Consider factors such as your child's development and the effect of more financial pressure on your lives.
This post comes from Trent Hamm at partner blog The Simple Dollar.
Marjorie writes in with a very interesting question:
I'm a single mom with a 4-year-old daughter. Each weekday, I take my daughter to stay with one of my aunts so that I can work to earn a living and keep food on the table. After Christmas, my mom sat down with my aunt and me and gave us a bunch of information about a few great preschools in the area. My aunt told me later on that she's supportive, no matter what I choose. So, for me, the real question is whether or not my daughter would get enough benefit from preschool compared to days with my aunt to make the extra costs worthwhile.
I live next door to a single mother, and I see time and time again how she is forced into making difficult choices about the time devoted to her children. Does she make a nutritious home-cooked meal or does she spend an extra half-hour with her girls? Does she spend some time in the yard with them or does she get some of the never-ending household chores taken care of? This comes on top of the prerequisite day of work for single parents, after which they're exhausted but also wanting a strong connection with their children. On top of that, there are money concerns -- a single-income household in the modern world is never easy.
When it comes to a choice between a good preschool and other child care options, I don’t think there’s a simple cut-and-dried answer because there are so many factors involved.
Changes to Medicare mean more people will receive financial assistance to cover prescriptions.
Seniors struggling to stay on a budget may get a little extra help from the government if they are enrolled in a Medicare prescription drug plan.
The Social Security Administration says a change in the law makes it easier to qualify for extra help with Medicare prescription drug costs. The extra help program provides assistance to more than 9 million senior and disabled Americans, saving them an average of almost $4,000 a year on their Medicare prescription drug plan costs.
Following predictable sales cycles can save you 50% or more on groceries.
I don’t clip a lot of grocery coupons, because I don’t find many for items I want. Clipping coupons doesn’t pass my cost/benefits test. Neither does buying in bulk. I save more by living in a small space. But the grocery strategy that I do find worth the time is paying attention to sales cycles.
Have you ever noticed that items you buy routinely seem to go on sale the week after you buy them? Pay attention. Most items go on sale at predictable intervals. If you keep track, you can get those items for 50% off nearly every time you need them.
If you would spend $200 on a purse, what does that indicate about you?
J. Money at Budgets are Sexy directed us to a fun blogging game: How much would you spend on (fill in the blank)? A winter coat? A purse? Fashion boots?
Like all good games -- Monopoly comes to mind -- it can reveal traits you might otherwise leave unexamined. “These exercises are awesome because they get you to stop and evaluate your true spending habits -- something we tend to glaze over every now and then,” J. Money wrote.
Here’s a sample from his post, comparing what he’d spend with figures provided by Krystal of Give Me Back My Five Bucks and “Fabulously Broke” at Fabulously Broke in the City, who invented this little exercise. (Krystal and FB are using Canadian dollars, so Krystal’s $200 purse is $193.33 USD.)
There's no such thing as a bad market if you know what it takes to sell a house.
In the 30 years I’ve been investing in real estate, I’ve never seen anything like this housing market. Granted, all real estate is local and I live in Florida, which shares the title of worst market with California, Nevada and Arizona. Home prices here have declined up to 50%, and many houses have been on the market for years.
But as the saying goes, what doesn’t kill us makes us stronger. If you can successfully sell your home in a horrible market, you’ll find selling in better times a walk in the park.
How to cut winter bills without making major home improvements.
As consumers grow more energy conscious, and environmental advocates push for greater awareness, there is no shortage of suggestions for new ways to cut energy bills and help the planet in the process. The cost-savers can be great for homeowners -- but what about renters?
It turns out that many leases prevent tenants from making changes that could lead to substantial energy savings.
Spending money strategically now can save you lots over the long haul.
Frugality sites are full of advice for cutting your expenses right away. Everybody's got a list of unnecessary expenses, an exhortation not to buy stuff you don't need, and some ideas for how you can get the things you do need more cheaply. Living cheaply for the long term is different. Call it "strategic frugality."
Most people don't really have a goal to live cheaply. Rather, within the constraints of their income and their important long-term goals (like college for the kids and retirement), they want to live as well as they can. The problem is, boosting your living standard at each opportunity makes it impossible to take the strategic actions that let you live better for less. (And once you've got that down, funding your long-term goals gets a lot easier.)
Converting to a Roth IRA doesn't eliminate uncertainty about future tax rates.
As most of you know, 2010 is a special year for taxes. It is the last year covered by the Bush tax cuts which, as you may remember, were engineered as a package of temporary adjustments and deals rather than permanent changes. Most of it goes poof on Dec. 31 of this year.
In the meantime, 2010 is a special year for converting traditional IRAs into Roths. When the Bush cuts were being constructed there was a need to find more government revenue, particularly at the end of the period covered by the law, i.e., 2010. IRA conversions fit the bill because, in the short run, they generate additional income tax revenue. (In the long run they do not, since conversions reduce income taxes paid in the future.)
So as of a few days ago, the income limitation on conversion to a Roth is gone. And just to get things started with a bang, for 2010 only, you have the option to defer the income tax bill on the conversion to 2011 and 2012. (That is, it is split between those two tax years.)
Predictably, the arrival of 2010 has brought a flurry of interest in IRA conversions in the mainstream and not-so-mainstream media.
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