Do You Need Two Incomes to Get Rich?

Often I’ve heard people saying that they would like to have one spouse stay home, but they just can’t afford it.  I’ve also heard others say that they have had to sacrifice because one spouse stayed at home.  The assumption is normally that two incomes is better financially than one income.

While at first it may seem that a household earning more money will grow wealth more quickly than a one-earner household, the truth is that unless both spouses have very high incomes (greater than $100,000 per year), most families will do better with one spouse at home than with both spouses working, particularly if there are children who need daycare.  The reason is that having both spouses working results in a lot of additional expenses that aren’t there if only one spouse works.  Some of these expenses are:

Childcare ($500-$2000/month):  The largest and most obvious cost incurred if both individuals are working  is childcare.  Infants are enormously expensive to put into daycare, and it is very difficult to make any money if you have to pay for childcare for a couple of children.  Even after they get older and are spending some of the day in school, there is still afterschool care and childcare for the time that school is out.  Also, there is a reason that most animals have one partner that stays and takes care of the nest (for penguins, it’s the male) – if both parents are out hunting, you need to find someone you trust to take care of the children.  Is this something you really want to trust to someone making minimum wage?

Clothing ($100-$300 per month):  Working means buying business clothing or uniforms.  Many of these threads are expensive, and while it may not seem like much each month, it adds up over the course of the year.

Gasoline ($100-$400 per month):  Depending on the length of your commute, rising gas prices can really put a strain on your wallet.  In addition, there is extra car maintenance and insurance and can be tolls and parking.  Add another $200-$400 per month for these items.

Meals Out ($300-$2000 per month):  Because no one has time to shop and no one has time to cook, a lot of two-worker families eat most meals out.  Even at $20 per meal at fast food, this can quickly add up for a family of four.  Don’t forget about those lunches out as well.

Taxes ($300-$2000 per month):  An additional paycheck will mean additional social security and medicare taxes will be taken out.  In addition, the additional income earned will be taxed in the higher tax bracket.  Remember that each dollar saved because an expense is avoided by a spouse not working is multiplied because it also results in tax savings.  You need to make $1.20 or so for each $1 in childcare you are paying.

Add everything together and for most families it will actually make more sense monetarily for one person to stay home, particularly while the children are very young and payment for childcare would be required.  And speaking of sacrifice, much of what is sacrificed is clothing and cars that will be destroyed through trips to the office and meals out that become mundane quickly.  By working time with the kids and home cooked meals are sacrificed.

So, while not everyone can take on the extremely challenging role of raising children, for those who wish they could but think that they both need to be working to make ends meet, perhaps you should reevaluate what you are really netting after all of the additional expenses.  Whether the mother or father stays home, there are also intangibles such as having a bigger influence on your children’s lives and morals.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Photo Credits: CELAL TEBER, Website www.celalteber.com

The Tools for the Job – Kitchen Tools and Gadgets you Really Need

A few posts back I gave some time-saving tips for cooking.  The connection between this investing blog and cooking is that you can save a lot of money and thereby have money to invest if you make a lot fo your meals yourself.  Today I’ll finish this series by discussing what tools and gadgets you really need to cook. Note that this assumes you are starting with a bare kitchen – maybe moving into your first apartment after the dorms in college.

There are always a lot of things out there you could buy.  A lot of gadgets advertise that they will make cooking a lot easier, but the truth is that most of those gadgets only add value if you are cooking in bulk.  For example, if you are making gallons of salsa, it makes sense to pull out the Cuisinart.  If you are just cutting up an onion, however, you’ll spend ten times as much time dragging the thing out and then washing it and putting it away than you will actually spend cutting the onion.  You’ll find that most of the time it is just easier to pull out a knife.

Here are the items that a well-stocked kitchen should have:

• 1 set of mixing bowls (small, medium, and large)
• 2 glass measuring cups – 1 cup and 2 cup
• 1 set of plastic dry measuring cups (1/4 cup, 1/3 cup, 1/2 cup, 1 cup)
• 1 set of measuring spoons (1/4 tsp. 1/2 tsp. 1 tsp. 1 tbsp)
• 2 spatulas, two large spoons (one solid, one slotted), a whisk, 2 rubber spatulas, 1 two-pronged fork, 1 set of tongs
• 2 frying pans (cast iron is best), 4 sauce pans (small, medium, large, and extra-large) with lids
• 2 baking sheets
• 1 collander
• 1 set of knives (1 chef knife and 1 paring knife, perhaps a bread knife)
• 1 set of wooden spoons
• 1 grater
• 1 set of pot holders
• 2 cutting boards (one for meat, one for everything else)
• 1 set of cake pans (round)
• 1 9×13 pan
• 1 9×9 pan
• 1 muffin pan

These are nice to have, but are used less often:

• A blender, a salad spinner, a waffle maker, a toaster over, a crock pot.
• A pastry cutter
• An extra spatula (never have enough)
• An extra small sauce pat
• A ladle
• A bread pan
• Apple corer (metal)
• Egg slicer
• Food processor
• Hand mixer

 

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Photo credits:  Jim O’Connor, downloaded from stock.xchng.

Staples for Cooking – What you Need for your Pantry

 

Cooking at home is one of the best ways to save money for investing and retirement.  A family can easily spend several thousand dollars per year for dinners out and take-out, even if it’s fast food.  Sadly, if you eat every meal out it also goes from being a pleasant experience to mundane.  Limit meals out and you’ll have a lot more money to put towards other things and your meals out will be more special.

In the last post I discussed time-saving tips for cooking.  Today I thought I would provide a list of supplies that we normally have on-hand.  While the initial expense may be fairly high (probably $300 or so to initially stock the pantry), with these ingredients you’ll be able to cook a wide variety of standard meals.  Also, once you have bought the initial supply, many ingredients will last for a long time and be used in several meals.  There are always some fancy ingredients beyond this list that you may find in recipes, but those can be bought as needed.  In fact, you may be able to leave many of those ingredients out (since the left-over will just sit on your shelf for years anyway).

Here are the basic ingredients you should always keep in stock:

Basic foods:  Bread, potatoes, eggs, bacon, milk, flour (unbleached if possible), cheddar cheese, carrots, celery, fruit (apples, pears, oranges, etc…), lettuce, greens (spinach, mustard, collard, chard, or turnip greens), onions, butter or margarine, cooking oil, olive oil, vinegar, bread crumbs, shortening, baking powder, baking soda,  sugar, frozen vegetables, canned vegetables and beans (green beans, corn, tomatoes, cream soups (mushroom, celery, or chicken), kidney beans, great northern beans). pancake syrup, jams and jellies, corn meal, and rice.

Meats:  Each shopping period you would buy the meats you would use (for example, chicken, pork chops, steaks, ground beef, and fish).

Spices:  Salt, pepper, garlic power, paprika, ground dried mustard, bay leaves, basil, thyme, cinnamon, nutmeg, cumin, and chili powder.

Note we don’t tend to use a lot of the short-cuts like pre-made biscuits, pie crusts, and pizza crusts.  These are actually fairly easy to make with just flour, salt, shortening, and baking powder, but having them would save a little time (in exchange for a little extra expense). Pancakes are really easy from scratch and a lot better (the secret is to whip the snot out of the eggs with a whisk).  We also don’t tend to use a lot of the spice mixtures like Italian Seasoning, but these can save a little time looking for spices.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Photo credits:  Jim O’Connor, downloaded from stock.xchng.

Learn to Cook and Improve Your Financial Future

Of all of the things you can do, learning to cook and cooking most of your meals at home is probably one of the best ways to improve your financial future.  Meals out are a huge expense, not to mention the sodium content and calories.  If you just eat in most meals, limiting your eating out to about a meal a week, and invest what you would have spent at the restaurants you can easily retire a multi-millionaire just from the savings.

Unfortunately, with the push to the two-earner household of the 1960′s many twenty and thirty-somethings today have no idea how to cook.  All of their meals were at restaurants or they grew up on pre-processed, frozen meals.  Many people also feel that they don’t have time for cooking at home.  For this reason, the next few blog posts will give some of the basics for learning to cook and some tips to save time.  If you plan it right, you could actually spend less time cooking than you spent driving to and then waiting at restaurants to eat.

Here are a few tips:

1.  Don’t try to cook like someone from the Food Network.  Also, forget those elaborate recipes you find in the cooking magazines that require umpteen ingredients.  Just learn how to make the basic meals (chicken, pork chops, hamburgers, fish, spaghetti, stew, etc…).

2.  Buy a general cookbook that will give you the basics. Good ones are The Joy of Cooking and Betty Crocker.

3.  It takes the same amount of time to make six portions as four.  Cook a little extra and you’ll have a lunch that is the envy of your office the next day.

4.  Make a big salad and keep it in your refrigerator covered in plastic wrap.  Only put in lettuce, carrots, and celery.  Add things like tomatoes (that don’t do well in the refrigerator) during the meal to each portion.  You can also make a big portion of soup and heat some up for meals during the week.

5.  Many meals freeze well.  Make a double portion one week, then freeze and reheat the next week.  Be sure to write the date you made it and plan to eat it within a month or so.

6.  Plan you meals.  Write what you plan to eat during the week or next two weeks then make your grocery list from the ingredients needed.  Freeze any meats you won’t use for at least three days.  The day before the meal, put the meat for the next meal in the refrigerator so that it will be defrosted and ready to go (it will taste better if not defrosted in the microwave too).

7.  The crock pot is your friends.  All of your soups and stews, and even things like ribs and chicken can be made in the crock pot.   You can even put them together the night before, put it in the refrigerator, then start it on low in the morning before work.  When you get home, you’ll have a hot meal waiting.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

The Joys of Home Ownership

After a relatively long drought we’re starting to see some significant home repairs.  These come, of course, right after we did some modest kitchen upgrades, and planned a fairly expensive vacation (at least compared to our normal car trips – airfare is expensive with all of the TSA add-ons.  We have now found that a poorly constructed patio is diverting water under our house and will probably need to be removed.

Luckily we caught the problem early and will probably be able to correct the damage to the house with minor repairs.  We’re expecting a good-sized bill for removing the patio, however, and then there will be the cost of replacing the patio with something properly constructed.

My first lesson to share is to look carefully at things like grading and water flow paths when buying a house.  Also, make sure you get a good home inspector to look for issues like this.  Think about where water will go when it rains and make sure it isn’t directed under the house, as it is with ours, by any patios or sidewalks.

The saving grace, however, is that since we have not been racking up debt on credit cards and making two car payments a month, we’ll have the money available to just pay for the repairs.  It is not pleasant, and not exactly how I like to spend money since it doesn’t seem like we getting anything new for our money, but at least I’m not looking at getting a HELOC or something to pay for the repairs.

This type of security is a big reason why saving and investing are important.  Some people will buy the biggest home for which they can qualify for a loan.  They then don’t have the money to heat and cool the place, let alone replace a roof or deal with unexpected repairs.  With time they get deeper and deeper into debt until their dream home becomes their nightmare.

When you’ve saved and built up an investment portfolio, emergencies become inconveniences.  Job losses become opportunities to find something better.  It may be difficult to eat lunch in while coworkers are going out everyday, or spend more time with family game nights than going out for dinners and movies, or vacationing at the beach while friends are flying to Europe, but the security and flexibility it gives you is invaluable.  Also, as the income from your investments builds you can start to do the same things, except you’ll be able to pay with cash and end up paying a lot less than your friends.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Picture Credits:  Christa Richert Website http://de-de.facebook.com/people/Michael .. , downloaded from stock.xchng