Financial Planning When You’re Expecting a Baby

financial planning

Along with all of the big emotions that accompany a positive pregnancy test comes the stressful question: How will I be able to afford this? No matter if the pregnancy was planned or a total surprise, many parents find themselves balking at the impending massive expenses associated with supporting a child. Diapers, formula, clothing, baby food, nursery furniture, baby gear, toys, books, activities, day care, doctors’ visits, education—these expenses and many more will need to fit into your budget over the course of the next 18+ years. Without a doubt, it can feel overwhelming to financially prepare for an expanding family. Here are a few steps to help you ready your finances for parenthood.

First things first: relax!

Take a deep breath and focus on one thing at a time. If you have just found out that you or your significant other is expecting, you likely have at least seven to nine months to get things situated.

Evaluate your current money situation.

The first actionable step is to determine your spending “before kids.” The best way to do this is to take a very hard look at the first month after you find out that you’re expecting. In order to successfully track your “pre-baby” finances, spend like you normally would, but keep a diligent record of every penny spent. At the end of the month, you will be able to see your expenses, your income, and how much money you have left over. Take notes throughout the course of the month regarding any expense categories in which you may be able to cut back.

Estimate your baby’s first year expenses.

Once you have a good idea what your current monthly spending looks like, ask friends and family who have recently had a baby how much they spent preparing for baby and how much they spend monthly now that their baby has arrived. In a 2010 study completed by the USDA, they found that new parents spent an average of $12,000 on child-related expenses in the baby’s first year of life. This number (quite easily, in fact) breaks down to about $1,000 a month.

Keep in mind that expenses will be slightly different for each family due to variables like the cost of bottles and formula vs breastfeeding and the cost of childcare vs stay-at-home parenting. To get a breakdown of your first year expenses, you can use Baby Center’s First-Year Baby Costs Calculator. There are also expenses for things you don’t think about at first, like keeping your house warmer—and paying a higher heating bill—to accommodate a sensitive newborn. Your financial plan for your new baby isn’t meant to be exact; rather, it will give you an estimated idea of how much you can expect to spend.

Based on your above estimate, make a plan for your baby’s first year of life.

Now you have some decisions to make. No doubt you will realize that you are currently spending money on things that need to be cut or eliminated to make room for new expenses related to having a baby. But some of these decisions are bigger, and more emotional, than simply eating out less frequently or cutting entertainment costs.

For couples living on two incomes, deciding whether or not one spouse will stay home to care for the child can be an emotional as well as financial decision. Some parents may wish to stay home while their child is young but find that they will have trouble making ends meet on one income. Other parents may thrive on the sense of self they derive from their work life while simultaneously struggling with leaving their child in day care. Start planning for these challenging choices now so you aren’t burdened with them after the baby’s arrival – when emotions are high and you’re living on little sleep.

Look beyond the first year.

Beyond everyday expenses, there are a lot of longer range expenses to think about when you have a child. Believe it or not, as expensive as newborns are, kids actually tend to get more expensive as they age. And while new parents can find themselves already starting to worry about college expenses, the best thing you can do for long-range planning is to protect your family financially. This means getting life insurance and establishing a will or estate plan in the event of your untimely departure. Once those important decisions are made, you can begin saving for college and other future expenses. The sooner you start, the better your future position will be to help your child achieve their dreams.

Bringing a new life into the world is an overwhelming, emotional experience. The good news is there are steps you can take now to make it financially manageable. Understand your expenses, set a budget, and stick to it. Now is the perfect time to take the necessary steps to set your family up for financial success.

4 Ways to Start Building Your Savings

how to build your savings

For a lot of people, the idea of having any money to save can be laughable. When you’re working paycheck to paycheck and struggling to make ends meet, it might seem impossible to put any amount of income away for the future. After all, what is the point of saving $5? But saving any amount of money is worth it. Studies have shown that having even $500 in savings can help immensely in the event of an emergency. So while the standard advice for a savings goal is six months of living expenses, every little bit helps. If you are new to saving money, or recently had your savings drained, here are a few ways to build your savings account or emergency fund.

1. Pay Yourself First

Whether you are building your savings account for a big purchase, to fulfill a life goal, or for retirement, the best way to achieve your savings goals is to pay yourself first. A lot of people make the mistake of trying to save the money they have left over at the end of the month—and often find they don’t have any money to put towards their savings accounts. Before you have the chance to spend the money on anything else, put it into a designated savings account.

In order to make sure you pay yourself first, you must get a good handle on your budget. If you can determine what your income and expenses are, you will have a better idea of how much money you can safely put towards savings every month. A budget will allow you to be realistic about your savings goals, while also curbing your excess spending. For example, if you notice you are spending a lot of money eating out, make an effort to cook at home more often and then put the extra money into savings. Every little bit does matter! When creating your budget, make savings the ultimate goal and allow your spending choices to reflect that goal.

2. Make Building Your Savings a Habit

Another good way to build your savings is to make it a habit. It matters less how much you are saving each month; it’s more important that you are consistently depositing money into your savings account. A great way to do this is to set up an automatic deposit. Most banks will let you automatically deposit a set amount of money from your checking account into your savings account on a specific day of your choice. The first few days after pay day is a good automatic deposit day. With automatic deposits, you may not even notice the money is missing from your checking account in the first place. As this “habit” will largely go unnoticed, making it a very easy way to save!

3. Look for Sneaky Ways to Save Even More Money

After you have been saving for a while, you will have a good idea of your income, expenses, and budget. At that point, you should critically examine your spending to see where you could eliminate expenses in order to allocate even more of your income to savings. It is always a good idea to put “extra money,” like bonuses or tax refunds, into your savings. Make sure you are taking full advantage of your employee benefits. If your employer offers transportation reimbursement, matching retirement savings plans, or insurance, you can save money by taking advantage of these benefits. If you are job searching, look for employers who can help you achieve your financial goals.

4. Create a Separate Emergency Account

Once you have an established savings account, it might be a good idea to consider a separate savings account labeled as an emergency fund. Having an emergency fund that is separate from your savings account can ensure that even when facing an unfortunate financial event, you won’t lose all of your savings in the process. With a savings account and an emergency fund, you can plan for unforeseen medical expenses or an unexpected car repair while still putting money away for your future.

Saving money can give you peace of mind and a sense of financial security. Knowing you have the financial resources to get through some of life’s many hurdles is a powerful feeling. Every dollar you put into savings is an investment in your financial future. Everyone has to start somewhere, so start saving today!

Investing Basics for Millennials

investing for beginners

As the average college student graduates with around $30,000 in debt, it can be hard for young adults to even think about using any of their income to invest. Even for those who did not go to college, most working Americans are living paycheck to paycheck. In fact, the latest Merrill Edge Report found that 66% of millennials would rather put their money in a savings account instead of investments or a retirement plan. For many millennials, it can be confusing or scary to entrust their financial security into the hands of others. The good news is, investing doesn’t have to be scary or difficult. Here, we explore a few ways beginners can start investing in themselves and their financial futures.

Why invest in the first place?

Put simply, the number one reason to invest is to create wealth. Smart investing is the best way to increase the power of your financial resources. Investing can make it possible for you to achieve your financial goals, start a college fund for your kids, establish a legacy, or even just create a safety net for retirement. If you think you don’t have enough money to invest, think again. There is no one-size-fits-all investment plan. While most financial planners suggest investing 10% of your income, investing what you can is better than not investing at all. A small initial investment when you’re young can have a big long-term impact.

There are many different ways to invest, but the most common forms of investment are the ones you can choose as part of a brokerage account or through your retirement plan at work. These generally include:

 

Stocks
Stocks are a partial ownership of one or more companies. If a company does well, the value of their stock increases—along with the return on your investment. While more prone to sudden and sometimes drastic changes, stocks have a high return potential over longer periods of time.

 

Bonds
Bonds are fixed income investments designed to create a consistent stream of income. The values of bonds are vulnerable to interest rate fluctuations, but they are considered to be more stable than stocks, despite having a lower return potential.

 

Cash
This doesn’t just mean physical cash. It also includes investments like savings accounts, artwork, or collectibles. Cash investments tend to be the lowest risk, but they also have the lowest return on investment.

 

Mutual Funds and ETFs
These funds invest money pooled from many investors in an array of stocks, bonds, and other investments.

 

Your personal investment portfolio will be different than any one else’s portfolio. Part of learning how to invest is learning how to make the best decisions for your own financial future. Still, there are some basic rules to help you start making smart investment choices.

The biggest rule in investments is to create a diverse investment portfolio. Diversification can help you ride any potential losses. Even if one of your investments takes a hit, you will be able to rely on your other investments to make up for the loss.

Another important rule of thumb is to invest in what you believe in. Don’t let others do your research for you. If you don’t know or understand what you’re buying, don’t buy it! Do your own research to figure out which investments will be the most profitable for you. After all, no one cares more about your money than you. Be patient with your investments and only invest in what you can afford. If you invest what you reasonably can and give your investments time to mature and grow, you will see some great returns.

Creating wealth through investing involves a lot of research and evaluating different kinds of investments. Once you feel comfortable with the basics, you can come up with a game plan for your financial future. Even with limited funds, making steps towards investing can dramatically affect your financial future. Investing will get easier the longer you do it; all you have to do is get started.

How Much Does it Cost to Sell your NJ home?

sell your nj home

You’ve made the decision to sell your NJ home. This can be an exciting time for many reasons, not the least of which is the proceeds from selling your old house. But what a lot of sellers don’t realize is that selling a house can sometimes be a costly experience. Zillow estimates that an average U.S. homeowner spends more than $18,000 in extra costs when trying to sell their home. These extra costs can eat away at your proceeds. Here, we take a look at the major costs of selling your house.

Closing Costs

Typically, it is up to the buyer to cover the majority of closing costs, which end up to be an average of 2%-5% of the sale price of the home. However, sellers should be aware that they may have to pay some closing costs as well. The seller will have to pay any legal fees and fees associated with money going into escrow. New Jersey also requires the seller to pay a real estate transfer fee, which would be about $800 for a house with a sale price of $180,000.00.

 

Real Estate Agent Commission

Commission costs typically make up the majority of the seller’s extra expenses. Normally, the seller splits the commission with the buyer’s agent, typically about 6% of the final sales price. This 6% reflects all the hard work that goes into selling a home. The agent will market the home, hold open houses, show the home to interested buyers, and answer inquiries about the home. While this 6% commission can sometimes be negotiated, many experienced real estate agents will not negotiate their commission.

 

Home Repair and Maintenance

A lot goes into getting a home physically prepared to sell. According to Zillow, homeowners spend an average of $2,000.00 on home repairs and maintenance and sellers who enlist professional help can spend upwards of $5,000.00. These costs include putting up fresh, neutral paint in the interior, carpet and floor cleaning, lawn care and landscaping to increase curb appeal, and a full, thorough house cleaning before the buyers move in. You will also need to repair any items that are not working properly. If a buyer has a home inspection performed on the property, any findings will need to be addressed and repaired before sale.

 

Mortgage Payoff

The proceeds of selling your home will be used to pay off your mortgage. The money you receive is what is leftover once your remaining mortgage is paid and all other fees and costs are deducted. As an example, if you still owe $80,000 on your mortgage and you sell your home for $180,000, you will have $100,000 after paying off the remainder of your mortgage. Subtract $10,800 in commission fees and you will have $89,200—and this isn’t even counting any closing costs, home repairs, and preparing your home for sale.

There are a lot of costs that come with selling a home. Not all homeowners consider these costs before jumping into the real estate market. Veitengruber Law provides experienced real estate representation in New Jersey. We will make sure that you are prepared for these fees and expenses. We can also review and draft the complex legal contracts involved in real estate transactions. Our team can help you negotiate a deal that will keep as much money in your pocket as possible. Call us today at 732-852-7295 for your free consultation.

Common Mistakes in NJ Asset Protection Planning

NJ asset protection,

Asset protection is an essential aspect of estate planning. Protecting your assets is critical to preserving your estate and your legacy. On the other hand, the consequences of making a mistake in your asset protection plan can be disastrous. Here are the five most common mistakes made in asset protection planning:

  1. Doing Nothing

There is a common misconception that asset protection is only for the super wealthy. This is not true! In a lot of ways, asset protection is more important for the average person than it is for millionaires, whose financial resources can typically absorb many potential issues. If you have any assets, you need to take steps to protect them for yourself and your loved ones. Not taking the time to protect your assets can be financially devastating. Often, people wait until it is too late to try to protect their assets. If you are overwhelmed by the process of asset protection planning, or don’t even know where to start, the best thing to do is find an attorney experienced in asset protection.

 

  1. Working with the Wrong Attorney

Going off of our previous point, it is important to work with an attorney while you are creating your asset protection plan. Not all attorneys have experience in asset protection. Working with an attorney that is experienced with the many ins and outs of estate planning is the key to a great asset protection plan. These skilled experts know the NJ estate planning and asset protection tools that are best for each individual situation. They can foresee potential problems and know what future creditors will be looking for. With an experienced attorney, you can rest easy knowing your financial future is secured.

 

  1. Relying on Insurance Alone

While it is a great idea to include insurance in your asset protection plan, insurance itself cannot replace an asset protection plan. Insurance can protect you and your assets in very specific circumstances laid out in your insurance coverage plan. There is also the risk that your insurance company could drop you, coverage could be denied, or that your insurance company will not be able to cover all of your claims. An asset protection plan, however, will protect you and your assets in any circumstance.

 

  1. Using One Size Fits All Plans

No two estate or asset protection plans will be the same. It is important to assess the unique details of your situation to determine what kind of plan is best for you. Your specific goals will not look the same as those of your neighbor or your friend. Planning tools that might work for one person will not be as suitable for someone else. An experienced attorney will be able to create a plan that is custom fit to your needs so you can use the legal options that are right for your goals.

 

  1. Not Making Timely Revisions

Once you have an asset protection plan in place, you will need to make revisions often. The legal regulations that cover asset protection techniques change from year to year. Your asset protection plan will also have to change to reflect your changing life. The addition of a new family member, a divorce, or a job change are just a few of the life events that could affect your asset protection plan. If you do not consistently update your plan, it may become inconsistent or obsolete and therefore ineffective in protecting you and your assets. Reassess your plan regularly and notify your attorney of any changes as soon as they happen.

 

Veitengruber Law is experienced in NJ asset protection and estate planning. We provide personalized strategies to fit your specific needs. Our attorney and legal team will sit down with you to go over your goals and explain your legal options in plain language. We want our clients to be able to make informed decisions about their financial futures. Call us today at 732-852-7295 for your free, no-obligation consultation.

Can I be Approved for a NJ Mortgage with a Bad Credit Score?

NJ mortgage

A lot of people with a bad credit score assume it is impossible to become a homeowner. A low credit score can definitely make it harder to get a new credit card or any type of loan, including (and especially) a mortgage loan. If the one thing standing between you and home ownership is your credit score, don’t give up hope. It is possible to get approval for a NJ mortgage with a low credit score.

What is considered a “bad” credit score to mortgage lenders?

Different lenders have different criteria for loan applicants. The lower your score, the more likely it is that potential lenders will see you as a risk. If your score is somewhere in the middle—between 620 and 740 (approximately)—there is a little more wiggle room. While you will likely face higher interest rates and be restricted in how much you can borrow, you should still be able to secure a mortgage loan without much issue. Generally, if your score is under 620, you will not be able to get a loan from a traditional lender. But that doesn’t mean you have no options for getting a loan; it just means you will have to go through less traditional lenders.

Private Lenders

One option for borrowers with low credit scores is to go with a private lender. Mortgages through private lenders often come with higher interest rates and more substantial minimum down payments for borrowers with bad credit. You also may have to do a little more work with a private lender, like providing additional paperwork that is typically not required with a traditional lender. It’s important to do your due diligence when going through a private lender. Shorter payback periods and higher interest rates can make it difficult to make your monthly mortgage payments. Make sure you will be able to make timely payments in full for the duration of the loan.

FHA Loans

Another possibility is a Federal Housing Administration (FHA) loan. If your credit score is at least 580, you can qualify for an FHA mortgage with 3.5% down. With a score between 500 and 580, you will need to put at least 10% down. The cutoff for credit scores with an FHA loan is 500. Downsides to an FHA loan include: high interest rates and a mortgage insurance premium of 1.75% as well as monthly insurance premiums. If you pay less than 10% of the loan for your down payment, you will have to pay these monthly insurance premiums throughout the life of the loan.

Mortgage Tips for Low Credit Score Borrowers

Sometimes it’s possible to make up for a bad credit score in other ways. You can offset the risk of the loan by offering to pay a bigger down payment. While first-time home buyers typically put down 6% or less, making a 20% or more down payment could encourage lenders to approve your application despite a poor credit score. Plus, the more money you put down, the lower your monthly payments will be.

Another option is to enlist the support of a co-signer. If you have a close friend or family member with a great credit score, they could help you secure a mortgage loan. This is not a commitment to take lightly, though. While the mortgage is in your name, the co-signer will be equally responsible for any payments. This means if you miss a payment, their credit will be negatively impacted. Working with a co-signer requires a lot of communication and trust.

#1 Way to Own a Home with Bad Credit

If your goal is to buy a property but your credit score is poor, the best thing you can do is take the time to rehab your credit score. The higher your credit score, the better chance you’ll have of working with a traditional lender. Working with a traditional lender means your down payment, interest rate and monthly payments will be lower. Regardless of your situation, Veitengruber Law can help you determine which path to home ownership is best for you.

Creative and Affordable Valentine’s Day Ideas

 

Love is in the air this week and if your budget is tight, fear not! There are plenty of ways to show your loved ones you care without breaking the bank. Here are some creative and affordable ideas to make your Valentine’s Day special.

 

Gifts for Her:

  • Find some video tutorials on YouTube that explain folding origami flowers. Make a bouquet that will last weeks instead of flowers that will die in a few days. Bonus points on learning a new skill.

 

  • Find a recipe for DIY bath bombs and schedule an hour for her to use them. Prepare a beautiful bath experience with soothing music, a spa pillow, candles – and if you have kids, take them out for a bit so she can unwind in peace.

 

  • Bouquets of fresh-cut flowers are a huge expense, bad for the environment with their extra plastic wrap, and don’t last long at all. Instead, choose a beautiful potted plant that can be enjoyed indoors year-round like lavender or succulents. Alternatively, select a perennial you can plant together in the spring together like a rose bush. You’ll love returning to the plant each year for more buds.

 

 

Gifts for Him:

  • Print out photos of the two of you and make a collage in a frame he can fit on his desk. Glancing at the two of you all day will make him happy to come home!

 

  • Buy lottery tickets with numbers that are meaningful for you as a couple. Use birthdays, anniversaries, addresses, lucky numbers, etc. Watch the drawing together and split the winnings!

 

  • Skip the massage parlor and bring home a bottle of massage oil. Treat each other to a sensual couple’s massage without the awkwardness of a spa.

 

  • Download Cards Against Humanity card templates and create a personalized game for him using inside jokes and memories.

 

 

Classroom Valentines for Kids:

Many schools have banned food treats, so you may have to get creative.

 

  • Buy heart-shaped molds and melt down broken crayons into fun rainbow heart crayons. Attach a card that says “You Color My World.”

 

  • Let nature be your inspiration! Check out these adorable ideas using rocks (You Rock!), sticks (Let’s Stick Together), shells (You Bring Me Out of My Shell), feathers (We’re Birds of a Feather), acorns (Nuts About You), and pine branches (I’m Pining for You).

 

Activities:

  • Beat the cold weather and take a trip to your local planetarium for a romantic night under the stars.

 

  • Make a valentine-themed meal together. Serve an appetizer of tomato and heart-shaped mozzarella drizzled with balsamic vinegar. Make and top mini heart-shaped pizzas with heart-shaped pepperoni. Cut strawberries into hearts to decorate a slice of cake.

 

  • Get in on the paint and sip trend. These are affordable nights out where you learn to paint a chosen picture and bring your own wine for the evening. Choose a bottle you’ll both enjoy and a picture you can hang side-by-side as a memento of the evening.

 

  • Choose a few favorite movie titles and put their names in a jar. Pick out one or two for a movie marathon evening. Don’t feel obligated to pick a rom-com. To some couples, The Terminator is just as romantic as The Notebook.

 

  • Escape rooms are a fun way to spend your night. Get locked in a room with each other for an hour and puzzle your way out. You’ll learn new things about each other and have a memorable experience to share.

 

It’s easy to stick to a budget and still show those you love you care about them. With a little creativity your Valentine’s Day can be both memorable and affordable.

Filing for Bankruptcy in NJ = Finding Financial Freedom!

filing for bankruptcy in NJ

If you find yourself facing unmanageable debt from credit card bills, loans, medical expenses or a variety of other potential issues, bankruptcy can provide a path towards a brighter financial future. Filing for bankruptcy in NJ can be an excellent way to take control over your finances and make the process of repaying your debts much more affordable. Unfortunately, despite the many benefits of filing for bankruptcy, many people are hesitant to file when they should. Some debtors feel a sense of failure or shame in filing for bankruptcy and wait years to file, while their financial situation becomes more unmanageable in the process. This delayed filing can be disastrous for your financial future.

A recent study by the Consumer Bankruptcy Project (CBR) found that nearly two-thirds of those who eventually file for bankruptcy report struggling under the weight of their debt for two or more years before filing. The study found that most people are filing for bankruptcy only after years of significant financial hardship. This period of time is commonly referred to as “the sweatbox.” While in the sweatbox, debtors are constantly bombarded by debt collectors, face the threat of losing their homes, and many even experience wage garnishment. Debtors in the sweatbox can find themselves in lawsuits over unpaid debt and may even be unable to pay for basic needs like food and electricity. Often times, these financial situations could have been avoided by filing for bankruptcy earlier.

When we meet with clients in the sweatbox, they almost always wish they had talked to us sooner. Often, those who wait to file for NJ bankruptcy do so with fewer assets and a much higher debt-to-income ratio than those who file earlier. Essentially, the longer you wait to file, the worse your financial situation is likely to be. On top of this, the stress and uncertainty of struggling through years of unmanageable debt will take a very real emotional and mental toll on anyone. And yet, many of our clients who finally file for bankruptcy long after the pros greatly outweigh the cons still express feelings of failure and shame.

At Veitengruber Law, our goal is to help people see bankruptcy as an opportunity for positive financial change—not as the end of the line. We work with our clients to dispel some of the prevailing myths about bankruptcy. We know that many of our clients face bankruptcy due to a number of circumstances outside of their control. Loss of employment or underemployment, divorce, medical expenses, and student loan debt are some of the most common obstacles to financial security that our clients face. We understand that no two clients are the same, which is why our debt relief solutions are created to fit your particular needs and goals. Bankruptcy is just one of the many tools we can help clients use to restore financial health.

Struggling through years living under the enormous weight of crushing debt is not a measure of personal integrity, nor is it financially advisable. Waiting too long to file for bankruptcy can put your financial security at greater risk. Don’t spend years struggling in the sweatbox. Veitengruber Law’s holistic approach to debt management and bankruptcy strategies will ensure that you receive personalized service for your specific needs. Filing for bankruptcy can be an intimidating process, but you do not have to do it alone, and working with us will not put you further in debt. Don’t wait until it’s too late.

When you call us for your free consultation, we will answer any questions you have and help you decide if bankruptcy is the right choice for your circumstances. If bankruptcy is not the right option for you, we will offer you alternative solutions that are viable in your specific situation. No risk – no obligation. We’re here to help!

Image: “FREEDOM!” by Gonzalo Baeza – licensed under CC by 4.0