Twins stretch couple's $110,000 income thin
By Stephanie AuWerter
June 4, 2013: 6:49 PM ET
 
With twins, Rachel Hopper and Josh Williams, 39 and 38, now have a bigger family and a tighter budget.

For years, Rachel Hopper and Josh Williams had hoped for a sibling for their son, Espen, who was born in 2005. So the Minneapolis couple were thrilled when they learned that Espen would have two sisters: twins Elsa and Rory, now 1.

"It's wonderful -- and it's very hard," admits Josh.

The couple's income of $110,000 (Josh is a city planner; Rachel works for Minnesota's Department of Natural Resources) is stretched to capacity. They struggle to cover all their costs, including day care for the kids -- $376 a week -- and a loan for a car that comfortably fits the whole family.

No longer saving for retirement, they have also depleted their cash stash and racked up $7,800 in credit card debt. "We're smart people with good jobs," says Josh, "but we're living paycheck to paycheck."

Time for a new game plan, says Indianapolis financial planner Elaine Bedel: "What may have worked for their family of three isn't working for their family of five."

Three fixes

Squeeze the budget. Over the next two and a half years, Josh and Rachel must focus on eliminating credit card debt and creating an emergency fund -- even at the price of delaying other savings, says Bedel. "They're in a precarious situation," she adds.

They now put $575 a month toward their card debt. Though their budget is tight, the couple should be able to pay down an extra $300 by utilizing Rachel's upcoming raise and trimming some discretionary spending. That would erase the balance in 10 months.

Create a cushion. Once the credit card is zeroed out, that $875 should go toward emergency savings.

Bedel recommends three months of living expenses, or $18,000, knowing that Espen's 529 plan could also be tapped if needed (though they'd incur taxes and a 10% penalty on earnings). This will take about 20 months to build.
Catch up on retirement. In 2016, Josh and Rachel should redirect the $875 to their retirement plans, for annual savings of roughly $13,000 pretax; they should also up their total contribution 2% annually. Combined with Social Security, that should give them $50,000 in annual after-tax income (in today's dollars), provided they retire at 70.

A wildcard: If they stay with their employers, their pensions could provide significant income. But Bedel hopes they will find new jobs. Josh could earn 15% more in the private sector, which would seriously ease the family's budget.  

Depending on where they live and how much tax they pay it might be difficult to get by as they have been accustomed.

I see the way my brother spends money even though his job for the next few years will only be about $50,000 per annum.  He is going to find out how quickly money is depleted, between his car payment, rent in a somewhat expensive city, and necessities.

He's certainly smart.  Just not experienced.

The couple's income of $110,000... is stretched to capacity. They struggle to cover all their costs...

Yeah, it's got to be tough  

Congratulations Jacob.

Worry not! There is no horror to parenting- didn't you get your parenting manual?

Quote from: s2srea

The really foolish thing is having her work, then turning around and placing your kids in child care...

Agreed. I suspect mom is a "career woman" who just doesn't want to suffer the indignity of being "caged" all day. Let someone else take care of the children all day while she feels "fulfilled." I know a woman who spends more on childcare than she makes monthly.

This is why so many people, I suspect Catholics as well, prevent generation. Its cheaper to live your comfortable life with 1 child in daycare- 4, 5 6 or 12? Impossible. My sister is a real sad case of this. She's working full time now, and I can't tell you how much it bothers me that she puts my Goddaughter /niece in daycare a few hours per day. I've dropped hints, but I am not her husband, and her husband, while a good man, is no leader; and he doesn't really care about it, as far as I can tell. Granted, I haven't had the discussion with them and put the issue out in the open, and am not sure if I will- but I easily see their ego's being hurt- especially my sister. She's trying to live in two worlds and it doesn't work. Please pray for her.

I've read that part of the drive for men working their wives is because of an effort to compensate for feelings of inferiority, by purchasing things or setting financial goals that give them status, which they couldn't afford on the husband's wages.  

Multiples often involve a NICU stay and sometimes surgery for mom. They may have relied on fast food and the husband missing work to care for their oldest child. That may have been where their credit card debt came from. Having hospitalized children is expensive apart from the hospital bill.

My twins were in the NICU for 3 weeks. But it sounds like their jobs are good, government jobs which normally provide good health benefits; I could be wrong. I don't think there is a reason to truly be 'scrapping' by as they are but you're right to point out there may be many reasons they might be in debt.

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No longer saving for retirement, they have also depleted their cash stash and racked up $7,800 in credit card debt. "We're smart people with good jobs," says Josh, "but we're living paycheck to paycheck."

That's a matter of opinion.

It's not their "smarts" that I'm worried about.  It's the status of their very souls.

This couple sees children as a cute option to decide on as their mood sees fit.