Child-care costs strain single mom's resources
Joan Leib, who has degrees in music and English from Oberlin College, works as a technical writer for a software company in Acton. Up until now, her $53,000 salary has been sufficient to cover the bills, but just barely.
Leib, who turned 32 last week, has wanted children ''since I was a kid myself basically," she said. She made arrangements with a sperm donor, putting it in writing that she would not ask him for child support. Her son, Isaac, was born in 2003. She is expecting a second child in April, by the same sperm donor, ''because I think it is important for everyone to have siblings," Leib said.
While conceding she has chosen a difficult path, Leib says she has a ''wonderful example" in her mother, who at Leib's age took a similar course, choosing to raise a daughter and son alone.
Leib applied for a Money Makeover back in October, after Hurricane Katrina had hit Gulf Coast refineries and gasoline prices were rising in response. Leib commutes 50 miles a day, and a $1-a-gallon increase was a significant hit.
The Globe paired Leib with Rick Miller, a fee-only financial planner and owner of Sensible Financial Planning in Cambridge. The problem, he found, was not a surge in gas prices but what she will be spending on day care.
Last year, day care for Isaac in Acton four days a week cost Leib $15,000. ''When I do the math for four days a week, it comes out to about $8 or $9 an hour. I really love his teachers. If you think about it that way, I feel like I wish I could pay them more," she said.
After her second child is born, child care costs will rise to $35,000, because infant care is more expensive, and could cost as much as $45,000 if Leib moves the children into comparable day care closer to home in Cambridge, which she was considering.
''This notion of paying $35,000 to $45,000 a year for day care is not realistic," Miller said.
Leib would need to make at least $100,000 starting this year to not take on significant bank debt. At the very least she would need to make $60,000 to maintain her current standard of living, and would still need to borrow up to $140,000 over the next five years to pay for day care.
If she can't get a raise, she would have to cut her annual spending in half, to $12,000, which is not feasible, Miller said.
The solution? Miller recommended Leib look into getting an au pair. His research showed she could hire an experienced au pair for about $18,000 a year, and a novice for $14,000. But it would take more work than finding traditional day care.
Leib would also have to move because her Somerville condo does not have room for an au pair.
Another option would be hiring a nanny. Although more expensive, it would not require uprooting. Another possibility would be for Leib to seek a job at a company that subsidizes child care.
During the meeting, Leib said she has discussed sharing an au pair or nanny with her brother and his wife.
''Sharing care with your sister-in-law is a brilliant solution. If you can keep the costs to around $20,000 a year, that will work financially for you," Miller said.
Leib also has the safety net of her 63-year-old mother, who lives in Cambridge and cares for Isaac one day a week. Her mother lent her $40,000 for the down payment on Leib's condo and helps out with occasional small loans.
Miller stressed the importance of protecting the children should something happen to Leib.
She needs to increase her life and disability insurance, make a will, and appoint guardians. Because Leib's employer does not match 401(k) contributions, Miller recommended that she stop paying into her 401(k) for the next five years because of her cash crunch.
Afterwards, Leib said: ''A lot of time you can talk about in the abstract the way your decisions can affect your finances. For me, I found it helpful to have the actual numbers attached to it. It's sobering."
NEED A MONEY MAKEOVER?
To be considered for a Money Makeover, fill out the application at the ''Your Money" section of boston.com/business, or call 617-929-2916.
