# Finance - Taking care of your kids



## Smitty (Oct 15, 2005)

Well, Greg Truby's post on Melanoma got me to thinking about how many folks don't think about preparing for their children in the event of a tragic loss (or even for things like retirement, college, etc.).  Case in point, one of my General Managers, who is in the 6-figure range and her husband (same range) have a daughter about to go to college, and they have no idea how to pay for it.  Hell, she just started in the employee stock program and 401(k) this year after I convinced her.

I talk to employees all the time about planning and the grim realization is that very few do (I'm adamant about it, but not being in the 6-figure range, unless you count the decimal points, I do what I can), so I'm going to throw out a few suggestions that I tell employees about.  (Please note that the recommendations I'm gonna' make aren't solicited, nor do I have anything to gain...)

1) www.UPromise.com

A non-profit company started by Bill Bennett, a former US Secretary of Education (yeah, I know, that's kind of like "Military Intelligence" right?), that's gotten corporations to pitch in a portion of your spending to tax-free college accounts for your kids.  I.E. For every gallon of gas I buy at Exxon/Mobil, $0.01 goes into a trust account for Campbell.  (It may not sound like much, but she's not even 2 yet and my wife drives a Ford Exploitation...I think Bradley Tanks get better mileage!)  Buy something from Overstock.com and 3% of the purchase goes in, etc.  Get my drift?

And friends and family can sign up as well.  It's relatively painless too; just register your credit cards and "charges made at qualifying merchants" go into the kiddo's college fund. (Tax-free too!)

2) www.sharebuilder.com

For those of you who don't have brokerage accounts, this is the place to start!  There's no minimum to start an account, and you can buy stock on the basic plan for $4 per trade.  They also do dollar-cost-averaging and DRiPs.  I.E. I've got $10, but the stock I want to buy costs $55/share; OK, then you get $10 worth...(of course with a $4 trade fee, that'd be a stupid buy! )  You can also direct deposit into them and the $ sits in a money market account earning $$$ until you decide where to put it.

DriPs-->Dividend Reinvestment Plan...I.E. I used to get checks from my company's trading house everytime there was a quarterly dividend.  Yeah, I'm going to go drive to the bank and spend an hour in line for $1.09!  Well, a drip means that $ goes right into your account and gets reinvested.  In fact I have a check for $1.87 and I can't believe that I'm going to waste $0.37 to send it in!  (OK, my company has some wires crossed and sends me checks for stock I already sold, so who am I to complain?)

3) www.ingdirect.com

A Netherlands based bank, but 100% Internet.  Again, no fees involved, but they're paying 3.85% on a savings account right now!  What's your bank pay? 0.85%?  They do direct deposit from you paycheck as well and you've just got to love the no fee thing.

It's a no brainer for "rainy-day" money.

4) www.legalzoom.com

OK, so this one was done by Robert Shapiro, one of the guys who helped OJ get off, but if you've got a family, write a WILL, will ya'!  From what I've heard, California Probate court sucks, and your wife will certainly desecrate your grave if she has to go through it alone.  I think it's about $99, but they do everything, including the filing and they're not limited to CA.

5) www.quicken.com

Yeah, this one costs, but get your **** finances in order!  My wife consistently has -$12 in the bank because of not using it and I consistenly have $12.50 to bail her out because of it!   

Just some thoughts from a guy whose pot to pi$$ in ain't sterling silver.

Take care,

Smitty


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## just_jon (Oct 16, 2005)

And don't forget long-term care insurance, so as to not saddle them with the cost of an old, worn-out you in a few years.


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## litrelord (Oct 17, 2005)

Guess that explains your username then Smitty.

Even better with ING at the moment, unless it's just in the UK, just moved my savings account to them.  Got 4.87% which'll do me.

Nick


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## Smitty (Oct 17, 2005)

> Guess that explains your username then Smitty.


Nah, that's the name of the company I work for. 

Smitty


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## NateO (Oct 17, 2005)

Hello,


			
				pennysaver said:
			
		

> DriPs-->Dividend Reinvestment Plan...I.E. I used to get checks from my company's trading house everytime there was a quarterly dividend.  Yeah, I'm going to go drive to the bank and spend an hour in line for $1.09!  Well, a drip means that $ goes right into your account and gets reinvested.  In fact I have a check for $1.87 and I can't believe that I'm going to waste $0.37 to send it in!  (OK, my company has some wires crossed and sends me checks for stock I already sold, so who am I to complain?)


I'm not one to try and discourage saving and being financially responsible, but make sure the record keeping is tight on these.

Here's a couple things that come to mind with these or even more so, purchase plans:

1) Do they disclose what price you're buying in at? Are you paying 10 times market value? I’ve backed into some scary looking prices on something similar…

2) What happens when you sell and it's time to pay Uncle Sam? What's the cost-basis for your gain?

If you're getting shoddy records on this stuff and/or have to back into your own cost-basis, some of these ongoing infusion plans strike me as a logistical nightmare for tax purposes. To the extent where I might just be tempted to let that $1.09 transfer to a money market account (most brokerages should be able to handle this), and add it to other dollars come time for my next investment.

In any event, good hunting.


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## Smitty (Oct 17, 2005)

> 1) Do they disclose what price you're buying in at? Are you paying 10 times market value? I’ve backed into some scary looking prices on something similar…
> 
> 2) What happens when you sell and it's time to pay Uncle Sam? What's the cost-basis for your gain?


Good points.  If you're going to blindly invest and expect someone else to take care of potential implications for you then you're better off keeping your money in Savings.

1) Market value.  They're an up-n-up low cost brokerage firm.  I suppose you could go with any of the "name brands", like Ameritrade.  I just chose Sharebuilder because they had the best offerings at the time.  Many are using similar models nowadays.

2) Determining cost basis is on you, but I have to the the same when I sell my ESPP shares.  I use Quicken, so it's calculated automatically though.  But it does take some dilligence when setting it up.

As for putting dividends into the MM fund, that's the default; you have to opt-in for DRiPs.

Smitty


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## NateO (Oct 17, 2005)

pennysaver said:
			
		

> 1) Market value.  They're an up-n-up low cost brokerage firm.  I suppose you could go with any of the "name brands", like Ameritrade.  I just chose Sharebuilder because they had the best offerings at the time.  Many are using similar models nowadays.


I'm just not sure what up-n-up means, though. I have nothing against them, but I wouldn’t be surprised if Ameritrade is out of business tomorrow… 

All I'm saying is keep them honest, if they're not telling you how many shares you bought for x dollars, even if it seems like small dollars, tie it out. There's no sense in buying  $.2 for $1.00 if it's readily available elsewhere.

If there's no commission on trades, buyer beware, the people managing this money/executing these trades have to make a living one way or another... Want one way to do it? Take the high end of a 2-week trading average, etc....



			
				pennysaver said:
			
		

> 2) Determining cost basis is on you, but I have to the the same when I sell my ESPP shares.  I use Quicken, so it's calculated automatically though.  But it does take some diligence when setting it up.


I’m not sure it should be up to the individual for a few reasons. Most people will not back into their trades and store accurate records, to be sure. That is each week, quarter, whatever, determine how many shares they bought at what price and then figure out their basis. And what happens when you sell part of your holdings, say 3/4 of your stock? Are you using FIFO or LIFO? This will affect your gain and liability pending when you bought the issue and where the price was at.... 

These things make me cringe more than VBA... My two cents. But still, yes, save and invest, just be careful about what you're doing.


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## just_jon (Oct 18, 2005)

Might be able to invest in a nice_ brewery _stock and get rich, eh Nate?


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## NateO (Oct 18, 2005)

You bet, Jon; recession-proof.


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## killerleaf (Oct 19, 2005)

The part about the long term insurance...it is worth every penny.  My mom got it, and my dad ranted and raved about the cost...but she kept it.  Then, two years later, she suffered from three back to back strokes.  It meant over three months in a nursing/rehab place, which the insurance paid for.  Now, since Dad has passed away, Mom is in an assisted living place, very, very nice, and the insurance is again helping to pay for it.  If it was not for the insurance, then she would either have to be in a regular nursing home, (and around here there aren't any nice ones that don't smell or are questionable in their care) or she would have to live with me in my car.  (I would have to quit my job to take care of her, as I don't have a way to pay for a nurse, no job means no way to pay bills, not paying bills means living in car)  Soo...LONG TERM INSURANCE MAKES LOTS OF SENSE!  And don't think that you can put it off.  Mom was 62 when she had her strokes.


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## Legacy 1363 (Oct 19, 2005)

Notwithstanding killerleaf's comments, it's also worth thinking about how you can ensure your children will be both willing and prepared to look after you when/if you are old and penniless.


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## killerleaf (Oct 19, 2005)

Also look at the benefits of the different ones offered; sometimes just a couple of dollars in the premiums, and it helps pay for at-home nurses, or day care, which is better for everybody all the way around.  My parents never owned a house, and Dad was confined to a wheelchair in the last few years of his life.  Medicare/Medicaid would not pay anything to help him with mom, so he did everything himself around the house, taking care of her.  It is tough to see your parents struggling, and realizing that you aren't in any better shape.  I don't want my kids to have to go thru some of the grief and guilt I have gone thru.


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## Legacy 1363 (Oct 19, 2005)

Money is not necessarily the most important factor.
Willingness to make efforts/sacrifices based on affection and love is not something that can be taken for granted, nor guaranteed by having an insurance policy in place.


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## just_jon (Oct 19, 2005)

C. O. Jones said:
			
		

> Money is not necessarily the most important factor.
> Willingness to make efforts/sacrifices based on affection and love is not something that can be taken for granted, nor guaranteed by having an insurance policy in place.



Absolutely true, sir. With enough effort by loved ones, assuming the family/friends in question have the time to do it, you can get by with a minumum amount of extra cash - as for years was the case with extended families, the taking care of their elders.

However, some of us are physically unable to provide those services - not able to assist with activities of everyday living, and in that case an enormous amount of money may be required.

And as a friend once pointed out, carefull and prolonged investing can leave enough of a nest egg to handle a lot of elder care issues.


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## killerleaf (Oct 20, 2005)

Ok, I have started and restarted this 4 times..and I guess it is because, yes, I do have a lot of guilt because I don't have mom staying with me.  It hurts when other people seem to indicate that it is a matter of love and dedication.  Sometimes, it is a flat out matter of money.  I would love to be able to either hire someone to stay with mom during the day so I could still work, or just stay at home with her.  She has to have 24 hour supervision.  Unfortunately, I have bills that have to be paid, and my hubby's two jobs don't cover all of them, so I have to work to be able to pay them.  We don't have luxuries; we don't go on trips, we are basically one (well, maybe two) missed paycheck from living in the car ourselves. 

so..I guess my point is, just be very careful how you word things about future planning.  I once thought the same things, but, after being laid off twice from well paying jobs, it has shown me just how things can change in an instant...and all the great intentions don't mean a thing if you can't implement them because you are broke.


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## Smitty (Oct 20, 2005)

All I can say is that I wish you the best.

Smitty


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