The Reproduction Equation: X + Y = Oh Boy!

Our friends and family will tell you that we have been known to overana­lyze everything. Since we prefer to plan for things—especially those large in scope—before we start executing a new plan, it can take us a while to set all the variables in place for a favorable result. So as you can image, planning for children has been a long process for us. To the chagrin of our parents, we kept dragging our feet before having a baby because we wanted to try to figure out how much is enough cushion to have on hand before expanding the family. What do you need in place finan­cially and emotionally to be prepared for this giant step? When do you know you are really ready to have children? These are questions that have kept us up at night and kept us from taking the plunge into parenthood.

Everyone has a different opinion about these questions and a lot of times people tell us that there aren’t any “right” answers. Larissa’s Grandpa Bill has a pretty liberal outlook on kids and we always chuckle when we remember what he told us early in our marriage when we said we weren’t ready to have kids yet. Grandpa responded so matter-of-factly in his Oklahoma accent, “Whatcha waiting for? Nothing’s gonna change!”

Even though it is difficult to argue with Grandpa’s statement, we keep going back to conservatively approaching planning when we think about the statistics we’ve read on the cost of having kids. For instance, the USDA Center for Nutrition Policy and Promotion reports that a middle-income family with a child born in the year 2000 will spend about $165,630 to raise that child for seventeen years. And that figure is for just one child! When we start doubling and tripling it, it gives us a headache and has served as effective birth control for quite a few years.

What we soon came to realize is that whether you’re having your first child or your third, being pregnant for nine months affords more than simply giving your baby enough time to fully develop its hands, toes, head, organs and the karate-chop kick it likes to execute on the inside of its mother’s belly during the third trimester. Nine months of being pregnant also gives couples time to mentally, physically, and financially prepare for one of the biggest and most life-changing elements of their relationship and their lives. So whether you only have the nine months before the baby is delivered to prepare or if you find yourself with more time to plan for your baby, it is important to take the following five factors into consideration.

Think Beyond the Baby Shower

We’ve all heard parents-to-be naively say they don’t have to worry about buying clothes or furniture for their babies because they are going to get ev­erything they need at their baby shower, as well as multiple gifts from grand­parents and other close family and friends. Even though it’s true that family and friends are good resources for parents-to-be, couples have to think beyond the fantasy period of having a child (three days for some, three months for others—it just depends on how much sleep the parents are able to get) and plan for at least the first full eighteen years.

Parents we have talked to estimate that monthly, they spend about $100 on diapers and $100 on formula when their kids are babies. After the kids are potty-trained and past the formula stage, though, these costs do not just disap­pear. Instead, they transferred over to other expenses that arose as kids grow, such as baby food, videos, books, and more. Based on our experience and the experience of other parents we’ve talked to, just as you have to plan for the initial start-up costs associated with having a baby, you also must consider the ongoing costs that might shift, but don’t decrease.

Save Like You’ve Never Saved Before

There isn’t a universal rule for how much is enough to save to be fully pre­pared for the birth of a child. Even with all of our pre-planning, we didn’t know ho much we needed to save, so we just saved as much as we could. As soon as we became pregnant (truthfully, as soon as we started discussing the possibility—about a year prior to conceiving—because we are savings freaks), we went into major savings mode. Any extra money remaining after we’d paid the bills and set aside a moderate amount for other spending went right into our savings ac­count. We deemed it, “Project Baby Savings!”

The importance for growing your savings is so great when you are plan­ning on having a baby, not only because your regular living expenses are going to dramatically increase, but also because you never know what huge expenses will pop up along the way. From emergency room trips when your toddler bumps his head on a coffee table to mishaps during extracurricular activities, kids are expensive little boogers. Similarly, it’s more important than ever to have a savings cushion so you’ll have something to fall back on in the unfortunate event that something happens to your job. Layoffs and closures are a fact of life, so it’s good to be prepared. With a child in the picture, you not only have to take care of yourself, but you are responsible for the consis­tent well being of your child.

To that end, our rule of thumb is to aim for accruing three months worth of paychecks in savings by the time you have your baby. At first, three months’ worth of savings may seem like a long shot, but when you break it down into smaller pieces, you’ll see it is attainable. Let’s say that you bring home $2,500 a month as disposable income. To have three months’ worth of savings, you would need $7,500 in the bank by the time you have your child to meet our rule of thumb savings goal. If you take $7,500 and divide it by the nine months you will be pregnant, that equates to saving $834 per month, or $417 a pay­check. This, of course, assumes that you don’t have any money in savings to start out with. If you do have even a little bit of money set aside for a rainy day, then you won’t need to save as much each month. If you aren’t able to make the three-month cushion by the time your bubbly, happy newborn enters the world, don’t fret. Just try to get as close as possible to the three-month cushion as you can. Even if you don’t make the overall goal, the exercise is a good start for conditioning you to begin and continue saving for all of your children’s lifelong experiences.

Stay tuned for the next blog where we will continue the conversation on financially preparing for our bundles of joy by talking about the dreaded cost of day care, health insurance and education – fun stuff!

Happy Saving!

Planning for the Golden Years: 401(k) Pointers to Take to the Bank

Whenever you start a new job, it is always a learning experience. Will I do a good job? Did I make the right move? Where is the bathroom? The questions and anticipation can make anyone nervous. So when your Human Resources department comes around with the three inch stack of paperwork, it’s easy to find the nearest empty drawer to dump the paperwork into and get back to finding the best parking space. Little do you know that the company that just hired you was offering a 6% raise in that HR package.

 

By several accounts, nearly 1 in 3 people does not participate in their company’s 401(k) or similar retirement plan. If you are that one person, look to your left and to your right (if you are in a cube, then ‘prairie dog it’ and sneak a peek over your cube wall.) Assuming they are in the same job, and assuming that you all have the same salary, the people around you at work are making more money than you do. Why? Because they participate in their 401(k).

 

Maybe you’ve been putting it off, thinking it is too complicated. Maybe you think you can’t afford to contribute to your retirement right now. Whatever the excuse, here are some things to consider that should encourage you to participate in your company’s plan today:

 

-          You are giving yourself a raise. Most companies offer some kind of matching program to the funds you put in your account. The most common matching program gives employees 50% of whatever they contribute on the first 6% of their salary. For example, if you earn $50,000 and contribute 6% of your salary ($3,000), the company will contribute another $1,500 on top of that into your account. In most cases you get to keep the company’s portion after so many years of service. But what many people perhaps need to remember is that the $3,000 that you put into the 401(k) is always YOUR money, no matter what. Only the matched portion is lost if you leave before you become ‘vested,’ meaning the money then becomes yours.

-          If you don’t pay yourself, you pay the IRS. One of the great things about a 401(k) is that your contributions are automatically tax deductible. That is, you don’t have to pay income tax, Medicare, Social Security or other payroll taxes on the money you contribute. To follow the same example from above, if you are not contributing to the 401(k), then you would have reported $50,000 in salary income to the IRS and paid tax on it. Had you contributed to the 401(k), your taxable salary is only $47,000. Assuming that you are in a 15% tax bracket, you saved $450 in taxes by reducing your taxable income. So not only are you saving for retirement, and not only is your employer chipping in, but the IRS is even helping. Your $3,000 contribution to retirement really only cost you $2,550 out of pocket.

-          It’s easy. You don’t have to be a stock market wizard to participate in your 401(k). There are a variety of mutual funds called ‘lifestyle funds’ that do most of the work for you. Simply answer a few questions about your age and how risky you want your investments to be, and there is a fund for you. The best part of these funds is that they automatically adjust their investments as you get closer to retirement, moving from more risky to less risky investments. In theory, you would only need to buy one fund from your first job to your last day at the office.

 

So whether you are just starting a new job or have been at your job for a while, but haven’t participated in your 401(k) plan, get into the (retirement) game! We know money is tight for many right now, but putting away a little bit right now has the potential to reap big rewards in the future. Don’t miss out on this essential retirement planning opportunity.

Please note, that these are just few quick guidelines for participating in a 401(k) plan. There are so many elements associated with planning for retirement  and determining how much money you are going to need when you decide to hang up your hat, that we have dedicated two complete chaptersabout in our book, The Financial Love Triangle: Yours, Mine & Ours, to the topic of retirement. So, if you want more information about 401(k) retirement plans and/or making sure that the goals of you and your spouse are in line when it comes to planning for retirement, we encourage you to check out Chapter 20: Planning for the Golden Years and Chapter 21: Computing Your Retirement Needs. There also is a retirement planning calculator on our Web site as well to help you manage the retirement planning game.

Good Luck and Happy Saving!

Larissa and Dan Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Stock Market Basics: It’s Good to Have These Words of Wisdom Under Your Belt Before Diving into the Market

Sooner or later, just about everyone from any walk of life will decide to invest in the stock market. Maybe it’s a bonus or an unexpected windfall that is burning a hole in your pocket, or maybe you are tired of working for someone else and you want to accelerate retirement. Or maybe you’ve seen or heard a friend talk about the success they have had buying and selling stocks.

There are certainly gains to be made by investing in the stock market. However it is important to understand if your plan is to invest in the stock market, or speculate in the stock market. Investing involves true research of each stock you intend to buy, as well as the discipline to stay with investments in the long run. Speculating on the stock market involves more short term investments which rely less on research and more on hunches and momentum.

 Before you start investing, here are a few words of wisdom to remember:

1. There are people that know more about stocks than you do. No matter how much research you intend to do, unless you are a Wall Street stock analyst, somebody out there is doing a lot more homework than you are. They are calling company management, asking questions and spending a lot of time following the stock you are. It’s possible you will both come to the same conclusion on a stock, but it also raises the question of how you can expect to earn bigger returns than the experts. For this reason, picking individual stocks might be fun, but isn’t always the best way to earn consistent returns.
2. You do not know something that no one else does. Similar to the first point, it’s common with eager first time or novice investors to think they have learned something that nobody else knows, either through research, through a ‘tip’ or something else. The reality is that if you know it, so does everyone else. And if somehow no one else knows something, and it’s important, it is illegal to buy stock based on it. That is the definition of insider trading, just ask Martha Stewart.
3. It doesn’t always pay to diversify. While it is true that buying various stocks reduces your exposure to any one stock, over diversifying can lead novice investors to throw away profits fast. For example, let’s say you have $1,000 to invest, and you decide to buy 10 stocks with a $100 investment in each stock. Even if you are using a low cost broker, it is probably going to cost you $16 to buy and sell each company. With a $100 investment in each stock, you need to earn a return of 16% on each investment … just to break even! Even if you are a longer term investor, 16% is a lot for a stock to gain before you simply recover your costs.
4. Consider more than just stocks. If you are looking to invest your money, keep in mind that stocks are not the only investment. In fact, the stock market as a whole is relatively small compared to other markets. For example, the bond market is several times larger than the stock market in terms of value. There are also other investments including commodities such as grain, beef, oil, etc. Each has its own merits. If you are looking to be a serious investor, and if it is appropriate, investments other than stocks can also make sense.  

Please note, that these are just four quick pointers when it comes to investing. There are so many questions about how to invest and what to invest in (and maybe even some confusion), that we have dedicated an entire section in our book, The Financial Love Triangle: Yours, Mine & Ours, to the topic of investing. So, if you want more information about personally investing and/or making sure that the goals of you and your spouse are in order when it comes to investing in your future, we encourage you to check out Section Four of our book. The chapters in this section include:

Chapter Eleven: Making Your Money Work for You

Chapter Twelve: Investing Basics: What’s What in the Investment World

 Chapter Thirteen: Alternative Investments to Round Out Your Portfolio

 Chapter Fourteen: Emotions of Investing: Keeping Your Financial Cool

G00d Luck and Happy Investing!

Dan and Larissa Kusel

Authors of The Financial Love Triangle: Yours, Mine & Ours

www.financiallovetriangle.com

Get Out or Stay In – Either Way Will Save You a Buck

Whether you live in the mountains, on the beach or in the city, enjoying the fresh open air is a free and healthy activity that anyone can do. Go for a hike on your local hiking path, bring a towel and a good book for a day at the beach or pack a sandwich and some snacks for a day at the park – all are fun and relaxing activities that don’t have to cost a dime. They also are great activities for meeting new people who live within your area (and great ways to wear out your kiddos if you have little ones in the house . So, kill two birds with one stone and save money, while hitting the social scene outdoors style.

On the flip side, with the start of college football season happening this past weekend and the pros ready to hit the field, consider staying in for the big game by inviting your friends over to your place. Rather than dropping a couple $50 bills at the local pub to watch the your college teams big rivalry game (ouch, CU vs. CSU game last weekend) , invite your friends over to your house for a potluck or BBQ and watch the big game in the comfort of your own home. By having everyone bring one food item and one drink item, the event is cheap for both the host and the guests. Plus, lounging on your comfortable couch or recliner is a lot more cozy than sitting on a rough plastic bar stool that sticks to the back of your legs each time you get up to use the restroom or order another $5 beer at the bar. Stay in, have fun, drink responsibly and save money. Sounds like a good plan to us!

Happy Saving!

Larissa and Dan Kusel, CFA

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Money Savings Tip No. 9: Local Events Calendars Offer Free Family Entertainment

A common theme in most people’s budgets in today’s economy is figuring out how to reduce the entertainment fund. Americans like to be entertained and we are willing to pay a pretty penny for a good laugh and a good time. But, you don’t always need to fork over the dough to have an entertaining time. In the summer, many shopping districts and city parks offer free summer concert series. Just last night, our family had a choice between three different free outdoor concerts to choose from, all within 10 miles from where we live. The one we picked was at a local outdoor mall plaza. We had so much fun dancing the night away and enjoying the beautiful Colorado summer evening, it was hard to believe that the entire evening was free!

Throughout the year, museums, galleries and other government sponsored entities also typically offer free or reduced rate days where they wave or dramatically reduce the admission fee. You could easily fill your days full with free or reduced priced events if you wanted to. You just have to keep an eye out for the local deals. Most of the time, these deals are listed in your local newspapers or local Web sites. Most cities even print local events calendars and mail them to the residents within their communities. If you are like one of my friends who is always on the free local events hunt, you may even need to keep a spreadsheet of local events in your area to keep them all organized. Now that is dedication! So keep a look out for those free local events and enjoy summertime with your family without breaking your budget.

This money savings tip is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com.

Money Savings Tip No. 8: Rent a Movie, Rather than Going to the Theatre

Going to the movies is an American pastime, but the price for a movie theater experience today can leave you with the taste of burnt popcorn in your mouth. During a recent spring break vacation, we took our niece and nephew to a matinee movie, bought one popcorn to share, and a few sodas. At the end of our afternoon movie rendezvous, we ended up spending almost $50 for two hours of entertainment. We don’t know about you, but when we look back on this expenditure, there are a lot more fun and entertaining things we could have done with that $50. The next night, we chose to stay in and rent a movie. For $5, we still got to watch a great movie, and we were more comfortable on the couch in our pajamas.

Larissa will be the first to admit that sometimes going to a theater has a more enjoyable aura (even if it is the sticky-floored cheap theater or dust bowl drive-in) than renting one. If you agree with this opinion and can’t bring yourself to combing the new release aisles at your local movie rental store, there are still some ways you can save money on your movie ticket. Many national grocers and employers sell reduced price movie tickets you can use two weeks after a movie is released in the theaters. Many times the reduced movie tickets can save up to fifty percent. And even though they can be few and far between, drive-in movie theaters and budget theaters can provide a fun, adventurous movie-going experience for a fraction of the cost.

Happy Saving!

Dan and Larissa Kusel

Author of The Financial Love Triangle

www.financiallovetriangle.com

How to Keep a Discussion About Finances with Your Spouse from Becoming a Heated Debate

Money, salary, expenses, and finances are not dirty words. They are not x-rated and cannot cause bodily harm. So there isn’t a legitimate excuse for not having conversations about these issues with your spouse or even with your close family and friends. You would be amazed at how much insight other people’s situations can lend to your current or future financial experiences.

 

It is important to note that you don’t have to wait until a financial conflict surfaces in your relationship to start discussing money and finances. Most of the time, you can avoid financial conflicts if you talk openly about money in the first place. Whether you consider the communication between you and your spouse as consistent, non-existent, or overbearing, setting up a little bit of communication structure can help out any couple’s financial relationship. To jump-start the financial communication between you and your spouse or to hone your financial communication skills, we recommend that you set up a specific time each month for an hour specifically reserved for an open discus­sion about finances. This means putting it on your calendar and committing to spending an uninterrupted hour talking with your spouse about your fam­ily’s past financial activity, future financial activity, and to touch base with each other about what each is feeling about the family’s financial situation. This might seem daunting since there tends to be so much baggage associated with talking about finances. The last thing any of us wants is to schedule a time to talk about finances, if the time ends up causing spousal fighting.

To keep the financial discussions from becoming heated discussions, it is important for couples to set predetermined goals and parameters prior to the discussion to keep the time productive and enjoyable for both parties involved. (A bottle of wine doesn’t hurt the situation either.) The following is a set of goals and parameters that can be helpful for establishing a framework for monthly financial discussions.

 

Discussion Goals:

·         To review the previous month’s spending and savings patterns to see if you are spending too much money in one area and not saving enough in another area.

·         To discuss upcoming large purchases that you foresee during the next month. (i.e.: repairs (house, car, etc.), medical bills, entertainment purchases, traveling expenses, etc.)

·         To check in with each person’s feelings on the family’s financial landscape. (This includes identifying the financial stresses that each person is feeling, as well as the financial successes that each person may have accomplished over the past month.)

·         To set spending and savings goals for the next month. (By setting these goals to­gether, you are creating a benchmark for both of you to reach. This benchmark helps to subconsciously keep you in check when you may be thinking about going on a shoe shopping spree or a golf playing marathon. It also provides a concrete number for you to focus on accomplishing, rather than vaguely saying, “Let’s save more money this month.” If you set your goals too vaguely, then you are shooting in the dark and you don’t have any accountability to yourself or your spouse.)

Discussion Parameters (Rules):

·         Don’t play the blame game. One of the easiest traps to fall into when discuss­ing finances is to start pointing fingers and trying to pawn off responsibilities on each other. This approach creates a recipe for disaster because it will turn a discussion into a confrontational mess. To eliminate the rise of ineffective con­flict during your monthly financial discussion, it is important for each person to take responsibility for his or her actions and focus on how these actions are positively or negatively effecting the couple’s financial situation. By keeping your focus on your own actions and not comparing them to your spouse’s ac­tions, it becomes a lot easier to be more open and honest.

·         Give each person a fair share of time to discuss thoughts and feelings. In most relationships, one person tends to be more outspoken than the other. Even so, it is imperative that each person has an adequate amount of time to speak his or her thoughts and feelings for an effective financial discussion to take place. Whether you and your spouse are very outspoken or more introverted, you may need to bring a stop watch or timer to the discussion so each person is guaranteed the appropriate amount of time to say what is on his or her mind without running the risk of being interrupted or talked over by the other spouse. You can structure the discussion to include five minute introductions or financial overviews by each person, a fifteen minute “what’s working and what’s not” for each person, and then a twenty minute open discussion about ways to keep what’s working on track, as well as to suggest possible resolutions for what’s not working. This approach may seem pretty rigid, but a structured environment in the beginning will help establish the groundwork for effective financial discussions in the future.

·         Play like a team. Throughout our relationship, we have always joked around by calling ourselves “Team Kusel,” but that’s the type of outlook that you need to tackle your finances and come up with a strategy to ensure a win. Just like when you’re playing sports or working on a big project with your co-workers, you have to work cohesively to realize results. It is essential that you make sure that every move you make is in the best interest of the team, not the result of some self-serving motive.

·         No outside distractions permitted. Everywhere you look or go, there is some­thing to offer a distraction. When you sit down to have your monthly financial discussion, try to eliminate as many distractions as possible so you can focus all of your attention on communicating effectively. This means turning off the TV, phones, and your PDA. If you have kids, then it may be most effective to schedule your monthly discussion after the little ones are in bed or when they are out visiting friends or family.

·         Meet in a neutral location. To make your financial discussions effective, it is important to level the playing field by making sure each of you is comfortable with the environment. This could be a common area in the house like the kitchen table or patio. What it probably shouldn’t include is an area where one person may be seen has having more authority than the other, such as a home office or study.

 

Open and consistent communication is the cornerstone of a healthy and prosperous financial relationship. Accept your natural reactions and perspec­tives toward money, accept your spouse’s natural reactions and perspectives toward money, and establish open communication about the similarities and differences on a regular basis. If you take this approach to discussing finances, you may be surprised to find how non-threatening and non-confrontational talking about money can be. If you are financial nuts like we are, you may even find your discussions about finances fun. However, we don’t want to stretch it here, so it’s completely okay if you don’t get a kick out of talking about your money and what you should do with it. Whatever your feelings are on the subject, you should strive to maintain an open perspective and commit to communicating openly with each other on a regular basis.

Good Luck!

Larissa and Dan Kusel, CFA

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Money Savings Tip No. 7: Evaluate Your Bills on a Quarterly Basis

Reassessing your bills quarterly is a good way to keep your expenses in check. By designating this review time, you can determine whether you are really using that $50 per month gym membership or if the bells and whistles cable package with a DVR is really necessary. We did a reassessment of our bill situation when Larissa quit her full-time job  a while ago and money was a little tighter than we were used to. When we looked at our bills, we realized that we were paying almost $60 per month for our cable package, which included hundreds of channels. What we decided is that the majority of the channels we watched on a consistent basis were the local channels that we would still receive if we downgraded to the lower-end cable package, which still offered 30+ channels. By downgrading our cable to the basic package, we ended up only spending $15 per month, which ended up saving us more than $500 per year. So make sure to take a look at your bills every now and again to make sure that you aren’t spending more than you need or want to.

Much Financial Luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Money Savings Tip: Participate in a Cafeteria or Flexible Spending Plans for Medical and Daycare Costs

One of the benefits that many companies offer their employees is the use of a Cafeteria or Flexible Spending Plan, which typically can be used for medical and daycare expenses. Even though each company’s plan is a little different, in essence, cafeteria plans enable you to allocate a certain amount of your paycheck into a pre-tax fund. For instance, if you know that your daycare expenses are going to be $6,000 per year, you can set up a cafeteria plan at the beginning of the year that will deduct $500 per month out of your paycheck, pre-taxed. The money then will reside in the cafeteria fund until you submit your daycare receipts for reimbursement. The benefit of this plan is that by deducting your expenses pre-taxed, you are able to lower the amount of taxable income that you report to the IRS, which can help you save on taxes at the end of the year if it puts you in a lower tax bracket. The risk with cafeteria plans is that you have to guesstimate how much money you are going to spend on medical and daycare costs for the year because the final figure has to be determined at the start of each year. If you end up not spending the total amount that you have allocated into your cafeteria plan by the end of the year, then you usually are not reimbursed for the remainder in the plan and you lose those funds. The bottom line is that you typically have to use all of the money, or you will lose it. When you use all of the funds in the plan; however, then you are putting yourself in a better position to potentially save money on taxes at the end of the year.

This money savings tip is compliments of the newly released book, Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

 

Fun Date Ideas on the Cheap!

To continue on our theme of weddings and dating from last week, this week’s blog will offer some ideas for couples to consider when looking for cost effective ways to spend time together and celebrate their marriages.

$50 Dates

• It’s rarely easy to go out to dinner for two people at a restaurant and stay within a $50 budget, but it can be done! Cities across the country have special restaurant weeks where participating restaurants will offer set menus for a set price. One example is in Denver (The Mile High City) during the month of February every year high-end restaurants feature a special “5280 Menu” which at least includes appetizer for two, dinner entree and sides for two and two deserts for the total cost of $52.80 per couple. By keeping an eye out for special events like this, couples can enjoy trying new and different food at a reasonable price!
• Go to Broadway shows or musicals during matinee and non-peak times. If you are a Broadway junkie or would like to expose someone you love to the arts, you don’t have to spend next month’s pay check. Although ticket prices can get pricey if you let them, you can get reduced priced tickets if you attend the shows during matinees or non-peak show times. Most of the time, these tickets can be up to twenty-five percent cheaper than tickets during peak times, and you also can usually save money on the other costs of attending a show, such as parking. It can be financially beneficial to keep your eye out for shows that are playing in smaller, less prominent venues. Often, you can get less expensive tickets at these venues, as well as the chance to experience the arts in a more intimate setting.

$20 Dates

• Relax at a local coffee shop. In our society of Triple, No-Whip, Sugar Free, Skinny, Mocha Java Lattes, the coffee shop has become a staple for many Americans as they are driving to work and need a pick-me-up. But, local coffee shops can provide a setting for a relaxing, intimate date for you and your honey. Order your favorite coffee drink, share a pastry and sit in comfy leather chairs by the fireplace together enjoying each others company.
• Hit Happy Hours. Let’s face it: sometimes you just want to go out to eat and it doesn’t even have to be a special occasion. You may be sick of eating the same old food every week or you may simply need to get out of the house for a meal. In any case, you can save a substantial amount of money if you go out during a bar’s or restaurant’s happy hour times. At most restaurants, happy hours will have both food and drink specials that typically include half-off specials or two for one drinks and/or appetizers.

$5-$10 Dates

• Rent a movie, rather than going to the theater. Going to the movies is an American pastime, but the price for a movie theater experience today can leave you with the taste of burnt popcorn in your mouth. During a recent spring break vacation, we took our niece and nephew to a matinee movie, bought one popcorn to share, and a few sodas. At the end of our afternoon movie rendezvous, we ended up spending almost $50 for two hours of entertainment. We don’t know about you, but when we look back on this expenditure, there are a lot more fun and entertaining things we could have done with that $50. The next night, we chose to stay in and rent a movie. For $5, we still got to watch a great movie, and we were more comfortable on the couch in our pajamas.
• Invite friends over for the big game. Rather than dropping a couple $50 bills at the local pub to watch the NBA Finals or Stanley Cup game, invite your friends over to your house for a potluck. By having everyone bring one food item and one drink item, the event is cheap for both the host and the guests. Plus, lounging on your comfortable couch or recliner is a lot more cozy than sitting on a rough plastic bar stool that sticks to the back of your legs when you get up to use the restroom or order another $5 beer at the bar.

Free Dates! (The Best Ones!)

• Check out the local events calendar. A common question as people budget is how to reduce the entertainment fund. Americans like to be entertained and we are willing to pay a pretty penny for a good laugh and a good time. But you don’t always need to fork over the dough to have fun. In the summer, many shopping districts and city parks offer free summer concert series. Throughout the year, museums, galleries, and other government-sponsored entities offer free or reduced rate days where they waive or dramatically reduce the admission fee. You could easily fill your days full with free or reduced priced events if you wanted to. You just have to keep an eye out for the local deals. Most of the time, these deals are listed in your local newspapers or local web sites.
• Get outdoors. Whether you live in the mountains, on the beach, or in the city, enjoying the fresh open air is a free and healthy activity that anyone can do. Go for a hike on your local hiking path, bring a towel and a good book for a day at the beach, or pack a sandwich and some snacks for a day at the park; all are fun and relaxing activities that don’t have to cost a dime.

Good luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Money Savings Tip No. 3: Brew Your Coffee at Home

In our days of $5 daily lattes and frozen espresso concoctions, the coffee shop has become a social and habitual stable in our lives. Even so, coffee expenses can be dramatically reduced by at least 50 percent if you brew your coffee at home before heading to work or swing by the dorm cafeteria to fill up your coffee mug on the way to class. This way, your coffee shop outings are reserved for socializing or study engagements, rather than a habit to get your morning fuel. 

 

If you can’t limit your strolls down to the neighborhood coffee shop, you also can save money on your coffee expenses by choosing a cheaper black, drip coffee that you can customize yourself at the coffee condiment bar, rather than ordering a fancy mocha, skinny latte with three shots of espresso. When looking at the numbers, you will spend $25 a week if you go to the coffee shop five times a week and purchase a $5 latte each time. If instead, you order a $2 drip coffee five times a week, you will only spend $10 a week; which equates to a 60 percent savings each week and a yearly savings of $720. That’s enough money to go on a decent spring break trip or Christmas shopping spree.

Happy Saving!

Dan and Larissa Kusel

Authors of The Financial Love Triangle (www.financiallovetriangle.com) 

 

This money savings tip is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

Money Savings Tip No. 4: Turn the Thermostat Down and Keep Lights Turned Off

We don’t want to play the gender card here, but typically the women we know have a lower tolerance for cold than men. So, we are not recommending that you freeze your girlfriend, sister, etc. out of the house during the winter to save money, but it can be cost effective to turn down the thermostat to maintain a consistently moderate temperature in your house. A moderate temperature will be different for everyone, but by being conscious about how often your heater kicks on in the winter, or even your air conditioner in the summer, you may be able to save a good amount of money each month on your heating bill. This strategy may not work that well, though, if the parties in your household cannot agree on what a moderate, comfortable temperature feels like. There may be some trial and error to find a happy medium that everyone can agree on.

 

On a similar note, you can lower your utilities bill by shutting off lights, TVs, computers, etc. when you aren’t in the room or using that piece of electronic equipment. We aren’t suggesting that you convert your house into a dark dungeon, but there isn’t any reason to have a TV on downstairs when you are only watching the one upstairs, unless of course you are recording one of your favorite sitcoms. There also isn’t any good reason to have every light in the house on at all times. A good habit to get into is to turn off the light whenever you leave a room. Not only will these simple acts help with saving money, but they are environmentally friendly and you can tout to your friends that you’ve gone green.   

Happy New Year Everybody and Happy Saving in 2009!

Larissa and Dan Kusel

Authors of The Financial Love Triangle (www.financiallovetriangle.com)

This money savings tip is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

Money Savings Tip No. 5: Leave Your Car at Home

As gas prices continue to fluctuate, driving your car can be a big drain on your finances. One way to save gas money is to bike to work or school once a week or as often as possible, if that is practical. If biking to work or school isn’t practical because of the distance of your commute or the safety of the route, then you can save money by committing to run one errand a week on your bike. Instead of hopping into your car to pick up a couple of dinner items at the grocery store or head down to the local neighborhood pub, clean the cobwebs off your bike seat and peddle down to the store or pub. It’s good for your budget, the environment and your health!

 

If you aren’t recreationally inclined, another possibility is to take public transportation. Depending on where you live, this option may be more cost effective and environmentally friendly than driving to work each and every day. If you are interested in taking public transportation, it can be beneficial to check with your employer or university to see if they offer free or price-reduced public transportation passes. Many times companies can offer their employees a reduced rate on these passes because they have worked out a deal with the city or public transportation governing body. Universities also typically offer students a public transportation pass as part of their student fees. It’s worth checking out.

 

Happy Saving!
Larissa and Dan Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This money savings tip is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

Coping with Challenging Times: How to Keep A Recession from Becoming a Relationship Depression

It is one thing to work together as a couple and manage finances when things are looking up, or even when things are just coasting along in neutral. It’s an entirely different challenge to deal with a setback in your financial condition. The following upcoming blogs will address the issues and concerns about dealing with a difficult financial landscape.

 

First, let’s start with the basics. Turn on the news lately, and people start to throw around the big “R” word: Recession. Everyone is on the news talking about how long the recession might last, what a recession means, etc. But there’s even debate about whether or not the economy actually is in recession. Ironically, we usually don’t know the answer until we are already in a recession.

 

Officially, the National Bureau of Economic Research reports that a recession occurs when there is a significant decline in economic activity lasting more than a few months. Perfectly clear? Of course not. Often people define a recession as two consecutive quarters of decline in real gross domestic product (GDP). That is that for six months straight, the economy produces less than it did before. Most recessions fit this criteria, but this is not a hard and fast rule, hence the constant debate about whether we are in fact in a recession or not. In some ways it would be like being on a ship that’s beginning to sink, and debating on how much water needs to be in the boat before you fire off the flare gun and ask for help.

 

For most households, the biggest threats in a recession are jobs and home values. Many people do not have the luxury of being able to take several months to look for work. Similarly, many households have a significant portion of their net worth tied to the value of their home.

 

Of course, there is no secret way of making you recession proof. While some cities and parts of the country may be harder hit than others, moving to a “safer” part of the country doesn’t make you immune from the effects of a tough economy.

 

To help guide you through the possible rough times that a recession can create for couples, we offer the following suggestions for coping with challenging financial times.

 

Plan for A Rainy Day

 

Remember that “Rainy Day” fund? Well, when recession looms, the storm clouds roll in. Rather than wait for the downpour, a reserve of cash is essential in staving off larger financial problems. Maybe in the past you have put off setting up a budget as a couple or going through all your bills to determine what’s needed and what’s a luxury due to time constraints, mutual interest, etc. But much like the definition of recession itself, it’s usually too late to start doing these things once a financial burden hits. If at all possible, the goal should be to have three months of core expenses (home, utilities, food, etc.) in cash. Without this reserve, many couples find themselves financing their challenging times with credit cards or refinancing their home. Both of these strategies provide short term relief, but will ultimately make the recovery from a recession longer. These may be second or third options once the cash reserves are exhausted, but a reserve will go a long way to smoothing out bumps in the road. To get started, an excellent resource is reading the Budgeting Section of The Financial Love Triangle, which provides tips and suggestions on this essential financial concept, and using our online budgeting calculator at www.financiallovetriangle.com.

 

In our blog next week, we will discuss another top concern that is looming in everyone’s minds with the conditions of today’s economy and the real estate market – Forclosures!

 

Stay Tuned for Next Week’s Blog: Dealing with the “F” word (no, the other “F” word …)

Take Care and Much Financial Luck!

 

Larissa and Dan Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This financial blog is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

 

Coping with Challenging Times: Dealing with the ‘F’ word (no, the other ‘F’ word …)

If you are a homeowner, these can be even more challenging times. When we bought our first house, we found ourselves consistently bidding on homes for sale at or more than the asking price, and losing out on offers that had been made just 15 or 30 minutes before ours was sent in. It was definitely a seller’s market. When we bought our next home in 2007, it was a very different story. We had kept an eye on the house we wanted, and when the price dropped by $10,000, we saw an opportunity. Not only was our offer of $15,000 less than the lower list price accepted, but the seller also completed another $2,500 in repairs/improvements, and contributed $2,500 to our closing costs. This kind of offer, just five or six years ago, would have been unthinkable.There’s no question that across the country, the real estate market has taken a beating through 2008. And certainly the proliferation of loose lending practices, exotic mortgages (interest only, very low teaser rates, etc.), are coming back to haunt us as many homeowners find themselves unable to make their payments. However, if you want or need to sell your home, don’t necessarily assume that your neighborhood has declined like the rest of the country. John Berry, a local Denver area real estate agent, told us that he put eight offers on homes over the list price during the summer of 2008. Admittedly he said, these offers were on bank-owned properties. His point, however, is that some neighborhoods and communities may still be showing signs of strength.

If you do decide to sell your home, the little touches that go into selling a home become much more important in a buyer’s market. Potential buyers know they have the advantage, so it is important to put your home in the best possible light. John recommends taking care of as many maintenance and aesthetic issues as possible before you put the home on the market. If the house badly needs a new paint job, you may want to paint it before putting it up for sale. You run the risk of a buyer not liking the color you choose, but at the same time when someone drives up to your home, they don’t see a lot of headaches ahead of them. In a sellers’ market, many homeowners would simply leave some of these items for the buyer, thinking that the buyer would want to decide on colors, styles etc. If you choose to go this route, be prepared to contribute money at closing to these items.

Of course, a very prevalent topic these days is the foreclosure ‘crisis’. People are losing their homes and property values are declining. As a homeowner, this admittedly is cause of concern. However, a home, like any investment, will have periods of increased values and decreasing values. As hard as it may be to see a positive in someone losing their home to foreclosure, that foreclosure now creates an opportunity for someone else to purchase a home. And hopefully, the new buyers will avoid the mistakes of those before them and select a mortgage that is appropriate for their financial situation.

If you are looking to buy a home, it’s tempting to look through the many foreclosure listings and start salivating over the great deal you will be getting. But it’s important to remember a couple of things about buying a foreclosed property. First, the bank is selling the house, and they are trying to get back the money they lent. So they are already putting a discount on the price of the home. As John mentioned earlier, you should sometimes expect to actually bid at or higher than the asking price for the bank to accept your offer. The bank wants to sell the house quickly, so they start low and hope to receive a number of offers.

Secondly, it’s important to do a thorough inspection of a foreclosed property before you buy it. Many foreclosed homes are not well maintained. A

homeowner, sensing they might be losing the house, is not likely to invest the time and money to the upkeep the property. Additionally, a foreclosed house may have been vacant for some time prior to being sold. There are often significant repair and maintenance items to consider. Be prepared to invest time, money or both to make the house livable or presentable. And despite the number of “fix and flip” shows on TV these days, this isn’t always an easy process.

If you are in a home and are having a hard time making your mortgage payments, you are certainly not alone. Delinquency and foreclosure rates have been steadily increasing. According to a news release from the American Bankers Association dated June 5, 2008, the percentage of loans in the foreclosure process is at its highest point since 1979. Furthermore, 6.35% of all mortgages were delinquent at the end of the first quarter in 2008. The article did note that a significant portion of the delinquent loans were concentrated in adjustable rate mortgages (ARMs), however the overall trend remains a concern.

When making the mortgage payment becomes difficult, there’s sometimes the tendency to treat your mortgage payment like any other bill. You may begin making the payment 10 or 15 days after the due date, or only paying part of the payment when it’s due. This is a recipe for disaster. If you are unable to make your mortgage payments, it is imperative that you actively work to find a solution. Failing to make your payments or hoping the problem will go away can turn a short term hiccup in your finances into a life long issue.

One simple solution may be renting out your home. When Larissa was pregnant with our son Dawson, we looked at our first home and realized that there was no way we were fitting toys, highchairs and all the other baby paraphernalia into our existing house. We had enjoyed living in the house for over five years, but it was time to find something that we could grow into. Unfortunately, the housing market was not very good and we didn’t think we could sell the house for a price that we were comfortable with. Fortunately however, the rental markets in the Denver area were showing signs of strength. We did some research and felt that we could rent our home for at least what our mortgage payments were. So rather than selling for a price that wouldn’t meet our financial needs, we moved out and rented the house. While there are always risks and issues with being a landlord, renting out the house allowed us to achieve our personal and financial goals of moving into a home. Renting your home may be an option if you are having problems meeting your mortgage payments or if you are in a position of needing to sell your house, but unwilling to take a financial hit to do so.

Fortunately, there are many lines of support for you to explore if you need help with your mortgage. Unfortunately, there are a multitude of fraudulent schemes and firms out there looking to take advantage of people that are already down on their luck. So our word of advice is beware and do your research. The Federal Reserve Board has a list of links for homeowners to legitimate sources of help. You can find the list at frb.gov.

One of the links is to the Federal Housing Administration (FHA), which established a toll-free line for anyone to call and get help (call 1-800-569-4287). From there, you can be connected to a qualified and approved mortgage counselor.

Stay Tuned for Next Week’s Blog: Investing: Navigating the Ups and Downs of a Volatile Market

 

 

Take Care and Much Financial Luck! 

Larissa and Dan Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This financial blog is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

 

 

 

 

 

Investing: Navigating the Ups and Downs of a Volatile Market

2009 is in full swing, and for many households around the country (and the world), there’s a bitter taste lingering from the previous year. No, it’s not your uncle’s special turkey stuffing that no one else wants. And no, it’s not the credit card statement for all the presents you bought this Christmas (some were even gifts for other people!). For many of us, we have a year end 401(k) or retirement statement sitting on our desk that we just can’t bring yourself to open. For those of you brave enough to have opened it, many of you have just been picked up off the floor and are wondering what to make of it.

 

On New Year’s Day, 2008, the Dow Jones Industrial Average was right around 12,800. Right before the end of the year, it stood at just over 9,000. That’s a one year loss of nearly 30%. For those of us invested more aggressively, our losses can be even higher. For many would be investors, especially younger investors, there can be a tendency to want to give up on retirement savings. Often people felt that they were sacrificing a lot to be contributing 10% of their salary to their 401(k). And to see it disappear so quickly, many feel the right thing is to stop losing more money.

 

For those of you reading this that are 35 years old, remember this number – 839.

 

If you are 45 years old, remember this number – 2,753

 

And if you are 55, your number is 11,497.

 

What are these numbers? They are not the number of years you now have to work before you retire. These figures are the where the Dow Jones Industrial Average was 30, 20 and 10 years ago. In other words, if you were 35 in 1979, the Dow Jones ended the year at 839 and you’d be retired today at 65 with the Dow at just over 8,800. That is not a typo. In 1979 the Dow was 839. Not 8,390. Not 18,390. Eight hundred thirty nine. What that means is that had you invested in 1979, and not done anything through this latest market crash, you would have had an annual return each year, for 30 years, of 8.5%.

 

For you 45 year olds, your annual return would have been 7.5%

 

Now I know what you are thinking 55 year old. Uh oh. What about  me? Well, all is not lost. In fact, like many other things in life, even the 35 and 45 year olds can learn from your situation.

 

While it might make sense to ‘cut your losses’ and stop investing, these market corrections can in fact be the perfect time to increase your retirement savings, or at the very least, continue your retirement plan. The reason is that for you right now, all your investments are on sale. The concept is called ‘dollar cost averaging’. By continuing to invest in a down market, you are lowering the average cost of the stocks you buy, which means you can profit when the market recovers.

 

For example, let’s say you have the absolute worst luck in the world, and you put $10,000 into the Dow Jones Industrial Average on January 1, 2008. The Dow in January was approximately 12,650. Today, your investment is now worth $6,373. Now let’s say you invested another $10,000 in the Dow Jones at today’s price, 8,063. What you have done is lowered the average price you paid for the Dow Jones to 10,356. That means now that in order for you to realize a positive return, you need the Dow Jones to recover, but not to 12,650, but rather to 10,356. If the Dow were to return to the original 12,650, you would have earned a return of 22% on your entire investment. Had you succumbed to fear and stayed out of the market, your return would be 0%.

 

This was of course an overly simple example, but the concept applies to anyone, regardless of age. But for younger investors, the benefits of being consistent in your retirement saving, or even increasing your investment in these correction markets if you can, have tremendous upside.

 

Not quite ready to take the plunge? Here are some ideas to help keep your calm in choppy waters:

 

1. Turn off the news. Every day lately, the market is either up hundreds of points, or down hundreds of points. It’s enough to make your head spin. By no means should you stick your head in the sand, but on the other hand, it is not necessary to check your retirement account balance every time you read an article in the Wall Street Journal. Set a time each month or each quarter (quarter is probably best) to review your investments. Between those times, look at the horizon, not the individual waves in the storm.
2. Just do nothing. If increasing your retirement investment is keeping you up at night, then don’t do it. Simply do nothing and don’t reduce your retirement contributions. In these volatile markets, people often feel like they have to do SOMETHING with their investments, when in many cases, the right course of action is to take no action at all. If you automatically contribute to your retirement from your paycheck, then the smartest thing may be to simply stay the course.
3. Start Now. If you’ve been putting off investing or saving for retirement, there is never a bad time to start. In fact, if you start now, you would kind of be like the person who waits until the day after Thanksgiving to do all their shopping. Everything is on sale and you have the opportunity to invest at attractive prices.
4. Be Patient. Another tendency at times is for people to change their investments in an attempt to try and earn back their losses quickly. So people that normally were conservative investors decide to try and make back their money quickly by moving to riskier investments. Sometimes evaluating your portfolio is the right thing to do, but many times you may be doing more harm than good. No one can perfectly time when the market will recover, and for those folks that were conservative before, moving to riskier investments almost guarantees more sleepless nights. Think about it, if these investments were too risky for you in an expanding economy, why are you comfortable with them now in a recessionary one?

Stay Tuned for Next Week’s Blog: Wedding Pitfalls to Avoid – Things to Do and Not to Do As You Prepare to Say “I Do” 

Good luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This financial blog is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

 

 

 

 

 

 

 

Wedding Pitfalls to Avoid – Things to Do and Not Do As You Prepare to Say “I Do”

Weddings are a lot like the Super Bowl. It is a huge event that culminates weeks, months or years of effort and preparation. It is all for one single day where everything gets intense and amplified. Everyone knows that the coin toss at the Super Bowl can easily take 45 minutes. This is just like a wedding reception where cutting the cake is a huge, symbolic event that can take up to 30 minutes to cut the first slice and make a huge mess on each other’s face.

 

To make sure that your wedding doesn’t turn into a goal line fumble, the following are four wedding pitfalls to avoid so you a wedding full of end zone celebrations.

 

1. DO: Make a Budget

Often people planning for a wedding start booking things, making arrangements, etc. without an idea of what the total wedding is going to cost. With all the things to plan: food, music, location, flowers, dresses, even down to what kind of china and flatware to use, it’s very easy to make a lot of small decisions and find out that you are spending a lot more money than you originally had thought. That is why it is important to start with an overall budget so you don’t find yourself at the bottom of a financial wedding pit with no way to get back up to the surface before your big day.

 

2. DON’T: Charge Everything

Most of us don’t think twice about the cost of a wedding. And who can blame them? Credit cards are so tempting, it is so easy to blow your budget (assuming you have one; if not, then you need to read the budgeting section in The Financial Love Triangle) if the financial strategy is “Just charge everything and we’ll pay for it after the wedding.” Nothing can be more of a post-wedding downer than looking over the credit card bill and regretting purchases after the final wedding bells have rung.  That isn’t to say that you have to always pay for everything in cash. For many of us, that’s just not an option. But just as you should discuss the costs of the wedding and come up with a budget, it’s important to figure out ahead of time how you plan to pay for everything. Are parents helping out? Are there specific items you can make them responsible for? Depending on how long your engagement is, this also gives you an idea of how much time you have to save for the big day.

 

3. DO: Talk About Post-Wedding Finances

You don’t need to come to an agreement on everything in one conversation, but certainly it wouldn’t hurt to get an understanding of hw each of you expects things to look from a money perspective once the champagne from the wedding has gone flat. You’d be surprised at people’s different attitudes about life after the honeymoon. Some expect things to stay the way they are, while others anticipate sweeping changes, including how the household finances will be run. The time before a wedding can be very hectic running around picking up tuxes, friends, flowers, cakes, etc. So, take 30 minutes before you walk down the aisle and ask each other: will you have a joint account? What money goes into and out of that joint account, if you have one? What bills do each of us have individually and what bills will we have as a couple?  You don’t need a full financial plan at this point, but at least cover the basics.

 

4. DO: Spend your Whole Budget

It may be hard for some couples to put a price on their wedding day. That’s perfectly understandable. Everyone wants a perfect wedding, and no one wants to feel like they are short changing themselves. Sometimes when you have a budget, though, there’s a tendency for one person in the relationship to try and “beat the budget.” For instance, you may have budgeted $500 for flowers, but then one of you may decide to try and come in way under budget. This is a surefire way to cause conflict where none is necessary. Once you decide as a couple what you want to spend on something, work hard to get as much as you can for that budgeted item, and spend every last penny you have allocated to it. You’ve already accomplished something by setting the budget, now enjoy using what you have budgeted to have a wonderful wedding day.

Good luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This financial blog is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com.