Preparing For The Birth Of A New Baby
Well, well. If you read my last post, then you know our good news. My wife and I are going to have another baby. He/She is due in April. We’ve spent the past three days telling our friends and family. We are so very, very excited. My daughter, 7, wants the baby to be born NOW. My son, 3, wants twins, so that “he can have one and she can have the other”!
Over the course of the next few months, I’ll be adjusting my budget so that I can be financially prepared for the birth. I will increase the amount that we budget for health care. (We have health insurance, but we will need to prepare for co-pays, prescriptions, medicines, and other incidental expenses.) I’ll begin to gather baby-formula coupons. (Our doctor usually has a big stack of coupons for Similac, our preferred baby-formula.) I’ll check Amazon for diaper specials. We’ll go through our closets, sorting through usable and unusable baby items. We already have a crib, a rocking chair, and other baby basics, but we’ll be looking for a new changing table/twin bed. (Instead of a changing table for our son, we simply used a twin bed. It served two purposes. We could lie him down on the bed to change him, and if one of us needed to sleep in his room at night, we could sleep on the twin bed. But, now HE’s sleeping in the twin bed, so we’ll have to get another one, if we choose to go that route.) As far as baby clothes go… grandparents baby, grandparents!
I’m really looking forward to being a daddy (again). Clearly, once the baby arrives, our lives will change. Household expenses will go up. Free time will go down. Budgets will need to be adjusted and belts will need to be tightened. But, it’s going to be awesome. My words fail, as they often do… so allow me to simply share the following from Psalm 139: 13-18
For you formed my inward parts;
you knitted me together in my mother’s womb.
I praise you, for I am fearfully and wonderfully made.
Wonderful are your works;
my soul knows it very well.
My frame was not hidden from you,
when I was being made in secret,
intricately woven in the depths of the earth.
Your eyes saw my unformed substance;
in your book were written, every one of them,
the days that were formed for me,
when as yet there were none of them.
How precious to me are your thoughts, O God!
How vast is the sum of them!
If I would count them, they are more than the sand.
I awake, and I am still with you.
We Are Going To Have Another Baby!!!
I have some great news. My wife and I are going to have another baby! The baby is due in April, so I’m sure I’ll be doing a lot of blogging about “baby stuff” between now and then. Our daughter is 7 and our son is almost 4, and they’re both really excited about the idea of having a baby around the house. I’ll have much, much more to say about the baby (and how this news will affect our finances!) in the days to come, but I just wanted to write a quick post and share our awesome news! Yay!
Learning More About My 403(b) Plan
I work for a tax-exempt organization so, instead of having a 401k, I have a 403(b). My retirement contributions are sent by my employer to the company that operates the 403(b), but the responsibility for allocating those contributions rests with me. I’m rather new to the “investing game” and I’m taking the time to research the various mutual funds available to me inside my 403(b) plan.
My 403(b) offers two different fund categories.
Category 1: Select Funds: These are basic mutual funds. By selecting among the various “select funds” I can create a completely customized “portfolio”.
According to the Securities and Exchange Commission, “A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, or other securities.”
According to Wikipedia, “In finance, a portfolio is a collection of investments held by an institution or a private individual.”
So, when I invest in a select fund (mutual fund) my money is pooled with the money of other investors and used to purchase stocks, bonds, etc. The combination of all of my select funds (mutual funds) equals the total value of my investment portfolio.
Types of Select Funds available in my 403(b):
Money Market
Low-Duration Bond
Medium-Duration Bond
Extended-Duration Bond
Equity Index
Real Estate Securities
Value Equity
Growth Equity
Small Cap Equity
International Equity
Let’s assume that I have $1000 in my 403(b) account. I can choose to allocate that $1000 in any manner that I wish. I can put 50% in the International Equity fund and 50% in the Equity Index Fund, or I could allocate 5% to Small Cap, 10% to Real Estate Securities, and 85% to the Medium-Duration Bond fund. The choice is completely up to me, as long as the allocations for my funds add up to 100%.
I’ve created the following graphic to illustrate how a 403(b) retirement account would work if my entire portfolio was invested in Select Funds (Mutual Funds):
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Category 2: Blended Funds: These funds invest in the various Select Funds. In other words, these are funds-of-funds.
Types of Blended Funds available in my 403(b):
Flexible Income
Growth and Income
Capital Opportunities
Global Equity
These funds provide inherent diversification and are listed by their assumed risk/return ratios. In other words, those looking for a higher return (and who also have a higher tolerance for risk) might choose to invest 100% of their contributions in the Global Equity fund. I can purchase one Blended Fund and still diversify my investments. Going further, I could also purchase multiple Blended Funds, but doing so might defeat the purpose of purchasing a Blended Fund. Blended Funds, by definition, are already diversified and categorized by risk/return assumptions.
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My 403b provider offers Select Funds (which are mutual funds) and Blended Funds (which are funds that invest in the various Select Funds). I am free to decide how to allocate my investments.
1. I can choose to purchase only Select Funds (or just one Select Fund).
2. I can choose to purchase only Blended Funds (or just one Blended Fund).
3. I can choose to purchase Select Funds AND Blended Funds.
Confused? Most people are. I will confess, it takes a lot of effort to understand retirement funding and the various allocation options that are available. There are so many terms to understand, so many different opinions about what to invest in, and so many people trying to make a dollar “giving advice”. It’s amazing that something so important, so vital, is shrouded in difficult to understand terminology. Hopefully, as I move forward, I’ll gather more information and understand more and more about investing.
So, how have I chosen to allocate my money? I went the easy route and put 100% of my money in the Select Fund - Equity Index. This fund is an index fund, it invests in the stocks of the S&P 500, and it has a very low expense ratio. I like to keep things simple - very, very simple!
(One note: My 403b provider describes their funds-of-funds as Blended Funds. Certain mutual fund providers also offer regular mutual funds labeled “Blended Fund”. If you run into this term, be sure that you understand the difference.)
Please note: I am not a financial professional and I do not give investing advice. Take the time to educate yourself about investing.
Resource: For additional information about the 403(b), checkout 403b wise.
Resources: If you are looking for a great book about investing, may I suggest the following two? I really like them both.
The Bogleheads’ Guide to Investing
How To Get The Most Out Of No Credit Needed
When I started No Credit Needed in April of 2005, I intended for this site to be a simple blog - a site where I could track my progress as I paid off my debts. Over the course of the last two and a half years, No Credit Needed has evolved into much more - a place where I can share my own story, link to other sites that I like, and connect with other people interested in personal finance. Now, not only do I maintain No Credit Needed, I also publish the NCN Podcast and manage the NCN Network. I want to thank long time readers, listeners, and members for keeping me motivated. If you are a new reader, here are some ways that you can “get the most” out of No Credit Needed.
Subscribe to No Credit Needed:
RSS Feed - Simply add the No Credit Needed feed to your favorite feed reader and you will receive up-to-the-minute updates.
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Listen to the No Credit Needed Podcast:
NCN Podcast - Visit the NCN Podcast homepage and you can stream recent episodes or listen to archived episodes.
Add the NCN Podcast to Itunes - By adding the podcast to iTunes, you can automatically download the latest episodes.
Add the NCN Podcast RSS Feed to your pod-catcher - If you are not a fan of iTunes, simply add the podcast feed to your pod-catcher.
Visit and/or Join the No Credit Needed Network:
NCN Network - Visit the NCN Network to see over 200 personal finance charts.
Join the NCN Network - If you have a personal finance goal and you would like to share it with the world, join the NCN Network.
NCN Network RSS - Subscribe to the No Credit Needed Network RSS Feed.
If you have ideas for improving the site, feel free to leave a comment.
Finally, if you have website and you link to any of my sites, please leave a comment or contact me and let me know. I believe in creating community, and if you’re site meets some very basic requirements, I’ll gladly link-back.
Creating A Basic Budget And Orgnizing Your Financial Documents
For those of you who are new to my site, you might not realize that back in January I moved my site from “blogger” to “wordpress”. During the move, I lost most of the comments associated with my old posts. Also, many of the category listings failed to transfer. I’ve been combing through the archives, in search of my favorite “articles from the past”. Here are two of my favorites, one written in August of last year, and the other written two years ago.
10 Steps For Personal Finance Organization: If you struggle to keep your financial documents organized, join the club! Hopefully this article can help you manage your payments, organize your documents, and clean up your desk.
Simple, Simple, Simple: This is one of my favorite articles. If you are trying to figure out how to create a simple, easy-to-use budget, read this article. You’ll find out how to create a simple, zeroed-out budget.
If you are ready to move from pencil and paper, may I suggest long-time site sponsor, YNAB Personal Budget? I’ve been using Jesse’s products for almost two years, with great success.
Envelope System Video Tutorial (Step By Step Guide To Using The Envelope System To Manage Your Cash)
I use the Envelope System to manage my cash. The idea behind the envelope system is pretty simple. By distributing you cash into manageable budget categories, you can control spending, manage receipts, and fine-tune your budget. I thought that it would be interesting to create a video tutorial, explaining the basics of my envelope system. (Please note: I use actually envelopes to manage my cash, but you could use any method for dividing your cash into manageable amounts.) You will have to click the arrow to start the video… and you might have to hit the small volume bar at the bottom to get the audio to play. I did not set this video to “auto-play” because I hate going to sites that set their videos to “auto-play”. 
Leave a comment and let me know what you think about the video.
(I’ve created a video podcast episode from this tutorial. If you would prefer to download the video and/or watch it with QuickTime or iTunes click here: NCN Podcast Video Podcast: Episode 1: The Envelope System Tutorial)
(My Dad watched it and said… “Looks like the opening to Napoleon Dynamite”. Gosh! )
