Archive for October 2006

Financial Advice to Married Persons

Financial Advice to Married Couples

o Work TOGETHER on your finances!
o Discuss all major purchases BEFORE making the purchase.
o Share ALL FINANCIAL INFORMATION with each other.
o No financial secrets.
o If you work TOGETHER, it will make you stronger.
o Avoid the trap of debt
o Some couples shell out thousands just for their marriage!
§ It is nice to have a great wedding, but to go into debt to do it?
§ Is it worth it?
o After many couples get married, they attempt to get everything that their parents have:
§ House
§ Furniture
§ Cars
§ Boat
o As a result, the first thing they have done as a couple was to strap themselves down under a weight of payments.

o Develop a plan for your future. Make your financial plan support your future plan!

o I recommend that a newlywed couple WAIT at least one year before making any large purchases (> $1000).

o SAVE money for emergencies.
o When you have no savings, every little thing that happens wrong to you (car problem, appliance problem, medical bill) becomes a financial emergency.
o Financial emergencies lead to STRESS.
o With 3 – 6 months of savings JUST SITTING THERE, these financial emergencies will not exist and therefore the stress will also not exist.

o SAVE money for the future!
Ask the following questions:
o Is the fact that you are going to retire someday unknown?
o Is the fact that your children are going to college someday unknown?
o Is the fact that your children are going to get married someday unknown?
o Is the fact that you are going to purchase a house someday unknown?
o Is the fact that you want to go on a nice vacation to Hawaii someday unknown?
o Is the fact that you want to buy a nice boat someday unknown?
o Is the fact that you want to own a nice car someday unknown?
o Is the fact that you want nice furniture someday unknown?
o NONE of these questions are unknown, yet many of us NEVER EVEN BOTHER TO PLAN FOR THEM!!!! The result of NOT PLANNING? They either go ahead with these goals and incur a TON OF DEBT OR they are unable to realize their dreams and instead live a lifetime of woulda, coulda, shoulda regret.

o Pay cash for purchases.
o Saving money takes time.
o Time allows you to truly understand if you really want that item
o It also allows you time to learn what a good deal is for that item

o Hold each other accountable.
o When one of you gets the I want this!!!-itis, the other can calm you down!
o You are stronger TOGETHER.

o Managing your money can be fun. Done correctly,
o It allows you to support VERY WORTHY causes that you strongly believe in!
o It allows you to save more than you ever thought possible.
o It allows you to spend more than you ever thought possible.
o It allows you to give more than you ever thought possible.

Systematic Savings & My 529 Plan

“My how the time flies!”

“Was it really 4 years ago that we last talked?”

“Our 20 year high school class reunion is THIS YEAR?!?!!”

Time has remained constant, but as we grow up we get so busy that it really does appear that time flies by!

It was almost 7 years ago that my daughter was born. WOW! I can not hardly believe it. In just 11 years, she will be off to college. UNBELIEVABLE!

Wait a minute … Off to college … Have I started saving for that?

The answer for us is YES!

Here is what we have done to save for her college. We started up a 529 College Savings Plan. It was VERY EASY. I went to our local bank and asked to open a 529 College Savings Plan.

Facts about the 529 College Savings Plan I am involved in:

  • They required a mere $50 minimum amount to open the account.
  • Additional future contributions were required to be at least $25.
  • They ZAP my bank account once a month with an amount I have told them to deduct.
  • The money is invested in mutual funds that I have selected.
  • The money is put in AFTER-TAX, but I am able to withdraw the money (principal PLUS interest) TAX-FREE for my daughters qualified educational expenses.
  • I am ONLY allowed to contribute $298,770 to this account at this time (I suspect that this will pay for college 🙂 )
  • Qualified expenses included tuition, fees, books, supplies, equipment, room and board.
  • If I withdraw the money for non-qualified expenses, the interest earned is subject to income taxes PLUS a 10% penalty.

Do you know how easy it is to contribute a monthly amount to savings when you do not have to do anything? No writing checks. No on-line bill payment. Nothing. It is removed from my checking account automatically, and it is deposited into the 529 account automatically. It is then automatically used to purchase additional units of the mutual funds I have selected.

How sweet is that? Here is an example of what has happened to my 529 plan since it was started in 2003.