Newlyweds: 5 Money Matters For A Recession-Era Marriage

Stephanie Christensen, provided by

Monday, June 27, 2011

You made it through the wedding planning and budgeting process, and started your life as a married couple. But have you decided as a couple how will you handle your finances? (Marriage can be like doubling an income, as long as you avoid doubling these expenses. Check out Marriage: For Richer Or Poorer?)

Handled improperly, marriage and unaddressed money issues can wreak havoc on a relationship. In 2009, The New York Times reported the findings of a Utah State University study which indicated that “couples who reported disagreeing about finance once a week were over 30 percent more likely to get divorced than couples who reported disagreeing about finances a few times a month.”

The best way to avoid financial disagreements with your new spouse is to address challenges openly, have a shared plan of action, and to understand how credit and the financial system works. Maxine Sweet, vice president of public education for Experian and Wedding Planning Expert Kimberly Schlegel Whitman offer their expert advice for the top five money matters facing recession-era newlyweds.

1. Fight the Newlywed Homeowner Fantasy
Though you’re starting a new life as a married couple, one’s financial past does not go away so easily. Particularly if one spouse owns real estate that has lost significant value in the housing downturn, it’s important to be realistic and plan for your new financial life together, with a broad vision on the long-term. If you’re swept away by the fantasy that a newly married couple should purchase a home together to begin a new life, it’s time for a reality check. Schlegel advises couples that own a home they can’t sell to consider staying in the existing home until the market improves. If you’re itching to buy housing right after marriage, consider renting as a temporary option to build savings and a solid financial foundation. Agree as a couple how long you will stay there, and how you will start saving and building your assets for home buying in the future. “The most important thing is to protect your credit history, so that when you are positioned to be able to buy a new home together, you can get approved, and at the best interest rate,” says Schlegel.

2. Save for Worst-Case Scenarios
While the economy is making a slow recovery, job security is still wavering in many industries. Though double income may leave you feeling like money is pouring in, Schlegel advises married couples to have savings amounting to at least six months (preferably nine) of your total monthly income as a couple, in the event that one spouse loses a job, or some other disaster strikes. Choose an interest-bearing savings account together, and establish an automatic savings plan (ASP), so that a portion of each spouse’s paycheck is deposited to the account regularly. Destroy the ATM card so there is no temptation to dip into the funds.

3. My Debt, Your Debt
While joining finances can be a “rite of married passage” for couples, Sweet urges newlyweds to remember that as a married couple, you are both responsible for debt incurred on a joint account. If you decide to consolidate finances, joint accounts will be reported on each of your individual credit reports, and both spouses are financially responsible for any debt incurred. Likewise, a missed payment will negatively impact both of your credit scores and histories. If you live in a “joint property state,” which are predominantly located in the Western part of the United States, Sweet reminds that both spouses are held liable for debt, even if your name is not on the account.

4. Maintain Your Individuality
While financial planning should be a joint activity after marriage, Sweet also recommends keeping at least one individual account in each spouse’s name open. This approach will ensure that each individual has easy access to credit in case of an emergency. If you do find yourself facing divorce one day, having an established account in your name will also help you rebuild your individual credit history. (Does signing a prenuptial agreement put your marriage on shaky ground, or is it just smart planning? See Marriage, Divorce And The Dotted Line.)

5. Understand Credit as a Married Couple
In today’s tightened lending environment, credit is more important than ever. Sweet reminds that while each spouse will always have an individual credit history, even after marriage. Lenders will often consider both of your financial standings when you apply for credit jointly, especially for major purchases like a car or home. Missing just one payment on one of your individual accounts, could impact your future ability to open joint accounts.

The Bottom Line
Money and marriage can be a challenging and stressful issue for many. For recession-era newlyweds, the unique circumstances presented in an economic downturn make sound financial planning as spouses even more critical. Use these five steps as a guide to pave the way for your new job as joint money-managers, and ensure that you’ll start your new financial life as a married couple on the right foot. (Strengthen your marriage by discussing these financial pitfalls. Refer to Top 6 Marriage-Killing Money Issues.)

 

Original story – Newlyweds: 5 Money Matters For A Recession-Era Marriage

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What To Do When Your Unemployment Checks Stop Coming?

By Tisha Tolar, on April 6, 2011

You’ve learned to live off of your unemployment benefits. You’ve cut your budget and are finally starting to make some progress in the new job market. Right when all seems to be going well, the rules change. It is expected that many more states will start the process of cutting back on the unemployment benefits they are issuing to their unemployed residents.

The bottom line is many states are broke. Cutting back on unemployment helps solve a portion of this immediate financial problem. In addition to saving a state budget funds, the cuts are being considered because of the unemployment taxes companies have to pay. The hope is that if business taxes can be decreased, more companies would begin to hire new employees.

Changes Are Coming

States across the nation are inundated with claims for unemployment benefits since the recession came about. Employers were quick to downsize to keep the company afloat, leaving many in the lurch without reliable income or the prospects of finding a new job immediately. The unemployment trust funds set up in each state took a serious beating, prompting some to take a loan from the federal government in order to meet the demand for covering eligible benefit distributions to those without jobs.

The states of Florida and Arkansas are currently looking at reducing the number of weeks unemployed workers can receive benefits. Florida’s legislature has proposed cutting the benefit receipt time by 6 weeks. Indiana has been working to reduce the number of jobless that are eligible to receive benefits in the first place. Govenor of Indiana Mitch Daniels recently signed into law a bill that limits eligibility for unemployment benefits. The law also changes the way payments are calculated and these changes will start in July 2012. There are a total of 32 states which still owe monies back to a federal unemployment fund. For now, the total owed is estimated at $45.7 billion and states are expected to repay about $1.4 billion back in interest.

This is not the first time states have had to borrow federal funds and make cuts to unemployment benefits. It happened in the 1980s when a recession forced states to borrow $28 billion to meet the unemployment benefits needs for laid-off workers. During that time 40 of the 50 states made changes to the way money was distributed for unemployment, even going as far as changing up the eligibility guidelines for workers.

How to Prepare for Benefit Cuts

Above all you need to get off unemployment benefits. Even with multiple Congressional extensions they will eventually run out. Aside from that, the best thing you can do now if you are worried about cuts and changes to your unemployment benefits is be proactive about learning the facts. Follow the news in your state about the impending changes on benefits guidelines so you know what to expect.

You should also look at the big picture and work to save enough cash as you can while you look for work. It may not be easy to get by even with the benefits you are now receiving, but planning budget cuts of your own is a good start.

Brush up on old skills or learn new ones as you continue to look for a new job. There are often community accessible courses where you can learn new skills and improve your existing knowledge. Many of the unemployment departments in your state will either already require some job polishing efforts by recipients and often have resources available for free that can help spice up your resume. You will also be able to find opportunities to seek work through the unemployment office in your state.

Most changes will not be immediate but it is important to plan for the inevitable, especially if you have gone a while without securing a new source of income.

Holiday Shopping Tips To Keep You Free Of Debt Stress

As retailers move into the holiday shopping season earlier and earlier, it is more important than ever for consumers to avoid getting caught up in the hysteria and instead heed some money and credit management advice to keep the holiday season happy and free of debt stress. With this in mind, the National Foundation for Credit Counseling (NFCC) offers the following information and advice on how to avoid overspending and maintain good financial health during the upcoming holiday season:

• Develop a spending budget. Write down household and personal expenses for November and December. For each month, subtract the total amount of expenses from your monthly take-home pay. The amount left over each month becomes a starting point to gauge how much you can afford to spend. Make a list of purchases from gifts to decorations.
• Make a list. Follow Santa’s example. Make a list of all the people you need or want to buy gifts for, including small gifts for babysitters, teachers, newspaper deliverers, etc. These small gifts can add up and are often the cause of going over your gift budget. Include money you’ll spend on Christmas cards, postage, holiday parties, decorations, holiday entertainment, etc.
• Consider creative gift-giving. When it comes to gifts, some people still believe, it’s the thought that counts. Consider gifts that have a personal touch, such as hand-made and homemade gifts like tapestries, quilts, pastries or other prepared foods. Don’t forget about fruit baskets, which are both economical and healthy.
• Look for shopping deals. Check out retail sales, special discounts and coupons in circulars or newspapers and deals online. Consider purchasing holiday decorations in-bulk and splitting the costs with friends and family members. These deals can add up to substantial savings.
• Avoid last-minute shopping. Shopping under stress can lead to more spending. Plan your shopping trips in advance and shop as early as possible before the December holidays.
• Pay with cash when possible and spend wisely. Stick to your spending limit. Pay with cash when possible and leave your checkbook and credit cards at home to avoid temptations for unplanned and unnecessary purchases. If using credit is a must, limit purchases to one card. Use the credit card with the lowest interest rate and don’t use more credit than you can afford to pay off in 90 days or less. Remember, credit card debt amounts to a short-term loan. The longer the length of the loan, the more you will pay.
• Avoid the post-holiday debt hangover and don’t overspend: Tally the receipts from all holiday expenses, including gifts, postage, meals, entertainment and decorations. Once you’ve completed your shopping list, stop shopping! More mall time can amount to more spending.

Getting Your Degree On Plan B – College – daveramsey.com

Getting Your Degree On Plan B – College – daveramsey.com.

Money Managment Tips for Your 20’s

This week as I enter a new decade in my life, I reflected on my 20’s in terms of what I did right and where I left room for improvement when it came to money management. I have a few tips for you 20 somethings.

Live like a cheap college student as long as you can. When you graduate from college and start making a few bucks you have the urge to buy new, nicer things. Resist it. Be creative. Most of the furniture in our home office is stuff given to us that I spray painted black. Up until two years ago our bedroom furniture was my husband’s childhood bedroom set. We got by just fine until we paid cash for a bedroom set we’ll keep forever.

Stay Out of Debt! Except for a home mortgage do whatever you have to do to stay out of debt. If you can’t pay cash for it, you can’t afford it, period. One of the best money management things we have done is becoming debt free (except our mortgage) before we turned 30. Unlike many Americans I sleep easier, have less stress and a happier marriage. I’m not fighting over money, worrying about or strapped down by a payment.

Your 20’s are the most important years of your retirement savings. Retirement is the last thing on your mind in your 20’s, but it should be the first. At this time in your life, interest is on your side. Most people don’t get that whatever you can manage to invest while your in your 20’s has the most time to grow. All the time I hear, I can’t afford to save for retirement now. Actually you can’t afford not to. Our investment adviser gave us the rule of that if you invest $27,000 towards retirement by the time your twenty-seven years old you will have a million dollars when you retire.

Set up a Roth IRA right now. Hopefully you realize you need more than your work 401K to retire. The first thing you want to get is a Roth IRA. It’s a tax-free investment, so it grows tax-free and you won’t be taxed when you withdraw at retirement. My husband and I both have one. Each month we have money automatically withdrawn from our checking into it, just like our other expenses. By automatically withdrawing the funds we never miss it and its treated as another monthly expense.

Avoid car payments. Contrary to popular belief having a car payment is not something you have to have. Just because you can doesn’t mean should go buy a new vehicle. I cringe just thinking about all that interest people pay on vehicles. You can get a decent vehicle for around $10,000. This will easily get you through your 20’s. When you don’t have a vehicle payment, you can withdraw money as if you did into a saving account and pay cash for the next one. I say this from experience. I bought a brand new GMC Acadia two years ago and its paid for now. I absolutely love my vehicle, but shouldn’t have bought a brand new car. That money (and interest) I paid for two years could be sitting in my new home fund right now. Even just purchasing a vehicle that’s a few years old saves alot of money.

Get money mentors. Find people who you admire or look up to when it comes to how they manage their money. Ask them for advice or what has been successful for them. Keep in mind many of the people with all the nicest things are often the ones farthest in debt and the least financially secure. Seek out people who have made good decisions and have similar goals as you.

Keep you standard of living under control. The more you make the more you have to spend or so you think. Since my first job right out of college, I make twice what I did then and my husband, three times what his first job paid. You’d never know it. We still live in the same house and except for the mistake of buying a brand new vehicle we really haven’t changed the way we live or save. The longer you can keep your standard of living down, the faster you can accomplish your saving goals for the purchases you truly want.

Have at least 20 percent down if not more when you buy a home. A bank will approve a home loan for way more than you can actually afford. Just because they’ll give you that much money certainly does not mean you should take it. Life it too short to be stressed out with a mortgage you can barely make. Do not get a second mortgage either. We fell into that trap. If we’d had a little patience and waited another six months to a year we could have easily made the down payment, avoided a second mortgage and the higher interest rate that went with it.

Read. Educate yourself on money. It’s overwhelming to get married, start your own household or buy a house. Read everything you can to make the best choices. Magazines, books and the internet all have great resources. My husband and I both read the same books and that helped us be on the same page when it came to money. A couple I recommend: Total Money Makeover and The Millionaire Next Door.

Have goals. You can’t get where your going if you don’t know where your going! You may have career or personal goals and you should have financial goals too. If you want a different vehicle figure out how much you need to save a month to get there. I’m currently saving to build a new house and have a savings goal in place for a down payment. I have photos of homes I’m interested to keep me on track and motivate me. Each time I’m tempted to divert from savings I look at the photos to keep me on track.

Utilize Coupons. I wish I would have know about couponing ten years ago. Much of our financial success has come from not our income, but controlling our expenses through coupons. You can drastically reduce your expenses when you get things for free and pay at least 50 percent off the retail price. We’ve found this small time investment has paid us large returns in savings.

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4 Immediate and Simple Steps to Personal Debt Reduction

Saving money is not always an easy task, and reducing debt can sometimes seem impossible. But fear not! Not only is it possible, with these tips, reducing debt can be a simple, painless process. These small steps will add up quickly to help you reach your debt reduction goals in no time.

Trim the fat
This by far is the easiest way to reduce debt. Debt is like waves in the ocean. They just keep coming. We tread water, clean the sand out of our bathing suit, get ahead a little and then we get knocked right back to shore, buried in sand all over again.

If you cut your monthly expenses your debt will not compound so much. The waves won’t hit you so hard, day after day, week after week and month after month. Getting out of debt only to go back into debt makes very little sense. Try trimming your overages. Kill the premium channels on your cable subscription, renegotiate your cell phone plan, have one less $4 coffee drink, burn less gas, eat at home, etc.

Did you know that savings are returns? If you save 15% a week in expenses, your return was 15% — numbers don’t lie!

Save no matter how little
“I can’t afford to save, I am broke.”

“There’s not enough. Save what?”

We have all been guilty of saying these things. Stop saying them and get real! Put a measly 20 dollar bill away each week and in one year you will have $1,040 painlessly. Put $40 away and you will have $2,080. If you do nothing else, do this. It is so easy and should be automatic.

Would you prefer to contribute $400 at one time, or $20? Which do you think is easier?

Pay debt off consistently
This has been pounded into our heads thousands of times. So why don’t we listen? I don’t know, but as my dad always said to me “maybe this time you will listen”. Stay the course and no matter how small the move in the right direction. If you follow step one and step two above, step three should be automatic.

Focus on a single goal, living debt free. Make it your mantra. Practice debt free principles. Read about living debt free, become a student of debt free living.

Stay positive and think debt free
Before you buy something, anything, ask yourself this one question; is this purchase moving me closer to my goal or further way?

If you stay positive and ask yourself this question without fail, you very well may be able to become debt free easier than you ever thought possible. Good luck and remember to enjoy the journey.

If you need more help there are literally hundreds, if not thousands of valuable and free resources to help you on your journey. Seek them out, live it, learn it, love it and become debt free.

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