Money & Marriage – Matt About Money Simple. Meaningful. Success. Thu, 17 Oct 2019 12:24:55 -0400 en-US hourly 1 9092505 An Essential Formula For a Financially Healthy Marriage Tue, 22 Oct 2019 13:30:01 +0000

Money is one of the prime sources of conflict in marriage. However, conflict avoidance isn’t the route to a happy marriage.

In fact, John Gottman, a psychologist who has devoted over two decades to studying what makes for a healthy marriage, believes that “fighting—when it airs grievances and complaints—can be one of the healthiest things a couple can do for their relationship.”  They key has to do with how you fight.

More Positives Than Negatives

As he writes in his book, Why Marriages Succeed or Fail, one of Gottman’s most important findings can be boiled down to a simple formula: “You must have at least five times as many positive as negative moments together if your marriage is to be stable.”

So, the next time your spouse does something financially that bothers you, try opening up the conversation with some positives.

If he shows up with a new iPad that you didn’t discuss buying, tell him how much you appreciate how hard he works and how much you want him to have things he enjoys, AND (a better transition word than “but”) you would feel much better about the family’s finances if you had a plan for such purchases.

For example, you could each have certain budgeted amounts you could spend as you’d like to each month – amounts that are part of a bigger plan that ensures you’ll still be able to meet all of the family’s expenses and accomplish other goals. He can have his iPad, but it might require that he save his allocations for a few months before making the purchase.

Beyond Money and Marriage

Of course, Gottman’s formula doesn’t just apply to how we manage money in marriage. It applies to all aspects of our relationship with our spouse, and even our relationships with others such as friends and co-workers.

As you think about your most important relationships, how well are you following the five-positives-to-one-negative formula?

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Profitable Ideas: Secrets of Superstar Savers, A Richer Level of Happiness, and More Fri, 27 Sep 2019 13:30:06 +0000

Weekly roundup of some of the best personal finance articles from around the web.

The No. 1 thing people with fat savings accounts scrimp on that you likely don’t (MarketWatch). The importance of getting the big things right.

Parents, don’t sacrifice yourselves on the altar of your children’s education (Tim Mauer). Sacrificing to save is wise. Sacrificing by taking on debt? Not so much.

The cost of selling your home (A Wealth of Common Sense). Before buying, make sure you plan to be there a while.

Young people are starving for classes on finance, tips on taxes (MSN). Whether kids grow up learning about wise money management depends heavily on whether their parents are willing and able to teach them.

Marrying money (Humble Dollar). If you know anyone who’s engaged or newly married, may I also recommend the book, Money & Marriage?

We have to let go (Liberty Wealth). The comparison game — it’s hard to avoid, and impossible to win.

Millennials are bullish on Roth IRAs. Many wish they started earlier (CNBC). Is there a young person in your life that you should introduce to a Roth IRA?

Choosing a richer, fuller level of happiness (Becoming Minimalist). A good reminder about where happiness is found.

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If You’re Single or Don’t Have Kids, Do You Need Life Insurance? Tue, 24 Sep 2019 13:30:31 +0000

The prudent see danger and take refuge, but the simple keep going and pay the penalty. – Proverbs 22:3

About 37 million U.S. households have no life insurance, according to industry trade group LIMRA. For many, the cost of coverage stands in the way. But there may be some, such as singles and married couples with no kids, who don’t have insurance because they think they don’t need it.

How to Know Whether You Need Life Insurance

The easiest way to determine whether you need life insurance is to consider whether anyone would suffer financially if you died. You may not need life insurance if you’re married, both you and your spouse are working full-time, and neither of you have children from a previous marriage. If one of you died today, the other may be able to handle his or her financial obligations.

Still, there are some reasons why a single person or a couple with no kids should consider buying life insurance.

If you don’t have much money in savings. You may want enough life insurance to cover funeral and other final expenses.

If you want to protect against the possibility that you or your spouse could become medically uninsurable in the future. If you developed some type of illness while you did not have life insurance, you may not be able to get a policy. Buying a policy while you’re healthy guards against that scenario.

If you want to lock in the lowest rates. Premiums for life insurance will typically go up as you get older. Buy a policy now, and you’ll lock in the lower cost.

If you have financial obligations that require both of your incomes. I don’t recommend buying a house that requires two incomes (Read How Much Should I Spend on a House?), but if you’re in that situation, you may want to have enough life insurance to be able to pay off the mortgage or pay it down so it could be refinanced and afforded by the surviving spouse.

Credit card debt held in one spouse’s name does not necessarily absolve the other from the responsibility for that debt. In a community property state, a spouse’s debts incurred after getting married may be the responsibility of the other spouse as well; state laws vary.

In states not governed by community property law, many creditors will write off the debts of a deceased person when he or she held the debt in his or her name only, but not always. In some states, if the debt was accrued through purchases of items that benefited the family, a surviving spouse may be held responsible for those debts.

If you have student loans. Check the terms of your loan. It’s possible that the loan would be discharged upon your death. However, if you live in a community property state and you took out the loan after getting married, your spouse may be liable for the debt upon your death. And if someone co-signed your loan (something I encourage people to avoid), your co-signer will probably be responsible for the debt upon your death.

Again, if someone else would suffer financially from your death, carrying life insurance would be the responsible thing to do.

Once you have children, the question quickly shifts from “Do we need life insurance?” to “How much life insurance do we need?

If you are single or married without children, do have life insurance?  Why or why not?

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How to Mess Up Your Marriage Tue, 30 Jul 2019 13:30:25 +0000

Have you ever felt like a stranger living in a strange land? Like somehow you’ve woken up in a place where you don’t speak the language? 

I felt that way while watching a morning news segment about financial infidelity.

The host mentioned the results of a national survey in which:

  • 71% of married Americans acknowledged keeping secrets about their spending from their spouses
  • 44% said keeping secrets about money is acceptable under certain circumstances
  • 40% admitted that they tell their spouse they spent less on purchases than they actually did (women lied mostly about clothing, shoes, and things for kids; men lied mostly about things for the car, entertainment, and sports tickets)

And these weren’t even the parts that surprised me.

When the cure is worse than the disease

What made me feel out of place was the matter-of-fact advice given in response to the survey.

Expert number one, host of a cable TV show about money, said, “I don’t think financial infidelity is all that bad. I mean, women need to have independence in their relationship and they need to be able to have private numbers that they can do whatever it is they want with.”

Expert number two, a personal finance author, tempered things a bit by saying, “I agree, except that let’s acknowledge that we’re each going to have this pool of money that we can do with what we want and we don’t have to talk about it.”

She believes couples should keep three bank accounts: “One for me, one for you, one for the house. And the house gets taken care of first.”

To which expert number one responded, “Oh my gosh, without a question you should have separate bank accounts. I mean you should be able to do with your money whatever you want to do with your money.”

The host concluded the segment by saying, “Good advice.”

I concluded by saying, “Good grief!”

Separate lives

While writing Money & Marriage, several divorce attorneys told me that when money is the issue that brings a couple in to see them, as it often is, the specific issue is usually that the husband and wife were living separate financial lives. Over time, one spouse damaged their finances, usually by racking up lots of debt. By the time the other found out, it was too late. Not only were their finances a mess, but now all respect and trust had been lost as well.

Want to mess up your marriage? Live separate financial lives. What’s yours is yours, what’s mine is mine.

Information is love

I don’t care how many people have gotten on the separate accounts bus, I’m clinging to my quaint, clearly out-of-fashion point of view that the ideal way for man and woman to get along financially is to practice full financial disclosure before marriage and complete financial transparency after marriage.

Full financial disclosure means talking about money before marriage. A lot. It means detailing how much debt you have, how you got it, and what you’re doing about it. It means revealing how much you have in savings and investments and how much you earn.

It isn’t about interrogating each other; it’s about talking with each other about something that’ll impact countless aspects of your relationship.

The two shall become one

And here’s where I’ve really gone off the deep end. I have this odd point of view that if one person had a lot of debt before getting married, after the wedding, both spouses have a lot of debt. If one was rich before the wedding day, the minute the vows have been said, both spouses are rich.

Crazy stuff, I realize.

Ongoing financial transparency means that after getting married each person should know exactly how much is coming into the household and how much is going out. You work together to set a plan for your money and then you track your finances with what I like to think of as a central financial operating system. In our household, we use because it automates a lot of the tracking and we both have easy access to all of the information.

Ongoing transparency also means talking about money on a regular basis. Some people call it a money date. I just call it communicating. At the end of each month, review the month together. Did you overspend in any categories? If so, why? And what will you do about it?

Freedom doesn’t require separate accounts

One point made by expert number two that I agreed with, to a degree, was this: “Let’s acknowledge that we’re each going to have this pool of money that we can do with what we want and we don’t have to talk about it.”

Jude and I each have separate clothing budgets. Each amount is a line item on our household budget. We each have the freedom to spend that money as we want, but we’re accountable to manage to the number. And we usually do talk about what we buy. Other couples use such budgeted amounts for lunches with friends, music downloads, etc.

You don’t need separate financial lives to have some semblance of freedom in marriage. You each just need a budgeted amount that you can manage.

Oneness is better for your finances, and your marriage.

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Profitable Ideas: How to Up Your Investment Game, Keeping the Financial Peace in Your Family, and More Fri, 12 Jul 2019 13:30:23 +0000

Weekly roundup of some of the best personal finance articles from around the web.

Why are we such poor investors (The Financial Bodyguard). How our brains, and our hearts, often lead us astray.

The thing that’s probably blowing a hole in your budget (A Wealth of Common Sense). It drives more of your financial life than you probably realize.

Your best tips for managing the family money (NY Times). I don’t agree with all of these ideas (and neither will you) but there are some good nuggets here.

The new Millennial obsession (Gartner L2). Oddly, pay-by-installment is the new credit card.

Why things break: Easy causes of business and investing failure (Collaborative Fund). Not a quick how-to article, but an interesting read, as is usually the case with Morgan Housel’s writing.

Here’s an example of the perfect résumé, according to Harvard career experts (CNBC). If you’re in the job market, here’s how to put your best foot forward.

Storm prep: How to keep your documents safe from a natural disaster (USA TODAY). This might be too late for the folks in New Orleans, but what if an especially bad storm hits your town?

5 tips on managing the ‘boomerang generation’ (NY Times). Lots of adult ‘kids’ are moving back home. Here’s how to keep the peace.

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Profitable Ideas: Seven Money Conflicts in Marriage, Popular Money Apps Put to the Test, and More Fri, 28 Jun 2019 13:30:19 +0000

Weekly roundup of some of the best personal finance articles from around the web.

7 common money conflicts in marriage and how to solve them (Kiplinger). What to watch out for and how to resolve these issues if they come up in your marriage.

Being satisfied with what we have (Seed Time). It’s counter-cultural and even counter-intuitive, but it does have the advantage of being biblical!

Benefits of assigning kids chores (Smart Parent Advice). Oftentimes, it seems easier to just do it yourself, but your kids will benefit (and so will you) if you get them more involved in helping out.

How I sold my car online for the most money possible (Bible Money Matters). Okay, you’ve done the right thing and kept your car for 15 years (right?). Here’s how to get top dollar when it’s time to part with your faithful ride.

How to make better (and quicker) decisions (Get Rich Slowly). Whether buying a car or a can of soup, there are endless choices. Here’s how to choose wisely.

Get happy (Humble Dollar). Time has a way of putting things in perspective.

One-third of workers are making a big mistake with their 401(k) (Money). Free is good, so why aren’t more people taking full advantage?

Mint vs. Personal Capital: Which money app is best? (Four Pillar Freedom). It turns out both are best, for different purposes.

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Profitable Ideas: How Your Phone Impacts Your Spending, Too Much Stuff, and More Fri, 07 Jun 2019 13:30:53 +0000

Weekly roundup of some of the best personal finance articles from around the web.

You spend 41% more at the supermarket if you keep checking your phone (MarketWatch). Distracted shopping costs more.

200 random things libraries will let you check out for free—from instant pots to skulls (Money). When was the last time you checked to see what your library offers?

Giving—or receiving—a down payment gift? Here are the tax consequences ( Some good rules to know, especially for first-time buyers. 

15 states with a ‘marriage penalty’ in their tax brackets (Kiplinger). There are lots of financial (and, of course, other) benefits to being married. But marriage can also cost more.

3 ways your office 401(k) gives you more money than you realize (Business Insider). A lot of people still long for the days of traditional pensions, but if you have access to a 401(k) plan, that’s probably a really good deal.

There is too much stuff (The Atlantic). It’s a first-world problem, to be sure, but “choice anxiety” is a thing. And it’s given rise to Instagram influencers, brand disrupters, and retail curators.

Here’s how much a US dollar is worth in every state (USA Today). The long-term benefits of living in a low cost-of-living state cannot be overstated.

Why spending less doesn’t reduce your quality of living (The Simple Dollar). It’s all about what you choose to spend less on and why.

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Profitable Ideas: The Wants/Happiness Disconnect, Marketing Endgame, and More Fri, 03 May 2019 13:30:32 +0000

Weekly roundup of some of the best personal finance articles from around the web.

What we want doesn’t always make us happy (Bloomberg). Are you pursuing things, and spending money on things, that won’t make you happy?

Here’s how much more money you’d have for retirement if you saved $100 a month starting at age 25 instead of 35 (Business Insider). Time is “the simplest and most reliable tool we have for building wealth.”

The root cause of your money problems could be an actual money disorder (HuffPost). Many people have destructive financial beliefs and behaviors, but at a certain point those beliefs and behaviors cross a line.

Cash is king (Humble Dollar). In “the house of the wise” is an emergency fund (Proverbs 21:20).

Give to charity without giving up your tax deduction using a donor advised fund (Peter Lazaroff). The new tax code has complicated charitable giving. Here’s a workaround.

Keeping money secrets from each other: Financial infidelity on the rise (NPR). I’m a big believer in complete financial disclosure before marriage and ongoing financial transparency after marriage.

Audi, Google, Hertz, and the Avengers: Endgame brand tie-in marketing machine (Fast Company). How much marketing did you notice in the latest Avengers movie?

4 things you should never buy refurbished (and 4 things you should) ( Sometimes used products are a good deal, but not always.

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A Money and Marriage Mistake to Avoid Tue, 09 Apr 2019 13:30:29 +0000

Throughout their marriage, John and Jessica had maintained separate credit cards and apparently didn’t talk about how they were each using their cards. After 12 years of marriage, Jessica was shocked to discover that John had racked up $68,000 of credit card debt.

Instead of asking for forgiveness, John asked Jessica to co-sign for a loan that would roll together their first and second mortgages, their car and truck loans, and his credit card debt.

While their names have been changed, it’s a true story described in an advice column in which Jessica asked whether she should sign for the loan.

While this couple’s story is dramatic, the underlying issues are all too common. Many couples live separate financial lives. This can be seen in the results of national surveys finding that 44 percent of married people say it’s okay to keep financial secrets from their spouse, 22 percent say they don’t tell anyone how much money they make including their own spouse, and over 60 percent say they don’t know when their own spouse plans to retire.

What we have here is not just a failure to communicate, but also a failure to commit to financial oneness. Married couples are best served by doing the money thing together, and one of the best ways to ensure financial oneness is to use a household budget that gives each spouse anytime/anywhere access to their household’s complete financial picture.

There are three equally important parts to a budget. The first part is a plan developed together for how household income will be given, saved, invested, and spent—preferably in that order.  The second part is a process for tracking how all household income is actually given, saved, invested, and spent. And the third part is an ongoing conversation about what adjustments need to be made in order to make household cash flow run effectively.

If the couple highlighted in the advice column had been taking those steps, they could have kept their separate credit cards while knowing the truth of what was happening with their finances.

What advice would I give the couple?

  • Don’t take out the loan. That will only deal with the symptoms of the problem instead of getting at the cause.
  • Stop using credit cards. They should both do this since the article indicated that the woman also has a propensity to charge up her card.  As I have written before, I believe credit cards can be used responsibly. But in this case, because of the couple’s age (he’s 59, she’s 62) and amount of debt, they need to be done with credit cards for life.
  • Find a great marriage counselor and begin the process of restoring their marriage.
  • Seek budget assistance of a trained counselor from Compass—Finances God’s Way or Crown, or contact the National Foundation for Credit Counseling and begin a debt management program.
  • Create a budget that provides complete financial transparency and helps eliminate all unnecessary spending.
  • Sell any unused assets to free up money for debt repayment.
  • Seek ways to maximize income for accelerated debt repayment.

It isn’t over for this couple. With the right attitudes and the right help, this difficult experience could be the catalyst for a forever-improved marriage. But it’s going to take some time.

What other advice would you give this couple?

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Profitable Ideas: Investing Missteps, Shore Up Your ID Theft Protection, and More Fri, 05 Apr 2019 14:12:55 +0000

Weekly roundup of some of the best personal finance articles from around the web.

Investors doubled their stock market losses in 2018 by making this costly mistake. Here’s how to avoid it (Money). The dangers of letting your emotions get the best of you. Here’s a better approach.

I decided to pay off my mortgage by age 40, and I’m convinced it’s one of the best things I’ve ever done (Business Insider). Some people say it’s foolish to pay off a mortgage early if you have a low interest rate, but sometimes the best financial decisions require more than a spreadsheet.

Money matters (The Humble Dollar). Why money is such a poor way to gauge value.

Fights over estates can tear families apart (Independence Advisors). How you can make things go smoother for your heirs.

The problems with do-it-yourself online wills (Next Avenue). The cost savings may look appealing, but you may end up paying a higher price in the end.

How to work through financial conflicts in your marriage (Bible Money Matters). Good guidance for the financial disagreements many couples face.

Identity theft: Act now to protect yourself (Kiplinger). The problem is only getting worse. Here’s how to shore up your defense.

Using the bank your college recommended? Check for fees (CNBC). Students need to be careful. The bank recommended by their college may not be best.

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