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Monthly Archives: September 2008

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What To Do Before You Get Pregnant

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Since we’ve blogged about prenups and weddings, we wanted to briefly discuss the next step in the life cycle: having children. Financially speaking, here are a few things you might consider before you get pregnant.

1. Check Your Insurance Benefits: If you have medical insurance you might determine if there are provisions in your policy that pertain to your impending parenthood. For example, you might be due a pregnancy benefit or you might be eligible to collect disability payments. In any event, be sure the policy will cover you while you’re expecting. Some insurers require that you buy the policy three months before you become pregnant*.

2. Review Your Tax Options: If memory serves me correctly, you may be eligible for at least two tax credits. The first credit reimburses you for monies you spent on child care. The amount of this credit depends on your income and how much cash you dropped on day care, check the IRS’s website for more info. Second, you might be eligible for $1,000 credit just for having children, but don’t take it from me, you should also ask the IRS.

3. Save Money: Wherever you decide to have your child, there will be a bill. Even if you are insured, your policy probably won’t cover 100% of the birthing costs. A friend of ours recently had twins, which necessitated that his wife spend 4 days in the hospital. The total bill was $20,000. He was fortunate because his policy covered everything, but I’d bet yours does not. – You might consider saving up so you won’t be unexpectedly by a big bill.

Best,

James

*Jane Bryant Quinn, Making the Most Of Your Money

How Much Debt is Too Much?

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Hi All,

With the rotten news coming out of Washington and Wall Street about the national debt, you might be wondering about how you can determine whether or not your debt is at appropriate levels.

Well, the quick rule of thumb is, don’t have your debt payments amount to more than 20% of your income, excluding housing. So, for example if you take home $3,000 per month then your credit cards and student loans shouldn’t amount to more than 20%, or $600 dollars per month.

Otherwise, here are some warning signs that indicate you might have too much debt.

1) You’re Juggling Payments. For example if you are stalling one company to pay another one, that’s probably a good indication that your obligations are getting away from you.

2) You Can’t Even Save Small Amounts. If you’re having a hard time socking away $25 or $50 dollar amounts, and you can’t seem to build up an emergency fund, then you might want to examine your debt situation.

3) Creditors Start To Say No. If you’ve been denied a loan or have been denied a product that requires a credit check, then its a pretty good indication that you may have too much debt.

So, if any these seem to apply to your situation, you might want some help on dumping your financial obligations (Clicky to learn how).

Thanks,

James

5 Steps for Surviving Tough Economic Times

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Hello All,

Unless you’ve been living under a rock, you’re probably aware that the economy is being severely pressured on a number of fronts. A lot of the chatter on the web had focused on what individuals can do to keep their own financial house in order when the big banks are loosing their shirts.

Since the press is calling our current economic times the worst crisis since the great depression, I though I’d get some perspective on the issue. So I got on the phone with some senior citizens who have been investing the depression in the 1930s. They had these points to say:

1) Don’t Overspend: When times are rough, you don’t want to waste money. This means you should consider eating at home, using up your stuff in the back of the cupboard, and bringing your lunch to work. Also, avoid making major purchases on credit – for example you probably shouldn’t consider taking a large vacation and putting it on your credit card.

2) Hold Onto Your Job: When recessions come knocking, almost all forms of economic activity have a pull back, this means that there will be fewer jobs and larger layoffs. If you have a job, do whats required to remain employed.

3) Have Cash: Don’t live paycheck to paycheck. Do build up an emergency fund. Also, the general sense was that these economic times were troubling, but that many banks were secure. If you have cash, you might consider putting it in a good quality local bank. Lots of local banks have limited exposure to subprime mortgages and are profitable.

4) Wait Until Prices Are Low To Invest: How do you know when prices are low? Well there will be lots of headlines about huge double digit declines in the asset class you’re looking at. The trick will then be to locate good quality conservative companies to invest in. The investors I spoke with liked natural resource stocks like oil, metal and coal.

5) Enjoy Every Sandwich: During the great depression people were really, really poor. The situation was so desperate that 20% of the country was out of work, in some states nearly 40% of people were unemployed. It was so bad that people would kill themselves out of desperation. Some people lost their homes, farms, businesses – everything.

Unlike the 1930s, there are some government protections that blunt the impact of economic downturns. For example, the FDIC now ensures bank deposits and unemployment assistance is available in many states. While the role of the federal government can be controversial, on the whole the public is better protected now than it was in the 1930s.

On a more personal level, you might consider taking appreciation for what you have. For example, if you might consider going through some of your old music or looking for clothes in your closet that once brought you joy. The main point is to enjoy and appreciate what you have today.

Best,

James

BB&T President Allison Criticizes the Bailout

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Hi All,

You’ve probably gathered by now that both of the authors of this blog are against the proposed Paulson/Bernake wall street “bailout”. Well, we are not alone. Perhaps the prominent critic of the plan from the banking community is John A. Allison, the chairman of Branch Banking and Trust- BB&T. He’s recently taken the extraordinary step of going public with his views in an open letter to congress. His letter is posted here because it outlines several of the most compelling arguments against the bailout from a free market perspective.

There’s been a good amount of media coverage of his statements. (1,2). Below is a screenshot of the first page to get you in the mood. You can see the rest of it here.

Married Couples: Be Good To Each Other

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As a bit of a break from the news about the wranglings over the bailout, we wanted to play a quick clip for you. This video is from part of sermon by E. Dewey Smith, Jr. a pastor from Decator Georgia. Its a part of a larger talk, but the clip highlights the need for couples to have a reasonable give and take, as well as to be supportive of each others accomplishments. At 4.30 seconds, its a fun listen.

[REMOVED]

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