Monday, June 29, 2009

Day Care (Dad)

I have to be perfectly honest. I have no idea where the money to pay for day care will come from. We're keeping a balanced budget on a monthly basis right now with just enough left over for savings and some long-term purchases (such as furniture and auto replacement). From what I understand, day care can cost one or two thousand dollars a month! We need to come up with at least ten thousand more dollars a year just to maintain our current lifestyle. And that's just for the first kid!

I'm not going to worry about it too much, though. I guess I'm just documenting all my thoughts. Already Danielle and I have experienced quite a few times where we couldn't see the path ahead very clearly, but things have always worked out, and usually better than we ever could have expected. I guess rather than get discouraged and panic, I should be excited to see all the interesting and unexpected ways God will meet our needs. Still, I wouldn't mind finding a big gold nugget in the backyard one of these days...


  1. Well, keep in mind that since the baby will be born in December, you'll get the additional deduction on your 2009 taxes.
    You may also want to look into whether or not your company offers a Flexible Spending Account (FSA) to use towards daycare. You choose a certain amount of money to come out of your paycheck pre-tax. Then you use that money to pay for daycare. There are a couple of tax benefits to doing that.
    If they don't offer that, you should be able to get a tax credit of a certain percentage of what you pay towards daycare.
    You can't get both - if you have the FSA, you won't be able to get the tax credit. But, you will more than likely get a better tax benefit by using the FSA if it is an option than the govt tax credit.

  2. Good thoughts. I've looked into the FSA, the one thing I hate about FSA's is that you lose them at the end of the year if you haven't used them up. So unless I have a very accurate estimate of day care throughout the year, I'd be hesitant about diverting funds into a limited time account.

    The tax credit, I believe, works out about the same as the FSA, only you can get it for the actual amount (no guessing). The drawback is that it comes a year later.

    Needless to say, I'm learning a lot more about childcare planning than I ever wanted to! Keep the advice coming, though, because I'm in over my head!


  3. The FSA is a great idea! Plus if i remember correctly i believe you can deduct medical costs from it also, so it's not hard to use up by the end of the year.

  4. Well, you should be able to get a pretty good idea of what the daycare costs when you find the one you want to use. And, you don't have to deduct the entire amount. So, let's say that it's going to cost you $10,000 for the year, you can set your FSA up for $5,000 just to see how it goes. You shouldn't have any trouble using that up by the end of the year.
    As far as Medical expenses, I'm not exactly sure how that works. The daycare FSA may be different than the medical FSA. Plus, if I recall correctly you have an HSA plan, which means you can't use FSA dollars on anything you use your HSA dollars for. So, it's considered a limited FSA (I stopped contributing to an FSA for medical expenses when I started my HSA plan, b/c it's too confusing! And I work in the industry!;)

  5. You should get your 1000 tax credit in April even if the baby is born 12/31.

    I totally get the day care dilemna. I was really feraked out about it. Have you gotten your name on any waiting lists? Or looked at any home day cares with just a few kids?

  6. We haven't begun looking just yet. I suppose we should!