It’s true that the benefits of a parent cannot be measured or quantified in any meaningful way. It’s hard to put a price on the emotional commitment and special experience of raising a child as a parent, some of which may not even be realized by the parents themselves until afterwards. But it is undeniable that the experience of parenthood is a rewarding and special time in someone’s life.
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?
Missing Money
Last week, I checked my credit card account only to discover I was over budget by nearly $1000.
What.
The.
Heck?
It threw me into a bit of a panic. How could we possibly have spent an extra grand without knowing it?
We didn’t buy new furniture. We didn’t buy new computers. We didn’t buy a new car. We didn’t take any trips.
Oh, wait.
I did take a trip. I went to work headquarters for three days. That’s about a $500 mileage allowance, plus three days of restaurant meals.
I forgot to file my expense report.
That’s where my money went.
Somehow, in all of life’s wonderful hustle, I neglected to ask my company for the almost $1000 they owe me. That’s an oversight, for sure.
Luckily, we keep that much padding in our other accounts, so I don’t have to pay interest on that money, but still.
That’s my money and I forgot about it.
I’m so not happy with myself.
What’s worse, is that even though I figured out the problem last week, I still haven’t gotten that expense report filed.
It’s not procrastination, I swear. I’ve just been absentminded and keep forgetting to do it. Right now, I’ve got “EXPENSE REPORT” written on my whiteboard to remind me to file it.
Cuz I’m going to do it tomorrow.
Twitter Weekly Updates for 2009-12-19
- RT @ScottATaylor: Get a Daily Summary of Your Friends’ Twitter Activity [FREE INVITES] http://bit.ly/4v9o7b #
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- @LenPenzo @SusanTiner I couldn’t help it. That kicked over the giggle box. in reply to LenPenzo #
- RT @copyblogger: You’ll never get there, because “there” keeps moving. Appreciate where you’re at, right now. #
- Why am I expected to answer the phone, strictly because it’s ringing? #
- RT: @WellHeeledBlog: Carnival of Personal Finance #235: Cinderella Edition http://bit.ly/7p4GNe #
- 10 Things to do on a Cheap Vacation. https://liverealnow.net/aOEW #
- RT this for chance to win $250 @WiseBread http://bit.ly/4t0sDu #
- [Read more…] about Twitter Weekly Updates for 2009-12-19
Evil Interest
Everybody with a savings account or almost any form of debt has at least a passing familiarity with interest. How many of you actually know what it is, or even how much you are actually paying?
First, some definitions.
Principal is the term used for the amount of money you have borrowed.
Interest is the rent you pay to have that money. Interest is money-rent, expressed as a percentage of the principal. If you borrow $100 at 10%, you pay approximately $10 in interest. I say “approximately” because it’s just not that simple.
There are two kinds of interest: simple and compound.
Simple interest is called that because it is just that: simple. It’s easy to understand and it’s what most people mistakenly assume they are paying. With simple interest, the interest rate is only applied to the principal, never to the accumulated, or accrued, interest.
For example, if you have borrowed $100 at 10% annual interest, this is what your balance will look like:
- At the time of borrowing the money, you owe $100.
- After 1 year, you owe 10% of the $100, in addition to the original $100: $110.
- After 2 years, you owe 10% of the $100, in addition to the original $100 and year one’s interest: $120.
- After 10 years, you will owe a total of $200.
That’s simple.
On the other hand, in addition to five more fingers, you have compound interest. Compound interest complicates things considerably. With compound interest, interest is applied to the entire balance of what you owe; both the principal and the accrued interest are included in the calculation.
For example, with $100 at 10% compounded annually:
- Year 1: You will owe $100 + 10% of the original $100, or $110
- Year 2: You will owe $110 + 10% of the $110, or $121
- Year 3: You will owe $121 + 10% of the $110, or $133.10
- Year 4: You will owe $131.10 + 10% of the $110, or $144.41
- Year 5: You will owe $144.41 + 10% of the $110, or $158.85
- Year 6: You will owe $158.85+ 10% of the $110, or $174.74
- Year 7: You will owe $174.74 + 10% of the $110, or $192.21
- Year 8: You will owe $192.21 + 10% of the $110, or $211.43
- Year 9: You will owe $211.43 + 10% of the $110, or $232.57
- Year 10: You will owe $232.57 + 10% of the $110, or $255.83
That is a total of $155.83 in interest paid over 10 years, or $15.58 per year, for an effective interest rate of 15.583%.
To throw another twist into the mix, interest is rarely compounded annually. Monthly, or even daily, is much more common. With monthly compounded interest, the annual rate, or APR, is divided by 12 and recalculated every month.
For example, using the same $100 at 10% APR, compounded monthly:
Since the interest rate is compounded monthly, we will be using the monthly periodic rate, which is 10% / 12, or .83%
- Month 1: $100 + .83% of $100 = $100.83
- Month 2: $100.83 + .83% = $101.67
- Month 3: $101.67 + .83% = $102.51
- Month 4: $102.51 + .83% = $103.36
- Month 5: $103.36 + .83% = $104.22
- Month 6: $104.22 + .83% = $105.08
- Month 7: $105.08 + .83% = $105.95
- Month 8: $105.95 + .83% = $106.83
- Month 9: $106.83 + .83% = $107.72
- Month 10: $107.72 + .83% = $108.61
- Month 11: $108.61 + .83% = $109.51
- Month 12: $109.51 + .83% = $110.42
That’s $0.42 more interest paid the first year, and that number will continue to climb each year the interest is compounded.
It gets worse if interest is compounded daily, like most credit cards. If you see “Daily Periodic Rate” anywhere in your agreement, you are getting compounded daily. This same loan, compounded daily instead of monthly will yield $110.51 owed the first year. That $0.51 might not seem like much, but imagine it on a $10,000 credit card, or a $100,000 house! And that’s just the first year. Every year after, the disparity gets bigger.
Edit: The formula for calculating compounding interest is Principal x (1 + rate as a decimal / compounding term)compounding term. So, for $100 at 10% compounded monthly, the formula is 100 x (1 + 0.1 / 12)12
That’s the downside to compounding interest. There is an upside, if you have investments or interest-bearing accounts. If that’s the case, compounding interest is working in your favor.
If you save $100 per week, and manage to get a 10% return on your investment, you will have $331,911 after 20 years(with $104,000 contributed) and $2,784,424 after 40(with $208,000 contributed). That mean you will have tripled your money in 20 years, or vingtupled* it in 40 years.
That’s how you get rich. $100 per week for the rest of your life will leave you with a comfortable retirement, without missing out on life now.
—
* Yes, it’s a real word**. It means a twenty-fold increase.
** No, I did not know that yesterday.
Memorial Day
JUST A COMMON SOLDIER
(A Soldier Died Today)
by A. Lawrence Vaincourt
He was getting old and paunchy and his hair was falling fast,
And he sat around the Legion, telling stories of the past.
Of a war that he had fought in and the deeds that he had done,
In his exploits with his buddies; they were heroes, every one.
And tho’ sometimes, to his neighbors, his tales became a joke,
All his Legion buddies listened, for they knew whereof he spoke.
But we’ll hear his tales no longer for old Bill has passed away,
And the world’s a little poorer, for a soldier died today.
He will not be mourned by many, just his children and his wife,
For he lived an ordinary and quite uneventful life.
Held a job and raised a family, quietly going his own way,
And the world won’t note his passing, though a soldier died today.
When politicians leave this earth, their bodies lie in state,
While thousands note their passing and proclaim that they were great.
Papers tell their whole life stories, from the time that they were young,
But the passing of a soldier goes unnoticed and unsung.
Is the greatest contribution to the welfare of our land
A guy who breaks his promises and cons his fellow man?
Or the ordinary fellow who, in times of war and strife,
Goes off to serve his Country and offers up his life?
A politician’s stipend and the style in which he lives
Are sometimes disproportionate to the service that he gives.
While the ordinary soldier, who offered up his all,
Is paid off with a medal and perhaps, a pension small.
It’s so easy to forget them for it was so long ago,
That the old Bills of our Country went to battle, but we know
It was not the politicians, with their compromise and ploys,
Who won for us the freedom that our Country now enjoys.
Should you find yourself in danger, with your enemies at hand,
Would you want a politician with his ever-shifting stand?
Or would you prefer a soldier, who has sworn to defend
His home, his kin and Country and would fight until the end?
He was just a common soldier and his ranks are growing thin,
But his presence should remind us we may need his like again.
For when countries are in conflict, then we find the soldier’s part
Is to clean up all the troubles that the politicians start.
If we cannot do him honor while he’s here to hear the praise,
Then at least let’s give him homage at the ending of his days.
Perhaps just a simple headline in a paper that would say,
Our Country is in mourning, for a soldier died today.