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Personal Finance

Annual Price Of Raising A Child

January 12, 2017 By Twila VanLeer

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.

Filed Under: Consumer Alerts, Life, Personal Finance Tagged With: Personal Finance

Pay Down Debt Or Build Savings?

October 7, 2016 By Twila VanLeer

The decision of what to do with left over money can be a serious one.
The decision of what to do with left over money can be a serious one.
People who take personal finances seriously sometimes have a decision to make. If you have money left over after taking care of essentials, is it better to use it to pay down debt or put it into savings? It’s an ongoing debate with no absolute answer and you should make a decision based on your own personal situation and goals.

Factors to consider, according to financial planners, include the type of debt you are considering, the amount of interest you pay and how long your obligation will last.

Some advisers see debt as the fatal flaw in personal finance plans and they advise getting rid of it as quickly as possible. Consider the cost: As of late May this year, the average fixed interest rate on a credit card was 12.52 percent. Variable rate cards come with an even higher rate – 16.03 percent on average. That’s a compelling reason to opt for the pay-down-the-debt approach. Ultimately, having more money at the end of the process is a cogent argument.

Mortgages

Mortgages often are the largest debt a person or family carries. They don’t usually come into consideration in this debate. Mortgage interest rates generally are lower than those on consumer debt. Also, they are tax-deductible.

Retirement Savings

On the flip side, consider these facts about saving. The most frequent target of savings is retirement. Workplace plans that sometimes offer an employer contribution also make this option desirable. Look into 401(k) or 403(b) opportunities.

Such plans withdraw the employee’s money before it is considered income, so there are tax savings. The arguments for putting your money into retirement options is great since many Americans find themselves facing the rocking chair with not enough padding to live on.

Still there are those who argue that having a cushion for retirement while still dealing with debt is not a good place to be. Make your decision based on the facts of your personal finance picture.

Of course, there is no rule that says you can’t do a little of both. Looking for an adequate but not cushy retirement option while putting the rest of your excess into debt payment may be the road you want to travel, Run the numbers and make them fit your own circumstances. Either way, there is compounding to consider: The interest on either debt or retirement savings goes on just the same. Take that into consideration while you ponder the question. There’s a good middle ground for you.

Filed Under: Budgets, Debt, Debt Reduction Tagged With: Budgeting, Debt, Personal Finance

Finances Change With Divorce

June 17, 2016 By Twila VanLeer

Knowing how to manage money after divorce is essential.
Knowing how to manage money after divorce is essential.
Unfortunately, in a society where divorce is common, no one expects women to be expert in personal finances. They tend to know more about weight loss, cooking and other traditionally feminine matters.

But, according to DivorcedMoms.com, knowing about money and how to manage it (especially when a divorce may have drastically cut your resources) can become absolutely essentially in your new reality. Here are some tips to help in the process.

Hope For The Best, But Be Prepared For The Worst

Though your ex may be as generous as he promised he would be, it often happens that support money begins to lag. Insist on discussing money issues as the split occurs. You’re better off, if possible, to plan on taking care of yourself financially. If you get all the help you are promised, you’ll be pleasantly surprised, and if not, you won’t be devastated.

Educate Yourself

Financial training for women should begin in high school, but it seldom does. If possible, plan to do your own taxes and hone your budgeting and investing skills. Find a consultant, research online or get advice from someone you trust.

Regular Savings Plan

If work is part of the equation for you, be certain that some set percentage of your income goes into savings. Take advantage of employer participation in a retirement savings, if that is feasible. If you still have dependent children, buying a home may be very desirable. But be sure that it’s affordable and leaves you enough for other necessities, including education for the kids. If you need to upgrade employment skills, there are agencies that offer free services or can steer you to affordable options. Don’t be reluctant to explore any options, including government support, if it is necessary to provide for your family.

Have A Strategy

Create long-term goals, including concrete plans on how you are going to achieve them. Get rid of what you don’t need in favor of the things that will help you reach your goals. Be sure your goals are realistic, seeking counseling if necessary to stay within reason. Most women have some assets, such as jewelry or over-expensive cars, that they can convert to cash if necessary. Incurring more debt trying to become financially self-reliant is not a wise way to go.

Live Within Your Budget

It may even do your children good to be forced to expect less. Teach them to live realistically within the new budget now in place. They could thank you for it later. Keep in mind that the old saying is true: You can’t buy happiness. Look for free entertainment, such as board games at the kitchen table, home movie nights, visits to the library, nature walks, local parks, etc.
Love and attention don’t cost anything and they’re the greatest gifts you can give your child. Don’t let your emotional fallout become their problem.

Seek Mediation If Necessary

Resist going to court with your ex-spouse for every dissatisfaction. Lawyers are expensive and courts not cheap. . With divorce child support orders can be changed if your circumstances change, but don’t make money a constantly divisive issue that too often puts children in the middle.

Look around you at all the women who have divorced and succeeded. One needn’t automatically exclude the other. Divorce creates challenges, but it isn’t the end. Learn from it, plan for success and stick with the plan.

Filed Under: Money Management, Personal Finance, Saving Money Tagged With: Budgeting, money management, Personal Finance, Saving Money

More Young Adults Live With Parents

June 11, 2016 By Twila VanLeer

More millennials are choosing to still live with their parents.
More millennials are choosing to continue living with their parents.
For the past century and more, young adults were prone to leave the nest and set up housekeeping for themselves. Now, they are more likely to be residents in the family home, either as singles or with a spouse, according to the Pew Research Center.

Young Adults Waiting To Get Married

The phenomenon, statistically changing the 130-year trend, is as result primarily of young people who delay marriage until into their 30s, the Pew study concluded. In 2014, the percentage of young adults living in their parent’s home was 32.1. It is the largest percentage since 1940, when some 40 percent were living at home.

Young Adults With Less Education

Choosing a spouse or living partner is the most likely condition to prompt living with a parent when the young couple is not prepared financially to be independent. Status of education is also an important factor. Young people with less education may be more likely to remain at home, the study found. The statistical breakdown showed that in 2014, 19 percent of young adults with a bachelor’s degree were living at home; 36 percent of those who had some college but not a degree; and 40 percent of those who had failed to complete high school.

Since 1980, the level of education has been more telling, with college education being a definite benefit in the job market and more of those without a high school diploma dropping into less well-paying jobs.

The trend not to marry as early has had a definite effect, a Gallup Poll shows. In a survey, 60 percent of Millennials said they had never married, compared with 16 percent of Generation Xers and 10 percent of Baby Boomers. The increasing trend for women to succeed in the job market, while more males are floundering is one of the reasons, experts say. The Great Recession had a greater impact for men than for women.

Attitudes also have been in play. Marriage formerly was considered a step to help young couples to reach employment and financial goals. Now, marriage is seen to be the final step to reaching such goals, the researchers report. They delay commitment to marriage until they feel their education and career goals are stable.

The rising costs of education, with a larger percentage of young adults saddled with overwhelming education debt, also enters into the equation. Expectations for “living high” in marriage, which most of their parents did not harbor, have an effect on marriage decisions as well.

Unemployment

Relatively high unemployment rates over the past decade also have been a factor. The number of young men who are unemployed and living at home far outstrips the number who are employed and living independently.

The effect on the parental household of having young adults still in residence is the flip side of the new trends, with some parents delaying retirement and other decisions to accommodate the extra persons they are helping to support.

Filed Under: Education, Personal Finance, Work Tagged With: education, Employment, Personal Finance

Compulsive Shopping May Be Sign Of Trouble

May 23, 2016 By Twila VanLeer

How do you know if you have a problem with compulsive shopping?
How do you know if you have a problem with compulsive shopping?
If you start shopping and can’t quit, there could be serious complications ahead. Losing control of shopping habits indicates an impulse control disorder that is similar to addictive disorders, but without the drugs.

Factors That May Increase Behavior

A multiplicity of social and cultural factors may enter the picture by increasing the addictive behavior. One is today’s easy access to credit and society’s general focus on material things. People are encouraged to accumulate possessions now and pay later. Online shopping and television stations that focus on sales day and night add to the possibility.

What Are The Signs That Your Shopping Is Out Of Control?

Spending and shopping to offset disappointment, anger, discomfort or fear tops the list. If you are stressed by your own habits to the point of emotional distress, be concerned. Arguing with a spouse or other significant person over spending is a clue. Also on the list are feeling lost without credit cards, buying items on credit that you wouldn’t buy if you were paying cash, getting a “rush” from spending, experiencing guilt, shame or embarrassment after a spree, lying about how much you spend, thinking excessively about money or spending time trying to reconcile your accounts and bills.

How Do You Know If You Have A Problem?

Four or more of the above indicate a problem. You might get a feeling or happiness and power while spending, but you have to keep shopping to maintain that feeling. The brief but intense emotional high doesn’t last long.

Consequences Of Addiction

Researchers have related compulsive spending with interpersonal difficulties, occupational consequences, and family/financial problems. Anxiety and depression may be more troublesome as spending gets out of hand. Borrowing money to cover credit buying exacerbates the problem. Too often, the extent of an addict’s spending doesn’t become apparent until the debt becomes overwhelming. Then a drastic change in lifestyle becomes an absolute necessity, and the emotional effects come home to roost.

How To Get Help

If you suspect you may have gone too far in your spending, contact a certified addictions counselor. Your regular physician may be able to help in locating one. Check your state health agency or a local hospital to see if they can direct you to the help you need. The American Psychiatric Association also has resources that are useful.

Better at this stage of things to spend a little time rather than any more money.

Filed Under: Debt, Self Improvement, Spending Habits Tagged With: Debt, money management, Personal Finance

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