Hi Michelle, Love your chats and columns! We just bought our new home after years of renting, we've been saving and have more than enough money, but my boo has never been in debt before, and is fixating on our $300,000 mortgage. How do I make him realize that as long as we're both employed we can pre-pay, and we have savings and family as extra cushions? Thanks!
I've always found it helpful when people are nervous about money to show them the money. And by that I mean show your "boo" the budget. Go over it together. Go through all the numbers so you can see your savings, expenses, etc.
You might also do a spreadsheet to show him that you have a cushion that your mortgage isn't overwhelming given your income...assuming it isn't that is. Hopefully it's less than the 30 to 36 percent of your net pay every month that many experts recommend.
Then keep showing him the numbers so that he can see you got this.
Hi Michelle, glad you are back! Can you recommend a good budget tracking software package? I really want to get a handle on expenses, and used to use Microsoft Money. I liked the functionality, but that program is no longer available. Any suggestions?
So I don't want to be seen as pushing any one product. But I will tell you that my husband and I use Quicken. Well, my husband uses it and I go over the reports with him. I like it and the charts you can create from it and that it downloads information into the system.
What would you say are the top reasons people should live with family?
Some of the reasons people should live together with family are related to the high cost of housing and health insurance. Healthcare costs are supposed to double in the next 10 years. People are living longer these days and it's expensive to live in assisted living facilities. It's important to plan ahead how to live together.
I used Mint - an online tool (mint.com) that is owned by Quicken. Doesn't have all of the bells and whistles of the Quicken software, but still really great. It pulls in information from all of your accounts, and you can input additional financial information, and it gives you a good picture of your debt to assets balance and where your money is going. It allows you to set up budgets based on your spending needs/priorities and also has the ability to set special one-time saving goals/budgets for vacations, holidays, etc. I started using it when I was just out of college because it was free (easier on the budget) and have enjoyed it so much that I've never moved to anything else. The only thing it doesn't offer is the ability to balance your checkbook within the site (shows what has debited from your checking account, but you can't reconcile it with what you've spent/written checks for), but I've been doing that with a Microsoft Excel spreadsheet for so long now it would feel wrong to do it any other way.
Thanks for the information. I've heard from a number of people who use Mint's budgeting program and like it.
But I will say if it doesn't do all that you want and you have the money, get a system that does. It's okay to spend money to help you make money or manage your money. Sometimes people don't think that they should pay for such things.
DD has a regular summer job that pays well and may be hired upon graduation. What book(s) would you recommend for the two of us to read? She will graduate wiith no debt. She is extremely blessed that she can begin to be financially stable at such a young age. Thank you and have an enjoyable July 4 holiday.
Hope you have a lovely holiday too.
So, I love it when I see young folks managing their money well and with no student loan debt.
The key is to use time on her side. That means when she gets that full-time job, start saving in an emergency fund and life happens fund (that's the money for stuff like car repairs, etc. so she won't have to dip into the emergency fund, and most importantly she should start saving for retirement. One of the books I recommend for young adults is "Get a Financial Life:Personal Finance In Your Twenties and Thirties" by Beth Kobliner.
But really any good basic personal finance book will give her the information she needs to stay on the road she's on already.
I used to use Mint as well but for the last couple of years they can't get in and download credit card information from GE Banks, so it could never get the information for my Sam's Club Credit Card, which makes budgeting and tracking difficult if one credit card isn't factored in. If Quicken owns Mint, would I have the same problem if I used the Quicken software you mentioned? I'd love to be able to move away from the tediousness of doing it all by hand on Excel.
I agree that you want software that will download your banking information. So before you buy Quicken or any other budgeting software check with your banking institution to see if they download to the software. Most do but some still don't.
In your book you suggest that families can make living with each other better by building homes with multiple kitchens and entrances. Is that really affordable in this economy? What if you don't have the money for such renovations or to buy a house big enough for everyone NOT to get on each other's nerves.
A third of American homes can be remodeled to add a separate kitchen and entrance - the two keys to successful multigenerational living. Our All in the Family book has a chapter about ways you can do so that don't cost a lot. You could put a lockable door at the beginning of a hallway leading to 2 bedrooms, a bathroom, and a laundry room. One of the 2 bedrooms could become a living room. The laundry room could have a plug-in electric grill to make it both a kitchen and place to wash and dry clothes.
I am in serious financial trouble. My family never really showed me how to budget and I am getting ready to get married in 4 months. My fiance grew up in a similar situation. Neither of our families can really help us and all we can think to do is borrow money. We have a bit of money on student loans we owe. That has to be paid. I just got a full time job in March with benefits and he is working part time still. I feel like there is nothing we can do. Is there a way that we can borrow money and come out of this situation we are in? I know everyone says that we shouldn't borrow money to start a marriage but we have no where else to turn. It isn't just the wedding, that we are worried about. We want to get ahead and then return the funds once we make more money. The wedding we have saved for the majority of the money.
So, I'm not clear what you need to borrow money for?
All I can go on is that you have the "majority" of the money you need for the wedding. Which says you don't have it all, which means you have to cut something from the wedding so that you don't have to borrow a penny for that celebration.
Or it means you can't afford to spend even what you have planned for the wedding. So if you haven't made any downpayments, etc. pull back. Scale back.
You don't get ahead starting your life off in more debt. If you don't have the money to pay for things now what makes you think you will have the money to cover the loans or loan you take out.
If it's a problem getting an apartment or house perhaps you can move in with your parents or friends or family until you've saved more. Or dare I say postpone the wedding and you each stay put in a parents or family or friend's place until you can save more to come together for the higher expenses.
Hope this helps.
Hi Michelle - our son is graduating next May. We have always been very careful to only take the subsized financial aid that he is offered, at the fixed interest rates. We are going to try to not take any aid at all this year because of the jump to 6.8%. One answer I can't find is whether or not the existing loan interest will be tax-deductible once he has to start paying them back next year. Do you by chance know?
The IRS has a tax topic on student loan interest deduction. Here's the link
In a nutshell the IRS says the following, which should be good news for your son:"You may be able to deduct interest you pay on a qualified student loan. Generally, the amount you may deduct is the lesser of $2,500 or the amount of interest you actually paid.The deduction is claimed as an adjustment to income so you do not need to itemize your deductions."
Is all this independence we pushing good for families? Shouldn't people learn to live on their own?
Living together can be helpful in many ways. Young people can save money living at home to be able to buy or rent a place later. Grandparents can look after grandchildren when both parents are working. As people get older and need help with various things, living together can be helpful that way, too.
This is a good answer and one that the bride-to-be should read given my earlier advice. Don't rush out too soon to live on your own if you truly can't afford it!
Check with your zoning office first: some zones don't allow 'granny units.'
It is a good idea to check with your zoning office first, since some do not allow granny units to be built or rented. However, because of financial issues, more zoning offices these days are allowing accessory units to be legally built.
They need financial counseling. The letter just screams it. Essentially, they need to find a free resource (must be something out there) who will teach them how to budget and how to stick to it. I wish them luck and hope they learn to live within their means.
One free or low-cost source is www.debtadvice.org. They have credit counseling agencies all across the country and you can ask to talk to someone to help you set up a budget. Or check community resources, etc.
Marriage is tough enough without starting out with your new spouse unsure of how to deal with your financial issues.
Get a duplex. In many markets, duplexes are cheaper than the same amount of space in a single-family house, and there's already separate kitchens, entrances, and bathrooms. Many duplexes have at least one common entranceway so they can act as a quasi "single family" if you keep the interior doors open (here, it's common to see a shared rear entrance that leads to a hallway containing stairs to the upper unit and basement, and a locked door to the lower unit). It's cheaper to add, say, a chair lift for the stairways than it is to add a whole new kitchen and entryway to a single-family house. (Also, some zoning codes don't let you have multiple kitchens in a single-family house.)
You provide a good alternative but I would caution to check about the resale of such buildings. Talk to realtors. Be sure this is something long-term because they aren't as easily sold as a single-family home.
Hi! How do you bring up the topic of intergenerational family living with your significant other? I suspect that I'd eventually like to have my parents come and live with me, or at least very close by - I think that would make the caretaking much easier, plus I really enjoy my parents. However, I don't think that my fiance would be completely thrilled with the idea. He's very much a here-and-now thinker and not a planner, so he doesn't like discussing 10-year hypotheticals anyways, and I think that he would especially not like having this conversation...but I do think that it's important. (For what it's worth, I'm also open to caretaking for his parents, and I also suspect that he doesn't want to think about that issue either.) Any advice?
Having parents living close by would be a good way to do it. In our book, we discuss a dozen ways multigenerational living can be done successfully. After interviewing over 100 people all over the country about how they do it, we came up with a dozen ways it can be done. The two keys to success are separate kitchens and separate entrances. Homes can be remodeled to do so. People can also buy places to live nearby each other.
Look, you have to just talk. You provide a good start here so use the same words. If he can't talk now about something so important I would worry about what other financial issues would go unsaid or unaddressed once you get married. You have to think long term in a marriage. What about your own retirement planning? Does he not want to talk about that either because it's so long down the road. I sense trouble here if you can't get your SO to focus on such important topics. You are right to want to address this now. Too many couples wait and it becomes a huge issue later.
Get premarial counseling so that a third party can help you broach the topic. But again if you SO won't talk you may have walk. He might be a great guy but financial issues are top on the list of things couple fight about.