MONEY First-Time Dad

Here’s How to Save on Summer Camp and Child Care

Luke Tepper

Money writer and first-time dad Taylor Tepper learns some strategies to keep more money in your wallet without compromising quality care

My son Luke is 14-months-old, so our summer child care plan follows our fall, spring and winter’s—that is to say, we’ll be sticking with our nanny share. Mrs. Tepper and I aren’t particularly thrilled to see so much of our income siphoned away for this purpose, but at least we don’t have to figure out an entirely new care arrangement from June through August.

Parents of school-aged children aren’t so lucky.

With spring barely in the air, this is the time of year that many working moms and dads are hustling for stopgap measures. “Summer care is this mishmash, patchwork quilt,” says Care.com’s Katie Herrick Bugbee. “It can be incredibly stressful for parents.”

And expensive. Babysitters earned a nationwide average of $13.44 an hour last year, according to a recent report from Care.com, up more than 11% in 2013. At that rate, assuming you get coverage for 40 hours a week—because of course you’ll leave at 5 p.m. each day—for 14 weeks, you’re dropping $7,500 easy. Day camps average $304 per week, according to the American Camp Association, but can hit as high as $1000—and that’s not including the sitter you’ll need to pick up and mind your kid until you return from work. Sleep-away offerings can set you back even more.

Year-long schooling suddenly seems more reasonable.

In empathy for my more veteran compatriots in parenting, I asked Bugbee to offer some suggestions to help navigating this challenge.

Think of Camp as Dessert

While summer camp is still a few years away for Luke, I did some preliminary research to get a sense of the market. A cooking camp in Manhattan ran $430 for the week, a Brooklyn music camp would set me back $630 a week, while a nature camp on the New York/ New Jersey border cost about $1,000 a week. All three would let him out at 4pm or earlier—the relatively affordable cooking option ended at noon—which meant that we’d have to arrange for after-camp child care, too.

There are a few strategies you can enlist to make camp a bit cheaper, says Bugbee.

If you have the flexibility to leave work early one day a week to participate, you’ll save a lot by not hiring someone to collect your child. But also get to know the parents of your kid’s camp-mates. “If you can’t do a 3 p.m. pickup everyday, you’ll need to find carpool arrangements,” she says.

Another option recommended by Bugbee is to scour silent auctions offered by your kid’s school and other schools in the neighborhood for camp discounts. Bugbee herself has bid on a couple weeks of camp.

Hire the Best Babysitter for Your Buck

If camp is out of your budget, or only doable for a week or two, you’ll need to look for a full-time summer nanny. And the time to start your search is nigh.

“This is the time of year when we start to see huge increases in summer care positions,” says Bugbee, who estimates that there are 30 times more openings in April than March.

Which means that it’s a sitter’s market. Based on the national average hourly wage, expect to shell out $110 a day, or $550 a week.

Just because sitters or nannies are in demand, though, doesn’t mean you have to accept bottom of the barrel. Look to friends and other families in your communities for referrals, but don’t stop there. “Run a background check, go through a lengthy interview process and check references rather than just relying on referrals,” says Bugbee. Only 36% of families run a background check, per Care.com.

Especially if you can’t afford camp too, you’ll want to look for a nanny that will be active with your kids. You could get at this by asking a prospective candidate for five activities to make a day more fun, or what he or she would do with your children on a rainy day. “Empower this person to come up with a plan,” says Bugbee.

Also, don’t hesitate to add on additional responsibilities—like light children’s laundry and cooking a few healthful meals a week—that will help ease your burden and stretch your dollar.

Create Your Own Camp-Lite

You can also hook up your nanny with other caregivers in the neighborhood to create a kind of nanny-camp collective.

Bugbee, for instance, lived in a community with lots of nannies. So she created a Google Drive spreadsheet, and each nanny signed up for a day to host the other kids.

On Monday, the neighborhood kids could gather at one house for a sprinkler party, while Tuesdays would entail a trip to the zoo. “Whoever wanted to show up, this is what they were doing,” says Bugbee. “It was special. The kids felt like they always had friends around, there was always something going on, and no one was sitting in the living room watching television.”

Plus it didn’t involve any extra money.

Of course, your caregiver needs to be on board with such a proactive schedule. Look to college RAs home for the summer, applicants with camp counselor experience and teachers looking for supplemental income.

Get Help from Uncle Sam

You can make up for some of your costs with a few simple tax steps. If your kids are under 13, sign up for a dependent-care flexible spending account at work. You can use pretax dollars to pay up to $5,000 of child-care bills—equivalent to a little more than eight weeks of sitting in our example. You’ll save around $1,400 in the 28% bracket.

If your employer doesn’t offer an FSA, you claim the child-care tax credit for up to $3,000 in expenses for one kid, $6,000 for two. A married couple filing jointly with adjusted gross income over $43,000 can write-off 20% up to these amounts.

I’m sure that when the time comes in a few years that Mrs. Tepper and I will need to figure out what to do with Luke for the summer, we’ll attack the issue with the same vigilance we do with every other facet of his life. With Bugbee’s advice in mind, we’ll look early for a camp or two, extensively interview prospective part-time nannies and help coordinate playtime with other kids on the blocks.

Just another parenting stress to look forward to.

MONEY stocks

3 Ways to Profit by Going Against the Crowd

fish jumping from crowded fishbowl to empty one
Yasu+Junko—Prop Styling by Shane Klein

Though it's scary, your best move in today's choppy market is to do what others fear.

Take a deep breath. After a whirlwind start to the year, you can be forgiven for feeling nervous about the state of the financial markets.

Yes, the Dow and the S&P 500 are back up after sharp declines earlier this year. But stocks are still on pace for their most volatile year since 2011. Sure, plunging prices at the pump are good for consumers, but they’ve taken a hammer to energy stocks. And interest rates around the world keep sinking. While falling yields boost the value of older bonds in your fixed-income funds, they sure make it hard to generate any income.

Rather than following the crowd that’s selling on today’s fears, take advantage of falling prices and do a little bargain hunting. Here are three places where that’s possible.

THE ROCKY STOCK MARKET

The worry: In 2013 and 2014, the S&P 500 experienced daily swings of 1% or more about once every six trading days. So far this year, it’s been one in three.

What the crowd is doing: Racing into low-volatility funds that focus on boring Steady Eddie companies like Procter & Gamble. As a result, the price/earnings ratio for stocks in the PowerShares S&P 500 Low Volatility ETF is 12% higher than the broad market. Yet “low vol” shares have historically traded at a 25% discount.

The smarter move: Look to an industry that’s not particularly thought of as a safe harbor in a storm: technology. Mature tech anyway. “On a relative basis, older, established tech firms look really attractive,” says BlackRock global investment strategist Heidi Richardson. Many tech giants, such as Apple APPLE INC. AAPL -1.49% , trade at P/E ratios of around 15 or less.

They also have a ton of cash, which lets them invest in research and development while still paying dividends. Moreover, the recent volatility in stocks has stemmed from fears that the Federal Reserve may start hiking rates this year. Well, tech has historically outpaced the S&P 500 in the six months following rate hikes. Lean into this group through iShares U.S. Technology ISHARES TRUST REG. SHS OF DJ US TECH.SEC.IDX IYW -0.89% . Apple, Microsoft, and Intel make up more than a third of this ETF’s holdings.

THE ENERGY CRISIS

The worry: Oil prices may not be done falling. UBS, in fact, believes that the price of a barrel of crude may not return to recent highs for another 60 months.

What the crowd is doing: Ditching blue-chip energy stocks, including giants such as Conoco-Phillips and Halliburton, which have sunk 20% to 40% lately.

The smarter move: Play the odds. The Leuthold Group found that a simple strategy of buying the market’s cheapest sector—now energy, based on median P/E ratios—and holding on for a year has trounced the broad market. “Value surfaces without even needing a catalyst,” says Doug Ramsey, Leuthold’s chief investment officer.

You can gain broad exposure through Energy Select Sector SPDR ETF ENERGY SELECT SECTOR SPDR ETF XLE -0.59% , which beat 99% of its peers over the past decade and charges fees of just 0.15% a year.

THE THREAT OF DEFLATION

The worry: Rates around the world will keep sinking, as conventional wisdom says deflation is a bigger threat than inflation.

What the crowd is doing: Pulling billions from products such as Treasury Inflation-Protected Securities that are meant to guard against rising prices—investments now yielding even less than regular bonds.

The smarter move: Embrace that lower-yielding debt, at least with a small part of your portfolio. Joe Davis, head of Vanguard’s investment strategy group, says inflation may not spike soon. But the time to buy inflation insurance is when no one is scared, and it’s cheap. Consumer prices would only have to rise more than 1.8% annually over the next decade for 10-year TIPS to outperform.

Conservative investors should look to short-term TIPS, which are less sensitive to rate hikes, says Davis. Vanguard Target Retirement 2015, for instance, allocates about 8% of its portfolio to the Vanguard Short-Term Inflation-Protected Fund VANGUARD SH-TRM INF-PRTC SEC IDX IV VTIPX 0.12% .

This won’t seem fruitful—until, that is, inflation finally rears up.

MONEY inflation

What Today’s Inflation Report Means for Fed Rate Hikes

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Getty Images—(c) Brand New Images

While slightly improved, inflation remains below the Fed's target. What does that mean for interest rates?

U.S. consumer prices rebounded slightly from last month’s precipitous drop-off, while prices were flat over the past 12 months.

The Consumer Price Index increased 0.2% last month as oil stopped its dramatic fall, and was unchanged compared to this time last year, according the the Labor Department. So-called core inflation, which strips out volatile energy and food prices, rose by 1.7%, still well below the Federal Reserve’s 2% target.

Prices had fallen the three previous months.

While firmer than previous months, these low inflation rates come at a critical time for the Federal Reserve.

Investors have received mixed messages from central bank officials and economic data recently. For months, the Fed had reassured Wall Street that it would be patient when it comes to removing its accommodative monetary policy. Last week, though, the Fed dropped the word “patient” from its statement, implying that interest rates could rise soon—perhaps as early as June.

Yet in the same breath, the Fed lowered its growth and inflation expectations in the near term and signaled that even if rates are lifted soon, they won’t climb as rapidly as previously thought. That caused the stock market to soar.

“Just because we removed the word ‘patient’ from the statement doesn’t mean we are going to be impatient,” Yellen said in a press conference after the statement was released. “Moreover, even after the initial increase in the target funds rate, our policy is likely to remain highly accommodative to support continued progress toward our objectives of maximum employment and 2% inflation.”

Fed Vice Chair Stanley Fischer said yesterday that rates would likely rise this year. The federal funds rate, Fischer said, will be determined by economic conditions, rather than by a predictable path.

Competing economic indicators and measurements are complicating the Fed’s dual-mandate of price stability and maximum employment. Employers hired nearly 300,000 workers last month, and the unemployment rate dipped to a post-recession low of 5.5%.

Yet wages aren’t growing strongly and the strong dollar, while a boon for U.S. tourists traveling abroad, has made U.S. exporters less competitive globally. Low oil prices save hundreds, if not thousands, of dollars for drivers annually, but have weighed heavily on the bottom line of energy companies.

The Fed seems to be inclined to raise rates given the improving labor market, but has been hamstrung by a lack of meaningful inflation and consistent wage acceleration. By increasing the cost of borrowing, the Fed runs the risk of slowing down economic activity in the midst of a burgeoning recovery. Will interest rates really rise before economists can see the whites of inflation’s eyes?

MONEY inflation

Why You Should Hate Low Inflation

two balloons tied to one another
Robert Warren—Getty Images

The Federal Reserve hates near-deflation inflation too. Which is why the Fed hinted that the pace of interest rate hikes will be more gradual than expected.

You may think that you like abnormally low, bottom-of-the-barrel, near-non-existent inflation, but you don’t. Or at least you shouldn’t.

The first thing you have to understand is that inflation—or the general rise in the price of basic goods and services—has been historically low since the financial crisis. Some folks may have a tough time believing that, since the cost of some goods like meat and education, seem to only increase.

Nevertheless, over the last 24 months overall consumer prices have rested at or well below the Federal Reserve’s 2% target. Last month inflation dropped on a year-over-year basis thanks to very cheap oil. If you strip out volatile food and energy prices, inflation only rose at a rate of 1.6%.

So inflation is low. But why is that bad, exactly? Isn’t it a good thing for consumers that prices in general are growing only slightly? Who wants to pay more for things?

In a word: wages. There has been no sustained accelerated income growth for American workers since the Great Recession.

Despite an unprecedented fiscal stimulus effort, despite years of near-zero interest rates, despite three massive rounds of unconventional bond buying to lower long-term interest rates that many economists and politicians wrongly predicted would cause soaring prices, despite a year in which the economy has been adding 200,000 or more jobs a month, there just hasn’t been any meaningful wage growth.

A good metric that illustrates this point is the “employment cost index,” which measures fringe benefits and bonuses in addition to wages. In the last three months of 2014, total compensation grew at rate of 2.3%, or about a full percentage point lower than before the recession. If you look at median hourly wages, you see a similar picture. Workers just haven’t seen meaningful raises in a long time.

fredgraph (2)

This has a harmful effect on the economy. My spending is your income, so if I don’t see more money in my paycheck, chances are neither will you.

The Federal Reserve is clearly concerned about this problem.

The central bank’s most recent economic projections lowered the outlook for core inflation and economic growth in 2015, while simultaneously predicting that the unemployment rate will decline as well.

Which means that the labor market has some more to tighten.

And these worrisome economic indicators are allowing the Fed to be extra cautious about raising rates. “The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” the Federal Open Market Committee said in a statement.

If we are in a prolonged period of low-growth, as economists like Paul Krugman and Larry Summers have written, then the Fed should wait until the threat of inflation becomes real before pulling away the punchbowl.

Of course there is a real fear that if you let inflation run, it could quickly get out of hands. Inflation soared by more than 14% in the spring of 1980, while unemployment ran high and the economy ping-ponged between recessions. Then-Fed Chair Paul Volcker dramatically hiked interest rates to tame inflation, which pushed the U.S. into another painful recession just as Janet Yellen was beginning her career as an economist.

The Fed has certainly not rushed to raise interest rates this time, even when the economy blew past certain benchmarks. But there has been a tone that the time is nigh for an interest rate increase despite the lack of inflation. Rates have been very low for a very long time.

Whether it’s this summer or fall or next year, interest rates will eventually rise. (Although as MONEY’s Pat Regnier points out, they won’t rise as much as fast as the Fed originally thought.)

When they do, you should hope that inflation has moved much closer to, or even slightly beyond, the 2% target. The quality of your paycheck may depend on it.

MONEY mutual funds

The Easy Way Even Newbies Beat 86% of Professional Money Managers This Year

150313_INV_SmartMoney_1
Hiroshi Watanab/Getty Images

And there's an easy way to be on the winning side.

Mutual funds generally fall into one of two camps: On the one hand, there are actively managed portfolios that are run by stock pickers who attempt to beat the broad market through skill and strategy. Then there are passive funds, which are low-cost portfolios that simply mimic a market benchmark like the S&P 500 by owning all the stocks in that index.

The question for individual investor is, which one to go with.

On Thursday, yet more evidence surfaced demonstrating just how hard it is for actively-managed funds to win.

S&P Dow Jones Indices releases a report every six months which keeps track of how well actively-managed funds in various categories perform against their particular benchmark. The “U.S. S&P Indices Versus Active Funds (SPIVA) Scorecard” came out yesterday and told a familiar tale: active fund managers struggled mightily.

Last year only 14% of managers running funds that invest in large U.S. companies beat their benchmark. That means 86% of professionals who get paid to beat the market lost out to novices who simply put their money in a fund that owned all the stocks in the market.

It’s further proof that the genius you invest your money with isn’t that smart — or isn’t smart enough.

It’s not that professional stock pickers don’t have skills. The problem is, actively managed funds come with higher fees than index funds, often charging 1% or more of assets annually. And those fees come straight out of your total returns.

What this means is that even if your fund manager is talented enough to beat the market, he or she would have to consistently beat the market by at least one to two percentage points — depending on how much the fund charges.

A similar rate of futility appeared even if you extend the investing horizon to five or ten years. If you look at all U.S. stock funds, 77% of them lost out to their index.

International funds fared no differently. Only 21% of global active managers enjoyed above-index returns over ten years. Active managers also fell short in most fixed-income categories, for instance 92% underperformed in high-yield bonds.

One area where active managers have outperformed over the past one, three, five, and 10 years is in investment-grade intermediate-term bonds.

MONEY has warned investors against indexing the entire U.S. bond market because so much of such fixed-income indexes are made up of government-related debt, which happens to be very expensive right now.

So where should you put your money?

Look to MONEY’s recommended list of 50 mutual and exchange-traded funds. With a few of our “building block” funds you can cover achieve broad diversification in domestic and foreign stocks and bonds.

To be fair, our list also includes several actively managed funds, which can help you customize your portfolio by tilting toward certain factors that tend to outperform over time, such as value stocks.

Still, the bulk of your portfolio belongs in low-cost index funds.

MONEY inflation

3 Signs Inflation May Be Lurking Just Around the Corner

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Kutay Tanir—Getty Images

While consumer prices haven't been rising yet, several signs point to higher wages in the future. Here's what you should do.

After fits and starts and ups and downs, the American economy is finally looking strong — especially compared to Europe. U.S. gross domestic product grew 2.2% and 5% in the last two quarters of 2014, while the unemployment rate dropped in February to 5.5.%.

Yet inflation and wage growth, which are natural outgrowths of an accelerating economy, haven’t seemed to materialize.

At least not yet.

Despite years of unconventional bond buying and warnings from politicians and economists, consumer prices have actually risen less than the desired rate of the Federal Reserve.

The Consumer Price Index declined 0.7% in January, the steepest drop since 2008, thanks to cheap oil. If you strip out volatile energy and food prices, so-called core inflation only rose 1.6% in January over the past year, well below the Fed’s 2% target.

In fact, prices haven’t hit that Fed target in almost two years. Your paycheck has hardly fared any better.

But lately, there have been signs that show America’s workforce might at long last receive an overdue raise. About 70% of companies have said that wages are beginning to outpace inflation, according to the latest Duke University/CFO Magazine Global Business Outlook Survey. Industries like technology, manufacturing and health care should see wages grow by 3%.

A small business report points to a tighter labor force, as 26% of companies raised compensation (although that includes benefits like health care), and almost half said finding a qualified employee proved difficult.

What’s more, the 10-year break-even inflation rate, which is a gauge of how much prices are expected to rise annually over the next decade based in part on the yield of 10-year Treasury inflation protected securities — has been ticking up lately to about 1.8%, after touching a recent floor of 1.5% in the beginning of the year. The rate, to be fair, is still well below levels seen before oil’s drop.

So is inflation and wage growth finally set to take off?

That’s a question for Federal Reserve Chair Janet Yellen, who has said the Fed will remain “patient” when raising short term interest rates while price growth remains so benign.

This six-year herky-jerky recovery has made fools of many prognosticators, especially those who have shouted loudly that inflation is nigh. “Given that CFOs expect continued strong employment growth, it is surprising that wage pressures are not even great,” says Duke finance professor John Graham. Indeed.

What does this mean for your portfolio?

Well, one option is to add to your Treasury Inflation-Protection Securities (TIPS) holdings, especially short-term TIPS if you’re a conservative investor (though this should still be only a satellite portion of your investments).

TIPS have struggled recently after outperforming equities by 11 percentage points in 2011, and investors have started to put their money elsewhere.

But the best time to get inflation protection is when there’s little fear of rising consumer prices — and when inflation-protected bonds are cheap, like now. For instance, the Vanguard Target Retirement 2015 fund currently allocates about 8% of its portfolio to short-term inflation protection.

MONEY First-Time Dad

Why This Millennial Is Kissing the City Goodbye

Luke Tepper
This time next year, Luke will hopefully be playing on grass.

MONEY writer and first-time dad Taylor Tepper announces his retirement from urban living.

Renters in New York City have a uniquely dysfunctional relationship with real estate: The more time we spend living in some of the most desirable housing in the world, the less happy we become. Or maybe that’s just me.

My wife and I pay $2,100 a month for what seems like two square feet and minimal natural light in a converted hospital in a cool Brooklyn neighborhood. There’s an artisanal pizza shop, hole-in-the-wall cafe, and kid-friendly beer garden right around the block. I’m a 15-minute walk from a major metropolitan museum, botanical gardens, and the best park in all of New York. When it’s warm I bike, toss the frisbee, and drink whisky on rooftops. The beach is only 30 minutes away.

Unfortunately, warmth doesn’t last forever, and when it gets cold outside—say, from Thanksgiving to Easter—I spend more time indoors. Which means I’m trapped with a 21-pound baby monster who smashes, grabs, and pounds anything he can get his hands on, from cellphones to lamps. As a result, I’m slowly devolving into madness. Spending hours upon hours inside with two other people, only one of whom yields to reason, punctuated by intermittent excursions into tundra-like conditions, makes it seem as if the walls are slowly inching in on themselves.

Don’t get me wrong—I love the city, I went to school in New York, I’ve lived here for almost the entirety of my adult life. But after 13 months as a father and 19 months as a husband, I’m ready to escape to the land of malls and carpool lanes, single-unit houses and trees, the land of my birth: suburbia.

That said, it’s one thing to want move, it’s another to actually do it. Here’s a window into my thought process—and that of other millennials facing the same decision.

We’d Still Be Renters

Years of high rent and monthly student loan bills, combined with the cost of childcare, made it next to impossible for us to save up for a down payment. So we’re looking to rent wherever we go, which should mean more money left over for us. According to NerdWallet.com’s cost of living calculator, we could reduce our housing costs by about 25% if we moved to northern New Jersey or Long Island.

Even if we had enough funds stashed in our joint bank account, there are a couple of reasons why a home purchase would be a poor move. For one, conventional wisdom states that your target property should be no more than two and a half times your gross income. The odds that we’d find a New York-area home in the $300,000 range that’d we’d actually want to live in are low.

OK, let’s say that we had the savings and lived in a less expensive city. Should we jump into the market then? Not necessarily, says Pensacola, Fla.-based financial planner Matt Becker.

“Don’t rush to buy a house just because you want to go the suburbs,” Becker says. “That can lead to a quick financial decision as opposed to a good one.” Since transaction costs are so high, we’d need to stay in the home for a number of years to for buying to make financial sense. And who knows if we’ll want to live in a particular town for that long? My wife and I are still early on in our careers, we could end up lots of places.

Even Though Now Is a Good Time to Buy

If your bank account is fatter than ours and you’re ready plant some roots, buying might make sense. In fact, if you can get a mortgage, now is a great time to buy, since 30-year mortgage rates are absurdly low. Mortgage behemoths Fannie Mae and Freddie Mac announced late last year that they would allow down payments of as low as 3% on some mortgages. (These moves were directed at people who haven’t owned a home for three years, or are in the market for their first house.)

Once you’ve made the decision to move, you need to think about where you’d like to spend the next seven to 10 years. While we need more space, I don’t want to give up some of the best aspects of the city—good restaurants, a sense of community, hipster/independent movie theaters—in the trade. In that regard I’m like a lot of young buyers, says Greensboro, N.C.-based Realtor Sandra O’Connor. “There’s real movement among millennials who are looking for places to live with walkable areas,” she says. “They don’t want to always be in their car.”

If you’re still undecided about whether renting or buying is the better choice for you, check out Trulia’s rent or buy tool. Those who fall in the rent camp should understand that finding rental units outside of cities can be a lengthy process, per O’Connor and Becker.

All Suburbs Are Not Created Equal

So I want to move, but where should I go? I put the question to Alison Bernstein, president of the Suburban Jungle Realty Group, a firm that specializes in helping its clients find the best New York City suburb for them. Bernstein says that city dwellers eager to jump need to “understand that a house is a house, but the dynamic of a town is very difficult to grasp.”

To that end, Bernstein laid out a number of questions that anyone thinking about relocating needs to consider:

How many working moms are in town? What type of industries are there? What’s the breakdown of private versus public school? Even if the schools are highly ranked, there are towns where there is a lot of momentum to send kids to private schools and this does change the personality of the town quite a bit. What do you do over the summer? Does the entire town empty out? Does everyone hang out at the pool? Who is moving to the town? How will that change the school system and the vibe over the next 10 years?

Bernstein has also noticed a few trends with today’s younger buyers. “They are happiest with a smaller piece of property, a more modest home, and being in a more cosmopolitan suburb. Also they are not plowing every last penny into their house. They are still budgeting for travel.”

The Costs of Commuting

Right now I pay $112 a month (soon to be $116) for a 30-day subway pass to get to the office. We are only a 20-minute drive from my wife’s work, which means we shell out a very reasonable $50 a month on gas. When we move to the suburbs we will pay more. For the sake of argument, let’s say that we end up relocating to Pelham, New York, just north of the city. My monthly bill rises to $222, while my wife’s morning drive will consume almost twice as much gasoline, meaning our monthly outlay will jump by about $160.

But that’s just the money. The time we spend going from home to work and back will grow as well. Doing some back of the envelope calculations, my in-transit time will increase by 10 minutes each way, while Mrs. Tepper will spend an additional 20 minutes or so in traffic. Combined we’ll endure about an hour more per day on our commute, which sends shivers down my spine.

There are a few positives about the longer commute, though. For one, car insurance is generally cheaper outside of the city. According to CarInsurance.com, the average rate in my neighborhood is a little less than two times that of Pelham’s. While I wouldn’t necessarily expect to cut our car insurance costs in half, this savings would take a bit of the sting out of much higher commuting costs.

Aside from lower insurance rates, we could also dedicate a portion of our new abode as a work space. As Mrs. Tepper and I advance in our careers, we hope to have more leeway in terms of a flexible work arrangement. While our commute might be longer, we’ll most likely have to do it less often. And each saved car ride is more money in our pockets.

The Tradeoffs

Getting older involves a series of decisions that have the net effect of limiting one’s personal freedom. I became a journalist, which means I couldn’t be a doctor (leaving aside the question of whether or not I had skill to do it in the first place). Marrying one woman, and being keen on staying married, means I can’t marry a different one. A life in one town is a life not lived in another.

Which is all to say that I’ll miss living in Brooklyn. Despite the hipster clichés, I really do enjoy artisanal, delicious, overpriced hamburgers and 17 different IPA varieties at my bars. I like walking everywhere, even if we have a car, and a touch of self-righteousness about your home is good for the soul.

But I think of my sojourn in New York’s best borough as I think of college: I wish I could stay forever, but it’s time to move on.

Financial planner Matt Becker understands my dilemma. He recently moved from Boston to suburb-rich Pensacola and is still adjusting to his new life. He walks less and drives more. While his young family has more space to play and grow, that also means he has more house to furnish and air condition, which means more costs. I imagine we’ll encounter something similar.

The combination, though, of high rent and minimal space has lost its luster. Even if we end up breaking even in our move, or only saving a little bit, our dollars will go further. We can have a backyard for our son and our dog and us. We’ll have a laundry machine on the premises, so we don’t have to lug 20 pounds of clothes a couple of blocks through the snow. We’ll have a full-size dishwasher.

I proudly proclaim without regret what might have depressed my younger self: these amenities are more appealing than staying in Brooklyn.

More From the First-Time Dad:

MONEY CFPB

CFPB Says Mandatory Arbitration is Bad for Consumers

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Mike Kemp—Getty Images

You may have unwittingly ceded your rights to sue your credit card or bank.

Consumers who have serious beefs with their financial institutions can’t get much relief these days, according to a study released today by the Consumer Financial Protection Bureau.

The research looked at mandatory arbitration clauses in contracts for credit cards, prepaid cards, payday loans, checking accounts, private student loans and mobile wireless contracts.

These clauses state that either the company or the consumer can require any dispute over the product or service to be settled through arbitration rather than the courts—and generally allow companies to block class-action lawsuits, which tend to be a more lucrative means of getting redress.

The Bureau found that arbitration clauses were prevalent in the six consumer product markets it looked into. A full 92% of the prepaid cards obtained by the CFPB were subject to arbitration and 53% of the market share of credit card issuers, for example. And while only 8% of checking accounts have these clauses, that percentage represents almost half of insured deposits.

Meanwhile, three quarters of consumers surveyed didn’t know whether any contracts they signed had an arbitration clause, and only 7% understood that they could not sue their credit card issuer if their contract does include such a clause.

Why Mandatory Arbitration is Bad for Consumers

The arbitration practice is generally preferred by financial institutions since it reduces legal expenses.

But the CFPB notes that class-action suits tend to provide greater renumeration than other routes of seeking restitution, and that “larger numbers of consumers are eligible for financial redress through class-action settlements than through arbitration or individual lawsuits.”

In the 1,060 arbitration cases filed with the American Arbitration Association in 2010 and 2011, consumers received less than $400,000 in relief and debt forbearance, compared to the $2.8 million companies received (mostly for disputed debts).

The CFPB also noted that only about 1,200 individual federal lawsuits are filed by consumers per year in the consumer markets studied.

Comparatively, the CFPB found that more than 160 million class-members were eligible for some kind of relief in class actions taken over a five-year period—equating to about 32 million a year. This resulted in $2.7 billion in settlements.

One argument against class-action lawsuits is that litigation leads to higher costs for financial institutions—which could then be passed down to consumers. The CFPB, however, found no evidence to suggesting that arbitration clauses led to lower prices for consumers.

What Happens Next

The study was mandated by the Dodd-Frank Act, and the CFPB has the authority to issue regulations regarding arbitration clauses.

The CFPB says it will be meeting with stakeholders after they have had a chance to read the report, and invites comments regarding its findings.

Consumer advocates have long called for banning mandatory arbitration clauses.

Getting rid of a financial institution’s ability to use them “gives the consumer the ability to decide how they want to decide the case,” says Pew Charitable Trusts’ consumer banking project director Susan Weinstock.

By avoiding arbitration, she says, consumers aren’t subject to the rulings of arbiters who are often selected by the financial institutions, who may not hold law degrees and whose rulings need not be made public.

Even some in the industry are not fans. “Mandatory arbitration has proven to be a thorn in consumers side,” says Adam Levin, chairman and co-founder of Credit.com. “These clauses are biased towards the company.”

MONEY Jobs

Employers Add 295,000 Jobs as Economy Keeps Rolling

Amid signs of turmoil overseas, the U.S. economy keeps chugging along.

The U.S. economy gained 295,000 jobs in February, the 12th consecutive month employers added more than 200,000 to their payrolls. Meanwhile the unemployment rate dropped to 5.5%.

This is yet another sign of an improving — or what economists would call a “tightening” — labor market.

The rate at which workers are quitting their jobs has risen near levels not seen since before the 2007-2009 recession, implying that workers are feeling more secure that better opportunities lie ahead.

The number of unemployed workers who’ve been out of work 27 weeks or longer, while still high, is 31.1%, compared with 36.8% a year ago. Average hourly earnings grew by 0.1% last month, after rising 0.5% in January. Wages are up 2% over this time 12 months ago. That’s being be read by many analysts as a relatively sluggish number.

That last bit is important. While the labor market has been improving for more than a year, wage growth has disappointed. That in turn has kept a lid on inflation, which is one of the main reasons why interest rates have been next to nothing since the Great Recession and why the Fed, even now, will be “patient” in raising the cost of borrowing.

Even so “labor tightness is showing up in several high-profile labor disputes,” notes BMO chief investment officer Jack Ablin.

Recent anecdotal evidence points to workers having more power in their dealings with management — take striking port and refinery workers and pay raises for Wal-Mart and TJ Maxx employees. And the economy is still plugging along: an index that gauges non-manufacturing business rose a bit last month despite the headwinds from West Coast port strikes. “It was a miracle that the ISM non-manufacturing index managed to tick up for the second month in a row,” says Gluskin Sheff chief economist David Rosenberg.

Americans are feeling more confident about their finances, too. In the first three months of this year, the Wells Fargo/ Gallup Investor and Retirement Optimism Index jumped to its highest level since 2007. (Thank cheap gas prices.)

Wells Fargo Securities senior economist Sam Bullard believes the economy will continue to add workers this year at a clip of 224,000 per month.

“If realized, this strength in hiring would be enough to continue to pressure the unemployment rate lower and should result in a higher pace of wage growth–all supportive to a Fed tightening move in the coming months,” Bullard says.

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