The Weight of Money

One of the joys of raising children is that they need things, like clothes. Luckily, I have a wonderful daughter who isn’t the least bit interested in fashion or keeping up with her friends. This makes clothes shopping an easy and affordable experience.

A couple years ago, I stopped at my favorite thrift store to pick up some camp clothes for the daughter. These were clothes that I didn’t care what happened to them or if they ever came back from camp. Since we’re pretty frugal with most of our purchases, I didn’t want her taking her “normal” clothes to camp and getting them ruined or lost. I think I spent about $20 on shirts and shorts for the two week camp.

It turned out that she really liked a lot of those clothes and they quickly became part of her normal wardrobe. Suddenly, I realized that buying her clothes anywhere else made no sense whatsoever. So, we started shopping at thrift stores for pretty much all of her clothing needs. I love that I can pick up an entire season’s worth of clothes for about $30. I also love how flexible she is and the fact that she could care less where they come from or what they look like, for the most part. Plus, if you see the way she treats her clothes, you’d probably feel much better knowing that she crawling in the mud in a pair of $3 pants versus a pair of $30 pants.

So, today we’re heading down to our favorite thrift store shopping district to get some summer clothes that she’s been desperately needing. I’m really getting tired of seeing her running around in mid-nineties degree weather wearing flannel lined jeans (she swears she isn’t hot, but come on!). While I figure we’ll spend about $30 on clothes, maybe a little more if I get a few things, we’ll probably spend almost that much on lunch and gas as well. Unfortunately, there are no good thrift stores where we live and we’ll be making the partners commute to the stores that have proven time and again to be worth the drive. And, since we’ll be down by the partner during his lunch hour, we’ll stop in and dine with him too. A nice family lunch out on a weekday is a rare occurance these days since gas prices went up and we moved so far away from his work.

We’re all set to start round two of orthodontia for the daughter. First order of business is to use up the funds in our 2007 FSA ($600). I’ll just apply it to the orthodontic treatment and not worry about the piddly prescriptions and copays that we had earlier this year — from a paperwork standpoint, this is easier. I’ll also need to pull $468 from the daughter’s child support fund to make the first payment. Oh what fun.

Here is where I threw the financial secretary for a loop. We’re basically just doing monthly payments of about $133 — but because I’ve decided to apply $1,000 of next years FSA to her treatment, I’ll be making a $1,000 payment in January and then just make $50/month payments for the remainder of the year. It took a lot of discussion to finally get her to realize that this is exactly the same thing as paying $133/month (well, actually, it’s about $4 more for the year) and that I’m doing it that way because then I can put in an FSA claim in January for the $1,000 instead of putting in monthly claims for $133. Again, I like making the paperwork easy and I love that you can file a claim before the full amount is in the account. Woot!

Simple, right? It certainly didn’t feel like it after being on the phone for way too long. Of course, even with all this hoop jumping, the daughter won’t be getting her new appliance until after the new year as it’ll take a few weeks to get it made. I know she’s awfully disappointed about that (note of sarcasm).

But, to make financial matters worse, the same day I’m working out all of these details, I get an email from the daughter’s summer camp that registration is now open. A quick glance at the rate confirms my fear that prices have gone up again – only $50 this year, compared to a $100 increase last year. But I guess when you’re looking at almost a thousand dollars for summer camp, whats another $10, $50, $100?!? Come next year, when I imagine rates will hit (and hopefully not cross) that $1,000 threshold, I’m going to have a very hard time getting my hand to stroke that check. Fortunately, the child support fund has enough to cover the application fee and deposit and should have enough deposits to make the final payments on time.

Side note on sumer camp: not attending summer camp is simply not an option; while paying for it is a major strain, I continue to firmly believe that it is worth even (painful) cent. But for parents just now considering summer camp, be sure to pick one that is affordable before you fall in love with it and vow that it is indeed an experience your children must have each year. At times I wish that I didn’t know about this camp, but it’s too late now.

We need doctors that are closer to our home. The daughter has seen the same pediatrician since we first moved to Maryland, which sounds wonderful except for the fact that she was local for less than 2 of the 5 years we’ve lived here. Since then, she’s been more than 30 miles from where we’ve lived. But, I really like the doctor, value the continuity of care, and don’t want to leave her practice. About two years ago, the daughter started seeing an orthodontist which was then less than 15 miles away, now the distance is almost twice a far. Again, I really like the care we receive and am not interested in finding a new doctor.

For the most part, this isn’t a major issue except when I get the clever idea of scheduling appointments with each office on the same day, today. School was closed for some reason or another and I figure this would be the best time to take care of some standard appointments. This would have worked out fine if the pediatrician and orthodontist were nearby, instead they are both 30+ miles from us, in opposite directions. And, of course, it had to be wet and rainy today and traffic was slow and tedious. So we drove the 30+ miles to the orthodontists, just to learn that it is now time for phase II of her treatment (aka time to fork over $4,200), then 60+ miles to the doctor where all is well (but we need to come back in 6 months instead of 12), and then 30+ miles home.

I’m exhausted from all the driving and waiting around for appointments. The daughter is happy though because the appliance that is in her mouth gets to stay in for a few more weeks and she got to eat at one of her favorite places for lunch. While I don’t plan to change doctors any time soon, I will be wise enough to not schedule both appointments for the same day again. As for future children, a more local pediatricians is a must — but so far, the mummer about local doctors isn’t very promising (at least not for parents interested in altered or delayed vaccination schedules).

I’ve finally made progress on getting life insurance. Recently, I woke up in the middle of the night in a panic because we didn’t have any yet. So, I got some quotes to work with and have selected a company to move forward with. Next up is the application process. To determine our coverage amount, I took several things into consideration. The standard calculations of 7-10 times your current salary seemed too cookie-cutter and unrealistic. Here are the initial numbers I calculated:

Current Debt

• House: $250,000

• Credit Cards: $16,000
• Student Loans: $30,000
• Total: $296,000

Future College Tuition

• Children: 1, 4

• Cost of 4 Years of College: $40,000
• Total: $40,000, $160,000

Annual Income Replacement

• Partner: $40,000

• Myself: $20,000
• Duration: 20 years
• Total: Partner $800,000, Myself $400,000

I ended up with a calculation of more than a million dollars of coverage for the partner. That seemed to be quite high and led me to to reconsider some options. For one, college tuition is highly variable and I already have no intention of paying the full college tuition for my children. Also, I realized that the annual income I was hoping for was to cover expenses that included savings for retirement and college tuition. Seeing that the number seemed too high, I also realized that while I would love to be able to stay home with our children (there is only one now, hopefully two in the next year), I’d probably be better off getting another job and not fully relying on life insurance benefits.

To lower the coverage amount, I reconsidered our actual expenses (both current and future projections). I calculated our annual income needs to see how off the numbers really are (but again, these numbers are just estimated projections and they too could be very off).

Annual Income Needs for the loss of primary income (twenty years):

• Property Taxes: $4,000 ($80,000)
• Food: $8,000 ($160,000)
• Clothing: $3,600 ($72,000)
• Transportation: $6,000 ($120,000)
• Utilities: $6,000 ($120,000)
• Household: $3,600 ($72,000)
• Entertainment: $2,400 ($48,000)
• Other: $12,000 ($240,000)
• Total: $39,600 ($792,000)

This amount is pretty close to the $40,000/annual income I had originally estimated (and I included elevated numbers since everything seems to get more expensive over time). Next I factored in the fact that a loss of primary income prompts a return to work on my part. Lets assume the 4 children scenario and that the loss of primary income comes right after the fourth child is born. I would need the full $40,000 a year until the youngest child enters primary school, about 6 years. At that time, I could assume that I would easily be able to manage a part-time job and would be able to decrease the needed annual income to $27,000. After the youngest child enters high school, about 9 years later, I could move up to a full-time position and reduce the our annual income needs to $10,000. This works out to the following life insurance needs:

• $40,000/year for 6 years: $240,000
• $27,000/year for 9 years: $243,000
• $10,000/year for 4 years: $40,000
• Total need over 20 years: $523,000

Partially considering this scenario and my reluctance to opt for a million dollar policy, I chose $750,000 in coverage for the partner. Going with the scenario above, this would leave $227,000 to pay towards current debt, a sufficient amount assuming our debt decreases by the time a fourth child is born. There is not additions for college expenses because I factored deposits into college savings account in the “other” annual category listed above.

For my coverage, I selected the $400,000 to provide $20,000 per year for twenty years – this is to cover food and child care costs that my partner would incur if I were no longer in our household. Also, the idea is that the partner should be able to cut back his workload some to manage parenting alone. This number may actually be too high, but if there is an instance where both of us pass away, it will cover all of our outstanding bills and provide for the care of our children.

One final note, life insurance should be reassessed with life circumstances changes. Getting more coverage than we currently means we’re paying more than we need to for something we may never use. However, time passes quickly around here and I want to be sure that I don’t have to reconsider life insurance for the next few years. Now, come child 2, 4, or 6 – I will probably need to see if these numbers still make sense for our family – in the meantime, I’ll be comfortable thinking that we’ve got enough coverage for now.

Following up on yesterday’s post, and Jonny’s comment, I wanted to add another perspective to our situation. I have to agree with the emotion behind yesterday’s comment, getting a job should be a very easy decision to make. Obviously, finances would be better and I clearly have the ability to do something about it. However, it isn’t that simple for our family.

While working would improve our financial situation, it will negatively impact our family life. We’ve learned that the emotional stability of our family suffers when I’m working. Also, tasks and obligations don’t always get met and we’re under a much heavier burden of stress. The daughter exhibits many more negative behaviors when I’m working, which is caused by the emotional stress I bring home. My partner prefers having the happier, more functional family and has not pressed me to get a job. In fact, every time I start mumbling about finally getting one, he gently reminds me that it isn’t necessarily the best solution for us.

It works out that while a job would relieve financial stress, it will create far more stress than the lack of money does. Now, it’s impossible to ignore that more cash would really help (especially when I run the numbers); however, just because it will help, doesn’t mean that it is necessary. Can we make do with what we have? Yes, though it’s not much fun and it hampers progress towards improved financial position. Luckily, money isn’t everything for us, though I may still find a way to make it work.

I’m still looking at positions and weighing options. There is a lot to factor in and I need to see that there is a light at the end of the tunnel if I take a position. Working increases our monthly expenditures in terms of lunch, after school care, dinning out, transportation, and clothing. I need to know that a position will pay enough to manage those increases, cover enough bills or savings, and be manageable enough to reduce the emotional impact. So far, I’ve not been successful in balancing all of these things but I’m still willing to try to make some ends meet.

Also, my personal sewing business still draws in money. I’m working on more word of mouth advertising since I’ve moved to a whole new county. I have two meetings scheduled for next week that will hopefully bring in some extra business as well. It’s taking a little more work to find work here because it’s a much more rural area and there are more people who still sew for themselves here. However, there are murmurs of interest and I’m pretty patient.

I’ve finally done it: picked a family cell phone plan. It’s been about a year since I started talking about this and today I finally just made a choice and gave up on thinking I’d ever be really happy with my choice.

We now have one cell phone bill for about $70 instead of the two cell phone bills for $115 a month. We also picked up two new phones as well.

AT&T is the lucky winner, not so much because we liked them better, but because compared to Sprint they did have some options we wanted and my cell phone reception is much better than the partner’s at the new house. Most the local also suggest AT&T/Cingular for better reception as well, so the partner can look forward to acceptable coverage which is much more than he has now.

Now I wait for our new phones to arrive and the inevitable problems that seem to always occur when I’m turning on new service of any type.

Monthly Savings: $45 Annual Savings: $540

(Had I done this last year in October when I started thinking about it, we would have saved about $450 already)

Clever Cingular Ad

Originally uploaded by jasonhe

It’s been a year since I started thinking about combing cell phone plans and it’s finally time to take action. I’ve dug up the following details from both the Sprint and Cingular/Att (whats with the wishy-washy name changes?) website – where the partner and I each have a plan. We need to pick one this week.

Normally, I’d favor Making the Call, but I’m feeling all tapped out on calling people. Especially because I’ve called our internet company 3 times trying to move service and still haven’t gotten anywhere.

Here are the details that we’re considering right now:

ATT:

550m 59.99
700m 69.99
1400m 89.99

Rollover minutes, unlimited m2m
$36 activation fee
$26 for additional lines activation fee

Early nights/weekends for $16.99 (7pm-7am)

Data:

SmartPhone 5MB $9.99 – Unlimited $19.99 – Unlimited Max (w/1500 messages)$29.99
– Not for Treo

Data Connect 5MB $19.99 – 10MB $24.99 20MB – $34.99
— For Treo

PDA Personal 20MB $29.99, Max Unlimited 39.99
— For Treo

Messaging:
200 $4.99
400 $9.99
200 and Unlimited M2M $9.99

MEdia:
Basic 400 messages/ 1MB MEdia net 9.99
w/unlimited m2m 14.99
Words 1500 messages/5MB MEdia et 4.99
w/unlimited m2m 19.99

Phones:
Palm Treo 650 (Refurb) $99 (no rebates needed)
Palm Treo 680 (Refurb) $99 (no rebates needed)
Palm Treo 680 $99 (with $200 rebate)
Palm Treo 750 $199 (with $200 rebate)

Sprint:

550m $59.99
700m $69.99
1400m $89.99

Nights start at 7pm

Messages Unlimited Family $20.00 (with 69.99 plan or higher) – not per line, per month

Phones:
Treo 700 $299.99 ($100 rebate)
– can get free activation

Data
40 MB Mobile Broadband 39.99
Unlimited $59.99

Data plans are still priced a bit high for my taste and I’m not sure if we need them. I actually dropped my messaging plan last year because the partner’s phone couldn’t receive them. We currently pay $110 a month, combined for our cell phone plans, I don’t feel like going over that. In fact, I really wanted to go under it, a lot under. Maybe we just switch plans right now and then think about data plans a little later.

I feel like I’m in a whirlpool of financial directions, every thing has it’s own individual course and nothing is overlapping, just spiraling instead. With the purchase of the house comes many new options, needs, and priorities. Where, what, and how will we approach these, consolidate them, make them work.

Not everything is a real need, merely wants dressed up and vying for attention. Most of them are my own constructs and I’m not sure where the partner stands on these issues. It seems that the house has been our decision, but everything beyond that is just individual assumptions not communicated. It is as though all of our shared energy ends at the contract negotiations and we’re too drained to talk about what will happen afterwards.

The issues/wants/needs that I’ve been mulling over:

1. I stop working. When I decided to leave my full-time job and take a part-time position, I thought that it would be a temporary position. I figured that I’d work the part-time position until we moved into the new house and then just stop. What was I thinking?

   I was thinking that we’d buy less house and actually spend less per month on our mortgage than we’re paying in rent. Well, that isn’t happening and I’m okay with that, except quitting work isn’t as possible now.

2. Build a Workshop. I’ve mentioned that we need a workshop. Buying a house without a garage really puts us in a jam. There are two small sheds on the property, one is quite cute, but neither can hold the weight of the partners “stuff!”. I want to just get one built, but it’ll be some serious cash. I’ve pushed the partner to find out how much cash, but we’re both unsure of where to even start in looking up that stuff.
3. Expand the family. Having another child has been really pushing on my mind lately. It’s an on-again-off-again feeling of a couple of intense months wanting a kid and a few more refusing the thought of another kid. Since I’m on the upswing of desire, I want to add this to not working. But, babies cost money — or at least thats what some people want you to believe (another post on this another time).
4. Repairs/Updates/Furniture: The house will need a variety of repairs and many of them fall within the restoration range. We could go about doing restoration work on this house, but that does increase costs in some places. There are some tax incentives for doing restoration on an old house, but I’ve not read up on more recent laws and the book I’m currently reading only talks about restoration of commercial properties. Perhaps this only applies to commercial/income-producing properties still.

The partner and I need to talk about these things, but we are too tired to add more to our day. So much going on, not enough time to deal with it all.

Saturday evening, after a week long vacation away from home, the daughter wanted to talk about the dream house she designed. It was a house with multiple floors and all the entertainment an 11 year old can think up, and probably a little more. She had drawn up extensive floor plans and summary sheets for each floor.

The Dream
The room that she prized the most was the Electronic Den (the size of 3 football fields). Here, visitors would find thousands of tvs, game systems, dvds, games. She mapped out the game closets for each different game system, 1,000-person movie theaters and their furnishings (bean bags for kids, couches for the teens, and traditional seats for adults). She seemed to have thought of everything, from education, housing, exercise, food, and entertainment, except some major economic considerations.

“Everyone wants to work here and loves it so much they don’t want to be paid. I’ll make billions.”

“But how do your employees pay for the things they need if they don’t get paid, like a house?” Wanting to know this through a little wrench into her dream.

“If they need to buy a house, I’ll give them a loan to buy it.”

“But how can they pay you back if they don’t make money?”

“Okay, I’ll just give them the money.” Satisfied with that answer, I started to ask about how will they buy food (”they can eat at restaurant for free”), medical care (”I’ll pay for it”), education for their children (”attend the school for free”), retirement savings (”I’ll pay for it”), vehicles (”I’ll pay for it”), etc. She continued to respond to everything saying she’ll pay for it, but she drew the line at family vacations — they’ll have to pay for those but she’ll help them get on shows like Deal or No Deal and maybe they can win the money. Only the “lucky” ones would get to take vacations, the rest were stuck with their 12-hour work day (3 hours for breaks, time that could be spent at another job to pay for the vacation) and 9-hours of sleep everyday.

I kept asking questions and pointing out inconsistencies (”you say admission is only $5 for adults and $3 for kids, how many people need to come in each day to pay for all your employees and utilities?”). She finally got tired of my questions, “Mom!, it’s a *dream* house”.

Reality of Dreaming
The next day, as we were walking to the park, she suddenly blurted out, “I’ll never get to have my dream house.”

We talked about the reality of what she wanted and I told her that if she really wanted it then she could probably make a realistic version of it happen with enough effort. “But all those games and systems would cost too much!” We estimated how much she’d need and it was a pretty big figure, but certainly obtainable through the right choices and planning.

Just dreaming won’t get you there
I shifted the conversation further and brought up the example of winning the lottery. People who play the lottery are dreaming about what they could do with the money. Some people spend a lot of money each week on the lottery and end up with nothing in the end. Instead, if they stopped just dreaming and starting saving, they could work toward obtaining at least a portion of their dream.

Small steps add up
Our discussion veered into savings and interest (passive income). I provided the example of how much we have in savings, the interest ($20/month) it is making, and how that $20/month continues to increase every month. “But $20 is nothing,” she complained.

I continued the example through 5 years and pointed out how it was a way of making money doing nothing. “But it still nothing, I could get a soda machine and make more.” Yes, but the soda machine requires work because you have to stock it, withdraw the money, make repairs, etcetera. But still, in her eyes, the savings example wasn’t enough, why save at all if it’s only going to add up to just a little bit over time.

Necessary Persistence
I hope that I can raise her to eventually see that all those little bits, saved a little at a time, do add up to something more. Hopefully, we can get to a point where she realizes that dreaming can be supported by planning and that things are possible if you have enough motivation. For now, she seems more focused on an unreasonable dream and disappointed that she’ll never just wake up and it’ll be true, oh the limitation of being so young and considering only today.

Many times in life we make choices based on values, preferences, likes and dislikes. Sometimes they are very minor, but other times they take lots of thought and consideration. Sometimes we look back on those decisions and realize that our choice was not the best. Sometimes we make various compromises in values and choices and select an option we think is the best. Sometimes, once our choice has been made, we realize that our compromise is unsuccessful.
A month ago, I mentioned some upcoming changes that I was going to post about. While I was hoping to put it off longer, I figured now – as I enjoy the evening next to the holiday tree – is as good a time as ever. I’m leaving my wonderful job because the compromises I made have not worked for my family.

When searching for a job earlier this year, I had a few criteria in mind. I wanted a position that would make use of my degree and that would fit with my social consciousness. I needed a position that would be financially and professionally beneficial in the long run. The position I found in the nation’s capitol offered all of the professional, social (values), and financial options I desired. However, it required a commute of at least ninety minutes each way and often more.

I knew that it would be challenge for my family to adjust to this schedule and that the daughter would be facing a situation unfamiliar to her – one where I was gone for an extended part of the day, every day. Despite our best efforts (and there were many attempted solutions), this situation has not worked for my family.

It is clear that the daughter needs someone home more and that I need to be more available at home. Due to the stressful challenges from the daughter, the commute and the very strenuous workload, I had to reevaluate the compromise I made.

I love my job and find the work extremely fulfilling (and tiring) but I will not compromise family security and contentment for professional aspirations. It disappoints me that giving up the position is the only action I can take, but I am glad to make that choice in order to take care of my top priority and the thing I value the most in life – my family.