In my “debut” post 2 years ago, I discussed my wife’s and my aversion to having children.  This past weekend we talked about this again and are still fairly steadfast in maintaining our childless household.  This is kind of an amusing viewpoint to have, as I am writing this post while going to see my new niece, just born an hour ago (apparently my brother doesn’t really agree with me and my views on children as this is his second girl born in 17 months).  My wife and I spent the weekend with our nephews, aged 8 and 4 and after we were done playing with them (which was fun) we were both very happy for the quiet ride home.

In the past two years, my views haven’t really changed around having kids although I think my reasons have a little bit.  In my first article, I wrote about how expensive kids would be and how it would limit my chances of retiring early.  Since then, I have come to believe that kids are as expensive as you make them.  If you go out and outfit an entire room with fancy furniture, buy disposable diapers, and attempt to buy your kid a good childhood, then I could see how having children could easily approach the average cost of $250,000 I quoted in my original post.  Otherwise, I think costs could be kept down fairly low.

Where my views have changed, beyond my own personal preference to be free to do what I want to do when I want to do it (maintaining what could be called a selfish lifestyle) I really don’t know why I would add to the population.  The UN recently had a huge celebration that we as a species have achieved a population of 7 billion people.  For me to make a decision to add to this, is essentially being selfish.  I can’t really see how me and my wife adding to the population is really going to help anything.  The only reason I would be having a kid is because I would want one, as the choice is available.  Everyone out there adding to the 7 billion people on the planet is basically saying “What’s one more person?”

I’m not getting all Malthusian here or anything, I’m sure that we’ll somehow figure out a way to get more food for the next 7 billion people on the planet – I’m simply saying that, from the standpoint of the species as a whole maybe we should calm down a little bit in our population growth.  I don’t think the addition of another few billion people is going to have a positive effect on the planet, but nobody really talks about that (I’m going to say that population control is not a very popular campaign to run on).

So, no real change here, from my wife or myself.  We love kids, we just love to be done with them after a visit.  We are enjoying our freedom, and the maintenance of our DINK status.

I understand that this is kind of a charged subject, but my question of the day is can you see how down the road the planet will be a better place if we maintain our current level of growth?  Thinking of this, would you think twice before adding to this growth?

The little guy is much easier out of the two of us as we got his school list which includes crayons, pencils, glue, paint shirt and of course some new clothes and shoes (the kid is growing like a bad weed).  As of today we got just about everything the kid needs for a mere $132.  A fraction of the average Canadian back to school spending that comes in at $319.

How do we keep the costs down?  Well here is what works for us:

• Shop the deals.  For example Staples provided a lot of basic items like glue and pencils because of their sale prices.  Old Navy had a good sale that my wife got a lot of clothing for a steal and then Walmart rounded out some of the clothes and shoes.
• Does it have to be new? Then we recycled several items from last year that were still fine like his pencil case and lunchbox.  For a paint shirt I dug into my shirts to find the one I liked the least and stuffed it in his backpack.  Look around your house and you might be surprised to find out what you already own.
• Buy Quality for Some Items.  We made the mistake last year of getting a backpack that our son loved, but it was poorly made.  It only lasted a year unlike his first backpack which got several years of use because we bought better quality.

As for me I’m heading back to take some adult education classes to get a Professional Management Certificate from my local university.  You might wonder why I would bother to get more education when I plan on retiring early?  Well the classes are mostly business based which will provide some useful skills for my day job, my school board job and even my own business.  My philosophy in life is learning something new never kills you and often more helpful than I expect.

I haven’t even started my classes yet, but I’ve learned a few important things about my adult education so far:

• Get it Free.   My day job is actually paying for me to take this certificate as they are looking for people to have more business skills in the company. Talk about a nice $4000 job perk!  If that isn’t possible check out this article on ways to pay for it.
• Try to Get Paid Time Off.  Beyond the generous paying for the classes my work is also paying me my usual wage to attend.   So how is that for a nice touch to make you want to attend class: get paid to learn.
• Giving Up Some Things.  Beyond the obvious purely financial support to attend these classes I also know I will have to give up some of my free time to study.  So that means less books to read and movies for entertainment for a while, but I think it will be worth it.

So how much have you spend on your kids for back to school spending?  Or would you bother taking some extra classes yourself?

My seven-year-old nephew had a very profitable Sunday – it was his first communion  at his church and in total he received $500 in cash.  I don’t know about most people, but I really wouldn’t know what to do with $500 at that age – I couldn’t fathom the amount of stuff that I would be able to buy with that much money .  I don’t think I ever had $500 in my name until I started my first job when I was 11 years old.

I was curious, so I calculated what this amount of money would work out to at a conventional retirement age (65) at 7% interest compounded once per year (just a simple calculation) – around $25,000.  This got me thinking – if I were a parent (which I never plan to be) would it make sense to set up a “retirement” account for my kids?  If for example, you started a DRiP (Dividend Reinvestment Plan) with $1,500 and added an additional $1,500 per year until your child was 18, by age 65 (in an ideal world of course) the dividend account would be worth over $1,000,000*.

I understand that this amount of money may not be achievable for most people, but really any amount of money would work out to a sizable amount of money 65 years later.

To me, a parent starting up this kind of portfolio would have been much more useful than say an education account (something that I didn’t get, but is discussed at length sometimes in many personal finance blogs).   Perhaps I would have appreciated the education account while I was scraping by going to school, but down the road I believe I would appreciate having the “cushion” of a future retirement account accruing money that I’m not having to save right now.

What a retirement portfolio started at age zero would provide is freedom later in life.  If I knew at age 15 or so that I wouldn’t have to save for retirement (or at least not very much) perhaps my life would have been a little different.  Right now I wouldn’t have to work full time, as I would only really need “subsistence” level wages (to pay for current expenses) rather than worry about future expenses.  As long as the parent has provided at least a small amount of personal finance knowledge I think that most people would be able to experience more in life than working the normal 8+ hours a day 5 days a week.

Is this a wacky idea created by someone who doesn’t understand what it means to have kids, or would you parents (or “someday parents”) think about creating an account that would provide for your child’s retirement?  For me, I think I would be more than appreciative as an adult having an account like this.  I personally think that too much weight is put on saving for kids education, something that they should be able to pay for themselves.  This is simply an option that may help down the road.

*I’m not looking at taxes or anything here, this is just the pure compounded portfolio.

I have three young children, ages 2, 4 and 6. They are a big part of my life, and all I know about trying to retire early is intertwined with having children. In some ways, having kids makes it harder to retire early, but in other ways they make it easier. There are lots of ways that parents could spend bundles of money based on having children. On the other hand, children prevent parents from spending bundles of money on themselves. Without suggesting that there is any one “right” way to do it, here is how we approach saving money while having kids.

One of the choices we made early on was not to get cable. It reduces our monthly costs, but there is also the benefit (as I’ve noticed when the kids watch shows on cable elsewhere) that they don’t see advertising. This past week, while we’ve been on vacation, my oldest has sat in front of the TV while each advertisement for toys plays, saying “I want that, I want that, I want that.” There is no chance that we’ll get cable at home. Instead, we watch DVDs, some of which we bought at garage sales, some of which were gifts from grandparents, some of which we borrow from the library. In each case, there is little or no cost, but the kids still get to enjoy watching many different shows.

The library is actually one of my favourite places. For a nominal annual fee of $12, we have almost unlimited access to books, CDs and DVDs. It’s an indoor place to go during the winter and has the additional benefit for the kids that if they learn to love reading, it will boost their academic performance. We have internet and a computer at home, but if we didn’t, the library also provides access to computers with office software and internet access.

We take our kids to a variety of local playgrounds. In fact, we chose our house based on it’s proximity to a large playground and a community lake. Having these amenities nearby avoids wanting to build a playground in the back yard or wanting to put the kids in activity classes. Eventually, they’ll probably play community soccer or basketball, but we won’t put them in expensive and time-consuming sports like hockey. They can develop social skills while playing in an unstructured setting outdoors.

We are very fortunate to have high quality public schools, which our kids will attend. In each of these areas, we benefit from public goods and programs which are free or almost free and available to all. I want to be able to spend time with my kids while they’re young, not only when they’re teenagers and no longer want to be close to their family. It reduces the cost of programs and nannying, but it’s also what makes early retirement worthwhile for me.

The children do impose some limitations on the things I would otherwise choose to do with my time and money. I won’t take them to eat in expensive restaurants because they wouldn’t be well-behaved, but also because it would be wasted on them. I wouldn’t take them on vacation to Europe for sight-seeing, because the airfare and hotel cost would be prohibitive and it wouldn’t be memorable for them. Instead, on the occasions we eat out, it’s generally fast food (or Asian food) that is quick, inexpensive and casual. Our family vacation has been to Phoenix during spring break, where we have friends and cousins for the kids to play with, family activities and people to stay with.

There seems to be little comparison to retiring early with and without children. Both are possible, but each will be a different journey. Without debating whether or not a person should have children, which is a personal choice, how has having or not having children has affected your journey?

Our typical birthday party for our kids are low key affairs.  After all, all the kid really wants are a few presents and a cake.  So we give him just that.  Granted I tend to have fun making the cakes since I typically do something different each year.  In my past my boys have had boat cakes, construction sites, giant cars, race tracks and dinosaur cakes.  Yet ironically making fun cakes don’t really cost a lot of money (I love candy from the bulk bins).  So this year I’m trying my hand at a Lego themed cake with ingredents that set me back $11.  Then I just need to pick up a few decorations from the dollar store (mainly balloons, which also double as toys) and we have an party for less than $20.

It is sort of amusing to me to read stories like this one where parents spend $1000′s on a child’s birthday party.  From my own memories I most treasure the feeling of just being really special for one day a year.  I got to pick what we had for supper on my birthday as a small kid and then the restaurant we ate at when I got older.  I also got to pick what kind of cake I would like and I got a few presents.  What more did I need?

So if you have kids, how much do you spend on their birthday party (and what age are they)?  If you don’t have kids, what did you remember from your own birthday parties as a child?

First off she did not buy any new clothes for the start of school, instead she knows our son tends to our grow this clothes by about October.  So when on vacation she picked up some pants and shirts in the next size up on clearance.  So that was taken care of over a month ago.  The added advantage here is this is my son’s first time at this school so having ‘new’ clothes is rather pointless as he has no friends there to impress.

Then when the school supply list arrived she went shopping for the few items we didn’t have around the house such as:

Shoes – $18.92 (splurge item to get the Transformer pair)
Plastic school box for markers, etc -$2.26
Two Sets of Markers – $5.00
Large Scrapbook – $3.29
School Fees – $13 classroom, $4.50 agenda, $4.50 bus fees for class trips

Total $51.47

So after the splurge item of ‘cool shoes’ the next biggest cost item on the list was school fees.  Overall I’m not complaining about the agenda since I know that is done at cost.  I’m even ok with fee for class trips but I don’t understand what is included in the classroom fees.  So my wife sent a note to the teacher asking so what is up with that, but I haven’t heard what the answer is yet.

Since we are new to this ‘back to school’ shopping I’m not sure how that total ranks compared to other people or what ideas people have on saving money on back to school shopping.  So all you experienced parents out there, how much did you spend this year and do you keep you ‘back to school’ shopping bill down?

There are benefits and drawbacks to not using cash. Few people feel comfortable carrying large wads of cash, and worry about losing it or having it stolen. Credit and debit cards are a little safer, since fraudulent purchases can be disputed. They also take up less space in a wallet. But for keeping track of spending: cash is king.

I lived in Taiwan for two years. We didn’t even consider getting a credit card for two reasons: we were unlikely to be approved and no one else seemed to use one. We were never even paid by cheque. Either we would receive a cash transfer in our bank account or we would be handed an envelope of cash. It was not uncommon to walk into the bank with $4000 for deposit.

This made it extremely easy to control our spending. Once a week, I would withdraw enough cash for the week. When we ate out, went shopping, or took a taxi we would pay cash. If we wanted to know if we could afford something, we could look in the wallet to see if there would be enough money. I also noted spending in a simple spreadsheet, to keep track of where the money went. And, because everyone carried cash in the same way, we weren’t concerned about safety. Because of our experience controlling our spending, we developed good habits regarding what we would and wouldn’t spend money on. We also developed a sense of where our money was going and how long it would last.

Now, in Canada again, we use credit for almost all purchases and debit on rare occasions. We almost never use cash. My six year old and three year old sons have very little concept of money. Whenever they get a little money, they want to immediately take it to 7-Eleven and buy candy. I take them, and help them count out the candies so they can get an idea of the value of their different coins. When they get “five bucks”, they get extremely excited and want to buy “one hundred candies!” It’s fun and it’s a good start, but it will take time for them to scale their understanding to larger things. When we explain that we aren’t going to buy something large because it’s expensive and we aren’t going to spend our money on that, they say: “Just go to work, Dad, make more money and put it on the credit card. Then we can buy it!”

I plan to start the kids with a small cash allowance. We’ll help them understand the value of money, and the choices that come with spending it. From there, we’ll teach them about saving some for the future. We have the hope that by starting out using all cash, they can also develop good cash management habits before they get the inevitable credit cards.

So how do you teach your kids about money?  Do you use an allowance for them or even yourself?

Almost six years later, as we were planning for my oldest to enter grade one, an old idea resurfaced. It would be great if the kids could go to the Mandarin bilingual school. There is a single public school with this program in Calgary, it could be very beneficial in the future and their grandmother, who is Chinese, would be very pleased. This had never seemed realistic in the past, since the school is located at the other end of the city from where we lived and worked. But with the idea that I could retire in a couple years, and the fact that kids can only enter the program in kindergarten or grade 1, we decided to enroll.

With the school located so far from our house, we were faced with three choices. If we stayed in our house, our son would have a long bus ride, around an hour and a half, each way every day, sometimes arriving very late if there is snow or an accident; or my wife could drive both ways every day in traffic with three kids. The other option was to move much closer to the school (and my wife’s mother) and I would have a long commute every day.

To me, this underscores the fact that we don’t make all our decisions using financial reasoning. It would be least costly to stay in our house and send our son on the bus every day. But that wouldn’t be best for our family. I don’t think it would be right to put a six year old on a bus for three hours a day, especially when he can’t read yet to pass the time. We decided to move, and I chose to commute, because I felt it would be most beneficial for our family.

The LRT in Calgary is relatively quick and cost-effective when a single person is traveling from one end of the city to the other. My office is at one end of the line, and we chose a house at the other end. I save between one and two dollars each day (depending on gas prices), as well as the maintenance and depreciation of the car, by traveling on the LRT. Better than that, when I’m not driving, I can spend my time in ways that I choose. I bring a book, or my netbook, with a cell phone so I can do work or connect to the internet.

My final idea for making the commute more bearable may have been inspired by Tim. Who wouldn’t want to have an extra day off each week? I need to work 40 hours, but I’ve arranged to only come into the office for four, ten-hour days a week. I have to remain available by cell phone on the other day (Wednesday), but I save at least two hours by not commuting every day. It makes for four long days, but it also gives me an extra day that I can spend with my family and do things around the house.

We decided to move for our kids’ future, not for financial reasons. However, it meant that I would need to commute at least an hour every day. I found that taking public transit reduces the cost, but more importantly it gives me more time to read and write. I also reduced the time I spend commuting by working 40 hours over four days and remaining available by cell phone on the fifth weekday. It’s important to me to feel good about my lifestyle now, not postponing all my enjoyment until I’m retired.

How do you deal with commuting? How have you made a difficult situation easier? Are there things you do before retirement, just to make life enjoyable?

1. The Park – My kids are currently obsessed with going to the local school play structure so we have been going at least a few times a week.  We often just walk over take a drink and snack and spend a hour or two playing games like tag or how far can you go and not touch the ground.   Cost $0.  Cheap Add On: Slurpee run – walk to your local 7-11 or other store and pick up a treat/drink on the way home for $5 to $10.
2. The Library – This is a weekly event in our house.  Often I drive over since we often do this with other errands, but sometimes we walk as well.  Beyond picking up our holds we also pick out a few movies for the kids, read a few books, take out a few books, play with the toys at the library and then play at the park located outside.  Then come home and immediately put a movie in for the kids to watch. Cost $0.  Cheap Add On: Pick up some ice cream from the grocery store $3 to $5 or 40 Timbits for $5.
3. Water Fun – Now this one can be done in several grades depending on the effort/money you want to put into it.  Option a) Running around in the sprinkler at home.  Who knew watering the lawn can actually be fun? Cost $0. Option b) Hit up the local spray park and run around.  Cost $0. Option c) Hit up the local outdoor/indoor pool.  Cost $11 (at least around here).
4. Museums/Galleries/Science Centers – Playing tourist in your own backyard can be fun and my kids love to see new things, so this makes for a great afternoon event for us.  Cost Free to $30 depending on which one you go see.
5. The Lake – Find a friend/family member with a cabin and get a invite out for the afternoon or the weekend.  Be sure to ask to see if they need anything and be prepared to help out with chores.  We do this fairly often over the summer as my parents literally live at the lake for the summer so if we want to get a visit in we often need to go see them. Cost $40 to $100 or more (depends on gas, what you bring out: food & drinks, etc).

So what do you do for fun over the summer?  If you have an idea please share.

I had asked my brother what kind of diaper he was going to use with his new baby on the way.  He didn’t even think and answered disposables.

I questioned why he made this decision, to which I received the answer “because it’s easier”.

I asked him if he had looked into the cost of cloth diapers vs. disposables or any sort of analysis beyond the simplicity factor, to which I received a negative response.

At this point, because we were at a golf course on father’s day I left the point alone – until the car ride home when I went over the conversation with my wife and noted (even though we don’t plan on having children) I couldn’t see any reason beyond the pain of cleaning the diapers to buy plastic that had to be thrown out after 1 use vs. cloth that would last for a significant period of time.  I was told that most parents don’t think like that, they don’t want to deal with the messiness and inconvenience of cleaning diapers when there is a simple alternative available.  These are arguments that I really dislike – I’m as lazy as the next person but like to look at the big picture on subjects like this.  My arguments for diapers can be applied over many consumer products in use today, such as ziploc bags vs. reusable containers; paper towels vs. rags etc.

Tim had previously discussed his switch from cloth to disposable diapers here – rather than look at it from a quality of life stance, I’m going to look at the impact of using something disposable (in this case a diaper) to something re-usable (cloths).  Most of the information I got came from here, which admittedly is a pro-cloth diaper site, however I don’t think the pro-disposable diaper conglomerate has much in the way of an argument given the following:

• Over 92% of all single-use diapers end up in the landfill.
• It’s estimated that a disposable diaper would take 250-500 years to decompose.
• Disposable diapers are the third largest consumer item in landfills, and represent approximately 4% of solid waste.
• Disposable diapers contain traces of dioxin as a by-product of the paper bleaching process, along with several other nasty toxic pollutants, which besides probably not being good for a baby’s skin is definitely not good for the land and soil during the 250-500 years this product takes to decompose.

So, rather than having to deal with some baby messes most people buy something that will have to be dealt with for maybe the next FIVE CENTURIES?  Does this make sense?  I’m not really sure why there’s even a product like this out there – I would have to say that in this circumstance the environmental impact isn’t being looked at, rather most people are looking at the easier choice right now, rather than the total impact that the purchase will have in the future (hundreds of years down the road).

From what I have read cost of cloth to disposable varies, but let’s say they are approximately the same on average.  At the end of 2 years, approximately 6,000 diapers have been put into a landfill if you’ve been using disposable diapers.  While if you had chosen cloth, you’d have some tattered rags that could be used around the house, or alternatively (because it’s made of a decomposable material) will disappear (in optimal conditions in about 2 weeks).

As a culture we have created products whose main purpose is to be thrown out in order to make things more simple for us.  From a personal finance perspective longer-lasting reusable purchases tend to have a lot of up-front costs that make them undesirable to many people.  What is created by the easy choice is a lot of garbage.  I’m sure more trash has been created in the last 100 years than there ever has been in the past due to the invention of plastic.  From an environmental perspective these products are a nightmare, but most people are not looking at the big picture.

For myself, I attempt to purchase as little as possible and when I do I tend to buy longer-lasting durable products rather than disposable goods.  I will freely admit that I do own disposable products (ziploc bags, paper towels etc.) but try to limit my use of them.

I’m wondering:

1. Do you think about the purchasing decisions you make beyond the initial outlay?
2. If you have your child in disposable diapers did you ever think about cloth?  If you chose disposable diapers, how did you come to this conclusion?