By Amanda Morrall
1) Whoa baby
The day my youngest grew out of nappies was a thrilling moment indeed. Sure, changing them wasn't pleasant but the cost was the biggest stinker. I did cloth with the first born to save money, but two under two and cloth just got ugly and it was back to over-priced disposables. Any parent will tell you, kids don't come cheap. If you let finances dictate the decision, you wouldn't have them.
According to this piece published by yahoofinance.com, the costs of having children have exploded in the last decade. The U.S. Department of Agriculture, which tracks annual expenditures by families reports that the cost of raising a child from birth to age 17 has surged 25 per cent. The increase has mainly to do with the rising cost of groceries and medical care.
The DOA estimates that a middle-income family with a child born in 2010 can expect to spend around US$227,000 for food, shelter and other expenses necessary to raise that child. That doesn't include tertiary education costs. Factor in inflation and that rises to US$287,000. I couldn't find similar data for New Zealand however the article does have a number of relevant tips for would-be parents on how to plan for baby.
2) Indexation and inflation
On the subject of inflation, interest.co.nz tax columnist Terry Baucher takes a look today at what we can expect from Budget 2012. In short, not much. Baucher compares the zero budget business to some of the tax goodies unveiled across the Tasman where the tax free threshold for individuals has been tripled from A$6,000 to A$18,200.
Baucher also looks at the effect of "bracket creep", compounded by inflation and ponders New Zealand politicians unwillingness to discuss indexation as a way to offset the burden of continually paying more, taxation by stealth.
One couple's answer to lifestyle inflation? Once a year they crack the budget whip and challenge themselves to spend only on essential items. Their superfrugal savings strategy, documented in a guest blog on getrichslowly.org, works on the strength of having friends endorse the plan (no pressure to go out), planning ahead (particularly when it comes to meals), and doing heaps of free fun stuff.
4) Five economic concepts consumers need to know
Everything you wanted to know but were afraid to ask about how economic theory applies to consumerism. Investopedia, discusses five basic concepts.
5) LVR of 95%
The banks will disagree with me but I personally don't think you should buy a house with anything less than a 10% deposit saved. The interest you end up paying long-term is killer, even in more competitive interest rate environment. This personal finance item from the Globe Investor supports that view with a warning to homebuyers who go this route about why at a LVR of 95% you should be prepared to love your home for a long time.