Two relatives gave us some money for upcoming birthday for our baby (which is tomorrow).
I am wondering how to best invest them.
We already have an ESA account (that one was no-brainer since it can be used for any education needs, inculing private high school, middle school, even elementary).
I am debating if 529 plan is worth the hustle. I is kind of restrictive and counts against financial aid.
Givers gave no wishes or restrictions as to how the want the gift used, we could do whatever we see fit. Since we are able to cashflow all babys expenses I wanted to save it for him.
He won't need it for another 17 years.
I don't know. Maybe stock of something solid (like Apple) or SP500 fund? If I open it in his name as a custodian taxable account, will I have to pay taxes upon withdrawal at the babies tax rate or ours?
Archive for October, 2011
Two relatives gave us some money for upcoming birthday for our baby (which is tomorrow).
I keep seeing these annoying guidelines that say you should spend "30% of your income on housing, 10% savings, 15% debt repayment, etc..)
While I find them ridiculous because they imply "one fits all" approach, while one can be a family with no kids vs. 4 kids, middle-of-nowhere vs. HCOL, 20 year old vs 70, etc...)
Or if person A spends 30% on housing and 15% on debt repayment, are they really better off than the one who spends spends nothing on debt repayment and 45% on housing? Most financial experts would only yell at the person #2, because he wouldn't fit the chart.
I wanted to make a pie graph of our budget just out of curiosity. But I wonder how these things are calculated. I assume this goes for after-tax figure.
But some things come out pre-tax. I don't count health insurance premiums. I mean 401K, health spending accounts, dependent care accounts.
Would I count the numbers that I receive as a benefit or the money it would have been post-tax? And does it gets mixed in together in the pie chart?
For example, say you put 1K a month in your 401K. If you didn't, you would have $650 more in your take-home pay.
So should you consider that $1,000 is going to your savings(because it is actually going to your saving) or that $650 is going to your savings because this is what you are deducting from your take home salary to the savings category?
Same with pre-tax childcare and medical expences, which would be under "life" category. But if you count pre-tax expences/savings together with post tax without adjusting, it may appear that your salary is actually larger than it is. But if not, than you are not accounting for the actual money you get to spend or contribute.
This was our first year with our first baby, so I am proud that we accomplished these goals.
ROTH me $5,000 funded
ROTH DH $5,000 funded
ESA for baby $2,000 funded
student loan brought under $16,000 mark (will reach that goal in 2 weeks)
all electronics nearing the end of life cycle replaced (macbook, camera, cell phones) Won't need to replace anything next year)
and most importantly, between time off, work from home, careful planning and scheduling, and getting into DH's employers daycare after 18 months of waiting... we managed to cash-flow childcare expenses for 2011 without dipping into savings.
So we got DH's new paycheck and it now smaller.
We started deductions for baby's dependent care flexible spending account.
We are deducting the full $5,000 between now and December 31 (we can spend the money until end of March). That way we can do another $5,000 next year. Deducting it pre-tax saves more than 1/3 of that money.
So it is a money-saving thing, but check is now smaller.
With dependent care deductions, flex health spending account and 401K being deducted the check seems so small. It is a psychological thing. I do understand these things are benefits that save money. It is just when you transfer money after getting a paycheck, you get a different feeling than you do when you get a smaller one.
So this week my baby is sick all week. He is very grumpy, suffering, and of course can't go to daycare. We had to manage to stay home all week with him. Days off all around.
My husband was quite sick on one day.
I now got my baby's cold.
Apple stock option went down.
My new iPhone was stolen out of the box.
Got assigned a task at work that I quite dislike.
I found out that refinancing would cost $3,300, so it probably does not make much sense.
A bunch of other small things kept happening that waste few hours or few dollars...
One good thing happen though -- DH was excused from jury duty.
I am very pissed. I received the package with just an iPhone box in it.
They took the phone itself and everything else, and just left the empty box and the paperwork in the package.
Just a reminder how much human garbage there is in this world.
And btw, it is not usable as jail breaking it is extremely difficult, so only someone who does it on a scale in an organized way could possibly do it.
I was anticipating getting my new phone so much (my current one sucks). Never did I imagine getting this "lucky".
I wonder if watching ones money and knowing how hard it is to save affects how people give.
Because, the reality is, it does delay reaching ones goals. I think it has been affecting me.
Life is a combination making right choices, work ethic, personality, but sometimes it is just the luck of the draw.
I am LUCKY that my baby is OK. That I have great medical insurance and access to medical care. That is why one of my sons is alive and healthy today. If I did not have access to the best medical technology in the world(and no, I don't mean US medical care, I mean medical care you can get in NYC with a caddilac of insurance plans and best doctors and latest equipment to do a procedure that maybe 3 patients a year undergo), I don't know how my life would have turned out.
Imagine being a mom in a third world country who's 6 month old needed an extremely complicated heart surgery to live and was slowly and quietly getting worse and worse while they desperately try to raise money for the surgery in Germany. We are lucky not to be in her place, of helplessly watching your baby wasting away when she could be saved. I am sitting here crying. (they did raise enough money, now they are trying to get through the red tape and transport the baby to the clinic before it is too late. They are racing against time and the baby is barely holding on).
But there are so many more invisible children, children that we will never hear about, that will suffer quietly and their life won't be changed
and helpless people who are not in a position to help themselves. I wish the world was not like that.
I should help somebody this month, even with a tiny drop in the sea. That's the money I won't be able to put into savings, but I should do it.
It is a lot that one has to save every year. These are savings goals that we view as mandatory and must be met each year.
5,000 roth me
5,000 roth DH
2,000 baby's ESA
5,000 to DH's 401K (slightly above full match) We used to max this out at 15,500 but not after I got pregnant.
These are set in stone and have to be met, because these are limited-time opportunities. If we don't invest for the current year, that opportunity is gone forever.
plus $250 monthly autoinvest into a mutual fund, which is part of our emergency fund, which could be stop but trying not to. The market has been dipping, so we need to continue to invest to compensate and keep EF at a steady number. It is more important to invest when the market is down than it is when it is up.
401K comes out of the paycheck pre-tax, and it is a small enough number.
but the post-tax ones come out to 5K+5K+2K=12K, is 1K a month mandatory +$250 post-tax
That number does not work with our budget, it just does not, but we have been managing somehow so far.
I did not think we'd be able to make it the year of my pregnancy, or after the baby was born, but we did.
2011 is fully funded!!! Now I don't know how we'll do it next year.
I guess the key is not to give up and just do what you can. $100 here, $200 there... eventually it adds up to something.
So even though I don't see how we can possibly max out 2012, we'll keep trying this year as well, taking it one year at a time.
Why do I listen if I don't like him?
Simple -- there is just not enough financial reality shows that glimpse into the financial situation of ordinary people. So I listen for the calls, those tiny financial snapshot of random people all over the country, their lives and problems.
But lately there have been less and less calls and more and more political rants and non-stop self-promotion. I mean really, stop spending like 15 minutes each show advertizing yourself! That is just too much by any standards.
Suzie orman is also aggrivating to no end, don't even get me started, "girlfriend". But I don't know other financial shows with regular people call-ins.
Ok, now my rant is over.
Added $335 more to "vacation 2012" fund.
The new numbers are:
Trip to Asia $5,700 estimated need
Vacation Fund account -$4,936 saved
-$250 in amex cheques
$514 left to save
Asia vacation shopping fund
$600 to go
Local skiing: $750 (fully funded)
Week long ski trip $0 Funded (may have to forego).
I am carefull to keep vacation savings separate from regular savings.
That way I know how much I want to spend, not feel guilty about spending it, and feel good about adding to it when possible.
Last time we went away was 1 year and 10 months ago. So by the time summer 2012 hits it will be almost 3 years.
And we did not have so much money to save with the baby, the pregnancy, the new apartment.
It is so sad.
And wow, he really held on to the very last day that he could before stepping away. It must have taken enormous willpower and dedication. He certainly didn't do that for the money, not at that stage. He had to know how close the end was and was trying to do the best he could.
I am normally not affected by death of "celebrities". But Steve Jobs is different. One of the few people left that one can admire.
It is in great condition and I priced it 30-40% of the original price, but no interest on big items that take up space such as swing and infant car seat, kicking coaster, baby bath tubs, etc... I don't know what to do, it is not like I priced them badly. And the car seat is a highly-rated by consumer reports, an extremely popular model. Never was in any incident, etc...
The only things I sold were the once I thought I would never sell, such as fleece bundler, JJ cole car seat cover, bumbo (small items).
Yesterday I sold a playmat for $25. But since my mom bought the baby this playmat for $75 I thought I'd give the money to her. So I am still at $0 for baby stuff sold this month.
Some info from US News and world report, some with my comment:
A person living in Manhattan needs to earn $123,322 a year to be considered middle class, the equivalent of a $72,772 salary in Boston and a $50,000 salary in Houston, the study says.
• The average rent is $2,800, which is 53 percent higher than San Francisco, the second-most expensive city in the country.
• The average apartment in Manhattan sells for more than $1.4 million (the median price is $900,000).
• New Yorkers pay higher taxes than people in any other major U.S. city, roughly 50 percent more than the average in other cities and nearly triple the U.S. average.
Yet somehow there is much less rage and much more acceptance of this than in places that pay barely any taxes at all. Seriously, the less taxes people pay the more mad they are about paying them.
• Young families that earn less and have little savings are also being hurt. A family of three earning $55,000 a year will have to pay nearly half of that income for early childhood care. Families making $100,000 will often pay more in day-care costs than they do in a monthly mortgage payment or rent.
Middle class friends that have more than 1 kid all have a grandparent that stays at home with them. Otherwise it is impossible. Only poor people can have multiple kids, for middle class it is out of reach. Kind of screwed up system.
• Electricity bills are higher in New York than anywhere in the nation except Hawaii. Residential electricity prices increased by 27 percent between 2002 and 2007.
Really? Second after Hawaii? Never even noticed that, because utility bills are not so significant in comparison to rent, childcare, transportation… if you are paying 3K a month for your 1.5 bedroom, 120 electric bill for said 1 bedroom will not be bothering you as much.
1. Raise chickens in your apartment.
Sure, some sticklers on your co-op board may try to stiffle your frugal ambitions, but you can argue that chicken can qualify as a pet just as much as useless, no egg bearing parrokee. If they persist in their objection, threaten to rescue 20 cats instead.
2. Poop at work
Think about it, when you do it at work, you are being paid to poop! 5 minutes here, 5 minutes there, it adds up.
3. Stop eating anything that does not come from dented cans.
Following Susie Orman's logic... Would you rather have this peach now or would you rather have $300 when you retire in 50 years? Is this peach worth $300? Is it???
4, Having children.
Time to re-think that popular-past time entirely.
Think of all the extra money you would have if instead of child rearing you were to spend those hours working a second job!
In general, children produce negative return on your investment. Unless, of course, you can't afford to support them in the first place, in which case, the more the better! With some knowledge of the welfare system you can generate an income steam to support them, yourself, and a dead-beat boyfriend.
5. Shower less often.
Once a week should be sufficient. Saves a lot of money on your water bill.
As an added benefit, it should save money by cutting down on your social life, which is an unnecessary luxury, especially if you have pesky friends who like to do things other than going to the park and the library.
There have been so many money-saving articles lately...
I thought we can add to these wonderful ideas with suggestions with our own, even more frugal.
These are a few to get the ball rolling, I'm sure you guys have more. Comment if you want to keep this up. We need something to liven the mood on Monday.
Are these 2 tendencies at odd with each other?
I am not talking about the extreme (yes, I do watch "Hoarders").
I'm talking about a mich milder version, like few unneeded boxes, overstuffed closets and dressers, etc...
You "may" need an item. It is a perfectly good item. There is no reason to throw it out, except you have not needed it in 2 years.
But what if you do? You'll have to go out and buy it again.
Same with clothing. I'd go "oh, I may gain/loose enough weight to wear it again"
Or you just don't like it. (but you paid "good money" for it). Or you got them as gifts. Oh, I hate those. I can't throw it away (they are brand new and I have a problem with this from an environmental standpoint) but I JUST DON"T WANT any candles, frames, diffusers or nicknacks. So into the cabinets they go.
Oh, I wish I could have a garage sale! you people are lucky to just be able to have them.
Anyway, my struggle is that I like zen like decor. Natural, not ornate, not cluttered space. But the frugal me is holding on to stuff that makes place less "zen" than I would like.
My mother-in-law just got back from a 3 week trip to Hong Kong and Japan, and since she missed my birthday she took us all to Dohyo at Yotel. (her suggestion) I liked it, I think both the restaurant and hotel are pretty cool. Overpriced, yes, but nice. Maybe a great deal for brunch.
We had a nice time, this place reminded me of some places we went to in Asia. I like the outdoor seating that is on higher floors, with city views and trendy interior. No problem bringing the baby (of course we went just after 7, not midnight.
This dinner got me thinking, we should not be that cautious going to places like this with a baby, especially considering how agreeable and sweet he is.