Hypocrisy

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Sometimes people make choices for a variety of reasons entirely outside of my knowledge and understanding.  Yet somehow, I still manage to be dismissive and occasionally derogatory.

What I have come to realize is that there are numerous reasons for making apparent bad decisions.   It is easy, though often not correct, to dismiss these supposed mistakes as character flaws, without taking the time to fully understand the decision-making process.

For example, I am usually quick to point out the folly of gadgets.  Odd, that, for a gadget geek.  So many gadgets are merely ego purchases, bought because the are “cool”.  Obviously a waste of money.   A smartphone serves no practical purpose for an average person, right? What if that person’s life is so difficult to manage that a calendar sync including both spouses and multiple calendars will allow a family to make sure every kid gets to every activity on time?  Or he has a side business that is easier to manage with ubiquitous email?  Or even a strong urge to limit the number of items carried every day?  A phone/mp3 player is fewer gadgets than separate appliances.

Another example is a close friend who started running several months ago, to be met with questions of why somebody would run without being chased.  It’s easier to play on the internet or ride a bike, right?  And the special running shoes?  Silly.  Except running is cheaper than biking and running shoes beat knee surgery any day.   Running on the street is more effective than a treadmill, since you can’t step off after running two miles away from your house.

So here I sit, a runner with a crackberry and plate full of crow.

“Don’t judge a man until you’ve walked a mile in his moccasins.”  Indeed.

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Naked Money

In our house, the bills don’t get hidden. I’ve never tried to hide our finances from our children. I believe doing that is part of the reason I reached adulthood with no brakes. Growing up, finances were almost entirely invisible.  Now, I believe is financial transparency.

Now, as a father, I balance the checkbook and pay bills on the laptop in the living room where my children can see me. They see the stack of bills and they watch me balance the checkbook. We discuss how much things cost and how we can cut expenses while the bills are being paid.  Even the toddlers know Daddy is doing something important.

My ten-year-old son knows what sales tax is and where to find it on a receipt. He knows what property taxes are and how much they are in our neighborhood. He knows roughly what percentage of a paycheck gets withheld. I work to make my son financially aware. My girls are too young to understand the concept of money, but they will be receiving a thorough financial education as soon as they are able to grasp the concepts.

The hard part is explaining to my son how we screwed up our finances. I’ve shown him my paycheck and discussed our debt. I have explained to him that we were making much less money when we accumulated our doom debt, while maintaining a higher standard of living.  Now, when we go to the store, he doesn’t even ask if he can borrow money until we get to his bank account.  He has learned to dislike debt in almost all forms.  I’m fairly proud that my kid voluntarily practices delayed gratification.

What he doesn’t quite grasp is the idea of living within your means, even if your means are limited.   “But, Dad, what if you don’t have much money?  Then you have to borrow money for nice things, right?”  I’m not sure how to break him of that.  Delayed gratification is an understandable concept for him, but the difference between wants and needs seems to be missing.   Any ideas?

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Babies Are Expensive

From the comments here.  The discussion is on how much it costs to have a baby.  Edited for clarity.

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Actual birthing costs vary. We’ve had three kids over ten years and birthing costs have varied from $250 out of pocket to $8500.   Our highest and lowest price births were 20 months apart. The highest price birth involved induced labor with an epidural. For the lowest out-of-pocket price, I added my wife to my policy before the birth, so she was double-covered. If one of your policies is less than ideal and there are multiple policies available, I recommend doing this. It saved us thousands.  All told, If things go well, you could slide for as little as $1500 total.

For the highest price birth, we threw ourselves on the mercy of the finance department. They have a charity fund to pay the bills of the less fortunate. We qualified…barely.  If you have a medical bill you can’t afford, ask if there is a grant or donation you can apply for.  Always ask if there is some way the bill could be lowered.

Breast-feeding beats the heck out of formula, financially, but breast-feeding doesn’t always work. Ignore the boob-nazis who insist you are slowly killing your kid by using formula. I’ve got 3 kids, and each had different feeding issues.

Baby formula runs $19 for a big container at Sam’s Club, or a large percentage of your soul at most other big box stores.  Formula alone will pay for your membership in under a month. For a big eater, that’s $20-30 per week. For a normal eater, 2-3 weeks. For planning purposes, assume $100/month in formula costs for the first six months, when food starts coming into play heavily. After that, the formula expense goes down, but not away for at least 6 more months.

Diapers are painful. Not just the smell–though that hurts, too, sometimes–but the expense. I currently have 2 in diapers; one is potty-training. Our monthly costs for diapers, now, are about $75. It was easily twice that when they were younger. Figure at least $100 per month in diapers.  Unless your baby has irritation problems, go with cheap diapers. Leak-guard is a joke.   If you are relying on leak-guard to keep the contents inside the diaper, you aren’t changing your baby often enough.

I couldn’t begin to guess at how much you’ll spend on baby clothes.  I have never bought clothes for our kids. Whatever didn’t come free from friends and family walked into the house of it’s own volition, following my wife home from the store.

Toys are an almost purely voluntary expense. You’ll get as much as the kids needs free, as presents. You’ll go overboard and give the kids 10 times that, without realizing it. Don’t. For the first four to five months, its fingers and toes will be entertaining enough. After that, if there are more than about ten toys, it’s too many; the kid will never get attached to any of them. Keep it small. It’s better for the kids and the budget.  Little kids prefer boxes to toys, anyway.   Give the kid a shoebox instead of a Leapfrog.  Really.

Portraits suck, too. If you have to get them done professionally, get a membership that covers sitting fees, and use coupons. I recommend JC Penney’s. Using judicious coupons and the membership, we get portraits for under $20.

Baby food is probably cheaper to make in a food processor, but you can’t beat the convenience of the little jars. If you watch sales, you can stock up affordably. Mix every meal with some rice or oatmeal mush to stretch it, without making it unhealthy. Depending on your kids, and how much you listen to the “experts”, this is a nonexistent expense before six months. Our kids started eating baby food in their second months, at least a little bit.

Babies are expensive. Don’t doubt that for a second, but ignore the polled averages when it comes to expense.  Hand-me-downs, thrift stores, and good sales cut the expense a lot.

How do you save money and value with a baby in the house?

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Automatic Everything

In an effort to simplify my finances, I’ve automated every bill I have.  For years, I resisted, fearing a lack of control over my money.   A few months ago, I re-examined the bill paying options on my bank’s website and changed my mind.  This is one thing that USBank has done right.

The first thing I did was set a budget. Without a budget, it’s not possible to let your money take care of itself.   I did this months before I decided to automate.

All of the bills that offer a budget plan–a plan that averages your payments to avoid fluctuation–went on the plan.    It means I do overpay some months, but it also means I get to underpay some months.  Most important, I always know what will be due.   These bills were scheduled in the bank’s online bill paying system as is, along with the rest of the bills that do not fluctuate.

All of the bills that do fluctuate went in to the bill paying system at their highest level.  For example, I don’t pay for text messaging on my cell phone.  Some months, I send and receive text messages.  I pay my cell phone bill assuming that there will be a few messages.  This is slowly building a credit on my account.  If I don’t use all of the credit, I will get to skip a month of payments sometime next year.

I keep track of all of this using Quicken.  Every one of these bill is in the calendar.  They are all scheduled to be entered into the register on the first of the month, to post of the actual day of payment.   This lets me see, at a glance,  my cash flow for the entire month.

But wait!  What about the non-monthly payments, you ask? They are also in Quicken, broken into monthly line items.   There’s a “Set aside for property taxes” item, a “Set aside for web host” item, and a few other items.

My time to maintain this has been reduced to comparing the bills to the bill-paying system every other week.  At the same time, I consolidate all of the “set asides” so I don’t have 10 property tax entries when one will do.

I know this is an inefficient method of saving money, but my goal isn’t to save money, it’s automating money and removing one layer of stress from my life.  It has transformed bill-paying from an hour or two per week to 20 minutes, twice per month and very little stress.

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