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Understanding The Pros And Cons Of The New MyRA program

Couple Using Laptop And Discussing Household Bills Sitting On Sofa At HomeA few months ago, Pres. Obama proposed a new save-for-retirement program called MyRA. It is designed for the millions of low- and middle-income workers that work for companies that don’t have retirement plans. The White House estimates that this is half of all workers and about 75% of part-time workers. The idea behind it is to give these people the opportunity to save money for retirement. On the face of it, MyRA seems like a good idea. If you choose this program you could use it to put away money for your retirement knowing it would be protected by the full faith and credit of our federal government. But before you ask your employer to implement this program, it’s important to know how MyRA works and its pros and cons – to make sure it would be good for you.

How it works

How this program works is very similar to traditional retirement programs. Assuming your employer signs up for it, all it has to do is make payroll withholdings according to your direction. If your company uses an outside payroll service, the cost to offer this program should be a negligible. If it has an in-house payroll department the costs to accommodate this program should be very modest. Your employer won’t administer your plan. However it can create and distribute information about MyRA to its staff. The money that is withheld from your paycheck will be sent to your account via direct deposit. Like a Roth IRA the money you invest will be after tax dollars and when you retire it will be tax-free. However, unlike a traditional Roth IRA your money will be invested in government savings bonds.

Who’s eligible?

While the MyRA program is targeted towards people who don’t have a conventional retirement program, anyone that has their paycheck direct deposited will be eligible. This means you could use the plan to supplement your existing 401(k) plan – assuming your household income is less than $191,000 a year.

The pros

We’ve already mentioned one of MyRA’s biggest pros, which is that your savings would be totally secure.

A second pro is that you would be able to take your MyRA account with you when you change jobs or if you have several part-time jobs and contribute to your account in each of them. You would also be allowed to withdraw your contributions at any time without paying a penalty. Of course, if you withdraw the interest you’ve earned before age 59 1/2, you will have to pay taxes and possibly get hit with a penalty just as is the case with a Roth IRA.

Third, unlike a traditional Roth IRA there won’t be a lot of expenses to administer it as the program won’t have any fees.

Another plus is that you can initially invest as little as $25 and then contribute just $5 out of each of your paychecks through an automatic payroll deduction. And like a Roth IRA, you could contribute as much as $5500 a year.

If you choose to put your money into a MyRA, this can help you learn to save for retirement. When you save through an automatic payroll deduction, this could start you in the habit of saving money.

This program offers some tax relief. When you contribute to a MyRA you may be eligible for the retirement savers credit so that the government is, in effect, paying part of the cost of your contribution.

The conswoman thinking

One of the disadvantages of a myRA is that when your account reaches a total of $15,000 or if you have had it for 30 years you will need to move to a regular Roth IRA. When you do this your money will continue to grow tax-free. Plus, you have the option of switching to a regular Roth IRA whenever you would like.

A second con is that all you can expect to earn on your money is an average of 2%. This means if you were contributing $100 a month, you would have around $6300 in savings after five years, which would include about $300 in interest. In other words, a myRA offers no risks but you’re never going to earn a lot of interest on your savings either.

Unlike a 401(k) where the money you save is pretax, this program does not offer this benefit. Plus, there is no employer contribution. As noted above, contributions to this program are made with money you’ve paid taxes on. You can’t exclude or deduct anything.

Since the cap on a MyRA is just $15,000 there is no way this program can provide you with a secure retirement. The sad fact is that there is no way that $15,000 can give you a meaningful amount of income when you retire.

This program offers the same interest rate as the government’s Thrift Savings Plan Government Securities Investment Fund (G Fund) that it offers federal workers. It is so modest at 2% that it might not even beat inflation. For example, in 2012 the interest rate on G Accounts was 1.5% and inflation that year was 1.7%. The G Account interest rate in 2013 was 1.74%, which is just a bit more than the rate of inflation, which was 1.5%.

One of the bigger cons of a MyRA is that you can’t invest the money in stock mutual funds or bonds and earn a better return. The G Fund returned an average of just 1.89% over the past year. This means your savings will never grow the way it would if you were able to invest in a well-managed 401(k).

As written above the program has an income limit of $191,000 for families or $129,000 for individuals. If you’re making that much and not already putting away an adequate amount of money for retirement, you might need a tougher accountant or to have a long talk with yourself.

Finally, if you’re nearing retirement and you’re just now starting to think about putting money away, this program is not going to save you.

Would this make sense for you?

A MyRA account could be a good option if your employer agrees to participate in the program. The Obama administration has said that it will push employers hard to sign up for MyRA but that doesn’t mean all of them will. The program might also not make sense for you if you have a number of part-time jobs as not all of your employers may sign up for MyRA. However, if you’ve had a hard time saving money for retirement or haven’t been able to us save any money at all then a MyRA account could be a good option as it would not only help you save money but would also help you learn to save regularly. While you would not earn a lot of interest on your savings you would earn some and your money would be totally secure. Last but not least, if your employer doesn’t offer a 401(k) or some other qualified savings program then a MyRA could literally be better than not

Tips For Managing Your Finances When Unemployed

frustrated looking womanWe know from personal experience that there are worse things in life than losing your job but not many. It’s usually not just a blow to your finances but also to your ego. No matter whether you’re told, “you’re fired,” “sorry but were downsizing,” or it’s not your fault, it’s just corporate restructuring,” it still represents a rejection almost as bad as when the person you loved more than anything else in the world told you to get lost.

Being unemployed means having to search for a new job, which can also be very stressful. You will need to market yourself against competing candidates and try your best to keep up with all those daily job search tasks. It’s enough to make even the most jaundiced professional squirm. Add to this the fact that you now have another stressor and that is your personal finances. Of course, you’ll be in relatively good shape if you have built an emergency fund over the years, especially if it’s the equivalent of six months worth of your living expenses. However, if you are not able to do this, sit down, take a deep breath and as Green Bay quarterback Aaron Rodgers recently said,
“R E L A X”. There are things you can definitely do to keep your personal finances under control and even get them back on track.

First, take an honest look at your finances

If you’re not careful it’s easy to start rationalizing. You could be telling yourself, “I can get an odd job if necessary” or “I can always borrow money from my IRA or 401(k)” or “I can hit up the relatives for a short-term loan.” But this is a case where it’s much better that while you’re hoping for the best you’re also preparing for the worst. It’s critical that you be realistic and truthful about your finances and face them head-on.

Make a budgetbudget and scissors

Sadly enough if you’re typical you’ve don’t have a budget. It’s probably just one of those things that you always planned to do but never did. The good news here is that making a budget is pretty simple. All you need to do is write down all your revenue sources and all of your expenses. Then do a quick add and subtract and presto! You will know how big is the gap between the money you have coming in and going out. This will help you determine how and where to allocate your money each month.

File for unemployment

If you were let go by your employer, which is probably the case, and you weren’t fired due to misconduct then you should file for unemployment insurance. If you believe you would be eligible, don’t procrastinate. Contact an unemployment office in your state immediately. While unemployment programs vary from state to state you can generally count on getting benefits for at least 26 weeks. In some states your benefits can extend up to 73 weeks. Do understand that how much you receive weekly will depend on your income and how long you have been unemployed.

Decide what’s most important

For the next 30 days write down everything you spend money on excluding your regular monthly bills. This would include movies, eating out, drinks with friends, clothes, food – everything. If you just buy a paperback or magazine or a soda at your favorite fast food restaurant, write it down. Do this and you may be shocked at how much money you’re spending. Next, consider the items that you’ve enjoyed in the past but may not be necessary until you again have a job. Be realistic. Decide what you absolutely need and what you can do without. Then eliminate those things you could do without until you get a job. We’d be willing to bet that if you really put a sharp pencil to those expenses you’ll be able to slash them by 20% or even better, which would make it a lot easier for you to meet your fixed obligations such as your mortgage payment, auto loan(s), student loans (if appropriate) and utilities.

Get started right away

When you first start thinking about your job search plan set aside some time to review your personal finances. If you take control of them early on in your job search, you can put the issue aside and keep focused on what is important, which is finding a job. Plus, if your finances are healthy this will give you much greater control over your job situation – meaning that you won’t have to take the first job that’s offered because you’re so worried about money

Treat credit cards like Ebola

The simple fact of the matter is that credit card debt is very destructive debt. This is because of their interest rates. Some credit cards have interest rates as high as 20%. It may not seem like a very big deal if you’re buying necessary items on a credit card while job searching but beware! You need to pay the full balance at the end of every month and not just the minimum amount required. If you make just those minimum payments, you’re most likely headed for a downward spiral in your finances. The best tactic is to treat those credit cards as if they had Ebola – except in case of an absolute emergency.

man and woman shaking handsGet some professional financial advice

Again if you’re typical you don’t have a financial advisor. You probably feel you can handle your money yourself or you may be worried that the advisor won’t be looking out for your best interests. While these justifications might be valid, your bank or other financial institution has a vested interest in making sure you don’t default on your payments. Check with your bank or brokerage as it might have a financial advisor you could talk with — free or at very low cost. If so, do it. That person could help you put together a financial plan that would work with your current situation. And when it comes to financial planning never be afraid to get a second or even third opinion.

Don’t clean off your financial slate

If you are lucky enough to receive a severance package or if you have other assets available you may be tempted to use the money to pay off your credit cards, your car loan or other debts. However, this is a case where you might be much better off if you pay just the required or minimal monthly payments. This will help you stretch out your cash and meet your living expenses in case you are unable to find a new job within the first several months.

Harm not your retirement

If you have a 401(k), an IRA or some other employer-sponsored retirement plan you might be tempted to cash it out and use the money to help cover your living expenses. There’s one word for this– don’t. If you do this you’ll not only jeopardize your retirement you’ll probably be required to pay a lot in penalties and income taxes. If you have money in a 401(k) a better option is to roll it over into an IRA or just leave it in your previous employer’s plan. Don’t tap any of your retirement funds except as a very last resort.

10 Financial Resolutions You Should Make (And Keep) In 2015

This year resolutions conceptDid you make any New Year’s resolutions for 2015? The majority of us tend to make the same resolutions, which are to lose weight, get a new job, quit smoking or get closure on some issue that’s been bothering us. Unfortunately less than a third of all Americans are making financial resolutions for 2015. If you’re one of the two-thirds that have not yet made any financial resolutions here are 10 that should be easier to keep than quitting smoking or losing weight and that could make your life much less stressful.

#1. Make a budget, er playbook

We understand that the idea of creating a budget is not very appetizing. But it’s not all that difficult. All you really need to do is sit down and go through your checkbook and your statements to find areas where you could reduce your spending. You might also want to order your free credit report from one of the three credit reporting bureaus (Experian, Equifax and TransUnion) or get all three simultaneously on the website That way you would be able to see if there are any accounts you should be paying off faster than others.

#2. Pay down your debts

While paying down debts certainly isn’t as much fun as, say, spending a night on the town it’s the best way to get your finances under control. Some experts advise you to pay down those accounts with the highest interest rate first as this will save you the most money. Others such as the financial guru Dave Ramsey suggest you pay off the debt with the lowest balance first. You should be able to do this fairly quickly so you would then have extra money available to begin paying off the debt with the second lowest balance and so on. This is called the snowball method because when you get one debt paid off you should gain momentum to pay off the next – like a snowball rolling downhill. Of course, regardless of which of these methods you choose be sure to continue making the minimum payments on your other debts.

#3. Create an emergency fund

Actually this is something you should do before you do anything else. Most financial experts say you should save the equivalent of three to six month’s salary but the more the better. The transmission falling out of your car or an unexpected trip to the emergency room could set you back thousands of dollars. And in this era of jobs insecurity, losing your job could be devastating. Be sure to sock the money you’re saving away someplace inconvenient like an online savings account so that you won’t be tempted to dip into it for a discretionary purchase.

#4. Increase your savingswoman putting a coin in a piggy bank

Don’t do this until you have an emergency fund and few debts. But when you do the best way is through a 401(k) – assuming your employer offers one. This is especially true if your employer matches your contributions. This is like free money. You might also talk with your bank or credit union to see if it offers any financial planning services or can recommend higher-yield places to put away your savings. If so, you should set up an automatic monthly deduction from your paycheck to that new account. And try to contribute the highest amount allowable to your IRA or any other tax-advantaged savings plan.

#5. Create multiple income streams

We don’t mean by this that you should get involved in something like multilevel marketing. Assuming you have a regular job, you could parlay your hobby or your industry knowledge into freelance jobs or side gigs. You could also sell your unwanted stuff on eBay or your artsy or crafty creations on Etsy. Just make sure you don’t ignore your regular job while you’re pursuing these side ventures.

#6. Have “the talk”

One of the most uncomfortable conversations that couples can have is regarding finances. This can be more awkward than “the breakup talk” but everyone needs to know how things stand regarding spending, debts and savings. This is a financial resolution that’s especially important for engaged couples and newlyweds – to head off trouble in the future.

#7. Get your records in order

If you get your financial records for the year organized now you will be able to file your taxes early. There are great apps available such as Mint that can make keeping your finances organized drop-dead simple. Mint will track your spending and then organize it into logical categories such as food, clothing, entertainment, dining out, utilities and so forth. You could use Mint to create a budget based on those spending categories and if you overspend in any of them, Mint will send you an alert by email. It will even alert you if it finds a financial product better than one you’re currently using.

#8. Cut your spending

The idea of cutting your spending is a very popular resolution but one that’s too vague. If you haven’t done this already go back through your bank statements and checkbooks to see where you could realistically make cuts. Most people find the easiest categories to reduce spending are eating out, clothing and entertainment. You might also get an insurance audit as you could be overpaying on your auto or homeowner’s insurance. You might consider refinancing your mortgage. Interest rates are now basically at an all-time low so if you haven’t refinanced within the last 10 years the odds are that a refi could save you several hundreds of dollars a month. Depending on where you live you might also be able to get an energy audit, which could help bring down your utility bills. Here, courtesy of National Debt Relief are some more tips for cutting your spending and without sacrificing your life ..

#9. Invest in… you

One of the easiest and best resolutions to make is to invest in you in 2015. This could mean taking classes to get a better job or to merit a raise. One great thing about your education is that no one can take it away from you and it could even be tax-deductible. You might also want to sign up for an online class on stocks and bonds to become a better saver and investor.

#10. Make everything as easy as possible

One resolution that’s very easy to keep is to set up automatic withdrawals and automatic bill pay to help you achieve your financial goals. You could also buy and use a program such as Quicken to keep track of your finances. If your bank is typical you should be able to download all your checking and savings account information directly into Quicken so you wouldn’t even have to do much manually. Financial programs such as Mint and Quicken will not only make it much easier for you to manage your finances but will keep you continually on top of where you stand – in terms of the big picture.

14 Tricks And Tips For Turning Around Your Finances In 2015

Couple Using Laptop And Discussing Household Bills Sitting On Sofa At HomeThe end of 2014 is soon approaching and if you’re like most Americans there are a bunch of things you wish you had done differently especially in the area of personal finance. But if you’re coming to the end of the year and you feel your finances have become a jumbled mess, don’t despair. There are some very simple things you could do for turning around your finances next year. That way, when New Year’s Eve 2015 rolls around you’ll be able to pat yourself on the back and say about your finances, “job well done.”

1. Understand that you’re unemotional about your money

Whether we like to admit it or not we’re all pretty emotional about our money. As an example of this, if your desire is to pay off your mortgage so that you can live debt-free this might feel really good but it also might not be your best decision. The reason for this is that even with the tax break a 4% mortgage is really more like a 3% return on your investment. But if you were to put that $100,000 into an index fund with an 8% return you’d be way ahead of the game. The important thing is to understand that you have irrational feelings about your money and work to overcome them.

2. Don’t think bank balances. Think net worth

There are apps such Mint and Personal Capital where you can track your net worth. If it’s going up, things are great. If it’s going down, not so much. But by doing this instead of just checking your bank balances it will keep you accountable.

3. Create an emergency fund

It’s always best to have six months savings to get you through a period of unemployment, as this is the amount of time required to find a new job on the average. For that matter, you could suffer a disastrous medical emergency or the transmission could fall out of your car. In any event, if you have an emergency fund it will stave off having to borrow more money and keep you from going into debt.

Man counting money4. Try to negotiate everything

Don’t you just hate to haggle? Most of us do. But this is a big mistake. You should even try to negotiate all of your monthly bills and by this we mean all of them. There are states where you can choose which company generates your electricity, which could cut your bill dramatically. And, of course, be sure to haggle on your rent before you move in. If you can win a discount this will be multiplied across many months or years.

5. It isn’t savings until it’s in a savings account

Let’s say that you change to a new wireless plan and manage to cut your costs by $100 a month. Don’t think you’re really saving that money unless you put the $100 into a savings account every month. One good tip here is to open a separate account and then transfer the money each month. That way you can see your savings growing and growing.

6. Don’t be afraid to challenge everything

Sit yourself down on January first or second and go through your expenses line by line. Ask yourself in each case if you really need to spend the money on that item. For example, are you really using that gym membership? Or do you really need to spend $9.99 a month on Spotify. The important thing here is to challenge every one of your expenditures. Were willing to bet you will be able to find at least half a dozen that you could cut out and save money.

7. Sell your old stuff on Craigslist

The other side of the ledger to saving money is finding ways to earn extra cash. You should be able to earn that cash by selling all the junk you don’t use on Craigslist. We know of one person who sells just three items a month but has found that it definitely adds up. It’s also okay to sell stuff on eBay but with Craigslist you never have to worry about shipping the stuff.

8. Google the word “coupon” alongside whatever it is you’re planning to buycoupons and scissors

This is a great and simple trick especially when buying a big-ticket item. There are coupons available that will save you money on just about everything. Thinking about buying a bigger screen TV? Then try Googling “52 inch HDTV and coupon.” You might be amazed at what turns up.

9. Buy secondhand

There is no shame in buying stuff secondhand and it’s a great way to save money. If you’d rather not be seen shopping at Goodwill try one of the more upscale secondhand stores such as Plato’s Closet or Twice. For that matter you will also find really good deals on all kinds of things on Craigslist and eBay.

10. Buy everything with your credit cards to earn cash back

Try to put all of your purchases on credit cards to earn cash back. One of the best is the Chase Sapphire Preferred card. If you put $3000 on that card within 30 days you can redeem the cash for a $400 statement credit or $500 in travel. This means it’s basically $400 in free money just by putting $3000 on the card. You could easily meet the sign-up requirements to earn your bonuses by using the card to buy gas, groceries, regular purchases and even health insurance.

11. Or put those cards away

The financial guru Dave Ramsey advocates paying cash for everything. He recommends what’s called the envelopes strategy if you find you’re having a hard time keeping your spending in check. This is where you divide up your money every two weeks into envelopes representing your spending categories such as groceries, clothing, entertainment, dining out and so on. Then when one of those envelopes is empty that’s it. You can’t spend any more money in that category.

12. Determine your limits

There have to be areas where you could cut back on your spending. For example, how many times do you eat out a week? If the answer is more than four this is certainly an area where you could cut back. Another area where you should be able to trim your spending is on clothes. You don’t have to think about giving up everything. You just need to look at every one of your expenditures as a choice and not as a mandatory cost.

13. Google everything and we mean everything

If it’s something you’ll be spending money on be sure to Google it. We recently heard one story where a person saved $700 by searching for a part that she needed to replace on her car. You can find virtually everything online these days and there’s a very good chance that it will be cheaper than the “retail” price.

happy family14. Make realistic goals

You undoubtedly know the old adage “never bite off more than you can chew.” When it comes to turning around your finances its easy to create huge goals. Anything that’s worth saving for probably requires a large amount of money. When February rolls around and the euphoria of that New Year’s Eve resolution begins to wear off it’s easy to lose steam and just quit saving for that goal. A better answer is to break your big goals into smaller more realistic ones. That way, you can feel good about reaching each of your benchmarks. But even if you don’t reach a benchmark on time, you can keep saving, as you will be able to see that you are actually making progress.

Improve Your Mortgage IQ By Learning These 8 Important Facts

Street of residential housesIf you are thinking about buying a house, you’ll undoubtedly need a mortgage. Mortgages can be complicated and have a language of their own. There are some important facts you need to know about mortgages that could save you money and keep you from getting in financial trouble. Here are eight of them.

Choosing an ARM could make good sense

An ARM or Adjustable Rate Mortgage is different from a conventional mortgage because its interest rate will move up and down each month as market interests change. These mortgages generally have a fixed rate that can range from a month to 10 years during which time the interest rate doesn’t change. Then there’s a longer period during which it can change at predetermined intervals. The standard for ARMs has become a 5/1. This loan has an initial fixed interest rate period of five years with the rate then adjusting annually after this. This is usually called a hybrid mortgage. Other popular hybrids are 3/1, 7/1 and 10/1.

If you believe you’ll be in the house for seven years or fewer an ARM could make good sense, as its lower interest rate would translate into a lower monthly payment. But if you were to choose a 5/1 where the interest rate would reset after five years, there starts to be a change in the math. This is because your interest rate typically would go up two points every year after that.

If you’re applying for a conventional loan be prepared to pay for PMI

The three most popular types of mortgages are VA, FHA and conventional mortgages. Both VA and FHA mortgages are backed by the federal government. This reduces the risk to the lender. Unfortunately, conventional mortgages are not federally backed and, therefore, represent more of a risk to the lender. In this case, the lender will likely require you to buy PMI or private mortgage insurance. This protects lenders against a loss if you were to default on the loans. If your loan has a loan-to-value (LTV) percentage in excess of 80%, most lenders will require you to buy private mortgage insurance. The good news for you as a borrower is that this would allow you to make a down payment of 3% to 19.99% in comparison with the 20% you would be required to put down without PMI. You would pay on your PMI every month until you have enough equity in your home that the lender would no longer consider you to be a high risk.

It costs no more to use a mortgage broker

A mortgage broker is different from a mortgage banker. When you use a mortgage broker it serves as an intermediary between you and the lender. It will gather all the paperwork from you and then pass it along to the mortgage lender for underwriting and approval. The funds for the mortgage are lent in the name of the mortgage lender and not the mortgage broker. However, a mortgage broker will collect an origination fee or a yield spread premium from the lender as compensation for its services In other words, using a mortgage broker is really no more expensive than using a mortgage lender. Which you choose will be mostly a matter of your personal preferences. Some people are just more comfortable going through a broker instead of having to deal directly with the bank or lender. Plus, brokers can sometimes smooth out the transaction and make things simpler and easier for the borrower.

An FHA loan almost always has a lower interest rate

FHA or Federal Housing Administration loans generally have lower interest rates than conventional loans because the federal government backs them. This reduces the risk to the lender. One of these loans can be a good choice for a first-time buyer that doesn’t have much money to put down, as the down payment can be as low as 3.5%. This means you could buy a $200,000 house for just $7000 down. However, the downside of FHA loans is that you would be required to buy two forms of private mortgage insurance. The first is an upfront mortgage premium that would be 1.75% or $3500. However, this can be added to the loan so you would not be required to pay it out of pocket. But there is also an annual mortgage premium. In this case with a down payment of less than 5% you would pay 1.35% of the total loan balance. This works out to be $214 per month on a $200,000 mortgage. If you continue paying on that mortgage for five years you’ll have paid $15,708 just in mortgage insurance and over the life of the mortgage you would pay an incredible $49,479.

There are times when you might want to pay points up front

If you don’t know what a point is, it’s a fee equal to 1% of the amount of your loan. As an example of this a 30-year mortgage $150,000 might have a 7% interest rate but also a charge of one point or $1500. Lenders can charge one, two or more points. These are called origination points. The lender charges them to cover the cost of making the loan. In comparison a discount point is prepaid interest on your loan. If you want to lower the interest rate on your loan you should pay more points. You can generally pay from one to three or four points. This will depend on how much you want to lower your interest rate.

The decision of whether or not you should pay points and how man will depend on a number of different factors including how much money you have to put down at closing and how long you intend to stay in your house. If you intend to be there for a while, paying points is prepaid interest will reduce your interest rate which could be an advantage. However, if your goal is to get the lowest possible closing costs that you should choose the zero-point option on your loan program.

The good news of discount points is that they are tax deductible.

You can refinance that mortgage as often as you like

Despite what a mortgage banker or broker might tell you, it’s possible to refinance a mortgage whenever the mood strikes you. Of course, there are always transactional costs involved with refinancing a mortgage so its best to refinance only when this would reduce your interest rate to the point where you could recoup the costs while you are still in your home.

You could buy a house as soon as three years after  bankruptcy

There is a common myth that if you file for bankruptcy you can’t buy another house for anywhere from 7 to 10 years. The truth is that if you’re a veteran you might be able to qualify for a VA loan in as soon as two years. If you’re not a veteran you might qualify for an FHA-insured loan after just three years or even fewer if you can prove extenuating circumstances such as a medical emergency. However, both Fannie Mae and Freddie Mac generally will not insure loans to people until after seven years if they had lost their homes to foreclosure.

It might take more than 10 years before you’re really paying down the principle on a conventional mortgage.

If you had a conventional mortgage and 3.5%, the first $.35 of every dollar of your mortgage payment goes towards reducing the balance of your mortgage and the amount slowly goes up from there. It’s not until you’ve made 123 payments that half of your payment goes towards paying off your principal. And of course the higher interest rate, the longer it will be before your paying off half of your principal.

Mortgage mistakes

There are mistakes that can be made in choosing a mortgage and it’s important not to make them as this will probably be your biggest expenditure ever.  Here’s a short video about these mistakes and  how to avoid  making them.

10 Little Marriage Secrets Your Friends Won’t Tell You

Couple Using Laptop And Discussing Household Bills Sitting On Sofa At HomeAre you and your significant other starting to use the “M” word? Are you asking questions like should we get married? Do you want to get married? When should we get married? Or what would your parents think if we got married?

There’s no question about the fact that marriage can be a wonderful thing. Your husband or wife can be your best friend, your partner, your confidant and, of course, your lover. These are the things your friends will emphasize if you’ve discussed marriage with them. “Oh, yes, marriage is great.” “Marriage is just the best thing we’ve ever done.” Or “you really should get married – it’s wonderful.”

But while your friends are telling you how great marriage is, there are things they’re just not telling you and if they did, you might give the idea of marriage a second or even third thought. Here are 10 of these nasty, little marriage secrets.

Marriage is going the way of the dodo bird

According to the Pew Research Center, the percentage of American adults that have never been married has reached a new high. Two years ago, about 20% of American adults aged 25 and older (about 42 million people) had never been married. This compares with the 10% of those of that same age in 1960. There are several reasons for this. For one thing Americans are staying in school longer. They are also focusing more on their careers after they graduate and then getting married later in life. In fact, the median age for women getting married is now 27 and 29 for men, which is an increase from age 20 for women and 33 for man in 1960. But as you might guess there is one group of people where marriage is on the rise – same-sex couples. This has increased more than 50% to about 130,000 in 2012.

We’re into infidelity

Two years ago a research company affiliated with the University of Chicago found that some 12.3% of all married women and 19% of married men admitted that they’ve had extramarital affairs. While most Americans seem to favor monogamy, many of them would cheat if they thought they could get away with it. An interesting contradiction is that a survey done by the USA Network found that 82% of those that responded said they had “zero tolerance” for cheating but 81%, said they would cheat if they believed they wouldn’t get caught.

We planned our divorce before we planned our wedding

If you’re contemplating marriage have you thought about a prenuptial agreement? A recent survey done by the American Academy of Matrimonial lawyers found that about 63% of the attorneys queried said they have seen an increase in the number of people requesting prenuptial agreements. The major reason for this is probably the fact that so many people are marrying later in life and have amassed a significant amount of assets by the time they get married. This makes the idea of a prenup more attractive.

The more money spent on the wedding, the shorter the marriage

Another interesting fact is that the more money that is spent on a wedding the shorter will be the marriage – at least according to a study done recently by economics professors at Emory University. What they found in surveying 3000 couples is that those who spent $20,000 or more on their weddings were 46% more likely to get divorced than the average couple. In comparison, couples that spent between $1000 and $5000 were 18% less likely to split up.

Social media can kill a marriage

In the survey done recently by the USA Network, 86% of those that responded said that it’s much easier to cheat thanks to social networking and almost 33% said they had had an emotional or romantic relationship online. How can you prevent this? One thing you might try is setting time limits and boundaries on social media usage. For example, you might agree that each of you will spend no more than one hour an evening on Facebook, Twitter or whatever. But don’t start spying on your spouse’s use of social networking. This not only signals a lack of trust in your partner but if you’re caught could actually get you kicked out of the house.

Money keeps us together

According to the Emory study quoted above, the more money you make the more likely it is that you will stay together. Couples making more than $125,000 a year are 51% less likely to divorce than those that earn less than $25,000 a year. Of course, there is a strong correlation between earnings and education and people with better educations appear to be more likely to stay married. People with a high school diploma have a divorce rate of 42.8% by the time they reach middle age while only 26.5% of people with a bachelor’s degree or higher split the blanket.

You can’t be too old to get a divorce

While you might think that by the time married couples reach their 50s they would’ve gotten past the idea of divorce but this is not necessarily true. Adults that are 50 or older accounted for more than 25% of divorces in 2010, which is up from less than 10% in 1990. The good news is that the national divorce and annulment rate fell from four per 1000 people in 2000 to 3.6 per 1000 people in 2011. So more people are staying together and for longer.

The cost of our wedding left us broke

Do you know the average cost of a wedding? In 2014 it was $29,858 according to a survey that was done by of 20,000 brides. This includes an average of nearly $13,000 for a venue (including the necessary food), more than $5500 for the engagement ring and $2400 for a photographer – and this excludes the cost of a honeymoon. Why is this? Couples that marry later are more likely to be spending their own money. This means they no longer have to stick to a budget set by mom and dad.

It was her idea to split up

Women initiate two thirds of divorces according to the Marriage Project. This is because, for one thing, divorce laws tend to favor women with regards to child custody. A less kind hearted explanation is that women are more likely to have unfaithful husbands than husbands are to have unfaithful wives. In addition, women have become stronger and more independent over the past 30 years, and are more confident that they can stand on their own. Many of them have well paying jobs so that the idea of being on their own doesn’t seem as frightening as it might have 30 years ago.

We sort of screwed our guests

Finally, as our economy has improved there has been an increase in destination weddings that have more lavish ceremonies. This means that the poor folks on the guest lists are spending more money accordingly. In fact, this year guests were projected to spend about $592 per couple on the average per wedding. Plus, they were dropping another $109 on gifts per wedding. One of the results of this is about 43% of us say that we have declined attending a wedding for financial reasons. This is based on a poll done by the nonprofit organization American Consumer Credit Counseling.

Love conquers all?

There is the old saying that love conquers all but this may not necessarily be true. What conquers all in marriage is usually a combination of hard work and compatibility.  But then as Jenna McCarthy points out in the following video, for women the secret to staying married might be as simple as making sure you’re always thinner than your husband …

Tell Us Your Generation And We’ll Tell You Your Financial Mistakes

We don’t have a crystal ball but if you tell us your generation, we’ll tell you the mistakes that you’ve made or are most likely to make. That’s right, there are some mistakes that every generation makes.

frustrated woman with a paper and calculatorFinancial mistakes made by twentysomethings

People in their 20s have a number of things in common besides their age. Most have just either left home or finished college and are starting out on their real lives. They also tend to make the same mistakes. For example, one of the biggest mistakes made by people in their 20s is putting off debt repayment. You need to start paying off your student loans as quickly as possible as this will keep you from having to pay extra interest over the years. Plus, do you really want to still be paying off your student loans when you’re in your 40s or even your 50s?

A second financial mistake made by twentysomethings is not thinking about retirement. We understand that age 55 or 65 can seem like a long way away but that’s actually a good thing. The more time you have to save for retirement the more money you will be able to save and the more money you will earn in interest. You should be putting at least 3% of your annual salary into a 401(k) or a Roth IRA. Do this and the future you will be eternally grateful.

A third mistake is to avoid making investments. You may not have a lot of money to sock away but it’s important to get started. Your bank probably offers a free investment advisor to help you choose your investments. If not, just pick an index fund and get started. But above and beyond all, get started.

The mistakes made by thirtysomethings

If you’re in your 30s one mistake you may be making is short term financial planning. Whether you think this or not, you are going to really zoom into your 40s. Don’t let these next years slip by. You should be setting goals for the next five, 10 and even 20 years. As an example of this, your unborn or very young child may be years away from college but now is the time to start preparing for these expenses.

Trying to keep up with the Joneses is another mistake that’s almost always made by people in their 30s. You might think it’s fun to compete with family members and your peers but you need to understand that when that relative or friend comes home with a new car all he or she is doing is taking on new debt. The fact is that people who have nicer things are not necessarily better off financially than you and in fact might be worse off.

What’s better is to take pride in how your savings account is growing and not that you have the newest car or toy?

Many thirtysomethings have made the mistake of going back to grad school. In some cases it can be a good idea to get an advanced degree. And in today’s economy, many people are finding it hard to get a job in their field and they are returning to school to try to fix this. The problem is that this only increases your student debts and you might find your new degree doesn’t really lead to a better job or a higher salary.

Have you bought more house than you really need? This is another mistake commonly made by people in their 30s. We understand that it can feel great to buy that first home. And it’s a good investment. But don’t make the mistake of buying a house that’s too big for your budget and your needs. Do this and you’ll not only have a bigger mortgage, but you’ll also have higher taxes and bigger utility bills. A better idea is to start smaller and then move up as your needs and your net worth change.

House with cash on the roofFinancial mistakes made by fortysomethings

By the time you reach your 40s you’re probably well entrenched in your career and the idea of changing to a new one can seem very scary. But it’s a mistake not to consider this. If you want to change careers you don’t necessarily have to start at the bottom. You have good, valuable experience that should help you land an equally good job in a new career.

A second financial mistake made by people in their 40s is about their mortgages. You’ve probably been paying on your mortgage for so many years that it’s just become automatic. However, you should now start looking at your end goal. Could you do something to payoff your mortgage even faster? Maybe you would like to pay it off before you become an empty nester. If this is the case, you need to determine to increase your monthly payments to achieve that goal.

If you still have credit card debt this is yet another mistake made by people in their 40s. What you want to do at this time of your life is to get rid of your debts as much as possible. There’s no way to know what will happen to you in the next decade. You might lose your job, see your kids go away to college or be hit by big medical bill. To prepare for these emergencies, you need to not have any debt hanging over you.

Finally, people in their 40s often make the mistake of not having a will. We understand that thinking about your own death is not a fun subject. However, you need to have a will. This is the only way you can control what happens to your money and your other assets when you die. A will also makes sure that your loved ones are not left confused as to what they need to do if something were to suddenly happen to you.

Fiftysomethings and their mistakes

Unfortunately, one of the most common and worst mistakes that people in their 50s make is dipping into their savings. You should have a retirement fund that’s fairly impressive by now and it can be tempting to use some of that money, especially if you’re facing a financial pressure such as paying for your kids’ education or helping support your aging parents. What’s best is to leave your retirement money alone and figure out some other way to deal with any new financial pressures.

It’s also a financial mistake to underestimate what retirement will cost you. Today, the biggest cost most retired people face is healthcare. Whether you like to think about this or not, you have to plan that you might need long-term care in your 80s. This can cost as much as $6000 a month so it’s important to understand this and plan accordingly.

Third, it’s a mistake to let your children use you. We understand that you want to help your kids but they do need to develop some financial independence. You could start with small steps such as refusing to pay for their car insurance or taking them off your family cell phone plan. And, of course, they should eventually pay you rent, which can be a great way to encourage them to move out on their own.

10 Things That College Admission Counselors Won’t Tell You

student with a notebook and calculatorIf you’re a high school senior or even a junior the time is near – when you’ll need to apply for admission to the colleges or universities of your choice. You’ll also soon to need to fill out the dreaded FAFSA or Free Application For Federal Student Aid. While the deadline for submitting the FAFSA is not until June 1, the earlier you complete and submit it the better. And, yes, you need to fill it out and submit it even if you don’t intend to get any federal student aid. The reason for this is your FAFSA will be sent to all the schools where you apply for admission and it will be used in determining whether to award you a scholarship, a work-study grant or some other form of financial help.

There are other things you need to know besides the importance of filling out your FAFSA and here are XX that college admission departments just won’t tell you.

1. It pays to be nice to your teachers

Given today’s skepticism about the value of GPAs and test scores, there are admissions department that are weighing more heavily on the recommendations from high school teachers and counselors. And it when it comes to recommendations the most useful ones are the ones that show that you’re intellectually curious and that you contribute to class discussions.

2. We only sound as if we were exclusive

Admission was offered to less than one-third of the applicants in 2013 by 100 US colleges. This can make a school look “exclusive” and it is believed that some schools try to manipulate this rate. The way they do this is by encouraging high schoolers to apply for admission even though they have no intention of intending. In addition, some schools count incomplete applications to increase their applications-to-acceptances ratios.

3. Politics can play a role

Whether we like it or not, the NACAC says that about 33% of colleges and universities consider race as a factor in accepting students. Some of our states have banned racial admission preferences but their schools have been accused of using workarounds against those bans. Unfortunately or fortunately – depending on your parents – one practice that is usually considered legal is “legacy.” This is where the kids of wealthy alumni or powerful lawmakers get special considerations in the application process.

4. We don’t trust it

In this era of “helicoptering” parents, many schools worry that the essays submitted by some students weren’t written by them. The way they weed out ghost writing is by asking students to supply other pieces of school writing that were graded by a teacher. One retired dean of admissions said that “if the essay looks like it was written by Maia Angelou but the school work looks as if it came from Loman, this will definitely raise eyebrows.

5. We prefer students that can pay full price

How many college freshmen come from outside of the US? In 2013 it was 10%. Colleges love these people because most of them pay full tuition. At publicly funded state schools, the higher tuition charged out-of-state students often works to subsidize the education costs for those who live in the state. As an example of this, the in-state tuition at the University of California – Berkeley is $13,000 a year. But for an out-of-state student or foreign resident, tuition is about $36,000 a year.

6. We need you more than you need us

Would you like to do some negotiating when it comes your tuition? This year the number of high school graduates leveled off at 3.2 million. And it’s expected to stay at that level until about the year 2020. As a result, more colleges will be chasing fewer students. If you are accepted to more than one school, you may be able to do some horse-trading on the cost of your tuition. In fact, you could view it as about the same as if you were to go to an automobile dealer and try to negotiate a better rate for a new car.

7. We laugh that you obsess over class ranking

Less than 20% of admissions counselors think of class rank as being “considerably important.” However, it is more likely to come into play at larger schools where it’s just not possible to do detailed reviews of applicants.

8. You could be admitted but not stay admitted

One sad fact is that about 22% of colleges and universities revoked at least one admission offer in 2009, which is the most recent year that was studied. The most common reason for these were final grades followed by disciplinary issues and then lying about application information. For that matter, the postings put on social media have prompted some universities to reconsider their offers.

9. All grades are not equal

Have you taken college prep courses? If so, the grade you got in them will probably be given more weight than other grades. The reason why schools are becoming more skeptical is due to what’s known as “grade inflation.” The College Board, which is the organization that administers the SAT has research showing that the average GPA for all high school seniors increased from 2.64 in 1996 to 2.90 in 2006 despite the fact that SAT scores remained about flat. This was seen as proof that there are teachers using grades to reward good effort instead of achievement.

10. Were wondering about the SAT

For almost as long as anyone can remember the SAT has been the big benchmark in forecasting how students will handle college-level work. However, today many people argue that the SAT gives wealthier students an unfair advantage as they could afford those pricy test prep classes. In fact, around 800 of America’s 2800 four-year colleges now consider the SAT to be optional. The NACAC endorsed a study done recently that looked at the performance of 123,000 students that had been admitted to college between the years 2003 and 2010. What this study found is about 30% of the applicants had not taken either the SAT or ACT … and that there was no significant difference in college GPAs or graduation rates between those who took on of these tests and those that took neither.

Young black college graduate with tuition debt, horizontalTo borrow or not to borrow, that is the question

Another decision you’ll have to make besides choosing a college or university is how to fund your education. Generally speaking about 50% of students graduating from college needed to borrow money to pay for their educations. Of course, it’s much better if you don’t have to borrow the money and can start plus, life after college free of debt. If this is just not possible, be sure to get federal student loans and not private loans. Student loans have a number of advantages over private ones, such as the ability to change payment programs. For example, instead of staying in the Standard 10-year Repayment program you could switch to Graduated Repayment where your payments would start low and then gradually increase every two years. This can be a real boon if you’re just starting out in your career and are a low earner. Or you could choose one of the income-driven repayment plans such as Pay As You Earn that would tie your payments to your disposable income. Plus, federally backed student loans also offer options such as loan forgiveness, deferment and cancellation that are normally not available in private loans.

How To Have A Happy Low Income Household

povertyAre you struggling with your finances because you come from a low income household? When your income is not enough and you have a family to feed, it can be a bit stressful. And we all know that when there is stress, happiness will eventually go out the window. At least, if you cannot do something about your financial situation, you will soon find that it drains the happiness out of your life.

While we do not want to appear materialistic, it is a fact that the lack of money oftentimes drive couples to a fight. In fact, one of the most common reasons for marital fights involve finances. And we all know we do not fight about abundance of money. Usually, financial related fights stem from the lack of it.

According to an article from, the US poverty rate is already at a decline but it is still a high rate. In 2013, it was reported to be at 14.5% – a slight decline from the 15% rate in 2012. This is still higher than the pre-recession days of 12.3% in 2006.

The reason for this decline is the fact that people are now finding full-time work. However, thanks to the inflation rate and the higher cost of health care, this is not really making a difference for most people. There are still a lot of people that are living from paycheck to paycheck. If you want to improve your financial situation and get out of a low income household, you need to do more than that. You need to find a way to find extra money to propel yourself forward to a better financial position.

But before you can do that, you need to find the motivation to make the sacrifices necessary to reach your goal. And here is where it might become a bit confusing. In order for you to find motivation that will last you until you reach your goal, you need to put yourself in a happy disposition.

The reason for it is for you to be able to set the right goals and change the habits that will make you happy with what you are trying to reach. Take note that finding happiness is more than just getting more money. It is about teaching yourself to value what is important and be content with what is necessary.

4 ways to live a happy life despite poverty

That last part can be quite a challenge because it is hard to find happiness when you can barely give your children what they want. When you are constantly worrying about paying the bills, it is tough to say that you are feeling light and happy about your current predicament. So what can you do?

The key is to determine the simple truths that will help you find financial happiness. Here are 4 tips that might help you get started.

  • Concentrate on the experience rather than your possessions. Not that we are saying that you do not need material things. We all need them. But, you need to learn how to concentrate on the experience that you will get from the materials – rather than from the mere satisfaction of owning something new. A study published on, authored by Leaf Van Boven, said that focusing on the experience will help consumers get more positive memories about their lives. Happy memories are more evident when you have the experience in mind. It is also stated that it will help you foster better social relationships. That is because the experience is mostly associated with something that happened to you and those around you – whether directly or indirectly connected or not. So concentrate on having meals together – regardless of what is put on the table. Concentrate on enjoying cost-free weekends with the family – as long as you are together.
  • Have goals and monitor their progress. The next thing that you can do is to have a goal. A goal is something that will give your life direction. It will give you a reason to get up every morning regardless of the situation that you are in. It is one way to help you proactively motivate yourself further. Make sure that your goal is realistic. Big or small, it has to be well defined and something that you schedule to achieve sometime in your life. This will make it more tangible. As you track your progress, do not concentrate on how little you have. Instead, focus on being thankful that you are able to contribute anything to it at all. Even if the going is slow, at least there is progress.
  • Be close to people with the same situation as you. We mean surrounding yourself with friends coming from low income households too. This is to have someone to talk to and understand what you are going through. You can cheer each other up, find support during trying times and you cannot judge each other because you all going through the same thing. Not only that, you can find things to do together with the same budget. You do not have to work too hard to impress people because they know where you are coming from.
  • Change your mindset. Finally, you want to change your mindset about a low income household. It is not the end of the world. Granted that it is tougher compared to those who have more financial abundance. However, you both have something in common – you can both decide to take control of your finances. You need to accept that you have limited choices and instead of giving up, you take that as a challenge. Start by focusing on what you have accomplished despite your lack of finances. That should help make you feel better about your life.

Happiness, if you ask anyone, is actually just a state of mind. If you are willing to put yourself in a happy position, you do not need a huge amount of money to gain that.

How to level up from a low income home

Despite your pursuit  of happiness despite coming from a low income household, you need to make sure that you will still strive to make things better for you and your family. You want your kids to have the opportunities that were limited to you because of your financial state.

An article from revealed that poverty is still quite high in the US. 14.5% of Americans are living in poverty. That means 1 out of 10 people reading this article might be poverty stricken. The good news is, you can get out of that predicament. Here are some tips that will help you level up from a low income household.

  • Live a frugal life. First of all, you have to start living a frugal life. Face the facts that you have limited income. That means you need to prioritize where you will put your money. Live in a smaller home, get rid of the clutter and buy only what is essential. Frugality, when done correctly will give you a new perspective about your life.
  • Make sure you have extra money. The reason why you want to live a frugal life is so you can lower your spending so you can have some extra money. This is the money that you need for wealth building. It will help you increase your savings for your emergency fund. It will also allow you to invest some of your money to help it grow. Get that extra money and you should be able to grab opportunities that you never had before.
  • Involve the family. Getting out of a low income household will involve everyone in the family. You need to ask everyone to be wise about spending and to find extra money where they can. This is very important. It will keep the load from being too burdensome for you.

Here is a video from Bank of America that will give tips on how you can be smart with your money.

Is Yours An Egalitarian Marriage?

couple looking at a laptopA number of things have changed in our society over the past 40 years. For example, as we learned recently it’s no longer okay to punish your child by spanking or whipping him with a branch. And while it was maybe never okay to hit a woman we know now it really, really isn’t – especially if you’re a pro football player.

The idea of marriage has also changed dramatically. Some states now recognize same-sex marriages. And many of those that haven’t done this at least recognize civil unions. Divorce has become almost as common as, well, the common cold as about 40% to 50% of married couples in the United States now divorce. Finally, one of the biggest changes is due to the fact most families cannot afford to have one parent stay home with the kids while the other works. As a result two working parents now head 44.8% or nearly half of all US families. There are also couples known as DINKS (Double Income No Kids).

So what type of marriage do you have?

When both people work, what’s the division of labor? Is it sort of typical where the woman is responsible for cooking, cleaning and grocery shopping, while the husband takes care of the lawn and home repairs? Or is it what’s now called “egalitarian?”

The dictionary definition of egalitarian is “asserting, promoting, or marked by egalitarianism, which is defined as “a belief in human equality.” So how does this relate to marriage? It’s a marriage where tasks and responsibilities are shared equally and not based on sex. For example, in an egalitarian marriage, the husband may do some or all of the cooking and vacuuming, while the wife handles storage, dishwashing and home electronics. They may split the grocery shopping or one of the two might take full responsibility for menu planning and food shopping. In other words, responsibilities and tasks are split based on each partner’s idiosyncratic preferences, skills and interests.

Where problems arise

While an egalitarian marriage can be a good thing for many couples, it can have its issues unless boundaries are drawn very firmly. For example, consider the kitchen. Let’s suppose that the wife is responsible for kitchen equipment, organization and cooking but the husband is in charge of dishwashing and storage. Guess what can happen? The woman has a carefully thought out scheme of what goes where that is completely intuitive. However, the husband has no idea where measuring spoons go so he puts them wherever he thinks makes sense and half the time the wife can’t then find them.

That old way of doing things

In traditional marriages things might not have been great but they were simpler. Either dad handed over his paycheck to mom and in return she gave him an allowance for beer and cigarettes. Or the man took care of the money and mom had an allowance for household stuff and clothing and then had to beg dad for big purchases such as a dishwasher.

Live like roommates

How does this work in an egalitarian marriage? There have been a number of alternative solutions created by couples to try to get around the problem of who pays for what. Some choose to live like roommates where each person contributes money to household expenses. This can reduce the need for negotiation but may create even larger problems with “gaps.” What are gaps? These can be fights over things such as whether one partner needs to pay when the other calls a plumber about a slow drain.

Pool some of your income

A second option for handling finances in an egalitarian marriage is where you pool some income but each of you keeps some back. This can work well for young couples whose earnings are nearly equal. Unfortunately, if the earnings are unequal this can lead to problems such as you’re enjoying your new computer while your partner is trying to decide whether to buy a suit for a job interview or replace his dying phone. Under this option, you have fewer gaps but more overlap over personal and joint expenses. These then have to be negotiated, as does the issue of how you spend the larger pool of joint money.

Pool all of it

Of course, you can always pool everything and then each person could have an allowance. This can be a satisfactory solution if you have joint expenses that have begun to dominate your individual expenses. This would include things such as home renovations, having kids, pets and the like. This option does have a decided advantage in that it forces couples to define household goals and then enables them to direct all of their money towards them. However, to make this work you will need to create a detailed budget, track expenses and then negotiate basically everything that you spend money on.

Everyone spends what he or she wants

A fourth and final option is where everyone spends whatever they want out of the joint account. Unfortunately, this is the worst possible system outside of living like roommates. It is the favorite of DINKS until the day of reckoning comes when they wake up and find that they are 45 years old, overextended on their mortgage and have nothing saved up for retirement. The benefit of this is that right up to that point there will be a lot fewer fights over money.

What the modern family needs

As you have read, there is a downside to all of these options for handling a couple’s money. The best solution for the modern family is to use modern financial controls. This is where you have an explicit plan for how you handle money, use good accounting and recognize that no matter the system you use, there will be gaps and overlaps that you will need to resolve or figure out how to prevent them.

What is that explicit plan? It’s basically tracking all of your expenses, creating a budget and then determining precisely who is responsible for what. The good news for those that are seriously budget adverse is that tracking expenses and creating a budget is much simpler than it used to be. There are numerous financial apps and software available that make these tasks incredibly simple. For example, one of the most popular is It’s available for use on all types of smart phones and computers and is just amazingly simple to use. It will track your spending for whatever amount of time you decide and then organize it into logical categories such as clothing, entertainment, food, utilities, transportation and the like. You assign an amount to each of these categories and should you overspend in one of them, Mint will alert you via email. It will also alert you if it finds a financial product better than something you’re currently using (think credit cards).

Another good money management tool that’s becoming increasingly popular is Learnvest. With it you can sign up and add your bank accounts directly from your iPhone so that it’s very simple to track spending, stay within your budget and master your cash flow. It also offers access to financial advice and money-saving tips.

If you feel like you could use some help with your budgeting, here’s a video courtesy of National Debt Relief with some information that  features noted financial expert Dave Ramsey …


There are even apps available that can help if you’re having a problem with debt. One of the most popular is ReadyForZero, which will help you create a debt-repayment plan and then track your progress as you get closer and closer to zero or owing nothing.

After you’ve created a budget

You may find that creating a budget is not half as troublesome as deciding who will be responsible for what. This is where you will need to do some good negotiating and try to draw firm boundaries. But understand that no matter how good a job you do there will always be gaps and overlaps and the real secret of good money management is how successfully you are in resolving them.


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