Archive for Finances
Saving for College Gets Tougher in a Tough Economy
Posted by: | CommentsMost parents find college savings extremely daunting—especially when we calculate the potential costs of sending a child to college in 2028! If we save $100 a month starting when our baby is born, we’ll still have only about $48,000 saved by the time he enters college (assuming an 8% annual return). In 2028, that probably won’t cover even one year of college at a public university. Whew!
Saving for college is tough enough, but a bad economy makes it exponentially harder. Money magazine reported that many parents have resorted to pulling money out of their children’s 529 college savings accounts in order to either pay off debts or even pay their rent or mortgage. Of course, it’s hard to fault parents for pulling money out of their children’s accounts during particularly tough times. But as a society, it’s scary to think that the Great Recession of the last few years may negatively affect families trying to put their kids through college even decades from now. Raiding a 6-year-old’s 529, for example, sets parents back more than 6 years of savings, since the opportunity for compounded interest over those years will also be lost.
Let’s hope that the economy recovers soon so that we can put away enough money to put our kids through college!
Stay-at-Home Moms Can’t Get Credit Cards?
Posted by: | CommentsAs a former federal government employee, I am always intrigued by the latest goings-on of the government (I had closely followed the latest news about last week’s possible government shutdown to see if my former colleagues would be temporarily losing their paychecks—luckily, we all dodged a bullet there!). So, I was especially curious when my friend Melanie mentioned that the CARD Act (a credit card reform overhaul law) could have a detrimental effect on stay-at-home moms.
According to the new legislation, when an individual applies for a credit card, he/she now needs to show personal income in order to be approved for the card. That is, the applicant must personally make an income in order to get a credit card. Prior to the CARD Act, an applicant could use his/her household income to show that he/she had a sufficient ability to pay possible credit card expenses/debt. This new change means that stay-at-home moms (and other people who don’t personally earn an income) would need a co-signer in order to obtain a credit card.
Not only does this devalue the work (and importance) of stay-at-home moms in society, it also forces the employed spouse to put his/her credit score on the line for a card that he/she may not personally use. If the couple’s relationship were to sour, the unemployed partner could do damage to the employed partner’s credit score. So, really, the CARD Act has negative implications for both spouses.
I do understand the idea behind the law—we, as a society, don’t want people who have no income to be able to get themselves into credit card debt—however, it seems that changes need to be made so that stay-at-home moms are not inappropriately caught-up in the consequences of this law. Lawmakers should amend the law so that household income can once again be used as the basis for credit card approval.
Do Baby Girls Cost Less Than Baby Boys?
Posted by: | CommentsI know this topic may sound a little crazy, but I’ve been wondering if raising a baby girl may be cheaper than raising a boy. I pride myself on being a bargain shopper, so I’ve been shopping after-Christmas sales to stock up on clothes for my son. The problem is, the clearance racks are chock full of baby girl clothes and have virtually 
nothing for baby boys. Not that I should be surprised as this is nothing new. Most clothing stores carry more clothes for girls to begin with, so I suppose it makes sense that there would be more clearance items for them. Typically, there are about 3 clearance racks for girls for every one for boys. Since boys make up about half the population, I’m not sure why stores don’t market half of their merchandise to boys, but alas, they don’t. Have other moms of boys noticed the same thing?
While this is a frustrating fact of life, I’m not complaining. After all, I think in the long run, boys are quite a bit cheaper than girls. Girls often cost more as teenagers, and if parents choose to pay for their daughter’s wedding, they’ll likely be coughing up a small fortune. So, over the span of their lives, I think daughters are quite a bit more expensive.
But, for now, I’m feeling the baby boy budget pinch. Come on, retailers! Baby boys could use some more sale racks!
Life Insurance for a Stay-at-Home Parent?
Posted by: | CommentsAbout a month ago, I wrote a blog post about whether to buy life insurance for a baby. While I’m fairly convinced that baby life insurance is an unnecessary expense, I’m more torn about life insurance for a stay-at-home parent. On one hand, a stay-at-home parent doesn’t make any income, and since life insurance is intended to replace income, then families shouldn’t need life insurance for at-home parents. On the other hand, if a stay-at-home parent passed away, the family would suddenly have to pay for child care, so they would incur financial hardship, which makes the case that life insurance would be beneficial.
Since I’m a new stay-at-home mom, my husband and I are trying to figure out how much life insurance to purchase for me. I was advised not to apply for life insurance while I was pregnant, since insurance companies consider pregnancy a “pre-existing health condition” when calculating insurance premiums (crazy, right?!). I had already had a small policy for myself before I got pregnant, so now we have a small amount of life insurance for me and a large amount for my husband (since he’s the sole breadwinner now).
What do you think? Is life insurance for a stay-at-home parent necessary? Online financial advice seems to be mixed on this topic. Do you think that a family should have just enough coverage to pay for child care costs prior to kindergarten for each child, or do you think a family should purchase as much coverage for a stay-at-home parent as for the primary breadwinner? Or do you think life insurance for a stay-at-home parent is entirely unnecessary?
Baby Life Insurance: Worth the Price?
Posted by: | CommentsIn the past few months, I’ve received about a dozen mailers from Gerber urging me to buy life insurance for my baby. Really? I always just roll my eyes and toss these envelopes out with the junk mail. But it got me thinking. Is there some merit to baby life insurance? I mean, many people fork over their hard-earned cash to pay for it, so clearly they find it worth the expense. But I don’t get it. I’ve always been told that you should only buy life insurance for someone who would inflict financial hardship on the family if they died. Babies obviously don’t have an income, so I’ve racked my brain trying to come up with a logical reason to buy baby life insurance, and I just can’t. Smart Money has more food for thought on this topic.
Can anyone convince me that baby life insurance is not a total scam?
Paying for Preschool
Posted by: | CommentsMy husband and I knew we needed a plan to save for our son’s college fund, but we feel somewhat blindsided by the cost of preschool. Preschools in our area are not only super-competitive (our son may not even get into some of them since we failed to get on waitlists while he was still a fetus), they are expensive. Some of them are well over $10,000 for one year! And many people in this area sign children up for two years of preschool. We did not plan on coughing up $20,000 in the first four years of Pudge’s life, that’s for sure.
But, I’m not getting worried yet. First, I’m not convinced that two years of preschool is necessary or even beneficial. Second, I’m not convinced that shelling out $10,000 instead of a more reasonable $4,000 will make a child substantially more prepared for kindergarten.
What do you think? Is preschool necessary? For one or two years? And do you have a savings plan for preschool?
Saving for College…on One Income
Posted by: | CommentsMy husband and I were both fortunate enough to have parents who paid for our college educations completely. While we both have small student loans from grad school, we are really lucky not to feel substantial financial burden from undergraduate d
ebt. We are both unbelievably grateful to our parents for giving us a college education, and we are firmly determined to do the same for our children.
Our college savings goal was relatively easy to attain when I worked, but now that we are down to one income, it’s much harder. How do you save for college? Do you save a set amount each month? Or just save gift money? Or are you waiting until the stay-at-home parent (if there is one) returns to work to start saving? Or are you planning on letting your children pay their own way through college? The future cost of college is so astronomical that saving enough seems so daunting. I’d love to hear how other people are managing.
