Before You Marry It's Time To Get Financially Naked

With the statistics of divorce in this country, more than ever we must better prepare for the big step of marriage. There is a lot to do before the big day. The list is long with all the things that need to be arranged. The preacher, the hall the church, the caterer and on and on. Lots of time is needed to get all this done. We can't forget to be sure we are preparing our financial lives together, also.

With all the rushing around be sure you give yourself the time and space to talk frankly about your financial philosophies. With financial conflicts still among the chief reasons for divorce, it's critical.

You need to talk over all the obvious questions like, How are we paying for the wedding? Should we combine our accounts? What if one of us gets laid off? Those are the easy questions to ask. You need to dig deeper into philosophical questions. Is your future wife a clothes maven with a hundred pairs of shoes? Is the husband a car freak that will only drive a BMW? These things are cute when your dating your future spouse. But if your future love has spending problems, you need to know before the big day.

A thorough pre-marital counseling is imperative to work all the bugs out. You owe it to your future spouse to expose all your crazy spending habits, turn over all the cards and get financially naked.

There are so many facets of life to touch on during counseling you will only be able to touch on the very important ones. One of them being your future home together. Does one person want a small 3 bedroom house and the other want a lavish 2 story McMansion. When the kids arrive is it public or private school. Religious school or home school. What about vacations? will it be Hawaii or North Carolina?

Counselors ask piercing questions to get an answer from your soul, for example:

Imagine the Best. You have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything?

Life Cut Short. Now the doctor says you have only 5 to 10 years to live. You won't feel sick, but you'll never know when death will come. What will you do? Will you change your life? How?

Regrets. Now imagine that your doctor says you only have one day to live. Ask yourself: What did I miss? What did I not get to be or do?

With these sample questions, your philosophy comes out. You really get to know how your future spouse ticks. Today people are more careful with their money. If they don't know their future spouse well enough an anxiety about their future behavior arises. This leads to mistrust. A sign of this mistrust is the use of Pre-nup agreements. They are used to protect assets in case of divorce. This is a big red flag that your marrying someone you don't trust.

The action that needs to be taken is, if your engaged to marry,  get a good financial marriage counselor to help you better prepare for the big step your about to take.

Related articles

• Most American couples unfaithful ... about finances (today.msnbc.msn.com)
• Premarital Financial Counseling: Questions To Ask (christianpf.com)
• Should Christians Have PreNups? (christianpf.com)

Small Businesses Don’t Create Jobs – New Businesses Do!

Image via Wikipedia
How many times have you heard that small business creates the largest amount of jobs? You hear this all the time in the media. I am finding out that proposal is not really accurate. Even though the government thinks it can create jobs. More on that subject later. 

According to entrepreneur Peter Thiel, it's really new small business that creates jobs. Who is Peter Thiel? He happens to be the smart investor who in 2004 put up $500,000 dollars to finance a small business, run by Mark Zuckerberg, called "Facebook". 

Thiel says the misconception is only a urban legend and doesn't hold water. I am finding out that proposal is accurate. The real indication of whether a business is likely to create jobs is not how large a business it, but how old it is. 

This sort of make sense. New companies, by definition, tend to experience growth as they find their optimal, ongoing size. Once they reach maturity, whether it’s 20 employees or 20,000, they stop adding jobs so fast. And the smaller that number, the sooner the company is likely to reach it and quit hiring. And mature firms seldom enjoy significant bouts of growth. On the other hand, new companies also fail much more often than mature ones.

Conditional on survival, young firms grow more rapidly than their more mature counterparts. However, young firms have a much higher likelihood of exit so that the job destruction from exit is disproportionately high among young firms. More generally, young firms exhibit much more churning of jobs as evidenced by high rates of gross job creation and destruction.

Still, though, the study says young firms deliver more gross and net new jobs than older firms.

Obviously, this is a very big deal from a policy perspective. If we want to fight unemployment, it’s not very helpful to help small businesses in general. Instead, we should be promoting entrepreneurship and the birth of new businesses.

Related articles

• "Peter Thiel offers $100,000 to bypass school for entrepreneurship" and related posts (personalmoneystore.com)
• Drop Out and Innovate, Urges VC Peter Thiel (news.slashdot.org)
• "PayPal founder Peter Thiel wants to pay young entrepreneurs to drop out of college!" and related posts (blogs.babble.com)
• Why old people make better entrepreneurs than young ones. (slate.com)

Recession Lessons Learned In 2010

Image via Wikipedia
The last few years we all have been going through tough financial times. Expenses have been going up and incomes have been going down. We have been forced to do a reset on our financial lives. We don't spend money the way we used to, we can't, we don't have it to spend. The smart ones that haven't been effected, our cutting back for fear of things getting worse. They are saving more and spending less; they are reusing, reselling and recycling. The best lessons are learned in the tough times and hopefully they are integrated into our lives and endure.

I have listed a few of the lessons learned, I hoped you learned them to. 

Savings Accounts. If you are already saving your income every month your way ahead of most people. If your not, it's time to start. Make this your top goal for the coming year. Start small and as you begin to see that balance rise you'll be encouraged to increase the amount. Be sure to put it somewhere it's not easily accessed, so you won't be able to get to it easily when your tempted. And you will be tempted. 

Your home is not your piggy bank or a retirement account. What I have learned and most of America to is that home equity is not guaranteed. I have owned 2 homes in my life and always thought their price would always rise, it never occurred to me their value could be cut in half. My retirement plan was partially dependent on selling my house in ten years and retiring, using the proceeds to setup income producing investments. The idea of producing equity out of home appreciation, may be a thing of the past. The lesson to learn is, your home is not an investment.

Home Equity Lines of Credit (HELOC) are another thing to be avoided. They are a foolish way to borrow money. You putting your home in jeopardy, when you can't pay it back. That new kitchen or bath you borrowed the money for, will sink you when you lose your job or can't work due to illness. Do it the old fashion way, save for it, pay cash or don't do it. 

Living within your means. Americans are blasted everyday from the media that we need to buy things to make us happy. It's not true. Only buy what you need with cash that you save. Rule #1: If you don' have the money, you don't buy it. Rule #2: If you need to buy it, save ahead of time for it. Rule #3: Setup and maintain an emergency fund for those unexpected emergencies.

Credit Cards are not our friends. The main purpose of a credit card is to get you to use credit for your purchases and ask for only a small payment every month in result you pay interest to them. This interest is their way to make money on you. If you pay back your balance every month they make no money and actually lose money on your use of the card. Their goal and only reason to be in existence is to keep you in debt. Some debt always grows into massive debt. Your best move is to avoid credit cards altogether. They are built to keep you in debt. 

Car Loans will keep you poor. Keeping up with the Joneses is a trap you will never satisfy. If you think you have to be defined by what you drive your deluded. If you have a car loan, pay it off. If you need a car, buy a used car let someone else take the depreciation hit. Here's a plan, save for that car purchase and live within your means.

Job security is an illusion. Don't fool yourself. We are all self-employed. Your only as good as what you can do for the boss today. I don't care how many years you work for a company, your an asset on their books until your not needed anymore and then you will be put out. 

Frugality is a must. What we have must be used longer. Our money must be spent in the most economical way. We can't just go in a store and put down our money. We have to shop sales, deals and always get a bargain. Coupons and coupon codes are a must. Ask for discounts everywhere. Nowadays, it's become perfectly permissible to ask for discounts from your dentist, doctor, plumber and kids' tutor. Don't forget to ask for drug samples whenever your doctor writes you a prescription.

The recession has taught us many things we already should of known. Making your hard earned dollars do that much more is not a option anymore, its a necessity.

Related articles

• Learn Ways to Reduce Credit Card Debt Without Home Equity (brighthub.com)
• The American Credit Card Craze (creditloan.com)
• To Boost Your Finances, Sweat the Small Stuff in 2011 (dailyfinance.com)

New Years Eve Roundup

The New Year will begin very soon, it's a fresh start for all of us. Around the house we are decompressing from Christmas still. One more weekend to go before things get back to normal. The kids will be back in school and the tax returns carnage will start. This week on the Blog scene we had some pretty good reading . I picked out a few of my favorites.

Mint.com has really done a great job this year including this item. 5 Personal Finance Lessons From “The Biggest Loser”

Squirrelers.com says to think about your decisions in Penny Wise and Dollar Foolish: When Not to Be a Cheapskate

Personal Finance By The Book really hit it on the head with the gift giving at Christmas with Rethinking Our Family Christmas Gift Exchange

Canadianfinanceblog.com had some great and interesting insights on Christmas shopping with Annual Shopping Tips

The Biz OF Life Is always keeping an eye out on our wasteful government with another great article called Top Charts of 2010

Bargaineering.com had a great post about True Wealth Isn’t About Money , I agree.

Fivecentnickel.com told about Jim Otar’s book “Unveiling the Retirement Myth.” Free Retirement Planning Book

Dinksfinance.com had a great post about my favorite subject planning your financial life. We can’t predict our future, but we can make a plan

Cleverdude.com is cutting up some credit cards.And then there were 7…credit cards

20somethingfinance.com is listing all the free things in life with 10 FREE Financial Services to Help you DOMINATE your Financial New Year’s Resolutions

frugaldad.com is celebrating being 3 years old. Happy Birthday and a great post A Letter to Frugal Dad Readers: The Last Three Years

barbarafriedbergpersonalfinance.com has some great tax advice for us with TAX HELP; Tips to Lower Your Tax Bill

Carnivals I have participated in:

Carnival of Money Stories #86: New Year’s Resolution Edition

To everyone Happy New Years.

5 Easy Steps To Start The Financial New Year Off Right

The New Year is always the calendars way of saying here's another chance to get it right. We make resolutions to eat better and exercise more. Trust me, I have tried that resolution every year. But there has been one resolution I have been successful with and that is getting my financial life in order. You have to much debt and are not saving any money. It's the result of sloppy managing of your money. Get out a pencil and paper, its a lot easier than exercising and eating right, I know. Here are 5 easy steps to get you going.


Step 1: Admit that you have a financial problem. Admitting that you have a financial problem, whether it’s charging too much on credit cards or acknowledging that you own too many credit or store cards is the first step. You can’t begin to erase debt until you are able to admit to yourself (and maybe others) that you have a issue.


Step 2: Make a list of all your debts. You can’t know where to start until you have some sort of blueprint in front of you. And that blueprint will be your list of debts to attack. List out every debt you have (you can even put down your mortgage if you’d like) but list EVERYTHING! You cannot forget, by accident or on purpose, any of the debts. Many people will purposely not add a debt to the list on purpose because it’s a way of ignoring the problem. Part of your success in erasing debt will be how well you acknowledge each and every debt you have. List your debts starting with the smallest debt to the highest. Place them all in a column, one above the other.


Step 3: CREATE A BUDGET. The dreaded B-word. Everyone has a story or excuse or reason why they can’t create a budget or stick to a budget or a budget doesn’t work for them. I’m here to tell you that a budget does work if done properly. I’ve done it wrong and I used all of the excuses in the book to avoid creating one. But a monthly budget that is constantly reviewed and updated is the KEY to erasing your debt. Oooh, that sounds like work. Well, yes it is….


Step 4: Maintain Your Budget. You cannot create one budget and then think that that one budget is going to be the same budget used, month-after-month for the next few years until you get out of debt. If you do that you’ll be frustrated by month two and your budget will go down in flames as a miserable failure as most budgets do. A budget has to be modified every month to meet the needs of your family’s life style. Maybe even updated every week until you feel comfortable with it. And then even when you are out of debt, you will need to continue with a budget. The one guarantee I have for you if you stop doing a budget is that once you stop doing a budget, I guarantee that you’ll be back in debt again. Once you get use to managing a budget, it shouldn’t take up a lot of your time.


Step 5: Include Everyone in the Budget. Be sure to communicate with everyone in the family (spouse and kids) about the budget. Everyone needs to be on the same page and rowing in the same direction. You can’t have a wife following the budget and the husband off buying tools that weren’t budgeted for. It won’t work. EVER! Even tell the kids about the family budget. Now a nine year old doesn’t need to know all the finite details. But make them aware that there is only so much money. And that money is allocated to certain things. And some things are “not in the budget.” They will catch on soon and before you know it, they will be telling you what is not in the budget.


Bonus Step: Start living on a budget. It’s all fine to create a budget and talk about it. But if you don’t implement it, it will never work. What’s the worse that can happen if you go on a budget. You finally may actually start to understand where all your money is going. That may be scary at first but eventually it will feel liberating and you’ll soon erase that debt and start saving.

We are still not done yet. You need encouragement from friends and family for sure. You also need to keep on educating yourself in this money adventure. You must read books and keep reading blogs about personal finance. Also get some of Dave Ramsey's books. His "Total Money Makeover Book" is what you need to read again and again. Find other authors to read and learn all you can. You will be successful if you have a plan and follow it.  I Promise.

Related articles

• Five Reasons You Should Budget (turbotax.intuit.com)
• Review: Smart Is the New Rich (thesimpledollar.com)
• CareOne Offers 5 Tips to Raise Financial Awareness in 2011 (prweb.com)

How I Used My Emergency Fund

Well, it just happened to me. A rainy day. An emergency. Emergency might be too strong a word. But I did have something break that required repairing. Two days ago the a leak started on my water heater. I didn’t realize it at first. I saw some water on the floor and later that day no hot water.

I called around to get some prices for a new water heater. I called Lowe's and Home Depot they both had good prices. It turned out I had a 10% of coupon for Home Depot so I went there. The cost for the heater was $420. I got out the checkbook for the Emergency fund account and went down to get the heater. The store was offering 10% off if I opened up an account with them. It was tempting, I could have another 10 percent off. I was justifying it that I could open the account and just pay it off, then close it. Use credit or pay by check. Of course I chose the latter and paid by check from my emergency fund. 

But it was because I had erased my debt and built up an emergency fund that I was able to deal with this in a calm state of mind and not worry about where was the money going to come from to make this repair. I didn’t panic and place the payment on a credit card. I had the cash in reserve and I used it. Of course my wife and daughter laughed at me because they kept joking how it “hurt” me to part with the cash. And they were right – I hate parting with my hard earned money and savings. But better that than to go back into debt.


Sure, $420 may not seem a big deal to some folks. But to others it could be the source of great stress if they don’t know where the money will come from. Others may feel self-defeated and think, “stuff always breaks and I have to put it on credit card. I’ll never get out of debt.” But with a plan to erase debt and build an emergency fund, an emergency will just be an inconvenience and not a nightmare of falling further into debt.

Erase your debt and you too will have the money to take on life’s surprises.

Related articles

• To Pay Off Debt or Save? That is the Question (frugaldad.com)
• MICHELLE SINGLETARY: Facing Your Money Truths (kitsapsun.com)
• 5 Tips to Get Your Financial Life Ready for the New Year (Part 1) (quizzle.com)