Managing Money & Marriage

Managing money and marriage can be a delicate endeavor. Timing is important. Discussing a major financial decision right before bed may not be a good idea. My spouse and I made a pact to not discuss money on Sunday (God’s day) because we don’t want to set the day off in a negative direction. You also have to have money boundaries that work for the two of you. The two of you may decide on an amount of money (fun money) that you can spend without having to discuss it. Trying to micromanage your spouse’s spending is not going to have a positive outcome in most cases. It’s also important to discuss money goals. What do you both want to accomplish with the money you earn? Have you discussed retirement? Do you have adequate life insurance? If you have children….are you planning for college expenses? Do you have a budget? Which one of you crafts and maintains the budget? Not talking about significant money issues will NOT solve the problem. It’s not just what you say but HOW you say it. If things get too heated it’s OK to call a time out as long as you agree on another specified time to discuss the issue. Remember you are on the same team. Have you merged your two paycheck into 1 checking account? Do the two of you operate from separate accounts? What bills get paid from each account? The two of you may want to have a Money Date. This is an opportunity to discuss money issues specifically. You don’t have to go to a restaurant.  You can have the date on your front porch if you wish.

Money Talk Guidelines:

  • Use a civil tone of voice
  • Discuss one topic at a time
  • Agree to research a topic and bring it back later
  • Don’t play the blame game
  • Take responsibility for poor decisions
  • Be willing to forgive each other for mistakes
  • Be consistent in scheduling money talks (at least once a month)
  • Listen closely to each other
  • Remember that you both are on the same team

Discussing money issues in your marriage can be both challenging and rewarding. It is my hope that suggestions in this post can help guide your money conversations. What talking tips could you add to my list? Feel free to share your tips in the comments.

Giving Away Your Money

Many personal finance blogs give much attention to earning, investing, saving and managing money. Today’s topic is giving away your money to meaningful causes. What is a meaningful cause varies from person to person. There are literally thousands of non profits to donate money to. If your faith is an important part of your life you can give to your local church. Why should you give your money away? You worked hard for it and the choice to give some of it is a personal decision. There are no doubt millions of families and children that are far less fortunate than the typical American family. I just read on http://Www.pretendtobepoor.com that almost half the world’s population lives on less than $2.50 a day. We would be well served to take time to count our blessings to live in the U.S.A.  However, you don’t have to go beyond our borders to find those in need. I work in a local school and it well known that 1 of 5 students in U.S. Schools is food challenged. Take a minutes to count your blessings. Take another minute to ask yourself how you may give to others. Expressing gratitude is a worthy action in your life. If you are concerned about where your donated dollars go a great site to visit is http://Www.charitynavigator.org There is a search box where you can type in your charity of choice and see what amount of each dollar goes toward administration, program expense, and fundraising. Charities are given a 1-5 star rating. Giving money to great causes can be a great experience when it comes to blessing others. If you have a family taking time to discuss giving as a family can prove to be a valuable endeavor.

Do you give to causes that are important to you? Please share how you give money in comments.

 

 

12 Money Goals

Do you have a goal for your money? Where do you want it to go? What do you want it to do? Without a goal for your money you are unlikely to succeed. Goals give you direction. Goals give you motivation. To succeed with money you need to have financial goals. Have you ever written a financial goal? Are you guilty of the “get it and spend it” mentality? Below are some suggested money goals for you to establish in your financial life.

  1. I will save $1,000 in an emergency fund.
  2. I will live by a budget. For a free budgeting resource visit http://Www.everydollar.com
  3. Spend less than you earn.
  4. I will open a retirement account and invest $50 a month.
  5. I will talk regularly about the budget with my spouse.
  6. I will save up and pay cash for vacations.
  7. I will visit personal finance blogs to learn more about managing money.
  8. I will check books out of the library to learn more about managing money.
  9. I will schedule an appointment with a financial advisor to discuss my financial situation.
  10. I will purchase term life insurance to cover my family if the unexpected occurs. Great company with competitive rates: http://Www.zanderins.com
  11. I will talk to my spouse and make sure he/she has adequate term life insurance.
  12. I will begin talks with my children about making, spending, saving, and giving money.

Continue reading “12 Money Goals”

The Cost of Procrastination

They say the road to hell is paved with good intentions. You may be among those that says, “I’ll start investing for retirement next year.” Next years comes and you say it again. Next year comes and you say it again. Postponing investing for retirement can cost you LOTS of money when you get to your retirement years. What a sad consequence for someone to get to the end of their working life and be told you don’t have enough saved to retire. There are no doubt millions of elderly over 65 today working because they procrastinated year after year after year.

Example 1: A 25 year old begins investing $100 a month in a Roth IRA and leaves it alone for 40 years (age 65). 8% return on the investment.   Result: $335, 737.25                                                                                  Actual dollars invested: $48,000

Example 2: A 30 year old begins investing $100 a month in a Roth IRA and leaves it alone for 35 years (age 65). 8% return on the investment.     Result: $223,332.58                                                                                   Actual dollars invested: $41,000

The investor in Example 1 only contributed $7000 more dollars than investor in Example 2. However, his reward for investing 5 years earlier is $112,405.00!! Wow! When it comes to investing the early bird gets the worm financially!

Have you started investing for retirement yet? What is stopping you? I’m sure you can see from the above example that SOONER is much better than later. Don’t be hard on yourself if you’re a late starter. You can’t change the past, but you can learn from it. Below is a link for a Compound Interest Calculator. Go ahead and punch in some numbers to see what you can do with your money.

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

 

 

Know Your Retirement Options

It is imperative that folks know as much as possible about their retirement options. Not knowing your options can have negative consequences for your retirement income. Every day you fail to educate yourself and take action can cost you thousands upon thousands of dollars in retirement dollars. There is a lot to learn about investing for retirement. This post will give you specifics on many retirement options that are available.

Below are some retirement account options for Business, Government and Nonprofit:

1) 401K  Private company employees are eligible for this retirement option. Your maximum contribution for 2016 is $18,000. Employers often offer matches that range from 1%-6%. If you are 50 or older you can catch up by contributing an extra $$6000 a year. Your usual investment choice is mutual funds.

2) 403(b)  Employees at nonprofits and state and local governments are eligible for this type of investment. The maximum annual contribution is $18000 a year. Employer match is typically 3% to 5% of pay. If you are 50 or over you can contribute $6000 more each year. Invesment options for this investment type is mutual funds or annuities.

3) 457  Some government and nonprofit workers are eligible for this investment. Maximum annual contribution is $18000 a year. It is rare to get an employer match with this type of account. If you are 50 or over you can contribute $6000 more a year. You usually get a menu of mutual funds for this investment account.

4) Thrift Savings Plan – This is for federal government employees, including the military. Maximum annual contribution is $18,000. Employer match is 5% for those in the Federal Employees Retirement System. Annual catch-up if you are over 50 is $6000. Your investment choices are 10 funds, including 5 target-date funds.

Below are some retirement options for small business employers and employees:

1) SEP-IRA  Small business employers and employees are eligible for this option. You can contribute 25% of your salary, up to $53,000 (same for all personnel). All employer match contributions come from the employer. There is no annual catch-up but contributions are also permitted after age 70 1/2. All funds offered where account is held.

2) Simple IRA Maximum annual contribution is $12,500. The match is 3% (or 2% employer contribution to all employees). Annual catch-up starting at age 50 is $3000: contributions are also permitted after age 70 1/2. You have a menu of mutual funds to choose from.

3) Solo 401K  Sole proprietors and their spouses are eligible. Maximum annual contribution is 25% of profits plus $18,000, up to $53,000. No employer match. Starting at age 50 catch up contribution is $6000. All funds are offered where account is held.

Below are some funds for individual investors.

1) Roth IRA  All earners making less than income phaseouts are eligible. The Roth IRA income phase-outs for single tax filers is $$117,000-$132,000. The Roth IRA income phase-outs for married jointly filers is $184,000-$194,000. Maximum annual contribution is $5,500. Annual catch-up starting at age 50 is $1000. All funds offered where account is held.

2) Traditional IRA  All earners are eligible for this retirement account. Maximum annual contribution is $5,500. Annual catch-up starting at age 50 is $1000. Usual investment options are all funds offered where the account is held.

I hope that the above information gives you help in knowing what retirement account options are offered with your current employment situation. Remember: Nobody should care more about your money than you. Continually educate yourself about your financial opportunities.

 

PF Roundup

There are lots of good PF posts out there in the blogosphere. Below are some gems that I happened upon recently.

http://www.frugalrules.com/mind-your-money/ shares that nobody cares (should care) more about your money than you.

http://eyesonthedollar.com/why-higher-income-doesnt-guarantee-financial-success/ reports how higher income doesn’t always equate to financial success.

http://ptmoney.com/budgeting-for-unexpected-expenses/ great read on how to conquer the financial “unexpecteds” in your life

http://www.goodfinancialcents.com/passive-income-ideas CFP Jeff Rose shares 23 ways to create passive income.

http://www.goodfinancialcents.com/5-ways-to-prevent-your-70-year-old-self-from-hating-you/ Jeff Rose shares some valuable tips on thinking about your future financial self.

5 Simple Financial Truths Smart People Tend to Forget

 

Get Off the Spending Carousel!

The media in our culture invites us to spend money every hour of every day. Banks and businesses compete aggressively for your money. Billions of dollars are spent in marketing and advertising. We’ve all fallen prey to the media pressure to buy that newer model of whatever we desire. Below are some tips to help you get off the spending carousel.

1) Pay Cash – When you pay cash you spend less. Watching that cash leave your hand makes a lasting impression on your brain. Research says that we spend less spending cash than plastic.

2) Don’t go to the mall – If you don’t go there you can’t spend there.

3) Research your purchases – Stop buying things on impulse. There are good deals out there if you’ll be patient and weigh all your options. Sometimes a ‘slightly used’ item can be just as good as brand new (with less expense).

4) Try out a No Spend Weekend. Commit to spending no money on anything for a 3 day period. You might actually eat food off of your shelf. Isn’t that what you bought it for?

5) Don’t Compare Yourself to Others. There will always be someone that has more than you. Did you ever stop to think they may earn more than you? Did you ever stop to think they may be over their head in debt? Spend based on your needs and goals, not those of someone else.

The mantra of “I gotta have more” is ever present in our culture. Have you been listening and acting on this pressure? You can get off the spending the carousel. It begins with choice. Dave Ramsey shares that winning with money is 20% knowledge and 80% behavior. Are you ready to behave better with your money? I hope the tips I shared will help you begin to make necessary changes. If you have a tip you would like to add please share it in comments.

 

Win With Money? Have a Plan.

Ever wondered where all your money goes? Ever wondered why you end up with more month than money? It’s because you have no plan. A plan plain and simple is a budget. As much as some people hate the word it is a proven way to win with money. You tell every dollar where to go before the first dollar is spent. Do you want access to a great budget system with no cost? Go to http://www.everydollar.com All you need is an email address and a password any you are ready to go. The program already has categories available for you to use. You can add or delete categories as your needs change. Your budgets carries over to the next month automatically. You don’t have to reset when a new month begins. Remember: Those that fail to plan, plan to fail. Get yourself on a budget. Make your money behave.

Investing for Your Child’s College

Practically every parent wants to help their child with college expenses. Of course, the earlier you begin investing the greater risk you can take with investment options. You need to know your time horizon when evaluating your college funding options. Below are some suggestions to consider when planning for your child’s college education.

1) Put Tax Breaks to Work

In a 529 savings plan, your investment grows tax-free and can be withdrawn tax-free as long as the money goes toward tuition or other qualified higher-education costs like books and housing. Not all plans are created equal. You have a broad menu of investment options. Almost every state has a pre-packaged, age-based portfolio that shifts over time from a heavier stock allocation to more bonds and cash. You should also stay in state if your state has a tax benefit. If it’s at or below 5% your state’s plan is a winner. The Utah Educational Savings Plan, administered by Vanguard, has among the lowest fees in the country and gets top marks from both Morningstar and savingforcollege.com. When setting up the account title it in your name. That way, colleges will count the money as a ‘parental asset,’ meaning those dollars will lower your child’s potential financial aid by a maximum of 5.64% a year.

2) Sprint Out of the Gate

As a brand-new parent you should have 3 goals: 1) Start investing immediately; 2) Put aside as much as you can manage; 3) Load up on stocks.

3) Shift Gears for Tweens

Once your kids enter their second decade it’s time to recalibrate. You still need stocks for growth, but you’ll still want to shift at least some money into bonds for stability. If your automated plan’s allocation seems wrong for you, don’t be afraid to tweak it. If you’re in good shape but you’re using an aggressive path, check whether your state’s plan has a more conservative allocation.

4) Ratchet Down Risk
For the final years of high school, your 529 portfolio needs to get far more conservative. By the time your child is 16, you will want to have cut equities (stocks) to 20 to 30%, with your balance moved into bonds and cash.

Once your child is in college, you can move everything to cash and start spending down the balance. It’s important to weigh all your options when funding your child’s college education.

Note: This information was taken from Money magazine, Jan/Feb 2016 issue.

Retirement Planning: Watch for Inflation

A very real threat to you retirement is inflation. The costs of goods and services do rise over time. A gallon of milk at today’s price will greatly vary from what one costs 20 years from now. Are you putting off saving for retirement? Inflation is a REAL reason to start now. Let me give you an example. A round of golf with green fee and cart costs $50 in 2016. A round of golf at 2.5% inflation 20 years from now (2036) will cost you $81.93. Delaying saving for retirement affects your future financial self. Each year you delay saving for retirement requires you to save more to meet the higher prices of things in the future. The time to start saving for retirement is NOW. What is holding you back? Do you think you will get to it tomorrow? Next month? Next year? When I have more time? Don’t delay friend. Time and inflation can erode the power of your future dollars.

Suggestion: Start by saving 1% of your annual income for retirement. If your annual income is $80,000 this means setting aside $800 a year. When divided by 12 (months) this is $66 a month. Do you wonder where to invest such a small amount? I recommend http://www.betterment.com You can open an account at this site in less than 15 minutes. You can specify how much you want automatically transferred from your checking account each month. You can choose what day of the month you want it to come out. You can choose how much to invest in stocks and how much to invest in bonds. You can adjust this amount as you please as well. Don’t delay investing for retirement any longer. Start small and then increase your contributions as your budget allows. Those that fail to plan, plan to fail.