What Is Raising A Child Worth – We’re Going To One Income

island hopping

What is it worth to raise your child? Is it worth giving up an income?  For us the answer will be yes.  First the first time in a long while my wife will not be heading back to work this September (she works in education).  Instead she will be staying home to raise our little guy and our princess (19 months and 8 yrs old respectively).  This wasn’t an easy decision for us.  Giving up her income will require us to be a lot more frugal and we’ll really have to watch our spending now.  Our future savings will also decrease as we won’t have as much to put away.  We have  a nice cushion already and I think we can do this; it just requires us to change our lifestyle.

Here is why we’re moving to one income:

  • Child Care Cost – We were paying a LOT in child care.  And yet for all we were paying our son was getting sick way too often, catching bugs from the other kids at day care.  Not that the day care was bad; it’s just inevitable that a child gets sick and spreads it around.
  • Sick Days – My wife took a lot of sick days during the last school year.  As I mentioned the little guy was getting sick a lot.  Day care is supposed to help us go to work but it was causing a lot of stress instead.  Let’s face it, it’s painful seeing your child sick and not be able to do much about it.  And my wife was getting to a point where her sick days were going to start costing her.
  • Stress of getting around and making arrangements - Mornings were hectic to say the least in our home.  Getting two kids ready and getting to work on time s a big deal.  The evening before we had to make sure everything was prepared and laid out for the next day.  Then there’s actually dropping the little guy off and picking him up (sitting in traffic, finding a spot, etc…).  Ever leave you child with someone else and have him cry for you?  It will break your heart!  We also had to find arrangements for our daughter after school for a good part of the year.  And because I was dropping her off in the morning I was getting to work and leaving later.
  • Enjoying raising our children – Last on this list but first in our hearts, the main reason for my wife staying home to raise the kids is because we feel it’s the right thing to do.  We feel strongly about being there for our children in their formative years.  My wife originally intended to take more time out when the little guy was born but she ended up going back anyway.  Now she will take the time off to be there for them.

It’s a shame that in today’s economy having a parent stay at home to raise the kids has to be a difficult decision.  When did it switch from a second income being gravy to it being just about necessary?

Stay tuned to see what we have done so far to adjust to one income!

Have you moved from two incomes to one?  How is it working for you?

Creative Commons License photo credit: quarxdmz

Five Things Indiana Jones Can Teach Us About Personal Finance

Indiana Jones Lego

I saw Indiana Jones and the Kingdom of the Crystal Skull (among all the prior movies).

Was it as good as Raiders of the Lost Ark?  How many movies are?

Was it a lot of fun to watch? Absolutely!

I got to thinking about ‘ole Indy.  What makes him successful in his movies?  What is it about him that keeps him coming out ahead?  And can those qualities be translated to personal finance?

Here are five things I think Indiana Jones can teach us about personal finance:

Indiana Jones doesn’t need a lot of stuff

When he goes off on an adventure he has a few items: His whip, hat, jacket, side bag, boots, pants, shirt, gun holster, and notebook.  This is basically his adventure “uniform” and it doesn’t change.  Indy makes do with what he has and makes his stuff last.  Ever see him buy a new hat?  How about shiny new boots?

How this translates for us: Find out what you need in your life.  Note the word “need” and not want.  Don’t clutter your life with stuff.  Stuff takes up space and uses up money. Also it usually pays to buy quality when you can. If you take care of a good item it can last many years (like a trusty fedora hat).

Indiana Jones has focus and persistence

When he has a goal he goes after it with all of his focus until he can’t continue any more.  Do Nazis stop him?  Angry cult member?  Communists?  Even his enemies recognize this quality in Indy.  Think of the times he’s been caught, kidnapped, or blackmailed into helping the enemy.  Indiana Jones is the go-to guy if you want an artifact found.

How this translates for us: Create personal finance goals and stick to them.  Are your goals worth fighting for?  Will you retire?  Will you be financially independent?  Develop persistence and focus to stay on track with your goals and complete them.

He’s daring, brave, and well educated

There’s times where Indy is doing some crazy things (climbing into an archaeological dig surrounded by Nazis anyone?).   What keeps Indy afloat when he goes off on a daring adventure?  Luck has a bit to do with it.  But it’s his education that tempers bravado. R emember, not only is Indiana Jones an adventurer he’s also a doctor of archeology that teaches at the university level (and a Boy Scout).  A big part of why he’s successful in his adventures is because he’s already done extensive research on what he’s going after.  As wild as he sometimes seems he doesn’t blindly go off looking for adventure.  He’s put years into learning his subject.

How this translates for us: Don’t blindly make investments or make purchases without out doing your homework first.  Educate yourself about personal finance.  Keep learning.  Know why you are putting money into an investment and understand what the risks are going in.  When making a major purchase study up on different brands and their reliability and consumer responses.  Try to find the best value and price (maybe you can pick up a really good hat).

He carries a notebook full of information

We see Indy go back to small notebooks all the time.  Whether it’s looking up a map or deciphering a language, he keeps notes on all his research.

How this translates for us: Keep your own notebook.  Track your expenses to see where your money is going.  Keep notes of things you did that saved money.  Make to do lists to stay on top of your life.  Write out grocery lists so you only buy what you planned on.  And these days there are so many apps out there for notes that you can’t use not wanting to carry a notebook as an excuse.

He tries to do the right thing

There are many times Indy can get quick cash by obtaining an artifact and selling it.  But he doesn’t.  He tries to do the right thing.  Whether it’s saving children from slavery or keeping biblical artifacts from Nazis, Indy does the right thing.

How this translates for us: Act right in your life.  Don’t lie to your spouse about finances however small the lie may be.  Don’t take part in get rich quick scams – they don’t work.

There you have it. Five ways we can learn about personal finance from Indiana Jones.

Can you think of any more?

photo by Gaetan Lee

15 Things To Do With Your Economic Stimulus Check

The government Stimulus checks started going out on April 28th. If you are expecting one you should start looking for it in May (here’s a post listing the dates).

So what are you going to do with the extra money? Here are a list of ideas for using your stimulus check:

  • Pay off credit cards – If you have any credit card debt the stimulus check will be a great way knock some of that out! Paying off the debt gives you an instant return in savings of whatever you would have paid in interest fees. Psychologically, you will help in getting the debt monkey off your back.
  • Contribute to a Roth IRA – You can take your money and put it into your Roth IRA. For 2008 the contribution limit is $5000.
  • Start an emergency fund – If you don’t already have some sort of emergency fund (three to six months expenses seems to be the conventional wisdom) then your stimulus check is a good way to start one. Even if you have one you can use the money to increase your fund. A great place to start one is with ING Direct (you can even get a $25 bonus by opening your account with $250).
  • Contribute to a 529 college savings plan – You can use the money to help save for your kid’s education by putting the money in a 529 plan. Not only do you help save for college but you might get a tax break as well depending on your home state’s plan.
  • Pre-pay your mortgage – Take the money and make additional payments to your mortgage. By making additional payments you will own your home faster and pay less in interest. Just make sure the payments go towards the loan principle and not next month’s payment (also check that your lender will accept pre-payments without fees or penalties).
  • Go on vacation – You may have been planning to do this anyway so here is a good way to fund the vacation. Go and do something that will be a great experience for the family that you will all remember.
  • Improve the house – If there’s something you’ve needed to improve on your home, such as a furnace, you can use your stimulus check to pay for it (or at least help). Other options could be new paint job, carpet, furniture, appliances, etc…
  • Car maintenance – Have you been putting off a car repair? Need new brakes? New tires? Your stimulus money can fund it. If your car is about to go kaput your stimulus check could help pay for a new car (or a good new used car).
  • Learn to invest – Do some research and take the money and start investing. Companies such as Sharebuilder and Zecco offer low-fee investing. You have to do your homework with this option but it might be just enough money to start investing but not so much that you will be crazy worrying if you lose it. If you invest through Sharebuilder you can buy partial shares of Berkshire Hathaway B class shares. I hear that Warren Buffett is pretty good at investing.
  • Pay off student loans – If you have high interest student loans then your stimulus check can be a great way to help pay your student loans off. Just like with credit cards paying off your high interest student loans give you the instant return in savings of what you would have paid in interest.
  • Have a nice evening out – Take your spouse out to a really great meal. Get babysitting and go to that great restaurant you wanted to try. Go see that new show that everyone’s talking about. Make an experience you will always remember.
  • Get physically fit – The stimulus check should be enough to pay for a year’s gym membership (or more than a year). Use the stimulus check as a catalyst to get in shape and make your life healthier. Not sure about a gym? Find a class such as yoga or martial arts to join. Not into that? Buy a new bike and go riding. Or get yourself some good running sneakers and running attire. Join your local running club and enter a few small races. You never know, you may one day run a marathon.
  • Go to school – Use your stimulus check to enroll in a college course or two. This can be toward a degree or just continuing education. Hey, you can take a personal finance course. Maybe learn a second language?
  • Do nothing – This is the easiest of them all. Put the money in your savings account and forget about it. You don’t have to spend it or find any particular purpose for it. It doesn’t have to burn a hole in your pocket. One day you might find a good use for it but for now it adds to your savings.

Personally, we’re closer to the Do Nothing suggestion. Our stimulus check will come via direct deposit right into our ING account. We have no specific plans for the money so it will be added into our savings. Our check may pay parts of many of the suggestions or for none of them. Either way it will earn interest until it finds a home somewhere else.

Do you have any other ideas for using the economic stimulus check?

photo by Argenberg

Four Ways I Upgraded Out Of My Raises

That one day a year you have been dreading/anticipating at work finally comes.

Your boss calls you into their office and shows you a piece of paper that tells you your new salary. Yay, it’s more! Maybe it’s just a raise or maybe it’s a promotion, either way the new salary figure looks better than what you had. “Now I can get ahead of my bills and save a bit” you tell yourself. A few months pass and you look at your bank account. “Huh? It didn’t grow? What happened? I thought I was making more” you ask yourself.I’ve been there. It would happen to me a lot. I would make more but have nothing to show for it.

Know why? Upgrades.

I discovered that I would upgrade little things in my life that would eat away at any raises I got. Of course I didn’t realize this until much later.

Here are some of the bigger culprits:

Coffee – There was a time I didn’t drink coffee. Didn’t like it. Slowly I came to love the brown nectar. Instead of making it at home I would simply go to Dunkin Donuts. As well as regular coffee I would get all sorts of specialty drinks there as well like iced coffee, iced lattes – you name it. Later as I had more money I upgraded to Starbucks. Love their frappaccinos! But Starbucks is more expensive than Dunkin Donuts. Nowadays I still go to Starbucks as a treat but I’ll usually make my coffee at home or at work.

Clothes – There was a time I would shop at Old Navy. I’d get a pair of khaki’s or a polo for work or maybe some personal gear. Maybe I would get stuff on sale at the Gap. As I made more I’d shop at the Gap and get stuff on sale at Banana Republic. My income grew and I would shop at Banana Republic or Macy’s or Bloomingdale’s, not always looking for the stuff on sale. Now I try to stay frugal and shop at discount places like Century 21 or maybe Target. I also don’t buy anything unless I need to (like if a pair of pants blew out a hole that couldn’t be fixed).

Food – I remember a time where if I went out and ate sushi I would be broke. I might have been able to budget for it once a month but that would be it for going out to a restaurant to eat. As I made more money I would find myself eating out more and more. Sushi night didn’t hurt as bad and became more frequent (as well as other foods). I’ve since cut back a lot. We go out to eat from time to time but the majority of our meals are home based (except my work lunches but even those I’ve been getting cheap).

Gadgets/Doodads/CD’s - I used to buy so much junk that would clutter my apartment! I don’t think I have much left to show for it though. I do have hundreds of CD’s (no, not the investment type). Those aren’t a total waste but many I bought just to get something new or try a new artist. A lot of them don’t get listened to any more (and not just because of my iPod either). And you know how I’d pay for a lot of the stuff? Credit cards. So in the end I probably paid more than what the price stated. I’ve cut back on my impulses a lot and when I don’t I have my wife to answer to (luv u hon). As for music, I’ll still buy CD’s but very rarely and only from artists I’m really looking forward to (if only more artists would release their music like Radiohead for free).

So you see, I think a lot of the time when we get a raise instead of upgrading our finances we tend to upgrade our stuff or our lifestyle. As a result we upgrade ourselves out of our raise.

Have you upgraded yourself out of a raise?

ING $25 Referral Bonuses

Have you wanted to open an online savings account?

Well here’s your opportunity to open one with ING Direct! They offer high-yield savings with no minimum to open (this includes both savings and CD’s). This means better interest earnings than most other banks. I’ve been using them since April 2003.  If you use one of the referral links below you will receive a $25 bonus. You’ll also be giving me a bonus of $10 so it’s great for us both. In fact, once you open an account you can refer your friends and receive the same bonus as I would. The catch (isn’t there always one) is that you need to open the account with at least $250. What about those no minimums? You can always open an account with any amount lower than $250 but you won’t be eligible for the $25 bonus.

And check this out - If you open with $250 your $25 bonus is an instant 10% return!

Here are the links to use:

Shoot me an email for a link!

ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus

If you get the message “We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus” then the referral has already been used. Shoot me an email and I’ll send you a new link.Like I said, I’ve been using ING Direct for years and I highly recommend them. If I had kept my savings in my brick and mortar bank I would have missed out on a lot of savings and earnings. So what are you waiting for? Go open up a high-yield savings account!

If you don’t have $250 but still want to open an an ING account please click the banner below (please note this is for the Electric Orange account not savings):


As always read the fine print from ING to make sure their online savings is right for you. You should never sign up for anything online without understanding what you are getting into.

7 Credit Card Tips From ING Direct

Pile+Of+Credit+Cards

I was just on the ING Direct site checking out my savings accounts and decided to check out their tips. They list seven great credit card tips. Check them out (descriptions are mine):

  • Make your payments on time – Very important! Late fees can be very expensive on credit cards and can negatively affect your credit score. If you have problems with the due date you may be able to change your credit card due date.
  • Try to pay off the full balance every month – Pay off the full balance to avoid any interest charges.
  • Avoid cash advances – Cash advances on your credit card have different rates than normal credit. Yeah, it’s gonna be more expensive than if you just charged it.
  • Shop around – Compare rates and services from different credit card companies to get the best credit card offers.  Find one that fits your spending habits.  Make sure to read the fine print as well.
  • Use savings to pay off the cards – It’s great that ING Direct exists offering high interest rates on savings but that high rate doesn’t compare with the interest on your credit card (unless you have a low introductory rate).
  • If you’d like a better rate, just ask – If you have been a good customer you can call the credit card company and ask for a better rate. Try telling them that you received an offer from another company with a better credit card rate; odds are they can lower it for you. Make sure you understand what the new rate is though. It may only apply to new purchases not your outstanding balance.
  • Don’t be left holding all the cards – If you have a lot of cards it means you can do a lot of spending damage. This is bad for both you wallet and your credit score. Get rid of credit cards you hardly use or ask that the credits limits be lowered (a high credit limit can hurt you for some credit card companies).

Of course you should also watch your spending as well.  Don’t abuse your card and know what you can really afford.

Do you have any credit card tips to share?

What Is The Opportunity Cost?

The term “opportunity cost” is thrown around a lot but many people don’t fully understand the concept.

Opportunity Cost can be defined as

the cost of something in terms of an opportunity forgone…or the most valuable foregone alternative (Wikipedia).

Basically, everything you do has an opportunity cost which is what you are giving up for what you are doing.  If you sleep late, the opportunity cost is whatever you may have done in the morning instead.  When you buy something the opportunity cost of the item is whatever else you could have done with that money (or even with your time shopping for the item).

Why is this concept important? Whenever you make a decision, be it with money, life, whatever, you should look and see what the opportunity cost of that decision is.  This makes you stop and think about whether what you are about to do is worth it.  Is there a better action?  Is my time better served?  Can my resources be better used?   These are questions that should cross your mind.

In terms of personal finance this is looking at what you do with your money and figuring out it’s true worth to you.  See, an important aspect here is what your values are.  Is it better for you to redo your kitchen or put more money away for retirement?   There isn’t necessarily a “right” answer for this.  The decision is yours.  You should be aware of what other opportunities you will miss when you make your decision.

Try to think about the things you do today and figure out the opportunity costs.  Will it change any of your decisions?

Let me know.