Category Archives for "Finances & Careers"

Mar 22

Our Debt-Free Marriage: How We Paid Off $54,500 in the Name of Freedom

By Dustin | Finances & Careers

Would you like to have a debt-free marriage?  Does it seem possible?Our Debt-Free Marriage: How We Paid Off $54,500 in the Name of Freedom

I can tell you from experience that it is not easy.  But it is so worth it.

There have been several events in our life lately that have caused us to reflect on our own journey to financial freedom and all that it has meant to our family and our marriage.

I am excited to share our story with you with the hope that you will find some information and motivation that will help you wherever you may be in your own financial life.

The Debt-Laden Duo

When Bethany and I got married in 2001, we already had a fair amount of debt under our belts.  It was nothing extreme by any means, and we were probably on the low end compared to many of our friends.  We didn’t even have any credit card debt at that point, just a car loan and good ole student loans from college.

I even had a pretty decent understanding of personal finance thanks in large part to a co-worker who shared his copy of Financial Peace by Dave Ramsey with me on the eve of our wedding.  I really loved reading that book, and it gave me an appreciation for Dave Ramsey’s Baby Steps and the promise of living a debt-free lifestyle.  Unfortunately, the pull of “stuffitis” and all the things that seemed like “needs” in our early years together caused us to look past this wisdom and pile up the debt! 🙂

After a year of marriage, we decided it was time to buy our first house.  And with that came new furniture and appliances.  And a new car.  And then another new car.  And more stuff.

We peaked out in 2004 at $54,500 of non-mortgage debt.  Wow.  That’s a big number, but we frankly didn’t feel much pain from it because the payments were never a big strain for us.  We were a long way from a debt-free marriage, but it didn’t bother us much.

If you can make the payments, everything is fine, right?  Wrong.

The Wake-Up Call: A Positive Test

It was around this same time that we decided it was time to start trying to grow our family.  Through God’s grace and our discovery of Natural Family Planning at this same point in our marriage, we were to find out that Bethany was pregnant with our son.  (As an aside, I can now see in hindsight just how incredibly transformative these couple of months were in our lives in so many ways.)

That did it.  It was the realization that we had another human to care for that really got our attention.  Sure, we were doing okay with our finances, but we were certainly not being the wise stewards that we could be.  And we were not planning for the future the way that we should be as parents.

Welcome, Gazelle Intensity!

Once we decided it was time to clean up our mess and start taking our financial stewardship very seriously, all we needed was a plan to follow.  Fortunately, I remembered back to that Financial Peace guy I had pseudo-studied a few years earlier.  And he had a new book!

It was our reading of Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness that provided us with a clear plan for “what” to do along with many inspiring stories of families that have used the same principles to achieve financial freedom.  If you are looking to improve your financial life, I cannot recommend this book enough.

That said, the information it contains is far from rocket science.  His seven baby steps are pretty simplistic, actually.  The magic is in the focused intensity that Dave preaches, and the idea of “gazelle intensity” wherein you treat your debt like a hungry cheetah that’s chasing you (a fleeing gazelle) down.  Run!

It takes passion, energy and commitment to pay off a large amount of debt.  And it takes a lot of hard work.  There’s really no substitute for effort if you want to make a major change in your financial future and live a debt-free marriage.

For us, this meant a firm commitment to incurring no additional debt and a new mindset focused first-and-foremost on paying off our stupid debts.  Practically speaking, the real key for us was building and strictly following a family budget that reduced our spending on things like shopping and eating out at restaurants.  We didn’t take vacations and we kept our entertainment on the simple side.  In a word, we got frugal.

I also worked a LOT, and we used any small amount of money we could come up with to pay off the next debt in our debt snowball.  There weren’t many big moments of major progress.  Instead, it was all about being consistent and maintaining our intensity over the course of several years.

We’re Debt Free!!!

Once we got fired up and determined, it took us approximately 3 1/2 years to pay off our $54,500 of non-mortgage debt.  The day that we actually went to the credit union and paid off our SUV (our last debt) was surreal.

I called Dave Ramsey on behalf of my family that same day and got to scream “I’M DEBT FREE!” live on the air on his radio show. That was 2/29/2008 (hour two of the show that day), and that has become a very important date for our family.

Since then, our debt-free lifestyle has honestly become a routine. It just seems like the only logical way to live now, and I can’t imagine having so much of our income tied up in payments. I know making payments is the “normal” way of doing things in our culture, but this is another area where I have learned that normal sucks. 🙂

Debt-Free Marriage for Life

Debt-Free Marriage Pays OffWe’re still very proud of our accomplishments and excited about what it is setting us up to do in the future.  Each day without payments is a day that adds to our savings and investments and, ultimately, enhances our family’s financial freedom.

Like I mentioned above, the fact that we’ve been debt-free (other than our house) for two years now has really started to pay off (pun intended) recently.  I look forward to sharing the specifics in future posts, but suffice it to say that we love our debt-free marriage.

I strongly encourage you to consider adopting a debt-free lifestyle.  The rewards are fantastic and worth the effort.  If you need some help, check out our section on Debt Freedom and Money Management for lots of great tips.

I really want to hear from you on this topic.  Do you have a debt-free marriage?  Do you think it’s possible?  Where do you need help to make it happen?

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Photos by alancleaver_2000
Mar 19

Engaged Finances and Engaged Marriage- So Happy Together!

By Dustin | Finances & Careers

Engaged FinancesEditor’s Note: This is a guest post from Fern Alix-LaRocca who gives five great tips for achieving financial harmony in marriage.

Some couples will immediately combine their finances in a marriage and some will keep their money separate. It doesn’t matter how you divvy it up. What does matter is what you decide to do with it- together.

Many couples are squeamish around discussing money because maybe they are ashamed of the debt they accrued or maybe they feel bad about not knowing how to manage it properly. You can engage your finances together with these 5 tips:

1. Let your goals be your guide– not the economy or newspaper journalists. When you have the end result in mind, it’s a lot easier to save together to fund that goal. Figure out if you want to own a house, take off of work to be with a new baby, prepare to be self- employed, etc. Then use some of the free online calculators to figure out how much you need to save and invest to meet your goal.

2. Your money must earn money for you to get ahead.  Don’t get stuck in the rat race of making money and spending it. A part of every dollar that you earn should be saved and invested to make more money for you. Why? Because taxes and inflation will eat away at anything you earn, but if you have an additional way of making money (like investing) then you can get ahead over time.

3. Promote mutual understanding of each other by discussing how you were raised around money and what your money personality is. It is important that your spouse understands where you are coming from, so they can be more understanding and compassionate about how you make financial decisions.

4. Make saving and investing for the future fun. My husband and I have a financial meeting once a quarter before we go out to dinner on Friday night. We talk about what went right and what went wrong and how we can improve. Through our discussions, we educate each other and review options and opportunities that we can take advantage of to grow our money.

5. No matter how different you are in your money personalities you can still find common ground and come together to realize those goals and aspirations that you both want and deserve. Get out the pen and paper and start now after dinner with a discussion about what you really want.

Remember that you can’t reach a target if you don’t know what it is. Let failure be an option. You aren’t always going to get it right, but keep forging ahead. It is a learning and growing experience to be enjoyed together.

Knowing the basics of money will help you attract it, keep it, and make it work for you. Have a plan and make money work as hard for you as you do to earn it. Engage your finances with the tips above and stay happy together.

Photo by wwarby

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Fern Alix-LaRocca is a Certified Financial Planner™ and Financial Coach with over 25 years experience as a fee-only Financial Advisor. Get  do-it-yourself financial planning advice by subscribing to her free e-newsletter at http://www.wholeheartedway.com

Feb 25

You May Be Married, But Are You Truly United?

By Dustin | Finances & Careers

Marriage, Money and UnityEditor’s Note: This is a guest post by Brad Chaffee.  Engaged Marriage is sponsoring his Manage Your Money Challenge, and I encourage you to check it out.

Every year we find ourselves celebrating our anniversary with the one we love. What is it that we are celebrating exactly? What does it mean to be married? Marriage symbolizes unity, or the coming together as one, but is that what we are really celebrating?

It’s what we should be celebrating, but is it? Maybe what you are really celebrating is a social achievement that acts as a mask, covering the real reason that getting through another year is so special. Let me explain.

Before I go on let me just say that I am guilty. I am guilty of taking that day for granted sometimes. Don’t get me wrong. I love my wife with every ounce of my soul and being married to her is so wonderful, BUT the truth is that I sometimes fail her. Sometimes I do not act as if we are a team, and she would probably admit she has her days as well.

It’s a part of being married. What do you do?

You remind yourself every single day how much you love your spouse, and you FIGHT to make yourself a better mate! You’ll never be perfect but when it comes to your family, it should always be your goal. My point is that you should never stop trying to be extraordinary in your marriage. You should never stop trying to be truly married united.

Are you truly united with your spouse?

That question reaches into many aspects of your marriage, but I want to talk about one in particular. Did someone say money? Well what did you expect, I am the Enemy of Debt after all.  And I am feeling very pumped up right now about this subject specifically, because I am starting my first ever Manage Your Money 31 Day Challenge. In order to win with money you have to manage it right?

What if I said budgeting could save your marriage?

Money is one of the leading causes for divorce, and certainly the number one reason for money fights. Money causes money fights? Go figure. 🙂

Are you truly united with your spouse on money?

  • Do you have a budget?
  • Do you feel like a team?
  • Are you on the same page?
  • Do you talk about your goals?

Does your spouse know where YOU WANT TO BE in 5 years? (I know, enough with the questions already, but I have a challenge for you at the bottom of this post about those questions, so bear with me.)

First, let’s discuss how you can become better united with your spouse. I want you to practice “becoming perfect” by working on the list below. I want you to do it as a team. Spend 15 minutes a week discussing this list—make an appointment to meet about this specifically. Forget about American Idol and ESPN for 15 minutes. This is how you continue to FIGHT AS HARD AS YOU CAN to be your spouse’s everything. You become extraordinary. For you, for her, and for your family’s sake.

This list pertains to every aspect of your marriage, but for today, and this challenge, we are going to focus on your money relationship with your spouse. Budgeting is the best way to come together with money. Perhaps you could become united with money the right way by signing up for my Manage Your Money Challenge.

It’s TOTALLY FREE, there are A LOT of prizes that will help you both become UNITED with your money, so I hope you’ll consider it. (I encourage you to join but even if you don’t, check out that awesome prize list.)

“THE” List WE Need To Work On
To be practiced daily

Challenge Yourself To:

Be Accountable – No placing blame anymore! If there was a mistake made and you weren’t involved in it, you should have been—take responsibility.

Be Patient – It takes time. Don’t think you are going to be able to agree on everything. Mastering the budget *specifically* takes time and patience. Stick it out!

Be Realistic – Do not make, or hold onto unrealistic desires. If you have debt, and no budget, you can’t afford to buy a new car. Just sayin’. 😉

Be Understanding – Understand that your wants and needs will not be your spouse’s wants and needs. Compromise on the things you may see as invaluable, even if you don’t understand. as Dave Ramsey says, “You don’t have to get it, you just have to get it.”

Be Specific – Make sure that you are clear about what you want? Discuss your goals in detail. What do you want? How are you going to get it? When do you get started?

Be Honest – Managing the money as a team is about trust. Don’t ruin that trust by being dishonest about your purchases. Ladies, you know you spent $30 from your grocery budget to pay for that purse. And men, you know your friend didn’t pay for that fishing trip.

Be United – Be on the same page! It’s hard to read the same book when you are both on different pages. Just like it’s hard to win with your money when there is constant resistance slowing you down. It’s in your best interest to be united.

Remember you are a team! Act like it.

I asked a lot of questions in this post. A bonus challenge of sorts, although it could be argued that you should do it first, is to take a piece of paper and write every question down. Answer the questions honestly, and discuss them at your first 15 minute meeting. Get to know each other. You don’t have to cover every question the first time. Try one per week.

Maybe Dustin would be so kind as to let me do a follow-up post to see how we’ve done, *myself included*, in about two weeks. 😉

Good Luck!

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My name is Brad Chaffee from Enemy of Debt, and I absolutely love helping people become debt free. Something I love even more is helping you realize that you are the only person holding you back. I was a non-believer myself, but now I am debt free and you can be, too. Stay motivated and subscribe to Enemy of Debt today.

Feb 19

Budget Software Reviews: Choose Your Tool for Successful Money Management

By Dustin | Finances & Careers

Best Budget SoftwareBuilding a budget is a primary step toward achieving financial success for your family.  Our family has used some homemade Excel spreadsheets as our “budgeting software” of choice for several years.

However, as I explained previously, our day-to-day money management has really grown stale recently, and it had a lot to do with the cumbersome way that we have tracked our personal finances…think piles of receipts accumulating until month’s end followed by hours of data entry among several spreadsheets.

Our system lacked efficiency, and it frankly got so boring and time-consuming that we let it slide.

I decided it was time for a change.  So, I’ve spent a great deal of time lately researching and reviewing popular budgeting software.  And, lucky for you, I am going to share with you what I’ve found.  You will find below five of the top budget software tools available along with an overview of their features and my opinion on who may find them most useful.

The Best Budgeting Software I’ve Found

1. You Need a Budget

UPDATE: Since my original cursory review, I completed a detailed review of YNAB.  Please read my full review of You Need A Budget.

I am thoroughly impressed with You Need a Budget (YNAB) and its mix of capabilities and simplicity.  YNAB is a computer-based software that you buy for a one-time fee.  It does all of the things a great budgeting software needs to do, but it goes well beyond the typical tasks of tracking income vs. expenses and planning for future purchases.

For starters, it allows you to directly import your transactions from your bank which allows you to say bye-bye to receipts and data entry.  The YNAB community is also very impressive with free online classes, a blog and forums so you can learn all about effective money management.  But what really sets You Need a Budget apart is that it has a powerful “Money Management Methodology” built right in.  The four key rules of this method are reflected in the software’s set-up to make them easy for you to achieve:

  • Rule One: Stop Living Paycheck to Paycheck
  • Rule Two: Give Every Dollar a Job
  • Rule Three: Save for a Rainy Day
  • Rule Four: Roll with the Punches

The only drawback I saw with You Need a Budget is that it’s not web-based, so you’ll be limited to using it on a single computer.  However, the ability to import your bank transactions makes it just as convenient.

Who This Software Is For: Anyone who is looking for a thorough budgeting program built on solid financial principles with good money management lessons included.  This is not the software for you if you need a web-based platform.

Where You Can Get It: You can learn much more about YNAB and sign-up for a free 34-day trial at their website.

2. Pocketsmith

Pocketsmith is a web-based program that you pay for on a monthly basis, although a free version is available as well.  Pocketsmith takes a unique approach to the budgeting interface by utilizing a calendar to forecast your future cash position.

It works like any web-based calendar, except the events are financial.  You put in your scheduled salary, bill payments, rent, and grocery bills, etc. on the appropriate date and you can make them repeat as appropriate.  As you go, PocketSmith takes the events and generates a 6 or 12 month cash forecast (depending on the level of detail you purchase), so you can plan your budget for the coming year.

Pocketsmith allows you to directly import your transactions from your bank as well.  And since it is web-based, you can access your budget and make changes from anywhere that you have access to internet.

Who This Software Is For: Those who are looking for a web-based budget that operates on an intuitive calendar-based platform.

Where You Can Get It: You can learn more about Pocketsmith and sign-up for the free, premium or super version (depending on your need for accounts, budget events and length of forecasts) at their website.

3. Pear Budget

Pear Budget is another web-based budget that requires a small monthly fee.  The creators of Pear Budget present it as “a really simple budgeting and expense tracking service.” Budgeting plus simplicity…sounds like a winning approach!

Pear Budget uses the classic “envelopes” approach to monthly budgeting but brings it online for ease-of-use and full access from anywhere you can get on the internet.  You will have to enter your own receipts, but the program helps keep it as fun as possible.  The built-in step-by-step set-up wizard will have your first budget ready to go in ten minutes, and the system is designed to make updates simple and quick as well.

Who This Software Is For: Those who are looking for a web-based budget that is simple, attractive-looking and based on the classic envelope system.

Where You Can Get It: You can read more about the features of Pear Budget on their (simple) site.  You can also sign up for a free 30-day trial while you’re there.

4. Mint

Mint is a totally free, web-based budget and financial account hub.  In addition to a detailed budgeting component, Mint also allows you to access information for all of your online accounts from a single location.  This gives you a real-time snapshot of your cash, investments, debts and net worth so you can easily track your overall progress.

The budget portion of the Mint program is fairly intuitive and easy-to-use after the initial set-up.  It automatically imports all of your bank and credit union transactions, and you can change their labels to correspond with the budget that you set up at the beginning of the month.

A cool feature is the ability to set alerts that will be emailed to you when your attention is needed (over budget, low checking account balance, large transaction amount, etc.).

Who This Software Is For: If you want a free web-based budget that gets the job done, you’ll want to check out Mint.  However, keep in mind that free comes with a price…in the form of advertisements and “savings suggestions” where you’ll be offered products that could potentially save you money (like a different credit card or auto loan, which are not my idea of money-saving products).

Where You Can Get It: You can read more and sign up for a totally free account at Mint.  You’ll need to feel comfortable providing the log-in information for your online accounts, although you will remain anonymous (they never ask for your name).

5. Quicken

Let’s round-out this budgeting software review by taking a look at a classic player in this market.  Quicken is a computer-based software that you buy for a one-time fee.  It offers a full financial management picture rather than focusing solely on budgeting.  In that way, it is a lot like Mint in a desktop (rather than web-based) application.

Quicken brings your accounts together all in one place and helps you set budgeting and savings goals, and it provides alerts for upcoming payments to help you avoid late fees (assuming you are accessing the software to see the alert).

While its budgeting approach is not as intuitive as the budget-focused YNAB software, it does have the added bonus of integration with TurboTax.  This allows you to export your financial data directly to TurboTax for fast and accurate tax preparation (with the additional purchase of that software, of course).

Who This Software Is For: If you prefer a desktop-based software that provides a full financial picture (rather than focusing on budgeting alone) at the risk of being a bit complicated, then you’ll want to take a look at Quicken.

Where You Can Get It: You can read more about Quicken and its customer reviews on Amazon.

So, What Are We Using?

I hope you enjoyed reading about these popular budgeting software systems, and I trust that you found one that may work for you and your family.  The difference in format, features and price in these products provides a great opportunity to find an awesome budget that serves your needs.

Remember, though, that having a budget and using it is much more important than which particular software you choose.

Personally, I am trying out Mint right now and enjoying its full financial summaries and online access.  However, the usability and awesome money management principles built in to You Need a Budget are really drawing me in.

I’ll let you know when we make our final decision, and I’m sure a full review will follow.  NOTE: We made the switch to YNAB and love it – here’s the full review!

I’m anxious to hear from the community on this topic.  Have you tried any of these systems?  Have I piqued your interest in any of them?  How does your family handle your budgeting currently?

By the way, some of the links in this post are “affiliate links” so if you purchase that product after clicking through from here, I receive a small commission though your price is not affected at all.  It’s a small amount, but I wanted you to know that upfront and let you know that any support you offer Engaged Marriage is always greatly appreciated.

Photo by Don Hankins
Feb 16

Holy Crap! I Eat Out A Lot!

By Dustin | Finances & Careers

Easting Out is Hard on the Family BudgetMy wife and I have recently recommitted ourselves to the budgeting process.  We’ve lived on a budget for the past several years since we discovered Dave Ramsey and followed his plan to become debt free in 2008.

However, in the past six months or so, we got a bit lazy and lackadaisical in our day-to-day finances.  I decided to check out some new budgeting software that would make things both easier and more fun to track than my good ole, self-made Excel spreadsheets.  I learned a lot about what’s available in the world of budgeting software, and you can read my review of five top budgeting software systems for the details.

For this post, I just had to get something off my chest…I seem to have a big problem with eating out at restaurants!

Every day?  Yep.

As I took the time to reflect on our spending habits over the past several months, it quickly occurred to me that I had eaten at least one meal at a restaurant virtually every…single…day!

This habit is really apparent during the work week.  Last spring and summer, I was doing great and using my lunch time to go cycling when it was nice outside or hit the gym on rainy days.  I brought a simple lunch most days and maybe went out for lunch once a week or so and usually when I was traveling for work (and it was reimbursable).

Not lately.  I have literally been going out every day for the past four months or so.  This could be a sit-down restaurant with co-workers, lunch with clients or just fast-food drive-through on the way to a meeting. And our family usually eats at least one meal in the form of carryout each day of the weekend just to top off our excess.

Wow, this explains a lot!

Holy Crap, that’s Big Money!

So, what’s the big deal?  Well, let’s take a look at what this is costing our family.

For just my lunches, I spend probably an average of $11 per meal when you average out a few $6 value meals with more frequent sit-down restaurants with bills around $12-15 with a tip.

At five days per week, that’s $55.  That adds up to around $220 per month.  Or more than $2,800 a year…for lunch!

That’s half of a fully-funded Roth IRA.  Or a nice used car every five years.  If you invested that money every year in a good index fund and averaged 8% annually for the next 30 years, those Big Macs start looking like $350,000!

Holy Crap, that’s a Big Belly!

If you’ve been following the Improve Yourself! challenge, you know that I am trying to shed some extra pounds.  Well, I think I found a big part of my problem.

I looked up the nutritional value of one of favorite meals at Applebee’s Restaurant.  The Oriental Chicken Roll-up with a side of fries weighs in with an artery-clogging 51 grams of fat and more than 1,100 calories.  And that’s with a side of zero-calorie Diet Pepsi!

This is certainly not the worst thing I eat each week, but it probably represents a fair average.  I could instead be eating a healthy turkey sandwich and baked chips at under 500 calories.  That’s a net difference of around 600 calories per meal.

So, over the course of a five-day workweek, I am consuming around 3,000 extra calories!  That’s the equivalent of almost one pound per week…just from my lunch choices!  Or around 50 pounds per year if all else is held constant!

My Family Deserves Better

I am really glad that we decided to take a fresh look at our family budget.  It seems so obvious now, but it really took the effort of focusing on my habits to reveal my lunchtime problem.

So, I have committed to reform my expensive and fattening ways.  I will be limiting myself to one lunch out per week, and I’ll try to make that on a day when I am traveling and get reimbursed for the expense.

Our family is looking forward to having some extra money in our account and less weight around my waist as a result.

How often does your family eat out each week?  Do you have any other habitual budget-busters that you know you need to address?

Photo by pointnshoot
Jan 29

Should Married Couples Have Joint or Separate Bank Accounts?

By Dustin | Finances & Careers

Do you and your spouse use a single, joint checking account?  Or do you choose to keep separate bank accounts?

Have you considered the alternatives?

I was frankly surprised at the responses I’ve heard to these questions over the past week or so.  And I was really shocked at the emotional reaction that many have in defending the structure of their family finances.

It started in the responses I received where everyone seemingly ignored my main points in the “7 Simple Steps to Financial Success in Your Marriage” and focused in on my statement that a joint checking account was the way to go.

Curious, I then posed the question on the Engaged Marriage Facebook page and received some incredible responses.

For instance, the pro joint account crowd provided comments like this:

Mary: We have a joint checking account. Always have and always will. We’re married and share everything – nothing is his and nothing is mine. We agree on finances and how we spend OUR money.

Erica: We have joint everything…we discuss all major purchases/goals/bills, but gas, food, etc. just comes out of our joint account as needed. It works very well for us and I couldn’t imagine having it separate. All the figuring out who has paid for which thing and how much and trying to make it “even” etc. has never made sense to me. It’s US, and OURS. 🙂

And some readers love their separate checking accounts:

Sam: We have separate accounts. I cover most of the bills and the majority of his money is used for discretionary costs (gas, food, etc). We both have access to each others accounts, so it’s not like my money is strictly my money (and vice-versa). Works for us!  Honestly, I think a joint account would cause some stress for us.

Jennifer: We have separate accounts. I pay mortgage and living costs (groceries, fun, etc.) and he pays all other bills and savings. We find it much easier to manage money that way.

Don’t Tread on My Financial Life

I don’t think my suggestion of trying a single joint checking account was too radical or really all that forceful in the way it was presented.

Nevertheless, pretty much every comment on my Couple’s Financial Success post was related to that issue.  I was even accused of making broad generalizations, and it was clear that I offended some folks with my recommendation.

It turns out that people can be pretty passionate about their choice of bank accounts!  I loved the conversations, and as I have taken some time to think about the issue a little more, I’ve even opened my mind a bit.

I thought it would be useful to outline the main reasons why a married couple may choose a single joint account vs. separate accounts.  And then, for the really important part of this exercise, we’ll take a look at why this decision should matter to you and your spouse.

Reasons Why a Joint Bank Account is Best

  • Encourages regular communication about finances
  • Built-in accountability partner on spending matters
  • Fosters unity in money matters
  • Strong sense of working together to meet financial goals
  • Clear that all household income is treated as “our” money
  • No conflict or administrative work in “splitting up the bills”
  • Dave Ramsey says this is best, and we all love Dave, right?

Reasons Why Separate or “Yours, Mine and Ours” Bank Accounts Rule

  • Duties of financial bookkeeping not solely on one person
  • Clear boundaries set up-front for individual spending
  • May be easier to track specific savings goals
  • Easy to surprise your spouse with gifts
  • No need to talk about finances regularly
  • Each spouse can keep “their proportionate amount” of household income
  • Ability to maintain privacy about what you spend money on
  • More independence and autonomy to spend as desired without seeking concurrence

So, who is really right?

After reading a lot about this issue and reflecting upon it, I have divined the one, true and infallible answer to this age-old question:

It depends.

You will notice that the reasons I listed in support of separate accounts are broken into two groups.  In my opinion, the “black” group are legitimate and healthy reasons for having multiple accounts.  However, the “red” group spells trouble.

The reasons listed in red are centered in a mentality of not just separate accounts, but separate finances within the marriage.

I feel strongly that this is a dangerous and unhealthy foundation for money management for a married couple.  These reasons come from a spirit of selfishness, and they do not reflect the fact that marriage is a partnership.  And they certainly do not support open communication and trust.

The Key is Intent

Personally, Bethany and I use a single, joint checking account and feel that is absolutely perfect for us.  And before I gave this much thought, I would have prescribed this same arrangement for every married couple.  Actually, I still think this is the way to go, but I can see where other approaches can work fine, too.

The main reason that we choose to keep a joint bank account is our belief in unity.  We believe that when you get married, you become one, and money is a key area where this is lived out.  There is no “yours, mine and ours” but only “ours.”

When you handle your money together, you are agreeing on your hopes, dreams and goals together.  The use of a single joint account also encourages (requires, really) open communication about your finances, which is absolutely critical to a successful marriage.

As long as the right intent is there, I think you also operate in full unity with multiple accounts.  I don’t think it provides as accommodating of environment for unity and open communication, but I fully believe many couples lead happy, healthy and successful financial lives together under this arrangement.

Plus, we feel it is just easier to manage when everything goes into one account and out of the same account.  For us, it’s the simpler solution to maintain a single checking account.

I realize that some couples find the simplicity of their money management to actually be enhanced by using multiple accounts.  And, while that’s not our deal, I can certainly understand and respect that.  In fact, we have several different savings accounts for this same reason.

The Bottom Line

In my opinion, the real question to ask here is not how many accounts you have, the types of savings accounts, or what you call them.  The key is to operate your finances in a unified way with open communication at all times.

You can do that with one account or twenty. However, if you do operate with multiple accounts, they should all be “joint” accounts that you both can access, and there should be absolutely no secrets about how money is being earned or spent.

And remember that your motivation should be one of unity.  That will keep you in the black and out of the red in more ways than one.

So, I just have to know:

Do you and your spouse use a single joint checking account or do you choose to keep separate accounts?  Why?

If you are new to Engaged Marriage, I’d encourage you to sign up for our popular Marriage Time newsletter.  And please check out all of the great resources we’ve compiled for you in our Get Debt Free & Enjoy Your Money tutorial.

Photo by alancleaver_2000
Oct 31

Dave Ramsey’s Baby Steps: A Real Path to Family Financial Freedom

By Dustin | Finances & Careers

Family Financial Freedom

Have you heard of Dave Ramsey and his Seven Baby Steps for success in personal finance?  If not, you are missing out on a fantastic resource for achieving financial freedom for your family.

In a basic sense, Dave Ramsey’s teachings on personal finance are conservative, Christian-based and old-fashioned.

Dave himself often describes his advice as “God’s and Grandma’s ways of handling money” on his mega-popular daily radio show.  And he jokes about how strange it is that common sense has become so marketable within financial circles in the United States today.

It’s the simplicity of his message that makes it so appealing.  When you read anything written by Dave Ramsey or listen to his radio show or podcast, you can understand it.

More importantly, you can follow his advice and implement it quickly, not because it is easy (it’s not) but because it is sensible and simple.

Unlike so many of today’s financial gurus, Dave does not advocate a get-rich-quick path to financial success.  Instead, he offers common sense and provides the tools and motivation needed to achieve long-term family financial freedom.

At the heart of the “Dave Ramsey plan,” are his increasingly-famous Baby Steps.  These seven steps will get you on a budget and take you from a very vulnerable financial status to one of substantial wealth and the ability to help others like you have never dreamed possible.

The Dave Ramsey Baby Steps

Baby Step 1: $1,000 to start an Emergency Fund

An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.

Baby Step 2: Pay off all debt using the Debt Snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

Our family reached the milestone of completing Baby Step 2 in February 2008 after paying off almost $55,000 of debt!  I can’t express the level of financial freedom our family enjoys based on this accomplishment.

Baby Step 3: 3 to 6 months of expenses in savings

Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund.

It is recommended that your full emergency fund be saved in a high-interest (i.e. not your local back), easy-to-access (i.e. not a CD or bond) savings account.  Personally, we use and highly recommended an online “Orange Savings” account with ING Direct.  It is very easy-to-use, highly secure, FDIC insured and held by a company with a CEO that shares beliefs similar to Dave Ramsey (and myself). 

If you sign up via my referral to ING Direct and deposit more than $250, you’ll even receive a $25 bonus! Please note I receive a $10 bonus for referring you to ING Direct.  If you’re ready to sign up, just contact me using the Contact form or leave a comment and I’ll send you a referral code so you can get your $25 bonus!

Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Baby Step 5: College funding for children

By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

Baby Step 6: Pay off home early

Now it’s time to begin throwing all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

Baby Step 7: Build wealth and give!

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It’s really the only way to live!

There you have it…a simple, but not easy, road map to family financial freedom!  Obviously, there are a lot of details to be learned as you go through the process, and I hope to shed light on those as I continue to add posts related to personal finance.

I have been a member at Dave Ramsey’s membership site since 2003, so I interact frequently with like-minded folks and see/answer a lot of financial questions on a regular basis.  I also encourage you to check out another quality site devoted to teaching these principles at Enemy of Debt.

Of course, the most straightforward way to learn additional information is to read one of Dave Ramsey’s bestselling books.  His first book Financial Peace Revisited provides the background and answers “why” his plan is what it is.  His latest book The Total Money Makeover: A Proven Plan for Financial Fitness provides a clear plan for “what” to do along with many inspiring stories of families that have used these principles to achieve financial freedom.

Our family is currently doing Baby Steps 4-6, which are concurrent steps as long as you need to save for retirement, save for college, and pay down your home mortgage (provided you have decided to own a house).  If you already know about Dave Ramsey, please leave a comment to let us know how you found this message and state where your family currently is in the Baby Steps.

Here’s to long-term Financial Freedom for your family!

Photo by borman818
Sep 28

When Should Newlyweds Buy Their First House?

By Dustin | Finances & Careers

First Home for NewlywedsSo, you are newly married (or preparing for marriage) and ready to get off on the right foot financially.

Everything you have heard leads you to believe that you should purchase a house as soon as possible rather than “throw your money away” on rent.

A house is your biggest investment and the basis for long-term wealth building.

Prices are down, tax credits are available, and everyone from your uncle to your real estate agent are urging you to act now…NOW!

Not so fast.

While I agree with each of the reasons above, this does not mean that you should purchase your first home as soon as you return from the honeymoon (or even before your wedding). Trust me, while having a good estimator for your taxes for the year is always a good asset, it is going to take a lot more than a few tax credits to make buying a house feasible.

Based on my own first-hand experience and the extensive reading that I have done on this topic, I urge you to consider two primary questions before you buy a house (and one is not even a financial consideration).

Are You Ready Financially?

I think most engaged and newlywed couples know that they need to consider their finances before they decide to buy a house.

Typically, this thinking is focused on figuring out the bare minimum credentials that a mortgage broker will require before approving them for a loan.

This is the wrong mindset.  Please do not set your financial sights on just sneaking under the limbo bar of mortgage underwriting requirements.

Trust me when I tell you that mortgage brokers and real estate agents will approve you for a much larger home loan that you should actually take on…even after the recent subprime mortgage meltdown.

I strongly advocate a more conservative approach that generally follows (I’m a bit more lax) the advice of one my financial role models, Dave Ramsey, whose books Financial Peace and The Total Money Makeover have shaped my own approach to personal finance.

Here are the financial goals you should meet before you pursue your first home purchase:

  • Have a solid credit score; 750 or higher should get you the best mortgage rates.  Alternatively, have no credit score because you don’t borrow money and get a manually underwritten mortgage.
  • Have at least 5-10% of the purchase price to apply as a down payment (in addition to closing costs).
  • Ideally, become totally debt-free, but at a minimum you should pay off all unsecured consumer debt.
  • Have an emergency fund of 3-6 months of household expenses saved up.
  • Only take on a mortgage where your total payment (including taxes and insurance) will be no more than 25- 30% of your monthly take-home pay based on a 15-year fixed-rate mortgage.

Basically, if you follow the step-by-step Married Money Management plan, you’ll be ready to thrive.

I know that my advice will seem conservative compared to what you will receive from many, especially those with a vested interest in getting you to buy a house, and a big house, as soon as possible.

However, please consider that my interest is squarely focused in helping you have a happy and successful marriage.

If you stick within these guidelines, you can be confident that you won’t become house-poor and have your home ownership dream turn into a nightmare!

Are You Sure This is Where You Want to Live?

While most couples take the time to evaluate their finances (or are forced to by the lender), many do not properly contemplate the permanency that comes with buying a house.

Generally, you will need to stay in your house for at least two years (preferably five years) in order to make the costs work out.

In other words, you are going to be in the house for a long time if you don’t want to lose a bunch of money on Realtor fees, closing costs, etc.

I strongly advocate waiting to buy a house for at least a year after you get married.

I think you will need that much time to be able to best answer questions like these:

  • Will our careers keep us in this general area?
  • Are we each comfortable with the daily commute that will be required?
  • Is this neighborhood up-and-coming and do other young couples live here?
  • Given we’ll be here for a while (and maybe you have children already), is this the school district we want to send our children?
  • Are we an appropriate distance from our mothers-in-law!?!

If you take a solid year to let your marriage mature, you will have much better answers to these questions.  Plus, there is something to be said for renting and remaining free of the responsibilities of mowing, maintenance, painting, etc. so you can just enjoy your new spouse and focus on your new life together.

But don’t just take my word for it regarding the sacredness of the first year of marriage, just look in the Bible:

DEU 24:5  If a man has recently married, he must not be sent to war
or have any other duty laid on him. For one year he is to be free to
stay at home and bring happiness to the wife he has married.

So, take it easy and just enjoy each other for at least a year.  Use this time to get settled and strengthen your financial situation.

And then find a great home at a reasonable price, and you will set your family up for an awesome financial life!

House photo by karla kaulfuss; Billboard photo by sylvar
Aug 24

Marriage & Finances

By Dustin | Finances & Careers

Money and Careers

Do you and your spouse or fiance ever have disagreements about your finances? Of course you do. It is only natural that we would have some differences of opinion regarding our spending decisions, especially when you are combining households and dealing with all of the other life changes that accompany marriage.

However, it is important to recognize that money fights and financial difficulties are widely regarded to be one of the leading causes of marriage problems and are often cited as a main reason for divorce.

It is vitally important that your marriage include a solid financial plan! The good news is that it is actually pretty easy to make smart decisions about money and set your marriage up for financial success. This is one of my favorite topics, so you can look forward to plenty of information about having a great career, buying a home, budgeting, becoming debt free, investing, giving, retirement savings, planning for college funds, buying a car, spending wisely, increasing your income and much more.

I have read many great (and not so great) books and free online articles on these subjects, and I love checking out useful forums and podcasts. So you can also expect some honest reviews that cut through the B.S. and show you where you can find the best tools to master this important aspect of your marriage.

Stay tuned for tons of useful posts that will give you the knowledge and resources you need to have a “million-dollar marriage”!

Photo by Rob Lee

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