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R. Klein, EA
R. Klein, EA, Accountant
Category: Finance
Satisfied Customers: 2880
Experience:  Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
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Im considering international adoption and not sure of the

Resolved Question:

I'm considering international adoption and not sure of the best financing route.
Looks like the total cost, hopefully without hidden/incidental fees, will be between $28,000-$40,000. I have relatively little debt (credit card $900), no mortgage, school or car loans. Monthly income approx. $4800 w/monthly expenses (food, personal items, etc. $200-$300). Anticipating the cost will be more on the high end, I thought of paying for half the cost with savings and the rest on credit card or bank loan. This will leave about $25,000 left in savings; it makes me very nervous that my savings will be low as I will be adopting as a single parent. I'm looking into grants, but may not qualify because of income.
Advice? Other options?

Thank you.
Submitted: 8 months ago.
Category: Finance
Expert:  R. Klein, EA replied 8 months ago.

R. Klein, EA :

Thank you for your finance question and congratulations on your choice to adopt.

R. Klein, EA :

Do you currently own a home? You said you have no mortgage, but you didn't indicate whether you rent, live with parents, or own free and clear

R. Klein, EA :

It would also help to know your approximate monthly outflow currently.

R. Klein, EA :

A couple of thoughts:

R. Klein, EA :

1) Your proposed savings floor of $25K represents between 5-6 months of income. This is generally considered a safe, minimum level for emergency savings

R. Klein, EA :

2) Credit card debt is the MOST expensive borrowing you can do. Avoid it at all costs.

Customer:

Thank you. Living overseas (DoD civilian) within allowance for housing, so when the exchange rate is 'good,' then no out of pocket expense. However, for the last couple of years, $100 out of pocket on some months.

R. Klein, EA :

If you currently own a home, consider taking out a home equity line or loan. This is generally the least expensive money, and it is tax-deductible to boot.

Customer:

Monthly overflow?

R. Klein, EA :

Thank you for the clarification.

R. Klein, EA :

If you are living off basically no out-of-pocket expenses, then $25K is MORE than enough savings.

R. Klein, EA :

In this case I would recommend finding as low cost loan as possible.

R. Klein, EA :

I have personally been down this road a few times (finding cash for an international adoption). My kids are now in high school. Now I look forward to figuring out how to send them to college!

R. Klein, EA :

I would NOT be concerned that you only have $25K in the bank unless you foresee leaving your job in the near future.

R. Klein, EA :

It sounds like you are putting 4K+ a month INTO savings.

R. Klein, EA :

You also have little or no taxes on your income if you are overseas.

Customer:

I never fathomed the cost would be so great! (Any side advice regarding agencies would be appreciated, too:)

R. Klein, EA :

This price doesn't seem so great....The adoptions I did were in that range 15 years ago!

R. Klein, EA :

Of course, depends on the country and where you need to travel to.

R. Klein, EA :

And I was not making as much as you are now!

Customer:

Ok, good to know that amount in savings is considered enough. Asia, specifically Philippines, India or the Marshall Islands.'

R. Klein, EA :

It's worth every penny....that is until they become teenagers...:)

R. Klein, EA :

I have several Russian exports

Customer:

I've had to make some decisions about limiting lending to family members and put towards saving for adoption.

R. Klein, EA :

YOU come first (sometimes)

R. Klein, EA :

If you can put money INTO savings at the rate of $2500+ a month for at least a year, I would not worry about spending down that savings to an even lower level.

Customer:

Glad to hear it! So many horror stories fill the news regarding adoption, but speaking to people who have been through the process and who can share the woes AND the joys is encouraging.

R. Klein, EA :

When we talk about emergency savings, if you have a "true" emergency and you can tap your credit cards at THAT point, you are actually better off spending our current savings rather than using any credit.

R. Klein, EA :

Horror stories are the things that reporters want to write about. The boring bland ordinary adoptions which is 99.98% of all cases isn't worth writing about. Nobody will read it or care.

R. Klein, EA :

Dog Bites Man is boring. Man Bites Dog is interesting.

R. Klein, EA :

Most of the time Man bites Hot Dog, so it was just hyperbole.

Customer:

So true:)

Customer:

Well, thanks so much for your time and advice.

R. Klein, EA :

The hardest part of the adoption process was the time the Russians would not let my wife out of the country. We had messed up visas and they let me through before they caught her.

R. Klein, EA :

After a visit to the "back room" and a few US dollars....problem solved!

R. Klein, EA :

She was scared that I would not come back for her!

Customer:

I am going to work on saving more. I should be putting away more, but traveling at every opportunity has affected my savings...started to curb this though as adding to my family far outweighs another trip.

R. Klein, EA :

You probably will travel less if you have a child any way.

Customer:

Yikes! You guys will have lots to share with the grandkids some day. Throw a little KGB action in there and you'll be the coolest grandparents ever!

R. Klein, EA :

KGB was replaced....But they were around,,,,

R. Klein, EA :

Consider that one has to have an FBI clearance just to adopt in Russia....

Customer:

Before I go, any particular bank comes to mind with super low loan rates?

R. Klein, EA :

Any way, most exciting thing you can prbably do in your life and one that will be with you for the rest of your days!

R. Klein, EA :

Don't worry about the money!

R. Klein, EA :

That's my advice!

R. Klein, EA :

Anything YOU do is better than what these kids would have if you DON'T!

Customer:

Thank you again.

R. Klein, EA :

Have a good day! To close this conversation, do take a moment to provide a rating!

R. Klein, EA, Accountant
Category: Finance
Satisfied Customers: 2880
Experience: Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
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