Answering A Reader: Our Own Child Care

In a comment to my last post, reader Dog Ate My Finances (love the name, by the way), asked why my wife doesn’t start her own child care to make up for the difference in pay that we’ll be taking once she leaves her job to have our baby.
There are some financial reasons and some non-financial reasons for not doing so. I’ll start with the financial reasons:

  • The local economy in Michigan is not that good. Many parents are pulling their kids out of day care as they are losing their jobs, so the market is very tight. As such, there would be no guarantee that it would even take off.
  • The costs involved are not something we’re interested in. To open a home day care would require significant costs for certification, licensing, as well as changes I’m sure that we’d have to make around the house. Not to mention insurance that would have to be taken out. While I wouldn’t mind someday taking the venture into a start-up, this isn’t a risk that we really want to take.

This leads me to the non-financial reasons of why this idea wouldn’t fly around here. The biggest is that my wife simply has no desire to continue in that role in a long term fashion. Right now, her and I are both excited for her to have the opportunity to focus on our baby.
Her background in college was in Child Development. She had hoped to do something to the level where she could work within a health system or some other parallel position, and work with children who needed special assistance or had developmental needs. She didn’t have her teaching certificate, although this is something that she briefly considered, so classroom instruction was out of the question.
But to get the type of jobs that I described, at least here in Michigan, she would have needed a Masters Degree. She didn’t want to simply accumulate loans, so before she made that jump, she wanted to work for awhile, and see if she even was interested in pursuing that. Which would give her time to pay down some of the student loan debt she accumulated in her undergraduate studies. The job that was most available was working in child care facilities. These decisions were made solely by her as her and i were just dating at the time.
While she enjoys the interactions with children and is great at what she does, the bottom line is that she doesn’t have the passion to commit to it for a career. Now, before anybody says that taking care of our children is parallel, let me just say that there’s a huge difference in taking care of our children versus taking care of somebody else’s. She has a passion and a fire for one and not the other. I’ll let you guess which one!
And, honestly, once we started talking about when we wanted to start our family, we came to the conclusion that the timing wouldn’t make it so that going back for her Master’s was a good idea, at least not yet. Why? Because either way, we wanted my wife to take some time to focus on our family. This was something we discussed before we were even engaged, so we’ve been on the same page with this for a long time. Going back to school now would simply have added debt that we knew we wouldn’t have time to pay off before we started our family.
So, while there are financial reasons involved, the non-financial aspects hopefully fill in the rest of the picture.

Wasting Money On Poorly Timed Traffic Lights

The first electric traffic light was installed around 1920 in response to numerous accidents as the automobile picked up in popularity. Since then, there have been hundreds of thousands of traffic lights installed as well as a lot more intricate technology.
In the 1990’s, the county where I live began implementing a new type of traffic control system. At most major intersections, they began installing cameras or pavement sensors to detect traffic. The purpose is to adjust the timing on traffic lights based on traffic at the intersections. It is designed to adjust traffic during high volume times, as well as to avoid people sitting at intersections where there is no traffic, yet wasting gas because of a red light.
For the most part, the statistics show that these systems have helped relieve congestion versus a standard traffic light system that changes on fixed intervals. I can see the benefit at times, though there have been some frustrating areas.
One thing that drives me nuts is how the system deals with gaps in traffic. The system is designed to sense a gap in traffic, and change the light if there is traffic waiting to go the other way. In theory this makes sense, but I think it can be improved. Right now, the system detects gaps via cameras placed near the intersection, and it can sense the number of cars at or near. That’s great most of the time, but I wish that they would take it one step further and place sensors further away from the lights. This way, the system would know what’s coming.
I’ll illustrate why I think this could be an improvement. There have been times where a gap is created because of someone driving a little slow, or someone who pulls out of a side street or business, and hasn’t gotten up to full speed. The sensors see only the break and change the light, but as a result, a whole line of traffic gets stopped. I think that if the system had knowledge of what’s further back, it may be able to allow more traffic through at a time. The system could anticipate as well as react.
The other thing I wish they would do is consider reducing the number of lights in operation during non-rush hour times. Obviously, lights at major intersections need to run all the time, but it’s the other lights that drive me nuts. The lights around subdivisions or shopping centers are the two most common types.
I can understand having many of these lights operate during high traffic times, but how many times have you been stopped at a light that could easily be a blinking yellow for 16 hours per day? I know some might say I’m being impatient, but I see that it’s a waste of money if people have to spend time idling and burning gas unnecessarily.
Hopefully the technology for these ’smart’ traffic light system improves and saves time and money for drivers.

The Most Economical Video Game Purchase I’ve Ever Made

I’ve always been a pretty big fan of video games, but not obsessive about it. I am not into the standard shoot-em-up games nor do I get big into sports games anymore. My favorite game is Mario Kart for my Nintendo Game Cube and I also like strategy games.
This leads me to the most economical video game purchase I’ve ever made.
Before I tell you what it is, let me tell you something that I’ve enjoyed a lot over the past few years. I’ve always enjoyed playing football or baseball games, but not so much the ‘live action’ games. The part I really enjoy is what’s called ‘Franchise‘ mode. You basically take a team and play it out over time.
Video game systems of yesteryear couldn’t accommodate a franchise mode for the simple fact that there was either no memory or very limited memory. Therefore, you could store a season of stats at time if you were lucky. Nowadays, with hard drives and/or flash memory built in, you can store saved information to your heart’s content. So, once this started happening, I started getting into the football games, but was more interested in playing general manager. I enjoyed signing and cutting players, running the draft, and other tasks that a general manager performs.
The game that’s given me the most enjoyment in this regard is ESPN NFL 2K5.
It was a cheap purchase. I had purchased earlier installments of the game and had enjoyed them. However, NFL 2K5 got great reviews, and was also one of the cheapest games when it was originally reduced for the type of game that you got. What happened is that the NFL stopped licensing their logo and player names to anybody but EA Sports (i.e. Madden) beginning in 2006. So, since ESPN (who made the 2K franchise) knew that 2005 would be the last year, they released the game for $19.99. The normal price for earlier editions and for Madden was around $50. So, right away it was a hot seller.
I bought my copy about a year after it came out. I got it used at one of the game stores at the mall. What did I pay for it?
$1.99
That’s right. I got it for 10% of the original value.
And it’s been the most economical video game purchase because I’ve played the heck out of it. Every few months I get the itch to play my hand at general manager. I think a lot of that has to do with the fact that the Detroit Lions are our local team, and Matt Millen (before finally getting fired) is regarded as possibly the worst general manager in professional sporting history. When he’d make another bonehead move, I always like saying ‘Anybody could do better than that’ and I play it.
(FYI, I’ve taken the Lions to the Super Bowl within three years on a couple of occasions)
So, while I’ve had games that I’ve played and played and played over the years, there has been no other game that I’ve gotten the value and ‘bang for the buck’ so to speak.

2009 Financial Goals

2009 is upon us and it is that time where we start setting out goals. This is the first time I’ve ever publicly stated goals for the entire year, so I may skip around a bit. I’ll try, though to keep it organized.
Balance Sheet Goals:

  • Property – My goals here assume that we pay our normal mortgage payment, which is in our control. The thing that is out of our control is that I’m assuming that our property value remains relatively stable. Hopefully the prices in our neighborhood don’t continue double digit percentage falls this year!
  • Autos – I am assuming that the overall value of our cars goes up, but that we take on a loan. This is assuming that we sell my car, and purchase a used automobile to accommodate the baby. Neither of our cars are very ‘family friendly’ I’m looking at getting something modest and taking on a very small loan, but it’d be nice to not have to take one at all!
  • Mutual Funds – With everything going on this year, we probably will not invest in non-retirement mutual funds. We do hold some, and I’m hoping for a 10% increase in the value, which would mean that the market recovers this year. Let’s keep our fingers crossed.
  • Long Term Savings – We hold cash reserves for emergency fund as well as bigger expenses we expect to pay for in the next several years. I’m hoping that this remains stable (i.e. no big emergencies)
  • Retirement – I’m hoping that the value of our retirement account goes up about 30% this year. That would follow the expected 10% market recovery this year, as well as several other things. First, I’m assuming that I will become fully vested in my company match 401(k), which should happen due to the company being sold last year. Second, I’m assuming that I can contribute 8-10% of my salary and realize the full 6% company match.

If we manage all this and things work out favorably in the market, this would increase our net worth by about 20% this year. This is what I was averaging in years past until the free fall in stock and real estate in 2007 and 2008. It’d be nice to get on the ‘right path’ again.
Personal Goals:

  • Continue my quest to level out our monthly expenses
  • Make a successful adjustment from a two-income household to a one-income household as my wife will not be working following the birth of our first child
  • Don’t freak out when the expenses hit for the baby! I took my first walk through of Babies R Us this week, which was my wife’s way of easing me into it!
  • Maximize our rewards for normal spending. We have a Citi Dividends card which pays us 2% for grocery and gas purchases, and 1% for everything else. We also signed up yesterday for our bank reward program, which gives points for using our debit card. I’d like to make sure we’re maximizing our rewards as the year goes on.
  • Reduce student loan payments by 30-40%. If we can hit this number, then the higher end loan that my wife has will be mostly paid off. This would be awesome!
  • Refinance the mortgage – We are currently paying 5.875% for a 30-year mortgage. This is a good rate, but I think that rates will be below 5% before long to where a re-finance might make sense. It’d be nice to reduce our interest obligation.
  • Begin saving for major house expenses – Our house is about 10 years old. I know that we’re getting a few years away from routine tasks that cost a good deal of money. I expect a new hot water system will be needed within 3 years, a new roof within 5 years, new windows within 7, a new furnace within 10, a new deck and driveway within 12 years. I’d like to begin saving for those now rather than figure out how to pay for them as they come up.

All in all, it will be a very interesting year with a lot of changes. I will look forward to updating throughout the year as well as looking back at the end of the year to see how we did.