Tag Archives: goals

Why every couple needs a prenuptial agreement

This morning, I read this New York Times article on the importance of financial common ground in marriage. These are basic tips that we all know, but it got me thinking about the underlying theme of basic communication.The article discusses the importance of communication during marriage, but the groundwork for good financial communication begins before the wedding.

I am often surprised at how little my friends share financial information with their significant others. I’m not suggesting that you swap credit scores on the first date, but full financial disclosure is an essential part of engagement. It was easy for Tony and me to blend our finances because we started with so little; it’s more complicated for couples who have already acquired independent assets.

Drawing up a prenuptial agreement before marriage can help facilitate these discussions. A common misconception is that prenups are only for couples with huge amounts of wealth, or that their purpose is to protect one spouse’s assets from the other in the event of a divorce. In reality, a prenup outlines what will happen to all assets if you divorce, even normal assets like the equity in a home that you bought before you met your spouse.

The prenup has gotten a really bad rap, but it shouldn’t be viewed as a way to keep your spouse from getting your money if you divorce. If you come into the marriage with individual assets, a legal document that says what belonged to whom before the marriage and how shared assets will be distributed makes things clearer.

All couples need a “prenup.” It doesn’t necessarily have to be a formal legal document that distributes wealth. For young couples who have no assets, it can simply be a verbal agreement about how you plan to manage your finances.

A prenup allows you to lay it all out there before you’re married, take stock of your individual and shared assets and debts, and have some very important discussions about money that many financially independent adults are uncomfortable having with their partners. Through these money discussions, you’ll discover common ground from which you can build your financial goals and philosophies.

Tony and I agree that money will be an open topic in our family, not just with each other but also with our children. There will be no secrecy about our budget or how we manage our money. I want them to understand that money management takes hard work, and even a grown-up salary isn’t a limitless fortune.

We also share a mutual desire for security above possessions. We don’t want to spend our income, no matter how much we have, on a lot of “stuff.” Our frugality began out of necessity, but we plan to continue living frugally even as our income increases. We will always drive inexpensive cars, cut corners where we can, and live below our means. As our income increases, the only difference in our lifestyle will be that we’ll have more money to distribute in our savings accounts for emergencies, retirement, and education for our children.

We agreed that I’ll continue to work full-time until he finishes graduate school, and then he’ll take over the responsibility of earning our income so I can stay home with our children for a few years.

Finally, we agreed that once we got married, our assets and debts became shared. This may not work for everyone; for instance, your prenup may dictate that you’re not responsible for your fiance’s credit card debt. Tony and I decided it would be easier for us to blend everything and work as a team to pay down debt and continue saving together. The important thing to is figure out what you’re comfortable with before you tie the knot.

We moved in together shortly after we got engaged, and we opened a joint bank account. The lines between his and hers were immediately blurred. Communication eased the transition tremendously, and we’ve had no problems with this system.

Drawing up a verbal “prenup” made it much easier for us to budget, manage our money, and plan our future. We frequently remind each other of our goals during moments of financial weakness (i.e. the clearance cookware that nearly blew our budget last month). These shared goals have strengthened our bond.

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Fall cleaning?: Clutter cleanup goals for September

I’m getting a late start, but I decided this past weekend to set a new goal for myself. We have a ton of clutter that’s built up in every nook and cranny of our apartment. Drawers in the guest bedroom, closets, the bookshelves … basically everywhere that is capable of accumulating stuff.

I tend to get motivated to clear clutter in the fall instead of the traditional spring cleaning for a few reasons:

  • With colder temperatures and bad weather coming up, I know we’ll be spending more time indoors.
  • We might be getting some visitors in October or November, and I want to be ready for them.
  • We’re heading out to Seattle to visit my sister the first weekend in October (more on that later), and I’d like to get everything cleared away before we go. Don’t you just love coming home to a clean house? It makes the end of vacation not so bad.

So here’s the rundown of everything that needs to be done in the next three weeks:

  • Massive wardrobe overhaul – I want to donate everything in my closet that I haven’t worn this summer. My husband and I share a closet, so I like to do this every season to clear up some space. Because we don’t have a lot of room, we put seasonal clothing into storage at the beginning of each new season. Clearing out my closet now will ensure that I’m not wasting space by storing things I don’t wear, and it will make it easier to transition to winter clothes.
  • Empty out the drawers – I have a really bad habit of stuffing things into drawers without organizing them. Extra drawers become a depository for things that I don’t really need or want. The drawers I use on a daily basis are pretty organized, but if I don’t see it, then I have a bad habit of letting it get out of control. When I do need something (like batteries for the flashlight last weekend), I open the drawers to find nothing but a big old mess. So I periodically need to clear everything out, organize what I’m going to keep, and throw away the things I’m not.
  • Organize the closets – Like the drawers, the closets we don’t use regularly are a big mess. We have three extra closets, and they’re all full. Ridiculous. Time to purge and organize.
  • Organize our kitchen cabinets – We’re usually pretty good about keeping these in order because we use them every day. But the space under our sink has gotten pretty cluttered, and the inside of the cabinets could use a good cleaning. There’s also some nonperishable stuff in the pantry that, although it’s “nonperishable,” has been in there too long.
  • Assess our book and DVD collections – We’ll probably always be book collectors. My husband is going to be a literature/creative writing teacher, so it kind of goes with the territory. I don’t mind a large book collection. There’s always something to read! It needs to be monitored in the same way that a wardrobe does, though. We haven’t been buying many books for the past year, but our may tastes have changed. We may still have books/DVDs that we bought a long time ago and don’t like enough to keep. It’s time to go through them, dust the bookshelf, decide what’s staying, and sell what’s going.

These are some pretty big goals for me, especially since I’m notorious for making big plans to be productive over the weekend and getting nothing done. My husband is always willing to team up with me on projects like this, so I won’t be doing it alone. Hopefully we can get it all done!

Does your home need a good fall cleaning? Why don’t you join me! Tell me your goals for getting your home clutter-free and ready for winter and the holiday season!

Clutter clean-up update

I had the best of intentions to get rid of the clothes I never wear and round up all of the magazines that have been accumulating around the apartment for over a year. Then we spent yesterday afternoon and evening at two different cookouts. The bigger part of today went to running errands, grocery shopping, and honestly doing nothing. Then it was suddenly 7 p.m., and I realized I’d gotten nothing done. Oops.

The nice thing about blogging is that I now hold myself accountable for the little goals that I set. It’s just too late for me to get started on the massive undertaking that is my clothing surplus, but I figured I could get the magazines taken care of easily enough. So I set to work collecting all of the magazines scattered around the apartment. I found magazines in pretty much every room in our apartment. 42 in all. Yikes.

Here they are all stacked up and ready for recycling. Next to them is our very curious dog trying to camouflage himself and blend in with the magazines. He didn’t understand why I was lying on the floor taking pictures instead of playing with him:

Tony and I spent an hour flipping through them and tearing out articles, recipes, and workouts that we thought we might use in the future. We only found a tiny stack of useful information. The rest is going to the recycling center tomorrow evening along with all of the junk mail, newspapers, and other paper waste that’s been accumulating in the corner of our guest room for two months.

We’ve acquired a number of new subscriptions in the past few months, so our goal is to keep up with our magazine build up from now on. We want to get rid of them as we read them so the only issue we have on hand is the current one. We’ve tried this method in the past and, obviously, failed.

I don’t know why I’m convinced that I need to save magazines. I never go through them again. Never. It feels good to have them all stacked up in one place and ready for recycling. Here’s hoping we can stick to it this time!

Anybody else have a magazine problem? How do you manage it?

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Being frugal when temptation strikes (is really hard)

Sigh. Being frugal is hard enough without the constant testing.

Today, Tony (the husband) and I were on a routine shopping trip at Target. Dish detergent (bought with a coupon), dog treats (also bought with a coupon), Raisin Bran on sale, and deodorant. We picked up our items, and because we’re masochists and we’re not doing anything else until we head out to a cookout later, we decided to browse a bit. Big mistake.

I don’t even bother looking at high ticket items anymore, so Tony saw it first. The Calphalon cookware we’ve been eyeing for over a year. On clearance. 50% off. Gulp.

As you know, we cook a lot. Aside from two Calphalon skillets we bought at Bed, Bath and Beyond with a gift card we got at the wedding, we’ve been using the same cheap cookware for two years. It’s still functional, but we’ve been dreaming of a new, high-quality set of cookware since before we moved.

So there it was. The exact set we’d been dreaming about for two years marked down from $200 to $100. It’s like the fates were trying to tempt us.

We stood in the aisle for about 20 minutes just looking at it and drooling. Tony, who I know wanted it more that I did because he does most of the cooking, tried to make it easy on me. “Let’s just go,” he said, gently pulling me away. “We don’t need it.” I knew he didn’t mean it, though. And I knew, despite his heroic attempt to save me from myself, that he was hoping I’d override his veto.

Mostly because it was something that I knew he wanted, I started making the standard excuses. “We’ve been so good this month. We deserve it.” Then the little frugal voice in my head that’s been getting louder and louder lately said, You want to celebrate the fact that you’ve saved money this month by spending money? How does that make sense?

“But because we’ve done so well, we should end up having about $300 left over at the end of the month from cutting corners in our budget. We could afford this without even breaking our budget!” To that, the little voice said, Um, up until two minutes ago, you couldn’t wait to put that toward your last little bit of credit card debt or your savings.

And of course, the excuse that used to trump them all: “We need it.”

But this time, that excuse wasn’t going to work. I reminded myself of the $100 Target gift card we received at the wedding. We discussed putting it toward new cookware, but ultimately talked ourselves into using it for an ice cream maker attachment for our stand mixer. Yeah, dumb.

To be fair, the cookware cost $200 at the time, and we didn’t want to spend money in order to use our gift cards. We did receive cash from relatives at the wedding, but we decided to use it as the first deposit into our savings account.

The fact remains, if we really needed that cookware, we wouldn’t have bought the ice cream maker first. You didn’t need that cookware so badly when there was something frivolous and fun you wanted two months ago, the frugal voice said. After all, gift cards never expire. Nothing was stopping us from saving up money to pay for the rest of it or saving the gift card until we saw a great deal like this one.

After I had talked myself out of it, it was Tony who started having second thoughts. “I guess when you think about it, we would easily spend $100 by going out to eat only four times. For that price, we can get brand new cookware that will help us cook hundreds of cheaper meals at home.”

As much as I hated to admit it, though, that’s not the point. We can easily make hundreds of meals at home with our old cookware without spending another $100.

Besides, do we really want to undo all of our hard work and restraint this month by spending money now when we’re so close to our first month of budget success? Celebrating your financial successes by spending money is a good way to keep yourself from ever really getting anywhere.

It was the hardest decision we’ve made since we decided to get serious about living frugally, but we walked away from the clearance cookware. Even though we had the money for it, and even though it was an amazing deal. Sigh.

I’m still questioning our decision. Eventually, we’ll need to buy new cookware. Will we end up paying twice as much for it and regret our decision to wait? That thought has definitely crossed my mind. But I just can’t risk getting off track now that we’re so close to our first successful month. We need to know we can do this, and we need to walk away from some good deals for a while if we’ve ever going to get ahead.

I’m sure someday, after many months of budgeting success, we’ll be able to make exceptions for things like that when the deal really is great and it’s something that we really could use. But right now it’s just too early to start making those exceptions. If we give in to every temptation from the very beginning, how will we ever get anywhere?

What do you think? Did we make the right choice? What would you have done?

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Getting started …

After almost a year of lurking in the personal finance blogosphere, I’ve picked up some great advice and finally feel like my husband and I are on the right financial track.

It’s taken me this long to start my own blog because I didn’t really feel like I had much information to add – I still have so much to learn! But I think it’ll be good for me to get my goals in writing to keep me honest and on the right track.

I originally got into frugal living when I moved to a new city with my fiancé (now husband) right after we graduated from college a year ago. He’s in grad school earning a small living stipend as a teaching assistant, and I struggled to find an entry-level job in the stalling economy.

When I finally settled on a temporary part-time job, I realized that we weren’t making nearly enough to maintain our lifestyle. The savings we’d built was quickly depleting. I didn’t want to feel deprived because, honestly, things were pretty bleak at the time. While I didn’t want to increase our debt by living above our means, I did want to live well and live healthy. So I started looking for ways to cut our spending without sacrificing our comfort too much.

What have we accomplished in the past year?

For starters, we kept our heads above water and avoided the dreaded paycheck-to-paycheck lifestyle despite our low income.

I’m also proud to say that instead of increasing our debt, we’ve paid off about $4000 in credit card debt left over from college. (We’re scheduled to make our final credit card payment in November.)

We paid cash for a beautiful wedding with a $5000 budget thanks to our own savings and help from our parents. We also went on a lovely frugal honeymoon in Washington D.C. where we enjoyed free admission at the nation’s museums and landmarks. We spent a little over $1000 on the hotel and food (also paid in cash from savings).

We’ve saved about $2000 in a high-interest ING account, and I’d like to see that grow now that I’ve finally found a full-time job.

What are our goals?

Now that I am working full-time, I’m faced with some tough decisions about how to use the small amount of extra income that we have. The last thing we want is to fall into the spend-all-you-have trap.

Some of our goals include:

  • Paying off a significant chunk of student loan debt.
  • Building and maintaining an emergency fund.
  • Starting a retirement account in the next year or two.

I’d like to make headway on our emergency fund, savings, and student loan debt before I start a retirement account. We’re only 23 and 24, so I think we’ve got a little time, but I want to begin contributing to a retirement account by the time we’re 25. My employer doesn’t offer a 401K, so it will be an individual account. I’m fine with that because I’d like to keep the bulk of our retirement savings in a Roth IRA anyway.

Most importantly, since we’ve only been married two months, I want to start developing good money habits now when we don’t have much. My main goal is to live comfortably and well without spending every penny that we earn.

I’ve lived above my means through credit card spending, and that certainly wasn’t what I’d call living well. I was constantly stressed about money and never had extra money without putting myself into more debt. If we can get ahead of the game then we’ll have extra money, less stress, and a richer life (though not necessarily more “stuff”).

I like to think that if we can do that at our current income, then we’ll be able to maintain those good habits as we start to make more money. In the future, I want to devote the majority of our income to savings and cash purchases and avoid excessive debt.