Taking Care of the Baby Boomer-Our Parents

elderlySo if you are like me in your mid-30s or early 40s you might have thought about if you are going to have to take care of your aging parents.  The baby boomer generation is getting older and will need help whether it is from family, retirement facilities/communities, or other live-in care.  The one caveat that I do stress on this topic, is don’t wait until your parents cannot speak for themselves.  According to recent data, 41% of baby boomers do not have a will or trust, and it increases to 71% for adults under age 34.  Wills and trusts are not just for wealthy people.  This is where anyone can and should state their wishes–leaving assets, pets, children, digital assets, burial instructions, and medical directives.  Ask them the tough questions now.  They may not want to think about it -but everyone will be more at ease when an order of business is clear.

  1. Do they have a will, Trust, Estate, power of attorney, and medical directive in writing?  Where is a copy or where can one be obtained should something happen?
  2. What are your parent’s views of nursing homes, retirement communities, and other live-in care?
  3. Is your family able and willing to care for one or both of your parents?
  4. What financial and emotional strain would caring for your parents impose on your family? your marriage? your children?
  5. What is your parents financial situation?  What will it be if one of them passes away?

These are important questions to ask yourself, your spouse, your siblings and your parents.  This topic is not only a potential financial strain, but an emotional strain as well.  This includes your parents and your family (or other family members who will take care of them).  This is by no means a conversation to preview your potential inheritance so make sure your parents are aware of that.  This is to give your parents the best life till the end of their life.

Just make sure everyone is on the same page and the plan includes:  financial stability of each parent, should the other die first; financial stability should one or both parents need some type of nursing care; ability of family to take care of parents— who, duration of care, monetary costs; and final requests, burial plans, etc. 

Again, death is a hard subject for all of us to face, but we all know it will happen to all of us eventually.  So discuss the terms now, so family can help ensure terms are applied and that we all go with the dignity we deserve.

Have you discussed with your parents their situation regarding elderly care and their terms?  Let me know via “Mom Cents.”  Janna

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Creating a Medical Budget

medical-expenses-deductionsOne of the top reasons for filing for bankruptcy in the U.S. are medical bills that cannot be paid.  I know that a severe car accident could put any of us into this situation, especially if we did not have any health insurance.  But are there ways to manage your medical expenses? The answer is yes!

First most hospitals, emergency rooms, and surgical practices are happy to make payment arrangements for debts that you owe them.  Most of the time these are reasonable, zero to little interest and can be up to a few years to pay off.  Typically cheaper than credit cards.  In order to get the respect from the medical institutions, you must respect them.  Therefore, contact their billing department as soon as you receive a bill.  If you wait till you have been submitted to collections–it is too late to resolve anything and it will affect your credit rating negatively.

For those of us who have insurance, it is important to understand your family policy.  Who is covered? Co-pays. Pre-authorizations and your deductible- both individual and family (they can be different).  Make sure you utilize doctors that are in your network and know which hospitals, urgent cares, and emergency rooms are also in your network.  That will in itself save you money each time anyone goes to a doctor.

Next when you have a doctor visit or procedure, make your co-pay if you have one.  Then wait for the bill from the doctor(s) and facility.  If you just went to simple doctor’s office you will likely just get one bill.  If you had a procedure- even out-patient you can receive a few different bills from different doctors and facilities.  Then wait for your Explanation of Benefits (EOB).  This is what all insurance carriers provide to the insured about what portion was covered, discounts, and amounts applied to deductibles.  If the EOB states you still owe the doctor/facility money— wait for a new revised bill from the doctor/facility that shows the amount paid by insurance and the new balance due– if and only if they match– pay the bill!  This is really important!!!

I always paperclip all the paperwork together until I receive that final bill that matches.  If the revised bill does not match.  Start making phone calls, write down names, dates and times in detail and any paperwork that you re-send etc.    It can take over 6 months for insurance companies and medical facilities to get their paperwork straight and for you to get the final bill– so do not rush to pay until everything matches!!   Our local emergency room has been billing the correct insurance company for years for our family- however the doctors who work under separate contract- cannot seem to get their act together and ALWAYS bill the wrong insurance company-thus saying we have no insurance.  So every time one of us goes to our local ER it takes about 6-8 months for them to get it correct.  Usually after I send them 2 faxes and an email.  I do not know why they still have not changed it in their system?

Once you have an organized system to handle all the paperwork that comes with medical bills and understand your medical insurance- now its time to start budgeting.  First your base of your medical budget should be your deductible divided by 12 months–that is how much at a minimum should be allocated to your medical budget.  Then add dental visits, extra money if you know certain medications are not covered, or other extras (maybe you go to an out of network doctor because he is the best).   I try to move this monthly amount of money into a savings account.  Then use this money to pay medical bills only.  Thus if you never meet your deductible for the year-you now have money saved in a worse case scenario.

Also remember, it takes most medical institutions and doctors some time to actually bill you for services.  I rarely see a bill before 30 days, typically 60-90 days after services.  So you have some time to save up if you are not already doing so.  Start making deposits into a medical expense fund because you don’t want to be caught off guard when the unexpected happens.

How do you handle your medical expenses?  Do you have a separate savings account for them?  Let me know via “Mom Cents.”  Janna

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When …..it Happens?

appliances-stainless-steel-lg2So what happens when the unexpected happens?  A medical emergency, a new water heater, a new roof, a new car?  Some of these happen with no warning while others are items we can save for because we know that eventually we will need a new roof or new fridge.  So what steps should we take to mitigate these potential budget busters?

Saving in your emergency fund is one solution.  Another is having a major repair account that you fund every month-knowing that in the future you will need a new roof, new fridge, new car etc.

Additionally, we have to be able to tell a want from a need.  Yes, we may need a car, but do we need and can we afford a $40,000 car.  Maybe our budget allows us a $15,000 car.  There is nothing wrong with that as long as the vehicle gets you from point A to point B.  We may want to keep up with the Joneses, but don’t go into debt to do it.

Also we like to use those consumer credit cards when buying for instance a new fridge.  Some say, if you cannot pay for it now, then you should not have it.  I believe that if you are not disciplined with money then that should be your mantra.  If you cannot afford the new fridge, then start shopping where you can afford– damaged goods warehouses are an excellent choice— items are marked down due to scratches, dents, etc.  Typically it is just cosmetic damage but with huge discounts.  Also look at craigslist, eBay, and other selling websites.  Sometimes people suddenly have to move and cannot take large items with them– thus selling on a discount.

However, if you are financially savvy and have excellent credit, you can get really good offers for 0% on these consumers cards for 1-3 years.  To me that is free money.  Now I don’t take an offer from a consumer card and just go out and buy a fridge because they offered.  I wait for when I NEED a new fridge and have done research as to where the best deal is and if any retailer has 0% offers.   I have bought a TV, air compressor, mattress, grad school tuition, and laser hair removal — all for 0% over 1-3 years.  Of course you have to make your payments, never miss a payment, and be fully aware that if you miss any payment you will lose your 0% and automatically go to some outrageous interest rate-typically above 18%.  Again, I only recommend this to savvy financial people who can maintain the payments.

Lastly, the final things to remember about big ticket items, they are not always predictable so start putting away a little money now every month so you won’t be tempted to whip out that credit card when …..it happens!

Let me know how you save for future big ticket items via “Mom Cents.” Janna

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Kids’ Budget Busting Expenses

baby bagSo your kids are the love of your life!  However they come with their own additional expenses from birth through college.  Some of these expenses are expected and calculated such as diapers, food, schooling, and possibly college.  But what about those unexpected expenses that kids bring to the table- and are potential budget busters.

Some potential budget busters:

ALL KIDS:

#1.  Medical-For all kids no matter the age the number one budget buster is a potential medical emergency, medical condition, or ER visit.  Trust me it will happen eventually.  Both of my kids have been to the ER (several times for other reasons) for severe cuts- one from falling and cutting open a chin, the other cutting a hand when broken glass fell.  Accidents will happen.  If you have medical insurance they should cover a portion depending on what the situation is and your policy.  If you don’t have insurance- this could be the time to use the emergency fund.  Since my kids seem to enjoy the sights and sounds of ER’s, I actually budget ever year as if we will max out our insurance deductible, plus I add about $500 on top of that.  So when an ER trip happens I do not have to dip into that emergency fund.

#2.  School- Schooling comes in many forms.  This includes daycare, preschool, homeschooling, public school, private school, boarding school, and college.  I will not go into details about college as I have written other posts about that topic.  But for the other forms of schooling, even public school is not totally FREE!  Tuition for any of these situations is pretty well spelled out and can easily be put into your budget (if it does not fit into your budget-you may need to re-think your schooling options) however, there are lots of “extras” that come with any schooling.  This includes school supplies, special clothing/uniforms, school spirit items, yearbooks, school pictures, fundraising sales (cookies, books, etc.) field trips, PTA donations, or other classroom needs.  These small items add up quickly.  Again, since I know to expect these additional costs I now have them in my school budget for the year.  No surprises!

#3.  Clothing-  All kids no matter the age grow like weeds and it just seems they grow right in the middle of a season, so need new clothes.  First since kids grow so fast, they don’t need a full wardrobe.  I cannot tell you how many clothes still had tags on them when my kids were little- till I figured it out.  We are fortunate to live in an area where there actually are 4 seasons each year.  So I like to shop the clearance racks at the end of each season for the following year.  This is especially good for regular items like jeans, shirts, shoes, and shorts.  For specialty items- such as swimsuits, snow gear, etc. this does not always work (though sometimes you get lucky) as those items tend to have a short shelf life and most stores do not re-stock.  So I do pay full price for these items.  It also helps if your children are the same gender, then hand me downs are worth gold!  I actually trade with my sister in law who sends me boy clothing and I send back girl clothing—I have lots of friends who do this with family or friends whose kids ages just work out well.  Consignment stores, thrift stores, Craigslist, and discount stores are great places to buy clothes.  I am no were near being a fashion icon and my kids basically wear out a lot of their clothes–  paint, mud, holes, rips, etc.  partially because they play hard, partially because I don’t buy them a ton- so they wear out what they have till they hit that next growth spurt.

Also I keep a tub for each kid and switch out the seasons 2 times per year.  Once in the Spring and once in the Fall.  This way I keep things on hand that fit– so if we go to Hawaii during the Winter the kids have stuff to wear on vacation.  This also works if they happened to not grow that much over one season.  Then I am not starting over again with new clothes.  Don’t go overboard with clothes.  Remember even adults only wear 20-25% of their closet and how many times does your child wear that same Princess shirt or Cars shirt in the same week?

Did I miss any potential budget busters when it comes to children?  Let me know on “Mom Cents.”  Janna

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How Much Should Moms Get Paid?

stay-at-home-moms-salary-2012-shareThis idea came from a group of friends chatting at school pick up.  So how much would Moms get paid, if we were paid for everything we do?

Well they actually do annual studies on this question around Mother’s Day.  So in 2012 the average stay at home Mom would make about $112,000 per year.  They calculate that the average stay at home mom works 95 hours per week, while working moms log in an additional 58 hours-after their away job.  However that figure can change based upon where you live, if Mom also works outside the home (@ $62,000 for working moms in addition to their job salary), how much Dad chips in, etc.  I found this Mom salary calculator and entered my info— I should be making $78,469!!  I currently work 15 hours per week, plus attending graduate school, so my husband to his credit does a lot of cooking and child caring while I am at school, so those variables are in my calculation.  At least I know how much I am worth- right before Mother’s Day!  How much should you be bringing home in your Mom paycheck?

So it was fun to calculate what I do every day and assign a value to it.  As with many things in our life, some things cannot have a dollar value attached.  Such as your kids, husband, love, trust, security, and on and on.

However, an interesting side note came about when researching this topic.  This is actually maybe why this study is conducted annually- not just for our amusement.  They have found that many life insurance policies for Moms are either non existent or undervalued.  Basically Moms are not getting enough life insurance coverage to cover the cost to the family should Mom no longer be around.  1/3 of single mothers do not have any life insurance and most working moms rely on employer sponsored life insurance and do not know the value of their life insurance policy, nor know if it is enough coverage.

I have emphasized trust and estate planning in a previous blog “A Mom’s Worse Fear-Are You Prepared?”  Again, it is a difficult topic to think about one’s mortality but you have to do it for your spouse and your children.

So promise me that you will take a look at your current life insurance policy- yours and hubby and make sure that you have enough coverage should one of you pass away.  Also make sure your children and their caregiver would have enough should both of you pass away.  Here is a life insurance calculator to help you out. 

Lastly, just know that as Moms we shouldn’t measure our worth in monetary terms.  We are more than that to our children, spouses, family, and friends.  Though maybe our family does not show appreciation enough or at all.  Remember most of our values and most precious parts of our lives never have, nor never will have a monetary value.  Because Moms are priceless!

Please share your Mom paycheck or give some insight that your life insurance policy is enough to cover your family via “Mom Cents.”  Happy (early) Mother’s Day!   Janna

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How Should You Spend Your Tax Refund?

tax-refundThere are some interesting statistics regarding how Americans spend their tax return.  The average American tax refund is just over $2,800 with about 75% of  filers receiving a refund.  So, should we essentially be loaning the government $2,800 per year with no interest?

That depends on your ability to save or if you are a spender.  For savers, the tax refund can be an easy way to save as long as you have the discipline to put that refund check into your emergency fund, savings account, or long term repair account.  The only reason that this works today is because interest rates are so minimal that you are only losing about $14/year in interest.  However, should interest rates rise– it may be wise to adjust your withholding on form W-4 with your employer so Uncle Sam does not hold as much of your money.  Additionally, it is not wise to wait for your tax refund to pay off debt- though 58% of us do use our tax refund to pay down debt.

So how do you know if your withholding are correct on your W-4?  which by the way you can change anytime during the year with your employer.  Well if you file a simple tax return without self employment tax, or other incurred taxes, the IRS has a calculator to see if you are withholding too much or too little.  I am OK with having a little cushion so you do get a tax refund- but your $2800 could be better spent than sitting with Uncle Sam for a year.  So double check your withholdings.

Say you like getting that big check from your tax refund.  Do you buy a new TV, go on vacation, save it, or spend it other ways?  A lot of us spend it right away because we believe that we deserve to treat ourselves.  However, the money you are getting back has been yours all this time.  It is not actually “extra” money that Uncle Sam is doling out.

So if you spend your $2800 on a new TV, then after you have spent it you have zero left and a TV.  But if you invest that $2800 over 25years you would have almost $24,000.  Then compound that with each years tax return— you end up with an emergency fund, long term repair account, and maybe a vacation or 2.  I don’t know about you, but that sounds more rewarding than a new TV!

Are you receiving a tax refund?  Are you going to spend it or save it? How and why?  Please let me know on “Mom Cents.”  Janna

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Creating an Emergency Fund

emergency_fund

Emergency funds are the staple of recommendations from financial planners around the country.  Most stipulate that you have anywhere from 3-8months of monthly expenses saved and put away so you don’t touch it unless you need it.  So if your monthly expenses including your mortgage is $4000 that would mean you should save $12,000-$32,000.  That is a lot to put into savings for most families today- especially if you live paycheck to paycheck.  The good news is that everyone should have an emergency fund, though it may not be possible to save $32,000, it is possible to save something.

You may think it is impossible to save even $1000 but it is possible if you pay yourself first.  Remember saving is a function of discipline, not income.  There are many strategies to start an emergency fund.

  • automatic transfer from your bank account to a savings account
  • using a change jar
  • using your tax refund
  • paying your self $10, $20, etc.- whatever you can afford every month
  • treating your emergency fund as a monthly expense– like a bill that you pay each month
  • Many others—you can read about more ideas at “21 Strategies for an Emergency Fund

Whichever strategy you choose, you have to first have a budget so you know 1) monthly expenses and 2) amount of extra money to put into the fund.  Without that information you will not be able to make a good decision on what is appropriate for your savings.  Remember the emergency fund is a continuous process of saving money, so if you only have $100 in it right now–don’t worry it will keep building.

Now once you have been funding an emergency fund– the key is to decide what will constitute an emergency.  For me it is an actual emergency—like flying out of state for a family funeral; a major car accident; unforeseen medical issue; the water heater blows up, etc.   To me an emergency fund should NOT be used for car repairs, paying late fees, paying the mortgage, or other estimated yearly expenses.  The only time an emergency fund should be used for these expenses is if the main income source of the family is lost, via losing their job or severe injury.  That is why you are trying to build the fund to 3-8 months worth of expenses.  Your backup plan for when the unthinkable happens-but hopefully never will.

Do you have other tips on how you build your emergency fund?  Do you have an emergency fund?  I would love to hear at “Mom Cents.”  Janna

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Vacation Budget

vacation_965867Summer is around the corner and that usually means a vacation or two.  So do you have a budget for your vacation?  Why should I have a budget for a vacation?  After all it is a vacation!

Budgets are important for vacations as well as our every day lives.  If you set a budget you tend to stay within your means and not over indulge or overspend, both of which are easy to do on vacation especially by swiping that credit card!   So no matter where your vacation takes you this Summer here are some things to keep in mind to enjoy your vacation without having to come back to unexpected credit card bills.

If you are unsure of how much things cost where you are going there is a great FREE website at http://www.budgetyourtrip.com/.  This website lets you plan a budget for your trip and allows you to see what accommodations, flights, hotels, food, etc. cost in certain areas–especially great for foreign travel.

Most traveling involving airfare you will need at least 2 weeks before departure to purchase tickets.  All airlines raise prices the closer to departure date.  Hotels are hit and miss depending on the season, location, and events in the area.  So if you are going to a big event-plan ahead with reservations.  If you are traveling during slow season you may get better deals closer to the travel date. 

Once you understand your budget, you can now set aside cash for your daily expenses.  Put each day in an envelope and keep in the hotel safe.  Only use a credit card for emergencies.  Before you leave call your credit card company and tell them you are traveling so they don’t put a security hold on your card, especially if your are traveling to a foreign country.   Next set a gift budget and create a list of recipients.  Don’t overindulge in gifts for others.  It is the thought that counts-not the cost!  Lastly, leave room in your luggage for the extras you will bring back, or pack an empty duffle bag and use that to bring back the goodies.

Once you arrive at your destination, eat like the locals.  Typically the restaurants in the hotels are more expensive than surrounding places.  Ask locals where they would eat and try them out— the food could be amazing and cheaper! 

So with these tips and preparing a budget before you go on your next vacation- hopefully you can relax without worrying about money– because who wants to do that on vacation!

Do you have travel/vacation tips to save money?  I would love to hear via “Mom Cents.”  Janna

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Budget for Baby

eric 4 months 12So your having a baby- exciting news for all parents to be.  But what about all those new added expenses.  Are you prepared for all of them that come with the new bundle of joy?

So what expenses to expect after the baby arrives.  First is the potential medical bills that insurance does not cover.  My daughter was a normal delivery and we had no further expenses that were not already disclosed by the doctor and paid for by insurance.  However our son (picture to left) had some medical issues and was in the hospital for 3 days.  Even with insurance our family co-pay became payable in full at $3000.    So though additional medical expenses are unpredictable, just make sure you have a plan should the need arise.

Additionally, you will incur some medical bills with initial shots, pediatrician checkups, which typically is 3-4 visits within the first year- just for well baby visits.  So be up to date on what your insurance does and does not cover.

Hopefully by the time you bring baby home, you already have your necessities such as a car seat, stroller, crib, and changing table.  Even better is that these items were given to you by friends, family, or others.  Obviously the 2 you must have are a car seat and crib- the others are options.

So those are the biggie items.  Here are some of the seen/unforeseen that you need to account for before baby arrives:

  • diapers–you might as well buy stock in Pampers and Luvs you will use thousands!
  • Formula– if you do not or are unable to breastfeed this becomes a HUGE expense.  I was only able to breastfeed both my kids for about 3 months, then lost my milk- so formula was our only choice at about $100 per month!
  • Clothes- they grow like weeds– trade with friends, consignment stores, thrift stores are great places to find clothes that they barely wear once before outgrowing, especially if looking for something for a special event.
  • Toddler car seat– they out grow the baby seat about 1 year old- so get a great seat that will last till they are 7-8.  I LOVE the Britax Frontier 85.  Transitions into a booster when the child is older, thus you don’t need multiple seats as they get older!
  • Daycare/Childcare–  this MUST be in your budget if both parents will be working after maternity leave.  Visit my post about nannies and babysitter from a couple of weeks ago.
  • Toys/Books—  Personal experience- kids are most fascinated by the cheapest items.  My daughter at 2 played with a soda cup/lid/straw for almost 2 hours on a car trip.  They really need a few great toys and books.  Save the money and put it into other things- like swim lessons.
  • Lessons–  swim lessons for when they are young– then it grows to soccer, karate, dance, etc as they get older.
  • School– most pre-schools are not free.  Even public school is not totally free— fundraisers, class projects, field trips, teacher gifts etc.

A new baby brings lots of love and gifts into the home and the baby will get LOTS of stuff from family and friends during the 1st year.  Everyone loves a baby.  Just be realistic about your new family budget for decades to come.

Any tips on baby budgets, I would love to hear them via “Mom Cents.”  Janna

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Creating a Food Budget

budget-foodProbably one of your family’s biggest expenses besides your mortgage, vehicles, and insurance, is FOOD.  So how do you control your food expenditures but maintain fullness and nutrition for your family?

It can be done for reasonable costs.  During my research there are many families of 4 and moms that live on budgets of $200-$250 per month for food.  Check out Lydia for some great ideas.  However I was shocked at that number and further researched to find that the average family of 4 spends $700-$800 per month according to the stats provided by the USDA.  So my family is above  average.  We check in at about $1100 per month in food costs.  So now I ask, why and how can I save at least $400 per a month?  I don’t know if I have the will power to get to $200 per month.

I find that our family does eat out quite a bit, partially due to our work schedules and me being at graduate school at night so my husband goes for what is easy.  I also don’t have as much time to cook.  Secondly, we live in a mountain community where the closest Walmart and Costco are 40 minutes away so when we need staples and last minute items we tend to pay a higher premium at our local store.  No excuses but our reality.

So here are my goals to cut my food budget to $700 per month.  We have 2 adults and 2 kids, who are 7 and 5.  By the way they eat like horses- their nickname is “bottomless pit!”  This is not a bunch of junk food or processed foods– both my kids are high calorie, life loving kids who just burn energy constantly, even as babies and they are skinny as rails.  I wish I had that problem!

  • Plan weekly meals
  • Do not eat out for the entire month
  • Buy groceries at Walmart and other discount stores & buy in bulk
  • Avoid processed foods when possible
  • Try using coupons

It is good to set goals and I will check back and let everyone know how I do this month.  Wish me luck and hopefully the family does not feel deprived.

How does your family save on your food budget?  I would love to know your tips.  Let me know on “Mom Cents.”  Janna

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