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Life Events, Pay Down My Debt

Should You Use Layaway to Buy Holiday Presents?

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Buy Holiday Presents

The holiday season is probably already putting a pinch on your bank account, and many are still looking for ways to fund the rest of the gifts on their lists. There are many-a-pitfall that can set you back financially for the New Year, which is why many opt to lean on overburdened credit accounts to make it through the holidays. While the immediate happiness that comes with providing gifts to loved ones is great, the long-term stress lies just around the corner once the gifts have been opened and life-as-normal resumes once again.

An older, but still used, method to purchasing your holiday gifts debt free (but with an added cost) is known as layaway.

How Layaway Works

If you haven’t heard of using layaway since the days of your childhood, then maybe it’s time to consider using this as a way to pay off gifts before the holidays. Yes, layaway may seem ‘old fashioned’ to many, but the fact of the matter is that it’s still alive and well in the financial planning of many families.

Layaway accounts work like this: You take the items you want to purchase to the layaway counter and pay a deposit. This deposit ensures that the item is still yours until you pay it off. You can make payments in store or online in many cases, and there’s a service fee for the layaway use.

These contracts typically have an expiration date wherein the items are placed back on the shelves if they’re not paid off. These can range from 30 days to well over a few months with the typical layaway contract lasting around 90 days. There are other details that can change from store to store like cancellation fees, additions, and restrictions, so you’ll need to check with the store you’re using.

The great part about layaway accounts is that your items don’t typically accrue ‘interest’, per se. You’ll be charged a service fee in many instances, but these fees tend to be minimal compared to credit card interest rates.

Fine Print Alert

One downside is that if you don’t pay the remaining balance on your items or if you don’t contact the department before your contract is up, you may end up forfeiting your items and any payments you’ve made thus far. That’s right – you don’t get the gift and don’t get your money back. It’s important to read the fine print of a contract before signing. Many of the big box retailers that offer layaway will give you a refund after taking a fee. Walmart, for example, charges a $10 cancellation fee – but some smaller business may be more likely to keep the payments. Toys-R-Us charges a $5 set-up fee and also a cancellation fee that varies based on state.

Also check to see when the layaway offer deal ends. Walmart’s ended on December 14, so any items not picked up or paid for in full by then were automatically cancelled.

Should You Use Layaway?

Layaway is ideal for those who have a solid plan to pay for their items in a short period of time and in full and worry the item may no longer be on the shelf by the time you get the money together to pay in full. It’s also a nice way to avoid debt and only purchase items you can afford. However, there is a price to pay for the ability to do layaway.

 

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Life Events

How Much Baby’s First Year Will Cost You

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How Much Baby’s First Year Will Cost You

If you’re a veteran parent, are expecting a child, or are simply planning ahead for the future, then you’ve already likely experienced at least some of the exciting emotions that come along with family planning. A new baby ushers in a whirlwind of emotions that swing from excitement to anxiety on a moment’s notice. A baby is not only a new family member, but a new life, and one for which you’re responsible.

Some couples choose to wait until the right financial moment to start growing their families. Whether you’re an avid planner or not, it’s still important to sit down before the baby’s arrival to calculate the impending costs. There are many financial aspects to raising a child – especially within the first year – that are important to consider when planning out your baby budget. Let’s take a closer look at some of the costs that many parents will experience within the first year of baby’s life as well as different ways to reduce these financial burdens to ease the strain on your family’s finances.

Insurance and Medical Bills

Before baby is even born, you’ll begin to rack up charges for medical bills. Regular doctor’s visits typically require a copay (depending on your insurance), while other specialty visits for sonograms, vaccinations, laboratory testing, and the like will also start to slowly dwindle away your cash. Your insurance plays a large role here in how much you’ll be paying for each visit as well as how much you can plan to pay in total for your deductible to be met.

How can you make this more affordable? You have some say in which insurance company you pick, and opting to use insurance offered by an employer typically means that the employer will pay part of the cost of that insurance every month. Be sure to pay close attention to the deductible limits as well as maternity care costs and how much you can expect to pay (typically a percentage) after you’ve met these limits.

When choosing your doctors, always check to be sure that they’re in network with your insurance company. When you choose medical providers that are out-of-network, you’ll likely end up paying substantially more than if you stuck with somebody who was in-network. For instance, an in-network laboratory testing may only require that you pay a copay amount. These amounts are typically pretty low, especially compared to the price you’ll pay out of pocket if you choose an out-of-network provider.

Keep in mind that many insurance providers will automatically add your newborn to your plan for 30 days after, but you’ll usually need to contact your HR department (if insurance is through your employer) as soon as possible after the arrival of your baby to get him or her added to your plan.

Formula, Diapers, and Supplies

If this is your first baby, then you may have had the luxury of a baby shower where many of your initial supplies have been covered by the goodwill of family and friends. But there’s always something that you realize was missed, and for those having their second or third child, many of these supplies will need to be purchased by the parents. So what does it actually cost for many of the basic supplies?

For formula (if you’re not breastfeeding), one can likely expect to spend about $60-$100 per month (according to BabyCenter) which totals about $720-$1,200 for the first year of life. Other estimates put this first year cost at closer to $1,700.

For diapers, it’s estimated that disposable diapers will run you around $30-$85 per month for a yearly total of $360-$1,020.

How can one make this more affordable?  Many first-time moms will likely be inundated with coupons in the mail before baby even arrives. Be sure to utilize these where possible for diapers and formula, and ask on online yard sale websites and other forums for unused coupons from other moms too. If you’re opting to breastfeed, then the cost of formula is $0, but you’ll want to consider the costs of nursing covers, absorbing pads, and a breast pump (although pumps can be covered by insurance, cutting out that cost as well). If you’re opting to use cloth diapers, then you’ll spend a little more money off the bat (each disposable diaper can run you anywhere from $25-$60 or more, depending on the type and brand you choose), but after that initial purchase, you simply just calculate the costs of extra laundry loads and liners.

Beyond diapers and formula, you’ll also have varied costs of clothing, gear, and other accessories, which depends on what you already have, what you think you need, and what you prefer to purchase. Sticking to the essentials will obviously cut out more of the financial burden than somebody who prefers to purchase all of the available accessory items and gear, so those looking to save a few dollars will want to purchase the basics and only splurge when items go on sale.

Ultimately, the Costs All Depend on You

Your first year costs for a baby – including medical bills, insurance, formula, diapers, accessories – can vary drastically depending on how you go about purchasing items and how careful you are when selecting these items and providers. According to a 2010 USDA report, the average middle-income family will spend roughly $10,000-$12,000 on child-related expenses in their baby’s first year of life. Cut down on some of these costs by making wise, thought-out decisions instead of splurging on tempting, but unnecessary, baby items, and always be on the lookout for ways to cut back when possible. Check out BabyCenter’s First Year Cost Calculator to get a better grasp on your expected costs, and find avenues for cutting back on different areas to bring your total to a manageable level.

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Life Events

Staying Traditional with Women Breadwinners

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Wedding

“Bringing home the bacon,” is still a popular phrase used today in reference to bringing money into the household, and this phrase has typically been linked to the male breadwinners of the family. As we all know, the classic household dynamic has evolved over the years, and more and more women are either also bringing in their fair share of income or – as is such the case with 4 in 10 women – supplying the primary or sole source of household income for the family.

The changing family dynamics with income brings a necessary evolution in the socio-familial structure as well. The ‘manly’ roles of the family are now blurred as women take over some of the traditional income generation that, at one point, was left solely to the man of the house. Budgeting and paying for bills is still the end-game of it all, but the shift in who supplies the funds for these tasks could potentially threaten the traditional family structure, especially if the man of the house values his position as ‘breadwinner’ for the family.

If you find yourself in this shifting situation – a situation that is more than likely to continue to become more popular as the years progress – then it may be worth taking extra considerations before issues arise. Here are some tips to keeping the social and emotional family dynamics of your household at ease while the income-related dynamics take a shift towards women becoming the breadwinners in marriage.

Budget Your Bills

Depending on how you and your spouse have decided to split the bills (split accounts, shared accounts, or otherwise), you may have to do a little math to figure out the best route of coping with a shift in income. The good part is that if you had come to an agreement beforehand when the woman made less income, then those agreements should still hold true as the woman increases her salary. Typically those with split bank accounts fall into the following categories:

  • Split Bills: Split accounts means that it’s more difficult to share the bills, so many will opt to split the bills in a way that is equal for both parties. This typically means that while one party pays for, say, utilities, the other party would pay for rent.
  • Shared Bills: In this setup, those with split accounts put an equal amount of money for each bill into a shared account wherein the bills are paid from. Everything is shared evenly.

If the woman had made less before and the couple maintained separate accounts, then the shift in earnings shouldn’t change how bills are paid. For couples that share an account, the income all ends up in the same place, and bills can still be paid in the same fashion.

But budgeting boils down to more than just the bills for the house. This is where we get into ‘spending’, which can pose more of a threat than the budgeting itself.

Budgeting can involve how one budgets for groceries, activities, and so on…and in this regard, we shift towards more of the ‘spending’ aspect of money management. When one spends their money, they typically do so in a fashion wherein the essentials are paid first, and then the expenses trickle down to the least necessary items. When working on a tight income – regardless of whether the woman or the man makes more salary – spending can get tricky.

If you’re operating under the ‘split accounts’ setup, then the man of the house may feel a little threatened when the woman is now able to cover more of the family bills and luxuries. For instance, after one pays the bills and the necessities, the leftover money can be spent on more enjoyable activities. When the woman begins to bring in more income into a split account, they’re left with a larger sum to spend on extras. Whether these extras are items that the man would ever want is not of importance; it’s the fact that the woman has the money available to spend in the first place while the man is left with little to no extra money on enjoyment.

To overcome this potential obstacle, it’s important for the breadwinning woman to consider not spending her extra money if the man also cannot do so and vice versa. Instead, consider lumping some of the extra towards a family-oriented goal (such as home improvements or a family vacation). When doing fun activities together than would involve this ‘extra money’, it may be worth it to open up a joint account for either party to utilize in family situations. While both parties should contribute to this joint account, it’s not necessarily important to see who is contributing more. But in instances of, say, a fancy dinner out together, the man (who may have not been able to contribute enough on his own to afford the expense) is able to use his card connected to the joint account to perform the task of paying for the meal, preserving his feelings of being a provider.

Preserving Tradition if It’s a Value

As women start bringing home more of the bacon, it’s important to retain many of the traditional socio-familial dynamics that many men (and even women!) value. Spend the time to spend your money in a thoughtful way, just as your partner would do.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.