Money before Marriage

Money before Marriage

Financial Issues to Consider

While You’re On the Hunt For Your Future Mr. or Mrs. Right

Debt

Today’s college students graduate with an average of $26,600 in student loan debt. Combine that with other credit card debt, auto loan debt and a bleak job market and you have a disaster ready to happen.  Understanding each other’s debt ratios is extremely important before you say, “I do.” Don’t wait to have this important conversation after the fact. If you’re dating someone and consider him or her a potential spouse, you need to begin the culture of financial transparency now. Understanding the numbers behind each other’s debt can help you put boundaries in place now so you can start eliminating your debt and begin your marriage on a healthier, less leveraged financial footing.

Is credit his or her best friend?

Watching how your potential future spouse treats credit cards is extremely important. Impulsive spending, living for today and hoping to pay for the lifestyle tomorrow should be a warning sign of things to come.  Do you know how many credit cards your future spouse has? Do you know the balance they owe? Are you ready to take on that credit card debt as part of your marriage deal? Talking about the use of credit is very important before you tie the knot. Simple guidelines like paying the balance off every month or having a clear strategy to pay the debt off and having full transparency when it comes to using credit should be discussed sooner than later.

Spender, Saver or Hoarder? Do you know each other’s money personalities?

We all have a “financial personality” and knowing each other’s money personality will help you understand and work though the financial issues that will sooner or later surface.  Is he or she shopping a lot? Do they follow a spending plan? Are they paying their bills on time, every time? How often do they say “no” under social pressure to spend money? If you pay close attention you’ll quickly find out what natural tendencies your special someone has – which will ultimately be the same tendency they will bring into your marriage.

Saving for the future

Ignoring the importance of saving and being financially prepared for a “rainy day” can cause enormous financial pressure in marriage. Pay close attention to the ability to live within an  income by spending less and saving the rest. Do you know that, on average, American’s spend 5.7% of their annual income on restaurants and only 2.6-3% of their income goes to savings? Talk with your potential future spouse about their saving habits. Are they thinking and planning ahead? Are they pursuing financial short and long-term goals or simply living from paycheck-to-paycheck hoping that the future will take care of itself?

You see, the issue is not how much your potential spouse has or does not have. The real issue is, do they understand the basic financial laws and principles that govern our lives, such as:

– Spending less than we make and investing the rest

– Having sufficient financial reserves

–  Saying no to immediate gratification

–  Understanding the dangers of easily accessible credit

Since money issues are some of the highest contributing factors in marriage breakups, cherish the fact that you still have time to do something about it! Here is to your “Happily Ever After!”

Original article appear on: http://www.crosswalk.com/family/finances/planning/4-financial-issues-to-consider-when-searching-for-a-spouse.html

Want financial success? Write down your goals!

Write down your goals!

67% of wealthy write down their goals!

Tom Corley, author of the RichHabits.net, spent time observing and tracking the habits of the rich as well as the poor. One of the habits that differentiated the two groups was related to goal setting. Here is what Corley discovered:

He found that 67% of wealthy write down their goals vs. 17% for poor.

What’s the lesson here? How we approach goals can have a huge impact on our financial wellbeing.

If asked, most of us would raise our hand admitting we have financial goals and dreams. But how many of us actually do something about those goals? Wishing for a specific financial outcome will not move us any further in life. But according to Corley, those who take the time to write their goals down, and then track the progress, will have a much better chance at turning that “wishful thinking” into reality.

Even though there is no “formula” for how to set and track goals, there definitely is a trend – a habit that successful people have discovered and are putting into practice. The good news is that this habit is not limited only to the successful. All of us, at any time, can pick up the habit of setting goals and make it part of our daily routine.

Here are few suggestions to help make financial goal setting a fun and a fulfilling part of your life:

1. Don’t set too many goals. If you tackle too much at once you’re bound to become overwhelmed and quit.

2. Once you set a goal, think through what it will take to accomplish it. Understand both the opportunities as well as potential roadblocks to achieving this goal. To sum it up: be prepared.

3. Break each goal down into smaller sub-goals.

4. Give each goal and sub-goal a due date.

5. Post your goals in a visible place.

6. Track your goals regularly.

7. Celebrate and reward yourself for achieving each milestone.

8. Find a personal finance app to help you automate not only your goal setting, but also progress tracking.

9. Even if you encounter “hiccups” along the way, remember that small progress is still PROGRESS!

All of us love hearing stories of financial breakthroughs, but how often do we “look under the hood” to learn what made the success possible? Financial turnaround won’t happen by chance. Plan for it, track it, and keep yourself accountable. When you do that, you’ll start experiencing the breakthroughs you’ve only been hoping for until now.

Here is a nice visual to help you with smart goal setting

goalsetting2

4 Ways to Budget before Buying Your New Home

buyingahome

Purchasing a home is one of the biggest expenses you can make in your lifetime. The key to being able to afford taking on such a large financial responsibility is properly planning and budgeting prior to purchasing. These four tips will help you budget so you can afford your home purchase when the time comes.

Evaluate Your Financial Situation

The first real step toward creating a reliable and trustworthy budget is to evaluating your current financial situation.

This means writing down every single cent that you earn and spend over the course of a month. When you write it down, it’s much easier to identify where your money goes and where you can make cutbacks.

As you write, ask yourself the following questions:

· How much do I earn?

· How much do I spend?

· Of my spending, which are fixed expenses?

· Of my spending, which are variable expenses?

· What are my assets and how much are they worth?

These questions aren’t always easy to answer or understand, so make sure you take time to really evaluate your financial status.

Once you have this plan, you’ll see exactly how much money you have left at the end of each month, if any, and how much you can afford to spend on a mortgage.

Budget Bills to Get a Better Credit Rating

Before you budget to buy a house, you need to take stock your bills and credits cards and make sure you’re able to pay them in time. Done correctly, this will increase your credit score.

A good credit score is an essential part of purchasing a new how as it helps prove that you’re a reliable borrower during the loan application process. Some of the best ways to ensure your credit score is high are:

· paying your bills on time

· reducing your credit balance to below 30% every month

· having three or four credit accounts that you successfully pay off on time every month

At the very least, make sure you don’t have any overdrafts or late payments within the three months or so that precede submitting your loan application.

Make Small Changes to Decrease Debt

As well as ensuring that your credit rating is high, you should try to cut as much debt as possible before investing in a property purchase. Outstanding debts are the last thing you want to have when you take on the responsibility of a mortgage.

Set feasible monthly goals for saving cash. Even if the changes seem small, the bigger picture could really make a dent in your debt. Can you cut out the following to save?

· Stop buying coffee at expensive shop. Those who buy a coffee every weekday may spend $780/year when paying an average of $3/cup.

· Stop eating lunch out. Those who eat lunch out three times a week may spend $1,500/year.

· Stop smoking. Those who smoke a pack a day may spend $1,638 per year.

Before you enter into a mortgage agreement, it’s important that you have eliminated as much financial burden from your budget as possible so that you can focus on purchasing your property. So look for little ways to save and pay off debts as quickly as possible.

Don’t Forget to Budget for Emergencies and Additional Expenses

One of the biggest mistakes people make when trying to budget is to stretch things so far that there’s no room for anything unexpected that might pop up. It’s all very well creating a budget which allows you to adequately pay for your new property mortgage, but if you don’t have any breathing space for emergencies, things could become extremely stressful indeed.

Try to free up a small amount of money each month that goes into a savings account so that if your car breaks down, your oven breaks, or you need to fly across the country to visit an ill family member, you will have the funds available to deal with this.

Also don’t forget the additional costs that come with purchasing a new home. You may need to set aside additional money for:

· Home Insurance – Get a quote at http://homeownersinsurance.com/.

· Property Taxes – Get a quote from the county’s property appraiser site.

· Homeowner Association Fees – Learn how HOA fees are determined.

Setting aside the additional cash will make you far more prepared to make the big purchase — even if emergencies arise.

Clever budgeting will make your money stretch much further than you imagined, leaving you with more options, less stress, and a healthy relationship with your bank manager. It takes a lot of discipline to follow a strict budget but the results are well worth it if it makes it possible to purchase your own property.

Blog post provided by Dylan Adams

1 Rule and 2 Solutions for Conquering our Finances

Winning Financially

What if I told you that there is one rule, one principle, one truth that if applied, can almost 100% guarantee a life free from debt and a life of true financial freedom, would you listen?

No gimmicks, free of charge, without a hidden agenda, here it is:

“Never spend your money before you have it.” – George Washington.

That’s it! Nothing more, and nothing less.

If it is that obvious, why do so many of us ignore or blatantly violate this rule? Could it be that, until today, we’ve never heard of it so our own ignorance is to be blamed? Somehow, I doubt it.

If we can’t use ignorance as an excuse, what can we pinpoint as the main reason for dismissing this truth as we live out our daily financial lives? There are probably quite a few reasons, but here are two of the most pervasive.

I want it, and I want it now

Half of Americans are spending more than they earn, but don’t realize it – that’s according to the survey by Rasmussen Reports for Country Financial.

Our parents or grandparents understood that in life we can’t have it all, and that it takes time and sacrifice to reach certain financial goals. We’ve convinced ourselves that there is no use in waiting, since we literally can have it now, if not with cash then with credit. The “I’ll buy it now and pay for it later” approach is what’s driving so many of us to insane levels of debt. We make conscious decisions to “play now and hopefully pay later,” convincing ourselves that the days of reckoning will never come. If you’re living a lie that you can have it all, that debt is really not as bad as it seems, and that you’ll somehow manage those monthly minimum payments, it’s time for you to wake up! If the day of reckoning hasn’t come yet, it will soon, and the longer you wait the tougher your life will be. So how can you break this destructive cycle?

Admit your problem.

Find an accountability partner, someone who will have your permission to keep you on the “straight and narrow”.

Stop using debt and live on a cash basis ONLY.

Use a tried and true system, such as envelope budgeting to designate an envelope for each spending category, designate a specific amount for each of your envelopes and make a commitment to stop spending once the envelope is empty. You can fund it again with your next paycheck. This way, you will never spend more than you make, and can even start creating envelopes to help you make progress on things like paying off debt or finally putting money into savings.

Easy fix

“Nothing will work unless you do” – Maya Angelou

We are constantly bombarded with messages of simple, quick, no effort required solutions, that without realizing it, we have fallen for the “easy fix” lie and expect financial success to come without any work on our part.

Living a life of financial abundance, a life of contentment and financial margin will not come easy. There is nothing easy about the road to true financial freedom. It will require hard work, effort, commitment, guts, and going against popular culture or even peer pressure. Are you ok with that? Are you willing to work hard to make your financial dreams come true, or will you just keep dreaming? If you’re ready to put your “hands to the plow,” here are few steps you can take:

If you don’t have a plan for spending your money, make one. You need to have a written financial plan, a roadmap that you can follow.

Find a tool that will help you enforce your monthly budget. If you love technology, then search for financial apps that help with planning and tracking your daily expenditures.

Spend 15 – 30 minutes every day reviewing your budget and where you stand to date. By doing this you’ll be able to see what parts of your budget are overspent or under-funded and you’ll be able to make quick adjustments in order to stay within your monthly spending limit.

Each of us could probably come up with few more reasons why we continue spending money before we have it, but I hope that this article can serve as a motivation to help you break that destructive cycle. Once you’ve put yourself on solid ground and have overcome financial challenges through applying these two solutions, you’ll be in great shape to follow the one rule from George Washington that will set you up for long-term success. The longer you wait the harder it will be, so make today the day of your financial turnaround. Work hard at it and give it time.

$1000 In Savings for the First Time In Our Marriage!

Learning to live on a budget!

We have learned to adjust our spending to what we have budgeted…

Can you imagine living from paycheck-to-paycheck, having a family, and not being prepared to face even the slightest financial emergency.That’s how Justin and Amanda’s financial life looked, until they decided to do something about it.
Just recently one of our Money4Life coaches, Nathan, shared with us this quick note he received from Justin and Amanda, avid users of Mvelopes:
“Since using the program, we were able to have a set budget.  Instead of spending and then adjusting our budget to what we spent, we have learned to adjust our spending to what we have budgeted.  We were able to get $1000 in savings for the first time in our marriage! And because we had that savings, we were able to take care of a broken dryer, a broken car and a broken vacuum without using credit cards and still sticking to the spending plan we had created!” – Justin and Amanda

Justin and Amanda decided to follow this one simple rule spoken of by George Washington: “WE MUST CONSULT OUR MEANS RATHER THAN OUR WISHES.”
You see, it’s not about how much income they did or did not have. Once they decided to adjust their spending to their current level of income, magic started to happen.

For the first time in their married life they had enough in their savings to cover their immediate financial needs with cash. No more debt!No doubt, there is a great financial future in store for Justin and Amanda!

Justin and Amanda’s smart financial moves:

  1. Decided to create a spending plan – a budget. No more guessing!

  2. Adjusted their spending to the level of their income.

  3. Created an emergency savings account and began a habit of setting a specific amount to build a $1000 reserve.

  4. Disciplined themselves to stick to their written plan – their budget.

Planning for healthcare expenses

Planning for medical expenses

Regardless of your financial situation, there are certain things you can do, or at least become informed about, in order to prepare for the road ahead. Here are 4 ideas that will help ready you and your family, no matter what your plans are for your specific health care and insurance needs.

1. Begin with a budget. Budgeting for healthcare begins with an honest look at your expenses over a 12-month period. While this may seem or sound daunting, you’ll want to take the time to cover all four seasons, so it is worth the effort. Be sure to include things like prescription drugs, over the counter medications, and trips to the ER.

Once you have come up with an annualized number for your out-of-pocket costs, the key is to break it down into the monthly average amount. For example, even though you might only spend $30 in June, and $100 in December, find that monthly average number and build it into your budget. By following this “envelope budgeting” approach, you’ll have put away the money in the less expensive months in order to make sure you have enough for the more expensive months.  Knowing you have the cash on hand will help keep your costs down from borrowing money or charging it, not to mention the stress relief that you’ll enjoy!

2. Take advantage of a Healthcare FSA account. An FSA is a pre-tax “flexible spending arrangement” for qualified healthcare expenses where funds are deducted from your paycheck each pay period based on the annual amount you decide to set aside. So once you estimate your health expenses for the year, especially if you know you may have some procedures done like eye surgery, dental work, etc., your employer will start setting those funds aside each pay period so you can use them as you incur medical expenditures. Three things to remember about FSA accounts:

1. You can use the entire amount of your FSA election at once without having to wait for it to accumulate into your FSA account.

2. If you don’t use those funds you’ll lose them, so it’s better to underestimate your needs a bit rather than overestimate and have money left over.

3. FSA is a great way to fund your healthcare on the front end. It’s an “out of sight out of mind” approach that allows you to put away a certain amount of money before your paycheck hits your bank account.

3. Better safe than sorry – be proactive. With current changes to the healthcare system, even though we can’t tell you how you premiums will change, it’s safer to assume an increase than be caught by surprise. So whatever your premium is right now, add an additional 10-20% and include that increase in your budget. You may have to look for ways to cut back on another budget category in order to save for potential healthcare increases, but think, if your premiums stay as they are, you just saved additional funds to allocate to debt payoff!

4. Talk to your employer & local church about a benevolence fund. Many employers have a benevolence fund set aside to help employees with needs like unexpected medical bills. Ask your employer about the way the benevolence fund operates and if you can afford to do so, contribute to it as well. You never know when you may need a “hand up” with a large medical bill. Your local church should have a benevolence fund as well. Learn about qualifications and what’s needed to receive help. Understanding the help available to you ahead of time is a great way to be proactive and be prepared for life’s unexpected turns.

Mvelopes changed our lives!

Mvelopes changed our lives!

We had little to no money in savings…we were living from paycheck to paycheck…

15 years is a long time, would you agree? That’s how long the Henriksen’s have been struggling to make their finances work, with nothing to show for it. They knew that “getting on a budget” was something they needed to do, but nothing seemed to work, until they found Mvelopes. Here is their turnaround story, in their own words:

I just wanted to thank you for this program.  It has completely changed our lives.  I know that this sounds a bit dramatic but my husband and I have been trying for 15 years to get on a budget.  Bill paying was very stressful, we had little to no money in savings, we were not getting our debts paid off and we were living paycheck to paycheck.

Now, in just a couple of months of using this program we have more money in savings than we have ever had, there is money ahead of time to pay our bills, we are paying our debt down and paying our bills is virtually painless. Our 5 children are also excited because we have been able to create an envelope for each of them and have started giving them a small allowance.

We feel that there is finally a light at the end of the tunnel to living debt free.

Thank you so much! The Henriksen Family

You see, “some quit because of slow progress, never grasping the fact that slow progress is still progress!” Henriksen’s never gave up…even after 15 long years of trying and failing. Have you given up on your finances? What’s holding you back from trying, just one more time?