Wednesday, 22 August 2012

Money Changes Everything

I'd heard all of these rumors about children being expensive, but I didn't really believe them.  We'd been parents for nearly a year and managed just fine with a limited amount of penny squeezing thanks to the extra money I'd saved while we were pregnant to allow for $400-$600 of extra cash during my maternity leave.  Then the sucker punch came.  We realized just how much daycare is going to cost us for infant category twins and that it equals A LOT.  That extra money should have been saved for this year, not last, but it's too late now and I'll be honest we had a great year, so I'm beyond regrets.

We toyed with the idea of a nanny, which would have been more cost effective for the first 6 months, but then more expensive then daycare after the minions reached 18 months.*  After having managed to get 2 spots in our number one choice daycare, with only a ten minute walk from our house because 2 families decided to move at the last minute, we knew it was meant to be.  We forked out the admissions deposit and registered the minions.  Waiting lists in Toronto are insane, and a lot of them require a $50 deposit just for the honour of waiting.

When we started crunching the numbers, over 35% of our net income will be going to daycare expenses.  Thankfully our housing costs are only 25%, but things are going to be a little lot tighter than they used to be.  We toyed around with the idea of me remaining home, but that just isn't in the cards right now financially and I really need some more adult interaction in my life then I've been getting.**  I also thought that I really need to give the whole working mom thing a good solid try while we work on rebuilding our pre-baby savings account.

At first I went into full blown panic mode, unable to sleep having nightmares about cheques bouncing everywhere and everything that could go wrong, then I started to take action and we came up with a plan.***  Here's what we've come up with so far:

One of my favorite things to do when the minions go down for a nap is watching the television show Til Debt Do Us Part while I eat my lunch.  One of the first things that host Gail does when she's helping a couple get out of debt and/or save money is put them on the jars system.  To work the jars you allocate a certain amount of money to various areas of your non-fixed living expenses: Food, Transportation, Entertainment, Clothing and gifts, Other etc. and record how you spend it.  You refill the jars weekly.  We have been on the jars for about a month now, and although we don't record how we spend the money (we probably should though) the jars have created good conversation about spending priorities, limited us to one weekly grocery trip and has curbed our late night convenience store binge substantially.  The fact that when the money is gone, it's gone has been a good motivator.  We've also created a weekly babysitter jar to make sure that we get out for more than work and can't use it as an excuse in addition to taking some family members up on their offers to look after the minions.

A photo we took at Seattle's EMP Museum this Spring BD (Before Daycare)

Research and Negotiate with your Service Providers
When I was looking at our monthly bills for cable, internet and phone in addition to the fact that we were paying a significantly higher mortgage rate than that what is prime right now, I started to make some phone calls.  By looking at the competitors, researching bundles vs. non-bundles and knowing what we were paying, I was able to negotiate a $60 a month total savings on our internet and cable package and a lower interest rate on our mortgage that saves us $76 of interest every month.  A couple of hours of time has saved us over $1600 a year. I will be researching our house/car insurance this November when our contract expires.

Take Inventory
We are really lucky that so many friends and family have been generous enough to pass on car seats and clothing to our children, so much so that we've barely had to purchase anything for the minions.  This has saved us endless amounts of money.  It makes sense to take an inventory of what you have clothing and supply wise for the kids regularly (at least seasonally) so you can budget for what you need or add the items to birthday and Christmas lists if the timing works out.  Most parents are happy to get rid of old clothing and toys - so ask your friends who have kids a little bit older than your kids.  The most helpful clothing is from children about a year older than your own because the sized clothing will work for the correct season.  We've also had some really good luck at used clothing stores like Once Upon A Child where you can get really gently used (often name brand) clothes for about a quarter of the price retail.

For items like formula, diapers and wipes, talk to a friend or family with a bulk items department store membership, most people would be happy to take you shopping for discount items you need.  We've also started to plan meals and take inventory of our fridge and cupboards before we hit the grocery store.  Forcing us to use more leftovers, get more creative and eat a lot more healthy, which is never a bad thing.

Apply for an Income Tax Reduction
Do your research on whether or not childcare counts as a tax deduction where you live.  We decided that we'd much rather apply to have less tax deducted from my pay each and every pay cheque then to be cash poor all year and get a large tax return come Spring.  In Canada the form is called a T1 and you can ask your employer for a copy.  Fill it out and send it in as soon as you can, processing takes 2-8 weeks and they may ask for additional documentation delaying the process even further.   If you're approved your payroll will get instructions on how to adjust the tax your income giving you the taxation benefit year round as opposed to one annual lump sum refund.  I'm currently on week 4 of waiting and check the mail with bated breath daily to see if/what our new, more cash lax budget will be or whether I have to provide more paperwork and start waiting all over again.

Prepare for Emergencies
Our car is over 10 years old, our porch needs to be repaired, our washer moans as we process endless loads of clothing and our garage door has seen better days.  Even though we can't afford a huge emergency fund these days, we're setting aside $100 a month for emergencies**** because we just know that all of these items will die within months of each other.

Turn off the Lights
We've hit that magical time of year where most of the time, save for a few days, you can leave the heat and the air conditioning off and control the temperature of the house by opening and closing windows.  This in addition to turning off unnecessary lights and doing your laundry and dishes at off peak hours you can save about $30-$40 a month on your utility bills.

Walk the Line
Parking at the subway station by our house/day care is $4 a day, that adds up to $80 a month.  Our daycare is exactly half way between our house and our local subway station, and has stroller parking*****.  We are hoping to walk the minions to and from daycare every day until Christmas break and a couple of times weekly once the winter hits to save some money and wear and tear on our above mentioned "antique" car.

This is what we've come up with so far and it's working, for the most part - I'm not going to lie and say that things haven't been really tight.  From time to time we need a few tweaks, but the system is helping us stay on track.  I'm going to start an advent calendar for when Molly and Jack enter full day kindergarten and when the ugly word "daycare" can be ejected from our vocabulary.  In the mean-time any additional money saving tricks and tips would be appreciated!

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*If you are pregnant and reading this: 1) get on as many daycare waiting lists as possible now 2) start saving for daycare....I'm not joking.
**Even though Molly's vocabulary is up to 5 words, 6 if you believe she's secretly learning German behind our backs because she yells "NINE!" sometimes when she's in a bad mood, it still isn't cutting it adult conversation wise.
***I was that guy on the phone with my mortgage agent in the middle of the night trying to work things out.
****If our tax reduction comes through with enough savings we'll be raising this to $200.
*****I never in a million years thought that stroller parking would be a word in my vocabulary.


  1. Have you heard of toy libraries? I know there's at least a few in Toronto. My understanding is you borrow toys just like you would books and then return them - great way to have novel toys around when you need them without spending any money.

  2. Hey! I re-read this post just tonight as we have recently bought a home and I'm looking for ways to be less house-poor. Any chance you can do an update on this post, listing what worked and what else you've done lately to save mooula??