Beating Broke

Personal Finance from the Broke Perspective

Would You Be Better Off Single (Financially)?

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There are, undeniably, some benefits to being married.  Both financially, and otherwise.  But, are there benefits to being single as well?  Would you be better off single?

One of the biggest financial benefits to being married is the ability to have two full-time incomes coming into the household.  Using both incomes, we have the ability to save more money for retirement and for emergencies.  But, we’ve still got to have the ability to see each other once in a while, so we have a limited ability to extend our work hours to increase our incomes.  Being single, you have the ability to work 10-12 hours a day, and increase your income through overtime, or through a second, after-hours job.

Together Time 106/365As a single person, there’s no arguments over where the money should go, how much of it to save, or whether a person can survive on a diet of rice and beans.  Frugality can be taken to extremes that are usually off limits to the married.  Want to live in a one room shack with limited heating and cooling because you’re at work more than you’re at home?  If you’re single, you can do that.  Being married, especially if there are children, makes that a near impossibility.  Want to take up a bike lane living lifestyle?  In North Dakota?  If you’re single, that’s probably possible.  Married?  With kids?  Think again.

Being single also helps you save money.  There are no Valentines gifts or anniversary gifts needed.  Why buy a fancy bedroom set when a mattress on the floor will do the trick?  Your dining out bill is easily cut in half, or more, since you don’t need to eat at those fancy restaurants. Taco Bell and Dominos will do just fine.

Without the restrictions on your time, you have free rein to do what you want, when you want to do it.

Are you single?  Are you better off financially than you would be if you were married?  Are you married?  What do you think?  Would you be better off, financially, if you were single?

photo credit: SashaW

Shopping for a New House

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When we decided that it was time for a new house, (read this post for the reasoning) we knew that we had to be smarter about it than we had been when we bought our first house.  We weren’t going to just jump into it and make a rash decision that might cost us down the road.  What we discovered when we started really talking about it was that we had a slightly different idea of what we wanted in a new house.

One of the biggest reasons that my wife wants a new house was because she feels (rightly) that our current house is too small for our growing family.  Between the two kids and the big dog, we just don’t have room for all the stuff.  Yes, stuff is just that.  Stuff.  It can be gotten rid of, but it seems to just re-accumulate.  There are certain luxuries that we allow ourselves, that some people would just call stuff.  Will it cost us money to keep those luxuries?  You bet.  Are we willing to pay that price?  You bet.  While I’m sure there are some who can live on $7,000 a year, and do so enjoyably, I’ve come to the conclusion that I’m not one of them.  Call it what you will, but I like my stuff.

3D Realty HandshakeBut, I also like my space.  So, for me, one of the biggest things I want in a new house is a sizable yard.  It doesn’t have to be huge, but a small postage stamp yard isn’t going to cut it.  We’ve got a dog, and he needs room to run, too!  Yes, there are parks in town.  Yes, we could go to them and run and play there.  But, it’s easier to just do that in my own back yard.  I imagine that part of that is from my experiences growing up where we always had some land to play on.

We’ve got other requirements, as well.  The kitchen has to be comfortably large.  It doesn’t need to be one of those huge kitchens you see on the home remodeling shows, but it needs to be large enough that two people can pass each other without one of them having to practically stand on the stove to do so.  It was a mistake we made in buying the house we have now that the kitchen was just too small and makes any combined activities pretty much a n0-go.   Also, as our family grows, we’d like to have more than one bathroom.  It wasn’t so bad when both kids were in diapers and could go wherever they were, but now that they’re both out of diapers, it makes it very difficult to get everybody ready and out the door in the mornings.  Impossible?  No.  But damned difficult.

So, with a few requirements in mind, we set about looking for a new house.  Luckily, most of the realtors in the area are pretty good about taking enough pictures to really help you get a good idea of what the house looks like before you go and see it, and we’ve been able to weed some of the less than desirable ones out before we wasted our time to see them.

We quickly weeded through the available houses, and came up with only two that were even close.  The one was a bit older house, but had the land.  It’s failing was that, despite being bigger than the house we are in, it was configured all strangely, and all the extra room was in all the wrong places.  The second house is on the edge of town.  This was a bit worrisome to my wife because the town isn’t known for it’s excellence in snow removal, and there’s a chance that, being on the edge of town, it might get even less attention than the rest of town gets.  It does have a large yard (2+ acres), and has plenty of room inside.  We found ourselves slightly excited by our first visit.  Enough so, that we went for a second visit.  And then made an offer.

The owners countered our offer, and we took their counter, so now, we’re in the process of getting all the ducks in a row and buying a house.  We will need to sell the house we are currently in, to use the funds from the sale for a larger down payment.  God willing, we might be able to close on the house and be moved in before Christmas.

photo credit: lumaxart

A Simple Technique to Help Parents Meet Their Savings Goals

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Having kids is not cheap.  There are many expenses that are associated with small children that are hard to get around no matter how frugal you are.  For instance, if you are a dual income family, you must pay for daycare and disposable diapers as most daycare centers will not accept cloth diapers.  In our area, daycare for an infant can run a family $1000 a month.  You may rejoice when your child enters preschool because you will find an extra $1000 a month in your pocket.  Instead of just absorbing that money back into your budget, why not earmark it for something else?

Imagine if you took that $1000 a month and invested it?  That is $12,000 a year!  You could continue to pay it to yourself, perhaps setting up a college fund for your child with the money you used to pay in daycare.  In five years, you would have $60,000.  After that, just let it sit and earn interest for the next eight years, and your child’s college education would be largely paid for.

JJ Following The Girls To School free creative commonsWhat if one of the parents decides to stay home to care for the children, in part to avoid expensive daycare?  They may not have the $1000 a month to put away.  While this is true, there are still plenty of other expenses associated with young children that you eventually won’t have to pay.  For instance, we are paying roughly $75 a month to diaper our two girls, and I anticipate within the next 6 to 8 months, both girls will be out of diapers.  It would be very easy to just absorb that $75 back into the budget, but that isn’t what I plan to do.  Instead, I plan to set up a college education fund for my kids and invest that $75 a month.  Yes, $75 a month will not add up very quickly, and it certainly won’t put even one of my children through college.  But it is a start, and it is more than we are putting away right now.

Likewise, if you have a monthly car payment, when the car is paid off, use that money to pay yourself a car payment so you can pay for your next car in cash.  If you bought a car 7 years ago, and had a monthly payment of $475, and you paid off the loan in four years and continued to make that monthly payment, you would now have $17,100 set aside for a new car, which would be enough to buy a nice, one to two year old car for cash.

You may argue that the car payment or the daycare payment was a hardship and that now that you no longer need to pay those payments, you need the money to pay for other things.  This might be true, but if your child was still younger than preschool age, you would find a way to make the payments because you would have to.  Or, if you now have other expenses for your child such as after school care for $300 a month, deduct that from the $1000 you used to pay for daycare and save the remainder.  If you can maintain that mindset, you will find yourself reaching your financial goals quicker than you imagined, simply by not seeing that money as “free money” to now spend as you will but rather as money to continue to invest in your and your child’s future.

photo credit: Pink Sherbet Photography