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Olivia Wilde is Having a Baby: What are the first-month expenses?

Celebrities, Gossip

English: Olivia Wilde at a San Diego Comic-Con...
English: Olivia Wilde at a San Diego Comic-Con panel for Tron Legacy in July 2010. (Photo credit: Wikipedia)

Olivia Wilde recently announced her pregnancy with fiance Jason Sudeikis as she’s due with her first child in the coming year. Although the couple have declined to reveal their due date, they likely are expecting to set aside a budget for their baby, even with their high incomes. With forty percent of moms saying that having a baby is more expensive than they initially assumed, it’s important to look at the overall costs in the first month for plenty of preparation and financial planning.

Food

The first-month’s expenses can slightly range, depending on if the mother is using formula to feed the baby or is breastfeeding.

Breastfeeding is free and will not cost a dime, besides the breastfeeding supplies that cost an average of $15 in the first month due to nursing pads and milk storage bags for freezing.

Name-brand formula can be expensive, an average cost of $25 a week as the baby will be feeding on it several times a day, totaling about $100 in the first month. Generic brands of formula cost half the amount, an average of $12 a week.

Medical

Health insurance is one of the most expensive costs for newborn babies with 39 percent of mothers paying $1,000 with their childbirth. Some even pay at least $5,000. Health insurance will also likely increase to $200 a month for the child with co-pays that range from $30 to $100 per visit. Some health insurance will refuse to cover certain costs, which include vaccines and immunizations.

Daycare

Paid maternity leave is considered a luxury in the U.S. and is often unavailable for mothers who are self-employeed or do freelance work, making daycare a necessity. Daycare for newborns averages to $100 a month, but can be at least $1,000 for celebrities that use an in-home nanny.

General Care

Wipes will cost an average of $13 in the first month with a $5 increase in the water bill for the baby’s laundry and baths.

Diapers are one of the scariest expenses that are priced at $80 for basic Pamper diapers for newborns. Using cloth diapers are a one-time expense, so if provided by a friend or relative at a baby shower, they are free to use consistently and do not require much water or detergent to wash every other day.

Bath soap, detergent, and baby-safe shampoo will cost $30 a month to maintain the hygiene of your baby.

Although Olivia Wilde’s baby will be unique in its feeding habits and the materials for diapers used, the average cost in the first month will likely total $200 and can go as high as $4,000 for a celebrity. Many of the costs simply depend on the baby and are determined by the type of diapers used, the amount of doctor visits, daycare that may be needed, and whether the baby prefers breastfeeding or feeding on formula.

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Budget Lesson, Part 3

Finance

I keep calling these lessons, but they are examples and explanations, more than lessons.   Names aside, please see Part 1 and Part 2 to catch up.  The Google Doc of this example is here.

School Lunch

This time, I’m going to review my non-monthly bills.  These are the bills that have to be paid, but not on a monthly basis.  Some are annual, others are quarterly, or even weekly.  Every month, the amount–adjusted to the monthly equivalent–is set aside in Quicken.

  • School Lunch – We don’t qualify for any of the reduced lunch plan, and I don’t know that it is possible to send a brown-bag lunch that is both cheaper and healthier than the school’s menu.  This is automatically replenished whenever it gets below $15.   This actually gets paid about every other month.
  • Property Taxes – Semi-annual and increasing every year.   I know the valuations around me, so I don’t think an appeal would win.
  • Life insurance – We pay this quarterly.   If I die, my family will be completely covered for several years, without adjusting a single expense.   If the expenses are adjusted to account for the fact that I won’t be eating, driving, or using electricity, it will last much longer.  This is a separate policy from the one discussed in Part 2.  GET INSURANCE!  Take care of your family.
  • AAA – Since we got reliable cars, this hasn’t been a money-saver, but it’s priceless in terms of peace of mind.
  • Vehicle Registration – We have two cars and a motorcycle that need registration every year.  I’m planning to sell the bike in the spring, but I was planning that for last spring, too.  It’s easy to put that off, since I enjoy riding.
  • Daycare – Daycare is a weekly expense.  As a two-income family, this isn’t an expense we can do away with…yet.  As time goes on, the bill will be getting lower.   In June, my youngest reaches a cheaper pricing table and my oldest is almost ready to be done with daycare completely.
  • City Bill – Our garbage and sewer are paid through the city on a quarterly basis.
  • Web host – I’ve got this blog, plus a few other side projects hosted here.  I have been simplifying and reducing the projects that aren’t fun or profitable, but I’m not sure this expense will ever go away.

There aren’t too many items here that can be legitimately and responsibly trimmed.

Money Problems – Day 7: Paying Off Debt

Finance

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Today, I am continuing the  series, Money Problems: 30 Days to Perfect Finances.   The series will consist of 30 things you can do in one setting to perfect your finances.  It’s not a system to magically make your debt disappear.  Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days.  That’s not my schedule.  Also, I think that talking about the same thing for 30 days straight will bore both of us.   Instead, it will run roughly once a week.  To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 7, we’re going to talk about paying off debt.

Until you pay off your debts, you are living with an anchor around your neck, keeping you from doing the things you love.  Take a look at the amount you are paying to your debt-holders each month.   How could you better use that money, now?  A vacation, private school for your kids, a reliable car?

If you’ve got a ton of debt, the real cost is in missed opportunities.   For example, with my son’s vision therapy being poorly covered by our insurance plan, we are planning a much smaller vacation this summer–a “staycation”–instead of a trip to the Black Hills.  If we didn’t have a debt payment to worry about, we’d have a much larger savings and would have been able to absorb the cost without canceling other plans.  The way it is, our poor planning and reliance on debt over the last 10 years have cost us the opportunity to go somewhere new.

The only way to regain the ability to take advantage of future opportunities is to get out of debt, which tends to be an intimidating thought.   When we started on our journey out of debt, we were buried 6 figures deep, with a credit card balance that matched our mortgage.    It looked like an impossible obstacle, but we’ve been making it happen.   The secret is to make a plan and stick with it.   Pick some kind of plan, and follow it until you are done.  Don’t give up and don’t get discouraged.

What kind of plan should you pick?  That’s a personal choice.  What motivates you? Do you want to see quick progress or do you like seeing the effects of efficient, long-term planning?   These are the most common options:

Debt Snowball

Popularized by Dave Ramsey, this is the plan with the greatest emotional effect.   It’s bad math, but that doesn’t matter, if the people using it are motivated to keep at it long enough to get out of debt.

To prepare your debt snowball, take all of your debts–no matter how small–and arrange them in order of balance.   Ignore the interest rate.  You’re going to pay the minimum payment on each of your debts, except for the smallest balance.  That one will get every spare cent you can throw at it.   When the smallest debt is paid off, that payment and every spare cent you were throwing at it(your “snowball”) will go to the next smallest debt.   As the smallest debts are paid off, your snowball will grow and each subsequent debt will be paid off faster that you will initially think possible.    You will build up a momentum that will shrink your debts quickly.

This is the plan I am using.

Debt Avalanche

A debt avalanche is the most efficient repayment plan.  It is the plan that will, in the long-term, involve paying the least amount of interest.  It’s a good thing.   The downside is that it may not come with the “easy wins” that you get with the debt snowball.   It is the best math; you’ll get out of debt fastest using this plan, but it’s not the most emotionally motivating.

To set this one up, you’ll take all of your bills–again–and line them up, but this time, you’ll do it strictly by interest rate.  You’re going to make every minimum payment, then you’ll focus on paying the bill with the highest interest rate, first, with every available penny.

DOLP

This is the plan promoted by David Bach.  It stands for Done On Last Payment.   With this plan, you’ll pay the minimum payment on each debt, except for bill that is scheduled to be paid off first.   You calculate this by dividing the balance of each debt by the minimum payment.   This gives you an estimate of the number of months it will take to pay off each debt.

This system is less efficient than the debt avalanche–by strict math–but is better than the snowball.  It give you “quick wins” faster than the snowball, but will cost a bit more than the avalanche.   It’s a compromise between the two, blending the emotional satisfaction of the snowball with the better math of the avalanche.

Snowflaking

For each of these plans, you can give them a little steroid injection by snowflaking.  Snowflaking is the art of making some extra cash, and throwing it straight at your debt.   If you hold a yard sale, use the proceeds to make an extra debt payment.   Sell some movies at the pawn shop?  Make an extra car payment.  Every little payment you make means fewer dollars wasted on interest.

Paying interest means you are paying for everything you buy…again.  Do whatever it takes to make debt go away, and you will find yourself able to take advantage of more opportunities and spend more time doing the things you want to do.  Life will be less stressful and rainbows will follow you through your day.  Unicorns will guard your home and leprechauns will chase away evil-doers.   The sun will always shine and stoplights will never show red.   Getting out of debt is powerful stuff.

Your task today is to pick a debt plan, and get on it.   Whichever plan works best for you is the right one.    Organize your bills, pick one to focus on, and go to it.

Assuming you are in debt, how are you paying it off?

 

 

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Getting Back on Track

Life

I should be ashamed to admit it, but we drove ...
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Have you ever set a goal…and failed?

At some point, it happens to all of us.   After all, our reach should exceed our grasp, right?   That doesn’t make it easy to admit failure, or to correct it.   Did you let a New Year’s resolution lapse, or slip off of a diet?   Have you started shopping indiscriminately again, or stopped going to the gym?

It’s okay if you did, but it’s time to fix it.

How can you get back on track after failing a goal?

1.  Pick a day to start over.

Just like when you first started towards your goal, you have to decide when you’re going to get back on board.    If you can’t decide, just pick the beginning of the next month.   A new beginning is a great time to tackle your new beginning.

2.  Recommit.

You failed once.  Accept it and move on.  Past behaviors don’t have to be an indicator of future performance.   Just do better this time.

3.  Announce it.

Somebody has noticed that you aren’t on the wagon.   Your coworkers are seeing you eating candy, or your spouse has noticed you buying things you don’t need.  Talk to these people.  Tell them you’re going to redo the things you’ve undone.  You’ll change the world, but you have to start with yourself.

4.  Don’t be ashamed of your lapse.

Unless I have seriously misjudged my audience, you are human.  Humans sometimes make poor decisions.  Being ashamed won’t help you, but take the opportunity to learn from the past.  Do you know what caused you to fail?  Are there triggers to your behavior that you can avoid this time around?  When I quit smoking, I tried to avoid rush hour, because I smoked heavily while I drove and I wanted to avoid being in car for as long as possible, minimizing one of my triggers.   What cause your lapse, and can you avoid it?

5.  Don’t do it again.

This one should be the most obvious, but the fact that it’s a problem means it’s not.   Do whatever it takes to not make the same mistakes and uphold your goals.  Don’t smoke.  Don’t eat garbage.  Exercise more.  Whatever you’ve decided to do or not do, do it….or not.

Have you missed a goal?  How have you picked it back up?

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Decision Making Made Easy

Life

Cinderella Castle at the Magic Kingdom, Walt D...
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Have you ever had to make a difficult decision?   Not necessarily a decision that’s difficult because it’s life-changing, but a decision that’s difficult because there are two phenomenally wonderful, yet mutually exclusive options?

For example:

  • Should you put caramel or strawberry sauce on your ice cream?
  • Should you go to Disney Land or Disney World?
  • Should you subscribe to Live Real, Now by email or RSS?
  • Should you take the job with the stellar benefits package or the higher salary?

These are all real decisions that you may be called on to make.

For most decisions, there are some alternatives that are easy to discard.

MadDog 20/20 isn’t a good alternative to caramel sauce on your ice cream.   The local BDSM museum probably isn’t a great choice for a family vacation.  Sending me hate mail is obviously worse than subscribing.

Then you’ve got some choices that are both okay, but one is clearly better.    You’ve got free airfare and hotel.  Do you go to Topeka, or Paris?  Neither is horribly, but I think the choice is obvious. You’re going out to dinner.  McDonald’s or…nevermind, this fits the first category.

After you’ve discarded the obvious bad choices and the okay-but-not-great choices, how can you decide between what’s left?

This is the point that starts to cause stress.  What if you make the wrong choice?  What if you regret it forever?   What if you’re still not happy?  Gridlock.

The reason your stuck is because it’s not apparent which is the better choice.  All of your experiences and knowledge are telling you–on some level–that the options are identical in terms of your life, happiness, and goals.    It truly does not matter which one you choose.  You will probably be equally happy, either way.

Given that it doesn’t matter, you have two choices for making the final decision:

  1. Pick the one you want.   The rational decision is a tie, so make it an emotional one.   Does one job match your dreams, but with a bit more risk?   Has one vacation destination been a goal since you were little?  Do it!
  2. Flip a coin.  If the decision doesn’t matter, leave it to fate.  That way, if it doesn’t work out, you can always blame the quarter.

The one thing you don’t want to do is wait.  Failing to decide is still a decision and one that is guaranteed to keep you from being satisfied with your choice.   Don’t wait until you have all of the possible information, because that kind of perfect world doesn’t exist.   Get to about 85% of fully informed and run with it.  You’ll usually be happier making a decision–even the wrong one–than sitting back wondering “What if I had done that?”

How do you make hard decisions?

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Debt Scams

Finance

When you are up to your eyeballs in debt, praying for a step-stool, sometimes life–more accurately, con-artists–try to trip you when you are vulnerable and look for a solution.  They aren’t muggers on the street.  They come at you wearing ties, invite you to a real office, with real furniture and a real nameplate on a real desk.   They are a real company, but that doesn’t mean they aren’t trying to scam you out of the little money you have left to put towards your debt.

Yes, I am talking about debt management scams.  These scams come in 4 main varieties.

Debt Settlement companies instruct you to stop paying your bills completely and send them the money instead to be placed in a settlement fund.  When your creditors get desperate enough, they will be willing to settle for pennies on the dollar.

In theory, this can be a good strategy for some debtors.  Unfortunately, it has some drawbacks, even if the company is legitimate.   They tend to charge high fees as a percentage of your deposits.  Some take another fee when a settlement is accepted.   The entire time you are building your settlement fund, your credit rating is sinking, leaving you open to being sued or garnished.  The bad companies take the fund and run, while even the good companies can’t guarantee your creditors will play ball.

Ultimately, they aren’t doing anything you can’t easily do yourself.    If you want to go the settlement route, stop making your payments and funnel the money into a savings account that you will use to offer settlements from.  It takes discipline, but there is no upside to paying someone else for the same function.

Debt Management plans are used when you owe more than you can afford to pay. These companies work with your creditors to adjust interest rates and minimum payments and they try to get some fees waived for you.

A good company will work with you and your creditors to make sure everyone is working together towards the goal of eliminating the debt.   A bad company will tell you they are working with your creditors while ignoring any contact from the creditor.  They’ll tell you the creditor isn’t willing to negotiate while never stepping up to the negotiation table.   Another trick is to offer the creditor a set payment, with a “take it or leave it” clause.  Any input from the creditor is interpreted as a refusal to participate.   This, coupled with high fees paid by the debtor, make debt management firms a risky proposition.  Most states require the firms to be licensed.  Check to make sure they are before giving them any information.

Debt/Credit Counseling companies work with you to establish a budget and eliminate expenses; in effect, they are training you to be in control of your finances.  They are often organized as a nonprofit, but not always.

Some–the sleazy ones–lie about what they are doing, or attempt to misconstrue what you are agreeing too.   Be careful not to use your home as collateral to consolidate unsecured debt and don’t walk into a Chapter 13 bankruptcy without that being your intention.  Both of those are common debt counseling scams.  If the company isn’t able to provide all of the details of a transaction–company name, address, licensing information–or they aren’t willing to spend as much time as necessary explaining the details of the transaction, walk away.   This is your life, you are in charge of it.  Don’t let anyone bully or prod you into signing something you aren’t comfortable with.

Credit Repair is almost always a scam. There are ways to get correct bad information removed from your credit report.  If the information is correct, those methods are illegal.   There are two legal methods to repair your credit.  First, stop generating bad credit.  Make your payments on time and eventually, the bad items will fall off.   Second, write letters disputing the actual incorrect items on your credit report.  There are no quick fixes, and anybody telling you different is flirting with a jail sentence, possibly yours.

How do you avoid the scammers?

  • Be skeptical. If it looks to good to be true, it probably is.  There is no such thing as a magic wand to fix your credit and make your debt disappear.  Bankruptcy + 10 years of your life is the closest thing to magic credit repair in this world.
  • Only use a legitimate credit counselor. Verify them through the Better Business Bureau and the National Foundation for Credit Counseling (1-800-388-2227 or www.nfcc.org)
  • Check the license. Most states require credit and debt counselors to be licensed.  If they’re not, run away and report them.
  • Read the find print.   Don’t sign anything you don’t understand.  Like every other piece of your financial life, own the transaction. Know what your are doing, or don’t do it.
  • Are they willing to work with you? If they’ve got a generic plan that doesn’t account for your specific situation, they are probably a con.  At the very least, they are a worthless company and a waste of both time and money.
  • Are they willing to work with your creditors? If not, they won’t be accomplishing anything for you.
  • How much do they cost? Higher fees may not be an indicator of a scam, but call around and find out if they are in the right ballpark.  Triple or quadruple the going rate is a sign of someone who will disappear late one night, with your hopes, dreams and savings in tow.
  • Above all else, trust your gut. If it doesn’t feel right, it probably isn’t.  There is nothing a counselor can do that can’t wait a few days while you check them out.

There is no magic bullet to kill debt.   You’re not fighting a werewolf, you’re fighting a lifetime of bad or unfortunate choices and circumstances.  It’s important to keep a realistic outcome in mind.

Update:  This post has been included in the Carnival of Debt Reduction.