Personal Finance Advice

When expectant parents have a new baby on the way, it’s common to go a little overboard with purchases.  First time parents are the biggest culprits because they aren’t entirely sure what they actually need to buy and what is just plain frivolous.  After all, lots of expensive things seem completely reasonable until you realize you really don’t need that camera monitor because it makes you sit and watch your baby sleeping when you should instead be resting yourself or you never really use the wipes warmer.  Buying designer bedding suddenly seems a lot less reasonable once it dawns on you that you’re not supposed to put frilly bedding in the crib with your baby.

How can you keep your finances under control with a baby on the way? Here are a few ways to make sure you don’t go broke buying all the things you’ll need (or want) for your upcoming baby:

Talk to experienced parents.  You can save a lot of money by taking the time to ask experienced parents about what purchases are reasonable and which ones aren’t.  By having this talk you’ll discover that you don’t need a high chair until the baby is much older, there is no point in buying a baby gate just yet, and some of the cutest baby items are completely unrealistic and will never be used.

Stay on budget.  If you don’t have a budget for your purchases then there is a good chance you are going to spend too much.  Don’t rely on your credit cards to but the things for your baby because inevitably this will result in you spending much more than had planned on paying.

Don’t panic.  Time is on your side.  You don’t have to have a full decorated nursery four or five months prior to your due date.  In fact, if you have to wait to make some purchases until after your baby is born then this actually won’t be such a hassle.  After all, if you can’t afford to buy a changing table then you will be pleased to find that your bed or the floor works just as well, if not better.

Don’t place a price tag on love.  Your baby is going to adore you whether you bestow upon her a huge nursery full of the most trendy baby items or if you stick a secondhand crib in the corner of your bedroom.  Get it out of your mind that the amount of love you have for your baby can only be demonstrated by how much stuff you buy.  Not only is this an ineffective parenting technique, but it can be a very expensive one as well.

Get what you need on sale.  There are some things you absolutely need, such as a car seat and plenty of diapers. When you make these purchases, look for the best sales you can find.  Try to avoid paying full price whenever you can, whether that means looking for clearance sales or clipping coupons.

Congratulations!

You’re closing a savings account because you’re tired of paying the hefty monthly fees your financial institution charges you on the account.  You already have a savings account lined up with another bank or credit union, so there’s no way the representative is going to talk you into keeping the account open.  When you sit down with the representative, he starts with the barrage of statements that are designed to get you to leave the account open:

“I can reverse some of the fees if you keep the account open.”

“Do you know how important it is to have a savings account?”

“How about we keep the account open so you can think about whether you really want to close it or not.”

It can be incredibly annoying to have a representative at a financial institution talk to you as though you’re not very bright, but in the vast majority of cases there is no ill will intended.  Representatives are usually simply going through the script that they have been required to memorize.  They’re told to say certain things in certain situations, and since the last thing a bank or credit union wants you to do is to close your accounts you have to be ready to deal with some resistance.

The same goes for other transactions.  Turn down an additional product - such as disability insurance coverage for a loan, for example - and the representative might say things that offend you on some level.  You might have to sign paperwork with wording that you object to because it’s designed to make you feel silly, such as initialing something that says I don’t need disability insurance coverage because I know I’ll never get sick.  

Your first instinct might be to object to the implications - real or imagined - that you’re being treated like an idiot.  Of course you know that you need to have a savings account and of course you know that everyone gets sick once in a while.  The representatives know that you know this.  They’re simply trying to find ways to hang on to your business, not to insult you.  Don’t take it as a personal attack. 

Is it really worth your energy to get into a heated argument with a financial institution representative? Money is a passionate topic, so there may be times when it’s difficult to avoid feeling as though you want to scream at the person on the other side of the desk.  Instead, respond with, “Thanks for the advice,” or a simple “Uh-huh.”  Remember that nine times out of ten the representative isn’t trying to belittle you. 

If you truly feel as though someone has said something that is indeed intended as an insult, calmly talk to the manager.  After all, do you really want to scream and yell at someone who has full access to your accounts? 

You’re not the only one who is trying to stretch your dollars a little further, but this does not mean that you should allow yourself to get into major financial trouble.  It’s one thing to occasionally use your credit cards to buy groceries or to refuse an invitation out with friends because you can’t spare the money to buy dinner at a restaurant, but it’s another thing entirely to fall into a pattern where you’re heading straight toward financial disaster.  Recognize the patterns as soon as possible so you can come to the realization that you need to make some major changes now. 

Do any of these sound like you?

You’re using payday lenders.  If you have resorted to utilizing payday lenders in order to make it through to the end of the month then your #1 priority should be to stop.  Payday lenders charge amazingly high interest rates and fees and can really throw consumers into a perpetual cycle of debt and dependence.

You are afraid to answer your phone.  When you fall far behind in payments you’ll notice a barrage of phone calls from the financial institutions you owe money to.  It’s not unfair that they want to know where their money is - after all, they did lend it to you - but if the ringing of your telephone makes your heart skip a beat then that is a pretty good indication that you need to make some major changes.

You couldn’t get a loan if you tried.  When you don’t pay your bills on time your credit score suffers, making it difficult to get approved for any type of credit product through a lender.  Subprime lending exists for people who can’t get approved for a traditional loan or credit card, but if your finances are in such disarray that you can’t even get approved for a subprime product then this is a huge red flag.

Bankruptcy seems like a pleasant alternative.  Bankruptcy can indeed provide debt relief in some instances, but it’s an arduous task that can be humiliating and expensive.  If you find yourself researching bankruptcy and thinking wistfully about how great it would be to get the process started, you need to figure out quickly how to get your finances back under control (even if that does mean bankruptcy).

You feel desperate.  Finances can take a huge toll on your psychological well-being.  If the thought of your financial situation makes you feel anxious, depressed or panicked then you need to make some serious changes right away.

Don’t ignore these signs.  Take solace in the fact that no matter how bad your personal finances get there is always a way to dig yourself out.  It may take a great deal of time and effort, but you certainly won’t improve anything by ignoring the huge red flags waving in front of you.