Yesterday I asked what do you use an EF for. Today I ponder an interesting question, raised actually by the person who lost their job. I heard this from my mom. Do they assume that the man will immediately be able to find work, and thus leave their 4 year old enrolled in preschool? The preschool they have their child in, goes from K-12 as well, as a private school. They were happy to get him in and already accepted into the program for K-12. It’s reasonbly priced, well located, and something they wanted and had been waiting for 1 year already.
But with the job loss, should they pull him out of the program and let their parents watch him? Or if their parents are too tired, let the unemployed parent stay at home with the kids until that person gets a job? Ouch, what a tough call right? Daycare costs $700/month in this case, not sure what the working parent makes.
This exact scenario I was discussing with a friend whose husband is in a precarious situation at work. He’s survived 2 rounds of layoffs but another by the end of the year could be imminent. They do not have family in the area to help watch their son, but day their nanny costs $1800/month for a part-time share. That $1800/month is a lot of moola!
But in both cases, if they give up the nanny or preschool slot, it could be VERY difficult to get back either one if the unemployed parent finds a job. The preschool will likely give away the spot to a family on the waitlist. While the nanny will likely take on another family. Thus if the unemployed person gets a job offer they will have to scramble for childcare.
But if they unemployed person stays unemployed for a year, then they’ll have wasted that childcare money from their EF or monthly income. So what to do?
Is there a rule of thumb parents should try and follow when employed and using childcare services? These are pretty hefty numbers and it can be difficult to find trustworthy, reliable childcare. So how do you balance the different financial aspects?
I don’t know what I would do in the situation. Both situations are tough calls, but I think I would probably pull my child out of the nanny care because $1800/month eats up all of the unemployment. The $700/month I might stick with because it allows the child to go to the private K-12, and if that is important to the parents, then maybe it should stay.
Now if both parents lost their jobs, I’d cut all childcare. What do others think? Have you ever faced such a tough decision?
16 responses so far ↓
1 Kristy // Jul 30, 2009 at 9:35 am
I am actually facing this decision now. While I have some work, I am really only working part time and could pull the kids two days a week and stay home with them and save about $300 a month. The problem is that I have an infant in daycare that I waited 9 months to get into and a toddler who loves going to daycare.
I could pull the infant two days a week but it might take me a year to get back into full time care. I could pull my DD out two days a week but there is no guarantee that a spot would be there full time either if/when I needed it. We don’t have family available to watch the kids either.
So, they are staying in daycare and I hope that I make enough to pay the bills without dipping into our EF. I have however, stayed home with them on some days off but I still have to pay for it.
2 sara l // Jul 30, 2009 at 11:18 am
My comment became a post. http://tiny.cc/Ujcu4
3 R. May // Jul 30, 2009 at 11:40 am
Perhaps while they are looking at options they can look at cheaper options. 1800 a month is insane (to me) but since they both were working and could afford it fine. Now they can’t – so maybe a home daycare instead of a nanny. Or a center instead of a preschool. I understand the desire to provide children with the best advantages but sometiems what you consider the best you can’t afford.
4 Meg // Jul 30, 2009 at 12:52 pm
In both cases I would leave the childcare in place for at least a few months in order to feel out the job market. That’s what emergency funds are for! But if you have no leads after a few months or if your emergency funds start to dwindle then you need to reconsider of course.
But also, familes spending that much on childcare probably have lots of room to make other cuts as well – cable, internet, needless phone services, entertainment, eating out, shopping, gifts, club memberships, etc etc. They probably even have cars and jewelry and other big ticket items they could sell to pay the daycare costs for awhile. It sounds dramatic, but if their kids’ education is a priority then that’s what needs to be done. (If it’s not, then you should be pulling them out and saving that money anyhow).
5 LAL // Jul 30, 2009 at 2:38 pm
Kristy, why did you have to wait 9 months to get into daycare? That sounds like a long wait.
Sara thanks for the tips.
R.May, $1800 is the going rate where I live. The $700 is in Hawaii, much cheaper because many people have grandparents to watch in Hawaii. Like I’ve mentioned I live in a HCOLA. Most places full time daycare centers charge over $2200 for a newborn. Home daycare is not really cheaper. HCOLA are expensive period.
Meg good point. The HCOLA people have one car needed for work. They live in a very expensive $500k 1 bd + den in the city. They are looking to sell and move out because space is getting tight. They also have massive student loans, equal to the daycare.
The other family can pull the child out and send him to be watched for free. I think a lot depends on how fast they get jobs.
6 R. May // Jul 30, 2009 at 3:29 pm
Yes daycare is expensive in HCOLA area – but I find it difficult to believe that if 1800 is for a private school preschool or nanny that there wouldn’t be cheaper alternatives. Typically those are the most expensive options.
7 LAL // Jul 30, 2009 at 4:12 pm
Nanny share $1800/month.
Infants cost a lot. Bright Horizons starts at maybe $2500/month for an infant at a center.
I’ve looked at home daycares in my neighborhood, it’s around $2500/month not including food.
My carpool lady pays $1800/month for in home daycare of her 4 year old, the same daycare I looked at for infant.
It’s expensive. Accept that fact. I’ve looked a few other places. Infants cost the most. This is not a place next to a HCOLA, this is the HCOLA.
This is not living in suburbs of VA/MD going to DC. This is living in DC and paying DC prices. Or Manhattan in NYC.
8 bogart // Jul 30, 2009 at 6:20 pm
A 9-month wait for infant care in my area (MCOLA) would not be unusual. Most openings occur in August, as kids “move up” to the next step in the system (obviously this starts officially at kindergarten, but there’s a ripple effect right down to infant within institutional care (rather than nannies), or so I’m told (and have observed).
In terms of the decision you ask about, I think the kid’s situation would be a huge part of my decision, in two ways. If losing my job means I can provide full-time care and I’ll do a good job at it, then, great. I personally would go crazy if I spent 24/7 with my son (or anyone else), so having him in (some kind of good) childcare is better for both of us; it also provides an (easy) context for him to socialize with other children. So I’d try to keep him there. And of course if the parent needs to spend as much time looking for work as he or she was spending working, then foregoing childcare may not be a workable option.
I’d try to keep the child in the same setting (assuming I liked it) if possible; I’m a believer in minimizing change. The exception might be if (e.g.) the child were “moving up” to another facility anyway in, say 3 months. In that case I might try to keep the child at home as a brief (free) “vacation” from childcare. Again, depending on the needs of the child and the parents.
9 Kristy // Jul 30, 2009 at 7:57 pm
A 9 month wait is not unusual for a daycare. I think it was ONLY 9 months because I already had a child in the same center. Daycare was the first to know that I was pregnant (except for my husband)! I told them as soon as I found out. The reason in our area is that there are very few centers and alot of in-home daycares. The in-home ones that I have seen are not very good. The center has a very good reputation, therefore, there is a long wait. Plus, the ratio for infants is 3:1 and they only have 6 infants at a time.
It is more expensive for an infant at the daycare we use as well. Once the child turns two the number of kids permitted in the room increases and the montly rate decreases.
10 fengshui // Jul 30, 2009 at 9:54 pm
“Most places full time daycare centers charge over $2200 for a newborn. Home daycare is not really cheaper. HCOLA are expensive period”
I remember you quoting what the average family income is in your area, (but I can’t recall what it was) and even it being a HCOLA, the average income didn’t seem as high as I thought that it would be. In order for me to justify paying $2200 a month on daycare, I’d have to be making $100k a year or more to justify that. And I know that the average family income isn’t anywhere near $100k a year, so I’m still baffled as to how people afford things…… sigh….
11 fengshui // Jul 30, 2009 at 9:57 pm
Another option would be for everyones MILs move-in/ watch kids! lol
12 R. May // Jul 31, 2009 at 9:33 am
All I’m advocating is instead of an all or nothing -pull the kids or keep them where they are – is to look at alternatives. Especially now with the economy as is and many people having to pull their children from daycare, many providers are willing to compromise. So they look and maybe they find nothing cheaper anywhere in the city or maybe they do.
13 Karen // Jul 31, 2009 at 1:04 pm
Why don’t you consider staying home with your kids? You’d have to make a whopping salary to come out ahead with day care costs that high. As long as your partner works full-time and has good benefits, cutting your other living expenses (cable, car payments, etc.) would likely make staying home with your children a viable option until they are elementary age.
Can’t imagine trusting anyone – no matter how much I paid them – to care for my infants, toddlers, etc.
14 fengshui // Aug 1, 2009 at 12:41 am
How could you cut certain things like car payments? I don’t think that it would be safe to only have 1 car….. and if you’re down to just one income I couldn’t imagine having the cash on hand to be able to pay cash for a car. Unfortunately no matter how broke we were, my dh refused to go w/out cable. He’d rather starve than to have no tv. What would we do in our free time?? oh no!
15 Karen // Aug 1, 2009 at 8:50 pm
Well, you eliminate that second car. Use public transportation, take turns with who has the car… honestly, what’s going to happen that if you don’t have the car the day of an emergency? You can always call a cab, the ambulance, call your partner, call a friend… How about Netflix? Costs a lot less than cable. Library – borrow DVDs, books, music, etc., all for free. How about all the free tv sites, Hulu, etc.?
If we’re talking about suddently losing a job, these are the types of decisions that must be made. We take an awful lot for granted in our society, thinking we don’t have a “choice” about many, many luxuries… but we do.
16 LAL // Aug 3, 2009 at 11:44 am
Bogart and Kristy, I had heard the lines were long in my area.
Fengshui, a lot of people I work with are losing money to pay for daycare. That or they have their parents live with them if they are Asian or Europeans. Americans do not do that.
Most people I work with want to work and are trying to reach a goal, thus they are paying for it, by paying for daycare. They do not save for retirement period. They RENT and they often do not have cars, or one beater car.
The lady next to me lives in a 2 bd apartment, her mom lives with her for now. Then her sister.
The woman who works next to my DH who works full time, sends her son to live with her MIL and GMIL and her family to be watched. He will live with them 2-3 months and she’ll fly to visit him b/c her husband works for an airlines.
I personally know 3 couples who sent their children back to China until age 5.
So people in HCOLA make a lot of sacrifices.
My neighbors are Indian and her mother will be living with them for 6 months after birth. Then her in-laws for 6 – 12 months.
Karen, many people prefer to work because they have a specific goal in mind. They KNOW they are paying more to work than not (often it costs more than staying at home), but they choose it because they want a specific career, such as a professorship. You cannot take time off if you want to be a professor.
Many of these people do not have a second car, live in apartments, and do extraordinary things to save money. Including sending their children away to live with family or having family come to live for 6-12 months.
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