Jean Chatzky blog :: The Difference :: Personal finance, debt, and money advice » Family & Friends

Bow to Wow

Jean — Thu, 19 Aug 2010 15:04:26 +0000

Anybody want a dog? I can vouch for Benjamin, the 3 year old snuggle muffin I carried onto the set. Seriously, Jill and Richard do an amazing job with all of these pups. I was tempted to take one home with me but wasn’t sure Teddy (the cockapoo in residence) would approve!

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Is There a Motherhood Penalty?

Jean — Thu, 12 Aug 2010 16:07:37 +0000

Are working women penalized for having a family? Some working mothers have reported everything from lower wages to job loss — but is it because they’re parents? This morning on TODAY, I reported with two other working women on how you can let family life integrate with work life — and still be a successful and productive employee.

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The Money Mom: Budgeting for Baby

Jean — Mon, 09 Aug 2010 13:12:45 +0000

I get a lot of questions about preparing financially for a baby. We’ve all heard that if you wait until you’re financially ready to have kids, you’ll never have any, and I think that’s good advice. But it doesn’t mean you can’t do a few things to pad your savings account before the new addition comes along. Having a baby means two things, financially speaking: You need to start preparing for the future, and you’re going to have more – and different – drains on your wallet. We’re going to tackle both, starting with how to handle and prepare for new expenses. Check back next week for part two, when I’ll cover preparing for the future.

Here are my favorite tips when it comes for budgeting for baby:

Use your pregnancy to save. This is going to be a long nine months – trust me, I’ve been there. Twice. So use it to your advantage by setting a goal to put away as much money as you can in extra savings by the time you go into labor. This is especially useful if one of you would like to become a stay at home parent – I highly suggest you “practice” living on only the income of the parent who will continue to work while you’re pregnant so you can see if it’s possible. Bank the other income for that nine months, and not only will you be able to give your new arrangement a trial run, but you’ll supercharge your savings.

Run the new numbers. Adding a child to the mix can add $500 a month to the budget – sometimes less, sometimes much more. You need to figure out where that money is going to come from, and what you’re going to cut back on in order to stay afloat. Take some time before the baby comes to prepare a brand new budget. To do this, go through your old budget first line by line and ask yourself: Will I spend more or less on work clothes? Commuting? Insurance? (If you’re planning to stay home, your homeowner and auto insurer may be willing to give you a lower rate, and you’ll most certainly save on clothes and commuting costs.) Then take that new budget and add in estimated expenses related to the baby. It’s easy to research costs online, or you can ask a friend. If it helps, use this worksheet – I developed it for my last book, Money 911.

Take your tax credit. Some of these new expenses will be offset by the child tax credit – so if you’re eligible, don’t forget to claim it. Married couples who file jointly, have one child, and earn no more than $110,00 a year can claim $1,000 annually, in addition to the $3,650 exemption that you can claim for each dependant in 2010.

Save where you can. You’re going to be tempted to buy every cute little baby outfit you see, but I have one word for you: Borrow. If you have friends that were recently pregnant, many of them will happily lend you hand-me-downs for the baby when the time comes – as well as maternity clothes for you. Just keep them in good shape and give them back when you’re done if they want them, or pay it forward by passing them along to someone else. If that isn’t an option, you can also buy great clothes from used children’s clothing stores, which seem to be popping up more and more. Children outgrow their clothes so fast that it doesn’t make sense to splurge here.

And don’t forget you’re likely to receive at least a few gifts from friends and family members. In fact, I might hold off on buying anything until after your baby shower.

Stopping Overshopping — Once and For All

Jean — Mon, 02 Aug 2010 15:00:36 +0000

We all know that shopping makes us feel good. It’s a scientific fact – when we see something we want, it triggers the release of feel-good endorphins and hormones that inspire us to make a purchase – something I talk about in my book, The Difference. But I know from reading many of your e-mails that, in some cases, this kind of feel-good shopping can become a real issue. When you shop compulsively – buying things you don’t need, and racking up debt – it can take a real toll on your life.

My good friend April Lane Benson, PhD, is an expert in overshopping – and how to stop. She authored a book – To Buy or Not to Buy: Why We Overshop and How to Stop – to help compulsive shoppers curb their behavior and live a financially responsible lifestyle. Recently, April let me know about a new study she’s working on to test her treatment for compulsive buyers. The treatment has been a success for more than 100 shopaholics – and it incorporates a series of steps that help to re-shape buying behavior, and keep you from falling back into a bad habit once you’ve fixed it.

The study takes place over 12 weeks, where you’ll work with a small group (five to seven people) to treat compulsive buying behavior one night a week. It’s open to men and women, ages 18 and older, that live in the New York City area. You’ll pay a one-time fee of $150, which covers the materials and session costs, including the materials needed and the session fee.

If you’d like more information, visit April’s website. If you’re interested in participating, leave a message at 917-885-6887 and a researcher will call you back to arrange a preliminary fifteen-minute telephone screening to answer questions about the study and to make sure you meet the eligibility criteria. Actual inclusion in the study is determined after an in-person interview with a clinician that will assess eligibility more comprehensively and answer any remaining questions.

Guppie, Tadpole, Minnow, Frog: The Secret To Reaching Your Goals

Jean — Tue, 27 Jul 2010 13:42:48 +0000

The American Red Cross swimming program, at least as implemented at one Westchester County, NY daycamp, has discovered the secret of reaching your goals. Break ‘em into achievable benchmarks. My young friend Sasha, age 5, started camp as a non-swimmer, as did my own kids years ago. Back then, a half decade or so ago, kids had to cross a slew of items off their list to move from Level 1 to Level 2 and so on. It could take an entire summer to scale a single rung. No more. This year, within her level, Sasha has been challenged to hit a number of benchmarks within Level 1. She started as a guppie, moved to tadpole, then was a minnow, now she’s a frog. And, reports her mother, “she feels great!”

Of course she does.

This is why losing 10 pounds is best achieved by aiming for 2 pounds a week — then taking satisfaction in the small movements of the scale. And middle income folks who aim to save reasonable amounts save more — in total dollars — than those who set the bar too high. Set a mark you can reach, cross it off your list, and like my friend Sasha, take pride in every move you make.

Surprising New Lending Standards

Jean — Wed, 21 Jul 2010 15:21:18 +0000

Lending standards have gotten tougher in the past couple of years, and banks are starting to dig a little deeper into their customer’s finances before they give out loans. However, some expecting parents are being turned down for mortgages, and credit score requirements have gotten even stricter. This morning on the Today Show, I talked with Matt Lauer about some of the surprising things that might hold you back from getting a loan — and how to prepare yourself before you apply.

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The Money Mom: When it Comes to Funding Children’s Passions, How Much is Too Much?

Jean — Mon, 19 Jul 2010 13:00:24 +0000

It’s not new news that kids are a big investment. According to estimates from the U.S. Department of Agriculture, it’ll cost parents anywhere between $205,460 and $475,680 to support a child born in 2009 until they’re 17 – estimates that do not include college tuition (an expense I’ll be facing in the next few years). And it’s not just money you’re expending, it’s time. The financial impact, researchers note, corresponds with the time spent on kids and their various activities.

The mother of a tennis player and a horseback rider, I know all too well what a new racket or pair of riding boots will set me back, in both minutes and dollars. But after a recent conversation with a friend, who’s three children participate in a collective 13 extracurricular activities, including (but not limited to) youth hockey, lacrosse, ballet, and swimming – I feel like I might be getting off easy.

Take their nine year-old hockey-playing daughter. A true tomboy, hockey is just one of the sports she has in common with her eleven year-old brother. According to USA Hockey, parents spend between $5,000 and $10,000 a year on the equipment, team fees, and travel expenses for each of their hockey-playing children. So, if we’re generous, that’s about $15,000 between the two of them. However, that doesn’t begin to include the indirect costs – the babysitter they need to hire for their three year-old when tournaments keep them out until 11 PM on a Wednesday, or the over-priced hot dogs and fries they grab at the arena for dinner. Nor does it count the value of the minutes spent at 6 AM practices, weekend tournaments, and the ones spent in the dentist’s waiting room (which might be significant, considering the sport).

So how much is too much? “Participating in youth sports, pageants, and the like help kids build confidence and learn teamwork,” says Jeannette Pavini, Household Savings expert at Coupons.com, “but a red flag should be up if it’s affecting the family budget, lifestyle, and other family members.”

So how can you save – and teach your kids that there’s a point where the expenses need to end? Pavini had some tips and ideas to share.

Get them involved. Teaching your children the value associated with these activities can help them put it into perspective. “If you have your children take on extra chores, or explain to them what each practice or lesson is costing you, they’ll understand what it really means financially,” says Pavini. The cost-per-wear concept works well here – if you’re spending $1200 on a baseball season, but because of other games or practices, they’re only attending two or three sessions a week, you need to ask your child to pick one or the other – that way, you’re spending less, and what you’re spending on becomes more worthwhile.

Set a spending cap. Especially now, when families are tightening their belts, it’s important to set some spending ground rules to avoid any major fiscal repercussions. “If you can afford for your kids to try a bunch of sports, then go ahead and let them experiment!” says Pavini. But if your financial situation is a little more restricted, then you need to do some research on what a new sport or after-school activity will really cost once you add in all of the extras. If it’s too much, then you may need to cut an activity altogether – or see if there are any deals if you decide to only participate a few days a week.

Decide what’s a passion, and what’s a whim. Kids often want to try something new because their friends are doing it – whether it’s football or dance classes, you should always give your kids the chance to try it out. “Until you’re convinced that this is something they’ll commit to,” warns Pavini, “don’t make any big investments.” Many retailers like Play it Again Sports will rent used equipment, and often group lessons will come at a discounted rate.

The Money Mom: Still Looking for a Summer Job?

Jean — Mon, 07 Jun 2010 15:01:23 +0000

The New York Times recently reported on the “silent victims of the economy” – the 16-24 year olds that are currently competing for summer employment. Facing a record 19.6 unemployment rate, this country’s youth are certainly struggling — and if your child hasn’t yet started his or her summer job search, it’s definitely time to get going! “Consistent with last summer, I’m finding that teens have to submit 10 applications to get one job offer,” says Steve Kimball of SnagAJob.com. “The competition is high.”

But that doesn’t mean there aren’t jobs out there. I asked Kimball about where there are still opportunities if your teenager hasn’t found work yet. “There are lots of sectors still hiring,” he says. Right now, SnagAJob has postings ranging from positions at 11 Six Flags locations to shelf-stocking and cashier work at national craft stores like Michael’s and JoAnn Fabrics. Keep in mind, however, that some of these positions have age regulations. “National companies likely won’t hire you until you’re 16,” says Kimball.

If you’re trying to think out of the box, Kimball suggests approaching companies with an idea of your own. “Go to a non-profit organization to see if they need help stocking shelves or organizing donations for a nominal stipend,” he says, “and prove that you’re willing to help them get work done.” Also, if your child is particularly handy, you could pay them to do the work around the house you’d normally hire someone else for, like repainting the porch or mowing the lawn.

While some positions require a high school diploma, many do not. “Small businesses are always looking for teens and young adults,” says Kimball, for part-time help with organizing their office, helping with social media sites, and answering phones. According to SnagAJob, 61% of small business owners say that they’re hiring. “This is where you want to use your network of family and friends as leverage,” says Kimball. Now is not the time to feel shy about asking the friend who asked you for connections to return the favor. Or about putting your own teens to work.

Tom Gegax, author of The Big Book of Small Business, thinks hiring your own kids is a win-win. Instead of putting the money you’d pay them in some other teen’s pocket, you keep it in the family. “If your business is providing your family’s livelihood, your children might be some of your most honest and hardworking employees you can hire,” says Gegax. “Hiring your own children gets a bad rap sometimes, but you’re hiring them already knowing their attitudes and what they’re good at.”

But what if your child’s interests stray from your business’ focus? Perhaps you and another small-business owning friend could swap. Start with ground rules. You’ll need to set the same expectations of your own child or a friend’s as you would of any of your other employees. And paying them the same wage (I don’t think collusion laws apply in these circumstances) would eliminate any familial tensions. Then let them put the experience on their resumes and use it to get a job on their own after college, a time when Gegax doesn’t approve of hiring your own kids. “They need to understand job searching and have experience with other employers. They need to see how tough it is.”

Finding Cash In Your Closet

Jean — Tue, 01 Jun 2010 13:40:13 +0000

Who doesn’t want some extra cash? Whether you inherited your grandmother’s jewelry or no longer have a use for your designer suits, you can make money by selling things in your own closet. This morning on TODAY, I shared the stories of two women who were able to sell some of their clothes and jewelry — and also provided some tips on how to make sure you get the most out of what you have to offer. Watch the clip below!

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Travel Tips and Credit Protection on Money 911

Jean — Wed, 26 May 2010 15:36:59 +0000

How can you protect yourself and your credit when your identity has been stolen? Can you avoid fees on your credit card when traveling internationally? Will marriage impact my credit score? Watch the video below from this morning’s Money 911 for the answers — and click here to submit questions of your own!

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