How to Manage the High Cost of Back-to-School Expenses

Do you remember the back-to-school excitement?  Your parents likely took you out shopping for new clothes and new folders, pens, pencils and other supplies.  While you couldn’t wait to get out of school in June, you were equally excited (at least temporarily) to go back in August or September.

Yet, now, many parents may dread the back-to-school season because of the financial burden.  Yahoo! recently reported that the average back-to-school price tag for a high school student is $1,402!  That includes the cost of back-to-school supplies, musical instrument rentals, sports and field trips.

If the high cost is concerning you, especially if you have more than one school-aged child, there are plenty of ways to save.

Back to School Supplies

manage back to school expensesWhen it comes to back-to-school supplies, there are several cost-cutting measures you can take.

Shop the sales.  Target, Walmart, Office Depot, they all offer back-to-school supply sales.  Cherry pick the best deals, and you won’t have to pay much for school supplies, especially when you can get notebooks for .05 a piece!

Check out the dollar store.  Your local dollar store will have school supplies at a fraction of the cost of retail.  This is a great one-stop shopping place to go if you don’t have the time to cherry pick sales.

Clothes

Buying your kids new clothes for school can really eat into your budget.  Try these strategies:

Take inventory first.  Before you buy any clothes, take inventory.  You and your child can look through her closet and see what clothes are still in good condition.  You  may find you have very little to buy.

Stagger your purchases.  There’s no rule that says you have to buy all your child’s back-to-school clothes the week before school.  Buy some jeans and long sleeve shirts before school.  Then, in October or November when the weather cools, buy some sweaters.  Stagger your purchases based on need and sales.

Buy second hand.  Another option is to buy second hand, either through a consignment store or a place like Goodwill.  You can also try joining and buying from Facebook groups selling the brands of clothes you like.  You’ll save a bundle!

Extracurricular Activities

Extracurricular activities are important for your children’s development, and in the high school years, participation also helps to round out their college application.  Yet, extracurriculars can be expensive!  The key is to find ones that your child enjoys and that you can afford.

Look for free extracurriculars.  Especially when children are younger, look for things that they can do for free.  When my son was young, choir was free, but after school gym cost money every month.  He joined choir, and then later he also joined Art Club, in part because it was free.

Choose one extracurricular.  As your kids older, choose one extracurricular activity that they excel at.  Have your child focus on that one.  Then, you only have one expense to pay versus three if he was on a sports team every season.

Have your child become a teacher.  Has your child been taking piano since she was five years old?  If she now has 10 years’ experience, she could start offering lessons to younger students to help pay for her own lessons.  There’s nothing wrong with a high school student helping to pay for her activities and interests.

Combine these strategies, and you’ll find your back-to-school expenses are much more affordable.

What are your favorite strategies for saving on back-to-school items?

Pay Off Your Debt for Good

“There are two ways to enslave a nation. One is by the sword. The other is by debt.” There is an ongoing debate on the internet about whether or not that quote was first said by John Adams. Regardless, the quote is very powerful with its meaning. Debt is slavery. With debt you are controlled by the person in which you owe. If you don’t believe me, stop paying your monthly payments on your house, car, or other loans. The bank or other creditor will come along and seize that asset from you or other assets that have been used as collateral. Debt is very powerful and can take a massive financial and psychological toll on us. Paying off our debt can lead to previously unfathomed levels of financial freedom and happiness. I’ve started Young and Wealthy Living to help others realize this dream.

Today, we will observe multiple methods that can be used to pay off different types of debt faster by taking various steps.

Pay Off Your DebtThe Debt Portfolio

If you’re like most people, you have many different forms of debt. These could be a credit card balance, mortgage, student loans, car payments, or personal loans. If you are looking to make more than just your monthly payments on these loans, I commend you, this is the first step to finally becoming debt free. But you may be wondering, which loans should I put the extra payments toward? To answer this we will use the debt stacking method, as I strongly believe that this is the best way to attack debt. It’s very simple and straightforward. Put extra payments to the debt with the highest interest rate and pay the minimum payments on the rest of the debts. The reason this method works is that over time you will be able to accelerate how quickly all of your debt will be paid off since more and more of your payments will be going towards the principle instead of the interest. Using the debt stacking method you will pay less in total interest and you will have all of your debts paid off faster than if you just used the shotgun approach on your debt.

Student Loans

If you’re like me, you graduated with student loans consisting of private and federal loans. My student loans ranged from 3% interest to 6.8% interest. If you plan on taking the full ten years to pay off your student loans, you could be paying thousands of dollars in interest alone over this time period. If I had only been making the minimum payments on my loans I would have paid over $10,000 in interest alone. To help lower your monthly payments and literally save yourself potentially thousands of dollars in interest, you can consolidate all of your loans into one loan. Yes, you read that correctly. Not only does this give you only one loan to have to keep track of and remember to pay, but it would most likely lower your interest rate and save you money. A couple of good resources for this are Sofi and Earnest. You can also check with local credit unions as many of them offer this service as well. There are a couple things to note, however. First, many services will require that you be employed or have an offer of employment and some might require that you have an emergency fund setup. Continue to make the larger payments you had before consolidating and you will have your student loans paid off ahead of time!

Credit Cards

The average credit card debt for American adults with a credit card is $5,047 according to creditcards.com. Unfortunately, credit card debt is usually the most painful because it typically carries the highest interest rate of debts people are likely to have. It is not unlikely to see credit cards with an APR of 15% to 24%. If you are carrying a large balance on your credit card you can expect to pay thousands of dollars in interest before your card is paid off and have it take years to do. The key to lowering your payments on the credit card debt is to lower your interest rate. This will allow you to pay off that debt faster and potentially saving you thousands in interest payments.

The first method here if you have a high credit card balance and are struggling to make your payments is to transfer your balance to a new card that offers an introductory offer of 0% interest on balance transfers. A couple of great cards for this are the Chase Slate and Discover It cards. This introductory rate is only good for a period of time however, typically 12 to 21 months, before it increases to the typical 15% – 24%, so you should be paying as much as possible during this time as 100% of your payments would be going towards the principle. Again, there are a couple things to note here. Sometimes there is a fee to transfer a balance, oftentimes of 3% – 5% and you will need good to excellent credit to qualify for the best offers.

Another method you should try if you have not already: simply ask. Just call up the credit card company, be very polite, and explain to them that you would love to pay off your credit card debt but the current interest rate makes it very difficult for you to make extra payments. Then ask them if they could lower your interest rate for you. You may initially get a ‘no’ but it is very likely that you will need to go through several people in the company before you reach someone that has the authority to negotiate this. Just remember to be polite to the person on the other end of the phone and they will be willing to pass you along to someone who can help.

You may think the credit card company doesn’t care about you and if you can make your payments or not. But the truth is they absolutely want you to make your payments and have a payment plan you can afford. They would much rather work with you and have you pay off your debt than to sell your debt to a collections company for pennies on the dollar.

Of course, these are not the only methods you can use to decrease payments and pay debt off faster but we all have our favorites and those we believe to be the most effective. Recognize how debt has the ability to control you and make a plan to attack it and you will be well on your way to wiping out your debt and becoming debt free! Feel free to share your debt elimination plans and stories with me by emailing me at nic@youngandwealthyliving.com. Together we can conquer our debt and be on the path to financial freedom!

Our Cross Country Move: One Year Later

Almost one year ago, our family made the move from Chicago to Tucson, Arizona.  Honestly, I wasn’t that excited to be moving so far away from my family in the Midwest, but we thought the move would only be for two or three years.  The move was a smart choice for my husband’s career (something we still believe), so I tried to make the best out of it.

Now, a year later, I’ve found that a cross country move can evoke a wide range of positives and negatives.

The Positives

Cross Country MoveKeeping in touch with relatives is easy, thanks to technology.  My mom has made the trip out to Tucson three times in the year we’ve been here, so we’ve been lucky to see her so frequently.  Because of the cost of taking our family of five such a distance, we only expect to be able to travel to see her once a year.  She’ll likely cut her trips down to once or twice a year to see us from now on.  However, thanks to Skype, keeping in touch is easier than ever.  Whenever the kids miss grandma, we just Skype with her.

Having a back yard is priceless.  In the Chicago suburbs where we lived, we just had a tiny patch of yard.  Since we were renting, we couldn’t do anything with it.  Now, we have a full back yard for the kids to play in and we have three garden beds (though we’re still learning how to grow anything in this crazy desert).

A cheaper cost of living rocks.  No surprise, Chicago was expensive.  We could never own a house because property taxes alone were $12,000+ a year, and starter homes in less than ideal conditions were easily $350,000 as a starting price.  In Tucson, we’re able to own our own home, and the property taxes are a fifth or less of what they were in Chicago.

The Negatives

All health insurance policies are not the same.  My husband’s health insurance policy in Chicago was generous, but we always found it very annoying that medical bills were not paid until 9 to 12 months AFTER the appointment.  (Illinois’ tight budget was the reason.)  When we moved here, I was impressed that our bills were paid within a few weeks.  However, we pay more to insure our family here, and fewer expenses are covered.  We did not estimate just how deeply medical bills would impact our bottom line, and right now we’re recovering financially from the nearly $5,000 we had to pay out of pocket for the first four months of medical expenses in 2015.  (These expense would have likely been much less with our Illinois insurance.)

Moving is SO expensive.  We originally hoped to only be out here for two to three years, but moving cross country is so expensive.  Now I find myself hoping we stay here five years so we don’t have to spend so much money to relocate so quickly after relocating here.  We need time to recoup our expenses.

Moving cross country has been an experience, but despite the expenses, we’re still glad we did it.

Have you made a large move?  What did you learn a year or so into relocating?  Would you do it again if you had the choice?