Planning for a major "What If"
We have a not so firm plan to adopt a child. It’s been the plan for a while, but adoption is expensive and other things have kept coming up. Right now, the not so firm plan is to wait for the husband to finish school (in one to two years) and then save up the money for adoption fees. There’s a local agency that does a sliding scale fee, so we’re looking at around $14,000 for them and then attorney fees. It’s a lot of money, but ifwe’re not paying for the husband to be back in school (even if he’s not working), it won’t take us too long to save to the point that I’d be comfortable starting the process.
However, there is a chance, a small chance, maybe 10%, that sometime in the next year or two, we’d have the opportunity to do a private adoption without going through an agency. For our friends, who did this just a couple years ago, it cost them ~$20,000.
So this weekend, the husband and I talked about where we were financially right now, and if the opportunity came up in the next couple of months, how would we manage it? (It is not a question of whether or not we’d do it. That answer is yes. The only question is where would the money come from.)
Well, right now, we have $9,500 in savings. By the end of September, we should have $12,000 in savings, not counting whatever we pay in tuition for my husband.
If the chance to adopt came up, we would apply for all federal student loan money they were willing to give him, even the unsubsidized. 6.8%APR isn’t great, but it’s better than what credit cards charge. Say that gets us to $15,000.
You don’t pay all adoption costs up front, and my company will reimburse up to $2,000 for adoption expenses. That means, I submit receipts from the for money we pay and have that $2,000 back by the end, so now we’re at $17,000 of the $20,000 we need.
My parents would loan us the money for that. My grandfather would gift us the $3,000 remaining if we asked. Of course, we’d probably rather not ask.
We have over $30,000 in credit available to us through our credit cards (this is down from a time when we had almost $100,000 available via credit cards), including one that is currently 0% APR through Dec 2012.
Then there’s the $13,000 tax credit available for adoption. Right now, this is available only through 2012, but since this is a “what if the opportunity comes up in the next few months” scenario, we could count on it. Even if we adopted in 2012, we could charge the remaining $3,000 on the card, have it paid off by the end of the year, then have the tax credit to help refill our emergency fund.
Maybe I’m a few thousand off. Maybe we don’t get as much extra from student loans as we’d like, but this scenario only includes the money we’d have in savings at the end of September. We still put $300/month in to savings for school and other costs. We could cut out our personal allowances for another $175/month, and cut the eating out budget in half for another $75. That gives us $550 more per month, taking only 6 months to get $3,300.
Is this the ideal budget scenario? Of course not, but babies rarely follow their parents schedule. It helps me to have a plan in place, even if it’s not concrete, and to know, that should that 10% chance happen, I can say “Yes, yes, yes” to the baby and know where the money is coming from.
Do you ever plan for the “What if”?
Absolutely. One day, I spent about an hour writing down what I'd do if I left my job, voluntarily or involuntarily, in order to avoid homelessness. I'm sure many people think that's crazy, but you never know. Plus, I came up with some really great ideas on how to cut my expenses and increase my income right now.
Kids are expensive – for 20 years! But worth it many times over. We wish we had waited a bit longer to have ours, so we could have been more financially secure.
Oh yes! Being the type A planners that we are we have several contingency plans for the "what if's" we can come up with.
I have the "what if we moved to Japan for a year" scenario in an excel sheet. Adopting is quite exciting and a big decision–I hope you have great luck with it, and also that you can save up a little more before it happens!Welcome to the Yakezie Challenge.