Tag: finances

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Depression and Finances: Socioeconomic Status

Posted on May 16, 2008 by Him

First off, I'd like to thank everyone for their support and warm comments regarding my newly diagnosed depression. I'm still learning much about it and how to effectively treat it, and welcome your stories and comments.

My psychiatrist gave me a document that outlines depression, from the etiology to risk factors to complications to treatments. It is an interesting and eye-opening read, and is also available on the web. In it, I found an interesting tidbits on depression and social/economic status:

The role of society and economics has specific implications for women. Being in a low socioeconomic group is a major risk factor for depression in anyone. Money, of course, allows greater access to good medical care, but this factor does not fully explain the higher rates of depression in impoverished people. People at any income level are likely to be depressed if they have poor health and are socially isolated. Some studies suggest that Western cultural attitudes that link income to social status may play a significant role in the connection between poverty and depression:
  • In one British study, actual poverty or unemployment increased the duration of any existing depression, but it did not appear to play any important causal role. Feelings of financial insecurity, however, both caused and prolonged depression.
  • Another study reported that Mexican adults who immigrated to America had half the psychiatric illnesses as did Mexican-Americans born in the U.S., regardless of their income. But the longer the immigrants lived in the U.S., the greater their risk for psychiatric problems. Traditional influences of Mexican culture and social ties appeared to protect newly arrived immigrants from mental illness, even when they were poor. Eventually, however, the consequences of Americanization added to poverty and led to feelings of alienation and inferiority.

It is indeed interesting how finances and social/economic status contributes to mood. When Her realized that she was on the path to financial hell, she suffered from anxiety and loss of sleep. Since we've managed to clean up our financial act, she sleeps much more soundly.

Her and I have seen how finances affects our moods both ways: Our finances have affected our mood, and our moods have affected our finances. Hopefully we will be able to get all of this in check.

Depression is Expensive, Denial Much More So

Posted on May 14, 2008 by Him

I'm depressed.

There, I said it. Not just depressed like in a bad mood or someone just kicked my puppy, but actually clinically depressed. This has actually been a recurrent theme in my life, and I suspect that it's also tied in with Seasonal Affective Disorder as well, because this NEVERENDING CHICAGO WINTER has sucked the life out of me and the other few million Chicagoans around here. The thing that was different about this time is that it has never been as bad as it has been the past few months.

Since this is a financial blog, I'll go about how dealing with depression can affect one's finances. Let me correct that: I'll go about how trying to thwart depression by doing everything except getting treatment can affect one's finances.

One of the crappiest symptoms of depression is losing pleasure or interest at things that used to offer them normally. When I first started feeling pretty crummy, I thought to myself, "Maybe if I go out with friends/eat at a nice restaurant/buy myself something I've put off for a while now that I'll feel better." I actually chose all 3 of those routes: I went out with friends more, went out for more meals, and bought myself a used Nikon D200 and a nice new lens with my tax refund. I don't even want to think about the amount of money I threw at the problem.

A few months ago, Her and I agreed that my depression started to affect our relationship; there's no money in the world that would be able to magically fix that. So I decided to go and see a therapist that I saw a few years back.

Seeing the therapist isn't cheap; when I saw her in prior years my out of pocket costs were about $75 a session, with the rest taken care of by my insurance company. Now that I have an HDHP/HSA I have to to take care of most of the fee out of my HSA account. Since there really wasn't anything going on in my life that could have been causing my depressive state, I was referred to a psychiatrist. The psychiatrist proceeded to prescribe an anti-depressant for me. Due to the way that payment is handled with the HDHP/HSA account, the costs of both seeing the psychiatrist and the meds will be revealed to me at a later time. I've just started on the meds, so only time will tell if this particular one is worth the money.

Depression sucks. Other than the obvious joy-deflating and relationship straining properties, depression can have major financial ramifications as well. Therefore, if you're feeling depressed or just not right, there's no shame in going to a psychiatrist/therapist/someone who loves you to talk about it. My method of "self-medicating" by blowing all sorts of money got me nowhere (well, I do have a sweet camera). The depression also messed with my concentration and sleep, making it difficult to focus on my job, this blog, our finances, and my life in general. If went unchecked, a lot of stuff could possibly have been messed up.

Right now I'm grateful for a few things: insurance for making all of this vastly possible without completely breaking the bank; the availability and acesss to great healthcare providers; and most importantly, Her, for sticking with me, offering her support, and remembering that we're a team.

MoneySmart Week in Chicago (and Michigan)

Posted on April 18, 2008 by Him

The other day I was at the library paying an overdue book fine (hey, it was cheaper than buying the book) and I noticed a bookmark with my favorite Benjamin on it (Franklin, duh). On it was information for MoneySmart week in Chicago.

MoneySmart week starts this weekend, and runs from April 20 through April 26. It consists of hundreds of free classes, seminars, and activities. You can peruse the schedule day by day, or if you're lazy, check out the whole week's worth of events with this link I created.

There are a bunch of cool events that I hope I have the time to check out next week. They include events such as touring the Chicago Board of Trade, sessions for those who are first time homeowners or those looking to purchase their first house, and even sessions for cooking at home within a budget. Anything personal finance - debt, credit, even identity theft - they have it covered. They even have a program with Terry Savage, a personal finance journalist, on what everyone should know about finances and retirement plans.

Unfortunately I didn't pick up the bookmark in time to alert you guys about other regions in the Midwest that were also having their own MoneySmart weeks:

Iowa (Des Moines, Cedar Rapids, Iowa City) - April 5-12

Quad Cities (Bettendorf, Davenport, Moline, Rock Island) - April 5-12

Illinois (Peoria, Bloomington/Normal, Champaign/Urbana, Rockford) - April 6-12

If you're in the Chicago area or in Michigan, you should check out the events. Happy MoneySmart week!

Financial Boredom/Apathy

Posted on March 14, 2008 by Him

If you haven't noticed, it's been a little quiet at Make Love, Not Debt headquarters. The reason: we've hit a financial lull. Compared to our finances 2 years ago, things are going pretty swimmingly around here. And that's a problem.

With the weather warming up, our new budgeting scheme, and wedding planning all going on, we find that having the same enthusiasm for finances is tough.

Add to that my general malaise about finances - I've often thought that dealing with finances are more like a necessary evil, much like cleaning toilets or having to be nice to my future mother-in-law. Finances are boring. Seriously. Like, I'd-rather-be-stabbed-in-the-eye boring. The more I could automate our finances, make them become more of a background fixture to our lives, the happier I would become. Out of sight, out of mind?

But it isn't that simple. Money does make the world go 'round. We can't spend willy nilly on anything and everything, lest we face the dire consequences.

Maybe this is a turning point - instead of thinking about money and how it affects us, maybe we should be thinking more of the role money plays in our lives.

What the hell does that even mean?

Ick, I'm rambling on the internet. Hey, this is a blog, after all.

(normal financial blogging to resume shortly...)

I'm Back, and Inspired!

Posted on March 03, 2008 by Her

I haven't posted in a while. It's not because I was too busy or anything. I've just been rather uninspired about personal finance, and I didn't want to write a half-hearted post. But why was I uninspired?

When we first started blogging, our metaphorical financial house was on fire. I was on the scene, blogging about the height of the flames and the number of fire trucks. It was exciting, this disaster! What would happen next? How would we survive? Well, we did survive. We paid off a huge portion of debt. We re-allocated our money so our debt cost us less and our savings earned more. We got raises. We had some fun along the way. We automated many financial tasks. And after a while, personal finance slipped into the background of our lives. This was nice, but it didn't exactly inspire my writing.

Recently, we've discovered that everything isn't as peaceful as we thought it had been. We almost paid a few bills late (fortunately, we caught them in the nick of time). With Him handling most of the finances, I drifted into blissful ignorance. When did we blow the budget for the wedding? Oops, didn't notice that! How did we miss the deadline for purchasing travel insurance for the honeymoon? Yikes. Hey, when did we go over-budget on monthly spending? Why are we broke? Oh nos!

What I've learned from all this is that it's never okay to fall asleep at the financial wheel. Even though we've automated things, the world continues to change. Interest rates vary. Due dates change. Markets expand and collapse. Salaries increase. Your perceptions of your spending change without you realizing it. Being a successful adult means dedicating time to manage your finances, no matter how smoothly things are going.

On Renting, Part 1: Our History

Posted on January 28, 2008 by Him

I should have seen this coming: after Friday's post about how we got an amazing deal to rent our place for a few more years, we inevitably received the obligatory "renterz drool, homeowners rule!" comment. I apologize, personal finance blogosphere, for not letting you know the nuances of our housing decision!

Buying property isn't something that we've been ignoring. Heck, I've posted numerous times about owning property. As you can imagine, it isn't as simple as going to the fictional neighborhood condo supermarket, picking one out, and viola! - move into a new place.

When Her and I first moved to Chicago three years ago, there was no way we were in any financial shape to own property. Every month we had about 30 different bills we were paying a month with over $20,000 of credit card debt alone, coupled with a lot of student loan debt. During that first year, the only way we would be able to afford a place would be if we took out a 100% loan, probably with some "creative" financing. I'm willing to bet that we would be in deep financial trouble had we bought a place then.

Two years ago, Her and I were starting to gain momentum in terms of getting our finances together. We still had over $18,000 in credit card debt and a lot of student loans. Again, looking at our overall financial situation, we were not ready to buy property without accepting a lot of risk.

One year ago, we were well on our way to becoming somewhat financially healthy. Looking at our finances, we were in a better position to buy property. We were aware, though, that we would be buying at a time when home prices were at, or at least near, their maximum. Prices for a 2 bedroom, 1 or 2 bathroom condo near public transportation in Chicago were still out of a comfortable price range.

Today, we're in the best position to purchase property. Home prices and interest rates are dropping. Even if we weren't earmarking much of our cash for our wedding, we still wouldn't buy. The reason: In 2 years we're probably going to move away from Chicago.

Tomorrow, I have a post lined up that explains what moving in 2 years does to our purchasing property outlook.

How To Afford Anything - Personal Finance Lessons From Ken Rockwell

Posted on January 23, 2008 by Him

If you're a camera buff, especially a Nikon camera buff, you've probably heard of Ken Rockwell. He provides reviews of camera stuff I want.

His style of writing is similar to personal finance type gurus - you take it or leave it, and you either love him or hate him. He has a strong opinion of things, and while they may not make the most sense, he doesn't give a damn about what anyone else thinks. He does tend to give the bottom line with his camera reviews, especially for those who can't stand sharpness tests or MTF charts.

When I was cruising his website the other day, I saw an article on how to afford anything. It reads like a years worth of personal finance blogger's posts stuck together; it is probably just as lengthy. Personally, I love it when I find personal finance articles in places I wouldn't expect to find them.

Here's the article in bullet points:

Don't:

Do:

My favorite line? "It takes the guts to be a cheapskate." Yep, sure does.

So what has all of this gotten him? How about every Nikon camera and lens from the last 10 or so years. Or a couple of (used) Mercedes. And a lot of smugness.

If there's something in his writing, it is passion. He's willing to focus his finances to get exactly what he wants in life. There's definitely a few lessons I can learn from him.

How We Budget, Part 3: The Analog $1,000 Countdown

Posted on February 15, 2008 by Him

Our last two posts have shown you how we manage our money in our various accounts and how we manage our cash flow. Today, we're going to explain how we deal with our non-fixed expenses.

If the other two posts left your head spinning about our budget, I'd have to agree with you. With all of the accounts, our money has been abstracted in a way that makes understanding exactly how much money we have at any given moment very difficult. That complexity has allowed us to make a simple system for tracking our expenses. How do we do it? By using a whiteboard and a box for receipts. Sure we could have used a piece of paper, but I love whiteboards, and we have one setup in our home office anyway.

For our non-fixed category, we've allocated $1,000 per month. Our non-fixed expenses consists of dining out, entertainment, groceries, household, pet expenses, automobile gas, gifts, and any other expense that isn't quite fixed. At the first of the month, we start at $1,000; as we spend money on non-fixed expenses, we write on the whiteboard the amount of the expense, rounded up to the nearest dollar, and subtract. Here's what it looks like:

whiteboard.jpg

The receipts for those purchases go into a box; at the end of the month, those receipts are reviewed and the non-keepers are shredded.

This system works for us in a few ways:

1. We don't have to ask each other how much money is available for purchases. We know exactly where to look to see if we have enough money for something. This seemed to have been a self-policed system so far; we're astutely aware of how much money we have, what we have coming in the month, therefore we make better decisions about our money.

2. Our receipts only pile up for a month, cutting down on financial paperwork. At the end of the month, we review the receipts, and toss the non-keepers. The keepers get filed to their appropriate location.

3. We don't have to worry about every single penny. If we blow some cash on eating out, guess what, we now have less for everything else. Again, this forces us to make better decisions so that we're not eating ramen at the end of the month.

For us, it is this simple solution that allows us to successfully reach our financial goals and maximize our dollars. How does your budgeting solution stack up?

How We Budget, Part 2: Monthly Cash Flow

Posted on February 13, 2008 by Him

Yesterday we laid out the flow of our money per month when it comes to accounts. But how do we allocate those funds once we get them?

In order to showcase my expert Powerpoint skills, I've created another diagram to show how our money flows. As usual, clicking it will bring up a bigger version.

cashflow.jpg

This cashflow scheme is based off of the 60% solution of budgeting and saving. Out of our paychecks every month taxes and funds for our retirement accounts (of which we get matching funds for) are deducted. After that, we both get a small amount of money per month for our own personal use. Our fixed monthly expenses are then accounted for; these are generally fixed or within a few dollars of a base amount. We then have a set amount that is deducted from our accounts that goes into savings. Lastly, the remaining funds go towards are non-fixed expenses. Any money that is not spent from our non-fixed expensed then gets funneled back into our savings account for the month.

In creating our budget, we've managed to include many of the mantras floating around the personal finance blogosphere. Our system allows us to to pay ourselves first and last. In order to make everything go smoothly, we put mostly everything on automatic; the fixed expenses and savings are both automatically deducted from our accounts so we never get to really see the money.

In order for this system to work smoothly, the money that moves into and out of our accounts follows a highly choreographed dance. I get paid twice a month; Her gets paid every other week. Therefore, we treat Her's pay as if she gets paid twice a month, with the three paycheck months treated like a "bonus." Taxes and retirement get deducted every pay period, obviously. Savings also gets deducted each pay period. As long as we stick to the amount we've allocated for our non-fixed expenses, we generally have enough cash in our checking account to pay for our credit cards bills as they come in every month.

On Friday, we'll show you how we keep track of our non-fixed expenses. It's the easiest part of our budget, allows us to be flexible, and most importantly it allows us to have some freedom when making purchases.

How We Budget, Part 1: Account Flow

Posted on February 12, 2008 by Him

This month the Money Blog Network is hosting a group writing project with the theme of budgets. We've had a few posts in waiting to go on this very topic for a while now, so we thought this was the perfect time to unleash them. We hope that our budgeting systems makes sense and others can learn a little from it.

We think we've finally straightened out our budgeting situation for 2008. We've posted before on how our budgeting wasn't adequate and how we've tried to change it. Well, those changes didn't work, so we've worked on another budgeting system, one that's been working for us for a little while now.

The first step of creating our budget was to figure out where all of our dollars go. In the last few years, our money situation has started to get a little complicated. In order to maximize our dollars, we've setup an elaborate cash/account flow scheme. We do this in order to maximize rewards, keep our individual credit scores relatively high, and to account for every dollar that comes into our hands. Check out our cash flow in the diagram below. You can click it to see a larger version.

cashflowBIG.jpg

Whoa, looks complicated, no? Well, it is. It took us a while to figure out how to do this, but after a few years we think we've finally gotten it down. This is admittedly a little more simplified in that I didn't put our fun money savings accounts on the graphic.

I've thought about summarizing the graphic, but it seems pretty self-explanatory to me. If you have any questions about the way we do thing, please ask away in the comments.

Tomorrow's post will more simply detail how we budget our money each month.

Ten Financial Considerations For Newlyweds

Posted on January 08, 2008 by Him

Somehow sometime during this long engagement of ours I was signed up to receive the "Groom's News" in my email inbox a few times a week. Along with cheerfully telling my how many days until the upcoming wedding and trying to sell me often unneeded high end trinkets and vacations, it points to articles that may be useful to newlyweds. In today's issue was this gem: Ten Financial Considerations For Newlyweds. Let's discuss, shall we?

1. From the beginning, save 15 - 20% of your income. By combining households, you should reduce your expenses a lot which should allow you to save. You should save to build your cash reserves, in your 401k plans and in a mutual fund.

This is a great tip to start off with. We're currently saving about 10% of our gross income, and after the wedding we're likely to increase that. It will be a balancing act with paying off student loans, though.

2. Rather than simply keeping two checkbooks like before you were married, pool your money into one checkbook and one savings account or money market.

We've spoken about how the joint checking account is working for us. We also have an allowance system to give us a little more freedom in making "guilt-free" purchases.

3. Change all of the beneficiaries on life insurance plans, retirement and other plans at work, and IRAs to your new spouse.

A nice reminder. We don't have life insurance, but we do have retirement accounts and bank accounts we'll have to check.

4. Decide how debts accumulated by each individual prior to the marriage (i.e. student loans) will be handled.

Since we've been living together and have had our finances combined for a while now, we've been living the "everything is ours" way of things - even debt - for a while now.

5. Work together on budgeting and tracking expenditures.

We've made efforts to budget in the past - this year we've implemented a new system that closely resembles the 60% solution. We'll detail that in a later post.

6. Discuss your approaches to handling money -- is one person a spender and one a saver? Create some ground rules on handling any differences.

Haha, it's more like "He's a spender, she's a spender." I mean, uh, we love to save money.

7. If both incomes are needed to pay expenses, be sure to have adequate life insurance.

We're definitely going to have to look at adequate life insurance after we get hitched.

8. Be sure to let each other know where important documents are kept.

More importantly, we need to get a safety deposit box to keep all that stuff. That's been on our to-do list for the past 2 years.

9. Consolidate your credit cards to avoid having double the number of credit cards needed.

Not sure if I agree with this one. We believe that we both should have individual credit. We've even opened some duplicate credit cards in order to take advantage of rewards.

10. Make a list of upcoming purchases together and prioritize them. You should decide jointly how to spend your money now.

Of course, communication is key. Her probably wouldn't like it if I just came home with a 52" plasma screen TV, and I don't quite know how I'd react if she brought home a couple pairs of Manolo Blahniks.

This list actually wasn't that bad. It will serve as a good reminder of things to-do after we're married.

How The Rising Cost of Gold Affected Us

Posted on December 17, 2007 by Him

goldring.jpg
photo: CaroWallis1

Last year around this time, Her and I went to the place where I purchased her engagement ring to shop for my wedding band. We ended up both liking a simple yet classic, plain, polished wedding band. The price for getting it in platinum was ~$800; the price for the same ring in white gold was ~$250. There was little discernible difference between the two metals except for the price, so we thought that we'd go with white gold. Since we knew that the wedding was more than a year away, we decided that we wouldn't purchase anything that day and would give ourselves time to mull over the choice for a while.

That while turned out to be another year. This past weekend, Her and I went back to the same jewelry store, spoke with the salesperson, and looked at the same simple yet classic, plain, polished wedding band. Except that this time, the price for the wedding band in white gold increased to $450. We finally decided to purchase it.

I've read headlines about the rising price of gold and whether to invest in it, but never really paid attention. I was pretty blindsided that the rising prices of gold would affect us in this part of our life. The salesperson was all too familiar with this and the daily fluctuations of the price of gold; she said that we wouldn't have to pay the difference if the price of gold rose even more during the period it took for them to order the ring.

At the end of the day though, it was a great feeling to be one step closer to being married.

Questions On Talking About Money And Relationships, Answered (Part 2)

Posted on November 21, 2007 by Him

Today we bring you the second half of our reader questions for Sheila Heen, communcations expert responsible for much of the content on Have the Talk America. I wish I could bring her along on negotiations with wedding caterers, but that's another post for another day. Onward to the questions!

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Indebted asked:

Hello,

Please help with advice.
I have been married since May of 2006.

Late last year, I found out that my husband had purchased a home without consulting me. He was planning on ‘flipping’ the house to make a profit. I found out about it accidentally when I came across some paperwork. I confronted him about it and he has shown little remorse. His explanation was simply that this was a business venture and had nothing to do with our relationship. He knows that I have been extremely upset about this for a year. It has also impacted our lived because he is always late on our rent payments and never has any spending money. He has not been able to sell the house.

This weekend, I found out that in addition to this house; he also took out another mortgage and a home equity loan on an entirely separate house.

All told in the year and a half that we have been married he has taken out a total of $550K in loans. I confronted him again this weekend and again he says that this is not my concern and that this was a business venture. None of this was purchased under a business name; this was all done under his name.

Is there anything I can do to protect myself? I am concerned that he is way over his head and will not be able to pay all of these loans. I am concerned that eventually I will have to start covering these expenses.

Does anyone have any thoughts to advice?

Thank you much,
Indebted and still in love

Dear Indebted & Still in Love,

Oh dear. I can see why you are concerned. Deceit, debt, and dismissive-ness are not a good combination.

Clearly your husband has a set of assumptions in his head. The first of which is that making unilateral decisions about financial matters in your marriage is okay - and, in fact, expected. He seems surprised that you are upset about it. And also that “business” is different from “marriage,” which, if true, would make his behavior make sense.

The problem for both of you is that debt (as well as assets) in a marriage are generally considered marital property. And if he ultimately has to file for bankruptcy, this is going to affect you and the whole family, not just him.

I wonder why he is keeping this information from you? He may feel a great deal of responsibility to provide for you, and feel that he is not supposed to burden you with the worries that he is carrying on his own. Now that things are tight and he can’t sell the property, the last thing he probably wants is to sit through a conversation where you are angry, accusatory and anxious. He’s probably got enough anxiety on his own.

So I’d approach him with compassionate concern. Tell him you want to understand what’s going on so that you can share the burden, and so that the two of you can settle on a plan for how to manage going forward. Get curious about how he thinks about these decisions and whether to involve you, and what concerns he has that lead him to leave you in the dark. Let him know that you two are in it together, for better and for worse, and that if you’re going to brave the worst, you want some involvement in making it better.

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Shri asked:

Hi,
It's nice to see your apt replies. I got married this June and currently not working. My husband had run into a 12K loan before marriage..He never mentioned that before marriage and there were big fights about that. Now he s in the process of repaying them. It did upset me big time, because I was working too and I had saved and invested well.
He is changing but as a next step, once he is done with loans, I want him to invest in real estate in a very lucrative place. He was like ' first I need to have some money in hand'only then will I consider any investment', but the prices are increasing every single day and I don't think it's wise to postpone things. Basically he is very slow in taking steps towards money saving, investing etc..I ll start working in 2 yrs from now after I do my MS. Till then I want him to take the best possible steps which is in the best interest of both of us. How do I go about this ?

Thanks for your patience in reading.

Regds
Shri

Dear Shri,

This is the hardest thing about marriage and money, especially for those of us who like to be in control. How much autonomy and control do I get to have over money decisions that affect me? What do I get to decide myself? What do we have to agree on together? And how do I get my way?

Believe me, I get it. I am the instigator in my marriage, too. It’s me pushing us to save a bit more, buy into the market earlier, and pay down the loans faster. And when I get any resistance from my husband, my instinct is to just push him harder. This, by the way, doesn’t work.

Actually, you should worry if it does work, because if you push him into something he’s not ready for - taking on new debt just as he’s getting out - and then the real estate market slows, you’ll feel responsible. And he may blame you. Not a great combination.

Remember that it’s not just about the dollars and cents. He’s not reacting to the market numbers that you see rising. He’s reacting to the unpleasant emotional experience of being in debt (and having someone you love angry with you about it), and the positive satisfaction of climbing his way out. It’s not surprising that he’s reluctant to take on a new set of anxieties very soon.

So one conversation may be about how you’re each feeling about where you are, and where you want to go. Also, the conversation may be about how close you want to live to the line of “just getting by” and how much risk you want to take.

The other conversation involves a clear-eyed look at the numbers you cite and the trends. The sub-prime mess has impacted a lot of real estate markets across the country - even areas that consider themselves recession-proof. Plan for more than the best case scenario - here’s our payment and income if all goes as planned. Talk too about some “what ifs” - what if one of you loses their job? Or gets a promotion that involves a move and you can’t sell the house? What if you need a new car? Are you planning to have children? Will one of you want to stay home? While there are unpleasant surprises, it’s also true that you can anticipate a lot of probable events in the next five years or so that will impact your finances.

Remember, the most important aspect is starting those two conversations and listening to your husband’s concerns as well as voicing your concerns. Good luck to you two.

--

We'd like to thank Sheila once again, for taking the time to answer some our readers' questions! We hope that all of our readers can take something from Shelia's advice or from the advice on Have the Talk America so that you can go ahead and have your own difficult talk.

...but just not at the Thanksgiving dinner table. Save it for after that.

Have a Happy Thanksgiving, everyone!

Questions On Talking About Money And Relationships, Answered (Part 1)

Posted on November 20, 2007 by Him

Last week, we asked if you had questions about how to approach the topic of talking with your loved one about a particularly difficult money situation. Sheila Heen, communications expert responsible for much of content of Have the Talk America, made her advice available and answered your questions. We'll present the first two today, and finish up with the second two tomorrow.

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KimberlyHMN asked:

This is such a great opportunity! I have a 'talk' I need to start, but really am dreading it. I just got engaged to my fiance (we've been together for quite awhile). I know the smart thing to do is to get a pre-nup, but he has said that they are the worst things ever!! He thinks you're preparing to divorce before you even get married! We both plan to spend the rest of our lives together (obviously) but just-in-case (since you never know who you or they will turn into!) I think we should have a pre-nup before we get married. How do I bring this up to him without hurting him and without making it seem like I expect to divorce sometime in the future?

Dear Kim,

First things first: Do you have much to protect? Forgive my forwardness, but I don’t want you to tackle this conversation and endure the pain if you don’t need to.

Pre-nups are designed to protect a spouse who brings significant wealth into the marriage. So if the couple later divorces, the spouse doesn’t have to divide assets that they feel were “theirs” before they even met their soon-to-be-ex. If you have a trust fund, inheritance, stock portfolio, real estate (with equity in it), or a yacht docked in Monte Carlo, then, yes, you should think seriously about a pre-nup.

If you think you might need one, it might make sense to talk with a lawyer, and take your fiancé with you. I know it’s touchy. You are preparing for the worst even while planning for, and expecting, the best. It’s emotionally confusing and may sound to your fiancé like you are sending mixed messages about your commitment or expectations of him. Reassure him that this isn’t the case at all, and try to explain what, specifically, you are worried about. And be sure to ask him what he hears you asking - this will give you a chance to clarify so that you truly end up on the same page.

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strange bird asked:

My boyfriend, who is in graduate school, is completely financially dependent on his parents. He lives rent-free and earns more than enough to pay his mandatory expenses and save, but instead spends everything he earns and has his parents refill his account when he overdraws. We talk about moving in together when we both finish school, but I'm afraid he'll expect to live off me the way he lives off his parents. It's not that I think he'll take advantage so much as I think he doesn't know how to take care of himself financially. How can I talk to him about "proving himself," without asking him to prove himself?

Dear Strange Bird,

I think you are “right on the money” - as they say - with your concern. A few of us had a class in school about how to manage our emotional relationship with money, which drives the way we spend, save, cash and charge. If your boyfriend hasn’t had a chance to make all the usual mistakes on his own, then you are along for the ride while he figures it out.

You’re right. Asking him to “prove himself” isn’t going to go down very well. This frames you as the grown-up who has the answers, and him as the financial first-grader.

Instead, talk about it in terms of finding out whether the two of you have compatible values, assumptions and habits around money. This will open up the conversation about how you each manage the money coming in and the expenses going out. How do you decide whether you can afford something? How much savings do you each feel you need? How much debt are you comfortable having, and for what? School? A car? Nice dinners out? Or the very latest video-game player? How might you test those ideas - with a household joint account? With a budget for the next couple of months?

If you can have this conversation in the spirit of thinking it through together, and resist the temptation to judge or lecture, then he may hear your concerns, have some ideas, and you can map a path forward together.

Good luck!

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We'd like to thank Sheila for being available to answer some reader questions!

We'd also like to point out that on the Have the Talk America website, if you make a pledge to talk with your loved one about a dificult topic, Nationwide will donate $1 to the Red Cross. I'm sure they could need all the help they could get with the recent tragedy in Bangladesh.

Last Chance - Ask How To Bring Up A Tough Money Situation

Posted on November 14, 2007 by Him

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Just a reminder:

Do you have a tough money/relationship question you need to ask someone, but don't know how to bring it up, or what to say? Leave a question for communications expert, Sheila Heen (bio), by MIDNIGHT TONIGHT.

See the details here.

How Much Do You Tell Your Parents?

Posted on November 09, 2007 by Him

I love blogging about my mom. Really. She gives me so much to talk about. My dad doesn't speak much, and he's not crazy, so I don't write much about him.

Ever since I've been more or less financially independent from my parents, I feel as if they don't need to know the financial minutiae of my life. When I first obtained my current job, I divulged my salary information to my mom; however, back then I did live at home and was eating their food. Now, I don't tell her much - currently, my mom doesn't know exactly how much I make. That doesn't stop my mom from asking, though.

I wouldn't mind so much if she asked maybe once a year or so. It gets annoying because everything eventually turns to "how much did it cost?" Here's a fun scenario:

Me: Mom, I'm running a half-marathon!

Mom: Oh really? How much does that cost?

Me: ...

You can substitute my first line with anything, from "I like midget bondage" to "Oh my god I sliced off my thumb" to "No, Mario Lopez will always be A.C. Slater to me." She will, in some way, ask about the cost.

Now, here's what happens when she's asks about money coming in:

Mom: So how much was your bonus?

Me: It was a nice amount...

Mom: You should give some to me and your dad.

Again, you can substitute "bonus" with "salary", "amount of Christmas presents", "tax refund" or "illegal mob money" and still get the same result.

Where I start to get angry is when my mom starts asking me about Her's salary, bonuses, cost of whatever. That is certainly not her business. She has even asked Her directly about some money issues. I thought that was way out of line and I told her so.

Why don't I like telling her specifics? My mom has a way of using whatever information I give her against me, and possibly Her, for her own evil purposes. Oh mama, you so craaaaaaazy.

How much financial information do you divulge to your parents? Do they ask you about your finances or do you readily give them information? How has this affected your relationship with them? Do you tell them, or do they ask about your partner's finances?

Want Advice On How To Bring Up A Tough Money Conversation?

Posted on November 07, 2007 by Him

"Listen, we have to talk..." At one point in your life, you have heard these words, and you know that it's never the start of anything pleasant. Maybe they were being said to you, maybe you heard them coming out of your own mouth. Maybe, you are even thinking about saying these words to someone in the near future, but don't know how to go about it. When I had to have a big financial talk with Her, it wasn't that pretty.

Do you have to have a difficult conversation in the near future, but don't know where to start? If you're having trouble finding the right words or right way to frame a difficult money discussion, leave a comment below explaining your situation for Shelia Heen (bio), a communication expert and author of Difficult Conversations, who helped come up with the quiz and tips on Have The Talk America. We'll leave comments open until Monday Wednesday, November 14, 11:59PM. She'll select a few questions to answer, which we will then post on by Have the Talk Day, November 20, a day in which you can prepare for to have your big talk.

Here are some examples of situations you may have trouble with...

Here are some good reasons to have a talk, according to the "Tough Talks" survey...

Have the Talk has a lot of tips on how to approach difficult conversations, from talking to your partner about money, talking to your kids about bumpin' uglies (aka SEX, per the urban dictionary), and how to talk to your parents about an estate plan. You should also take their quiz to find out your communication style.

To help soften up the initial invite to talk, you can send a humorous video invite, featuring Frank Caliendo, to that person. Admittedly, I was skeptical of them, but they are really funny.

So go ahead, and leave a comment for Sheila or visit Have the Talk.

(As full disclosure, the Have the Talk website is a campaign by Nationwide insurance, who paid us absolutely nothing to post this. We just thought it would be a great resource for our readers.)

Anyone Use Microsoft Money Plus (2008)?

Posted on November 02, 2007 by Him

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photo: ifranz

We've been using Microsoft Money quite diligently for the last six months and have been pleased so far by what it has to offer. So this week we "upgraded" our copy of Microsoft Money 2005 to the new Microsoft Money Plus -- and by upgraded, we mean had to buy the new version because automatic updates stopped working.

So far, we haven't come across anything heinously wrong with the program. Right now we're just using it to keep track of purchases, budget, and track investments. Everything still works, and all is right with the world.

I can't help but think that I can be using it in more efficient ways. I'm feel like the black sheep of personal finance blogs for using Microsoft Money; everyone else is loyally devoted to Quicken. In fact, it seems like the entire intarwebs is devoted to Quicken, with forums, websites, and shrines dedicated to keeping the Quicken gods happy.

Anyone aware of any Microsoft Money forums or websites or shrines? Anyone have any random tips for using Microsoft Money?

Finances and Relationships: Dropping the Debt Bomb?

Posted on November 01, 2007 by Him

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photo: agiel

Her and I met early on during our collegiate careers when we both had little debt, student loan or otherwise. To us, racking up debt was a normal part of college life, so it didn't bother either of us when the other pulled out a credit card to pay for something (in retrospect, that was probably a bad idea). We did everything together as we built our fledgling relationship, from getting wasted at parties studying really hard for classes to building a future of debt. So when we finally divulged our financial malaise to each other, the fact that we each had debt wasn't a surprise.

I wonder how different that conversation would have went had we met in different circumstances. How would this conversion even be brought up? Would I have still stayed with Her knowing how much debt she had? Would Her have been fine with my frivolous spending? Or would have ended with us making out and forgetting about it until another day? We often try and speculate about these things and talk about these "what if" scenarios, but both of us really don't know what would happen.

If you met your partner and either of you had significant debt coming into the relationship, how did you handle it? Have you shied away from serious relationships because of your financial status? Have yours or your partners' debt been the demise of a relationship?

(sorry, no one is going to see our Halloween pics from last night, that would make us not-so-anonymous now, wouldn't it?)

Financial Doldrums

Posted on October 09, 2007 by Him

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photo: atconc

Wow. Two weeks without a post. In internet time, that's equivalent to being dead for a few hundred years.

The above picture nicely represents how much extra time has gone towards finances. In the last two weeks both Her and I have been swamped with work, social, and volunteering obligations that haven't left us much time to write quality posts. The fact of the matter is that financially, we're coasting along. Our savings are automatically being deducted from our salaries and deposited into the appropriate accounts. Whee.

I've decided to skip the net worth statement for this month because I'm behind on bookkeeping - we've incurred more than a usual amount of reimbursable work expenditures that need to be tallied up.

This week isn't any better busy-wise, either. It is quite nice that when we're this busy, we have no time to spend money. Maybe that's a good thing.

The Cost of Laundry Service: Was It Worth It?

Posted on September 17, 2007 by Him

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photo: Melissa Gupta

We blogged a few weeks ago about how busy we were with guests, with our modest apartment being occupied for 11 days in a row. During the time leading up to the arrival of our first guests, both Her and I were busy at work, so any plans of getting our house in order were well-intentioned but difficult to accomplish.

Finally, it came down to the last night before our guests arrived. The house was a mess. There was a heaping pile of laundry that needed to be done. We were feeling quite overwhelmed at the task ahead of us, so we decided that outsourcing either cleaning the house or laundry would be the best method of getting everything done. After a minute or two of deliberation, we decided that we would send out our laundry and tag team cleaning the house.

So we carried our laundry over to the laundromat and had them weighed, and were told it was going to be 80 cents/pound. We had 48 pounds of laundry, so a little simple arithmetic reveals...

80 cents/pound X 48 pounds of laundry = $38.40

So was it worth it? Would we do this again? Absolutely NOT.

First off, the cost of having them do our laundry was higher than I thought in my previous post where I merely pondered this idea. Paying almost $40 every 2.5 weeks to do laundry would cost us

52 weeks/2.5 weeks per laundry event X $40 = $798.72 per year

...almost $150 more than what I previously estimated. By doing laundry ourselves at $16 every two weeks, we spend $332.80, potentially saving $465.92. I don't think I have to explain they benefits of having that money go towards something more useful.

Also, when we got our clothes back, they weren't sorted into piles for each owner of the clothes. The supposed time saved was reduced by the time we had to sort through everything and then put away the clothes.

This is definitely something that we're going to try to avoid. Hopefully we won't have to think about this too much in the future, as we'll be looking for a washer and dryer in the next place that we live.

Damn You, Washing Machine!

Posted on September 05, 2007 by Him

One fine day in the summer...

Her: Hey, have you seen my iPod?

Him: No, why?

Her: It's missing. I thought I left it in my workout shorts...but we just did laundry...

Him: (uh-oh)

Her: Wait, you DID check the pockets of everything before you threw it into the wash, right?

Him: Um...I thought we were responsible for our own clothing!

Her opens up the drawer containing her workout clothes and pulls out the pair of shorts the iPod was last known to be in. She reaches in the pocket and takes out a soggy iPod.

Her: Dammit, this is the SECOND expensive thing you've washed.

Him: At least it's clean?

Weirdly enough, the iPod actually worked, but only when it was plugged into a power source. We took the iPod into the Apple Store and ended up buying a factory reconditioned replacement for $80.

Needless to say, I diligently check the pockets now.

The $125 Load of Laundry

Posted on June 11, 2007 by Him

A couple of months ago we discussed whether or not it was worth it to have our laundry send out versus doing it ourselves. Fear not, loyal readers (or first timers, I guess); we have not succumbed to the temptation to have someone clean our clothes.

But maybe we should have.

The other day we were doing laundry and Her plunked down a full laundry basket in front of me to be loaded into a washer, while she went and attended to another washer. I diligently emptied the dirty laundry into the triple sized front loading washer, put the quarters and detergent in, and started the cycle. Her came up to me about ten seconds later.

"Where are my keys?" she asked.

"Why should I know?" I replied.

"Well, they were on top of all clothes that were in that laundry basket."

Clunk...clunk...clunk...

Yep, I threw them into the washing machine...with the key fob that disarms the car alarm attached.

"Seriously?" Her remarked, incredulous.

Yes, seriously. The next day I had to go to the dealer to get a new key fob and pay for the labor charges for them to program it, a total of $125.

At least the keys were clean.

Relationships and Finances, Reader Submission: JP's Story

Posted on February 12, 2007 by Him

This is a part of our continuing series on reader submissions on relationships and finances. If you would like to share your story on relationships and finances, please see this post Without further ado, here's JP's story.

Okay, I will admit it. Finances is one of our worst areas of communication. There are so many problems, and we don't really deal with any of them. But here goes:

A quick portrait - as a single woman in my 20s I made enough to save, invest, give to charities, travel, and spend on small splurges (mostly books and a pedicure every six months or so). My parents paid for my college degree, so I didn't have student loans. I had gotten into a bit of a credit card hole as a teen, but my parents closed the account with a stern warning not to spend money I didn't have. They paid off the card I got at my university's bookstore to the tune of about $700. For almost ten more years I never got another credit card, using just my check card or cash. I financed a car and paid it off in 2 years, and generally rented with roommates.

My now-husband was divorced with a child, and was also a small business owner trying to re-invest as much money as possible into his company; thus his salary was pretty meager. After the divorce he didn't want to battle his ex-wife and conceded a lot. His child support payments were so high that he could not live on his own, so he lived with his parents -- culturally acceptable because he is Hispanic and very close to his family. Together with his parents he rented an apartment. As a fairly recent immigrant he had bought a new car (but a modest one) at an average price, but with less-that-stellar financing that he eventually paid off. My husband did not have any credit cards or any other debt. Without his knowledge, my husband's ex-wife got several credit cards ran up the bills, and never paid. These were eventually "charged off." My husband always paid his bills, though sometimes late. When he checked his credit, it was wrecked. He contacted the credit card companies, and without much trouble got the major black marks off his credit report since he had never signed, used or even known about the cards.

While we were dating we lived separately and had a fair number of talks about certain aspects of our finances. We planned to buy a condo and move in when we got married. Which we did. The real estate agent advised my husband to get a credit card and use it responsibly to build up his credit. He did, and I did the same. We got a great mortgage rate and some extra assistance with the purchase through a First-Time Homebuyers program in our area. We bought a condo I knew we could afford.

We paid for our wedding with savings and gifts from our parents. We have done a lot of work on the apartment ourselves and furnished it with a lot of things we got at the wedding. We are pretty frugal.

Though I imagined we would share money after we got married, it hasn't happened. With my higher salary I pay our mortgage, our telephone bill, our homeowners insurance, car insurance and medical insurance, my own cell phone bill, and some other minor monthly bills. My husband pays for our cable and our condo fee, in addition to his child support. I pay a greater portion of our entertainment and grocery costs, but he does pay sometimes. I came to terms with the child support before we got married. I truly believe that it is not in the best interest of his son that he pays so much, and I think he would agree but he does not want to go back to haggle with his ex about it. And I have accepted that. He did increase his salary when we bought the condo, but it is still about half of mine.

I'm stretched a lot farther financially now. I rarely have extra money for the little things I used to do, and save a lot less. And sometimes I resent that. I worry about paying for college or having more kids or some unforeseen medical disaster just around the corner or being able to take the vacations I want.

When I start to talk about money, he always winds up saying -- "If you need money, just ask." But even if I do ask, it is usually forgotten. I wouldn't put myself in a situation where I really needed his money. I don't know if he feels that our financial burden is as unequal as I think it is. Maybe it is pretty equal and I just need to hear his side. Maybe I just need to ask for more. Maybe I just worry too much.

The thing is, his smaller salary doesn't bother me. I don't mind that we almost never go out to eat or go to the movies. And this whole financial analysis makes my husband sound so lesser, when in reality he is an amazing amazing husband and one of the most incredible fathers you have ever seen. He is gorgeous, and funny, and helps out around the house, and sometimes surprises me with a note in my purse or dinner cooking when I get home tired or a foot massage. He always has the words to make me believe, and is so supportive of me in ways no other man has been. I could go on and on - the patience, the sex, the trust. And I think, so what does money matter? We have enough.

We have talked about him staying home if we have more kids, and I think it would be great. And he really wants more.

We have agreed that is his ex-wife tries to apply for more child support, we will fight it. (But I swear -- if his ex-wife was in need I would gladly help her out. Take my word for it, she does not need the extra income. And she is not very good with money - my dream is that if she takes us to court for more money, maybe we can stop with the child support altogether and save that money for college for the kid. He spends half his time with us and we split or cover costs of all the basics, anyhow.)

We have talked about me going back to school ~ I'd like to change careers.

We have talked about getting a new car.

We have talked about helping some of his extended family overseas and talked about moving back there once V goes to college.

We have talked about taking care of our parents when they are older, or my brother who is developmentally disabled.

But those are dreams, plans, hopes and fears. We haven't talked about who will pay the next time we go to the grocery store.

Here and now, I am left with bills that will take up most of my paycheck and a shockingly small amount left over. Lucky he is so damn good.

Relationships and Finances, Reader Submission: JC's Story

Posted on November 20, 2006 by Him

Reader JC sends in her story of her and her husband's trials with money:

When my now-husband and I met, we were both at a turning point in our financial lives. After several years living in one of the most expensive metropolitan areas of the country, separately, we'd each realized the gravity of our debt situations and had decided to make a change - start saving, stop spending, and just in general to be more aware of our numbers. I think this mindset is part of what bonded us from the beginning. However, it is difficult to be serious about debt when you're falling in love! For about a year, we talked a lot about being responsible but did not take much action. The best thing we did financially when we were dating was to start a checking account together. Each month, we each deposited $200; that money was then used for all of our dating activities like movies, dinners out, or even just buying groceries to make dinner at his place together.

Our situation did not worsen drastically when we were dating, but it certainly didn't improve. After one and a half years, we got engaged and bought a condo together, and THAT is when we got serious. Suddenly we found ourselves planning a wedding and a future together, and already more than $40k in combined debt. Our engagement was difficult; we made some decisions about our wedding that did not please our parents and some family members, but we had to be responsible. We kept our wedding guest list under 50 and planned a very intimate day and although some feelings were hurt, in the end, everyone has tried to be understanding and the people who did attend the wedding have not stopped telling us how special it was. The best part is, with small contributions from parents and some of our own money, we were able to pay off the wedding ($15k) in roughly two months.

So, we hadn't lost any ground on debt, which is what we were afraid of. Nonetheless, we hadn't gained any either. It has now been six months since the wedding and we have major momentum. Some of the best decisions we've made financially:

1. Combining finances. All of our money goes into one account and he handles all of the payments. We do all of our spending on an airline miles rewards card (honeymoon, here we come!) and have set a ceiling on daily spending on that card.

2. Living more frugally. We grocery shop less and buy less expensive brands. We bring lunch to work. We dropped the $160/month cable (kept the cable internet), and bought $10 rabbit ears for the TV. We're not home enough to watch TV anyway! Now, our cable bill (for internet) is only $29!

3. Just a few months ago, I consolidated my car loan (high interest, as I was 21 and had bad credit when I bought the car) and another smaller loan onto a no-interest-until-november-2007 card. We will pay that off probably by next April.

4. Finally, my husband gets an 'extra' paycheck every six months. That money goes directly to our debt.

If all goes as planned for us, we'll be debt-free (including car loans and student loans) by the June 2007 timeframe! For all of the times we've felt defeated, we just look ahead to less than a year from now and remember that we will have paid off more than $40k debt in roughly 2 years. Most importantly, we did it together as a team, and we learned some great lessons along the way.

Thanks JC!

Do you have a relationship finance story you'd like to share? Submit yours! Check this out for details.

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