16 Financial Tidbits for Newly Weds

My neighbors’ son is getting married in June. Thinking about his wedding, made me think of all the “advice” I have for this couple.

I have a few things I can share from my own experience of being married nearly 17 years:

1. PATIENCE! It takes time for your finances to grow. When I moved to Texas in 1992, the ONLY stuff I brought with me was what I was able to fit in my 1988 Buick Skyhawk. Nearly 18 years later, we have a house full of stuff!

2. Don’t rush into any large purchases. Give yourselves time to adjust to married life before you decide where to live or what to drive.

3. DON’T GET INTO CREDIT CARD DEBT! Avoid it like the plague. You’ll be thankful you did.

4. Create and stick to a BUDGET! It doesn’t have to be super-detailed and it doesn’t have to ruin your life. However, you need to have a grasp on where your money is going.

5. Put money aside for emergencies—even if it’s a small amount. It’s amazing how even a small cushion of a few hundred dollars can help in times of need.

6. Start saving for a down payment on a house as soon as possible.

7. Start saving for retirement as soon as possible. DON’T LET THE ASSET OF TIME GET AWAY FROM YOU. Even if you can only afford to save a small amount each month, save it.

8. If your finances are tight, cut out what you don’t need. My wife and I went without cable for many years.

9. Give each of you an allowance that can be spent on anything you wish and don’t criticize each other’s purchases.

10. Have a grocery budget and plan meal menus.

11. Take your lunch to work.

12. Buy some term life insurance.

13. Sit down together and write out a list of financial goals and talk through the prioritizing of those goals.

14. Decide whether or not you’re going to tithe or give to charity.

15. Seek financial advice from your parents (as long as they are good role models).

16. Read some basic books on financial planning and investing. A great place to start is Jeff Opdyke’s Financially Ever After: The Couples’ Guide to Managing Money and Bill Schultheis’ The New Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get on with Your Life*. I have not read Opdyke’s book but am very familiar with his style, having read his columns in the Wall Street Journal.

Thoughts? What would you like to offer?

*Affiliate links

Poor Little Youngsters

Here are the opening paragraphs to an article I saw on MSN today:

A new survey conducted for the AFL-CIO suggests many American workers under 35 can’t manage the basic financial building blocks of an adult life. The union calls the past 10 years a “lost decade” for these young people, during which many fell short on getting their own places, finding stable jobs and saving money for emergencies.

About 31% of survey respondents said they made enough money to pay their bills and set some money aside, but 70% said they did not have enough money saved to cover two months’ worth of living expenses. Parents of these young workers know how far they are from making it on their own; one-third are living with their folks.

I thought this quote was kind of funny:

…Jannon says the results should not be interpreted as laziness. “Young people are really yearning to move out on their own to start their adult lives,” she says. “(But) they can’t find the type of work that supports an adult life.”

I think part of the problem is that we often look at luxuries as necessities and don’t want to make the tough choices of prioritizing our needs and wants.

Lest you think I’m full of hot air, let me give you some examples of what my wife and I did in order to get ahead.

1. We bought a house we could AFFORD! We were told by the mortgage broker that we could “afford” a lot bigger note than what we wanted. But, we knew the math and how the note would affect our finances. We also knew that the mortgage broker’s commission was based on the size of our loan. We went with what we could afford.

2. We went YEARS without fixing up our house. We did little things along the way, but for the most part, we only spent money on things that HAD to be fixed like a new roof and plumbing. It was a couple of years before we even had money to start painting and stuff like that. We could have painted but we wanted to do more than that so we held off until we could afford to do what we wanted to do. We have been in our house ten years now and still aren’t completely finished making it the house we want. We’ll get there though.

3. We went without cable for years. We did have internet service but it was years before we decided to get cable.

4. We had barebones cellphone service for years. Just within the last year or so have we upgraded our cellphone service and plan.

5. We didn’t spend a lot on furniture until we made sure we could afford it.

6. We put away the maximum amount we could afford to put into the 401(k). When my wife first became eligible for the 401(k), we put in the maximum amount. We weren’t able to keep up that pace when our family started growing but we always put in enough to at least get the full match from her employer.

7. We didn’t buy fancy cars. We did buy a new Civic, a one-year old new Ford Contour, and a new Buick Rendezvous (in 2002 and I’m still driving it today). I see young people driving around in BMWs and big trucks and think about all that money they are just throwing away.

8. We racked up some stupid debt but we made an effort to pay it off as soon as possible. We sacrificed to get our credit cards and student loans paid off. Our only debt right now is our house and a Honda Civic note that will pay off in May.

9. We didn’t spend lots of money on clothes. We bought cheap stuff or we shopped end-of-season clearances.

10. We didn’t spend a lot on trips and stuff like that.

Now we are in a pretty good spot. Our monthly cashflow is nice and we are finding ourselves able to pay cash for nearly all of our purchases unless we take advantage of a 0% offer or something like that.

I think young people need to realize that they shouldn’t expect to have it all as soon as they graduate from college. Sure, we all want things, but that doesn’t mean we deserve them or should go out and get them even though we can’t afford them.

I’m not trying to preach. I’m just stating things as I see them.

The Five Lowest-Paying Majors (From MSN)

Thought this was interesting: 5 Lowest-Paying Majors, And What You Can Do About it.

Their list:

• Social work

• Special education

• Elementary education

• Home economics

• Music and dance

Okay, so they are low-paying. Big deal. As long as you know this information going in, you can make adjustments to your lifestyle expectations.

For starters, if you know that one of the above careers is for you, I wouldn’t be saddling myself with a lot of student loan debt. Going to college and choosing a career is a business decision and it makes no sense to saddle yourself with $60,000 or more in college debt in order to take a job that pays $30,000 per year.

You should also realize that you most likely will never be rich from working in those fields. In addition, you shouldn’t be trying to live like a rich person with an income from those fields. No fancy cars or expensive clothes for you. Living within your means (which includes putting money back for retirement as well as some savings) will require some sacrifice but if you love what you are doing, you’ll be able to accept that.

It’s not all bad though. I know several families in which both the husband and wife are teachers and they seem to do okay. It can be done.

Six Benefits of Starting at the Bottom

Saw this article on MSN this morning: 6 Benefits of a Bottom-Rung Job

According the author, Paul Facella, there are six benefits to starting in a low-level job:

1. Teaches you the ropes. In my opinion, there’s nothing worse than a manager who doesn’t know what things are like down in the trenches. I realize that not all managers can do every job, but there’s nothing wrong with experiencing what employees go through on the front lines. Those who start at the bottom and work their way up, have that advantage.

2. Hones your work style.

3. Refines relationship skills. This is very important. There’s nothing like trying to balance friendship with trying to move up the ladder. Some people will be offended by your desire to move up the ladder. That said, learning how to deal with people from all positions within the company will help you go far.

4. Creates opportunities.

5. Forms networks. Depending on your position and company, you will have the opportunity to meet lots of people and have lots of networking opportunities.

6. Reinforces humility. Yes, starting at the bottom can be very humbling. I know this is tiny in comparison to losing a good job and having to start over, but when I first moved to Texas, I took a second job at IHOP as a dishwasher/bus boy. I had a pretty good position of manager trainee with the grocery chain I worked for and found it quite humbling to go work as a bus boy at a restaurant and having to take orders from other people.

One thing the author points out, which is very important, is that it matters a lot who you work for:

“…before you take just any “starter job,” you should find out if this is a goal- and growth-oriented job, as opposed to a dead-end job. In your interview, it is perfectly fine to ask such questions as: What percentage of your mid- to senior-level managers are promoted from within? What programs and policies are set up for helping high-achieving employees develop new skills? Is mobility at this company limited, or could one apply for jobs elsewhere in the company for which one is qualified?”

In other words, it’s not enough to get a low-level job, work hard, and expect to move up automatically. You have to make sure the company you work for will be interested in promoting you.

NOTE: Paul Fracella wrote the book, Everything I Know About Business I Learned at McDonald’s*

*Affiliate Link

A review of Jonathan Clements’ “The Little Book of Main Street Money”


Wiley’s Little Book series is a wee bit confusing in that there’s The Little Book That Beats the Market*, which is a stock-picking book. Then, in the same series there’s John Bogle’s The Little Book of Common Sense Investing*, a book essentially about indexing or passive investing. So, you read one book and say, “That makes sense,” only to have that opinion challenged by the very next book in the series. If it’s confusing to me I can only imagine how confusing it might be to someone who might be new to investing and financial planning.

That’s why I was pleasantly surprised when received a copy of Jonathan’s The Little Book of Main Street Money*, which is much more of a book on the basics of financial planning and the bigger picture rather than just another book touting a particular investment strategy.

For those of you who may not be familiar with Jonathan. He was the author of the Getting Going column, which ran in the Wall Street Journal for something like 17 years. I interviewed Jonathan a couple of years ago (Part 1 and 2).

I asked Jonathan about his book and he said, “I’m biased, of course, but I think it’s easily my best book. The “Little Book” format really suited my writing style. It was like penning a series of columns, except—because it’s a book—I was able to draw tight connections between the different topics.” He also added, “Most personal-finance books are about money and only money. But as we all know, there’s a whole lot more to life than dollars and cents, and I endeavored to make that clear with my Little Book. Money is just a facilitator, a means to an end, and we need to think long and hard about how we save, spend and invest if we want a truly happy financial life.”

In The Little Book of Main Street Money* you’ll find 21 truths about money expressed in a no-nonsense, easy-to-read manner. Truths like:

• We can’t have it all – a basic law of economics that people tend to forget.

• No investment is risk-free

• Markets may be rational, but we aren’t

• Paying off debts could be our best bond investment.

Because it is a “Little Book,” each chapter is short. The entire book can almost be read in one sitting (unless you’re a slow reader like I am). The concepts in the book aren’t new but have clearly been ignored by lots of people as you can tell by watching the news or reading the newspaper. It’s time to get back to the basics and that is what Jonathan’s book is all about.

I think that’s why this is my favorite of the “Little Book” series so far.

Sad News: Jonathan Clement’s LAST Column for the Wall Street Journal

My Wednesday morning ritual is coming to an end. Every Wednesday for the past 11 or years, I have made it a point to check out what Jonathan Clements had to say in his Getting Going column. I opened today’s paper to find out that this morning’s column titled, Parting Shot: What I Learned From Writing 1,008 Columns (free) will be his last.

Over the years I have grown to like and respect Jonathan for his honesty. I even interviewed him a couple years ago (Part 1 and Part 2). No, I didn’t always agree with what he had to say, but for the most part I thought he was right on the money.

Jonathan didn’t mention in his column why he’s leaving the Wall Street Journal. Whatever it is, I wish him the best. Now I’ll have to come up with a different Wednesday morning ritual.

Who Makes the Investment Decisions in Your Household?

Here’s today’s Question of the Day:

Who makes the investment decisions in your household?

I got the idea for this question from Jonathan Clement’s Getting Going column titled He Invests, She Invests: Who Gets the Better Returns? (free), in today’s Wall Street Journal. The column looked at the differences in the investment style of men and women. The main points:

1. Men typically take more risk and trade more often.

2. Women typically take less risk and trade less often.

According to the article, which sites a 2001 study, men turn over their portfolio 45% more each year than women. They attribute this turnover to men’s overconfidence. I’m not so sure about that. I would think it could be attributed to insecurity. In other words, men are looking for something better. I would think buying and holding would exemplify overconfidence. I guess it could go either way.

Anyway, I definitely take on more risk but I wouldn’t say that I trade often. I’m pretty much a buy and hold sort of guy. My wife could pretty much care less about investing. So, I would say that I make the investment decisions in our household. It works beautifully.

How about you? Who makes the investment decisions in your house? Do you both make them? If so, do you have obviously different investment styles and do these differences cause problems?