The High Cost of Having Kids

by Gerri Willis

It never ceases to amaze me what my friends spend to raise their children.  Between the child care, the private schools and clothing, it’s no wonder so many parents both work. The Department of Agriculture estimates the average cost of raising a child born in 2012 will be $241,080 or $301,970 if you adjust for expected inflation, And, this shockingly, does not even include the cost of a college education which currently is $22,826 for a public school or $44,750 for a private school – that’s before the 4 to 5 percent annual tuition inflation hikes kick in.

Of course, the real cost depends on where you live. In rural parts of the country, you might get away with spending just $143,600, but in the high-cost Northeast your costs might be $446,100, again according to the USDA. Trouble is some families spend even more, which raises the question: How can you cut your costs without sacrificing care for your child?

Let’s tackle child care – it’s one of the most expensive tabs parents face. According to the National Association of Child Care Resource and Referral Agencies, in 31 states and the District of Columbia, the average annual cost for infant care is MORE than a year’s tuition and fees at a four-year public college. In 2012, according to the same source, the average annual care cost for infants ranged from $4,863 in Mississippi to a high of $16,430 in Massachusetts. For a four year old, the average costs are similar ranging from $4,312 in Mississippi to $12,355 in New York.          

The best solution – getting a family member to care for your child, simply isn’t practical for many moms and dads. Given that, a good solution for some parents may be employer-provided child care which is typically run at a lower cost to employees. Peace of mind is higher when your child is down the hall or in the same building as mom or dad. If there is no onsite child care, your employer may provide you with referrals or even discounts to centers nearby. You may be able to pay for child care with pre-tax dollars through a flexible spending account, check your human resources office for details. Remember if you work in the public sector or for a company with more than 50 employees, you may be eligible for up to 12 weeks of leave to care for a sick child, under the Family and Medical Leave Act.

Another way to save is to share a nanny with other families and split up the costs of care. Other moms I know have set up a babysitting co-op, in which parents provide the care. You’ll need to work with families in which the parents have different schedules.

One word of caution for moms and dads: Don’t put your future at risk by putting every single penny into Junior’s education. Your son or daughter will be able to borrow for higher education, but you’ll have to foot your own tab for retirement.

 

Don’t miss The Willis Report starting 5pmET on FOX Business.

Getting Yourself Organized in 2014

by Gerri Willis

By Gerri Willis

 

Mea culpa. I am writing a blog about getting yourself organized, and as anyone who’s ever been to my office can attest, it’s not my long suit. It’s not even my short suit. I just struggle to keep things and ideas in their place. Everything seems too valuable to pitch. Having confessed to that, I decided to go on a search for the very best ideas for getting yourself together. Here we go:

 

  • First, there is Julie Morgenstern. She wrote the popular book, “Organizing from the Inside Out,” and has become a go-to expert on organization. She’s a great motivator and she doesn’t require that you buy a lot of hanging files or outboxes. She coaches you step by step. Here’s what she told me was key to getting organized: “Make a master list of all the organizing projects you would like to tackle, and then select an order of attack, starting with the smallest areas that will have the biggest impact on your daily life.  Don’t start with the most daunting project.  It’s fine to start with your sock drawer, cabinet of plastic containers in the kitchen, or toiletries in the medicine cabinet.  Getting one or two small projects done completely will fuel you with a sense of accomplishment and control that will create momentum and energy to keep going. Pretty smart stuff.

 

  • But let’s face it, you don’t get organized just to see pretty piles of paper on your desk or sweaters sorted by color in your closet. You want to get organized so you become more efficient in your personal and professional life. You want to be organized so that when your husband asks, “What’s your frequent flyer number for Delta?’ you don’t stare at him blankly. (Okay, maybe that’s a personal digression.) The reason you want to organized in so that you can more stuff done – maybe even attack that bucket list.

 

  • That’s where David Allen comes in. The author of the best seller, “Getting Things Done,” is a guru to professional workers. Companies hire him to present his theory of being productive and much of his philosophy has to do with clearing away the mental and real clutter that is constantly getting in the way of getting anything done well. For that reason, Allen recommends that your start by organizing everything in your life – from the need to stop at the grocery store to the bookcase overflowing in your office. Everything, according to Allen, has a place. This is harder than it sounds, but people who practice the message of “Getting Things Done”  are converts. Allen told me his philosophy boils down to this, “Your head is for having ideas, not holding them.” Clever, right?

 

  • I do have one trusted organizing tool – Evernote, an app that gives everything a place, automatically. Everywhere I go, I see segment and guest ideas for the Willis Report, all of them go into Evernote. The power of the tool is in tags. Every idea, every recipe, every contact can be tagged so that later you can sort by tags and find that information again. You’d be surprised just how useful this is. In Evernote, I keep just two give folders. The first is for items that have yet to be tagged and the second is for items that have already been tagged. The Evernote people save your stuff on the cloud, so that if your IPad gives up the ghost (as mine recently did), all your precious information is safe. Genius!

 

Ultimately, how you organize is a very personal thing. Some people like real world, hard files, while others like the ease of virtual ones. Either way, getting your stuff in its place will go a long way to making your life easier and I am all for that.

 

Don’t miss The Willis Report starting 6pmET on FOX Business

 

 

How to Land That New Job in 2014

by Gerri Willis

By Gerri Willis

 

People always ask me how I managed to make the leap from print journalist to TV journalist. Truth is I considered it more of a hop than a leap. So much was the same about my new job when I first moved to television. I was covering the same personal finance topics, even talking to the same personal finance sources. The biggest difference was that those interviews were conducted on air instead of over the phone. The move also eliminated all that pesky writing and crafting of sentences. (To be honest, I still like doing that). But my experience is similar to many people who transition into a new gig – they take something of their old life with them, preferably the part they liked the most. For me, it was talking to people about topics I found compelling.

More and more folks these days are asking themselves whether they could transition to a new career.  A new survey from Career Builder shows that one in five workers wants to get a new job this year. And, it’s easy to see why. Job satisfaction is on the wane. Forty-five percent of folks are dissatisfied with advancement opportunities in their current job, while 39 percent don’t like the work/life balance their job requires.

The good news is that many people are capable of transitioning to a new career. But the successful switcher will have to figure out whether they want to start from scratch, get more education and begin again on the wage scale or transition to something that is similar, but different. Consider: If you’re a successful salesperson, your Rolodex would be highly valuable to a not-for-profit looking for donors. Worked as an accountant for years in a big firm? You could simply put out your own shingle. Not every job switch requires a complete transformation.

Here are some ideas for making the change:

  • Unless you have already figured out what’s next, you need to do some soul searching. Robert Stephen Kaplan in his best-selling book, “What You’re Really Meant to Do,” advises readers to find a role that allows them to utilize their strengths instead of trying to hide their weaknesses in a job that isn’t right for them. By the way, Kaplan successfully transitioned from Goldman Sachs vice chairman to Harvard Business professor. According to Kaplan, if you don’t like what you’re doing now, you automatically limit your possibility for growth and advancement.
  • Making that transition may mean additional education but you may not have to go for a four-year degree. Some specialties can be learned by achieving a certification or training. That kind of work can be done at a community college or online. Remember in some fields getting a full-blown degree can be considered a bad thing, like computer programming. If you’re not sure what field your skills might translate best, check out careeronestop.org and onetcenter.org.
  • Learn the new rules of the job search. The traditional CV just isn’t as important as it used to be. According to Anita Attridge, a Five O’Clock Club career coach, 80 percent of new jobs come from networking and direct contact. Companies receive hundreds, if not thousands, of applications for the average professional job. Standing out in a pile that big is difficult. Worse, if you’re searching using one of the many online job sites, your resume may never be read by a human. Companies increasingly use computer programs to reduce sky-high resume piles, trolling for key words or phrases that they think the best candidates would include. Bottom line, expanding your network and talking to friends and family is key to landing a new gig.

 

Don’t miss The Willis Report starting 6pmET on FOX Business

 

 

2014: Another Big Year For Housing?

by Gerri Willis

By Gerri Willis 

 

2014 could be the year for housing. Sure, 2013, was good, but this year could be even better. That’s because market activity may be dominated – not by investors – but by first-time buyers who’ve been sidelined and the trade up market. And, trading up means selling. Unloading your home is never easy, but his year could be the best in a while if mortgage rates remain under control and inventory stabilizes. The National Association of Realtors forecasts that home sales will be similar to last year’s blistering pace of 5.1 million while prices will  rise 5.3 percent.

So, if you’ve been waiting to sell your home because you owed more than the house was worth or you believed that purchase demand just wasn’t strong enough, now is the time to start running the numbers, checking your equity and putting a toe in the water. Check your local realtors’ association website to get a sense of how well the market is doing. Zillow.com can and Trulia.com can give you a sense of pricing in your neighborhood.

If you decide to take the plunge, you’ll want to be sure your abode is in tip top condition. Here are four suggestions for sellers:

  • Consider staging the home if you lived in it for more than 10 years. We collect so much stuff over time that it is nearly impossible to see your home with fresh eyes and that is exactly what a buyer wants to see – your home without the golf trophy or bass photos. Take down the personal photos on the wall. Reduce the number of pieces of furniture in each room – less furniture makes the room look bigger. If there is a smoker in the house, have carpets cleaned and vacuum upholstered furniture.
  • Painting interior walls that have been neglected is a great idea. Just don’t go crazy with color. Deep hues may be the flavor of the moment, but a neutral cream or white will make your home look clean and well taken care of. Likewise, if your exterior is drab, consider painting your door a bright color like red. Prune the landscaping and make sure exterior fixtures work. Few things are as off putting as a buyer as trying to turn on a light and nothing happens.
  • If your home is older, consider upgrading the wiring. It’s not sexy, but young and technologically savvy buyers know that their demands for juice are high. A 200 amp panel is the minimum typically, but panel size is governed by the National Electrical Code. Hire a licensed electrician to do the work.
  • If you have time before you’re planning to put your home on the market to upgrade, check out Remodeling Magazine’s list of remodels with the biggest bang for the buck, here http://www.remodeling.hw.net/2013/costvsvalue/national.aspx. After years of major storms, installing a backup power generator is a top performer for mid-range projects.

 

Don’t miss The Willis Report starting 6pmET on FOX Business

 

Must-Have Financial Apps For 2014

by Gerri Willis

By Gerri Willis

 

I blame my overspending on modern life. Let's face it, who hasn't looked at a mysterious one or two dollar fee on our credit card statement, shrugged our shoulders and just paid it? Who has the time to fight every nickel and dime? Then, there's my health insurance provider. After every visit to my doctor, I get an itemized bill of costs for each service and test rendered. By the time the bill does come weeks or even months later, I've lost track of the charges I was sent.

Fortunately, there is a better way. And, it comes via modern life -- apps that can save you time and track your money. Here are some worth investigating:

  • Billguard: This iPhone app has the time and discipline to scour your credit card bill for unwanted "grey" charges, even if you don't. It watches for those recurring items that you never intended to order by consolidating the experiences of other consumers. The app connects with your credit card providers using the name and password you use to connect to your account online. One downside: You can add two cards for free, but any more and you'll pay a one-time fee.

 

  • Simplee: This app brings together data from your health insurance accounts. If you are spending a fair amount of time at the doctor's office, or even if you aren't, Simplee can help. The app tells you your total medical costs, tracks how much you've paid out of pocket, your deductible and total doctor visits. You can make your payments directly from the app. Many of the major insurers, Aetna, Anthem, Blue Cross Blue Shield and Delta Dental support the platform.

 

  • SigFig: It happens all too often -- you have retirement and investment accounts with a number of different brokers and investment managers and seeing the total pie is impossible. This app can bring it all together by connecting your accounts to this service. You can see your total asset allocation and performance with a single click. I hear mixed reviews on the investment recommendations. Having said that, though, the app's ability to alert you when you are paying high fees for funds compared to competitors in the same category is worth the price of admission.

 

  • Mint: This is the grandaddy of personal finance apps that integrates info from all major banks and institutions. It's easy to get started, and all your info -- every transaction -- automatically appears in the app. You can set financial goals and budget and explore ways to invest all from this single app. It calculates your net worth and updates your personal financial situation every single day.

Of course, it's not all about a comprehensive look at your personal financial situation. Some apps have much more modest goals. GasBuddy is a go-to app for consumers trying to find the cheapest gas in their neighborhood and relies on consumer reporting to get its info. We often recommend RedLaser, a barcode scanning app for price comparisons. The app helps you find out whether there is a cheaper price for the item you are shopping for at nearby retailers.

 In the end, though, even apps require some effort to stay updated. You'll need to monitor what's going on and enter new information. Alas, they haven't completed automated your financial life. Not yet, anyway.  

 

Don’t miss The Willis Report starting 6pmET on FOX Business

Impacts to Your Wallet in 2014

by Gerri Willis

By Gerri Willis

2014 promises to be a busy year for news that hits your wallet. The biggest consumer story this year – the rollout of Obamacare – has legs. Glitches, problems and out-right failures on the website have persisted. And, that means the government has had to delay deadlines for signup. Previously, Health and Human Services delayed the deadline for enrolling in coverage that starts Jan. 1 from Dec. 15 to Dec. 23. But now the agency has also made it clear that not only will shoppers have until Dec. 31 to pay their first month’s premium, they are also encouraging insurers to allow people who sign up after the Dec. 23 deadline to start coverage as of Jan. 1. What’s more, the Obama administration is also extending coverage under the health care law’s state high-risk pool to the end of the year. That program covers about 84,000 people.

One way to find out what you might pay for Obamacare coverage and what sorts of subsidies you might be eligible for is to go to www.kff.org, where you can get details on coverage and costs.

Watch for more difficulties with the Obamacare program to emerge in the coming months. Health care experts say that the coverage of people under corporate plans will likely change late next year as companies get ready for more changes under Obamacare. Taxes on so-called Cadillac plans will likely result in higher costs for workers and less extensive coverage. We may see even more companies opt to put employees into part-time roles to get around Obamacare requirements.

Another big story that will play out next year, are tax changes. High earners and people with large portfolios will find their taxes rising dramatically next year. Experts say that high earners will find their taxes tipping 50 percent of their earnings in many parts of the country, not just the big cities on the coasts. If you earn more than $200,000 filing singly or $250,000 married, filing jointly, you’ll pay a new additional tax on earned income of 0.9 percent. If you earn above $400,000 as a single filer or $450,000 married filing jointly, you’ll find yourself subject to a new income tax bracket of 39.6 percent.  A new Medicare tax on investment income of 3.8 percent will also sting investors.

Cherished deductions, like mortgage interest, state income and sales taxes and home office deductions, are on phase-out schedules for high earners. We’ll also be keeping an eye on housing to determine whether rising mortgage rates puts the housing recovery on hold or simply fires up eager buyers.

In short, next year is shaping up as a complicated one for consumers and The Willis Report will be there every step of the way to help you figure out how you can negotiate these changes that impact your wallet. Don't miss The Willis Report starting tonight 6pmET on FOX Business.

The Truth About Taxes

by Gerri Willis

By Gerri Willis

Have you ever noticed that taxes move in one direction: Up. And, so it is with property taxes. During the housing bubble, taxes rose as values climbed and in many parts of the country they are still stuck in the stratosphere, even after prices have plunged. Fortunately, you can do something about it.

In fact, Pete Sepp of the National Taxpayers Union says that high property taxes are a rare example of levies that taxpayers can reduce this year as investment and income grow like topsy.

Contesting your home’s assessment is a tried and true method of cutting your property taxes if those taxes are stuck at nosebleed levels. Start by reviewing your home assessment for errors. The dirty little secret is that many local governments use real estate software to assess properties. In other words, local tax officials may never have as much as driven by your house. Errors are common. Your first stop is the property assessor’s office where you’ll ask for the “property card” that describes your home in detail, including square footage, bathrooms and the like. Look for errors. Then pull your neighbors’ property cards, especially those with houses that are similar in features and age as yours. Look at as many as a dozen to find out whether your home’s assessment is significantly higher than the others. Even a 10 percent difference can be the basis for a case. Online resources are like Zillow.com can be valuable as well.

Typically you can appeal your bill 30 to 60 days after receiving it. Ask for an administrative review and gather evidence to support your claim that your home isn’t worth as much as the local government says it is. If you don’t get a resolution you like, you can typically appeal. If you don’t have time to go through the process yourself, you can typically hire a local expert to help, but don’t pay too much for the service. After all, you don’t want to give away all your tax savings to somebody else.

Don’t miss our special User’s Guide to Taxes on The Willis Report tonight 6pmET on FOX Business.

 

 

Things to Do Right Now to Save on Taxes Next Year

by Gerri Willis

By Gerri Willis

If you're smart about your money, you've probably already started thinking about what you can do before the year ends to reduce your tax bill. There are lots of changes awaiting taxpayers April 15 thanks to the Affordable Care Act and the American Taxpayer Relief Act of 2012, not much of it good.

First things, first. If you have a large portfolio or earnings above $200,000, now is the time to run a simulation of what your taxes may look like for next year. That way, you can at least get a sense of what you'll be on the hook for come April 15, 2014.

Next, if you're expecting a bonus or year-end income that will push you into a higher bracket, consider deferring that money into next year. Hold off selling assets that will produce a capital gain. If you're self employed, don't send out invoices for year-end jobs until early next year. Keep in mind, high earners are facing a new top tax bracket of 39.6 percent on taxable income of $400,000 for single earners and $450,000 for married couples.

Even if you aren't in the top tax bracket, it makes sense to salt more money into your 401(k). That will reduce your income reported to the IRS since most plan contributions are made before taxes are taken out. Remember if you are 50 or older, you can put in an extra $5,500 over the $17,500 limit.

Now is also a good time to review the limits on your flexible spending accounts. Under Obamacare, the limit on the amount you can set aside pretax was set at $2,500. (Before the ACA, there was no statutory limit on contributions.) Some companies allow a grace period to use untouched FSA funds, but not all. Plus, the Treasury recently announced changes to the use-it-or-lose-it rule. Now, account holders can carry over up to $500 in excess money into the next benefit year, as long as your company adopts that plan.

Also important to consider: The chances of mutual funds passing on long-term capital gains distributions are high. Fund companies release estimates of distributions this month. If you're planning on selling a fund do it before distributions.

Now is also the time of year to consider charitable contributions. Make sure your contributions go to an eligible 501(c)(3) organization so that you can take the deduction.

Don’t miss a special User's Guide to Taxes on The Wills Report starting 6 PM ET tonight on FOX Business!

Consumer's Guide to Year-End Tax Moves

by Gerri Willis

By Gerri Willis

 

Get ready to be socked if you’re wealthy. Or maybe the better word is soaked. Tax changes for the 2013 tax year are huge and if there was ever a year to run projections on your tax bill ahead of April 15, this is it. The nation’s top earners are likely to see their tax rates rise above a whopping 50 percent.

At risk for the biggest changes, are Americans earning over $200,000, says Melissa Labant, director of tax advocacy for the American Institute of Certified Public Accountants.  To be sure, though, earners above $400,000 for single filers and $450,000 for married filers filing jointly will get the biggest bite. And, it’s not just wages that will get more heavily taxed; investment income taxes are rising, and tax benefits that you might have taken for granted like personal exemptions and itemized deductions are under assault too. These changes come thanks to Obamacare and the American Taxpayer Relief Act of 2012.

“I think high earners may be surprised that multiple increases are hitting them,” says Rich Coppa, of Wealth Health LLC. “If they didn't pay attention to these changes from last year they are going to find a bigger bill to Uncle Sam.”

Here’s what you can expect: You likely already know about the increase in the Medicare payroll tax. In 2012, the tax was 2.9 percent and employee’s share of the tax, 1.45 percent, was automatically deducted from your paycheck. Effective this calendar year, however, high-wage earners owed an additional 0.9 percent tax on earned income above $200,000 for single filers and $250,000 for those married and filing jointly. This year also starts a new income tax bracket for people earning $400,000 for single filers and $450,000 for joint filers – a top tax rate of 39.6 percent up from 35 percent last year. That’s the easy stuff to understand. Some of the other changes are more complicated.

Your personal exemption of $3,900 last year is phased out. The amount of the reduction is 2 percent for each $2,500 in excess of adjusted gross income amounts of $250,000 for single filers and $250,000 for those married, filing jointly. The result is a complete elimination of the exemption for single filers with an adjusted gross income above $372,501, and for couples filing jointly over $422,501. What’s more, itemized deductions, such as mortgage interest, state income and sales tax and home office deductions, will be on phase-out schedules as well. (These are sometimes Pease deductions). This change will reduce the value of itemized deductions by 3 percent of adjusted gross income above $300,000 for couples and $250,000 for single filers to a maximum reduction of 80 percent of its value.

Even more pernicious are higher taxes on investment income. If your income is greater than $200,000 as a single filer or $250,000 married and filing jointly, a 3.8 percent Medicare surtax on investment income will be due. (The tax applies to the lesser of your net investment income for the year or the amount by which your modified adjusted gross income exceeds the income thresholds). Note that a taxpayer could be subject to both the additional 0.9 percent tax on earned income and the 3.8 percent tax.

In addition, Obamacare makes it more difficult to deduct unreimbursed medical expenses. Before the Affordable Care Act was passed, unreimbursed medical expenses could be deducted after they exceed 7.5 percent of adjusted gross income. The threshold is now 10 percent.

One single ray of sunshine for middle-class taxpayers: the Alternative Minimum Tax has been permanently indexed for inflation. In previous years, Congress would pass a patch each year to limit the number of people who might fall victim to this alternative to traditional income taxes. People subject to AMT paid more than they might have under the traditional system.

 

Don’t miss a special User's Guide to Taxes on The Wills Report starting 6pmET tonight on FOX Business.

 

Holiday Shopping: How Much Are The Markdowns Really Worth?

by Gerri Willis

By Gerri Willis

I’m one of the few who stayed home this holiday weekend and didn’t shop the Black Friday sales (and certainly not the Thanksgiving Day sales). I am always a little skeptical about how much these markdowns are really worth. When you consider that retailers mark down their prices over and over again during the holiday season, well, it stands to reason that jumping on the first sale may not be worth it.

And, analysis from the Wall Street Journal confirms my suspicions. A recent report broke down the numbers for a single item – a cashmere sweater and followed it through its many price configurations over the holiday season. The sweater starts with a suggested retail price of $50.00. Although, it’s worth asking who really buys the sweater at that price. My guess is not too many, if any. At the first markdown, the price gets cut 10 percent to $44.99. But hold the phone, the final discount price is $21.99, less than half the original price. Sounds like a good deal, until you realize that the retailer only paid $14.50 for the sweater. The average price consumers paid for the sweater is $28. And, that means that the retailer’s gross margin, despite two big discounts, is 45 percent.

Unfortunately, most retailers don’t tell you how much they pay for their inventory, nor do they describe how they bake their margins into original pricing. So, it’s up to you to figure out whether you are really getting a good deal when you shop over the holidays. The good news is this: Smartphone apps can at least help you figure out where the cheapest price can be found for the item you are purchasing. RedLaser, ShopSavvy and Smoopa are three price comparison apps worth your time. RedLaser has now been integrated on Amazon.com.

Also consider shopping with a list. I know it sounds simple, but people who shop with a list and stick to it tend to spend less than others because they eliminate the impulse purchases and the “while I’m at it” mindset that can drive your credit card bill higher.

Don’t get me wrong. I’m not a Scrooge when it comes to the holidays. I just don’t want to pay any more than I have to for the gifts I buy. I bet you’re the same way.

Don’t miss The Willis Report starting 6pmET tonight on FOX Business.

ADVERTISEMENT

On Twitter

ADVERTISEMENT