Entries Tagged 'Money' ↓

Today I read an excellent article called The Key to Wedded Bliss? Money Matters.  The author pointed out several things married couples could do to improve their relationships with themselves and their money.  I should summarize them here with my personal experience.

Talk and share goals – The hubby and I are pretty different in terms of our money management, but I think I am converting him into a saver.  We have talked quite a bit about retirement and having kids, and we generally agree with each other about what we want in the future.  Communication is definitely important in a marriage.

Run a home like a business -  I keep a running spreadsheet of our incomes and expenses for each month and give the hubby a report at the end of every month just to let him know how we are doing.  This has worked fairly well for the past year.

Be supportive of careers – We are very supportive of each other’s careers right now.  We both have pretty good jobs as engineers.  If either of us had a great job opportunity elsewhere I think we would both be okay with a move. 

Enjoy, but within reason - We spend our fun money mostly on food and vacations.  The hubby also loves games and gadgets.  As I wrote over a year ago, we started a budget where 2% of our income goes to entertainment.  That has worked out quite well and we still have a surplus in the entertainment fund.  As I wrote in my Wise Bread article from yesterday, there needs to be a balance between pleasure spending and saving, and I think we are doing fairly well. 

Use a mediator – Fortunately, the hubby and I haven’t really had fights about money, but we’d probably use our parents as mediators if we did have some unlikely scuffle.

Maintain some independence -  Both the hubby and I have credit cards, bank accounts, and investment accounts under our own names.  We also have a joint checking and investment account.  This is important because I think we should maintain our own credit histories. Also, we can’t have joint retirement accounts anyway.   So even though we are married I think we are both pretty financially independent.

Invest in your marriage - The hubby and I spend A LOT of time together when we are not working.  Sometimes it feels like too much, but that may change when we have kids.  We are definitely not workaholics and we like playing games and watching TV together quite a bit. 

Since many couples split up because of financial issues,  I feel that money management is an extremely important part of a healthy marriage. However, love and respect needs to come first before a couple can compromise on their money.  For example, I know that the hubby made a lot of concessions on the things he wanted to buy in the past year because he loves me and respects my saving ways. He also started to use coupons, FatWallet and subscribed to SlickDeals on his own (I am really proud of him).   On the other hand, I have also made compromises with the hubby and enjoyed spending more money and time with him.   He acknowledged that I am not as cheap as before.   Marriage is about becoming one single unit, and our attitudes toward money simply manifested how we balance each other.   I am having more fun with the hubby and  he’s glad that I am dealing  with the finances he  dislikes so it is a win-win situation.  So finally, I’d like to say that money management skills are able to be acquired, and if a couple really wants to fix their finances together then they can definitely do it, but if a couple do not care for each other enough to manage their money in a positive way together, then that may not be so easy to fix.  So my conclusion is that money management is much much easier than marriage management, and there is no reason not to tackle it first.

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Last week I read an article on CNN titled “Why you can’t teach money”.  In this article, law professor Lauren Willis argues that financial education is a waste of time and money.  Here are my thoughts on this matter.

Her first argument that financial education doesn’t work because financial product companies “spend billions drowning out well-meaning messages to consumers from nonprofits or government agencies.”  This is certainly true. I am sure people are more likely to know lines from the  MasterCard “Priceless” commercials rather than their own credit card interest rate.  Also, she says that financial products change all the time so it is hard for educators to teach a subject that is constantly in flux.  That is also true, but some basics stay the same.

Next she argues that teaching the basics of finance is a waste of money because sending people to class gives them the illusion that they are educated in the ways of finances and they  don’t change their financial behavior.  I’m not sure if I agree with this because just listening to the basics of budgeting and getting out of debt can be really helpful.  It may be that people who are forced to take classes in personal finance do not change their behavior, but people who want to learn and change can certainly benefit.

Finally, she believes that the government should spend more money on regulating the financial industry rather than trying to educate consumers about the dangers of certain financial products.  I agree that there needs to be regulation on deceptive business practices, but an informed consumer is more able to use the wide variety of financial products to his or her advantage. People do not need to have the knowledge of a professional financial planner to understand some arithmetic  and figure out what is best for them.  Indeed, some financial companies make the math more complicated than it really is, but I think  the basics of budgeting and interest rates be understood by any  human being with average intelligence.

To close the interview the professor stated that parents should continue to teach their children about money and finances because families can educate their children better than the government could.  That may be true, but if the parents have no financial knowledge, then it would be the blind leading the blind.   Financial education has to start somewhere, and blankly stating that it is a waste of time and money does not help the fact that many people are clueless about how to manage their money.  I know a lot of people want to learn how to manage their money better, and those who seek the education voluntarily are more likely to benefit from it.

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Some of my friends have asked me things along the lines of, “aren’t Christian women supposed to be stay at home moms?” I have never really been taught this idea in the churches I have gone to, but I know some Christian groups do  support the idea that Christian women should not work for a living and the man of the house should be the one bring home the bacon. So is it wrong for Christian women to earn money outside of the home? Well, ultimately I think the Bible should answer everyone’s questions on this issue.

The book of Proverbs ends with an acrostic poem describing a virtuous wife. This is actually a very long section focused on one single topic, and that’s pretty different from the rest of the book where various short phrases of wisdom are written in sequence. It begins with, “An excellent wife who can find? She is far more precious than jewels(rubies).” Prov 31:10. Then it goes on to describe the various things a good wife does, and interestingly enough a lot of things she does are related to business and finance. Here is what I read:

She invests in real estate - “She considers a field and buys it; with the fruit of her hands she plants a vineyard” Prov 31:16

She sells the goods she produces – First she produces: “She seeks wool and flax, and works with willing hands.” Prov 31:13 Also later in the passage she sells the goods: “She perceives that her merchandise is profitable. Her lamp does not go out at night.” Prov 31:18 “She makes linen garments and sells them; she delivers sashes to the merchant.” Prov 31:24

She is generous in giving – “She opens her hand to the poor, and reaches out her hands to the needy.” Prov 31:20

She is prepared – “She is not afraid of snow for her household, for all her household are clothed in scarlet.” Prov 31:21 “Strength and dignity are her clothing, and she laughs at the time to come.” Prov 31:25 I think both of these verses show that she is prepared for the things to come, and I think that being prepared for snow implies that the good wife is financially prepared for a non-fruitful season.

She is watchful – “She watches over the affairs of her household and does not eat the bread of idleness. ” Prov 31:27 I think this verse conveys the message that a good wife is not lazy, and she is very aware of what’s going on in her family. Finances is a big part of family affairs, and a wife that knows what’s going on with a household’s money would be much better prepared for disasters.

She diligently provides for her family - “She is like the merchant ships, bringing her food from afar. She gets up while it is still dark; she provides food for her family and portions for her servant girls.” Prov 31:14-15

She fears the lord – This is the final point of the passage. “Charm is deceptive, and beauty is fleeting; but a woman who fears the LORD is to be praised.” Prov 31:30

So from this book, I think it is fairly clear that a Christian woman is never required to be a stay at home mom and in a way the Bible actually encourages a wife to earn income and provide for her family. In my church there are all types of families. There are dual income families, and there are stay at home moms, and there is a pretty cool stay at home dad, too. Everyone knows that the guy is a stay at home dad and he was given a rose for Mother’s day. I think all of these family structures are totally acceptable as long as both people in the marriage agree with it and they trust each other and God enough to make it work.

I hope this post clarified the position of the Bible on women and working for income. I think that all women should be independently enough so that their husbands would not have have to worry about them very much. Finally, I believe that Christianity is a religion that gives women a lot of freedom compared to many other religions. We can choose to be a stay at home wife, or work outside the home. We do not have to hide ourselves and we can honor God in our own way. That is liberating.

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The New York Times recently published an interactive calculator that allows you to compare your debt situation to a group of more than 360 American families that were surveyed in 2004. After playing with it for a little bit, it was pretty clear that this survey indicates that those with more income are more likely to have debt. This led to me to ask, why is that those with more means seem to borrow more?

The calculator allows you to input your mortgage debt, credit card debt, automobile debt, and educational debt.  Then you can choose your income and age group on the bottom and it tells you how many percent of the families they surveyed are like you. So I put in $0 and less than 35 year old.  In my age bracket, 39% of families making less than $20,000 per year had no debt, and only 3% of families making more than $150,000 per year had no debt.  This is a very stark difference.  When I changed the age bracket to all age groups, 47% of families making under $20,000 had no debt while only 14% of families making more than $150,000 had no debt. That is still a very big difference.

I noticed that regardless of income, most of the debt of these families came in the form of mortgage. The average amount of mortgage debt goes up as you scroll up in income. This makes sense because more income allows people to qualify for larger mortgages.  Higher income families also tend to live in areas with high costs of living so housing is more expensive to begin with. Some would argue that mortgage is a type of “good” debt because it allows people to have a piece of real estate after it is paid off, but that alone  does not change the fact that it is a debt.

In all the other categories of debt, higher income families still owed more than lower income families on average.  The average automobile debt of families making over $150k  is nearly 9 times the automobile debt of a family making less than $20k.  All of this just shows that those with higher income spends much more on the same goods and services.

Personally I have lived in both ends of the income spectrum presented in this survey.  When we just moved to America we were living on one graduate stipend.  All three of us lived on less than $1000 a month and we watched our expenses day to day.  Nothing was bought without a coupon, and the damaged foods section is where we shopped first. When my family was at that income level, frugality was necessary for survival  and  there is no room for debt because one credit card interest charge could mean a week’s worth of groceries.

Later, my parents graduated and we moved to the San Francisco Bay Area.  They both had well paying jobs after a few years, and they took on a mortgage. A big change I noticed is that we no longer cut out every coupon we found for food and we ate out much more.  It was much easier to spend money because we had more income than before.  The rationale was that coupons were no longer worth the time and effort to redeem, and paying for good food was great because we can’t cook like that anyway. Being frugal is just harder when you have the means to spend your money and justify it later as only 0.25% of your salary.

Though, having said this, I would like to clarify that my family was never that extravagant and got in any debt other than their mortgages. Also, I think it would more interesting if the NY Times reported the amount of assets these families had and see if these families could cover the amount of the debt they have.  If the higher income families had enough assets to make their net worths positive, then they are not too badly off.  If they had the most debt and least assets, then they are really in trouble.

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Welcome to the Carnival of Money Stories #67!  This week we have sixteen great stories full of insights,inspiration,triumph, and tragedy.  Read on to be titillated and entertained!

Editor’s Pick of the Week - Silicon Valley Blogger tells the story of her friends’ ill fated real estate purchase in Bad Investment? Losing The Million Dollar House, Literally posted at The Digerati Life. This story is a must read.

Real Estate Stories

Dean Paley presents Mortgage Update #2 posted at Personal Money Tips. It seems pretty simple to negotiate your mortgage terms with the banks these days.

FMF tells of Five Signs that a Property Might be Ripe for a Lowball Bid posted at Free Money Finance. When I do buy a house, I will make sure to make a lowball offer. There is just no point in paying sticker price for anything.

Diseases and Money

Kelly from Almost Frugal tells us how she is Dealing with a Chronic Condition at Almost Frugal. When you have a chronic disease, money management is even more important.

GBlogger presents Success Stories: Age 49, Beating Back Brain Cancer, and Beating the Market to the Tune of $3,000,000 posted at CAN I GET RICH ON A SALARY. This is an inspirational story about a guy that managed to invest well despite the debilitating effects of brain cancer.

Debt & Credit Stories

Mr Credit Card presents Should you pay for Credit Building Credit Cards? posted at Ask Mr Credit Card. Is it worth it to get a crappy credit card to build your credit score? Mr Credit Card tells us his experience.

paidtwice presents Absentminded Eating and Absentminded Spending | I’ve Paid For This Twice Already… posted at I’ve Paid For This Twice Already….

Brooke presents A Bad Week (or better; A Bad Month!) posted at Dollar Frugal. In this story Brooke outlines how much she spent this month in various things. She has been bad.

Ryan Suenaga presents (Not So) Stupid Money Tricks: Credit Cards at a Convenience Store posted at Uncommon Cents. This is a tip on how to get 5% back on gift card purchases through credit cards.

Career Stories

Jim presents Don’t Let Fear Make Decisions posted at Blueprint for Financial Prosperity. Jim reflects on his decision to become a professional blogger.

The Financial Blogger writes about his new job in I Got A Small Raise. But I lost Everything In The End posted at The Financial Blogger. He is trying to make more income so that his wife can stay home without worrying about finances.

Other Stories

Dorian Wales tells us how to Teach Your Kids Basic Finance and Economics with Monopoly – 11 Valuable Lessons posted at The Personal Financier. Well, Monopoly isn’t really my favorite boardgame because there is too much luck involved, but this is a good post about it.

Todd tells us that his neighbors are having Garage Sales for Gas Money at HarvestingDollars. Hip hip hooray for Todd’s neighbor I guess.

Tip Diva presents Tip Diva | Top Ten Tips – If Your Wallet Is Stolen posted at Tip Diva.  I am sorry you were victimized Tip Diva!

vh presents Estate Sales: The Canary in the Mine? posted at Funny about Money. Estate sales are pretty awesome for furniture, and that ottoman vh got is quite delicious.

Money Monk and MoneyNing had very similar stories about living below your means. See Having an income sufficient for your basic needs and comforts posted at Moneymonk and Our Thinking of Money Matters is Way Too Complicated posted at Money Ning.

That is all for this week!  Next week the carnival will make a stop at Funny About Money so get your submissions in now!

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