Can we afford a second Child?

C

CorkGirl08

Registered User
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10
Age: 24
Spouse’s/Partner's age: 25

Monthly net income from employment or profession: 1860
Monthly net income of spouse: 1600



In general are you spending more than you earn or are you saving? Not saving much but not building up debt either.

Rough estimate of value of home: 375,000.00
Amount outstanding on your mortgage: 235000
What interest rate are you paying? EBS Variable Rate

Other borrowings – car loans/personal loans etc
My car loan €4000 outstanding (114 per month)
His car loan €9500 outstanding (201.50 per month)
No Credit Cards.


Savings and investments: 4000 aprx

Do you have a pension scheme? Yes, PRSA €40 Per month contribution

Do you own any investment or other property? No

Ages of children: One child aged 4

Life insurance: €28 per month for us both Mortgage Protection


What specific question do you have or what issues are of concern to you?


We are considering having another child but not sure if we will be able to do it financially.

We currently have no child care costs as a family member minds our child however we would not be able to avail of this again.




All advice much appreciated!
 
CorkGirl08 said:
Other borrowings – car loans/personal loans etc
My car loan €4000 outstanding (114 per month)
His car loan €9500 outstanding (201.50 per month)
No Credit Cards.


Savings and investments: 4000 aprx

Do you have a pension scheme? Yes, PRSA €40 Per month contribution
Click to expand...
Why are you saving when you have unsecured and presumably high cost debts? You might be better off using lump sum and regular savings to reduce/clear such debts first.

Do your income figures include CB and ECS (c. €3K p.a. for a single child under 6)?
 
You could reduce your outgoings by switching your mortgage. The EBS variabe rate is 5.33% - you could get a rate as low as 4.63% from National Irish Bank or 4.75% from AIB or Halifax.(Potential savings for you of around 100 euro a month.) Based on 25 yr mortgage.
 
Why not redirect the PRSA contributions towards debt reduction and resume pension contributions when you have reduced/cleared these? Unless you are contributing in order to benefit from employer matching of contributions?

Would renting a room in the house out to an au pair/childminder under the rent a room scheme be an option to benefit from a double whammy? Just throwing it out as a bit of lateral thinking...
 
Clubman,

We didn't want to go down the route of an au pair or renting out a room. PRSA contributions could be ceased but I couldn't see it making much of a differnece short term and both our loans are fixed so we could face penalties if we were to pay off lump sums.

Our main concern is that we would be able to manage on our incomes with a second child without having to scrape the cents together every month.
 
Can you post a summary budget outlining is as much detail as possible all of your (net) income and all of your major ongoing outgoings right now? Do you keep a spending diary to ascertain where exactly where the money goes? Are you good at budgeting and sticking to a budget?
 
Total Combined Net Monthly Income:3460
Childrens Allowance

Outgoings:
Mortgage : €945.00
My Loan: :114.00 monthly
Spouse Loan : 201.50 Monthly
Gas : 80.00 Aprx
ESB : 70.00 Aprx
Mort Prot : 28.00
Life Assurance : 12.90
Playschool :104.00 monthly
Total = €2581.40
 
Hi CorkGirl08,

will you be able to sustain the same level of income during and after maternity? Have you investigated the cost of childcare in your vicinity? How much can you afford to pay for childcare? Will you need to pay for two children or one child? Have you investigated whether it would be more efficient financially for the spouse with the lower income to give up work for a few years instead of paid child care? Or to change jobs to part time work? The older child should be starting school in the near future so it may be workable to pay for childcare for one and work part time.
 
During Maternity leave I would only recieve maternity benefit I don't think the differnce in my wages would be topped up by my employer. I would only have to pay for childcare for the new baby. I think if I decided to work part-time there would be a significant drop in my income. I rang one creche in the area and they were charging €245.00 per week for full time care which I thought was very expensive.
 
CorkGirl08 said:
Total Combined Net Monthly Income:3460
Childrens Allowance

Outgoings:
Mortgage : €945.00
My Loan: :114.00 monthly
Spouse Loan : 201.50 Monthly
Gas : 80.00 Aprx
ESB : 70.00 Aprx
Mort Prot : 28.00
Life Assurance : 12.90
Playschool :104.00 monthly
Total = €2581.40
Click to expand...
You should now keep a detailed spending diary for a month or two and then sanity check the above figures against it. You may be surprised. For example you have not listed anything like groceries, lunches, home/car maintenance/repairs etc. etc.
 
You have life assurance premiums of 12.90, is the 28 Euro Mortgage Protection for house insurance (fire/water damage) or is is a policy that pay out if you get ill?
 
You could "stress-test" your income for the conceivable situations (such as: drop in income from being on maternity leave, drop in income from being obliged to go off sick during pregnancy, increase in expenses from additional child) and see how you cope. Once you have a diary of your regular expenditure it should be possible to see how the reduced net income will play out. I'd run other scenarios as well such as going single income (don't forget about tax credits in all of this).
 
So-crates,

Going on single income - I dn't know how we would survive on a single income. Could you please elaborate more on how this would work? It really confuses me, sorry
 
CorkGirl08 said:
So-crates,

Going on single income - I dn't know how we would survive on a single income. Could you please elaborate more on how this would work? It really confuses me, sorry
Click to expand...


You say you dont think you colud survive on one income but with childcare costs so high it would hardly be worth working just to pay them and also this might answer your question about affording another child.
 
CorkGirl,

I'm not suggesting you do so. What I am trying to say is look at each option open to you from a financial perspective, work out what the costs and benefits of each option are and the general affordability. In some cases it works out that the cost of childcare on top of the cost of working (e.g. specific clothing and transport requirements) eats up the equivalent of or nearly one income. It is always worth sitting down with a pen and paper and weighing up the cost of the different options before choosing which is best for you, then deciding how you want to proceed. I suspect you would find that it probably wouldn't be worth it in your case but as you have indicated that child care could potentially eat up almost €1000 a month it is worth doing the sums. My aside was a reference to the fact that tax credits accruing to the non-working spouse can be transferred to the working spouse which would increase their net pay. Sorry for the confusion, I am not advocating at-home mam, just to check if a parent at home is more valuable.
 
Basically considering our incomes at the moment it would stretch the budget too far. So our only options would for one of us to re-arrrange our working hours i.e. go part time or something.
 
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