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Moneystepper’s 2015 Savings Challenge Update #3

couple money moneystepper savings challenge

It’s time for an update on the MoneyStepper’s 2015 Savings Challenge. Actually it’s overdue, but because we took a spring break last week I’m not feeling too bad.

I’ve signed us up for it as a fun way to build up our net worth and savings. The two main goals of the challenge are:

  • Grow Your Net Worth
  • Save % of Your Net Income

For 2015 our family will do our best to increase our net worth by 25% and have a 15% savings rate.

March Net Worth and Savings Results

March went by way too quickly – it was my first month back to work since having the baby. Even now, my work schedule changes every two weeks until I can find something that fits.

I’m currently doing a pseudo-split shift where I work in the morning for a couple of hours and then finish up in the evenings after my husband comes home. Not sure if I want to keep this schedule.

Otherwise the only other difference with March versus the previous month is our tax refund. It was smaller than precious years (we’ve gotten better with estimated tax payments with my work), but big enough to bump up our savings.

For those curious, here are our numbers for March:

  • YTD Net Worth Improvement: 8.9%
  • YTD Savings Rate: 27%

I’m really happy about this, especially with the big changes around the house.

Savings Challenge

Graham, though, had a different take on my progress. After I submitted my numbers and gave him an update on what was going on, he sent me a proposal for the challenge:

Given that you are currently 42% ahead of your pro-rata net worth goal and 80% ahead of your savings rate goal, perhaps we should re-evaluate your annual goals in order to keep them relevant and to ensure that you are really pushing yourself.

From our discussions to date, you’ve had one off events in Q1 …. which may not be repeated again in 2015.

Also, the markets up to the end of March have seen the FTSE 350 increase by 3.6% and the S&P 500 increase by 0.5%. Neither of these are hugely anomalous, and so these shouldn’t really factor into our re-evaluation decision.

Therefore, I would recommend that we alter your goals to:

  • Net Worth Increase: 30% (5 percentage points increase compared to your original goals)
  • Savings Rate Increase: 20% (5 percentage points increase compared to your original goals)

I know that this will be a challenge, but it is called the Moneystepper Savings Challenge after all…! 😉

What do you think?

My first reaction was “What? Are you crazy?!” LOL

We had a baby, I got a new workload, still trying to figure out this schedule…

When I took a day to think about it, though, I saw Graham’s suggestion differently. I began to see this as a way to push us to be more financially fit and get rid of the student loan.

We might not reach this new goal, but I believe at the end of year it will get us closer to financial freedom. So I emailed him back and told him we’re in. Hopefully next month’s review will show us meeting this new challenge.

Thoughts on Our MoneyStepper Progress

I’d like to hear about you and your family about your goals and progress so far. Have things been going well? Have you had to deal with any set backs?

Join Us for Money Smart Week and Master Your Money!

Learn how to build your net worth and marriage

Looking to Master Your Money? Great news; Money Smart Week is coming up quick and with it a ton of great events and resources to help you!

Created by the Federal Reserve Bank of Chicago in 2002, Money Smart Week® is a public awareness campaign designed to help consumers better manage their personal finances. This year it runs April 18 – 25, 2015.

There are events throughout the week from partner organizations including financial institutions, libraries, government agencies, media and nonprofits. They’ll be covering all of the major money topics and reaching out to all demographics.

What makes this especially good is that All Money Smart Week® events are FREE! 

Master Your Money

Couple Money is teaming up this year with an group a personal finance bloggers and podcasters to help you master your money. With so much to cover, it’s divided into two sessions so you can get the information and encouragement you need to tackle your money problems.

For those curious, here are the panelists:

speakers1

speakers2

 

The topic I’ll be tackling is How to Stop Fighting About Money and Build Wealth Instead. It will be focused on helping couples who have different and opposite getting on the same page

The session is free, but seating is limited. Register for either or both Master Your Money sessions today (use the links below) and reserve your spot.

Curious About How to Master Your Money

If you have any questions you’d like answered, please email me. I’ll also be updating this post as more information becomes available.

What You Need to Know About Mortgages

Learn from a mortgage loan officer what you need to know before you buy a house.

Buying a house is typically the biggest purchase couples make. You two can be ahead of the curve and save tens of thousands of dollars by learning the essentials about mortgages.

I’m not a professional financial expert so I compiled a list of questions that home buyers may have and sent them to Coastal Federal Credit Union.

They came through and one of their mortgage loan officers took the time to answer my questions about buying a home and getting a mortgage that works with your budget.

(Note: Minor editing to make format it for this post)

Saving Enough to Buy a House

While saving for a down payment is a necessary step if you want to buy a house you can afford, there are other expenses you need to be aware. Preparing ahead for these costs will make the process go a lot of smoother for the two of you and your budget.

What mistakes have you seen first time home buyers make when purchasing? 

  • Failing to plan. We encourage you to sit down with a lender first before starting the homebuying process. Get preapproved before you shop
  • Not working with a good realtor. Have a buyer’s agent, rather than calling the seller’s agent on a the sign from a home you saw
  • Not getting all the recommended inspections. Again, a good buyer’s agent can guide you through the process, and help you choose the inspections that will best protect you
  • Not Tapping into your network. Look to family and trusted friends for recommendations for both your lender and an agent.

Besides the down payment, what are some typical costs that home-buyers needs to plan and save for?

  • Moving expenses
  • turning on utilities
  • furnishings, appliances
  • maintenance items / tools
  • décor
  • sometimes there are repairs that are needed that the sellers didn’t cover

One bit of advice we give our members is to avoid buying things before closing, especially if you are using credit, because the added credit balances could affect their final credit check prior to closing the mortgage. Consider whether they have to buy out the remainder of a lease if they are renting.

For a couple looking to buy there first home, how would you advised them to plan? What numbers should they think about and run BEFORE they shop around for a lender? 

Start with the lender in order to get an understanding of how much home you can realistically afford. Go in knowing how much you spend on household and reoccurring expenses now, including rent; how much they owe on other loans and what your disposable income is .

Shop lenders for the first time homebuyer program that works best for you. Look for a lender that’s willing to hold your hand through the process.

Mortgage Interest Rates, APRS, Origination Fees, and Points

Besides saving for your house, it’s important to understand all the terms of your mortgage. That means becoming familiar with the jargon that lenders use.

When shopping around looking at various lenders’ sites, typically I see the interest rate and APR given. What exactly is the difference between the two? 

APR is a tool to standardize the comparison from one loan to the next. It is the annualized cost of the loan, including all of the interest and lender’s fees. The CFPB recommends that borrowers should always use APR for the best comparison. The interest rate is a component of APR.

What are origination points and how do they work? 

Origination and points are two different things. Origination is the lender’s fee and covers a variety of the services they provide in preparing the loan. Fees range from 0 to 1% of the total loan. Discount points are prepaid interest and are used to buy down the rate. Both origination fees and discount points vary from lender to lender.

Thoughts on Buying a House

What other questions do you have about buying a home or mortgages?

Spring Break, Being Money Smart, and Traveling

Couple Money links around the web

My mom is on spring break this week so we’re doing a family weekend trip. She offered to watch the kids for a couple of days, giving us some time to unwind at the beach. Yay grandparents!

If you’re on break too, I have some great reads to share.

Couple Money Around the Web

Besides writing here, I also run the Couple Money Podcast, contribute to other sites, and occasionally do interviews. Here are few things I’ve been busy with:

  • My Moneystepper Savings Challenge Update on Moneystepper: Since joining the challenge, it’s been a busy few months with having our second daughter and getting back to work. I talk to Graham about the progress we’ve made so far on our 2015 goals.
  • 5 Smart Ways to Spend Your Tax Refund on TurboTax: We received our tax refund last month and it was divided between helping us grow out net worth and covering the weekend trip. I listed some other ways you can spend your money to boost your finances.
  • The Saver’s Credit Explained on TurboTax: If you put some money into your retirement accounts in 2014 and haven’t filed your taxes yet, come check my post to see if you qualify for the Saver’s Credit.
  • How to Travel for Free….With Kids on Couple Money Podcast: Dan Miller from Points with a Crew shared how he and his family of eight save a ton of money when they travel around the country.

If you haven’t check out the Couple Money Podcast, please do. Besides Dan talking about travel, we recently had episodes covering credit unions, buying a house, and starting a home garden. It’s free to subscribe to CMP!

Money and More Posts I Loved This Week

I found a few gems this week on saving and earning more money.

I hope you and your family have a wonderful weekend!

How Credit Unions Can Boost Your Family’s Finances

Credit unions can be a great place for your joint bank accounts

Last week the Couple Money Podcast ran an episode about using credit unions for your joint accounts. Joe Mecca from Coastal Federal Credit Union was the special guest and he took time to answer some questions that people have about credit unions.

If you two are looking for a place to move your money, then you may want to consider adding some local credit unions to your list. You may find that they are a better fit for your financial goals.

What Makes a Credit Union Different?

Credit unions offer many of the same services as a bank – checking, saving, and money market accounts. Members can apply for car and mortgages. So what is the big deal between them?

The main difference with credit unions and banks is how they are structured. Credit unions are not-for-profit cooperatives that serve their members. When you join the credit union, you are part owner.

While a bank may reward shareholders, credit unions return their surplus income to their members in the form of dividends, better interest rates (both with deposits and loans), other benefits.

Bankrate’s 2015 Credit Union Checking Survey found that credit union checking accounts also tended to be cheaper than banks in other areas:

  • Lower overdraft fees
  • Lower minimum amount to open an account
  • Lower fees to use an out-of-network ATM

On top of those lower fees, surveys reveal that credit unions have higher customer satisfaction. My personal experience with credit unions has been fairly positive. One thing that appealed to me was the community feel and the personalized attention.

How Can You Qualify for Membership

While banks can be open to just anyone, credit unions do have a field of membership. Back in the day, many credit unions were based around an employer such as a school system or the state government. Now there are credit unions based on numerous bonds such as:

  • membership in an organization
  • geographical location
  • group membership – such as a church or school

As you can see it’s expanded to the point that there is probably a credit union that you qualify for in your area. You may also apply to be a member of a credit union if a close relative is already one.

Finding the Right Account for Your Money

Whether it’s a bank or credit union, you want your money at a place where it is not getting drained by ridiculous fees. When you’re looking at credit unions ask questions and see if they can offer a checking account that addresses your needs such as:

  • NCUA insured
  • No maintenance fees
  • Pretty fast (and free) bill pay system
  • Conveniently located ATMs
  • Good customer service

I learned from Joe that credit unions that particpate in the Allpoint network gives you access to surcharge free ATMs around the world, a big plus if you travel much. If you want to see if a local credit union can provide what you need, you can use this tool from the National Credit Union Administration

Thoughts on Credit Unions

I’d love to hear from you about your experience with credit unions – good and bad. Feel free to share your thoughts in the comments. How many of you are members of a credit union? What kind of service do you get?