Cutting A Paycheck In Half

In advance of my wife having our baby in May, we are starting to prepare financially for the new baby.
One of the things we are preparing for is for my wife leaving the workforce. She is going to be a stay-at-home mom. We had always agreed that when we started our family, that this would be the way. The main reason from a financial perspective is that she doesn’t make a lot in her field. She works in child care, and that isn’t a high paying profession. We did the math, and for her to work, and us send our child to day care, the net income would be less than $7,000 per year. We decided that wouldn’t be worth it.
Plus, since she’s already in child care, I have full confidence that at least one of us will know what we’re doing once the baby comes home. It still blows my mind that they’ll just let us take him/her with us afterwards!
Anyways, since we’re about two months out from when we expect her to stop working, we are phasing out her income. No, we’re not giving it back to the company, but we’re applying it right to savings rather than even let it hit our checking account. By the time that the last few checks come through, hopefully we’ll have ‘weaned ‘ ourselves of her paycheck, and the transition to a one-income family will be relatively seamless.
Wish us luck!

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Leveling Out Our Monthly Expenses

There are certain recurring expenses that I keep track of and fund out of a ‘virtual’ sub-account in our checking account. The way that this happened is that these are the types of expenses that I used to pay from my checking account, where most of the other expenses would be drawn from my savings account. Now, we only use a checking account and then a long term savings. So it’s sort of a checking and ‘virtual’ checking account if you will.

But, the type of expenses I track with this are, for example:

  • Netflix Subscription
  • Utility Bills
  • Car Insurance Premiums
  • License Tab Renewals
  • Auto Club Membership Fees
  • Charitable Donations

I am usually pretty on the mark when it comes to projecting the expenses that fall into this category, but what I’m trying to do now is to level out the expenses each month. See, many of the expenses above are monthly and around the same cost, but some are not. This is because of seasonal changes (higher electric bills in the summer, higher gas bills in the winter) or billing cycles for bills that aren’t monthly (the water bill every two months, the garbage bill every three).

So, what would happen is that some months I would set aside $800 where other months it might be higher. What I’m trying to do is estimate the costs over the course of a year, and even them out, so that I’m setting aside a consistent amount of money every month. Many times the electric company or gas company will do this for you, so in a sense, this isn’t a new concept.

I’m just starting to get into leveling the expenses out. I figure it will take a few months to adjust to where they’re smoothed out, and I won’t really be able to judge myself until the first year is done, but I’m confident that I will estimate correctly. Why? Because I’ve been tracking all of the actual costs of these categories for about 18 months, and I’ve added a cushion to where I should definitely not come up short.

Wish me luck!

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When Is A Kid’s Birthday Party Too Much?

Yesterday, there was a birthday party for a kid who lives in the first house by the neighborhood entrance. It was impossible not to notice, and it made me wonder, when is a kid’s party too much?
I noticed a lot of unloading and setup being done on Friday, when I pulled into the neighborhood after work. The location of the house made it a lot more noticeable. The next morning, a giant tent was being erected which covered most of the driveway. I’d estimate the dimensions at 40×20. Tables were being unloaded which covered the driveway.
The next day (Sunday) was obviously party day. There were table linens going on the tables, the sort which you would normally find at a wedding. There were giant inflatable toys being set up in the backyard, the kind which kids can actually go into and jump around. There was a valet service which was preparing to park cars for guests.
Later on, the party was in full swing. I swear, we weren’t spying, it was just impossible not to pass this house when pulling in or out of the neighborhood. Cars were lined up on both sides of the street, making for a dangerous game of chicken if one car was leaving and another was entering. The guests had arrived, and the gift tables (yes, plural) had piles of gifts so high you couldn’t actually see the guests. The caterers were off to one side getting the food ready.
I’ve seen the kids in this house, and I don’t think they’re old. My wife even speculated that this could be a first birthday party. I hope that wasn’t the case. At least, if there was a party that big, I’d hope that it would be for a kid that would at least be able to remember it. Even so, I have never seen such an event for a child of ANY age.
Don’t get me wrong. I’m all for celebrating birthdays. I had parties at my house growing up until I was a teenager. Family and friends were invited and it was a good time. But, the tables were set up in the basement and on the backyard patio. We played on the lawn with whatever toys were brought over or found in the garage. My mom did all the cooking with the possible exception of a cake being bought from a bakery. People parked their own cars.
And the thing about it, is that I had a great time. I didn’t need any more than that. I wonder if the parents are doing it for the kid or if it’s for themselves.
I also think this could be teaching the kid some bad personal finance lessons, which could hurt later in life. For example:

  • He/she might expect such a party every year. Or better. What if the parents can’t afford it one year? What about when the kid gets too old to get two tables worth of gifts? I think this could set the stage for feelings of entitlement, which is never a good lesson to teach children.
  • He/she might learn the lesson that spending money equals happiness. The parents were trying to create a happy time, but if you have to go overboard to do so, that could become the standard. This could create that mindset, and if it’s plugged in at a young age, that could lead to trouble.
  • It can create a pattern of jealousy. Assuming that friends of the birthday celebrant were invited, there could be feelings of jealousy, and that the things that go along with that generally only get stronger as one grows up.

I’m not trying to be a party pooper. I think kids birthday parties are great, and look forward to throwing them for my kids should we be blessed to have kids in the future. I really do think, though, that there are better ways to celebrate that might not teach your kids the wrong things about celebrating at an early age:

  • Backyard or basement parties
  • Pool parties
  • Pizza parties
  • Sporting event parties

These are fun, and plus I think kids enjoy them!

So, when is a kid’s birthday party too much?

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