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What’s Your One Page Financial Plan?

writing financial goals

While I’m a firm believer that couples should have a financial game plan, I don’t think it has to be complicated or tediously detailed. Obsessing over the numbers can be counter-productive as we all have unexpected events happen which can throw our carefully laid plans off.

It’s better to have a plan with enough flexibility to handle these curve balls so you can simply adjust as needed. If that sounds like something you’d be interested in, then you should check out Carl Richards’ new book The One Page Financial Plan.onepagebook

It’s a great read to have around whenever the two of you need to brush up on your financial and personal goals. (Pssst… you can enter to win a copy – check out the details after this post! )

The Most Important Money Question You Need to Answer

Most people visit financial planners like Carl because they want answers on what to do with their money. They want to know how much to save and invest, which debts to pay down first, or whether or not they can retire soon. The last thing they’d expect to hear from a planner is a question that Carl Richards asks his clients – Why is money so important to you?

In The One Page Financial Plan points out that understanding why you want to build your finances is critical. A CFP that is truly interest in you would give advice tailored to your needs, goals, and resources.

Imagine if you want to the doctor and she prescribed something before you’ve been examined and interviewed. You’ve probably find another doctor and quick. The same should apply to coming up with a financial plan – you need to look at the current situation and come up with the destination before you map things out.

As you’ve seen here on Couple Money, I think starting off with goals can be more productive. However it can be difficult to talk about money if you haven’t had much experience (or if previous attempts were tense). So how can you two apply this with your own finances?

Your One Page Financial Plan

Next time you have a money chat (go out and have some drinks!) bring a note pad and try it out. Talk about what money means to each of you. You may be surprised by what your spouse has to say.

Don’t worry so much about the numbers, just see think and dream about where you want to be and how you’d like to get there. When you two have a general idea of what you’d like to do, go ahead and write those down in the notepad.

Somethings you may want to keep in mind when talking about your plan:

  • Pick the right time to have the talk. Being in the right frame of mind is huge, so please avoid having this chat right after a stressful day.
  • Make it fun. Get out of the house to chat.
  • Don’t push it. If you two can’t get on the same page now, it’s okay. You can come back to it once you’ve had a chance to relax and think up some ideas.

Win the Book!

For those looking to improve your finances this year I have good news – I’m giving away two copies of the The One Page Financial Plan!

All you have to do is share your financial plan with me.

You can either:

I’ll round up all the entries and choose two winners next Monday, April 6, 2015 during my lunch break (at 1pm ET). I can’t wait to hear from you and see what big plans you have for this year!

Are Store or Discount Brands Always the Best Bang For Your Buck?

Hwo to Get the Best Deals When Shopping

If you see the title, you may have picked up on the fact that price is only part of the equation. While we do enjoy saving money whenever we shop, we also consider purchases for their value.

I had a great conversation last week with Len about finding the best deals with store and name brands. Len has been running a fantastic series where he has a panel of family and friends test out foods like potato chips, sodas, and cereal.

While the store brands were cheaper and scored better, they weren’t winners all the time. Sometimes, the panel picked the name brands.

And that’s okay with me.

When to Splurge and When to Scrimp with Groceries

Let’s admit there are some things that we’re just picky about. The taste, feel, whatever of certain products just seem better. (Personally I haven’t found a comparable Oreo substitute.)

The problem is when you’re paying more for a product and not seeing a real benefit. That’s when you money is paying for marketing.

You may be surprised at how little difference there is between the two. Some products are made in the same facility and just get different labels or they have almost identical ingredients. Couples can save quite a bit of money if they know which ones to buy.

The only way you can find out is to test it out yourself. Start shifting some of your spending towards the generic or store brands. If you don’t like them, you can always go back. I believe most families will find that they don’t need to have everything be name brand.

Value Over Price

Besides groceries, many couples can reduce their expenses by considering how they plan using items like clothing and electronics.

Stretching a dollar means more than just looking at the purchase price. It does us no good to have to keep buy cheap clothes and gadgets if we have to constantly replace them.

We found that it can be better to pay a little more upfront rather than being drained slowly. It comes down to value over price. Let’s take buying our girls’ clothes.

With a newborn, there isn’t so much a need for pricier pieces because she hardly moves in them so they don’t wear down. They mainly get spit up on and grown out of so I don’t see the more expensive outfits being a good deal. I still buy adorable pieces, just not going to break the budget over them.

For my older daughter, I do look a little  more at the quality of the clothes more carefully because I know she will be using them often.She will out grow these as well, but she when she plays, it’s outdoor kid fun so I really want those items to hold up.

Electronics are they same way. We replace our phones and gadgets like tablets when they break down or there is a considerable improvement or functionality in the new models. When do buy however, we are willing to pay more up front because we expect it to last for awhile.

Thoughts on Getting the Best Deals

That’s our take on things – I’d love to get your thoughts on how you shop. How do you find the best deals on groceries and other items? Have you’ve found any stores or brands that have consistently good deals?

How Much House You Can (Really) Afford

learn to calculate how much home mortgage you can afford

With our baby’s arrival and my returning to work, we’re focusing our attention on two of our goals for this year – paying off the student loan and buying a house.

As we begin the process one of our first steps is seeing how much of a mortgage we can comfortably afford and figuring a down payment goal.

If you’re also in the market for buying a home, I hope our notes can help you two be better prepared.

True Housing Costs

When figuring out how much we can afford on a house, we tried to keep in mind that there are certain expenses to owning a home.

Lenders typically focus on the actual mortgage payments, but it’s up to you to look at related housing costs like utilities, house maintenance (yard care, small projects), and a house emergency fund (replace roof, HVAC).

We discovered this when we bought our town home. We have a homeowner’s association fee that has gone up every year since we moved in.

Since we are looking at older homes for our next place, we have to factor in some buffer money for possible repairs. Thankfully we have friends who live around where we hope to buy, so we have some idea of what we can expect. (Though you certainly can’t plan for everything!)

Calculating Monthly Expenses and Budget

Now take another step back – what other obligations and goals do you two have? Owning a house is one of our personal goals, but it’s not the only one.

Our monthly budget has to have enough room in it so:

You may have similar goals or you may not – the point is many lenders when calculating how much house you can afford don’t take these factors into account. They may simply look at your income and your debt as the biggest factors. That’s why it truly pays for the two of you to go ahead and run the numbers for yourselves.

For us we take a fairly conservative position with the mortgage. When looking at houses, we’re basing our maximum limit on just my husband’s net income.

Examining the Down Payment

We want to make a much bigger down payment this time around with the goal of having a mortgage that is less than what we are currently paying.

The advantage of a bigger home down payment is that it will reduce your monthly mortgage payment. If you put 20% or more, you can avoid paying the additional expense of private mortgage insurance. You may also get a better deal with the lender on your interest rate.

Thoughts on Home Ownership

Enough from me, I’d love to hear from you. For those who already are home owners, what costs have you had to deal with that you didn’t expect? Besides mortgage payments, what have been your housing costs?

Finding Balance When Automating Your Money

The Pros and Cons of automating your finances

Based on several posts I’ve written about how helpful automating our finances has been, you may feel like it’s the perfect solution for a busy couple. While I believe it’s a fantastic way to simplify family finances, I think it’s smart to weigh the costs and benefits before signing up.

Being Careful with Automating

With technology rapidly changing, companies are offering more ways to automate finances. It can be tempting to sign up for a service, especially one that offers to help you save money. But you have to remember you are giving over some control or access to your money to a another party. You may find your finances under control of a disreputable company if you’re not careful.

To prevent that, your best course of action is to go ahead and thoroughly research any company or service you plan on working with before you handing over sensitive and important information.

Please look for those companies handling your finances at least offer bank level security. With some services like Mint you can allow them only read only access.

If you’re unsure or want more information, resources like Consumer Reports can be extremely helpful.

You’re In Charge of Your Money

No one will care about your money like you do. Automating your bills doesn’t change that. While it has significantly cut down on time spent with payments, my husband and I still check our bills regularly.

We’ve had times where certain bills like cable had slowly crept up. If we hadn’t reviewed our budget, we would’ve have missed it and been behind on payments.

And that’s what people have to understand – automation is not the end all solution. It’s a helpful tool that can make managing your more easier.

Thoughts on Automation

I’d love to hear how you handle your family’s finances. How many of you automate your money? How many prefer a more manual approach?

This post was based on a recent episode of the Couple Money Podcast discussing the pros and cons of automating your finances. You can subscribe to the show via iTunes, Stitcher, or copy this link to use with a podcatcher of your choice.

Moneystepper’s 2015 Savings Challenge Update #2

couple money moneystepper savings challenge

I’ve signed up for MoneyStepper’s 2015 Savings Challenge as a 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. With March here, it’s time to reflect and look at how we did last month.

February Net Worth and Savings Results

While February was a quiet month work wise for me, we had plenty to do when it came to finances. We had two big bills that had some numbers that didn’t add up.

Hospital Bill Confusion

Since having our baby girl, we have been receiving plenty of paperwork from both the hospital and our insurance company. As I mentioned last month, we had a very general list of charges from the hospital for about $9,500.

We’ve now received what was paid from our insurance company and some of it doesn’t match what the hospital sent in. Specifically an approximately $4,000 charge from a doctor neither of us remember and who wasn’t listed earlier. According to the insurance we’re responsible for a nice chunk of that money.

I called the billing department the other week to get more information, but the snow storm  delayed things. I called again and requested an itemized bill. We have no problem paying our portion, but I want to be sure it’s correct.

Up and Down Mortgage Payments

Every year we get a statement from our mortgage provider about the payments for the upcoming year. When our statement came in, I looked over it and discovered a problem – they included mortgage insurance with escrow calculations. We had received notice from FHA that we no longer had to pay it anymore so I called them up to get that fixed. Our monthly mortgage payments will now be about $50 less.

Once that was cleared up, my husband and I chatted about what to do with that extra money. We decided we’ll send in the same amount as this past year, but that small amount will be directed toward paying down the principle. I know it’s not much, but we feel better directing it toward finishing our mortgage just a tad sooner.

Saving Bit By Bit with Digit

Just as they promised, Digit has automatically saved me a little bit of cash as I went about my routine, sort of. Ironically knowing that Digit will shift some money away, I’ve been spending less. That’s a good thing for sure, but since Digit is based on your spending habits, the transfers have be in small amounts.

The Numbers Please…..

So with all of that out of the way here are our numbers for February:

  • YTD Net Worth Improvement: 4.99%
  • YTD Savings Rate: 10%

We’re chugging long right now, but I hope things will pick up starting next month with work so we can really amp up.

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?