Twila Van Leer

Annual Price Of Raising A Child

January 12, 2017 By Twila Van Leer

That Darling Newborn Will Cost You $233K

Ah! Isn’t he/she cute? But take a closer look at what that darling little one is going to cost you over the next 17 years.

According to the United States Department of Agriculture, the estimated costs of rearing a child today is $233,610. That’s about $14,000 annually. The figure is based on a middle-income family with two children. Kids cost more in the city, also, than they do in rural areas.

The estimates, released recently by the department, are based on 2015 data, so the cost probably increased while you weren’t looking last year. The bottom line is about 3 percent higher than for the previous year, an increase that outstrips overall inflation.

It’s enough to give new parents the heebie-jeebies. The figures calculated by the USDA are used by state governments and courts to prepare child support and foster care guidelines.

The bulk of the costs fall right where you’d imagine: housing, food, transportation, health care, education, clothing and miscellaneous expenses.

Housing Costs

In case you had’n’t noticed, housing is expensive, accounting for 26 to 30 percent of a family’s expenditures. The USDA figures the cost for another child by calculating the cost of an added room to a home. The department admits that it doesn’t calculate into the figure such items as a family’s desire to live in more expensive neighborhood that offer better schools and other amenities attractive to those rearing children.

Middle income married-couple families living in the urban Northeast reported the highest costs – about $253,770 for the 17-year total, ocmpared with the urban West at $235,140; the urban South at $221,730 and the urban Midwest at $217,020. The average rural amount was $193,020. Lower-income families averaged $174,690 per child through age 17. At the other extreme, higher-income families will spend, on average, $372,210.

Food Costs

Following housing on the expense list are health care and food. For the middle-income family, food takes up about 18 percent of the child-rearing budget. Child care and education eat up another 16 percent. Education costs have consistently increased each year since 1960, when the USDA started calculating the costs. At that time, education only devoured 2 percent of the child-rearing costs. Child care also has become an increasingly expensive item with more women entering the labor force.

Education Costs

The report doesn’t even consider the costs of higher education, which usually don’t kick in until after the child is 17. The average annual cost of college now is $47,370 for a private institution, $20,090 for a public college.

New parents who groan at the costs of diapers and formula have even bigger surprises ahead. Between the ages from birth to 2, the little cherub costs only around $12,680 while a teenager 15 to 17 will dip into the family’s finances to the tune of about $13,900 each year. The costs of food, transportation, clothing and health care all escalate for the teens.

Good news for larger families! Those with three or more children spend an average of 24 percent less per child. That’s because kids in large families share rooms, wear hand-me-downs, and inherit older siblings’ toys. Child care facilities often offer sibling discounts.

On the flip side, a single child costs an average 27 percent more.

Beware Of Holiday Fraud

December 21, 2016 By Twila Van Leer

Find out how you can become more aware of protecting yourself against fraud.

The happiest time of the year also is the most opportune for those who wreak fraud on the rest of us. With people spending more, traveling more and donating more to charities, they are looking for ways to dip into your holiday spending money, warns the Better Business Bureau.

The bureau advises extra caution. Don’t get so caught up in the season’s frenzy that you make yourself vulnerable to the predators. Here are some tips from the experts to help you negotiate the holidays without being victimized:

Online Shopping Issues

Online shopping has become popular because of the convenience, but it also can be the route to fraud if you aren’t careful. The U.S. Computer Emergency Readiness Team, an arm of the Department of Homeland Security, warns of the most common ways in which criminals can steal your vital information or relieve you of your cash through fraudulent means. They create phony sites and email messages, intercept insecure transactions and target vulnerable computers.

Verify Good Deals

You can best foil them by using the good sense you apply to shopping year-round. Deal with vendors you are sure you can trust. Don’t be misled into error in your search for a good deal. Be careful of sites that mimic the reputable dealers by offering a brand that is slightly off. Avoid clicking on emails and links from unfamiliar senders. If you find deals that are too fantastic to be real, they probably are not. The most frequent complaints to the National Consumers League involve such come-ons that prove to be dishonest. Popular items such as electronics and clothing tend to be the most frequently offered in fraudulent online “deals.”

Charity Donations

The holidays bring out the generosity in many people. Charities tend to use that fact to reline their coffers. Give, but back your generosity with some solid research. The Federal Trade Commission suggests looking at the BBB’s Wise Giving Alliance, Charity Navigator, Charity Watch and/or GuideStar before making your donation. Avoid any purported charity that won’t share pertinent information about its identity, mission and costs. Also beware of those that use a name that closely resembles a well-known charity in an attempt to misguide you. Never send cash or wire money. Pay be check made out to the charity or by credit card.

Travel Deals

Travel is an important item on the Christmas lists of many people. Keep the memories pleasant by avoiding hokey come-ons online offering hotel booking sites at a bargain. Stick with those whose reputations are firmly established. Use a good broker or make reservations yourself. Use only licensed taxi or ride services. Protect the details about sky miles and loyalty points as you would any other personal information. Using “free” Wi-Fi spots in the airport may make you vulnerable to exposure of the personal information on your phone, computer or other device.

Email Warnings

Some scammers even use Santa’s good name to do their damage. Be sure that the charming and personalized message you get from the North Pole is legitimate. Take the same precautions with electronic greeting cards. Gift exchanges online are just another variation on the old pyramid schemes and are illegal.

Keep your Christmas merry by thwarting the fraudsters who would make hash of your holidays.

Small Businesses Look At Health Care Costs

October 26, 2016 By Twila Van Leer

Rising Healthcare Costs & High-Deductible Insurance Coverage Increasingly Lead Consumers to Negotiate Medical Costs

Autumn. That wonderful time of year for colorful trees, an abatement of unbearably hot weather and the return of children to their schools. For small business owners, the season also means a return to the anxious wait to see if their health insurance rates for employees will go up. And if so, by how much?

Their 2017 premiums could see just minor adjustments upward, or could jump by double-digit figures and for many of the companies that operate on a small margin, it could be the breaking point. Finding workers to man positions in the small companies often depends on being able to provide health insurance.

Prescription Drug Costs

Factors that enter into the health care issue include in which state the business is located and how much its carrier paid in claims in the previous year. But pin the greatest cause of rising health care costs on increasing prescription prices. It’s an issue that has risen to the level of national concern among lawmakers.

Companies with 50 or more employees are required by law to provide employee health insurance. Many smaller businesses do it because they think it is the right thing to do and because it’s a perk that draws better qualified employees.

Health Care Managers

When carriers up their charges, the small business operators sometimes have to decide if they must scale back coverage or find other alternatives. Many companies hire a manager to deal with health care issues. The managers prefer companies that have self-funded plans. Such plans sidestep the 6.5 percent federal tax on premiums.

12% Rise In Cost

Self-funding has inbred risks, but with the costs of commercial coverage rising at the rate of some 12 percent per year, it is an option more employers are considering. Unexpected fluctuations keep the pot boiling. An unexpected drop of 11 percent in premiums had a small businessman in Las Vegas scratching his head, since nothing in his figures had drastically changed. He didn’t ask questions, but took the windfall and added vision coverage to the plan for his employees. Other business owners have simply had to dig deeper to provide the coverage for their workers.

Health Care Spending Per Person Hits New High

October 10, 2016 By Twila Van Leer

Rising healthcare costs are a big concern.

Health Care Problem For New President

Whoever wins the current presidential election will inherit a scary health care reality when he/she takes office. For the first time in history, health care spending in America has topped, on average, $10K per person. That means the new president will be stuck with an unprecedented problem in how to provide the health care that was initiated during the Obama years.

Increase In Total Cost

The bean counters in the Department of Health and Human Services announced the new high last month and predicted that the total cost will increase by 5.8 percent annually from 2015 to 2025. That’s less than the increases from 2007-09, just before the Great Recession, but faster than in the post-recession years, when health care spending kept pace with modest economic growth.

Average Per Person

The per-person average of $10,345 is part of the $3.35 trillion total in health care expenditures expected this year. The annual increase for 2016 is expected to be lower than the forecasts for the rest of the decade.

Attributing Factors

DHHS experts attribute the rise to a stronger economy, faster growth in medical prices and an aging population. The Medicare and Medicaid programs that provide for the elderly and needy are both expected to see new demands as the baby-boomers shift into these categories. By 2025, the experts say, government spending at all levels will account for nearly half of all health care expenditures, an estimated 47 percent.

Obamacare

If Obama’s health care reforms survive attacks from the Republicans, the experts project that more than 90 percent of Americans will have some form of medical insurance.

Republican and Democratic Plans

The figures are causing major angst for both major political parties. Republican nominee Donald Trump has declared he will do away with Obama’s plan while preserving Medicare and seeing that Americans are not “dying in the streets.” Democratic choice Hillary Clinton promises to expand government health care benefits.

Prescription Drug Costs

Both candidates say they will tackle the high costs of prescription drugs and the resultant drain on health care dollars. But the extension of benefits to millions of Americans through Obama’s plan will inevitably add to the overall total unless changes are made.

Out-Of-Pocket

The DHHS report, published in the journal Health Affairs, also predicts that Americans will pay more out-of-pocket for care as the number of people covered by high-deductible plans continues to grow.

Building A Good Credit Score

October 8, 2016 By Twila Van Leer

Use card responsibly and pay each month's bill on time. — Use card responsibly and pay each month’s bill on time.

Building a good credit score doesn’t happen overnight. There are steps you can take to assure good credit from the outset and establish yourself on a positive note. They include:

Credit Reports

Check to see if you have a credit report. You could have established credit without being aware of it. For instance, if you have been authorized to use a family member’s credit, you might have a credit report. It is also possible that you have been a victim of identity theft, and that definitely needs to be cleared up before you start building credit in earnest. WalletHub is one site that offers credit reports and scores that are updated daily. If you find a report under your Social Security number, analyze it and if necessary, dispute errors, fraudulent accounts and negative records related to unauthorized use.

Get A Credit Card

Starting with a clean slate, open a starting credit card. It is usually pretty easy. There are some that don’t charge an annual fee or require you to incur debt as loans do. They report to the major credit bureaus on a monthly basis.

Three options for a starter card include student credit cards, general use cards for people with limited credit and secured credit cards. You have to have an active college or university email address to get a student credit card. A secured card offers the best opportunity to get guaranteed approval without the risk of overspending. The alternative to a starter card is a loan, usually for home, car, student use or other need that requires debt with interest.

Use Your Credit Card For 6 Months

Use the card responsibly for at least six months. That will generate a credit report and score. The score could range from bad to well above average, depending on what you did with the card and how well you paid. This first report is critical, because it puts you under the credit score microscope. Mistakes will be magnified beyond what they would be if you were a seasoned credit user.

Pay Bills On Time

Pay each month’s bill on time and keep your utilization of the card below 30 percent – 10 percent for the best result. Never use all the credit they extend to you. Setting up automatic payments from a deposit account is helpful in meeting these standards. Responsible handling of the initial card will help when you are ready to apply for a higher credit limit.

Study Your Credit Report

When you have a sense of how your initial foray into credit card use went, continue to study your credit report regularly. By looking at all of the components of the report, you can gain a sense of how the system works and be prepared for long-term credit use. You can learn to adjust course if any element of your report seems out of sync.

A responsible journey into the world of credit can set you up for life in what is an important element in ongoing personal finance.