How to Create a Budget After Divorce

January 10, 2017

It’s probably not going out on a limb to say that just about everyone knows of someone who either got divorced or is getting divorced. Over the years, I have worked with several people getting ready to divorce and I find many are unprepared for what life is like financially afterwards.  Going from two incomes to one means an overhaul of your finances and for some, a readjustment of their lifestyle. If you find yourself wondering how to put all of this together after a divorce, consider using the following tips to get you on the right track:

1. Know what money is coming in. Review payments you may be getting or receiving from your divorce and adjust your total income accordingly. Typically, child support does not impact your income tax whereas alimony paid can reduce your income and alimony received counts as income. If you are getting or receiving alimony, you can use the IRS tax withholding calculator to make sure you aren’t paying too little in taxes or giving the IRS a large tax-free loan

2. Know what money is coming out. Create a spending plan to account for how much money you need to have monthly to maintain your lifestyle.  Consider ALL  of your expenses beyond  mortgage/rent, car payments and debts. Typically, the most underestimated and forgotten are auto and home maintenance, groceries and eating out.

If you are not sure where to begin, consider using online tools at your bank to find out how much you have been spending. Most online tools will categorize your spending, so first consider adjusting the categories. Then choose a 30-90 period to see what your average spending looks like.

3. Know what the difference is. Subtract your income from your expenses to gauge if you can afford your current lifestyle. If you have a surplus, review your numbers to make sure they are realistic, you have a category for savings and you have a buffer (10% or greater) to account for unexpected expenses (better known as Murphy’s Law).

Also review how much you are spending in each category. For instance the guidance is for household expenses to take up no more than 25%-35% of your net income and auto expenses (car loan, insurance, gas and maintenance) should be no more than 20% of your take-home pay. If you are spending more in those categories, you may not have the cushion to lessen the blow of an unexpected expense. If you have a deficit, then you may not be able to afford your current lifestyle and expenses may need to be cut. This could mean downsizing to a less expensive home, a less expensive car and in some cases, a less expensive neighborhood.

Divorce is hard enough on its own. You don’t want it to cause too many financial problems as well. Taking the time to review your expenses after a divorce can go a long way into making the transition process easier.

What to Expect When You’re Expecting

January 09, 2017

When I found out I was pregnant with my daughter, I thought a lot about what I needed to do to have a healthy pregnancy and birth. I didn’t consider how much it was going to cost. I had a healthy pregnancy, but during the last few days before labor, I developed high blood pressure, so I had to have extra monitoring for both me and the baby. My daughter was a breech baby, which we knew, and I ended up with an emergency C-section after nearly two days of unsuccessful labor in the hospital birthing room. My daughter was born healthy and I recovered quickly.

Luckily for us, I had excellent coverage from my HMO, so our out-of-pocket costs were minimal. However, for most families with low risk pregnancies, their costs could be in the thousands, especially if they have a high deductible health care plan. If a woman were uninsured and had a situation similar to mine, the cost could be $10,000 to $70,000, depending on where she lived and where she gave birth.

If you are thinking about getting pregnant or are already expecting, you’ll need to take care of your financial business in addition to your health. Even if you are insured, you are likely to have significant out-of-pocket costs for pre-natal care, labor and birth, and care for your new baby.  Step one is to contact your health insurance provider to see what’s covered:

Am I covered and how?

  • Will my insurance cover my pregnancy?
  • What kind of care does my insurance cover? What coverage is fully paid, and what costs should I expect?
  • What is the most I could pay out-of-pocket?
  • Does my health care provider offer a healthy pregnancy program and birthing classes? How can I participate?

What if I need more than the basics?

  • What happens if there are problems during the pregnancy which require special care?
  • Do I need preauthorization for any prenatal care procedures? What is the process for getting authorization?
  • How will I know in advance how much I will pay for a specific medical test or procedure?
  • What is the coverage if there are complications during birth?

What to expect for my hospital stay?

  • Do I need preauthorization for my hospital stay during birth? What is the process for getting authorization?
  • What if the hospital bills for a provider who does not participate in my health insurance without my knowledge (e.g., physician, lab, etc.)?
  • Do I have choices of where/how I can deliver my baby?
  • How many days can I stay in the hospital following the birth? What if I need a cesarean birth?

Is my baby covered?

  • Will my baby be covered right away under my health insurance? Are my baby’s costs covered if he/she has to stay in the hospital longer than me?
  • How can I add my child to my policy when he/she is born? Is there a time window (e.g. 30 or 60 days)?
  • Does my insurance cover any breastfeeding coaching and supplies?

While not everyone can plan in advance for the costs of pregnancy and birth, if you have the opportunity, estimate your out-of-pocket costs up front and build cash reserves to meet them. Even if your pregnancy is a surprise, you still have nine months to get prepared financially. That way, you will be able to focus on the joys of parenting and not the stress of unexpected medical bills when your baby arrives.

 

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here, and on Twitter @cynthiameyer_FF.

 

How’s Your Financial Life?

January 06, 2017

With today being my first post of 2017, it’s a great time to spend an hour or two over this weekend looking back at the year that was and looking forward to the year that is just starting. I have an annual tradition that I started long ago and will continue for as long as I am lucid. Feel free to use my annual process as a starting point, tweak it, and make it your own.

Each year, I put together a quick “How’s my financial life?” spreadsheet. I only need a few reference sources and in less than 30 minutes, I feel like I have a much clearer understanding of where I stand financially. Along the top of the spreadsheet, I list the year and on the vertical (Column A), I list the things I want to measure annually. Here are the things I measure and where I find the information:

Total Assets – I use this Financial Organizer. The goal is for this to increase each year.  Tracking the dollar and percentage increases are things I’ve added to my simple spreadsheet over time.

Total Debt – This is also found on the Financial Organizer. The goal is for this to decrease annually and eventually get to $0!

Net Worth – This is simply the total assets minus total debt. An increasing net worth is my primary financial goal each year.  This is another thing I track in dollar and percentage terms.

Annual Income – I use my last pay stub of the year. This is a number that should go up each year and if it doesn’t – that could be a warning sign. Or it could mean that you’ve happily retired or downsized your work stress level.

Estimated Mortgage Payoff Date – I pay a bit of extra principal with each payment and at year end, my mortgage company can calculate when the mortgage will be paid in full at my current level of extra principal payments. You can also build this yourself with an “amortization calculator.” (If you Google that term, you’ll find a bunch of them). This is important to me because when my mortgage is paid off, I’ll consider myself financially secure. At that point, my embedded cost of living will be property taxes, insurance, utilities, food and fun.

401(k) Balance and 401(k) Contributions for the Year – For the contributions, I need my last pay stub for the year and for the balance, I can either log on to the website of my 401(k) provider or quickly check Mint for my balance. Each year, I enjoy seeing the balance go up! (I wasn’t so happy with this back in 2008, though.)

Savings Balance – This is one I like to track in order to make sure I have an adequate emergency fund. I enjoy seeing it go up, although it took a big step backward last year because I used a chunk of savings as the down payment on a house. So while I wasn’t ecstatic when I saw that the balance went down, I understand why it did and will work to build it back in short order.  I can check this balance in Mint while I get my 401(k) balance, so locating the info is the easiest part of the job.

Life Insurance Death Benefit – I check this each year to ensure that should this be my last year on the planet, my mortgage can be paid off, my kids’ college can be handled without loans and there could be something left over for them to have a little head start in life, along with a few of my favorite charities getting a few bucks to do the great work that they do. I have to check a file in my desk to make sure that my information is up to date. We had a change in benefits at work and I replaced one policy with another last year so this is a data point that is in flux.

Date of Last Will Update – This is another item that I need to look in my desk drawer files to confirm. Looking at it this year, I’m probably due for an update. The last update of mine was almost 10 years ago, right after my ex-wife and I separated. (It’s amazing how quickly a decade can fly by when you’re having fun!) Hitting the 10 year mark or a significant life change are my triggers for updating this important document, along with my powers of attorney and healthcare directives.

Those are the data points that I can put together in the time that it takes me to watch one college basketball game. (Hey, it’s nice to have a pleasant distraction while working on your financial life.) So pick a game to watch and get busy.

5 Steps To Sell Stuff Online

January 04, 2017

Do you have a lot of stuff to get rid of? Several years ago, when I made a big move from Cincinnati to Chicago, I pretty much sold everything I owned online, including my car. Whether you’re de-cluttering in an effort to live more simply, preparing for a big move or even just looking to find some extra cash, here’s how I did it.

1. Decide if it’s worth selling. Growing up, we often held garage sales to pass along stuff that still had a useful life, but I lived in an apartment – no garage available. So I had to be a bit more discerning about what I would go through the effort to sell. My criteria was that I had to get at least $20 for each item. I put anything worth less in a pile in an empty corner of my apartment to eventually document and donate to charity.

2. Choose the best market. I considered three different places to sell: consignment, eBay or Facebook Marketplace. Here’s how I decided.

Consignment: This is where I took any brand name clothing and higher end furniture. It’s definitely the easiest option. You drop your stuff off and pick up a check a couple months later. The downside is that you have to pay a commission, sometimes up to 50% of the selling price, but that can still be worth it.

There are lots of apps that help with this too. Poshmark is one I’ve used for brand name clothing. It’s just not as much of a sure thing.

eBay: It’s best for collectibles, in-demand accessories and some electronics – items that people will compete to buy. To figure out pricing, search for similar items and price accordingly to sell. Keep in mind that your item must be new or like-new or it probably won’t sell on this platform.

Facebook Marketplace: It’s best for just about anything, as long as you’re willing to spend the time! Best of all, it’s free. Speaking of free, if you have stuff that’s pretty worthless or that you don’t want to haul to a donation center, the free category is a quick way to get someone else to do your hauling. Just be prepared. Your phone or email will light up as soon as you post, so only list when you’re ready for people to come and pick stuff up at that moment.

3. Use best practices for selling online. Here are the guidelines I used when creating listings:

Write a winning headline. Avoid using ALL CAPS or lots of exclamation points. Think about what words you would search for when looking for the item and put them in the headline.

Take photos that sell. Include one full-length of your item and a few close-ups. If you’re selling brand-name stuff, include a picture of the label.

Use clear descriptions that include measurements and bulleted features.

Know your price but prepare for haggling if selling on Facebook. My very first sale, I had a guy talk me down to 50% of my asking price by the time he walked out the door with my dining room set. That’s still on my list of top 5 regrets in life. List for $5-$10 more than you really want for smaller items, more if you’re listing for several hundred dollars.

4. Take care when dealing with the public. There’s a reason that most of my buyers brought their mom or significant other with them when I invited them to my apartment to pick things up, but that shouldn’t preclude you from using the website to make some money from your stuff. Here’s what I kept in mind:

Keep a spreadsheet. Mine included the item, listing price, date posted and the email address of the first three people who inquired. I learned very quickly that people say they want something then don’t show, so it was good to be able to reach out to the next person in line without digging through deleted emails, DMs and comments. Plus it allowed me to track how much I made, which was fun.

Be clear on delivery in your item listing. I always included guidelines for pick-up so that no one even bothered to ask if I would deliver: “If interested, you are responsible for picking it up from a mutually agreed-upon location. Pick-ups available M-F 6–8 PM or weekends.”

Beware of scammers. This is more of an issue on Craigslist, but beware of anyone asking you to click on an attachment or link to complete more information. Real people who want your stuff are going to send normal messages asking things like, “Is this still available?” To be sure, Google the person’s name or check their profile.

But be flexible. I had a shower curtain that was part of a collection that had been discontinued and a guy in California reached out asking if I’d take a PayPal payment for the price plus shipping. He was willing to pay me before I shipped, so I knew it wasn’t a scam. Just don’t give anyone your bank account number.

And stay open to selling other stuff. I had a lady come to my apartment to pick up a piece of furniture (I always had someone there with me) who ended up walking out with all my bed linens, bath towels and an old vacuum. She saw my pile of donations in the corner and asked if I was selling that stuff too, so I said sure. She collected what she wanted and made me an offer. The lesson here: keep your donations visible if you’re having people come to your house since you never know when your trash could be their treasure!

5. Make the most of your donations. If you’re taking a big load to a thrift store, take the extra time to document and get the receipts. You may be able to get a tax deduction!

With a little time and organization, you may be surprised by how much your unwanted stuff can net. I was able to pay my last month’s rent with my sales. That’s not too bad for stuff I wanted to get rid of anyway.

How to Stop Hating New Year’s Resolutions

January 03, 2017

I was having a conversation with friends over my favorite dessert, which is basically anything chocolate. One of my friends mentioned New Year’s resolutions and like a symphony, I heard a range of moans and groans. I told them to consider re-framing their idea of success by focusing on consistently (not perfectly) making small changes instead of focusing only on the end goal. If they change their behavior and do it consistently, the natural byproduct is their goal.  I gave them the following as a starting point to consider.

Being Healthier:

1. Replace two drinks a day with water. If you cannot stand the tastelessness of water, throw in some fruit – strawberries, lemons, etc for extra taste.

2. Fill half of your plate at lunch or dinner with vegetables. A salad is a quick and easy solution. Just minimize the dressing to 2 tablespoons or less.

3. Consider having a “walking” meeting with a colleague. Commit to a 15-minute walk during lunch. If you travel a lot, you can use workout apps with various workout programs and even a coach to keep you motivated like Aaptiv or Fitstar.

Saving money

1. Start off with an amount you are confident you can save per pay period and adjust your payroll to have the funds automatically sent from your paycheck to a savings account. You can always increase the amount.

2. Consider using the “round-up-to-the-nearest-dollar” bank savings feature or have deposits (interest, ATM usage rebate) automatically deposited into your checking account.

3. Have a “no-spend day” when you choose where you are committed to not spending any money for the day.

Becoming Debt Free

1. Stop using your credit card. The easiest way to reduce the amount you owe is not to acquire any new debt.

2. Call your creditors and ask for an interest rate reduction. Research from CreditCards.com cited that 3 out of 4 people who ask for interest rate deductions actually get it.

3. As we head into tax season, consider earmarking part of your tax return to reduce your debt.

What are your goals? Starting off with the small changes can give you the quick wins to keep you motivated to reach them by the end of 2017. Then maybe you won’t groan the next time you hear about New Year’s resolutions!

 

 

What a Financial Planner Told His Daughter After Her First Job

December 30, 2016

This week, I’m sharing a blog post from my colleague, Steve White:

My daughter is 22 and recently graduated college with a degree in human biology cum laude no less and she has a job working with a medical practice. (I’m a dad so I have to brag a little.) She has done several things that have reminded me why 1) being able to support yourself is important and 2) your kids do listen to what you say.

She called me when she got her first paycheck and said “Dad, I got a paycheck with a comma in it. Now you have to listen to me.” My father used to jokingly tell me that until I got a job with a paycheck, he didn’t have to listen to me, and yes, I jokingly told her the same (full disclosure – my dad did listen to me and I did and still do listen to my daughter). That paycheck with a comma in it meant that she now got to experience adult things that I’ve taken for granted like employee benefits. Her questions (and my answers) that we covered when she accepted her job included:

What health insurance do I sign up for? (the one that fits your situation) Should I check and see which one covers my prescriptions? (yes) If I take the high deductible plan, should I put money into the HSA? (yes) If I take the other plan, should I put money into the FSA? (yes)

How much life insurance should I get? (enough to cover your debt – see this life insurance needs worksheet) Who do I name as beneficiary? (whomever you want to – not me, name your mom) Wow, I don’t like thinking about if I die (Yeah, I know.)

Who is your beneficiary? (Mom) You need to name me as your medical power of attorney [see human biology major – cum laude] (I’ll think about it – aka no, let’s get back to your benefits.)

How do I fill out a W4? (What do the instructions say?) Will I have to file my own taxes? (yes) Can you help? (yes)

Thanks Daddy! (You’re welcome. What other benefit questions do you have?)

Do I need disability insurance? (yes) Why? (You’re statistically more likely to be disabled than die young – 24% chance of being disabled for 3 months or longer.)

Before she got her 3rd paycheck, she called me about budgeting, here’s how that one went:

Dad, I think I’m going to run out of money before I get paid again. (Oh, why is that?) I’ve got $23.42 in my bank account. (Yeah, I’d say that’s a possibility.)

I hate budgeting. (We all do sweetie.) Can you help me set up a budget? (Sure, I do it every day. That is one of the things I’m paid to do.)

(You remember when I decided to start watching what I ate?) Yeah, I remember you arguing with me about how many calories are in a fried pork chop. (Okay, besides that, when I thought about watching what I ate as a diet, I thought about in a negative light. I decided to think about it as an eating plan. That feels positive to me.)

Oh, I get it. I need to think about budgeting as a spending plan. (Yeah, just like you plan what you are going to eat, plan what you are going to spend.) Can you send me that spreadsheet thing you sent me before? (sure: Easy Spending Plan)

When she got her 3rd paycheck, our conversation went like this:

Dad, this morning at work, I was so excited that I got paid that I gave everyone a hug. (That’s nice.) I don’t think they expected that. (They have gotten a lot more paychecks. They have learned to restrain their excitement.)

I’m working on my spending plan and I’ve got a question. How much should I spend on lattes? (less than you do now) But I really like my soy double pump vanilla latte (I know), so what do I do? (Spend less on something else.)

But I need gas and food! (I know.) Dad – sometimes being an adult stinks. (I know.)

(Love ya sweetie.) Love you too Dad.

 

How to Make 2017 the Year of Financial Security

December 28, 2016

According to Fidelity’s annual study on New Year’s resolutions, the number of Americans considering a financial resolution for 2017 increased significantly over last year. If you are one of those who are hoping that 2017 will be the Year of Financial Security, I suggest a quick review of 2016 as a starting point. Ask yourself four questions to get started:

1. How much did you save? Before you start on a mission to save more money next year, take a look at how you did over the past year. Are you better off this year than last? Could you have saved more money? Were your expectations of how much you could save realistic?

Don’t let a small balance in your savings account discourage you from continuing your efforts. Make saving automatic by scheduling a recurring transfer on payday so you never miss the money. If you don’t yet have 6 months of your expenses tucked away in a savings account, that’s a good goal to start with.

2. How is your 401(k) or IRA doing? If you haven’t checked on your retirement account lately, this is a good time to log in and check your asset allocation. If nothing else, you should make sure you’re re-balancing your investments to account for changes in the stock market.

But you should also make changes to your allocation as you approach retirement. Someone who only has 5 years until retirement will have a lot more of their assets invested in fixed income funds versus someone with 30 years to go. It’s also a good time to run a retirement calculator to see if you’re on track to retire when you want to.

3. Did you reduce debt? Raise your hand if your financial resolution includes reducing or eliminating debt. Extenuating circumstances aside, if your total amount of debt increased or stayed the same in 2016, then it’s time to take a look at how you are going to make that number go down for the coming year. The first step in eliminating credit card debt is to stop using credit cards, so start thinking now about how you will shift your spending to cash only while you tackle your debt. Then make a plan and stick with it.

4. Has your financial outlook changed? Perhaps 2016 was a year of change for you. Perhaps you got married, got a raise, switched careers, etc. As you prepare your plans for 2017, cover these questions to set you up for financial success in the coming year:

  • What are your greatest concerns? What keeps you up at night about your life and money? It might be something totally different from last year. This will affect your financial goals.
  • Is there specific financial guidance you need? Perhaps you received a promotion and have a lot more money to throw around so you finally need investing help or maybe now you’re caring for a relative. Does that affect your taxes? Consider seeking out a professional to help you with any big changes you’ve encountered. Your workplace financial wellness program is a great place to start.
  • Have your goals changed? Did you get married, have a baby, move to a new city, or decide to go back to grad school? All of these will affect your long-term goals. Hopefully, you’ve already examined how these changes affect your finances, but if not, now is the time to take a look and make any changes needed.
  • Do you need to revise your budget? If you did have any major life events in 2016 or if you’re setting a “stretch goal” for yourself for 2017, you probably need to revise your budget. Take a look at those expenditures that have become routine such as stops at Starbucks or taking Uber home from work and decide whether you need to reconsider those activities. For me, I have a renewed focus on my health after a rough 2016. I’m planning to spend more money on fitness activities like specialty classes and less money dining out.

Goal-setting for the New Year can be overwhelming. Make sure you give yourself some time and head space so that you are able to mindfully set goals that are realistic, achievable and motivational! Happy New Year!

 

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What to Do Before You Adopt

December 27, 2016

I recently had the joy of attending a party for friends that finalized the adoption of their son. I watch them go through the emotional highs and lows of their 18-month process. Afterwards, I asked them for lessons learned from the adoption process. They both said they wished that strategies to financially prepare for adoption were emphasized as much as the legal process. If they could go back, they would had put more emphasis on the following:

1. Assess your own finances. Ideally, you should have 3-6 months worth of living expenses saved (separate from the funds for adoption) so an emergency does not derail you from adopting.  Living expenses should be captured in a spending plan so you have a clear idea of how much you need to have monthly to maintain your living standard.

2. Calculate the best and worst case adoption expense.  The type of adoption you choose can dramatically affect adoption costs, which can range from $0 to $50,000. Include the costs of bringing the child(ren) into your household – furniture, clothing, school activities, extra healthcare insurance, etc.

Research the costs for the type of adoption you are considering and be prepared to be flexible. If an international adoption is cost prohibitive, a domestic program may be a consideration. Some state foster to adoption programs can be run privately, offering a plethora of services at minimum costs.

3. Research how you will come up with the funds. Calculate how much you can save per month and how long it will take for to have the funds for the expenses. If you find yourself short of funds, research alternatives. Think outside the box and network with other adoptive parents to come up with ideas. If you have a gift for spinning a compelling story, consider starting a GoFundMe fund, conduct a fundraising activity or ask your employer about adoption assistance.

4. Understand tax incentives for adoptions.  Aside from your employer’s adoption assistance, research the various tax incentives for adoptions. IRS Publication  Topic 607 spells out expenses that qualifies for the adoption credit and adoption assistance programs. There is a nonrefundable credit for qualified adoption expenses and possibly an exclusion of income for employer-provided adoption assistance.

Don’t make the same mistake as my friends. Consider taking some time to research not only the adoption legal process but also the financial impact an adoption may have on your finances. The better prepared you are, the less likely a financial hiccup will affect your desire to grow your family.

Should You Pay Off Your Mortgage Early?

December 23, 2016

One of the questions that I have fielded fairly often in my career as a financial planner is about paying off a mortgage vs. keeping it for those who have the ability to write a check and pay it off all at once. I have had a lot of discussions with my friends who are in financially -oriented careers as well as with friends who have no financial background but who always show an ability to use common sense. After years of having this same debate, we have found that there is no true consensus around this topic.  But we have come up with the most important points to consider on each side.

In favor of keeping the mortgage: If the mortgage rate is 4% and it’s tax-deductible, the tax-adjusted cost of the loan is around 3%. If you can do better than 3% on your investments, keep paying the mortgage and invest your cash.

In favor of paying it off: For every dollar you pay in interest, you get a tax break of maybe $.25 to $.40. To me, that sounds like losing 60-75% of each dollar. The total interest cost can be 2-3x the amount borrowed over the life of the loan. You still lose over half of each dollar paid in interest with the tax impact factored in.

And in down markets (not that we’ve seen one since 2008), you not only lose money in your investment accounts (think about the -37% S&P 500 returns in 2008), but the interest on your mortgage is lost opportunity cost. Paying off the mortgage in Jan ’08 would have yielded a 4% return with the assumptions above. Keeping it would have cost 41%, the 4% paid in interest along with the 37% lost if your returns were similar to the overall US stock market. A mortgage can be viewed as a means of leverage, and as we’ve seen with the financial markets, leverage isn’t always a great thing.

I have seen dozens of “keep vs. pay off” mortgage calculators. The inputs on the calculators usually include the interest rate of the mortgage, the investment account’s assumed rate of return, and income and/or tax rate of the homeowner, along with other more specific data items.  The one thing that is NEVER seen in these calculators is “How are you wired? How would you sleep best at night? Do you like having a mortgage or do you really despise owing money to anyone?”

The most sophisticated calculators miss the single most important factor in this decision. Which option feels best to you? Financial planning isn’t always about the numbers. Sometimes human behavior and psychology are even more important.

In my experience, the option that feels best is the option that individual will choose. This is the same in your financial life as well as with exercise and nutrition. The things that work best are the things that you feel are consistent with your internal wiring.

There is a lot of analysis, discussion, calculations, changing of assumptions, and an enormous amount of time devoted to this decision. In the end, I’ve seen that what matters is the emotional viewpoint of each individual. Almost always, emotions outrank number crunching in this kind of analysis.

 

How to Stay Sane During School Breaks

December 20, 2016

I love the holidays. The world seems to slow down a little and I get the time to catch up with friends and family. The chocolate is even better. But with every holiday, comes a winter break and the inevitable question of what to do with the kids comes up. With the babysitters called “TVs” and “iPads” quickly exhausted, the following are cost effective ways to entertain kids during school breaks.

1. Organize babysitting swaps. If you have neighbors with kids close to your kids’ ages, consider doing a swap where parents take turns managing the children, giving the other parents a break. As odd as it may sound, it is sometimes easier to have a lot of kids that can entertain themselves than one or two kids who expect you to be their entertainment.

2. Look for winter break camps in your area. Some are surprisingly affordable, but the affordable ones go quickly so start early. Consider looking into the programs at your  local YMCA or community center.

3. Eat out on the cheap. Eating out in a restaurant is a fun activity for the kids. For many of us, the problem is the expense. MyKidsEatFree.com is a national database of places where your kids can either eat at a reduced cost or for free. You can also Google your local area for places where kids can eat for free.

4. Look for free activities. Stores like the Pottery Barn and Home Depot have fun kids’ activities. Local malls as well as your local public library also host kids’ events.

5. Plan an agenda. I got this one from my colleague, Cynthia, and it worked like a charm. I planned a series of events for the kids to include a talent show. This kept them occupied until the evening. I also had them watch a few movies and created a trivia game of questions to answer about the movie for a prize.

Holidays with the family is wonderful and tough at the same time. With these strategies, they don’t have to blow your budget. Then they can truly be happy holidays.

What to Do When Your Kids Ask for Expensive Toys

December 19, 2016

Do your children ask you – or Santa — for expensive toys? If they’re a kid in America today, chances are that they’ve asked you for an item whose price made you gasp. It could be an American Girl® Doll and accessories, a Thomas and Friends™ train set, a Microsoft® Xbox, or the latest Apple® iPhone.

Say “yes” and you’ll spend hundreds of dollars. It may not be affordable for you to gift something that expensive. Many parents are tempted to put the purchase on a credit card and deal with the payment later. Even if you can afford it, there are reasons to reflect and plan how you will handle the request before agreeing.

Start the conversation about money

A child asking for anything that costs money is an opportunity for financial education. Use your child’s gift request to initiate a conversation about spending, saving and prioritizing. Consider asking your child these questions:

  • How much does it cost?
  • Where will the money come from to pay for it?
  • How do grown-ups earn money?
  • Can you think of ways to save up for this?

For more ideas on how to talk to your kids about money, the Consumer Financial Protection Board (CFPB) has an excellent resource, Money as You Grow. It includes a book club with age-appropriate suggestions to spark money conversations. I also recommend picking up a copy of Ron Leiber’s perspective-changing book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money.

Santa has a budget, too

I’ve always told my kids that Santa represents the giving spirit of Christmas but is imaginary. However, if your kids believe in Santa and have asked for an expensive item on their wish list, talk to them about how Santa has a limited amount of resources to get gifts for all the world’s children. Check out this great interview with personal finance columnist Michelle Singletary for tips on how to explain Santa’s budget.

Have your child research buying options

When my kids ask for a pricey gift or want to purchase a large item with their own savings, they have to do their research first. Ask your child to:

  • Shop around for three price quotes. Show them how to evaluate costs, including shipping.
  • If there are alternatives to their desired version, have them make a grid to compare features and ratings. Ask them to explain how they made their choice of the best buy.

Consider buying a gently used version

If your child is discovering a new line of toy that’s been around for a while, consider buying a gently used version on eBay or your local second hand network. Take Pokémon® cards, for example. For the price of one new “mega” set with 60 cards, you could buy an entire set of thousands from a teenager who has outgrown them.

Sell or give away your kids’ outgrown toys

One family’s cluttered playroom can be another family’s holiday treasure. We’ve been the recipients of many wonderful hand me down toys, including a fabulous kitchen set, dress up costumes, train equipment and Lego® pieces. When your child has outgrown a toy, encourage them to either give it away to a younger child or charity or sell the item and apply the proceeds towards the expensive gift they’ve requested.

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here, and on Twitter @cynthiameyer_FF.

 

Will Refinancing Save You Money?

December 14, 2016

The general rule of thumb is that if you can refinance to a new mortgage rate that is at least 1% lower than your current rate, it’s a good idea. But there are other things to consider in that decision, namely any closing costs associated with completing the refinance. This refinance calculator will tell you exactly how many months it would take you to recoup the closing costs through decreased interest, which is useful for a few reasons.

First, if you’re planning to move in the foreseeable future, you may find that the breakeven date is beyond when you may actually get there. This is what we found when we evaluated a refinance opportunity. Assuming you’re planning to stay in your house indefinitely, then knowing the breakeven date can help you decide how to actually fund those closing costs. If you have the cash in a savings account, it also lets you know how long it will take to rebuild your balance, assuming you take the monthly interest savings and deposit it to your savings.

What if you don’t actually have the cash available? It can be tempting to roll the closing costs into the new loan, but then you’re paying interest on that as well. An alternative strategy could be to use a 0% interest credit card to pay the closing costs (beware of any fees if you have to use it for a cash advance) then use your savings to pay off the card.

Where the breakeven date comes in handy is that it tells you whether or not this strategy will work. If you have a card with a promo rate that runs out in 10 months but your breakeven is 12 months, then it may be a bum deal. You’ll be paying credit card interest for those last two months, so make sure you enter that into your calculation.

Refinancing can be a great way to lower your payment. Try to keep the new loan term as close to your original loan’s term as well. Otherwise, you may have a lower rate and lower payment, but the total interest could still be higher if you spread it out over more years.

Finally, I find that a lot of people avoid finding out what rate they qualify for because they’re concerned that the hard inquiry into their credit will lower their score. It’s true that too many hard inquiries (when a lender actually pulls your credit to evaluate you for a loan) can have a detrimental effect on your credit score, but the character of the inquiry matters too. Applying for a mortgage refinance is unlikely to knock your score down enough to make a difference. What hurts is when you hit the mall and open up multiple store cards to save on your purchase. Take a break from those types of credit applications within six months of applying for any type of loan.

 

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The Secret Financial Power of Home Cooking

December 12, 2016

If you could save an extra $500 per month or more by doing just one thing differently, would you do it? Think about what you could do with that $500: pay off your student loans or credit cards, save for a home purchase or home renovation, power up your retirement account or even take a fabulous vacation. If you’re like many Americans who are feeling squeezed for cash to apply to your big goals, there is one simple thing you can do to save a lot more money – cook and eat at home.

I’m as guilty as the rest of us. While I love to cook, I am the first one to order a pizza when the time crunch of work, kids and activities gets crazy. Plus, as an extrovert who works from home most of the time, I enjoy taking my computer to a café so I can see some actual humans.

The keys are 1) moderation – set an “eating out” maximum for the month and 2) preparation – plan to eat at home and shop in advance for ingredients. Need motivation? Here’s how much you could save:

Save money on breakfast

Let’s take a typical breakfast on the go: a ham, egg and cheese sandwich on an English muffin with a cup of gourmet coffee for $5. Eat that every day and you’ll spend $35 per week. How to cut this down?

Cook your eggs. Making your egg sandwich at home could cost you as little as $1.00 if you kept all the ingredients on hand and cooked from scratch (not to mention that it might taste a lot better). Your savings per week? $28 or $1,456 per year.

Brew your own coffee. You don’t have to sacrifice coffee quality. My serious Nespresso habit costs me about a dollar per day and I save the pricier coffee shop brew for when I’m out meeting friends.

Buy prepared in bulk. Even reheating a breakfast sandwich in the microwave and brewing a coffee pod would only cost about $2.50 or less per meal. Your savings per week: $17.50 or $910 per year.

Save money on dinner

Unplanned take-out food is the easiest place to fall off the wagon when it comes to your meal budget. For a single person, take-out Chinese food or a pizza dinner would cost about $15-$20 depending on where you live, and you’ll get two meals out of it. For a family of four, a take-out meal costs about $40.

Stock your pantry and fridge for easy meals. Having a well-stocked pantry and fridge is like having money in the bank because you’ll always have ingredients on hand to pull together a quick and easy meal. See the Food Network’s list of essentials to keep on hand and these suggestions from Real Simple magazine for easy meals you can make in a hurry.

Making dinner at home can save you about $7 to $15 per person. Replace just one person’s meal out per week with a home-cooked version and you’ll save $364 to $780 annually. That’s $1,456 to $3,120 for a family of four.

Use your slow cooker. My slow cooker is my favorite piece of equipment in my kitchen. I load it up with ingredients in the morning, turn it on, and presto! There’s dinner at 5 pm.  See this list of easy recipes from Cooking Light.

Save money on lunch

A typical lunch on the go costs $10-$15. Sure, you’ll want to eat out occasionally with co-workers in order to connect and have a change of scenery, but you don’t have to do it every day. How much can you save from bringing your lunch?

Bring leftovers. What better thing to bring for lunch than last night’s yummy leftovers? Bring a hot lunch of leftovers just once a week and save $520 to $780 per year.

Stock sandwich ingredients at home. You can make 5 tuna subs at home for the cost of buying a single one at the sub shop. Your savings? About $28 per week or $1,456 per year.

Save money on snacks

That mid-afternoon latte and muffin or trip to the smoothie shop can cost you $3 to $7 per day easily. Buy snacks you like in bulk and keep them in the office to save $520 to $1,300 per year. If you’ve got kids, you’ll save even more by keeping a cooler in your car stocked with healthy snacks to keep the hungry hoard at bay.

It doesn’t have to be all or nothing

I’m not suggesting that you should never eat out again. Rather, be mindful of how much you are spending on food out and set some limits. If you’re saving for a big goal or trying to pay down debts, this is an easy and almost painless place to cut back on your spending. Your return on your investment for preparation and cooking – or even just reheating — is high. That’s the secret financial power of home cooking.

 

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here, and on Twitter @cynthiameyer_FF.

 

Make Retirement Great Again!

December 09, 2016

Sometimes I need to learn to not open my mouth and make smart alec comments. The other day, I was in a meeting with coworkers in which we were talking about retirement, and I joked that we needed to help people “Make Retirement Great Again.” As a result, I was given the challenge of writing a blog post with that title.

We are living in a world where pensions are being frozen or eliminated, Social Security is projecting a reduction in benefits in the next several decades and the burden of building a secure retirement is now falling on our shoulders – not the government or the employer.  Today’s new graduates are a generation that is facing a mostly “build it yourself” retirement platform. So here is my absolutely non-partisan “6 step plan” for every person (from new graduates to grizzled workforce veterans) in this country to “Make Retirement Great Again”:

1. During your remaining work years, know exactly where your money goes. When you know this, you are in a position of power. You can say “I agree with where my money is going” or “I want to change this up a wee bit.” The key is that you then have the power to make informed choices. Whether it’s Mint.com, an Expense Tracker worksheet, a spending log or some other form of organized knowledge, find a tool that works for you so that you know exactly where every dollar goes.

2. Save an increasing amount each year. Many 401(k) plans have a “rate escalator” feature that allows you to increase your contribution percentage at pre-set intervals. For those who work for companies where annual pay increases are predictably timed, that is an amazing opportunity to increase your 401(k) contribution by 1% per year. Over the course of a career, this could mean hundreds of thousands or perhaps even more than a million dollars in extra retirement savings for those who are young enough. If you don’t have this feature, pick a day – either your annual increase date, your birthday, or on January 1st – to increase your contribution every year.

I promise that you won’t notice the difference in your net paycheck after 3 pay cycles. It will become your “new normal.” However, it may enable you to retire years earlier or move to a lower stress, lower paid job late in your career or position you well in the event of a downsizing.

3. Eliminate debt. In discussing early retirement packages with many dozens of employees recently, one of the key factors enabling those who accepted an early retirement package to walk into life beyond their long term corporate job was the absence of debt. Those who still had credit card debt or a big mortgage were far less confident in their ability to accept the early retirement offer. Most of them couldn’t accept the package even if they desperately wanted to.

If you aggressively pay down debt, including your mortgage, that is a tremendous way to position yourself to go into retirement feeling secure. A zero debt level allows you to have a very low embedded cost of living. It also allows your accumulated savings and investment dollars to last a whole lot longer since they aren’t being drawn down as rapidly.

4. Know your income streams. I’ve talked to so many people who “think they know” how much they’ll get from pensions and Social Security, only to be completely surprised (mostly on the happy surprise side but sometimes on the sad side) by the level of income they can expect from these sources. Knowing your numbers is a huge way to prepare yourself for a great retirement.

If you have a pension, run multiple estimates. Know your monthly payments at age 55, 60, 62, 65, 67 or or any other age that is relevant. See how the benefit changes can help you create your retirement vision.

Do the same thing for Social Security. Use this retirement estimator to see what you can expect from Social Security. Feel free to hit the “create new estimate” button at the end and use various ages.

5. Plan for medical expenses. Fidelity prepares a health care costs for couples in retirement report annually. For a couple retiring in 2016, the estimate is $260,000 in healthcare expenses from retirement through death. This is a pretty staggering level of expenses. How will you prepare for this?

A health savings account is a great tool to build a pool of funds for future healthcare expenses. If possible, max out your HSA annually between now and retirement and try to pay for medical expenses from your regular daily cash flow so that the HSA can build up and grow. Most HSA accounts have investment options as well, so those funds can be invested for growth. In the absence of that option, save even more aggressively in your 401(k) or bank savings account or some other form of savings/investments.

6. Be the opposite of Congress and try to reduce expenses or implement a spending freeze. This goes right back to step #1 and closes the loop. When you know what your expenses are, you then have the power to make changes.

Find small ways to reduce your spending. Even if it’s a couple dollars here and a couple dollars there, it all adds up. After a few months, you won’t miss the reduced spending.

When I’m ready to go into “expense reduction mode” or “spending freeze mode,” I have a cheesy way to keep focused. Every time I pull out my wallet (or log in to an online purchasing platform), I ask “Is this something that I really NEED, or do I just WANT this?” It sounds overly simplistic, but I can’t tell you how many times it’s made me pull out of the Starbucks parking lot before I get out of my car. Give it a whirl and see if it works for you. For every dollar you don’t spend, it’s a dollar that can be added to your emergency fund, paid on debt or invested.

 

 

The Fastest Way To Pay Off Credit Card Debt

December 07, 2016

Is one of your financial goals getting out of credit card debt so that you can start directing that money toward something more fun like a new home, college education or retirement? Throwing away money on credit card interest is an incredible waste. The best way to avoid this, besides staying out of debt in the first place, is to work to lower your interest rates as much as possible while paying off your debt as quickly as possible. Here’s how I dug myself out of $8,000 worth of credit card debt after college:

  1. I listed all of my accounts in order of interest rates, starting with the highest.
  2. I started paying the minimum on all cards except for the one with the highest rate. I paid as much as I could afford on that account, initially starting out with a fixed $200 per month payment.
  3. When I received an offer to open a new card with a 0% promotional interest rate on balance transfers, I applied and received a card with a $2,000 credit limit.
  4. I transferred $2,000 from the highest rate card to the new card but kept paying the highest amount on the original card.
  5. Once that card was paid off, I added $200 to the amount I was paying on the card with the next highest interest rate.
  6. I marked my calendar for when the 0% promo rate was to expire and a month before, I opened a new 0% card and transferred the balance over.
  7. I continued to pay down my other cards that charged interest with gusto.
  8. Anytime I came across extra money such as a tax refund or a signing bonus for a new job, I sent the money straight toward my highest interest rate credit card.
  9. Eventually, I was just left with the balance on the 0% card. I continued to pay it down aggressively, and when the promo rate expired, I continued to open new accounts at promo rates to transfer the balance.
  10. Within about five years, I was debt free.

Now, there are a few things to consider here. First, every time I applied for and opened a new account, my credit score took a hit. This only worked for me because I had excellent credit, which I maintained through on-time payments for all my debt, including my student loans, car payment and even utilities.

Second, each balance transfer incurred a fee that was typically a percentage of the balance I was transferring. I had to make sure the interest I was saving by transferring the balance was more than I paid in a balance transfer fee. Finally, I had to actually stop using credit cards in order for this to work. Once I was out of the debt, I did go back to using credit cards, but I kept a close eye on the balance so that I was able to pay it off each month.

If your credit isn’t great, you may not qualify for low promotional rate cards. If that’s the case, then consider calling up your credit card companies and request that they lower your rate. You may even suggest that if they lower your rate, you’ll transfer other balances onto that card. Remind them of your on-time payment history and threaten to transfer your balance away if they don’t work with you.

The key to success here is never wavering on that large payment amount. Being strategic about how you pay off your cards can also trim months or even years off your debt. Use this Debt Blaster to calculate the difference it will make.

 

 

How to Pay for Unexpected Dental Expenses

December 05, 2016

Last week, I cracked a molar, the second time in two months, and my dentist just informed me that the only way to prevent more of this going forward is to get braces. My total costs for dental care not reimbursed by my insurance carrier this year exceeds $3,000, and the cost of braces could be up to $10,000 over the next few years. Needless to say, I was not expecting this at all. I’ve taken great care of my teeth my entire life. However, as an apparent consequence of having kids in my forties (which caused my teeth to move during pregnancy) three years of teenage braces have been undone, causing stress fractures in my teeth when I bite.

Perhaps I should have expected it though. Unexpected dental expenses happen. In fact, they are more common than not, so perhaps they should be considered “expected but unpredictable” — and expensive. On the average, per an American Dental Association (ADA) study, only 48% of dental expenses are financed by private insurance.

The typical dental insurance plan is capped at $1,500 in coverage per year. If you have an unexpected dental expense that you aren’t financially prepared for, how can you handle it? Here are some ideas:

Flexible spending account

An FSA is a tax-advantaged account at work to which you can contribute up to $2,600 in 2017 from your paycheck in order to pay certain medical and dental expenses. If you already contribute to an FSA, that’s the perfect source to pay for most dental treatments that haven’t been covered by insurance. If your dental treatment is not urgent or can be spread out over time, consider putting it off until the following year, so you can choose to fund an FSA during your benefits enrollment. FYI, if you already contribute to a health savings account, you’ll need to choose a “limited purpose” FSA (just for dental and vision expenses) in lieu of a regular FSA. For tips on using an FSA, see this blog post.

Finance it

Dental problems don’t heal themselves. If you need treatment, but you don’t have resources available to pay in full right now, you may want to consider financing:

Credit card  – The advantage of putting the charge on your credit card is that it’s easy and immediate. The disadvantages are significant though: high interest rates, lower credit score (from higher credit card utilization) and reduction in monthly cash flow from credit card payments.

Personal loan – For a borrower with a good credit score, a personal loan may be a good alternative. Rates are generally lower than credit cards. Because a personal loan is considered installment debt (like a car loan or a mortgage), it may actually help your credit score.

You’ll still see a reduction in your monthly cash flow from loan payments though. Make sure you choose a reputable lender with low fees. See this article for more tips on finding a personal loan.

Dental office payment plan – For treatment plans that stretch out over time, your dentist may offer you the option of a payment plan, typically financed by an outside company. However, a dental office payment plan can have a very high rate of interest, more than a credit card. Be cautious and make sure you read all the fine print before you sign.

401(k) loan – A small loan against your retirement plan balance can be processed fairly quickly, without a credit check or any reporting to the credit bureaus. You’ll be repaying yourself via after-tax payroll deductions at a low rate of interest. There are downsides, however, including when you leave your company for any reason, any unpaid loan balances typically become due in full or are considered an early retirement plan distribution – subject to income taxes and a 10 percent penalty for early withdrawals.

Consider a dental school clinic

Many top dental schools offer affordable care from dental students and residents. This can save you fifty percent or more on the cost of your treatment. Search “dental school clinic” online for clinics or search this list of accredited dental schools near you.

What I chose

Luckily, I was able to dip into our cash reserves to pay my dentist for this year’s treatment. That’s what emergency funds are for, after all. I can’t say I enjoyed having to spend the money though.

I also chose to defer the decision about braces until next year, so I have time to weigh the pros and cons. We have some new benefits at work and no longer have access to a limited purpose FSA, so that’s not an option for me. I have some regrets, though, for not funding a limited purpose FSA for 2016. It would have come in handy.

 

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here and on Twitter @cynthiameyer_FF.

7 Ways to Earn More Money Without Quitting Your Day Job

November 30, 2016

When you hear the word “budget,” what do you think of? Chances are it makes you think of things like sacrificing, cutting back, going without or other restrictive terms that are often associated with budgeting. But a budget is simply a tool to help us achieve our life goals in a more deliberate and successful way. Sure, one way to balance a budget is to cut back, but another way is to increase income. Here are seven ways to do that – several of them that I’ve done myself.

1. Become a Tasker on TaskRabbit. Have you learned how to read the language of IKEA assembly directions or do you get a special thrill from the sound of the vacuum sucking up debris? These are just two of many everyday skills that can be put to flexible and lucrative use via the TaskRabbit app, which connects people who have more money than time to people like you, who have more time than money these days.

2. Babysit. Do you have any idea how much over-worked parents are willing to pay a teenager to watch their kids for a night out? Imagine what they’d pay a fully-employed responsible adult, even for just a few hours on weeknights… easy money!

There are even services like Care, Sittercity and BabysitEase that connect you with families seeking help. I was a sitter for BabysitEase back in my Cincinnati days and it was great! If I had a Saturday night with no plans, I just logged into the website and signed up for whichever family looked like the most fun for me.

3. Take care of cats and dogs. If kids aren’t your thing, consider offering your services as a pet sitter. This is another side gig I held until recently.

I signed up for a local pet sitting franchise that performed a background check on me and then offered me the chance to check in on people’s cats and dogs while they were out of town. I only did the ones I wanted to and they did all the work of collecting the money, providing insurance in case something happened, etc. This was an especially great way to make money when I was in town for the holidays.

4. Teach others your hobby. Are you the person your friends and family turn to with questions about technology, fitness or even just how to properly apply their makeup? Services like Dabble (not to be confused with the dating app) are a great way to teach other people how to do the thing you love while making some extra cash. I have an acquaintance that makes great use of Dabble to teach other crafters how to knit and crochet on weekend afternoons.

5. Sell the products of your hobby. Several years ago, I signed up for a booth at a local craft fair where I sold fingerless hand-warmers that I had knitted myself while binge-watching The OC on DVD. One of my ongoing coaching clients uses Etsy to sell her original paintings in an effort to escape her paycheck-to-paycheck lifestyle without having to leave her beloved apartment. It doesn’t cost anything to set up your store.

6. Blog about your hobby. I have a good friend with a day job who started a food blog several years ago to share recipes and entertaining ideas with friends and family. After building up a decent following on social media, she’s now able to pitch large brands for sponsored posts, which has helped her to pay down several thousand dollars in credit card debt!

7. Charge for your carpool. I’ve met some of the most interesting people while riding around town in rideshare cars via Uber and Lyft. They are authors, nurses, and even office workers who just give one ride each day after work before heading home.

No matter what way you decide to earn some extra cash, make sure you take the extra step and actually apply that cash toward your savings goals. While the money you earn may seem like just a little, it adds up. Make the most of your spare time to help get you where you want to go faster.

 

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What To Teach Your Child About Money Over Winter Break

November 29, 2016

Experience is often the best teacher. My mother told me this often and like most kids, I ignored her. I thought I knew everything when I was a teenager despite my lack of a high school diploma, never having had a job or paid a bill, and being on the earth for less than 18 years.

When I went to college, she gave me an amount of money to spend monthly. I, like most kids, did a horrific job managing my money and I found myself broke within days of getting my monthly allowance. My mother refused to give me extra money. Needless to say, it was a humbling experience.

During my first major break in college, my mother pulled me aside and showed me how to budget. For those of you with kids in college who are floundering with their money, take the time to help them learn how to budget. Trust me. They will be much more receptive after they have tried and failed. The following steps can help your child manage their money better – and create less of a headache for you.

1. Work with your child to create a budget.

At the time I went to school, the Internet did not exist, so my mother helped me create a budget on paper. My budget consisted of eating out, clothes, and entertainment. To her credit, my mother did not roll her eyes over my eating out expenses but guided me into limiting my spending so my money could last. Today, your child can use websites like Mint to manage their money. Help them think through how much they should spend weekly, so they have money for the month.

2. Establish rules for overspending.

This one was easy. My mother said, “Don’t ask me for more money.” She made it clear that if I could not manage my money, she was not going to be “Bank of Mom.” Knowing that there was a limit to my spending scared me into thinking more about how I spent it. Go over the rules for overspending so you and your child are on the same page.

3. Consider a part-time job.

I complained to my mother that the money I was given was not enough. She went over the amount and then how I spent it, which I blew on pizza, clothes and movies. She then told me that her job was not to manage my social life and if I want one, I should get a job to cover the expenses. Immediately, my complaining subsided.

If your child is struggling to manage the money they have, go over their funds with them to assess if the struggle is a result of poor money management or truly a lack of funds. Depending on your child, encourage them to work a part-time job. Surprisingly, when I eventually got a job, my grades went up. The job was a wake up call as to what my life could be like without an education.

While your child is home for the holidays, take the time to review their spending. Helping your child create good money habits now will go a long way to creating a financially successful adult. They’ll thank you someday.

 

 

The Best Gifts Don’t Have to Cost a Fortune

November 22, 2016

One of my favorite Christmas gifts was the first one my daughter made for me. To be honest, I am still not 100% certain what it was. It looked like it wanted to be a mug when it grew up but somehow morphed into a mug with a small bowl slated on one side with bumps. My daughter was so proud of her accomplishment and had the expectant look of, “Of course, you know what this is and how to use it,” so I did not have the heart to ask and this interesting interpretation of what a mug is has sat in a box for years.

As I think about the gift, I realize that the best gifts for many people can cost little to nothing. As you start to think of what to get people for Christmas, do not undervalue the gifts that cost little. Here are a few ideas:

1. Certificates for free babysitting, home repairs, etc:  Those of us that have kids know the value of a date night and the expense of hiring a babysitter. Getting a gift of free babysitting is a wonderful way to give couples a night off or to give a single mom a much deserved break. Are you handy, sew or have a valuable skill or talent? Consider donating your skills as a gift. It will be much appreciated.

2. Family pictures in an inexpensive frame: When you have kids, this is a gold mine. You can find some great frames at dollar or thrift stores or you can get creative and inexpensively create a picture frame. This makes a great family activity.

3. Baked goods: If you are a hidden “Betty Crocker,” consider whipping up your favorite yummy desserts and creatively package the delicious gifts.

4. Toy swap: If you have kids, we all know there are piles of toys in practically new condition sitting in the corner or under the bed. A friend of mine came up with the great idea of packaging the toys and swapping them as gifts for Christmas. It was an inexpensive way for us to give gifts to each other and we got rid of things our kids were not going to use anyway.

The gifts listed above are no to low cost and would be greatly appreciated. These are only a few items though so use your imagination to come up with more ideas. Remember, some of the most priceless gifts cost nothing.