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Childcare Costs - Is everyone paying this much?!?

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  • Childcare Costs - Is everyone paying this much?!?

    I would like to get a sense of what others on this forum think is a "reasonable" amount to pay for childcare. My wife and I live in a HCOL area and both work a lot of hours. I am a cardiac anesthesiologist that takes Q4 beeper call and Q11 in house overnight call. I also end up working late unpredictably during the week if a heart is added onto the schedule.

    My wife is a partner at a big corporate law firm. She commutes downtown by train at least 3 days per week and bills a lot of hours. Its not unusual for her to hop back on her laptop once she gets home around 6pm and also on weekends. Our kids are 8, 5 and 2. Our school district only does half day kindergarten, and they seem to give the teachers a day or two off every month for a random in service/training. Even when the kids are old enough for full time school we will likely need full time help to cover summers, school holidays and whatnot.

    We ruled daycare out pretty quick because they close too early for us to reliably pick the kids up. We could consider an au pair at some point but we would have to add an au pair suite to our house to meet the program requirements. They also take 10 weeks to get here, which would be very hard to cover. That left us with the full time nanny option, which we have been using for ~8 years. We have had some very good ones who have stayed >3 years and some really problematic ones that weren't reliable.

    We started out paying around $20/hr in 2015....but rates have escalated in our area. Our most recent search had most candidates expecting $25-30/hr. Most of them also expect year end bonuses of 1-2 weeks salary. Given our typical 42 hours per week plus taxes (we use a nanny payroll service), this amounts to about $70k/year! It is a huge chunk of our annual spending. It makes me nauseated to think about how many brutal 24 hour calls I take every year just to pay for childcare.

    We both have FIRE aspirations and would like to ramp down sooner rather than later.

    How much are the rest of you spending? Any other ideas?

  • #2
    That doesn’t seem out of line in HCOL area at all. Fortunately, with your occupations I would still think you can max out retirement accounts, fund 529s and add to a taxable brokerage account each year despite the childcare expenses. At our peak childcare costs we were paying 70-80% of your costs, but that was over 10 years ago. And we are FIRE.

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    • #3
      A nanny isn’t cheap no matter where you live but it’s more expensive in a HCOL area.

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      • #4
        Yes, we have been paying a bit for childcare as well. 2 physicians, just looked at her w-2, we paid our nanny 34K last year at 25 dollars per hour. We used to nanny share but the family we were doing it with backed out so over the past few months, we have been paying her 40 hrs a week for a few hours before and after school and to cover the every other week the teachers have a professional development day along with sick days/days off/etc, she was working 40+hours over the summertime so we were paying her overtime. Despite probably making some 50-100 dollars an hour looking at the actual hours our nanny has been working during the school year, our nanny just gave notice so now we are trying to figure out what to do. My wife has been looking at going part time, but hasn't done so yet. Part of the "problem" with 2 high income earners is that it actually makes financial sense for you to over-pay someone to cover you during hours you are working rather then cutting back your hours so that you will be available during those 1/2 days of school or sick days. We were also willing to continue over-paying her during the school year so we wouldn't have to figure out new childcare plans every summer. You should do the math, you both probably could cut back on the number of hours you are working and figure if post-tax, you were coming out ahead vs paying for an expensive nanny. It's definitely hard to get good help, that's another reason we were willing to overpay our nanny because we didn't want to risk having to end up with another bad one. Other then cutting back, nanny sharing, au pair, or living close to family that is willing to help out, I don't know any other way around it. I am very envious of people who have parents who provide free childcare, I think that's what a lot of people who work a lot of hours but can't afford a nanny end up doing. Inflation certainly doesn't help, I don't see why people would rather work in fast food rather then childcare, but as they raise their rates to 15 dollars an hour, it just means that you need to offer something more then that. The nice part about fire is that you will have large expense you can look forward to cutting out when you are calculating your number you need for financial independence. When I look at our annual expenditures to calculate the number we need to be FI, I subtract out the nanny and the mortgage to get a better number to aim for.

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        • #5
          We are in a MCOL city and pay our nanny 18 per hour for 40 hours a week. It is tough to find child care for all the holidays school vacations etc. if both parents work full time. Even school gets out relatively early!

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          • #6
            We always had a live in nanny. When our kids were young, my spouse was an attorney and I was a busy physician. Yes, it was expensive in this HCOL area, but well worth it to have help available at all hours.

            These days, the nannies for the grandchildren get paid $160-$200 per day, depending on the skill level. One nanny is a peds nurse from a foreign country who drives, will run errands, and makes notes with I's and O's and q4h vitals when the baby is sick. She charges $200 per day and is well worth it.

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            • #7
              Also, if you get a good nanny I’d advise paying well. A great nanny is worth their weight in gold. It’s really horrible having someone that is tardy or unreliable. And frequent turnover is super painful. We were always generous with pay, basically paying a fixed weekly amount even if the hours might not always be add up to 40. Anything to keep them for multiple years rather than months.

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              • #8
                Sounds about right. We’re about $20 per hour in MCOL. My friend in Los Angeles pay $35.

                it’s worth it as you trust them to care for your most prized possessions…your kids.
                and the holiday bonus is the same for me too. Same for my buddy in SF and LA.

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                • #9
                  Originally posted by HeyAnesthesia
                  I would like to get a sense of what others on this forum think is a "reasonable" amount to pay for childcare. My wife and I live in a HCOL area and both work a lot of hours. I am a cardiac anesthesiologist that takes Q4 beeper call and Q11 in house overnight call. I also end up working late unpredictably during the week if a heart is added onto the schedule.

                  My wife is a partner at a big corporate law firm. She commutes downtown by train at least 3 days per week and bills a lot of hours. Its not unusual for her to hop back on her laptop once she gets home around 6pm and also on weekends. Our kids are 8, 5 and 2. Our school district only does half day kindergarten, and they seem to give the teachers a day or two off every month for a random in service/training. Even when the kids are old enough for full time school we will likely need full time help to cover summers, school holidays and whatnot.

                  We ruled daycare out pretty quick because they close too early for us to reliably pick the kids up. We could consider an au pair at some point but we would have to add an au pair suite to our house to meet the program requirements. They also take 10 weeks to get here, which would be very hard to cover. That left us with the full time nanny option, which we have been using for ~8 years. We have had some very good ones who have stayed >3 years and some really problematic ones that weren't reliable.

                  We started out paying around $20/hr in 2015....but rates have escalated in our area. Our most recent search had most candidates expecting $25-30/hr. Most of them also expect year end bonuses of 1-2 weeks salary. Given our typical 42 hours per week plus taxes (we use a nanny payroll service), this amounts to about $70k/year! It is a huge chunk of our annual spending. It makes me nauseated to think about how many brutal 24 hour calls I take every year just to pay for childcare.

                  We both have FIRE aspirations and would like to ramp down sooner rather than later.

                  How much are the rest of you spending? Any other ideas?
                  If you weren't both high income professionals I'd suggest one or both of you cut back. But I think this is just the "cost of doing business" given your professions. The good news is it is temporary. Those kids eventually get older and one or both of you probably cuts back a bit eventually.
                  Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                  • #10
                    Our second part time take home income essentially paid for the nanny after her retirement and insurance taken out.

                    Well worth it though as peace of mind with the erratic hours and simply keeping the house running. She got the kids to school, laundry, light housekeeping and meal prep. with pickup and after school stuff -- so really home manager than nanny after the initial years.

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                    • #11
                      Mcol area. Like another poster, we kept our nanny on full time once our youngest started K ( full day) in the fall this year. So we're paying around 50k for probably 15-20 hours/ week during the school year. But I didn't want to have to find something for the summer. Plus she's kept the kids a couple weekends so we could go away without them to sort of even out the pay. We give her unlimited vacation and sick time and a week bonus at the end of the year. I'd say you're getting a pretty good deal at 70k with 3 young kids and 40+ hours a week in a hcol area.

                      We are planning to let her go at the end of this summer. It'll be a little tricky juggling everything in the fall but I plan to cut back to 0.5-0.75 fte come next year, plus my husband has a ridiculously flexible/easy work schedule so it'll all work out and save us a bundle. I have to admit though I will miss having her around all the time.

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                      • #12
                        As a two-physician couple, we decided to forego the au pair or nanny altogether. As a surgical sub-specialist, my income was 2-4 times that of my PCP spouse. So as WCI suggested above, it made the most financial sense for her to cut back. She has always worked 0.6 to 0.8 FTE, and did most (but not all) of the pick up and drop off. I do remember occasionally dropping off the kids at pre-care at 7 am, and picking up at 6pm, barely making it before closing time. It was very stressful, mostly for my spouse, and I am very thankful she was willing to make some sacrifices in her career.

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                        • #13
                          My most recent discussion with a physician family in a HCOL area (last week) had them asking the same question. They are paying $30/hr, $60k/yr. While I cannot say “everyone” is paying this much, you’re certainly not alone.
                          My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
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                          • #14
                            This is a sobering post to read as a single, early 30's young guy. Kind of speechless just letting your posts sink in on the reality of childcare costs...

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                            • #15
                              WCICON24 EarlyBird
                              I'm in a MCOL area and your numbers sound right to me. The main issue with your specific household are the odd hours. You both work a lot, including evenings and weekends.

                              would consider looking at it this way: you both work nights and weekends and I bet each of you are making quite a lot of money...probably $200k each based on what you wrote and honestly I think I'm really low-balling it. At the same time you want someone to watch your kids and work similar hours to both of you so that you can work your hours...but for probably less than 1/2 and perhaps 2/3 less pay than you? Obviously the work is different but it's hard to pay someone to work odd hours which is why people who do that tend to get paid more. In the end you are coming out ahead financially by paying someone $70k while each of you make at least 3x that

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