Tuesday, March 18, 2014

Financial Peace - Where does Adoption fit in the Baby Steps?

After posting Part 2 of this series, I received a great question from two different bloggers - How does adoption figure into the Baby Steps?

I was going to reply in just the comment section, but figured this response really deserved its own post because there may be more of you with the same question.

Dave's answer is always the same when it comes to debt. You must pay down your debt first. Yes, you save $1000 in the Emergency Fund in Step 1, but paying down debt comes in step 2 before any other savings.

I actually remember listening to this podcast where Dave welcomed author Julie Gumm to talk about her book Adopt Without Debt: Creative Ways to Cover the Cost of Adoption. Dave says:
One of the questions that comes up a lot on this show over the years, because it’s almost like people try to find something so they can stump me, and the one that they think they can get me with is the calling to adopt a child. Of course, because it’s so important and because it’s a child, I’m supposed to say it’s okay to go into debt because stupid while being noble works. It doesn’t work. I’ve sat and told people over and over there are lots of ways to adopt. There are lots of different things you can do in the adoption process to not get yourself neck-deep in debt.
Then we ran into one of our listeners named Julie Gumm. Julie is on the line with us here out of Phoenix, Arizona. She’s got a book out called Adopt Without Debt. She speaks all over the nation—around the world, for that matter—on adoption, global orphan care, and financial freedom. She and her husband have adopted children, and they did this shockingly without going $50,000 in debt to do it. I thought it’d be good to get a lady who’s not only actually done it but an expert who speaks on this subject to come on for a few minutes and talk about this.
I have not personally read this book, but here are two of the questions Dave asks Julie:
Dave: So what’s your household income?
Julie: Right now, it’s about $48,000. My husband and I both work in full-time ministry now.
Dave: What was it when you were adopting without debt?
Julie: When we started, it was about $80,000, but about two months into our adoption process, my husband ended up leaving his job, so our income was cut by about 70%. It was more like $34,000 when we started the process. 
For the full transcript of the podcast, go here.

Some thoughts:
1) Adoption can be very expensive - thousands of dollars if you work through an agency. If you are connected personally to a birthmother (though a friend, a crisis pregnancy center), you might pay less, since you are paying an attorney directly. Those with adoption experience outside an agency, please feel free to add comments below!

2) Foster-to-adopt is an option (and is often also less expensive), but I believe this is a special calling as well. Not everyone can handle the emotional upheaval that comes with this kind of adoption. These families are truly heroic.

3) If you are not debt-free, you may go further into debt to adopt, and debt is always very risky. When we were placed with C, we literally were at the hospital the next morning signing checks - the money had to be available quickly. (With our disruption in January, we were signing checks 5 hours after getting the phone call. Going to the bank to take out a loan is probably not something you will have time for.) Some questions to ask yourself - What happens if you/your spouse lose a job after the baby is placed in your family? Will one of you be staying home then to care for the child and thus losing income if you don't have significant family leave and need to take more time off? How will you pay for daycare? How much more quickly can you pay down debt if your goal is to adopt? What can you do to raise funds? Some people are very crafty and sell things to family/friends. Others have a yard sale. As I said, I never read the book Adopt without Debt, but from the podcast transcript, Julie had a bunch of ideas.

One other thing my husband remembers listening to - a man called Dave's show and told Dave they had just been placed but didn't have the funds. He asked if he should take out a loan. Dave asked him how much his car was worth. The man said "$15,000". Dave told him to sell his car.

I also want to mention that the Adoption Tax Credit is between $12-13,000 currently (see below for ways you can help keep this credit!!). Sometimes employers also help with adoption expenses - but that is usually after finalization occurs. So, yes, you will get some of the money back (provided you don't owe the IRS when it's time to file your taxes), but you still have to come up with the initial funds. When we received our tax credit back, it went immediately into an account towards our next adoption. :)

Last week I received an urgent email from our Agency - the above mentioned tax credit is in danger. I would love to have your support on this so that the credit is not eliminated. Thanks!

Elimination of the Adoption Tax Credit - We Need Your Help!
The House Ways & Means Committee is proposing tax reform that would include elimination of the federal Adoption Tax Credit. 

This was sent out by the Join Council:
On Wednesday, February 26, Chairman Camp of the Ways and Means Committee released his much anticipated  tax reform proposal and it eliminates the adoption tax credit. This breaking news makes our advocacy efforts that much more critical. Now that an actual legislative proposal has suggested eliminating the credit altogether, we need to ensure that every single Member of Congress  hears from us about its importance. Members will only be compelled to fight for its protection if they hear real stories from all of you.

Outreach to your legislators is the only way to protect the adoption tax credit.
Legislators only need to hear from 20 constituents about an issue before it becomes important to them. Remember, Members of Congress are people and oftentimes it is a personal story about why a law is needed that motivates them to act.   

When will Congress vote on the Adoption Tax Credit Refundability Act (H.R. 2144/S.1056)?An individual vote on this bill is unlikely to happen. However, the adoption tax credit will remain part of the broader tax reform discussions and is now particularly vulnerable given the proposal to eliminate it.
 Call to Action: Initial Emails to Your Members of Congress asking for them to cosponsor H.R. 2144/S.1056 - Find your three Members of Congress by using this link. Email each of them and explain the importance of adoption and ask for their support in protecting the credit. Speak from the heart and share your story about why the Adoption Tax Credit is important to children, your family, or others in your life. 


  1. YIKES! They better not eliminate that tax credit. Thanks for the heads up!!

  2. I hope they don't get rid of the tax credit as adoption is something we are discerning to start this year. Thanks for the ideas!

  3. Thanks for this! I think that makes a lot of sense (not going into debt - or at least too much debt - to adopt). In the short run, that means it might take us longer to adopt, but in the long run I can definitely see how that's for the good of our family, including the good of an adopted child! And that's really interesting how quickly you need to have funds available in an adoption - hadn't realized that. Thanks for this!


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