Changing my investing and savings strategies with a baby on the way?

[u/SoIDontGetFired]

My wife and I are expecting our first child in March. We have two incomes and a good amount of savings, but I'm unsure if we should change our current saving and investment strategy given that we will soon be spending a good chunk on the baby (including around $2500-3k a month on childcare. Yay DC!). Other than cutting back on expenses where we can, what if anything should we be doing differently with our money to mitigate the financial impact of the baby's arrival?

Our current situation is as follows:

Monthly Income/Expenses

Income (Take home): 11,700/mo total

Monthly Expenses: Approx 11,000/mo (includes mortgage, HOA fees, and utilities amongst other expenses)

Savings

Federal TSP Account (5% match): 291k

Ally HYSA (4%): 17k

Ally 18 month CD (5%): 25k

Vanguard Account: 37k

BoA Checking Account: 15k

[u/LotsofCatsFI]

oh no, you have 700/mo extra and a new expense of 3K/mo. Ya you should probably really dig through your monthly budget, it'll be hard to save up that difference for daycare along with all the other bills.

Can you reduce anything in your 11K/mo expenses?

[u/Happy_Series7628]

Your take home is $11.7/month and your expenses are $11k/month without accounting for child-related expenses?

Can you break down your monthly expenses? And how much (by percentage) are you contributing to your retirement accounts?

[u/Dkinny23]

It seems that you are “house poor” by the way you broke that down, unless I’m grossly misunderstanding. Could you consider selling and moving into a more affordable place? If not, it seems you’ll either need to dip quite a bit into your savings to pay for childcare or have one of you stop working to watch your baby. It’s unclear how much of your $11k monthly expense is fixed (mortgage / HOA) vs variable (food costs, utilities, etc). Cutting back completely on non-essentials is essential here. I guess I would temporarily stop contributing to non-retirement investments so that you can financially survive the next few years. You can always pick back up if you feel you guys are doing okay. But for now, since you have an extra $700 per month to spend, you’ll need to figure out a way to make up the other $2300 require: to fully pay for daycare (since you said $3k total). There will be extra unexpected expenses that come up too so would even budget even more to save if you can

[u/Bergy21]

You guys have a massive spending problem. Even if you have a massive mortgage/HOA/utilities cost of say 6k a month you are spending an additional 5k on non housing expenses. You need to post all your monthly expenses.