Money Matters » Couples

Looking Forward – Goals for 2009

debtfree — Fri, 02 Jan 2009 15:56:18 +0000

After a disasterous 2007 (completely my fault), 2008 was a very good year for us financially. 2009 isn’t starting out to look quite as good though. Our biggest challenge will be to maintain our current level of income. My wife works in the casino industry, which is being hit hard by the recession. They are predicting that 2009 will be one of the slowest years in recent memory. As for myself, I am a state employee on a year to year contract which expires in June. Our state is in the middle of a budget crisis, so my once secure job is no longer secure after next June. With that said, we have some pretty hefty financial goals for 2009.

Savings

I would like to increase our savings account by at least $12,000, not including interest earned. This sort of acts like an emergency fund, and also like a self employment fund. The eventual goal is to have 2 years’ worth of living expenses so both of us can quit our jobs and pursue self employment.

Investing

In 2008, I put $500 per month into a 403(b) at work. For 2009, I’m going to change this account to a Roth 403(b) and up my contribution to $1,266 per month (making my annual contribution close to the maximum allowed, $15,200). We will also fully fund my wife’s Roth IRA early in the year to take advantage of the current stock market levels. For 2009, I will also open my own Roth IRA and fund it to the maximum allowed.

As for what to invest in, my 403(b) at work is 100% in Fidelity mutual funds and will stay that way. Our Roth IRAs will be a mix of mutual funds and individual stocks.

Spending

My wife wants new blinds (our old ones really do suck) and I don’t know yet what that will cost. I also want to spend about $15,000 fixing up my Barracuda and about $3,000 on a deer rifle and related gear.

Conclusion

If we consider ourselves as living on one income, we will need to earn about $170 above what I make at work each and every day in order to meet our goals. A lot of this is covered by my wife’s earnings, but I’ve decided to make a goal of earning $170 net every day, above my regular salary. If we can achieve that, we should be OK even if both of us lose our jobs.

Cheers,

Ken

Yours, Mine, and Ours – Update

debtfree — Tue, 23 Sep 2008 18:27:13 +0000

Last month I talked about my wife and I dividing our money in to several different accounts (hers, mine, and ours). Since that post, I’ve modified my plan a little. We are keeping one account to pay bills from and one for savings, retirement, etc. Our personal spending money will just be cash, because I don’t see the need to open accounts just for personal spending. The plan now is to put my wife’s entire paycheck into the savings account, my entire paycheck into the checking (bill paying) account, and her tip income is split between our weekly spending allowances and the checking account. This way, we always have enough in the checking account to cover our (planned) expenses, we accumulate money in our savings account every month, and we always have some money to spend any way each of us wants. Some of the benefits so far are that:

I have complete control over my own personal spending
My wife has control over how much (minimum) we save each month
I don’t have to ask “permission” to move money from savings to checking to cover our bills
My wife can see our savings grow each month
Since I no longer use our credit card for my personal spending, it has decreased a lot
We have gone over 3 weeks without fighting about money

OK, so 3 weeks isn’t very long, but it’s kind of a record for us to go that long without having a money fight. It’s not a perfect system – my wife still feels like she should have more “veto power” over my personal spending, but when she raises the issue I point out that I haven’t put anything on the credit card since we implemented the system, and I haven’t had to move money from savings to checking to cover our bills.

There are two things I did regarding our personal spending money that I feel are very important to making this system work. First, I made sure that we both get personal spending money each week. My wife insisted this was unnecessary, that she was happy putting her personal money into our savings account, she didn’t need it, etc. I disagree. I feel it is important for each of us to be treated the same, otherwise in 6 months she’s going to be asking “How come you got $xxx every week and I don’t get anything?” So I just put her money in an envelope in her night stand.

Second, I insist on a fixed amount each week. She didn’t like this either (she still wants that veto power), so this is something we’re still working on. One thing that helped was explaining that it cuts both ways – she can’t cut my personal spending money on a given week because she feels we should be putting more in savings, but I can’t increase my personal spending because I found something expensive I really want to buy.

So far, it is working out much better than our previous system – ahem – lack of system. Yesterday she was looking for something and came across the envelope. She came running downstairs all excited about the money she had found and asked me where it came from. I told her it was her personal spending money from the last 3 weeks. She didn’t ask me to “just put it savings the next time you go to the bank.” Instead I got a smile, a hug, etc. So much nicer than fighting about money.

Cheers,
Ken

Yours, Mine, and Ours, part 2

debtfree — Wed, 27 Aug 2008 16:25:40 +0000

In my last post, I talked about the problems caused by a lack of agreement between me and my wife about how much we save and whether personal spending by one requires the approval of the other. When we first started arguing about money, my wife’s solution was to have seperate bank accounts – my paycheck would go into an account to be used for paying our bills, while her check would go into an account to be used for savings and investments.
I was tired of fighting about money so I went along with it, but I didn’t like it for several reasons. First, I felt that since it’s all “family” money, it should go into one family account. Separating our money into different accounts seemed to me like splitting it into “my” money and “her” money. Second, since “my” money was used to pay the bills and “her” money was for savings, it meant that I had no control over the money I earned (it was all going for expenses), while she had total control over the money she earned. Finally, my pay didn’t quite cover our expenses, so every month I would have to ask my wife to transfer some money from “her” account to “my” account. Not only was I having to ask for permission for personal purchases, it felt like I was having to ask permission just to have enough money to pay our bills. I really resented this. I’m not trying to excuse what I did, but this was the reason I started buying things on credit and hiding the purchases from my wife.
Having one account hadn’t worked to my wife’s satisfaction, and having separate accounts was a disaster, emotionally (for me) and financially for us. What is the solution then? We have gone back to one account, but that has brought back arguments about how much we should be saving. I don’t want to go back to each having our own account, because I believe it is completely unfair for one spouse to have final say over almost all discretionary spending. Fortunately, I found a book that has a plan I think will work. Instead of two accounts, we will have three. The first will be a household account, which will include money to pay the bills as well as our savings and retirement plans. Then, we will each have our own private accounts for personal spending. The rule is we each get so much per month for our personal accounts, and neither has any say-so whatsoever on how the other person’s personal moeny is spent. I’ve ran this by my wife, and she’s “thinking about it.” I hope she thinks it’s worth trying, because so far the other ways we’ve tried to deal with our differences over money haven’t worked.

Cheers,
Ken

Yours, Mine, and Ours, part 1

debtfree — Tue, 26 Aug 2008 15:55:08 +0000

My wife and I have a fundamental difference of opinion regarding money. My wife’s opinion is that we should spend as little as possible, saving as much as we can (with a twist – money invested doesn’t count as “savings” in her view), and buying extras only when our savings is built up to a level that she is comfortable with. If we have unexpected expenses, discretionary spending should be curtailed until the savings can be built back up.
On the other hand, I have always been a “you can’t take it with you when you go” type of person. I usually had my paycheck spent before the next one came in – too much month left at the end of the money. If I wanted something, I bought it, and if I didn’t have the money I’d just put it on a credit card. As a result, I incurred quite a bit of credit card debt over time.
When I got married, things obviously had to change. I stopped my reckless spending, but kept the debt hidden from my wife – didn’t want her to know what a loser I was. She eventually found out anyway. We got the debt paid off fairly quickly, and things were OK for a few years. It was pretty easy to stop my casual spending because we wanted to save for a new car, which we bought in 2002. After that, we were saving for a house, which we bought in 2003. Then, we built up our savings to about $10,000.
This is when our money problem surfaced again – I felt that since we had a new car (paid for), a house of our own, and $10K in the bank (not counting my retirement plan at work), it was OK to start spending money again on things I like. Not a lot, maybe $100 to $300 per month, and my wife could spend the same amount on herself. This amount of personal spending would still allow us to save something like 10% of our net income each month. My wife felt differently – she thought we should be saving much more of our income, more like around 25% (or more).
Any time I spent money that she felt was unnecessary, she would question me about why I was spending money on myself that rightfully belonged to the family. From her perspective, any money not spent on household bills belonged to the family, and required a family (at least husband and wife) consensus on how it should be spent. I felt (and still feel) that 1. I’m an adult, 2. I work hard for the money I earn, and 3. As long as we are making reasonable contributions towards our savings, we should be able to spend some money individually without having to ask permission or otherwise justify the expense.
Since we were unable to compromise on this issue, I just started buying things I wanted again and putting them on the credit card. I didn’t have the money to pay off the balance every month (my wife would wonder where the money went), so the balance just kept building. (Before you email me to tell me how stupid this was, I already know how stupid I was). Over time, and with some medical bills, interest, etc., it eventually grew to over $17,000. When she found out last October, I thought she was going to divorce me, but she didn’t. We got paid off in only a few months by wiping out our savings and applying my wife’s entire income against the debt. We were also able to build up our savings to almost what it was before.
So, no problem, right? Uhmm, there is still a problem. To make sure I don’t slip back to my old bad habits, I showed my wife how to get online access to all our accounts. There is absolutely no way for me to hide any spending from her. I still believe, though, that I don’t need her permission for every single purchase I make. She still believes differently, to her it is “family money” and can’t be spent without family consensus. So we’re back to having stupid arguments about money – for now. I have an idea to fix it. I’ve run it by my wife, she is thinking it over.

Cheers,
Ken