Saturday, July 28, 2007

stocks fall

i know it's been a while since i posted -- been busy with work, vacation, and i managed to throw out my back some how -- but i wanted to jump in and say a little something about the stock market's fall this past week. the dow had it's worst week in 5 years and the other major indecies were decidedly lower as well. so, should we panic? pull our money out of the markets while we can? no and definitely not!

perhaps it's time to keep a little more money in cash. perhaps it's time to sit on the sidelines and wait and see.

if you're me, you just keep plugging along and keep investing just as always. you've been dollar cost averaging over the long haul and this little blip won't make any bit of difference. and, if you've got a lump sum turning to cat food in your bank account, put it into play. i happened to be reading scott burns the other day and he had a particularly pertinent article:

One of the best exercises to demonstrate this was done years ago by the American Funds group. They told the story of two investors. One had an uncanny knack for selecting the best day of the year to invest – the day prices were lowest. The other had an uncanny knack for selecting the worst day of the year to invest – he unerringly invested at market tops.

At the end of a 10- or 15-year period of annual investments, there is very little difference between the two investors. What is important is that they have invested over a long period of time.

so, if you're me, just keep plugging along. in 10 or 15 years, this dip won't even be a blip on the radar.

Sunday, July 8, 2007

life insurance

my wife and i have never carried any life insurance above and beyond what our employers carry for us, but are considering it now that we'll have a family. i've always heard that term life is the way to go, but i have never done any research into it.

i started thinking, though, at what income level does life insurance become important and at what asset level does life insurance become superfluous? that is, if i make say, 5k a year, my income would easily be covered (i assume) by welfare and social programs to my survivors in the event of my untimely death. and, if i have a cash (or otherwise liquid) stockpile of several million dollars, why would i need insurance?

this general thinking is that insurance is a vehicle to replace an income stream (or streams, in the event that my spouse would have to stop working to care for our child) in the event that i became incapacitated and unable to bring home the bacon.

college savings

i have posted on here before that sometimes i wake up in a start, worried about the increasing cost of higher education. when i went to school (public state university), i was able to fund it entirely with scholarships. i had a part time job that helped me with expenses. i never asked my parents for any money, nor do i recall them giving me any.

but, since we're expecting, i started researching options for college savings. i actually signed up for a upromise account just this morning, though i haven't filled in all the necessary online paperwork just yet. it amounts to a cash back offer that participating manufacturers contribute to when you buy their products. it's free, so i thought, what the heck.

the other thing that i want to do is open up a 529 plan, that however will have to wait until the little one is born, as i have to designate a beneficiary. 529 plans come in 2 flavors -- a tuition lock program and a savings plan. i'm likely to go with the latter, as it affords the flexibility to put those funds toward any accredited university. i would hate to lock the kiddo into life as a longhorn if he/she really wanted to be an aggie. 529 plans are great in that the earnings are tax-deferred (though, you contribute after tax dollars) when they are used toward higher education, and you have a good deal of flexibility in naming and changing beneficiaries.

ira's are also a nice option, if you qualify, as you can put pre-tax funds into them. i assume that you are able to make penalty free withdrawals out toward education costs, but i didn't look into them in much detail.

again, the magic of compound interest plays a big part here, so my hope is that i'll be able to put a nice bit away on day one and make some small contributions between now and graduation.

Wednesday, July 4, 2007

vacation savings

we're out on a family vacation and i thought i'd share some tidbits on how we save money while on vacation.

first, we go on a family vacation once a year with my in-laws. they own a timeshare, so the accommodations are totally taken care of. that saves us a bunch of money right off the bat. i know not everyone will be able to take advantage of such a situation, but being able to trim housing costs is a great way to save. visiting friends, going camping, and planning your vacation around hotel deals are alternative methods that we like to use when we're not mooching off of the in-laws.

second, we eat in a lot when we're vacationing. everyone pitches in a prepares a meal or two. yesterday, i made dinner for 10, which included all the trimmings of a bbq dinner for perhaps 30 or 40 bucks, with leftovers enough for today's lunch. if we had gone out to even to a casual dining restaurant, it would have easily been $100, but probably much, much more.

next, we don't shop for fun. i know a lot of people love shopping and a lot of people love to shop when they are on vacation. we're not big shoppers, so it's easy for us to not-shop while on vacation. now, we do go window shopping, especially if it's a famous landmark, but generally speaking, we don't end up buying a whole lot of stuff to take home with us.

museums, zoos, beaches, and parks are great places for outings and way less expensive than amusement parks. we love the outdoors and love walking and hiking, so we usually end up spending one day doing that type of thing. a quick stop at the grocery store on the way out to buy a sandwich (or even better: some bread, deli cuts, etc) and we're set for a day.

now, don't get me wrong, we definitely do enjoy ourselves and eat out and hit the big tourist attractions -- it would be wrong not too, but we just don't do it every day. and being able to trim just one of those days off a vacation could result in some decent vacation savings.

Sunday, July 1, 2007

kids cost how much?

well, we're expecting big changes around here . . . perhaps the biggest. i'm not talking about site changes or job changes. i'm talking about a change that's due in about 9 months from now. which got me thinking, what is the cost of raising a child? my best guess was several hundred thousand dollars and perhaps more depending on the amount of schooling he gets.

my o so thoughtful wife sent me this tidbit:
According to government estimates, the average middle-income family will spend roughly $10,000 on child-related expenses in the first two years of life ($8000 for a second child), and some experts suggest that figure may be too low. You can count on spending at a minimum of $25 a week ($1250 per year) on diapers, formula, and baby food alone.
while that didn't sound too terribly bad (read: life changing), it sounds way too low to me. what about college savings? what about moving into family cars instead of the old roadster? what about the cost of delivery (or more accurately, the cost of insurance and co-pays and deductibles)? a nanny? birthday parties?

and that doesn't even take any consideration of the costs leading up to birth . . . i think i need a drink or another job.