I, too, benefitted form reading investment books.
For personal finance, I think Andrew Tobias’ “The Only Investment Guide You’ll Ever Need” is good, but I typically like what Suze Orman has to say (even if she’s s little tooo conservative for my tastes).
For investment. . .“Random Walk Down Wall Street”, and “The Intelligent Invester”. They changed my whole outlook on investing.
This is great. ZipperJJ, I love Suze Orman too. I almost bought her book a while back, but I thought it was too ironic to make an impulse buy on a financial book when I was in lots of debt.
My situation has improved a lot. The only significant debt I have right now is $12,000 in student loans. It’s a 10-year-plan (the shortest) I’ve been paying as much as I possibly can on those every month, because it is a fixed payment and I want it to go away ASAP.
I used to have horrible credit, but I’ve raised it 78 points in the last year and climbing.
Part of my confusion about money is the fact that I’m married now. My husband thinks the best thing to do is to pool all of our income, pay off what we have agreed are joint expenses (in our case: rent, money saved so we can buy a used car in cash 1 year from now), and then divide the leftover money equally. The other partner then has no say over how we spend the money left over after the joint expenses–it’s our individual responsibility, to manage our own expenses and our own, individual financial goals.
Is this a reasonable plan? It sounds reasonable to me, I just wonder if anyone has actually done it and liked the result. My brain wants to manage my money as if I’m still single, but that’s not the way it is anymore!
Well, this is one of the more divided subjects on the boards. Some people cannot imagine pooling funds and having everything be “us” money and some cannot imagine being married and having separate finances. We are of the “pooled” persuasion. I cannot imagine it any other way.
What you do as a married two-income couple is up to your individual preferences, styles and goals. I’ve been married for almost 20 years and my husband and I have never had any joint accounts at all. We just divide the bills up and invest in our individual investment accounts. If a big expense comes up, we talk about who’s got what in the bank and who can most afford to pony up. We’ve NEVER fought about money, ever, so that works for us. For other folks, that might not work at all, especially if you’ve got a couple where one half is a spendthrift while the other is a miser.
Don’t go shopping for fun. There are many other ways to have fun that won’t tempt you to spend money you shouldn’t. Go for a walk instead, somewhere where you’re not likely to spend money, or do something else that doesn’t make it so easy to spend money.
Don’t keep your credit card by you when you’re surfing the Net if you’re prone to online impulse purchases. If possible, keep it several rooms or at least one floor away, so that impulse buying isn’t effortless.
A car is an essential of life for many people. What isn’t essential for most of them is a luxury car or SUV, or a new car if the old one can still reliably get you from point A to point B.
Some people say they need SUVs, and that’s true of some of them. But you only need to own an SUV if you regularly drive in rough road conditions, haul large loads of stuff around, tow large trailers, or ferry lots of people around. You can have a carpool with three or four kids in a regular car- lots of us rode in cars in those conditions when we were young (back when dinosaurs roamed the Earth and there were no SUVs). If you’re doing something that requires a bigger vehicle a few times a year, you can rent a minivan or SUV for when you need it, and drive something cheaper the rest of the time.
If you do have a luxury car or SUV, that doesn’t mean you should get rid of it. You should keep it until it’s not reliable enough for you any more, and then get a cheaper car to replace it. Barring accidents or lemon cars, that probably means you should keep your cars for at least five years.
You’ll not only save money on car payments by buying a cheaper car, you’ll probably save money on car taxes (if you live in a state like California that makes you pay taxes yearly on the value of your car), gas (cheaper cars tend to be smaller), and car insurance as well.
If you really want a fancier car, then spend your money on that. But try to find some other areas of your lifestyle that are less important to you where you can economize to make up for it.
When it comes to consumer goods and entertainment, my philosophy is:
Don’t buy anything if you can borrow it. You’ll be shocked at how infrequently you need to use the things that you’d normally buy if you borrow them from a friend instead.
When that fails, rent it (assuming it’s something with a short-term use and a reasonable rental price, like a DVD).
If you can’t buy it or rent it, buy it used.
And finally, if the rest fail and you must own it, buy it online.
My best financial advice: Never finance a depreciating asset.
If it’s not going to make money for you, pay cash, and make sure that whatever benefit you get out of it is worth paying that cash.
This includes cars (and, currently, houses ;)). Now, it may be that you have to have a car to get around. But you don’t have to have a $30,000 car to get around. You can do perfectly well with a $3000-5000 car. So, consider anything above that $5000 mark to be a luxury purchase. There’s nothing wrong with driving a really nice car if you have the money, but financing an expensive car and claiming to yourself that it’s a necessity is not prudent.
olives, that sounds like a perfectly reasonable way to handle joint finances (says the single guy who’s never combined finances.But that’s how I imagine handling joint finances, should that day come), as long as it works for you. Just make sure that you are both in agreement about how much independence you have with individual accounts, and how much money goes to joint goals. I could foresee harsh feelings if, a few years down the line, one partner has been dutifully saving most of their individual money, and the other has spent it on toys and high living.
My husband and I do, indeed, have very different attitudes about money. Our mutual financial goals have always been important to both of us, but I tend to be much more ‘‘spendy’’ and prone to impulse-buys than he is. At the moment, I’m putting all of my extra money toward student loan debt–he doesn’t have any. If we completely pooled everything, he’d have to pay for my student loan debt, in part, and that doesn’t seem right to me.
I guess he figured this was the way to do it the fairest–we agree to certain, mutual goals, but then he doesn’t have to account to me for how he spends his individual money and I don’t have to account to him. And we’ve also agreed that any overtime either of us makes is ours to to use individually as we see fit.
What I want to know is, how is it POSSIBLE to do things individually, especially if there is an income disparity? If he pulls in 100 grand a year someday, while I, as a social worker, make something like 36,000 a year, obviously he’d be able to more easily cover half of a mortgage than me. I don’t know how that could be fair to either of us.
Amen. Your house is not an ATM. Don’t borrow money against the equity in your house to pay for anything that isn’t either an absolute necessity or going to increase the resale value of your home. If you end up owing a lot more money on your house than you can sell it for, and you can’t keep up the payments on it, you are all kinds of screwed.
Don’t go into debt for anything temporary, like a vacation or a wedding. Go into debt only for things that will have a tangible value for several years, and do it only for things that you need. It’s best if you can avoid debt except for housing, transportation, or an education that makes you more valuable in the job market. Never go into debt for something you want but don’t need. Understanding the difference between what you want and what you need is a crucial skill for managing money.
We have friends who are a “$100K vs. Blockbuster” couple. They have separate finances. He’s responsible for the mortgage, most utilities, and most expendable cash. She’s responsible for groceries, cigarettes, and her own gas. They argue about money constantly and she actually had to loan him money the other day. It makes me crazy to think about it!
Fair doesn’t necessarily mean 50-50. I’ve heard of couples splitting things up like this proportionally; e.g., both of you put 1/3 of your salary towards the mortgage rather than each of you paying $1000 a month.
Personally, if it were me, I’d pool all of our money and give each partner the same agreed-upon amount each month for personal expenses. If your husband has mad money to spend on luxury items because he’s an investment banker, while you’re shopping at Goodwill because you’re a social worker, that doesn’t seem fair either.
About the student loans: he knew about them when he married you, yes? You’re a team now, and if he can help you pay off your loans faster, then as a team you’ll be in better financial shape in the long term. If he had unexpected medical bills, you would work together to pay them off, wouldn’t you?
Obviously, you’ll need to find the solution that works best for the two of you, but those are my thoughts, for what they’re worth.
Always have health insurance, even if you think you don’t need it. An unexpected five-day stay in the hospital resulted in my mother getting a bill for $40,000. Very few people could take something like that in their financial stride if they weren’t insured. Also, if you have lapses in your health insurance coverage, some insurance companies will take advantage of that and claim “pre-existing condition” if you end up with an expensive problem later on.
Make sure you or your spouse always has a job that offers health coverage, if at all possible. If you’re not happy at that job, don’t quit until you’ve found another one that offers health coverage.
(This advice not valid in Canada or other countries where people are not expected to furnish their own health-care coverage)
This is a good point. He is the one who suggested we consider the loans a joint expense, because ‘‘It’s not really fair that I have rich grandparents who paid for my college and you didn’t. Consider it marriage affirmative-action.’’
I’m not too worried about whether it’s really ‘‘fair’’ or not, how we ended up here, but of course something like medical bills would be considered a joint expense, and in a weird way that is only now beginning to dawn on me, we should have a vested interest in one anothers’ financial situations because they will forever impact us as a team.
Our basic idea was, ‘‘We’ll lay these guidelines down, but if there’s ever anything important either of us wants (e.g. more education, time abroad, etc) we can break the rules to help one another out.’’ In other words, he’s not going to buy a Mercedes Benz if I can’t afford graduate school–but neither is he giving me $20 to go to the movies because I spent my monthly allotted income on shoes.
Save at least 10% of every dollar which comes into your hands.
Don’t pay interest on anything with the possible exception of a house and, even then, pay extra whenever you can and get a mortgage you can pay by the week.
You won’t believe the amount of interest you’ll save. Check a mortgage calculator out.
If all my plans fall into place, I will have paid a 25 year mortgage off in 11 years. And saved a ton of money.
If you don’t have the cash, don’t put it on credit.
At 24, you’re doing the right thing by taking an interest in financial planning. With the taxes we pay these days (in Canada, anyway), you’ll need everything you’ve got for retirement!
Exactly. When I got married, I was making $18,000 a year as a graphic artist. DH is seven years older and was making about $60,000 as a military officer. He already owned a house and since he was already covering all those bills, he continued to pay them. The only expense of mine that he took on was my car insurance since it obviously made sense for us to have both cars on the same policy. I continued to pay my car loan, gas, and personal expenses, plus I bought all the groceries and other household items. That was fair to both of us in that situation.
Later on, he lost his job and went back to school. By then I was making more than twice as much and was able to cover everything until he was fully employed again. We did take on a part-time pet-sitting job and split the earnings on that so he’d have some spending money.
As for the college loan thing, remember that a college education (theoretically, at least) increases your employability and income potential, from which you will both benefit down the road. It also makes you a more knowledgeable and interesting person to be around, which is good for your spouse too, so helping you pay those loans is an investment in both your futures. 
That is definitely one of the transitions to get used to in a marriage. You can’t make splurge-y purchases without thinking about how it affects the team, but on the other hand, you have someone to help out if things get tight. As a married couple, you should share the same financial goals–a house, grad school, being able to retire comfortably, whatever–and it only makes sense to work towards those goals together.
My husband and I are both about your age, olives, and in a similar situation. He’s more likely to want to buy a new toy, and I’m more likely to want to save in case the car dies. In addition, while we both have student loan debt, and stupid-college-student-credit-card-debt, his student loans are…let’s call it astronomical…and mine is merely bad. Luckily, he’s in a (eventually) lucrative field, and I’m in a moderate one. So he provides the cash, I provide the will-power. (I’m taking notes while reading this thread and I’m going to make him read it tonight.)
I’ll share some things that have worked for us over the past couple years:
-pretty obvious: we use a budget program, which really helps us see what we’re spending on each day and predict where we’ll be in a few months if we spend $X. I like this better than something like an excel spreadsheet, mostly for the predictability.
-not so obvious: even with carefully tracking our budget like that, we found that the occasional lazy-takeout night was creeping in after we’d vowed to be more careful. We now take out the same amount each month in cash (which we add to our budget program) and I get 1/3, he gets 1/3, and 1/3 is for communal stuff like a trip to the movies or eating out together. Of course, we’ll share our individual amounts if we still have it. Anything we don’t spend at the end of the month goes into savings.
We discovered that the problem was using our debit cards, even after we stopped using our credit cards. They work fine for planned expenses, but we can never use them for impulse buys. I know I know, as a member of the hip-new-technological generation, it pained me to realize it, but we really are more responsible with discretionary money when we have it in cash and can see it depleting before our eyes, and must stop when it’s gone.
When I went to get my first car, I had enough saved to put $1290 down. I simply couldn’t have bought a car with cash, and I make a fair living. It’s been nine years and I’ve just now got $3000 saved. Of course part of the reason is a chunk goes into retirement because I’m told that’s wise too.
I guess I’m doing something wrong.
If you are lucky enough to get a windfall - use it to change your life, not the moment.
Its really tempting to say “I’ll use that $40k Grandma left me in her will to take six months off work and see the world.” However, if you use that $40k Grandma left you to pay down your debts, you can then SAVE the money you were giving Visa every month to go see the world. Both will give you the experience of a lifetime - one means delaying it a bit, but in exchange, you’ll change every day of the rest of your financial life as well.
“Knowledgeable” and interesting about what?