Monday, December 29, 2014

Our lives will never be the same

A new addition to the RFI family
A few weeks before my wife and me were scheduled to fly out to Japan for our Asia trip, we were hit with a surprise: my wife was pregnant!  Jen had been very stressed out at work, feeling worn out and slightly emotional.  We didn’t think much of it, but then one morning she felt sick and then threw up.  As soon as it was time for lunch, my wife went and took a pregnancy test.  Shortly afterwards, I received the following picture message confirming what we both thought:

Yup, we are going to be parents in the summer of 2015!  We are both excited and anxious for our new baby. There’s so much that we have to prepare for.

Insuring for unplanned disaster
Now that we will have a dependent, we need to make sure that we are properly insured.  I have personal disability insurance set up for myself in case I am no longer able to continuing working at my job (due to injury, for example).  We have already increased my term life insurance to $500K and my wife's term life insurance to $250K, purchased through my employer (since it is extremely inexpensive at only around $15 per pay period).  We will be looking to purchase some extra term insurance outside of employment as well.

How expensive is raising a kid?
Most everything I've read online says how expensive raising a child can be.  When I Google “how much does it cost to raise children?” one of the first search results linked is this CNN article written in August 2014 titled “Average cost of raising a child hits $245,000.”  The CNN article warns “it could cost nearly a quarter of a million dollars to raise your child – and that’s not even including the cost of college.”  The article goes on to include miscellaneous and necessary expenses like “haircuts and cell phones.”  

Many coworkers of mine constantly mention how difficult it is financially to raise their children.  Diapers, nanny, doctor’s visits, daycare, food, entertainment, clothing, and after school activities can really take a large bite out of your take home income.  Breaking down the $245,000 cost of raising a child to the age of 18 comes out to be around an extra $1,135 a month.  This doesn’t sound too bad.   

Contrary to public opinion, my online mentor Mr. Money Mustache suggests that having a baby really doesn't have to be as expensive as the world would have you think.  Babies don’t need much; just food, clothing, and shelter.  If we can feed our baby breast milk, this will greatly cut down the costs formula.  MMM suggests that kids really just need a loving and nurturing environment to grow up in.  MMM rips on consumers’ “luxury spending disguised as necessities”.  MMM mocks families convinced that they NEED 7 passenger SUVs to provide safety to their children and laughs at families that feel that they NEED to send their kids to violin classes, horseback riding classes, and ivy league preschools.

The greatest gift you can provide for your child is your time.  Being there for your child and encouraging them to learn can make an incredible difference.  To quote from MMM: “just like most of the other areas of modern life, child-raising is one where the cost and the benefit are actually two unrelated things.  You can spend a lot, and get no benefit at all.  Or you can spend very little, and get the greatest results.”  MMM even goes as far to say that raising a child actually will save you money, since you will be spending so much of your time raising your child that you won’t have enough time to spend money on yourself.

Here are some excellent posts on parenting that you can read on the Mr. Money Mustache website:
We hope to remain as frugal and badass with money as we have been once we have our baby. 

Continuing to work
A while ago, we had thoughts of my wife becoming a stay at home wife when we had children.  This is because we won't be getting much help from the grandparents.  We are envious of families that have the luxury of help from the grandparents. 

After carefully considering our options, my wife will probably continue to work.  This means that we need to explore nanny or daycare options when both of us are working.  Daycare can help socialize our child before he or she starts school.     

Benefits of employment    
When we previously talked about my wife staying home to raise our child, we naively did not consider the other benefits of employment such as: health, dental, and vision insurance.  If we were to buy health insurance on our own for the coverage we want, our health care plan would cost over $600 a month.

Continuing to work offers other non-financial benefits, such as a sense of belonging.  At my wife’s job, she is part of team.  She finds her work fun and fulfilling.  She’s made friends with many of her colleagues.  I’ve read that women leaving the work force for several years may find it difficult to be employable in the future.  This is because the stay at home parent may not have kept up with industry evolving trends.  I’ve also read that many stay at home parents can feel extremely bored.  Being on maternity leave for several months will help my wife get an idea of what life is like without going to work every morning. 

We both have stable careers; of course this can always change without notice. Continuing to work will help us on our journey towards financial freedom and early retirement.  We will continue to hustle on the side for more income (currently brainstorming a lot of ideas).  Having more side hustle money definitely will make child costs less of a financial strain for us. 

We are both very fortunate to live very close to our jobs.  My office is 5.8 miles away from our home.  My wife’s office is 8.1 miles away.  If there is an emergency at home, we can easily rush back.

Continuing to fund our retirement
Most financial experts would agree that it's more important to fund your own employment rather than pay for your child’s college expenses.  Remember, your kids can take out loans for their college expenses and they can even work on the side.  Having your child pay for some or all of their own college costs will help than develop responsibility and maturity.  No one will give you a loan to fund your own retirement. 

I will make sure to continue to max out my 401k, which is now $18,000 a year in tax deferred contributions starting in 2015.  My wife does not have a 401k option at her work.  We will also both make sure we continuing maxing out our Roth IRAs, which is currently $5,000 a year of after tax contributions.  One thing that will probably change in the short term is the amount of money we put into our taxable accounts.

Temporarily surviving on one income
We already have an emergency fund with enough money to cover six months worth of expenses.  To prepare for unexpected baby costs, we are going to live on my income alone and save all of my wife's income for the next six months before her due date.  Starting earlier this month, we’ve already started depositing my wife’s entire paycheck straight into a separate account.  It’s incredible how much money you can quickly save up this way.   

Happily accepting hand-me-downs
We both have pretty simple tastes when it comes to clothing.  I don't see us clothing our newborn with designer labels.  Family and friends have been nice enough to donate plenty of baby clothing as well as maternity clothing. This will save us hundreds of dollars.  Some friends and family have even offered to give us their old used stroller and car seat.  Reusing baby products also helps the environment.   

Credit card cash back
Since we will not be flying much in the near future, we have begun to shift a lot of normal spending onto cash back credit cards. My current favorite card is the Citibank Double Cash card, which earns an effective 2% cash back on every purchase (1% cash back on purchase and 1% cash back on paying the balance).  We use this card for all purchases where we can’t earn more than 1 point per dollar spent.  We won’t be taking another international trip soon, so we don’t need too many airline miles.  We will still pay for things like our cell phone bill with my Ink card, since it earns 5x points.  Saving up points can also come in handy for covering airline tickets for family members who live far away and want to come visit. 

Paying for college?
Our baby hasn’t even been born yet, and I am already thinking about paying for college!  The two of us have been very fortunate to not have any college debt since we received a lot of grants and scholarships when we went to school.  I’m starting to do some research into 529 plans, a tax advantaged savings plan to help save for future college costs.  As I mentioned earlier, saving for college will come second to saving for our own retirement. 
Introducing our little one!

More updates to come
We will find out whether we are having a boy or a girl within the next few weeks.  These are just some of my initial thoughts about preparing for our baby’s arrival.  All these thoughts are subject to change when the baby comes.    

Friday, December 26, 2014

Our experience at the Tsukiji Fish Market in Chuo

The Tsukiji Fish Market is the largest wholesale fish and seafood market in the world.  While the inner wholesale market is closed to visitors, the outside retail side of the market is open to everyone.  The outside area of the fish market is filled with different kinds of restaurants and shops.

There are two fresh fish auction tours, which start at 5:25am and 5:50am.  The tours are free.  Due to the high demand and interest in checking out these tours, the daily limit of visitors is 120, with the two tour groups of 60 people each.  Prior to visiting the fish market, we read that we should arrive by 4:30am to catch one of the popular tours.

We woke up at 3:30am, and took a taxi to the fish market by 4:20am (subways and buses are closed this early).  The taxi ride cost 2,980 yen, or about $25.  We anxiously walked up to the Osakana Fukyu Center (Fish Information Center) excited to check out the fish auctions…however all the tours were already full.  Bummer. 

The locals told us that we should have aimed to arrive by 3:30am or earlier to catch a tour!  Since we already spent about $25 getting to the fish market, we thought we should make the most of our time here. 

We decided to grab sushi breakfast at Sushidai, the most popular seafood restaurant at the Tsukiji Market.  We hurried over there to find that a long line was already forming to eat at the restaurant.  

The reason the line was so long was because there were only 12 seats in the restaurant!  The inside of the restaurant was extremely plain. 

We waited in the dark and in the cold for 2 hours, and then we were seated!

The sushi chefs were very friendly and freshly prepared the sushi right in front of us.  The sushi was amazingly fresh and delicious, also surprisingly cheap!  I agree with most reviewers of the restaurant that Sushidai truly offers the best sushi that I have ever eaten.
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