work assignment, so we proved you did not need to buy a lot of stuff. 

Change table was a spare desk I borrowed from the project office, and made longer legs to bolt onto it to raise it up to a convenient counter height.

His crib for the first 8 months was a storage container with a thick beach blanket folded to fit into the bottom of it. Then that container became the toy storage bin, and we bought him a kids matress that sat on the floor of his room. No chance to crawl out of that and fall. 

After that it was a second hand high chair, new buy infant car seat, and a hand me down pram. We were living in a sub-tropical climate, so clothes were not a big issue. I think his wardrobe was five t-shirt/onesies shirts for the whole of the first year. 

Did a diaper service for two months, then changed to dispoables after tiring of changing him like 8-12 times a day in cloth diapers.


----------



## maxandrelax (Jul 11, 2012)

Hey The BOMB How are thinks working out? Any reflections on things so far?


----------



## thebomb (Feb 3, 2012)

maxandrelax said:


> Hey The BOMB How are thinks working out? Any reflections on things so far?


welll.....since you asked! Things are well. Little guy is 4 months old and turning out to be quite a little charmer. Here are my reflections on mat leave from a financial and somewhat career perspective. 

1)Once Type A always Type A! I spent most of last week on the phone with work, all of this afternoon and will be in the office on Thursday. So.....although I am not directly getting compensated, I will be sure to make note of this upon my return, though based on a couple of comments recently made by them I dont think I need to worry about reminding them. 

2) Cant remember who said it on here but someone warned me about going to the mall to stay sane!! I agree, I have fallen into this trap a couple of times and have spent money when I had not planned to. Damn, you can seriously go stir crazy, batty, insane, nuts, loco, mental, etc when you are at home in winter with a newborn. I CANNOT wait for the weather to get better. On the bright side, my purchases took advantage of the winter clearout for little man for next winter. 

3) Though I have had a surplus each month (except Christmas), I actually think I can save even more but I havent. In all reality, my spending hasnt really decreased with the exception of eating out at lunch at work, clothing costs and fuel costs. 

4) Used stuff is great. Quite a few folks on here recommended to get used as much as possible. My initial first time mom instinct was no way, but that has changed. Im still selective on what I buy used but I am not as uptight as I used to be. 

5) Formula is expensive, my little guy has a super duper sensitive stomach and as such takes the liquid concentrate sensitive stomach formula. In other words, not cheap. However as my mom says....he's human, he has to eat and then she reminds me that I spend more a week on groceries for myself than him. Makes sense.

6) If I could plan for one thing I didnt when I was saving was a seperate vacation fund account. An account that I saved for guilt free for a vacation to take while on mat leave. Because sanity is under rated. Getting a few hours sleep during the day is more valuable to me than a Brinks truck backing up to my garage and unloading 24k gold bars. Taking a vacation (sans child) is this mythical dream I think about admittadly too many times in one day. 

Thats it I think.....I seriously have a much different perspective on working moms now too. But that is a whole other thread. Lets just say that I think Ms. Sandberg is snorting coke. Off to sleep I go!


----------



## Tom Dl (Feb 15, 2011)

Not right for everyone but breast feeding is a lot cheaper and better for the kid, where possible. Plus to some extent you can doze while doing it. It least from what I observed while rolling over. In fact probably the worst thing about breast feeding is that it isn't an easily split duty, which worked out well for me.

One way to save money with kids is not to move to a bigger house. I didn't, not the best situation, but we have made it through, almost.


----------



## thebomb (Feb 3, 2012)

Blah, the dreaded breast feeding debate...and from a man nonetheless.....




Tom Dl said:


> Not right for everyone but breast feeding is a lot cheaper and better for the kid, where possible. Plus to some extent you can doze while doing it. It least from what I observed while rolling over. In fact probably the worst thing about breast feeding is that it isn't an easily split duty, which worked out well for me.
> 
> One way to save money with kids is not to move to a bigger house. I didn't, not the best situation, but we have made it through, almost.


----------

