Category Archives: Family

Picking The Perfect Location to Raise Your Family

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It took us months to decided where we wanted to buy our first house. 

It’s a decision that’s not to be taken lightly, especially if you have kids or are planning on doing so soon.

After walking through countless houses is various counties, we decided to build in a small community that is a lot like the one I grew up in as a kid, except a little better.

Our decision for our house location was based on the free demographic information, with which I payed especially close attention to the following criteria:

  • School System Rating (our is excellent)
  • Average income (we wanted to fit in, not too rich and not too poor)
  • Average house size and appreciation in value from previous years (nobody wants to be in a declining community)
  • Crime Rate (obvious…)
  • Amenities (Parks, Rec Centers, etc)
  • Taxes

After a lot of searching, we found the location where we now live at.  It had the perfect amount of families with children in the neighborhood, a small park that was a street over, it’s very close to junior high and high school, and we were able to walk to the Recreation Center to swim outdoors in the summer… 

It was a great pick, and we were both very proud of our decision.

Now some of you may be wondering why I was concerned about average income and average house price.  Well, this was because I didn’t want to be one of the poorest family in an expensive community.  Plus, such a community tends to have high taxes anyway…  Nor did I want to be the other extreme (crime might be higher in a such a location)…  I was going for the goldilocks position (just perfect)! 

What was your location criteria when you were house shopping? 

If you are shopping now, I hope this post can give you something to think about other than just looking for a pretty house!

-MR

4 Different Ways To Learn Financial Lessons

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After commenting on Mrs Frugal’s cooltobefrugal.com site, on post “Do Your Friends Share Your Financial Values?“,I realize that we learn financial lessons in mainly 4 ways.

  1. Learn from reading books, listening to teachers, and taking financial advice in general.  People that learn this way have the easiest time  picking up the concepts and avoiding major losses.  They quite literally learn from your mistakes so that they will never encounter them!
  2. Learn by ignoring what others have to say, and doing it your own way.  This method of learning is the most ineffective way of learning.  I have to admit, I went through a phase like this at one time.
  3. Learn by watching others and mimicking there actions.  This way is really a hybrid mix of #1 with a splash of  #2.  These people listen to what you say, but they also have to experience it for themselves (to let it sink in).  Still this is much better than #2!
  4. Doing the oppositive from what was trying to be taught.  I have a small subgroup of friends in this category too.

Okay, now here is the meat of this post.  If you ever try to teach your friends or family about finances, only teach the ones that learn using the following numbers: 1,3!  Those groups are trainable!  Life is to short to waste your breath on groups that don’t care!

The problem with #2 is that they aren’t going to do what you teach them anyway!  The are hand-on people that must experience the failures first hand to learn anything!

The problems with #4 is that they think you are trying to trick them or screw them somehow.  This is a suspicious bunch!

People move from from techniques 1 thru 4 at various times in there life.  I’ve been 3 of the above at various points in my life (I’ve never been #4). 

How do you learn financial principals?

-MR

Reasons For Having A HSA

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The main reason that I wanted to have a HSA was the fact that I hated to pay all of that money to the health insurance company every year! 

 

Hundreds of dollar each month was taken out of my paycheck and never seen or ever used.  It was very disheartening for me.   

Then in 2005, the company I work at announced that for year 2006, they were going to included a HSA plan in their medical options!  That when I started reading about it.  The first year it was offered, I didn’t bite, but it was very tempted and I really regretted that I didn’t join!  Then in 2007, I finally mustered up enough courage to take the plunge.  Nobody else around me was switching like I was, so I was second guessing myself alot, but the numbers made sense to me, so I switch to the HSA plan.   

My company had a yearly max of out of pocket expenses of almost $5,500 for family coverage, and $2,500 for individual max expenses.  Luckily, I had a Roth and other monies set aside that if the need truly arose, I could tap those funds to cover such emergencies.    

Reasons and logic as to why I went with a HSA:

  • I hate that I never, (NEVER), saw the money under the non-HSA plan.  It’s like renting…
  • We hardly used any money for health needs anyway.  Everybody is pretty healthy and young.
  • I thought the money would come in handy if for some reason I got laid off.  Taxes on it would suck though!!!
  • The tax benefits are phenomenal!  The contributions are tax deductible!  Up to the following top limits:  (for 2010) $3,050 for individual coverage, $6,150 for family coverage (and if you are 55 or older, you get an additional $1,000 amount tacked on to the above limits).
  • My company kicked in a free monthly contribution in addition to the one I was making!!!  Yeah Baby!

There were negatives too with the HSA plan such as:

  • You have to pay the money for all the visits to the doctor’s office, etc (although certain things were still covered with the company plan, like a physical and the kid’s checkups).  We got a credit card option with our HSA provider for HSA charges…
  • If we had a serious medical emergency the first year, then this would have costs us more than it would have benefited us.

As you can imagine, the positive aspect outweighed the negative aspects for my family.    

Here is the real kicker!  We have enough of a money basis in our HSA that we can now invest the money in a dividend stock of some sort and the dividend would pay for our yearly medical expenses (which currently come in less that $250.00)!  Not all plans let you do this though, but many will let you invest in mutual funds though.   

So far my small not-too-risky gamble has paid off with the HSA I am in.  Most of my work peers, don’t share my enthusiasm for the HSA plan, but for me, it’s a win-win!   

Readers, what do you have an HSA, and do you realize what a great money saving device it potentially is?

Increasing Insurance Coverage

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I decided to bite the bullet and up my life insurance coverage amount for the family.  I increased the amount by $300,000 more than my current coverage ($200,000).

So now, I’m covered for $500,000 if I die.  While that doesn’t sounds like a lot… in our case it is.  With the Social Security death benefits, my wife should do just fine, and my kids will still be able to go to college (or at least they’ll have enough for the first 3 years, if I were to die now or next year).

A smarter approach on my part would have been to have this level of coverage all along.  Now that this is in process, I feel a little better now.  The only problem with the new coverage amount that I now  have, is that the coverage is through my employer.  I’m not sure what would happen if I were to get laid off (or worse fired).  That’s why I am considering purchasing additional coverage separate from work.  I will earmark these funds separately too, perhaps putting the money in a bond or a safe dividend paying stock (or even a mutual fund or etf…).

What type of extra insurance am I considering?   Since I’m late to the party, I’m looking at 20 year term life insurance (If I was starting new, then 30 year).  Since this is extra security above the amount what I currently have with my employer, I’m going to look for bargain amounts (but at least $150,000).

What should I have done when I started my family?  If I were to start again, I’d buy a 30 year life insurance term right out of the gate.  I’d also make sure the coverage amount is at least $500,000.  If I was just starting a family in 2010, I’d probably go for the $750,000 to $1,250,000 range depending on how much the monthly cost would be.  Actually, I would most likely go for the $1,000,000 amount.  The thing is if you go too low and a mishap occurs and you need it years later, inflation might take a decent size bite out of the amount your family receives.

I can’t stress how important this coverage is.  I’m kind of surprised I was weak on this (to me, at the time, 200,000 seemed like a lot of money), but it’s not!  I also underestimated my chances of death.  But even if you are in excellent shape, that doesn’t prevent accidents from happening to you! 

If you have or are starting a family, please go the extra mile on this one, don’t be naive like I was!