Tales from the Wallet: Paying Down Debt vs. Saving

paying down debt vs. savingIt’s the New Year, and I heard a lot of chatter among commenters about when they should be paying down debt vs. saving. It’s a huge question, and we’ve talked about some related things (like how to pay off huge student loans and live within your means), but we haven’t talked about when to save vs. when to pay down debt in too long. Readers, what are your best thoughts on paying down debt vs. saving? When is getting out of debt a priority?

(Pictured: Comme des Garçons ‘Super Fluo’ French Wallet, $204 at Nordstrom.)

A few thoughts from me:

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Tales from the Wallet: Tips for Open Enrollment

Tips for Open Enrollment | CorporetteAs we’re coming up on the end of the year, I thought it might be interesting to talk about benefits — and specifically tips for the open enrollment period.  (One of our guest posters got into this a few years ago when she talked about using your benefits package at work to save $10K.) Interestingly, studies have found that people spend less than two minutes on benefit selection — but it really can make a difference (particularly if you’re thinking about getting pregnant or otherwise planning some health changes). (Pictured: the extremely well-reviewed Hobo’Sadie’ Wallet, $108-$118 at Nordstrom.)

To get some expert tips for navigating open enrollment, Kate talked to Shannon McLay, a financial planner and the founder and president of The Financial Gym, a company that offers classes on personal finance as well as one-on-one conversations with financial trainers. (Shannon previously gave us advice on finding a financial planner.) Here’s what she suggests: [Read more…]

Tales from the Wallet: Eldercare and Finances

eldercare-financesToday we’re bringing you our next installment of our Money Milestone series, where we’ve previously discussed paying for grad school, wedding finances, home buyingfinancially planning for a babyfinancial strategies for divorce, and saving for retirement.

Readers requested one on eldercare, finances, and aging parents — and I think that can certainly make an impact on one’s finances, so let’s have an open thread on it today. Have you had to help care for a parent, grandparent, or other loved one? What do you wish you’d known about it ahead of time in terms of finances (yours and theirs)? What were the best resources you found?  

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Tales from the Wallet: Retirement

retirement-womenLadies, how much are you saving for retirement? How large does retirement loom in your thoughts — and where does it fall in your priorities?  Welcome to our next installment of our Money Milestone series, where we’ve discussed paying for grad school, wedding finances, home buyingfinancially planning for a baby, and financial strategies for divorce.

I haven’t retired yet, obviously, but it does loom fairly large in my thoughts and priorities just because getting enough saved by the time we want to retire — and hopefully meet a personal goal of paying for college for both boys — is not going to be a simple matter.  Constant vigilance is the key, I think!  Of course, you don’t want to save so much that you can’t enjoy your life right now — after all, not to get too dark on this sunny day, but not everyone will have to worry about retirement.  We max out my husband’s 401K and my SEP-IRA every year, and we save what else we can in tax-savvy investments and with automatic investing.  (I just started using a new app called Acorns, which is interesting: you can link it to bank and credit card accounts, and it will round up every transaction and invest the difference in Vanguard funds.  Spent $8.95 at the drugstore? It’ll take that $.05 and put it in a queue to invest when you get to $5.  It’s a bit wonky right now — it mysteriously hasn’t updated in 10 days — but I think it shows a lot of promise.)

Readers, are you throwing everything you can at retirement — or are you prioritizing other goals first (like keeping investments fairly liquid for a home purchase or other big expense like a wedding, or paying down debt)?  (Incidentally, we did try to answer what retirement assets you can use for a first home purchase in a previous post.) 

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Tales from the Wallet: Surviving Divorce, Financially

financially-surviving-divorceWe haven’t done a Money Milestone series in a while, in part because I’ve been a bit trepidatious about this one. I keep reading that divorce can decimate your finances, and there are numerous things you should do in advance of, during, and after a divorce. However: I’m happily married (knock on wood). I still think this is important for us to talk about here, both for readers who may be thinking about a divorce or going through one.  So let’s do this as an open thread (anonymous as always) — ladies who’ve been divorced (or seriously investigated getting one), please speak up. What are your best tips for financially surviving a divorce? What would you do differently with your finances during the marriage, if anything — and when would you have done it? What resources can you recommend, either on the finances side or otherwise?  

In this Money Milestone series, we’ve done grad school, weddings, home buying, and planning for a baby.  In terms of money and relationships, in the past we’ve also talked about pre-nups, shared accounts, married money management, dating someone with less money, dating a fellow busy overachiever, and more.

Further reading:

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Tales from the Wallet: Financially Preparing for Baby

financially-preparing-for-babyWe’ve talked about some of the major financial milestones that can affect your life, like wedding and grad school — but we haven’t yet talked about how to financially prepare for baby. (We have talked in general terms about family planning, as well as when the “best” time to get pregnant is.) So here are the questions: how can you prepare financially for a baby?  What considerations should factor into the decision to start trying?  Mamas, what are your best tips for the women still just pondering it? 

First, a story.  I remember being pregnant with my first child and reading a story somewhere about how babies were so expensive.  Yeah yeah yeah, I thought.  Sure, there are big purchases like a stroller and a crib.  But a baby shirt is like $5! Diapers are like, what, $20 a box?  NBD.

Stopped laughing yet?  I didn’t get it — in a big way.  CHILDCARE is the huge expense for children.  It really escaped my notice that if I wanted to work for 40 hours a week, then someone would need to watch the baby for 40 hours a week.  In most states, public school doesn’t kick in until kindergarten — aka, age FIVE.  So that’s five years of childcare — per kid — that you need to figure out.  We’ve talked about the pros and cons of different childcare arrangements over at CorporetteMoms, and last week we talked generally about parental budgeting — but I thought we’d bring the conversation over to Corporette.

For my $.02, for those of you just considering a baby, I would say:

  • Lock down health insurance.  I would strongly, strongly, strongly advise you to get health insurance (a good policy!) before you consider having a baby.  Doctors’ visits add up, as do ultrasounds, visits to specialists, and the ultimate labor and delivery bill.  (I believe my copay was $1000 for each pregnancy, but for my relatively uncomplicated births I recall seeing that the hospital bill for Jack was $16K, and for Harry it was $14K…. I definitely would not have wanted to be facing either of those numbers without insurance.)
  • Know your maternity leave policy. Note that you are only eligible for FMLA leave if “you have worked for your employer for at least 12 months, and have worked for at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 miles.” We’ve also talked on here about negotiating for maternity leave at the interview stage, as well as (on CorporetteMoms) what an ideal maternity leave would look like.
  • Consider getting short-term disability.  Pregnancy may or may not be covered — and it may not be covered as a preexisting condition — so it’s best to think about this before you get pregnant.
  • Know if any vesting periods apply to you.  Stock options, pension plans, 401K matches, etc — if any of those employee perks may apply to you, take a look so you know what the situation is. If you’re only ten months away from being fully vested in a big perk, you may want to wait to start trying for another month or two.
  • Get a budgetary cushion.  You will need some cash for doctors’ copays and baby essentials, and you’ll eventually be able to roll that cushion over for childcare expenses.  In a perfect world I would suggest you have at least $1K-$5K cash, but obviously a lot of people have gotten pregnant with a lot less and been fine.
  • Talk to your doctors.  Finally, if you haven’t yet started trying to conceive, a minor note — talk to your doctor (and have your partner talk to his doctor) before you start.  My doctor suggested I get some more shots (the MMR vacine, if memory serves) that I could not have gotten while pregnant or nursing, and I also had genetic testing done. Unexpected health complications can be expensive, so being proactive here can really help.

Meanwhile, once you’re pregnant, I would suggest:

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