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Investing, Life Events

Confessions of a House Flipper: Our Biggest Wins and Epic Disasters

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

House Flipping art
Illustrations by Kelsey Wroten

House flipping has never been hotter.

There was a 20% surge in the number of homes flipped in the U.S. in the first quarter of 2016, according to RealtyTrac. Profits on flips soared to a gross average of $58,250, the highest level in more than a decade.

To qualify as a true flip, a buyer must sell a home within 12 months of purchasing it. If the property needs heavy repairs or upgrades before going back on the market, house flipping can easily become a full-time job. And what those RealtyTrac numbers don’t show is the net profit — how much flippers actually earn after pouring thousands of dollars and hours of labor into each home. Every day on a new project can present challenges that chip away at profit margins. 

“First-time flippers should be prepared [to be] over-budget and behind schedule,” says Matt Forcum, a realtor and auctioneer with Century 21 Realty Concepts. “Sometimes, no matter how good an inspection is, problems like property line disputes, environmental hazards or other undisclosed or undiscovered issues can result in a problem that derails the whole process.”

We asked a battle-worn group of real estate investors to open up about the highs and lows of house flipping. Here are their stories:

Mark Ferguson
Realtor and founder of Invest Four More

Mark

How long have you been flipping houses?

I started in 2001 and have flipped more than 100 homes.

What was your best flipping experience?

I bought a country property in Platteville, Colo. from an online auction site. The house was about 10 years old with 2 acres and a 3-car garage. It had a very low starting list price, and I knew the website would eventually list a ‘buy it now’ price, where they post a price and any buyer can accept that price and end the auction right then. I checked the site every couple hours for days to see if that price had been listed, and once it was — for about $215,000 — I accepted as soon as I possibly could. After paying the buyers’ premium and other costs, the sale price was $228,000, but I knew the home was worth over $300,000 and needed minimal work. We spent $15,000 to replace granite in the kitchen, paint and landscape. Four months after we bought the house we sold it for $349,900. We made about $100,000 after the carrying costs, financing costs, buying and selling costs.

Have you ever been burned by a flip?

The worst flip happened this year. I bought an old house from the 1800s that needed a lot of work, and I had a project manager/contractor working for me who said it wouldn’t be too big of a job to add an addition. He ended up tearing off the back of the home, gutting the interior, adding stairs that were not up to code … and then quit. After spending $25,000 on his work, the house was worth less than I bought it for.

I had 10 flips going on at the same time and decided to dump this house instead of spending another $100,000 to fix it. Luckily, our market improved greatly and I was able to sell it for $15,000 more than I bought it for, but I took a $20,000 loss after carrying, financing and selling costs. Obviously this contractor never worked for me again.

What are some of the hidden costs of flipping that no one thinks about?

  1. Buying costs, including closing fees, recording fees, title insurance in some cases, and inspections
  2. Financing costs, like origination fees, appraisals and interest every month
  3. Carrying costs, like yard maintenance, utilities, insurance, property taxes and HOA fees
  4. Selling costs (if that’s your goal), like agent commissions, title insurance, closing fees, buyers’ closing costs, inspection repairs, low appraisals and appraisal repairs
  5. Repairs, since they are almost always more than you think. I always recommend assuming the final repair bills will be 20% more than you think.

What’s the biggest misconception people have about flipping?

It will take longer than you think. Most people feel they can get in and make changes in a couple months, but it takes time to find a contractor, get the work done, go back and correct things that were not done right the first time, clean the home, and then, if you’re flipping it, get it listed, get a contract and close on the home.

What areas of the home have proved to be the biggest money sucks?

  1. The foundation. This can be a huge cost if it needs to be repaired or redone, generally between $5,000 and $20,000. (Note: This cost and all the following ones are based on a home of approximately 1,000 to 2,000 square feet — costs would increase for larger homes.)
  2. Electrical. Re-wiring a house can be expensive (between $2,500 and $10,000), but you also have to account for tearing up the walls to get to the wiring.
  3. Plumbing. Galvanized plumbing — or pipes that have slowly deteriorated to contaminate the water — is common in old homes and needs to be replaced. This can cost thousands of dollars and the house may also need to be torn up to get to it.
  4. Siding/paint. Many old houses have lead-based paint and possibly asbestos siding. If you disturb the lead-based paint or the asbestos, the work needs to be done by a certified company and it can run you between $5,000 and $15,000.
  5. Plaster/drywall repair. Older houses were built with plaster, which deteriorates over time. There are very few contractors who work with plaster, and it’s best to use sheetrock to replace it. This can get very expensive as well, generally between $2,500 and $15,000.

Mindy Jensen
Community Manager for BiggerPockets.com
Licensed real estate agent in Colorado.

Mindy

How long have you been flipping houses?

I purchased my first home in 1998 and it was ugly, so I upgraded the flooring, painted every inch of the walls and ceilings, and then lived there until I got married four years later. I sold it for 50% more than I paid for it, and was hooked on flipping. Together with my husband, I have flipped eight houses.

What was your best flipping experience?

My current home started out as a flip, but we decided to live here forever after falling in love with the neighborhood. We bought it for $176,000 as a 2-bedroom, 1-bath home with ugly everything. The market was just starting to heat up — it’s red-hot in almost the entire state of Colorado, but the Denver area just overtook San Francisco as the hottest real estate market in the nation — and this was a Fannie Mae HomePath foreclosure. Fannie Mae wants to put owner-occupants into homes as much as possible, so they accepted our offer over an investor’s offer because we were going to live here. We put about $75,000 into the property, adding a second story and remodeling the first floor to create a total of four bedrooms and three bathrooms, new landscaping, siding, windows, doors, wood floors, natural stone tile and upgraded electrical service. 

Have you ever been burned by a flip?

In 2006 we failed to accurately gauge the market — we had made so much money from past flips that we didn’t pay much attention to the housing market during our rehab. We continued to make improvements to the home, anticipating that the $100,000 we put into it would grow exponentially. We ended up selling it for $200,000 less than we would have had the market not dropped in 2008-2012. We still made a profit, but it was much leaner than we had expected.

How have you saved money on your flips? 

We do much of the work ourselves, which allows us to save a lot of money. We even live in the homes during the flips to avoid capital gains taxes. We’re finished with the home we live in now and could easily sell it today for $400,000.

In your experience, what are some of the biggest mistakes people make when buying fixer uppers?

  1. Paying too much for the property in the first place. You have to analyze each deal. If the numbers work at $X, then $X is your highest offer. If you pay anything more than that, your numbers get thrown out of whack.
  2. Not accurately budgeting expenses. If you’re remodeling a kitchen, it’s tempting to get a quote for cabinets, countertops, flooring and appliances — but what about lighting, plumbing and electricity? A ton of little things add up quickly.
  3. Pricing the home too high. If you’re planning to flip, you may be tempted to price the home as high as you can to get the most money out of it. However, by pricing it at or even slightly below retail, you will get a faster sale — and can even generate a bidding war to end up with the higher sales price. Pricing too high can have the opposite effect. The home will sit on the market and become stale. You get discouraged and drop the price, but then buyers wonder what’s wrong with the home that it sat for so long. Many times you’ll get less than you would have had you just listed realistically in the first place.

In your experience, what is the No. 1 thing people should keep in mind if they’re looking at buying a fixer-upper for the first time?

Even if you aren’t doing any of the work yourself, you will still have to manage the people who are doing the work. Stay on top of them, because time is money. You need to treat it like a business.

What are the first places you inspect when you’re sizing up a new home? 

  1. The bathroom: Check for soft spots near the corners of the tub, which is a sure sign that someone didn’t tuck the shower curtain into the tub and water spilled out. The water damage can rot the subfloor. Yes, the repair could be small (subfloor rot can be just a small corner that requires very little repair, while damage to the entire floor would require removal of the tub and an entire replacement), but you still need to budget for it. The same goes for around the toilet.
  2. The kitchen: Is the current layout the best option, or does it need to be reconfigured for better use? Reconfiguring can involve moving gas/electric/water lines, which is expensive.
  3. In the bedrooms: Determine the state of the flooring — does it need to be replaced?
  4. Cracks can be cosmetic or a very big deal. Horizontal cracks — running from wall-to-wall rather than floor-to-ceiling — are far more concerning than the vertical ones. That’s not to say that a vertical crack is nothing, but the horizontal cracks should give you pause since they can often be an indication of a more serious foundation issue, and they’ll require further inspection.
  5. Aluminum wiring requires complete replacement. Get a quote from a licensed electrician. If the home doesn’t have 200-amp service — which means you can run your large appliances without having to worry about blowing a circuit — I’d recommend upgrading it, which will require a licensed electrician, as well.
  6. Cast iron pipes rot from the inside out, so one day they may look fine on the outside, and the next your basement is filled with raw sewage. Get pipes scoped by a licensed plumber, which can range from about $150 to $250 and gives you an idea of the overall state of your pipes. To compare, replacing an entire broken sewer line could start at $7,000.
  7. Mold. Perhaps the tiny bit of mold that you see is the extent of it, but perhaps it’s just the tip of the iceberg and the backside of the drywall is completely covered. Be wary when you see mold, as it can eat up quite a bit of your budget if you aren’t prepared for it.

Corey J. DeHeer
Realtor, Property Manager and House Flipper

Corey

How long have you been flipping houses?

I’ve been involved in real estate for 10 years, and I’ve been flipping for four years.

What was your best flipping experience?

I bought a five-level, split house and started renovating in late 2015. I bought it for $79,5000 and sold it for $172,000, and only put about $35,000 into the renovations. 

Have you ever been burned by a flip?

I haven’t had a flip that I lost money on, but I have had a couple that didn’t return what was budgeted. The lesson learned was it’s better to be aggressive on getting the home sold, as the holding costs — things like property taxes, interest on the mortgage, utilities, insurance and sometimes HOA fees — really will eat into your profits.

In your experience, what are some of the biggest mistakes people make when buying fixer uppers?

Sometimes there aren’t a lot of deals our there, and I’ve seen people buy a house that didn’t meet their criteria. Most of the time, it’s better to wait until the right deal comes along. There’s always another house out there.

What is the No. 1 thing first-time flippers should do to prepare?

Create a detailed budget for expenses, holding costs and time. Try to stick to your numbers and also, if you’re flipping, after the flip go through and evaluate how you did on the money and time aspects.

What are the areas you pay closest attention to on a flip?

  1. Location. No matter what you do to the house, you can’t fix location.
  2. I check the electrical, roof and HVAC systems to make sure they are all updated and in good condition.
  3. A deal breaker can be structural issues. For example: Does the floor have a slope in it? If so, get a structural engineer’s opinion.
  4. The other thing I look at is the layout and size of the kitchen, master bedroom and bathroom. It’s easy to renovate these areas, but hard and costly to try to make them larger. This is where most buyers make their decision on whether it’s worth the purchase.

If you’re still in the beginning phases of looking for a new place, check out some of the other resources we have regarding home buying, like why you shouldn’t buy a house before you’re 30, when it’s best to apply for a mortgage without your spouse, and what to know before getting pre-approved for a mortgage.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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These Books Will Teach You Everything You Need to Know About Money

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

We’d all love to have our own personal financial expert at our beck and call, but not everyone can afford to keep a Certified Financial Planner on the payroll. Books, on the other hand, can be an excellent — and affordable — alternative if you’re looking for ways to improve your wealth, find success, and learn how to invest. Lucky for you, we’ve reached out to the experts themselves to find out which personal finance books they always keep handy.

The Expert: Kevin Smith, founding partner of wealth advisory group Smith, Mayor & Liddle

His favorite books: The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and The Richest Man in Babylon by George S. Clason

babylon millionairenextdoor

Why he recommends them:

“Understanding investments and having a quality portfolio are of little benefit to investors if it’s not accompanied by wise investment practices and disciplined financial habits. Both of these recommended books emphasize the latter, and avoid the technical descriptions and potentially confusing explanations that most financial books entail.”

The Richest Man in Babylon covers the perks of thriftiness, financial planning and personal wealth, offering timeless principles that can benefit readers for years to come. “I’d recommend it to anyone,” says Smith,” but particularly those of a younger age who have time on their side and can more easily benefit from compounding [interest].”

The Millionaire Next Door, on the other hand, emphasizes the ease with which anyone can become wealthy, and discusses how the typical millionaire is often much different than perceived.

“Those who have become millionaires are generally not those who own the biggest homes or drive the fanciest cars, but rather they’re common, everyday citizens who saved regularly, invested wisely, lived within their means and developed sound spending and investment habits at an early age,” he says. “It gives hope to anyone who might otherwise believe that the rich are only those with the highest paying jobs or beneficiaries of good fortune.”

The Expert: Jim Adkins, founder and CEO of Strategic Financial Associates, LLC

His recommendations: The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience by Carmine Gallo

jobs

Why he recommends it: Let’s face it. One of they key components of building wealth is doing well in your career. That’s why The Presentation Secrets of Steve Jobs is at the top of Adkins’ list. The book focuses on teaching people and public speaking skills anyone can use to achieve personal success. “The message of this book is that Jobs’ extraordinary impact is based on his authenticity and his passion for his company’s people and products,” says Adkins. “Everyone with a product or service that improves people’s lives has a story to tell and can learn from Jobs.”

The Expert: Molly Stanifer, CFP®, Old Peak Finance

commonsenseinvestmentanswer

Her recommendations: The Investment Answer by Daniel C. Goldie and Gordon S. Murray and The Little Book of Common Sense Investing by John C. Bogle

Why she recommends them: For budding investors, Stanifer says there are no better books to help explain the ins and outs of the stock market. Both books caution against pure stock picking in favor of investing in a broad array of assets. Bogle’s The Little Book of Common Sense Investing is practically mandatory reading for anyone wanting to learn more about the power of a diversified portfolio.

The Expert: Jeff Jones, CFP®, MS

habits9thhabite

His recommendations: The 7 Habits of Highly Effective People by Stephen R. Covey and The 8th Habit: From Effectiveness to Greatness by Stephen R. Covey

Why he recommends them: For books that focus on personal growth, Jones says it doesn’t get much better than these two Covey classics. “These books have stood the test of time and offer great re-readability factors,” he said.

The Expert: John Bohnsack, CFP ®, Briaud Financial Advisors

valueinvestor

His recommendations: The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment by Guy Spier

Why he recommends them: “Spier’s lessons — many of them learned the hard way — teach the reader about gratitude, surrounding yourself with the right environment and modeling the right people, his own hero being Warren Buffett,” says Bohnsack. “The book challenges the reader to become a better investor, but so much importantly to be a better version of yourself.”

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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College Students and Recent Grads, Life Events

3 Big Money Mistakes Your Freshman is Likely to Make

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3 Big Money Mistakes Your Freshman is Likely to Make

College is a time for adventure, growth and learning, but it can also be a time for silly financial mistakes if your freshman isn’t careful. This will likely be the first time your kid is out in the world on her own, so it makes sense that she’ll want to try new things. But her actions might come with some serious and long-lasting financial consequences unless you can help point her in the right direction first.

Here are three mistakes college freshmen often make when it comes to their finances — and how you can help your child avoid them.

1. They choose a college without considering the price tag

While it’s true that going to a good college is important these days, that doesn’t necessarily mean that your kid needs to go to the most expensive college to score his dream job after school. If your kid has always dreamed of going to a specific, but expensive, school, sit down with him at least a year or two out of applying to talk about how he’ll pay for it. The U.S. government recently launched the College Scorecard, where you can easily search for a school and see how its students fare financially after graduation. It might change his mind if he sees most students graduate from his dream school with tons of student loan debt. If your kid is willing to be a little flexible, you might want to point him towards one of these 20 most rewarding colleges for student loan borrowers, which ranks the best schools for generating the highest income after accounting for loan expenses.

2. They apply for credit cards before they learn how to use them

Luckily it’s gotten much harder for banks and credit card companies to market credit cards to students on college campuses. But the temptation to apply for credit will still be there. The second your kid applies for a credit card, she starts building a credit history that will follow her for at least the next seven years. A smart way to give her experience with some supervision is to add her as an authorized user on your credit card account. You can keep track of her spending habits and she can start building credit while she’s still in school. But don’t just pay the bill off each month without question. Talk to her about her credit score, what a credit report is for and how interest works. If you think it’s a good idea for your kid to dip her toe into the credit card world independently, consider starting her out with one of these best credit card options for college students. 

3. They never learn how to budget

The road to financial security starts with one simple building block: a budget. Unfortunately, budgeting isn’t something that comes naturally to everyone — especially for college freshman who may be trying to balance a job, classes, parties, and outings with friends. While your college kid probably won’t have a ton of disposable income to work with, it’s still a good idea to talk to him ahead of time about how to set up a budget, even when it’s just a limited amount of money he’ll be dealing with. If they can stick to a budget, they can also avoid costly mistakes like overdrawing their bank account, which can lead to all kinds of painful fees. During that conversation you can discuss the importance of an emergency savings account (because even college kids need an emergency savings account), how to divvy up income into necessary expenses and fun money, as well as how, once he graduates, he’ll likely need to put some extra money aside for retirement savings, as well.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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The 3 Most Important Things to Lookout For in Your Home Inspection

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Lookout For in Your Home Inspection

When my husband and I were forced to miss the home inspection of the first house we’d ever purchased because of an unforeseen and unavoidable family emergency out of state, a couple fairly important things fell to the wayside or went undetected.

For starters, missing the home inspection meant my husband didn’t actually get to see the home we were buying until we showed up to sign the papers on closing day, at which point it was far too late to back out (oops). Additionally, although the home was listed as having central air, it in fact did not, something our inspector had picked up on and included in his report, but that in all the hubbub we failed to notice ourselves.

Of course our particular circumstances were unavoidable, and at the end of the day, we knew missing the inspection meant potentially letting go of some of the rights we would have had had we been able to show up and actually pay attention. For other homebuyers, however, participating a home inspection — where the sole purpose is to identity and call out any unknown or undisclosed defects with the home — could potentially mean saving thousands.

“I always advise my clients to attend the end of the inspection — since being there the entire time may slow the inspector down or distract him from focusing on his job — so that the inspector can review their findings with them,” says Morgan Franklin, MBA, realtor. “Also, if the client is unfamiliar with home systems, like HVAC and plumbing, they can review the maintenance points with the inspector for clarification.”

Of course it stands to reason that missing out on certain findings of your home inspection (like missing air conditioning, for example) will be a costlier mistake than others (like a chip in the banister), so it’s a good idea to keep in mind some of the higher-cost things you’ll want to verify with your inspector while you have the chance. If you can catch these problems before closing, it’s usually possible to try to negotiate the repair cost or the overall price of the house with the seller. For example, as it turned out, the roof on our new house had some hail damage, but luckily this was caught in our home inspection report, and our relator was able to negotiate with the sellers to have them cover the cost of the repairs.

According to Morgan, here are three of the more expensive things you should pay attention to when it comes to your home inspection, if you don’t want to get stuck with a massive bill after the fact.

1. The Roof

What to look for: When it comes to your roof, particularly if you’re in an area frequented by rough weather like wind and hail, Morgan suggests looking out for aging and/or deteriorating shingles and/or flashing (or the metal corner pieces where the roof has a joint, like for a chimney or roof vent) that isn’t in proper order.

What it could cost you: The average reported cost of replacing an entire roof was approximately $6,794, with most homeowners spending somewhere between $4,663 and $8,951, according to HomeAdvisor.com.

2. HVAC (a.k.a. heating and cooling systems)

What to look for: While your home inspector will test the air temperature of your place, if they find issues with it you can always have an HVAC technician inspect your home, as well, to get further information. Morgan recommends looking at the serial number on your HVAC unit and running a quick Google search to find the manufacturer year — don’t just blindly believe the age on the disclosures (or, in our case, that one even exists!). “Once an HVAC unit reaches 15 years old, it’s likely close to the end of its useful life,” he said.

What it could cost you: If your HVAC is just in need of some simple repairs, most homeowners spent between $165 and $492 to fix them, according to HomeAdvisor.com. However, installing a new air conditioning unit is an entirely different story. Again according to HomeAdvisor.com, most homeowners spent between $3,693 and $7,146 to do so, with the national average being about $5,234.

3. Structural damage

What to look for: Your inspector will be looking for cracks and settling in the foundation of your home, to start. Of course the older your home is, the more likely these issues are to appear. “However, another contributing factor is water,” says Morgan. “For example, if the crawlspace is wet, look out for structural issues.” Any structural items noted by your inspector should thoroughly inspected by a professional — like a structural engineer or contractor — to assess exactly what damage is there and what the repairs will entail and cost.

What it could cost you: Foundation repair issues will vary widely based on what they are and where you live, but costs range from about $3,822 on average, with most homeowners spending between $1,763 and $5,880, according to HomeAdvisor.com.

The truth is that by the time you get to your home inspection, your head might be spinning from everything else you’ve already gone through (you know – finding a realtor, looking at houses, saving for a down payment, putting in an offer, etc.), but this is a super important step in the home buying process, so it’s important to not lose steam now. The good news? Your home inspection will be one of your final steps before closing day, so take heart in that fact, at least!

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Life Events

9 Ways to Spend Less on Childcare

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Wide image - Playing time with babysitter

Whether you’re already a parent or are expecting soon, you’re likely about to encounter what will possibly be the biggest new line item on your family budget: childcare.

Childcare is by far the largest annual household expense for families with young children, averaging $18,000 per year, according to a 2015 Care.com report.

There are all forms of childcare, each carrying its own price. Per week, families spend anywhere from $140 (for in-home daycare) to $477 (for a nanny). In the middle of the spectrum, it costs about $360 per week to hire an au pair and $188 per week for a daycare center.

There are some steps you can take now to reduce the cost of childcare, without jeopardizing the safety or quality of care for you child.

1. Throw out your old budget

To properly prepare for the added expense of childcare, parents have to look closely at their current budget and make adjustments, says Aaron H. Kahn, a certified financial planner at Wealth Management Strategies, Inc. in Pittsburgh, Penn.

“If parents are not acutely aware of exactly how much they need each month for the necessities, it will be impossible to build a budget,” Kahn says.

He tells his expecting clients to track their spending over the last 12 months, using a program like Excel or Mint to divide their spending into categories. Then, compare their spending to their annual take-home pay.  This exercise will give parents a chance to see how much wiggle room they have.

“It’s possible that they may already have enough extra cash flow each month to support childcare for the new baby,” he says.

Of course more often than not the opposite is true. When existing spending habits don’t leave enough room for childcare expenses, it’s time to make cutbacks.

“If possible, I’m always an advocate for a couple living on one salary while saving the other,” he says. “This is a great habit to develop not just for the childcare phase, but for life. Learning to live so far below your income can be a primer for tremendous financial health later in life.”

2. Look out for programs for single-parent households

The thought of covering childcare expenses on one income while also raising a baby can be daunting. To help handle the years before school, though, Kahn suggests seeking out childcare programs specifically catering to single parents. These programs often base fees on financial need. In some cases, if your income is a little too high to be eligible for these programs, Kahn recommends finding ways to reduce your taxable income. For example, you could increase your retirement plan contributions.

Besides saving up ahead of time to help defray some of the cost, there are other steps you can take to cut back on childcare expenses as well. Here are a few to consider.

3. Sign up for a Dependent Care Flex Spending Account

Your or your partner may have access to a Flex Spending Account (FSA) for dependent care through your healthcare provider. FSAs allow you to set aside pre-tax income for certain out-of-pocket healthcare costs, which can include childcare. Contributions made to an FSA are excluded from your gross income, so you don’t pay employment or federal income taxes on them. You can contribute up to $5,000 per year if you’re married and filing jointly or if you are a single parent. The limit is $2,500 per year if you’re married and filing separately. Keep in mind that FSA dollars can’t always be rolled over from year to year, so it’s a good idea to estimate the amount you need carefully. Or else you’ll have to forfeit any leftover money at the end of the year.

4. Make use of the child and dependent care tax credits

A special childcare tax credit provides parents with up to $3,000 in qualifying child care expenses for one child and up to $6,000 for two or more. Important: You can’t max out both your Dependent Care FSA and child care credit at the same time. For example, if you put $5,000 into your FSA for childcare expenses for the year, you’ll only be able to claim $1,000 for the Child and Dependent Care Credit. Find out more about the Child and Dependent Care tax credit stipulations here, and check out this calculator to help you determine the best way for you and your family to make the most out of tax savings on child care.

5. Ask your HR rep about employer-sponsored daycare options or discounts offered

You’ll never know if your company provides employer-sponsored options for childcare — like in-house daycare or discounts on other childcare options — unless you ask. “Especially if parents work for a large organization, or one with an affiliation to childcare products, they are likely entitled to programs designed to help with expenses,” says Kahn.

6. Approach your employer about a more flexible work schedule

If there’s a way to adjust your work schedule so you do not have to pay for a full week of childcare, you could save a bundle. Now, to be fair, having a productive work day at home is nearly impossible with a newborn demanding your attention. Think about inviting a relative or a part-time nanny to drop by at key moments during the day — feeding times, bath times, etc. — so you can focus on work and work alone.

7. Go with in-home daycare

In-home daycare is more affordable than most daycare facilities ($140/week vs. $188/week, according to Care.com). Picking an in-home daycare that feels right for you can be stressful (horror stories abound in the media). Start by asking around for recommendations from family and friends in your area who might have places they like. To save more, you should always ask if there’s a discount for enrolling an additional child, and find out if it’s possible to pay per day rather than monthly or yearly, which again might allow you to take advantage of family and friends nearby who can help out some days. There might also be some ways to cut back on superfluous daycare fees, like if you can pack a lunch for your kid instead of having to pay for the included meal.

8. Check out nanny share options

If you’d prefer the one-on-one care of a nanny but really don’t think you can afford the expense, try a nanny share. As the name implies, a nanny share occurs when you share a nanny with other families to help cut down on the costs. Keep in mind that if you’re going the nanny share route, in the eyes of the IRS, all the families that employ the nanny will be considered separate employers, and everyone will need to follow the proper nanny tax process of their state. Check out the HomePay section about nannies on Care.com for more information on nanny taxes. You can also check out the specific going rates for nannies in your area using this Care.com calculator to get a feel for what a share might cost you.

9. Look into publicly-funded daycare options

If none of the other options seem feasible, there are always plenty of reliable, publicly-funded daycare options to look into. For starters, you can check out this site for contact information in your state regarding child care assistance through the Child Care and Development Block Grants program, but be aware that there will likely be strict income and care guidelines if you go this route. Other programs options like Head Start are good places to check, or the National Women’s Law Center has a state-by-state fact sheets page with recent child care assistance policies depending on where you live.

Picking the best childcare options for your kid will be one of the more important decisions you make once your baby is born, but that doesn’t mean it has to cost an arm and a leg. With just a little bit of research and some digging, you’ll likely be able to come up with an option that you’re both comfortable with and won’t drain your bank account.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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5 Signs You’re About to Get Fired

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Job Security

Wouldn’t it be great if there were some way to know ahead of time when bad news was coming our way? When it comes to our job security, there definitely are some telltale signs of trouble.

If you catch the signs early enough, it may not be too late to save yourself. Other times, such as a company-wide layoff, the decision will be entirely out of your control.

Here are a few of the ways you might be able to tell your job is in jeopardy.

You haven’t been given new projects in a while

If your boss has overlooked you for recent assignments, you might tell yourself it’s just a slow time for the business. But pay attention. If everyone else around you is still busy with deadlines and meetings, it might be time to start questioning why you aren’t. Here’s an even bigger red flag: Your boss has been delegating tasks that you typically handled to other employees.

What you should do: If your boss has decreased your duties, look for ways to regain her trust. Brainstorm a few ideas to improve efficiency in your department or drive revenue and send your boss a project proposal that includes the names of people you would like on your team to help accomplish these goals, suggests Roleta Fowler Vasquez, a professional resume writer and resume expert for CareerBuilder.com. Showing initiative like that could help your boss see you in a new light and make co-workers eager to work with you again, says Vasquez.

You’ve noticed a change in your co-workers

It’s not likely that your colleagues would know about you being fired before you would (at least they shouldn’t). But if you sense a colder-than-normal vibe from your workmates, it could signal that they’ve lost confidence in your work or have stopped considering you as a part of the team. Some companies rely heavily on peer reviews, whether formal or informal. When your coworkers aren’t on your side, it could spell trouble for your future.

What you should do: Be as much a team player as possible. Let your colleagues know that you notice what a good job they are doing, and that you are always there to help. If the vibe doesn’t change, take one of your colleagues aside and ask them candidly if there’s anything you should know about your performance. He or she might be willing to open up about issues other workers have mentioned about your work.

Your boss is avoiding you

If you’ve been trying to schedule a meeting with your boss for weeks to no avail, they could be avoiding you purposefully. Apart from ignoring meeting requests, your boss might stop assigning you the same types of tasks that she always has in the past, simply to avoid the uncomfortable feeling that comes with conflict, which she might know is coming.

What you should do: Make every effort to continue to greet your boss with a smile and pleasantries. If you do finally get your meeting, Vasquez suggests using it as an opportunity to reestablish how committed you are to your job. Talk about the different career paths you would like to pursue within the company, even if it means making a transfer to another department or office.  “More directly, you could say that you have heard your job worthiness is being questioned, and that you are seeking advice on how to either improve your stance — always making sure to add ideas of your own, like an independent study or classes — or on how to exit with their good graces and a solid recommendation,” Vasquez says.

Your job description seems to have changed

It’s not unusual for the needs of employees to change frequently with an ever-changing professional landscape. But if it seems that all your important responsibilities have been whittled down to nothing and you’re left with menial tasks or responsibilities, it may be a sign your job is being phased out.

What you should do: Go into survival mode. If your specific job duties are quite narrow, show your team that you have skills in other areas they may need. Your manager should be transparent if your job responsibilities have changed, so you’re within your rights to go to your supervisor or Human Resources and ask for an official copy of your new description. “Normally, you are asked to discuss this with a supervisor or HR, sign it and you’re given a signed copy,” Vasquez says. “This legally protects both of you. If the wording indicates a new lateral assignment or worse — a demotion — you need to ask why it happened, and what you can do to avoid it.”

You’ve been asked to justify your job

The truth is, sometimes positions that once were valuable simply fall out of use (especially when a company is looking for ways to scale back and there are quite a few people on staff who have the same role as you do). If you’ve been asked by a superior to put together a note detailing your value to the company or what you do on a daily basis, it may mean that they’re trying to decide where they can afford to cut what they deem to be superfluous roles in the business.

What you should do: When large corporations are planning a significant round of layoffs, they often have consultants come in to audit the office and suss out any personnel “redundancies.” They’re on the look out for workers whose jobs overlap. “It’s not always because of something you did or did not do, but your job will be in jeopardy if you fail to justify your position,” she says. If possible, ask your boss why this is happening. If layoffs are unavoidable, be sure to show your team why your services are essential to the company’s mission and organization — explain your job tasks and how you perform them, and show the auditor how you go beyond the call of duty to get your job done.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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How to Shop and Save on Closing Costs

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

New Home Closing Costs

Back in April my husband and I put in offer on what would be our first home, and — joy of all joys — it was accepted.  We were finally on our way to the last stage of the seemingly never-ending home buying process: closing.

If you’re like us, then by the time you’ve decided to plunk down six figures on a new home, closing costs might seem like a minor fee. But these fees can add thousands of dollars to the cost of your home. According to Zillow, closing costs generally cost 2-5% of your home’s purchase price. On a $200,000 home, that could mean forking over an extra $4,000 to $10,000. (If you’re lucky, you can negotiate for the seller to cover some of your costs, but it’s still a big chunk of change.)

What many people don’t realize is that not all closing fees are set in stone. You can shop around and find better deals if you so choose.

We’ll explain which fees you can shop for and how much you can save.

Closing Costs: The Basics

Although you typically pay your closing costs in one lump sum, you’re actually paying for several different fees. Those fees cover things like your real estate attorney fees, your appraisal, title insurance, and a pest inspection. Your lender is required to give you a list of your closing costs along with your loan estimate within three days of receiving your loan application. That list will contain all the services you need to pay for and the different vendors the lender has chosen to provide them.

Closing fees can sometimes be bundled into your mortgage loan, which can save you the trouble of coming up with the cash right away.

But if you’ve got time on your hands – and you’re willing to put in the effort —  you can shop around for some fees and save yourself several hundred dollars. Here are a few fees that you can shop for (this list will vary from lender to lender, but it’s a good place to start):

  • Title fees (including the Title Search, Title Insurance Binder, Title Settlement Agent Fee and the Lender’s Title Policy — although keep in mind that in many cases the seller actually covers some of these fees … more on that later)
  • The Pest Inspection Fee
  • The Survey Fee

If you decide to find your own vendors, you need to decide quickly — ideally, before you put in your offer. Title insurance items are especially tricky to shop for after your offer has been accepted by a seller because some lenders require that your realtor write those stipulations into the contract of your offer. If they aren’t written into your contract ahead of time, it’ll likely be too late to go back and say you want to do some cost comparing later.

States, and even individual counties, often have their own laws regarding closing cost fees and transactions. Ask your realtor, real estate attorney and/or mortgage broker about the laws where you live. First American Title, a leading provider of title insurance in the U.S., has a state-by-state guide of real estate laws and customs on its site, but it might be hard to understand the jargon without the help an expert.

As we mentioned before, your mortgage broker is required to give you a list of companies in your area that provide the services for which you’re shopping. Just remember that if you decide to shop around for a vendor not on the list, your lender needs to agree to work with your outside choice.

How to save on closing costs

Title documents

What it costs: Title items usually come as a bundle (including the Title Search, Title Insurance Binder, Title Settlement Agent Fee and the Lender’s Title Policy), and the national average is around $2,263.16 for the package, according to Closing.com, a premiere source for closing costs and service providers in the U.S. residential real estate industry.

How to shop for it: Confirm that whatever company you go with is a licensed title insurer in your state. A good starting place is throughThe American Land Title Association, where you can find reputable title service options in your area. Jeffrey Goldstein, a real estate attorney, recommends working with companies that work in every single state in the U.S. and are considered among the safest underwriters. A few of these companies include:

Is it worth it? It could be.

Title items are tricky since they come packaged as a bundle and, as mentioned above, often the seller covers some of the fees (this will be stipulated in your contract if it’s the case with your offer). Asking to shop around for outside offers may mean giving up your right to have the seller cover his or her portion, or it may make your overall offer less desirable altogether. You’ll need to verify with your realtor and lender the rules in your area, but if the seller and your lender are game to let you do some research, this is definitely where you could save the most money, since it’s one of the most expensive closing costs.

Pest Inspections

What it costs: The national average is $126.37, according to Closing.com.

How to shop for it: Pest inspections aren’t always required, but if they are or you’d just like one, finding a reliable pest inspector in your area probably won’t take much more than a quick Google or Angie’s List search. My search for good pest control companies in my area on Angie’s List is here — just replace Arvada with your hometown to find ones in your own neighborhood.

You can also try The National Pest Management Association to help point you in the right direction.

Is it worth it? This one may not be worth the time and effort. Prices are so low relative to other fees that you may not feel like you’re saving much.

Surveyors

What it costs: The national average is $587, according to Closing.com.

How to shop for it: Land surveyors help you understand where your property line is exactly. Sometimes a land survey is not even required in closing, but it might be. To find a good surveyor in your area, The National Society of Professional Surveyors is a good place to start. As an association of licensed professional surveyors with access to reliable surveyors all over the country, they can point you to some good sources in your own area to do your price comparing.

Is it worth it? Depending on where you live, it could be. In Alaska, for example, the average land survey costs about $1,400. In D.C., however, where the typical survey costs $185, it’s probably not worth the effort. Check with the NSPS to get an idea for what the typical survey costs in your area before doing the work.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Life Events

6 Easy Strategies To Help Save on Your Wedding

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Save on Your Wedding

When my husband and I were beginning to plan our wedding, we were blown away by how much a traditional wedding would cost us. We even tried looking at smaller venues and trimming our guest list. In the end, we decided to elope instead, a decision that was partially driven by our own sticker shock.

The average wedding topped out at $32,641 in 2015, an all-time high, according to The Knot.

Of course not all couples chose to spend that much on their nuptials, and whether you do will be a personal decision between yourself and your fiancé (and perhaps any family who might be kind enough to chip in). In a perfect world, the betrothed couple would take into account other financial factors before jumping into an expensive wedding — things like their future plans to buy a house or have a family, pay down debt or go on a nice honeymoon. In the real world, however, a wedding is something that happens (hopefully) once in your life, and then it’s over, and for this reason, many people end up feeling like it’s okay to splurge on what is most likely the happiest and most important day of their lives to date.

If you’ve decided to go the fancy wedding route, there are still some things you can do to take the pressure off your wallet going into the planning. Besides some of the obvious (cut down on your guest list, pick a less popular day of the week to get married, DIY things like your makeup, hair, flowers or table decorations, etc.), we’ve rounded up a couple out-of-the-box ways that people are saving some cash on their big day, while still celebrating it exactly the way they envisioned.

1: Shoot for a longer engagement

If you haven’t started saving for your wedding yet, then a long engagement can buy you time. Start by setting a savings goal and contributing toward you wedding with each paycheck. Also, you’ll have time to encourage your friends and family to give you cash gifts for any special occasions leading up to your wedding, which you can put toward your savings. You’ll have time to set aside your tax refund and annual bonuses as well.

2: Get discounts from vendors by advertising their services at your wedding

Some vendors — like your caterer, the DJ, photographers, etc. — might offer you a small discount if you give them a plug on your big day. Of course you’ll want to make sure this is done in a tasteful way (putting your florist’s name in neon lights probably isn’t necessary). Usually, vendors might ask you to put a small place card at each table setting letting your guests know which vendors you used. Alternatively, you could print the list on the back of your guest’s place cards, if you’re using them. It’s a win-win. You get to trim your budget a little and you save your guests the trouble of vetting vendors themselves.

3: Consider a wedding package

If you’re looking to elope or have a small ceremony, a package can be an easy way to save on your overall costs. Many wedding venues (think hotels, B&B’s, and resorts) offer wedding packages. These packages typically include rooms for the bride and groom, a photographer, the wedding meal and other perks like a free bottle of champagne or tickets to a show. The downside is that you won’t be able to pick and choose your vendors. The venue may also limit the number of guests you can invite.

If you’re considering a wedding package for a destination wedding, then there will obviously be other costs to factor in as well. A destination resort wedding can quickly go from a great bargain to a budget buster.If you want a big wedding abroad, prepare to pay extra for every additional guest. Many resorts limit wedding packages to a certain number of guests (typically 10-50). On top of that, resorts often charge fees for every guest who chooses to stay at a different resort. In order to attend the wedding, they’ll need to purchase a day pass to the resort, which can cost $50 or more, easily.

4: Use a Pop-Up wedding service

If wedding planning has done nothing but stress you out — and if you’re willing to think a little bit out of the box — than a pop-up celebration may be just the thing for you. Pop-up weddings are basically slightly-better-planned elopements. Services will coordinate all the vendors for you. All you have to do is pay a flat fee and show up. Pop-ups usually involve just the couple, a witness, and the pop-up wedding planning service, although some services allow a limited number of guests to attend.

Pop-up weddings cost much less because they typically last only a couple of hours and they don’t require all the bells and whistles of a traditional wedding.

Flora Pop in Las Vegas, for example, plans pop-up ceremonies for couples complete with vintage signs and flowers to still make the day feel special and unique. Prices start around $550 for local ceremonies and increase to $1,200 or more for options that take place in the desert or other remote locations.

Pop the Knot, on the other hand, helps match couples looking for a pop-up wedding with vendors in New York (and soon Chicago). Pop the Knot will help you find a venue, an officiant, photographer and flowers. The service will even deliver your photos to you. You can pay for additional upgrades, such as decorations, an altar and videographer. They have a handful of different packages. A pop-up wedding with 10 guests at an art gallery in the Lower East Side is $2,239, while a pop-up in Grand Central Station with 10 guests (standing room only) is $1,615.

Pop Wed Co. is another option based in D.C. that offers to take care of everything for your fabulous elopement (including the paperwork to make it official) starting at $2,900 + 6% sales tax.

Then again, if you’re in Las Vegas and want to just get married on a whim, the Las Vegas Wedding Wagon skips all the fan fair and comes directly to you with an officiant, photographer, witness (if necessary), the ability to file your legal paperwork and a certificate for renewal of vows … all for the low, low price of $129.

5: Save on catering by hiring a food truck

Not only are food trucks popular right now, but they can cost much less catering a traditional sit-down meal. You can find the right food truck for your tastes on sites like Roaming Hunger. Couples can use the interactive map on this site to find the perfect food truck options in cities like Atlanta, Boston, Chicago, Denver, Philadelphia, Tampa and many more.

6: Never use the “W” word

One simple rule to abide by throughout your wedding planning: Avoid the word “wedding”. As soon as you ask a bakery for a “wedding cake” or a jeweler for a  “wedding band” then you’re automatically going to pay more. Try shopping around for some items for your special day without telling sales reps you’re having a wedding. You may find a beautiful dress for your bridesmaids off the rack at a much better price than you would find at a bridal salon. And you may pay twice as much for a cake if you call to order a wedding cake or wedding cupcakes. (Want proof? Check out this report on Vox).

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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New Parents Guide: Financially Preparing for a Baby

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Financially Preparing for a Baby

Getting ready for your first child will be one of the most exciting – and potentially stressful – times of your life. But before even starting to get into the nitty gritty financial details of what you’ll need to have prepared before your little bundle of joy arrives, take a second to rejoice.

You’re having a baby – congrats!

Then, once the initial giddiness has worn off, you’ll probably have about a thousand questions all at once:

  • Will I stay at work?
  • What do I need to buy?
  • When should I start saving for college?
  • Will my health insurance cover everything I need?

We’ll help walk you through each of the major important financial phases of having a baby, so when Junior arrives, you’ll hopefully be feeling calm and prepared.

Ready? Let’s take a walk down Baby Lane …

Step 1: Figure out your health insurance coverage

It should come as no surprise to you that having a baby requires lots of doctor’s appointments. From ultrasounds and glucose tests to genetic testing options and general checkups, over the next nine-plus months you can expect to become very familiar with your obstetrician.

So — just how much can you expect to pay for the joy of bringing your little one into the world? According to WebMD, without health insurance you can expect to pay about $2,000 for prenatal care (which doesn’t even include delivery and hospital stays), although remember that this number can vary drastically.

To gear up for prenatal and delivery costs, your first step before visiting the doctor (if you don’t already have one through your insurance) should be to check with your health insurance carrier for your options. They will be able to help you figure out which providers in your area are in-network (meaning you’ll be covered for visits with them and won’t have to pay additional out-of-pocket expenses), as well as which tests, check-ups and procedures are covered under your plan. Some things to remember:

  • Keep in mind that certain procedures tend not to be covered by most insurance plans (mostly optional tests, like genetic testing, for example), and they can cost a pretty penny if you plan to pay for them out-of-pocket, so get all the financial details up front before having anything
  • This extends to your hospital stay and delivery, as well. For example, the anesthesiologist in your hospital may not be covered under your health insurance plan, even if your doctor and everything else is. Again, always check with your insurance provider ahead of time so you can be prepared for any additional expenses that might come your way. No question is a silly question when you’re pregnant!

After you find out your maximum out-of-pocket expenses (aka the absolute highest amount of money you should have to pay for covered procedures and services performed by in-network doctors), you can budget accordingly so there are no big surprises come bill-paying time. Of course, sometimes surprises still come up, but if you think negotiating or haggling over your pregnancy medical bills might be in your future (which could be especially true if you don’t have coverage right now), it’s best to discuss that ahead of time with your doctor and figure out a plan. Along those lines, check out this piece for any additional specific pregnancy billing questions you might have.

Once you’ve figured out your own health insurance coverage, don’t forget that Baby will need insurance of her own once she’s born. If you or your significant other can provide it for her through your employer, get the specifics of that policy as soon as possible, or else check out your options through the healthcare marketplace.

  • If you’re uninsured: Keep in mind that if you’re currently uninsured, pregnancy does not qualify as a ‘change of life’ situation that would allow you to sign up for a healthcare plan outside of the open enrollment period, which starts again on November 1 and will run through January 31, 2017. Having a baby, however, does. If you’re outside of the open enrollment period and find yourself pregnant without health insurance, you do have a few options, including checking into your Medicaid eligibility, potential COBRA coverage if you recently left a job, or you may even be able to still get coverage under your parents’ plan, depending on your age and their policy.

Step 2: Take control of your budgeting and spending

If you listen to everything everyone says about how expensive it is to have a baby, you’ll most likely decide to never have one. In fact, according the recent USDA findings, the average cost of raising a child today is over $245,000, which doesn’t cover college or inflation.

Before you have a panic attack, consider some of the things these types of findings do cover, like housing expenses (which you’re most likely already paying, although you may need a larger space, depending on your circumstances), food and transportation expenses (which, again, you’ll already be paying some money towards, anyway) and miscellaneous items like personal care, entertainment and reading materials, which can vary widely.

In other words — take a step back from studies like this and reassess, because it will be okay … as long as you budget. In truth, you will be spending more on food and transportation once Baby arrives, and if you need a new car or a bigger space to live you’ll need to add those additions into your current budget. (We’ll talk about childcare in its own section.) To get ahead of the curve before Baby arrives, consider taking the following steps:

  1. Revisit your current budget: Sit down with your significant other and assess your current living situation, including where you might need upgrades, like with a second car or a bigger house. Determine how much extra you can afford to put towards these upgraded things each month so you can put together a new, baby-friendly budget to work with.
  2. Cut back where possible: Try to consider areas in your current budget where you can scale back, at least for a while, to make room for your new expenses. For example, perhaps monthly subscription services can take a backseat for now, since you’ll likely have little time for them in the beginning months anyway. (Learn how to get rid of your subscription services without feeling the burn here.)
  3. Open a new, baby-only savings account, and start saving now: If you can, it’s not a bad idea to start funneling away some additional money each paycheck towards a new savings account geared specifically for Baby. For as much planning as you do, it’s always best to be prepared for any additional, surprise expenses that come up, and having a little cushion to help cover these things will help you feel better during stressful times.

Step 3: Gear up on baby goods

Here’s one area where new parents have the potential to go a little crazy — buying all kinds of new stuff for Baby. That’s where a baby shower can really help though, and if you’re lucky enough to have someone offer to throw you one, you should absolutely take her up on it, and then be strategic about the items you put on your baby registry.

A couple things to keep in mind:

  • Heading out with someone you trust and who’s already a mom is always a good idea for the feedback and knowhow.
  • Remember that just because a product looks cute or promises to work wonders for your kid doesn’t mean it’s actually necessary. In fact, you might want to check out this piece for five things to reconsider putting on your registry. Not all babies love bouncy swings, for example, so it might be worth borrowing one from a friend for a bit to see if your kid even takes to the swing before dishing out (or having someone else dish out) for a brand new one.
  • Babies won’t need a ton of stuff in the beginning, so if you’re worried about space, it’s okay to scale back at first. Stock up on a car seat and stroller, diapers and wipes, a monitor, onesies and a bassinet or Pack ‘n Play to keep the baby in your room for a while, if that’s your plan (you can always get a crib later). Plus, if you’ll be breastfeeding, remember your pump could be free through health insurance, so check into that. Once you meet your little one and get to know him better, you can decide later if additional things would be necessary or helpful, like extra swings or activity sets, fancy products like a jogging stroller or bottle and wipes warmers, etc.
  • Remember, most places offer discounts for items left on your registry that you want to purchase once your shower is over, so if there’s something you really want but you worry about putting it on your registry because it’s too much, you should still do so. That way, even if someone else doesn’t get it for you, you’ll still be eligible for the discount. Sign up for email newsletters and follow your favorite brands on social media, too, where they’ll be likely to share coupons and additional discounts with their customers.

Step 4: Consider your work options

Ah, work. Especially for women, there’s so much to consider when it comes to having a baby and a career. There are essentially two main things that you’ll need to figure out heading into parenthood when it comes to your job and your baby:

  1. How much maternity leave do you have? Unfortunately the U.S. is one of the few developed nations that hasn’t quite come around to fair and practical maternity leave policies — in other words, we have no set policies. For the most part, it’s up to each individual company to decide how to handle maternity (and paternity) leave with employees. What we do have is the Family and Medical Leave Act, which entitles all eligible employees to take up to 12 work weeks within a 12-month period of unpaid, job-protected leave for specified family and medical reasons (like the birth of a child) with continuation of group health insurance coverage under the same terms as if he or she had not taken leave. Find out if you’re eligible for FMLA here. Outside of that, it’ll be essential to sit down with your employer or HR rep to discuss how much additional paid leave you’re entitled to, and whether or not you can use saved vacation or personal days for maternity leave. Figuring out how much income you and your partner will have coming in during maternity leave will help you potentially budget for the length of time you’ll be able to take and how much additional money you should have saved up before baby comes, too.
  2. What are your plans for returning to work? For many women there is no real option — they simply can’t afford to not go back to work. For women with a little more wiggle room with their choices, though, there is a lot to consider before leaving a job to be a full-time mom. Childcare costs (which we talk about below) are often a big factor that comes into play when most women are deciding whether going back to work is even worth it, financially at least. If you’ve determined that you can afford to stay home financially, you’ll still need to consider:
    1. Where your health insurance will come from (can a spouse provide it for both you and the Baby?)
    2. How will you continue to save for retirement (you can read more about that, here)
    3. How to keep your foot in the door for your career should you decide to go back some day. If you plan to take classes or enroll in continuing education to do so, you should consider factoring those additional expenses into your budget.

Step 5: Take a look at childcare costs

If you’ll be heading back to work after baby (or you’re trying to determine whether it’s financially necessary to do so), it’ll be essential to take a look at your potential childcare costs. To help determine average costs in your area, check out the interactive map on ChildcareAware.org for specifics. In Colorado, for example (my home state), a married couple can expect infant, center-based care costs to average around $13,154 annually (or approximately $23,036 when you factor in a second child).

So, how can you potentially lower the costs of childcare? Here are some suggestions:

  1. Tag in Grandma and Grandpa (or any other friends and family willing to help): If you’re lucky enough to live in an area near family — and especially retired family, or family with flexible work schedules — it’s worth seeing if you can work out some kind of care situation whereby they look after your little one, even if only for a day or two a week. You’ll need to check with your primary caregiving source if you want to go this route, though, as some require payment for full weeks, months or even a year, regardless of whether your child is there every day of the week or not.
  2. Trim back additional costs: If your nursery or daycare charges extra for additional services like providing a meal or late pickup options, find out what those are up front and do everything you can to avoid paying for them.
  3. Check your FSA: A Flexible Spending Account is a special savings account sometimes offered through employee benefit packages. If you or your spouse has access to one, you may be able to save up to $5,000 per year, tax-free, which you can then use to cover daycare costs. (Learn more about an FSA here.)
  4. Consider alternative care options: While daycares and nannies are the most popular childcare options, there are other choices. For example, you could host an Au Pair at your house whose job would be to watch your kids in exchange for room and board, or you could consider a nanny share, where multiple families share one nanny and split the cost.

Step 6: Get additional paperwork in order 

When you’re about to become a parent, there are all kinds of ‘grown up’ documents you’ll now need to have on your radar. Here are some of the most important ones to consider putting together right away:

A life insurance policy: Even if your employer offers one, it’s worth searching around to see if an outside provider might offer a broader range of coverage for competitive pricing. Remember that when it comes to life insurance, your main goal is to provide your family with the funds necessary to continue on with their lives should something happen to you (they might need money, for example, to pay off a house, put the kid through college, and just pay the day-to-day bills). There are many calculators online that can help you get an idea for how much estimated life insurance you might want to get coverage for, and about how much that might cost you per month but remember that how much you actually pay will be determined by a number of factors, including your overall health and lifestyle factors.

A will: When you don’t have a will, the fate of all your possessions and property will be left up to the law when you die, which is never something you’d want to have happen, but especially not when there are children involved. While there are plenty of DIY methods available to create your will, this isn’t necessarily an area where you want to skimp, and it’s best to make sure that everything is done properly and legally, so using an estate attorney is your best option. If that’s too costly, a legal online site (like LegalZoom) could be a backup, but those sites are really only helpful if your will is going to be simple and straightforward (as in you’re leaving everything to one person).

Another important aspect of your will is including guardians for your children. Ideally these will be people with whom you’ve discussed the arrangement ahead of time. Keep in mind you can also name two different types of guardians for your children — a guardian for their finances and one to actually look after their care — should you feel that’s necessary.

Short-term (and potentially long-term) disability coverage: Remember that you’re much more likely to fall ill or suffer from an injury that keeps you out of work for a while, so signing up for short-term disability coverage to keep those bills getting paid while you’re laid up is a good idea. Check with your employer to see what they offer, and read this piece for more on the different options available.

Step 7: Start looking at college savings options

While it might seem crazy to start thinking about saving for college before Baby is even born (and it certainly shouldn’t be your top priority, above everything else on this list), it never hurts to get a jump start thinking about this financial aspect, since it could be a hefty sum you’ll need or want to have saved.

College savings will be a personal thing you and your significant other will have to discuss — all parents must decide for themselves whether or not they want to pay for any, some or all college expenses for their kids, or if there will be some kind of limit they’ll put on their contributions, etc. Also keep in mind that most experts would recommend that saving the maximum amount you can for your own retirement plans should always come before socking away for your kid to go to college. As the old saying goes, you (or your kid) can always take out loans for school … you can’t do the same for retirement.

Having these discussions sooner rather than later will also help dictate exactly when and how much you start saving, since obviously the longer you invest, the more opportunity you have for your funds to grow.

  • When it comes to actually saving, a 529 is the most traditional way that most parents decide to save (if you’re interested in sorting through your own 529 options, check out this piece about the five best 529 options), but that’s certainly not the only way to save. Some additional options include Coverdell Accounts, UGMA or UTMA Accounts and even Roth IRAs. (We covered each of these in length here.)
  • After you’ve done your research and come up with a general idea of how much you’d like to save, and what vehicle (or vehicles) you’d like to save in, you’ll have a better idea of the timeline you’re looking at to start. Remember, additional products can help you save even more on the side, too (like the Upromise MasterCard by SallieMae, for example, or the Fidelity Rewards Visa Signature Card, which allows users to deposit rewards directly into their Fidelity managed 529 College Savings plan).

Of course this isn’t an exhaustive list of things you’ll need to have prepared for Baby (although it may feel exhaustive to read it), but prepping these items before the arrival of your bundle of joy will certainly help you feel more financially ready once she does get here.

Plus, if looking at this list scares you off, remember — you’ll have nine long months to get everything in order, which is plenty of time. Take it one day at a time, and you’ll be more than ready — both financially and emotionally — when Baby arrives.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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How to Make the Best Impression At Your First Job

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Female Woman Sitting At Interview

Whether or not you worked all through high school and/or college, those early days (or months, even) at your first job out of school are bound to bring on the nerves. There’s a lot to learn about office politics, how to behave, how to best deal with co-workers and bosses, all before you even start trying to perfect the skills you’ll need to perform your new job to your optimal ability.

Here are some things to keep in mind that will hopefully help you navigate those first tricky days in the real world, when everything might seem scary and totally brand new.

1. Have an open mind and be flexible

Probably far and away the trait that will help get you through the first couple months at your new gig is the ability to be flexible. So you were told you’d be reporting to two people and now it’s three, and the desk they showed you at your interview is actually half a mile from where you’ll actually be sitting (near the noisy kitchen facing a brick wall). Repeat after us: It’s all good. While there are certain things that won’t be okay to have pulled out from under you after you start working (like your salary and benefits, for example, but that’s why you get everything in writing before signing on the dotted line), the quicker you can realize that everything else is open to change, the quicker you’ll be able to adapt to the curveballs that surely will be thrown your way.

2. Be a team player

The sooner you can prove to the staff that you’re on their side and eager to be a part of the team, the sooner you’ll start winning people over and making strong, valuable first impressions. Of course being a team player doesn’t mean you sit back and only do what you’re told, but be strategic in terms of when and how you decide to share your own thoughts and opinions (which you absolutely should!). Taking the first couple of days to get the lay of the land and understand how work flows through the office before suggesting your 20-point plan for increasing productivity might be a good idea, for example.

3. Never be without a notepad

Those first couple of months at your new job will be chock full of things you’ve never done before, phrase you’ve probably never heard and people you’ve definitely never met. Keep a notepad and pen with you at all times and take diligent notes to avoid having to follow up multiple times on the same point. Having said that, always ask questions if you have them, rather than doing something incorrectly the first time and needing to fix it.

4. Be busy all the time

While it will probably take you a while to get into the groove of your new gig, and it might be hard for your boss to break away throughout the day to explain projects to you or help point you in the right direction, be sure that you’re using any down or free time you have to your advantage by tidying up where you see messes, researching on upcoming or past projects your company has undertaken or anticipating things your boss might need before he or she even has to ask (low on printer paper or toner? Work on getting those things refilled before your boss even notices.) It also doesn’t hurt to show up a little early and stay until you’re basically told to leave those first couple of weeks. A good first impression is everything.

5. Don’t be a stranger

Even though you’ll be pretty busy getting caught up those first couple of weeks, if you notice a group of co-workers hanging out in the kitchen during lunch, take a couple extra minutes to stop by and say hello, even if you can’t stay the entire time. The sooner your co-workers get to know your real personality, the sooner you’ll start to feel more like one of them, and less like ‘the new person’ in the office, which no one likes to be.

6. Be organized

Even if organization isn’t your strongest suit, make it your strongest, as least for the first couple of weeks. Keep your area tidy and familiarize yourself with where everything is kept that you might need at a moment’s notice (like that extra printer paper and toner we mentioned before). Do some practice runs on the copy machine and scanner, tidy up after yourself in the kitchen and refill the coffee pot if you finish it. Every little bit adds up, especially when you’re new.

7. Let your confidence shine through

The more you come across as confident, the more your boss and co-workers will see you that way. Being confident can be tough, since it often includes straddling the line for things that appear opposites of each other (take initiative but know when to ask questions or just follow orders; stand up for your own thoughts and opinions but know when to apologize for mistakes), but if you find yourself struggling, remember the golden rule that most people at work are following as well: fake it ‘til you make it. No one expects you to know or understand everything about your new job the first day or first few weeks you’re there, but put in a solid effort and always be present and make smart decisions, and soon enough you’ll catch on.

While we’re on the topic of jobs, check out this piece for suggestions on how to network like a pro, this one for three questions you should ask yourself before taking on a low-paying gig, and this one for six things you should do right away if you lose your job.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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