Stimulate this! Great ideas for using your economic stimulus package

As soon as I heard about Bush's Economic Stimulus plan, I started in with the subversion. I'd use my stimulus check to buy things, but entirely not the things Bush and big retail corporations wanted me to. My debit card wouldn't be swiped at Target or Sears or Olive Garden; with the whopping $2,100 my family will get (we have three children) I wouldn't buy a single gallon of premium unleaded gas, nor sink a nickel into video poker machines (I'm scandalized and saddened that's where Oregon's kicker went). No. I'd buy things that would work gently against big government and big big oil.

I made a promise to myself that I would spend my economic stimulus money on things that would save me from spending future fossil fuels, future money and future greenhouse gases. I decided I would invest my stimulus package into my little urban homestead's soil, air, and food stores. I'd get off the grid, just a bit, I'd use it to live lighter. I made a list of ideas and (helped by a substantial tax rebate) I've already started in on it. Do you have any ideas to add to the list? Where will your stimulus package go?

• A family bike. I bought this Electra Townie + Xtracycle + Bobike seat from Clever Cycles for about $1500; you could do it a lot cheaper ($450-$600) if you had a base bike to use (you could even use an old Schwinn). I'm waiting for another Bobike seat for Truman. I can transport all three boys on it! There are lots more thoughts about family biking here.
• A couple of garden boxes, fertilizer, compost, seeds and starts. It seems as if I'm not the only one thinking about this! Lots of your great vegetable gardening advice here.

How much is your weekly grocery bill?

Last week, the Oregonian's FOODday featured four families that put their family food budgets on a diet, ranging from $100 to $300 a week.

Why are we paying so much more at the store? Blame rising energy costs that make it more expensive to transport food and run a farm; spiking corn prices that inflate the cost of feeding animals we use for meat, eggs and dairy; and a run-up in what food manufacturers pay for wheat, soy and corn sweeteners, the main ingredients in bread, cereals and most processed foods on your grocers' shelves.

One family slashed their eating-out budget and planned their darndest to keep within their budget and scheduled meals.  Another family stopped frequenting all their favorite speciality food shops, opting - instead - to one-stop shop, saving on time and gas and impulse purchases.  The third family, raising two teenage sons, became masters at finding steals and deals, scoring enough milk for the boys' gallon-a-day needs and cheese or fruit for their constant appetite.  And the last family tightened their belts even tighter and focused on from-scratch cooking.

These days, we're talking about tightening belts, but we're also talking about lower-sugar, less processed cereal, peanut butter, and bread.  How do we balance the food budget with all these factors in play?  What is your family's weekly food budget?  What are tips and tricks to keep you within budget?

Happy Tax Day!

The day is almost over!  Have you sent in your taxes?  Did you do it weeks and weeks ago and already spend your refund?  Are you deferring and extending the pain until August because you owe the government money (YIKES!)?  Did you file electronically?  Or, will you be joining me at the main post office at 11:59pm tonight?  They're postmarking until midnight just for the occassion!

Are you tightening your belts?

I haven't seen it yet, but apparently Portland Monthly's cover story is all about Portland real estate and why Portland is still America’s hottest hometown.  We're not going to try to discuss the reality of the Portland economy here, but we've heard several families recently talking about changes in family finances to perpare for joblessness and other losses.  With this economy doing something funny, are you tightening your family money belts even more, saving more for those rainy days?  What are included in part of your essential monthly expenses and what are more discretionary (and, therefore, disposable)?  Do you feel secure here in Portland, a bit insulated from the housing crisis that hit hard in parts of California and Florida?  Or, have you noticed the chill, in one way or another?

Saving for College, Right.

The astronomical cost of childcare is one of my many favorite rants.  As evident by the conversation over at Activistas apparently I may not be the only one.  At the recent Naked Baby Swap, another mama and I engaged again in the topic with a twist.  She confided in me that her childcare costs are $1800/month.  But I then wondered, how are you saving for college?  She said they weren't.  Right, to foot a childcare bill that amounts to a mortgage payment, who can really think about saving for college!

With our childcare bill at over $19,000 over the next year, I too wonder why we are saving for college.  But in the end we feel it's important.  We scrape together a measly $75 a month to go towards a 529 savings plan for each child.  We also try to match 100% of monetary gifts provided by family members.  Are we doing the right thing even though we are still paying off my husband's student loans (which in and of itself is a small fortune)?  Knowing that both my husband and I worked our way through college with very little help from our own parents; and somehow we made it begs a series of questions.  urbanParents:

How many of you are saving for your kids college education?  How much and through what mechanisms (529 plans, etc)?  How much of the decision to pay for college stems from how they were raised and if you got help from your own parents?  If not, why not?  And lastly, are you in agreement with your spouse / partner about whether saving for college is necessary?

Budgeting to Support a Stay-At-Home Parent

Kudos to Mary for choosing to stay-at-home despite a drastic income differential.  She's seeking your advice on preparing for the changes in income and budget advice.  She writes:

We are expecting our first child the beginning of July and we are planning on me quitting my job to be a stay-at-home-mom.  And, with thoughts of having  one more and wanting to stay at home with them until they are both at least two years old, we are looking at a dramatic shift in income and the lifestyle that goes along with it for at least 4 years. This is a very scary step for us as our income will drop by over 40%. Does anyone have tips and recommendations for preparing for this income change and for living within a much smaller budget over the next few years?

Toys: What to (and not to) buy from mamas who've been there

Everett's developmental pediatrician has recommended, among other things, that we organize his toys better; and part of that has been purging lots of the precious whats-its and doo-dads garnered from the Bins, or from a random assortment of relatives and friends. We've been talking a lot about the concept of "quality" here at chez cafemama. And all last week while I had my nose to the corporate grindstone, launching a new personal finance blog called WalletPop, I was thinking about what things I wish I hadn't bought -- instead putting the money into college savings, or a therapy fund.

Today I couldn't help but fall in love with this post about toys you shouldn't -- and should -- buy your kids for Christmas. It's written by the mother of one of the lead bloggers at WalletPop (a financially-savvy 19-year-old). And to her list I'd add:

• Don't buy: Anything remote-controlled
• Do buy: Die-cast trains
• Don't buy: So-called "educational" toys, which nearly always have batteries and only teach your kids how to push buttons.
• Do buy: Books in quantity
• Don't buy: Toys linked to Disney movie / Cartoon Network show / video game; why further that vicious cycle of feeding your children to the marketing machine?
• Do buy: An easel, quality crayons and colored pencils, a big roll of paper.
• Don't buy: Excessive stuffed toys, especially those with voice boxes; they'll take over your playroom.
• Do buy: Dress-up clothes (or make them!)

What's on your list?

Seeking Financial Advisor

MoneyTalk is important, no doubt.  Kate recently emailed:

It was easy back when our finances were a simple checking and savings account. Now that we've got college funds, IRAs, a mortgage and - happily - some extra to invest, things are a bit more complex. We'd like to sit down with a professional who can help us decide how best to allocate our resources. We're looking for someone who will take the time to understand our individual situation, not try to sell us a financial package, and preferably someone who is familiar with socially-responsible investing. Any recommendations?

Mamas: Your best free activities & low-cost shopping?

For some of us, low-cost living is the reality.  We just don't have dual incomes or excess funds to go around.  Even when we are pinching pennies, there is still plenty to do with the kids.  We are sure of it!  What are your favorite free haunts?  Where do you go?  What about for household or children's items?  Where can you find decent quality, low-cost goods?  An urbanMama emails:

Can you give me ideas for how to go out and about (or stay in!) with my 3 kids (ranging 3-12) without spending money - or spending very little?!  I am up-to-speed with the library and the parks, but need more inspiration!  Also, shopping suggestions - both for household and childrens stuff.  Thanks (ps. the naked mamas party was a huge help!)

Wills, Trusts, and Estates

Would you say a good attorney is hard to find?  When it comes to setting up wills, trusts and estates, although there are many do-it-yourself resources, sometimes there's greater assurance in using a professional.  Blair is looking for a referral for a lawyer to set up wills, trusts, and the like.  Have you used someone good or do you know someone you'd recommend?  Or have you prepared these yourself a la Suze Orman?  Let us know below.

Money Honey

For sure money talks.  What age is the right time to start learning?  How should allowances work, if at all?  Thanks for your email Sadie Rose:

How do we do it??  What is the best way to teach our little ones how to spend, save, earn, value?  Sometimes we can't just rely on example (wink, wink).  But really, I am dying to hear how other uMs and uFams teach their children the best way to handle this thing called money.

Recommend a Financial Planner?

Oh yes.  Money talks.  Especially when we have little ones to consider as we plan.  Do you keep it in-house or do you have a consultant?  Jenny wants to know:

Hi! I have 2 girls (ages 2 and 5) and have been in Portland for over 10 years.  I wanted to ask others if they know of a good and not too expensive financial planner. My husband and I are middle class and are not looking to invest, but more to: budget, pay off debt, start thinking of retirement, etc. Anyone know of someone who could help us (preferably Downtown, in John's Landing, or Inner SE)? We are not great with money, but are ready to learn:)

Demystifying Medical Bills - the Impossible?

Since we're still on the topic of pediatrician's, Rebecca's interested hearing if anyone has experienced billing woes:

I am in the midst of an conflict with my pediatrician's office regarding billing practices, and it has got me wondering how widespread the problem may be...so I wanted to inquire if other uMs might have had similar difficulties.

My family has an insurance policy through Regence BC/BS which includes 100% well baby coverage for 8 pediatricians visits in the first 24 months of life. The ped group that I had chosen has twice billed two visits in my daughters first 9 months of life with diagnosis codes, thereby resulting in only partial coverage by insurance and me getting a bill. What is so frustrating is that we visited our pediatricians under the impression that they were "well child" visits...we did not make the appointments with specific complaints. Upon researching the charges with my insurance company, I have been surprised to discover the diagnoses resulting in these charges...one of the two visits in our case was "functional disorder of the gastrointestinal system"...doctor speak for constipation. I had mentioned that my daughter was occasionally constipated at that visit, but it was simply mentioned in a conversation regarding the well being of my child.

I am a physician, and perhaps since I have just finished my training and have not yet practiced on my own, I am naive to billing practices. But this does not seem right. It seems to me a clear example of why health care costs are so high.... Anyone out there with similar problems? Thanks!

Accountant Required or Turbo Tax Sufficient

Leah emailed me a while back about seeking an accountant, and finally, I am just getting around to posting about it.  We had a couple of posts regarding this around the same time last year.  There was one discussion thread on whether to use an accountant vs. turbo tax and one on babysitter / nanny and taxes.  So, mamas, we need your help again.  Can anyone recommend a good accountant?  What are your experiences with filing taxes?  Are you a DIY or are you the type to pay someone else to do the dirty work?

Work-Life Balance

A question from Maple:

Just wondering... what do you all do out there to pay for rent/mortgage, food, gas, bills, auto insurance, health insurance, preschool and all of the other necessary items and also take care of your child(ren)?

I'm currently having trouble figuring out how to balance work, money and spending enough time with my son.

Just curious what everyone else's situation is.

529 Waaa!

Experts say it's never to soon to plan for college savings.  With my first son, we started a 529 College Savings plan offered for Oregon last January when he was closing in on his second birthday.  I admit, I'm not sure if the Oregon College Savings plan was the best choice but I selected it mainly because it offers tax deduction for residents, and the fact that I wanted to choose a plan quickly before procrastination would soon kick in.  There are sites like Savingforcollege.com that offer tons of information but I don't have the stomach nor the patience to sift through the dizzying options.  Morningstar suggests Virginia, Utah, and Alaska have some of the best plans for those that don't like the options provided from your home state, but why?  What have you done?  What college savings plans have you opted to invest in and why?  What other alternatives are you seeking if you feel 529s are not the best option?

A Tightwad Shops Local

Shopping local in California can typically mean buying from the neighborhood strip mall. In Portland, though, shopping from locally-owned boutiques is a badge of honor.

I prefer not shopping at all, yet I am intrigued by all the start-ups on Alberta Street, my neighborhood thoroughfare. I peek inside the shops on a weekly basis, but am challenged by the $140 sweaters and $20 wind-up toys. It's tough for a tightwad to change her ways but, if I'm planning to buy a gift or a necessity, I'd rather skip Target and walk to my local boutique.

So, this holiday season, I'm slowly devising strategies for shopping local:

1. Buy less--holiday gifts can be fewer and simpler, but from my neighborhood store. I got sweet photo albums at Collage (1639 Alberta) for $5-$8.

2. Buy gifts at the grocery store--in this case, the Mexican grocery. La Playita market, next to the taqueria at 28th and Alberta, has $1.74 Saint candles, way funkier and cheaper than some pseudo-schmancy tea light lantern at Pier One and the like.

3. Think tiny--my son adores collections of miniscule treasures, like the homies from La Playita's gumball machine, the beads & trinkets from Picasso's bead shop (30th and Alberta), and the stretchy reptiles at Grasshopper (18th and Alberta).

4. Try art--this is wild, but small works of art are actually some of the better deals out there. The gallery at 3oth Street is hosting a "Tiny Things" show and has fused-glass bugs for $15. Onda (2215 Alberta) has alebrije ornaments for $20.

5. Aim for maximum style with minimal items--one "Anarchy in the Pre-K" shirt from Wild Child (at 14th, see the website at http://www.wildchildpdx.com/Index.html) says more than that outfit from Baby Gap.

Be Thankful and Prepared

Recently, I got a call at work from my husband.  It went something like this:

Husband:  "Hi. I'm in urgent care.  My headache hasn't gone away, I'm waiting for a CAT scan.  I've been here since 2 pm.  Can you pick up the kids?  You might want to call the sitter. I've gotta go."

Me: "Um, sure.  It's a quarter to five.  It's going to take me an hour.  Have you called the sitter?"

Husband: "I haven't had a chance. Can you?  I've gotta go."

Whaa?  The phone call caught me completely by surprise since (a) I usually don't get very many calls from my husband at work (b) we have not yet encountered a bind where I absolutely needed to pick up the kids (c) I only got enough information for all sorts of crazy scenarios to go through my head.

In the end everything turned out fine.  The diagnosis wasn't conclusive but something to the effect that he probably caught a virus and the side effect was a head-splitting migraine that left him unable to function normally for at least a couple of days.  However, for me, this was a good time to reassess our ability to deal with the impact of these worst-case scenarios.  When you're young, healthy, and financially stable you barely give thought to thing ever going wrong in life.  You start thinking about it more when you have kids.  And, then you really think about it when a situation scares you into more thoughtful consideration.

In my head, I made a mental note to check my husband's life insurance policy.  I have one for myself for enough to probably cover our mortgage, but that's it.  So, I googled to figure out how much insurance we would need. The results are dizzying.  According to a simple lookup table of just income replacement, my current insurance coverage probably would not be sufficient if something were to happen to me.  My husband's coverage would also need significant readjustment.  As a family, we do need to make the time to talk seriously about planning for life insurance. 

As I was chatting about this with a mama friend, she suggested also putting together a will.  So I mentioned this to my husband.  He thought this was a good idea.  "Sure.  Can you search for a form on the Internet?" he replied.  Yes, that's right.  That's what my lawyer advised!  There are plenty of documents that you can find or buy on the Internet to plan out your will and file with the local courts.  So, for those who have gone through both processes, it would so nice to hear from you, to see what's worked best for your families.

Tax Filing

Every year, I wonder - should we go to H&R Block, should we find an accountant, should we use Turbo Tax, or should we just wade through the mess ourselves? If I had the time without the kids to worry about, maybe I could dedicate a few hours and do it myself. Right now, that's not an option.

So, can you recommend an accountant? Or should I just use Turbo Tax?

Money Talks

I never got around to putting in my two cents, for which you'll really get the value for your money ;). As I have a background on Wall Street, and an MBA, I'm not only in charge of the money (of which we have none right now, but that's beside the point), but this discussion prompted me to inquire about being a financial advisor. I've rolled over three 401(k) plans and would definitely advise you to do so. It's worth the 30 or so minutes it will take you to do the paperwork. You can set up an IRA anywhere - Schwab has a great program - and once the rollover is in effect, you can have complete control over your money. You can keep it in the same funds, stocks, and bonds that it is now (I think that's called an asset rollover) or you can liquidate and just rollover the funds. Then you can control everything from one simple online interface. Mwa ha ha ha! Most importantly, if you need to request a disbursement for any reason, like buying a new house, paying for medical bills, or generally being broke, you don't have to spend weeks going through the HR department of your old job. No looking up phone numbers in your now-broken palm pilot. No spending hours on hold. It's all right there for you. And, if something should happen to any of your ex-employers - I was in this position twice (one corporate bankruptcy, one psycho tax-evading CEO) - you won't have to worry about your money possibly being held up for months or even years while you go through the legal inner workings of whoever's holding your retirement account. As for investments? I'm a stock girl myself. I pick my own, do my own research, buy stocks of companies whose business models I believe in. We're young yet, and if you have a good feeling for the honesty of the management and the quality of the product, it's hard to go wrong. I'm heavily invested in stocks like eBay, Starbucks, and companies I've worked with in my career (one hospital company was sold recently for a hefty premium to the stock price and they singlehandedly increased my portfolio by 50%. course my portfolio is very small right now given the aforesaid disbursements for general brokeness. just because i'm good with investments doesn't mean i'm good with finding jobs that pay the bills and allow me to work part-time. *sigh*). If I was going with a bond I'd head towards a high-yield bond fund. I could give recommendations if you're interested. These are on the safe side of the spectrum, give a relatively stable yield, and since we're young enough we can handle the risk. I'm very anti-mutual fund but it's a bias. I believe that mutual funds are set up to make their managers rich (and lots of my classmates from business school manage funds like this so I know exactly how rich they are ;). They're so hard to pick because the managers, and philosophies, change often. If you have a good amount of money - say at least $10,000 - it makes ever so much sense to me just to create your own mutual fund. I took the hardest class at business school which required me to develop hedged-risk portfolios. It's super technical but I'd be happy to help you out with picking a carefully risk-averse selection of investments if you're into that. If not? Pick a big reliable company like Fidelity or a local fund manager like Columbia and just go with whatever they're offering. It's a crap shoot after you get past the "is this company going to run off to Costa Rica with my money" question. Bottom line - the performance depends on the fund manager and there are often revolving doors for those positions. Unless you personally know the manager you're not going to get any benefit from researching them. It's all just marketing and you know how that goes. Past performance is no guarantee and all that - returns are truly random. And go with the Oregon savings plan, as someone mentioned you get a tax credit. You won't if you go with another state. I researched it in-depth and the fees and minimums are almost identical. Yeah, the Alaska one is supposed to be great but the Oregon state tax credit offsets any greatness in my mind. Then you can invest lots more and a few percentage points more of 100% of your money is a lot less than a few percentage points less of 150% of your money. If that makes any sense at all ;)

Babysitter (and nanny) tax time

If you paid more than $600 to any one nanny or babysitter this year, you're required by the IRS to report their wages and you may have to pay payroll taxes on their behalf, as well. Either way, you are going to need their social security number and home address, so go ahead and get that now. The question of the day is, are you an employer or a customer of your care provider? There are a couple of questions the IRS considers. First, is the work performed in your home? If all the care takes place under your roof, you're probably going to be considered an employer. Second, assuming that the care takes place outside of your home (in a nanny share, or in the babysitter's home), do you "control not only the work they do but how they do it"? If you do, you are an employer. You might not be an employer if, for instance, you have a nanny share outside your home where the nanny makes her own "lesson plans" and decides when to feed your child, whether to wash the dishes, etc. In this case, your nanny might be the employee of the primary parent (the one whose home in which the care is given), but would not be your employee. Another instance would be a stay-at-home mom who cared for a few other children in her own home. You might be able to get away with calling yourself a customer of your child's caregiver if the care was provided in your home, but your headstrong nanny told you at the beginning how things were going to work. Are you an employer? You may have to pay federal unemployment taxes, medicare and social security on behalf of your employee (you can choose to withhold your employee's portion, or pay it yourself if you're especially generous - or if you didn't think of this until after the wages were paid. Whoops.). Unless your employee is your spouse, child (under 21) or parent, or under 18, you have to pay social security and medicare taxes to the tune of 15.3% of the total wages. If you're withholding, you can withhold 7.65%. If the wages were over $1,000 for the year, and the employee is not your spouse, parent, or child under 21, you have to pay 0.8% of the total cash wages as federal unemployment tax, up to $7,000 of wages. If you have an employee, you need an EIN. You need to obtain one by January 31 of the year following the payment of wages (if you paid wages in 2004, you'll need one by January 31, 2005). You can obtain the EIN by calling 800-829-4933; by submitting a form; or you can apply online. Once you have an EIN, you'll need to submit a W-2 reporting your employee's wages. The form is here, but it's printed with special ink; you'll need to pick one up from a local accountant or order one from the IRS at 800-829-3676. You have to submit one page to the SSA by February 28 along with form W-3. If you're filing electronically, you have until the end of March. The employee's copies are due to the employee "generally by January 31." If you have determined your provider is not an employee, you'll have to submit form 1096. Like the W-2, this is printed with special inks and will have to be requested from 800-829-3676. Also, it is due by February 28 to the government, and as early as possible to your provider. For some reason, I haven't been able to find verification of this on the IRS web site, but an accountant friend told me this is what to do. Oh, and you DO put an "x" in the box, "if this is your final return, put an x here." Now that you've taken care of your care provider, it's time to take care of yourself. In most cases, you'll be able to deduct the child care expenses up to a limit (the worksheet on the form instructions will tell you how much). The form you need: 2441. Attach this to your 1040, enter your child care tax credit on line 47, and watch your refunds roll in. If you're an employer, you'll need to fill out and file Schedule H with your 1040, as well. What if you are the stay-at-home parent I referred to above? You're probably self-employed. If so, read on for more info.