Together or not Together

I would like to respond to the blog I linked to the other day entitled, “Get Your Act Together, Sisters!”

I want to first address the question regarding the effects marriage has on one’s credit score. I won’t go into detail today about what factors go into calculating a credit score, but you should know that your credit report is tied to your social security number. Even after marriage, each spouse has their own credit score. There is no “average score” or anything like that. The financial decisions each of you have made up until marriage are completely separate. Now, after you say “I do,” things can start to change once you open accounts together.

I highly advocate joint checking and savings accounts (for married couples) for a few reasons:

1. It forces communication between the two of you and provides accountability.
2. It gives you a common goal together as you work to improve your financial situation.
3. It serves as a reminder that the two of you have become one and are committed to a lifetime together.

I would also argue that financial management is just plain easier with fewer accounts to manage, especially if one person is doing the majority of the banking.

Now for a more controversial topic…

I think it is most wise for an engaged couple to keep their finances separate until marriage. I realize an engagement is a huge commitment, but it is not a binding one before God or the state.

One of the main reasons I advocate this is that it forces both of you to live within your means. If one of you can’t afford to pay rent on your own, maybe you should be looking for a cheaper apartment. If you’re struggling to make your own car payments, perhaps you should sell the car. If both of you are living within your means, you should be able to survive independently through your engagement. Then, after you are married, you will see a financial benefit and will be in a much better position to contribute to your savings.

Maybe you are thinking, “What’s the difference? We’ll be married in less than a year anyway.”

Well, it doesn’t make much sense to have the benefits of marriage without the commitment of marriage.


Please comment with any ideas or questions you may have!

Who controls the money?

Hello,

I read a blog post today regarding finances within the marriage (and engagement, as well). I will post my thoughts on the topic in the days to come. But for now, I would like you all to read it and get a head start on the topic. And also, PLEASE email any questions you have on the topic. It will give me a better idea of what my readers are looking for.

Happy Valentine's Day!

Blog Post: Get your act together Sisters

High Yield Savings Account Part II

Hello All,

Sorry I did not post yesterday. I'm a partner in a concessions stand and we had a big event this weekend. Sales were good...so I guess I'm not that sorry ;)

I have found the top four high yield savings account offerings. (If you find something that I missed, please let me know.)

1. Etrade.com 4.40%
2. Hsbcdirect.com 3.55%
3. Capitalone.com 3.50% *Includes free checks and ATM card
4. Ingdirect.com 3.40%

Etrade seems like an obvious winner, especially if you are already looking for a place to trade stocks and mutual funds online. The free checks and ATM card with Capital One are also a very nice bonus. Don't forget that these are introductory rates and will most likely go down a bit after the first couple months.

Ultimately though, the interest rates are determined by the Federal Reserve. The government is currently trying to boost the economy in order to get out of the slump we have been in. They have lowered interest rates, which has given consumers less reason to save their money, and more reason to spend it (by means of lower loan rates) on houses, cars, and the like. I can explain this more at a later date, and how it effects the decisions you make regarding your life and money.

Hope this helps!

What to do with cash savings

You’ve always been told that you should save your money, put it in the bank, and earn interest. That’s how you will become rich – compound interest. It sounds like a wonderful (even inspiring) plan until you get your bank statement in the mail and realize you are earning only 0.10%. But don’t worry, as soon as your account reaches $10,000, you will earn a whopping 0.80%. Even at that rate, your interest earned will equate to just $80 a year.

There must be some mistake here. Inflation is reported to be around 3% and the banks are offering a mere tenth of one percent!

Say hello to High Yield Savings Accounts.

High Yield Savings Accounts offer a much higher rate of return and are typically done through online banks. I have a high yield account with Capital One. My last statement shows it is paying an annual percentage rate of 4.41%. That is down slightly from the introductory rate of 5%.

How are online banks able to offer such a high rate of return when brick and mortar banks do not?

It mostly has to do with overhead costs. Online banks don’t have to keep up with building maintenance, landscaping, and staffing hundreds of locations. Plus, I’m sure they wouldn’t mind if you signed up for a credit card or two ;)

If the high interest rate is the obvious advantage, what are the disadvantages?

You will have to get over your fear of online banking.
It takes about three days to transfer money from your High Yield Savings account to your original account.

I recommend keeping just enough cash in your checking account to cover bills, expenses, entertainment, et cetera, and then put the rest in your high yield savings.

Check back tomorrow for current rates from the most popular online banks. I’ll do a little research in the meantime…

Quicken Financial Software

One of the best things I have done to keep a good handle on our finances was to purchase Quicken Financial Software. If you currently do online banking with your bills, bank cards, and credit cards, you will find it is very simple to use. Some of the advantages to the software include:

Automatic uploading of all transactions in your online accounts

A budgeting feature that will not only help you form one but also keep to your goals

Customizable categories that help you keep track of spending in areas like groceries, dining out, fuel, and entertainment

You can also keep track of assets (investments or your house, for example) and liabilities (loans or credit card debt), and ultimately keep track of your net worth.

There is nothing more valuable in financial planning than being able to see exactly where every dollar is going. At the end of a week, month, or year, you can see what you spent in each category and make adjustments to your budget if necessary.

Quicken also has a section that helps you determine what you need to save today in order to achieve specific long-term goals.

The Starter Edition is only $30 and is perfect for the couple who wants to get organized and be in control of their finances.

The Dollar Dance

Whether you had one of these at your wedding reception or not, I don't really care. There are many other blogs that will debate the etiquette and/or audacity of them.

I am here to discuss the post-nuptial dollar dance. The wedding is over and the honeymoon bliss is a fading memory. Two bank accounts have now become one. In this blog I will talk about the many different questions and issues that arise not only for new marriage relationships, but for anyone who wants to do it right.

It's time I put my finance major and love of this topic to use. As we go, please email me any questions you would like me to answer regarding banking, investing, credit, budgeting, and the like.

The purpose of this blog is to stop dancing around the subject of money and to start making educated decisions that will lead to a brighter, more financially independent future.

Let's go!