Updated on 11.10.06

The Road to Financial Armageddon #7: Here Comes Baby

Trent Hamm

Yesterday, I talked about the period in my life where my wife and I spent money like it was going out of style in order to obtain a “yuppie” lifestyle. Then, that magic moment happened: we took a home pregnancy test and discovered that a little one was on the way. I can remember that night like it was yesterday: we sat there excitedly holding each other’s hands and talking a hundred miles an hour about this child, our child, and what it all meant. I didn’t know it then, but this was to be the event that was the straw that broke the proverbial camel’s back.

The first mistake we made was insisting on only the “best” (read, most expensive) things for our child. We bought a ridiculously expensive crib, multiple layettes, multiple carseats, and so on and so forth. Perhaps the pinnacle of the overspending is when I had a slightly smaller duplicate of my own dresser made for him. We had this vision of a perfect little nursery in our heads and we were going to have it at any cost.

The little things added up as well. We bought him lots of toys, only to find out that free toys are often much more entertaining. We bought piles of wipes and diapers and such without understanding that we were spending our baby budget in nonsensical ways.

Now that we had all this stuff, we found out we were sorely unprepared for the day-in day-out costs of having a baby. Diapers, formula, wipes, clothes that he seems to outgrow every day; it’s a continuous cost that you’ve basically committed yourself to for, oh, the next eighteen years or so. We were completely unprepared for this new financial reality and we soon found that we didn’t have nearly as much money as before.

The lifestyle changes that the baby brought also brought a second wave of changes on us, and accounted for a second mistake: we spent money instead of coping with our lifestyle changes. For instance, we started eating take-out most every night simply because we were spending so much time with the baby and his night-time feedings were making us both worn out. We also travelled quite a lot when he was about three months old simply to show him off to others instead of inviting his many well-wishers to come and visit us, which would have been cheaper and more convenient but was alien to our lifestyle of showing off.

The real problem was that we were unable to separate what our child actually needed from what we wanted. We deluded ourselves into believing that buying all of this stuff for him was actually going to benefit him. The reality of the matter is that it doesn’t matter if it is a $50 crib or a $1000 crib, he’s still going to stand up in it and chew on the railing and he’s still not going to remember it when he’s four years old. The only difference that it makes is to us, so that we could feel some sort of parental glow when we saw it, but the child in the crib ended up counting for more than the crib ever did.

If you haven’t put the pieces together yet, things were just about to collapse. Bills were piling up left and right and it would only take a few things for the whole house of cards to collapse. Let’s just say you should tune in tomorrow for part eight in this series. It’s titled “Meltdown.”

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned

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  1. BigBuddha says:

    I .. perhaps luckily .. do not have kids yet .. my wife and I have been talking about it for sometime … but we plan to do more investing and saving so that the passive income will pay for our childs needs education and all …

  2. Rani says:

    what i discovered to be the best way to save costs of having baby is to breastfeed as long as possible. It saves me a lot, and buys me time and convenience. I don’t need to buy formula, don’t need to buy bottles, I don’t spend my time washing and sterilizing the bottles, I don’t spend my energy lugging backpack containing formula equipment. I get more rest, particularly when I breastfeed while lying down.

  3. I can definitely relate. My wife and I are expecting our first child in January and the temptation is huge to buy the most expensive products for you baby…some sort of badge of honor that somehow you love your kid more than the person who didn’t spend $800 on a stroller. Its really quite ridiculous when you think about it. Stories like yours have helped me shy away from this behavior and realize that babies aren’t nearly as concerned with brand names as we are!

  4. Kathy says:

    I am a SAHM and we therefore have one income. We have a 5 year old, 4 year old and 19 month old. We incurred a lot of debt that first baby year. We went from making over $100K to $30K and added a baby and health insurance. Yet I wouldn’t change it for the world. Breastfeeding is great. Garage sales/hand me downs are the best. People who have kids ALWAYS have stuff to get rid of. Buy the bouncy seat etc. for $10 from a friend/sale and put the other $40 to buy 2 weeks worth of diapers. Have grandma/best friends buy you clothes and diapers in 12 month+ sizes. You will have tons of newborn stuff, but the freebies stop soon enough. By baby number three you realize that you don’t even use half the stuff you think you might. Wait until the baby comes to figure out what you need. The first few weeks all you need are breastmilk/formula, burp clothes, wipes, pj’s, crib, car seat and diapers. lots and lots of diapers.

  5. boardmadd says:

    Oh yes, we remember very well how much we spent on kid #1, slightly less for kid #2, and kid #3 pretty much got the bottom of the barrel treatment (LOL!). Not that kid #3 didn’t get love an attention, but it took us until that time to wise up and say “c’mon, they don’t *need* this stuff”.

    One of the coolest discoveries we made with our first child was that we had a box of cast off costume beads and other little things that were just sitting around. All of our kids combed through and played with tose “bead boxes” for hours at a time. It was such a hit qwith our kids that we started making these bead boxes to give to other parents, i.e a very inexpensive item that provides lots and lots of entertainment.

  6. Florida Girl says:

    My daughte is now 2 1/2 and the lessons I learned are priceless. She is my first and only child. We started out the same way,..the best and by the time she turned 1 the house was full of useless, expensive stuff. A crib was a waste of money altogether. We hade a nice bassinette and then she spend about 2 month in an expensice crib and I moved her to a mattress on the floor. This way she is able to come out of her room on her own, she will anyways, only without climbing and falling. Hand me downs are the ticket. For the first few years kids grow so fast we hand down the hand me downs :) they usually still look like new. Now she’s out of diapers and boy does that make my pocketbook happy. It get cheaper and easier as we go on. I don’t buy any Expensive toys. I hate the ones that suck up multiple batteries only to make some sounds nobody wants to hear incl my daughter. We made bocci balls out of aluminum foil and had a blast the other day. She still has the paper crown her daycare lady made when she turned 1. Check out the dollar stores. $5.00 will buy crafts supplies for weeks and I don’t sweat it when she is being a careless 2 year old handling them.

  7. Megan says:

    Reading this series is, quite frankly, shocking to me. My parents made good money but some poor decisions (nowhere near your level, though) and taught me very little about financial planning–though my mom was always warning me against credit cards, and began at times to share with me the level of stress that came with carrying consumer debt when I became a young adult. I also bought a slightly used car with my OCD father when I was sixteen and the deal was that I would pay $200 a month on this car for the next 5 years–which I think is too heavy a burden on a teenager. I guess the outcome of all this early training was that debt feels BAD. To this day, knowing I’m in debt to someone else, no matter how little the amount, is a horrible feeling. Now I am married with two children and our only debt is the remainder of my student loans, which should be paid off within the next six months. Like I said, it pains me to read your story and I hope my morbid curiosity concerning just how much debt you built up will be satisfied in the next installments…

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