Strategy 44 of 107
Run a licensed family child care home
What it is
Get your state's family child care license: training, a home inspection and background checks.
Steps
- Get your state's family child care license: training, a home inspection and background checks.
- Join the USDA Child and Adult Care Food Program to be reimbursed for meals and snacks you serve.
- Part of the home's costs can be deducted for the business use. Send the net income to principal.
Repeat: Monthly.
Measure: Net monthly income after costs and tax.
Try it in the calculator Enter its amount in "Monthly non-income amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- Long days and real responsibility for children.
- Zoning, HOA and insurance requirements.
- Income ends if you stop.
Who it fits
Married couples, Newlyweds, Single, No high school diploma, No college degree, Average household, Grandmas and grandpas (62 and over)
Needs
Any homeowner with a mortgage.
How predictable
Depends on people or program rules (tenants, family, IRS records, lenders)
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (married couples). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: get your state's family child care license: training, a home inspection and background checks.
Suppose it brings $600 a month on principal from this strategy, not from the paycheck. The loan would be paid off in 16 years 3 months instead of 30 years, saving about $196,219 in interest. To finish in five years, they would still need about $3,374 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Income from the home stack: Work the home already supports: child care, paid care for a relative who lives with you, and one big event week a year.
Sources and more information
- ChildCare.gov: Family child care homes childcare.gov
- USDA: CACFP family day care homes fns.usda.gov
Where to get help
- CFPB: Find a HUD-approved housing counselor (free or low cost) consumerfinance.gov
- USA.gov: Government benefits usa.gov
Related strategies
- 45. Run childcare and commuting through pre-tax workplace benefits
- 42. 70½ and over: give from the IRA directly and send the tax saved to principal
- 46. Claim every tax credit you qualify for and send the refund to principal
- 47. Amend the last three years of returns for missed deductions and credits
- 40. Kill the costlier debts first, then roll everything into the mortgage
- 48. Rent out a car, trailer, tools or gear you rarely use