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DF and I are due to have a baby in January and I will be taking 6-12 months off before hopefully going back to work part-time. We went over our budget last night and came to the realisation that things are going to be really, really tight on only DF's income. We are very good at budgeting and put money aside for EVERYTHING, but are also paying off a lot extra on our mortgage at the moment, which we'll cut back sometime between now and when the baby arrives.
My question: Should we drop our mortgage repayments down now, start living off DF's income and save all mine to make things easier when baby arrives... Or should we keep paying extra on the mortgage for a while longer? I keep changing my mind and can't decide!!
We already have $7K in an 'emergency fund', and my sister owes us $5.5K which we'll have back within the next 8-10 months or so, which will also go into the emergency fund.
I will say don't bank on your sister paying you back. She might she might not but don't plan on that money.
Secondly what's the repayment for on your mortgage? Did you get behind on your payments or is this some type of government program that you're doing or what is the purpose of paying extra on your mortgage right now?
I'd also encourage you to get a work at home job. If you are going to stay home with your baby for awhile, that's fine, but it sounds like it's going to put a good financial burden on you. Places like Customer Service, Virtual Call Center Consulting, Work From Home, Alpine Access is a customer service work at home position pays around $9 an hour and is 100% from home so you can have your cake and eat it too.
Thanks for your reply. My sister is pretty good at paying me back (I had to help her buy a car a while back). She's already started paying us back $350 per fortnight, so the money is slowly coming back in!
Nope, we are not behind in our repayments, we just set up our mortgage right at the start so we could pay extra without getting penalised. Our repayments are $374.18, but we pay $500 at the moment. It was more than that, but we dropped it down a little when I fell pregnant, so we could save a bit more. Now we wonder if we should drop it back to the $374.18. I think we've paid about $13k extra on our mortgage already.
I should have mentioned I'm in New Zealand, so not sure if those links will apply to me! But I'll have a look. Our plan is to save as much as possible, so we can afford for me to be off work for at least 6 months then go back to work a day or two a week, but it's so hard to plan these things - I have no idea how much a baby will cost us!
Okay so that's not a repayment, you're just paying your mortgage note and paying extra on your principal each month in order to pay your note off quicker (repayment is typically referred to when you were behind on your note and you are repaying your back payments). If it's just your regular loan I'd pay the normal amount for now and save the extra so that you are okay when baby comes and then once you go back to working start paying the extra on the principal again.
But again I wouldn't bank on your sister. Don't factor that into any extra money because the reality is she could stop paying, if you plan on having that that puts you in a bad position, if you don't then hey it's just something extra and nice to have. Don't ever depend on someone else...that's how you get in trouble.
I'd also say I wouldn't make going into debt an option. Pay attention to the finances and if things start getting low make arrangements to head back to work early if needed. Once you're out of debt there's definitely no reason to go back into it. Get rid of the credit cards throw them out, close the accounts so they're not tempting you and then make sure to budget and to stay on top of what you've got in the bank and the bills that are coming in.