Personal Finance « Married (with Debt)

Who’s Your Real “Head of Household”?

By Libby Balke on May 2, 2013 / Personal Finance / 12 Comments

The following is a staff writer post from Libby Balke. She’s an amazing writer, work-at-home mother of two, and has been married almost 8 years. Please leave any questions or comments below for either Libby or Crystal.

“He’s a great husband and a great father,” I found myself saying to a few friends over drinks one night, as we discussed the relative merits (and demerits) of our spouses. Then I paused.

“So what’s there to complain about?” one of my friend’s chimed in.

“Well, he’s a lousy head of household,” I replied. My friends just looked at me, an obvious expression of confusion on their faces.

My Head-of-Household Definition

For most of us, our familiarity with that term – head of household – is limited to the IRS’s description of it. My husband’s never filed his taxes as head of household; he never earned enough income to file federal taxes until we were married, and since then, we’ve always filed jointly. What I was talking about here (and what my friends failed to understand) was my husband’s inability to manage our household, at least financially.

In our family, I am in charge of:

Paying all the bills. That includes everything from our mortgage payment to our daughter’s preschool tuition to the credit card statement. I can’t remember the last time my husband paid a bill, to be honest.
Keeping track of all our tax documents, then getting them to our tax preparer (aka, my dad).
Setting our monthly budget and making sure we’re living within it.
Managing our investments, including our stocks, retirement accounts, and kids’ college savings.

You get the idea.

It’s Not All Bad

On one hand, I’m happy to be in charge of all these financial responsibilities. I’m a money-minded person, after all, and all this comes naturally to me; my husband, on the other hand, is a recovering spendthrift whose parents never instilled the value of money on to their son (they weren’t negligent with their own money – they just didn’t see the need to teach him about handling it). But on the other hand, I fear I’m doing my husband a great disservice. If I were to die tomorrow (my overly-superstitious Catholic-self is performing the sign of the cross as we speak), my husband wouldn’t know where to find half of the accounts in my name – he’d never be able to collect my life insurance policy, because he wouldn’t know where to find it.

It’s not that he isn’t a part of our family’s financial decisions: we talk about money a lot, and make virtually all our decisions as a couple. I don’t even spend my Christmas or birthday money without checking in with him first. But when it comes to executing our financial plans, I’m the real “head of household,” while he’s simply a clued-in bystander.

I know this isn’t the way it used to be. My dad, like his dad before him, is the money-manager in his marriage. Taking control of the family’s finances used to be considered a man’s job, and for some of my friends, it still is. I once had a friend who told me she had no idea how much her husband made, how much they paid for their house or mortgage, how much they had in savings, and if they even had any type of retirement accounts. I found this proposition absolutely horrifying – I’ve never felt that ignorance was bliss, especially when it comes to money – and told her as much. “It’s what works for us,” she replied, neither thrown off by my harsh judgment nor by her own lack of information.

Sometimes, I ask my husband if it bothers him that I tend to take over all our family’s financial transactions. “Not really,” he answers. “You like that stuff; if I did it, it would only be out of obligation. Plus, you’d have to spend a lot of time showing me how to do everything, and I know you think that’s a waste of time.”

This man knows me far too well.

Who is the financial “head of household” in your family? Does your family’s situation ever bother you?

Selling Our House Update

By John Miro on April 24, 2013 / Personal Finance / 12 Comments

by John Miro

Many of you know that my family is selling our home and moving because I found a new job. It’s been almost two months since the house was listed, and I must admit that it feels like our house will never sell.

We sold our first house in 2008 when all the housing mess was going on, and maybe I’m repressing memories, but it seems like it was easier to sell then. Granted, there was a homebuyer tax credit for first time buyers back then. We were also selling a home within the price range of a first time buyer, so that probably explains much of the difference.

I also read a recent article that said despite overall progress, sales of existing homes are slightly down. The article said also that sales of expensive homes were increasing. What I take from that is a lesson that if you try to play around in the middle, you will get lost in the sea that is the middle. Our house is not priced low enough for a young family, yet it is not expensive enough for the upper middle aged couple looking to expand.

One thing I learned from the housing crisis and the ensuing actions by the US federal government and treasury department: the rich get bailouts, the poor get handouts, and the middle class gets left out.

For those that play around in the middle, and by that I mean live a middle class life, it is tough to get ahead. Hell, it tough to get even, to get back to zero. When we paid off our debt last year, sending the final check on the same day we boarded a plane for two weeks in the sunny Adriatic, it was hard not to experience a variety of emotions. The first was jubilation for being debt free (minus the house) for the first time since graduating high school. That joy quickly turned to “oh shit I don’t have any money saved!” I thought about the two paid-for vehicles back in our garage, and instead of pride I felt fear of what would happen if one just died. A vehicle is a debt, even when it’s paid off, and as I recently wrote, having one can be an intangible asset in our lives, especially if we live in a place with no mass transit options.

So, back to our home selling issue.

We are having a few problems:

The home is at the higher end of the price spectrum for the neighborhood. It is move-in ready and except for eventually needing to replace the driveway, but there isn’t much needed to do to it. This means there isn’t much room to get your money back on improvements.
It has a small, crappy yard. We were never dog owners and prefer public parks and fields to backyard activities. We are finding that many people will sacrifice their own comfort (buy a smaller house, etc), if it means more yard for their dog or children. This is something I don’t quite understand, yet I acknowledge that it exists.
Uncertainty. This means I don’t know why the ‘eff it isn’t selling, and maybe the answer is uncertainty. Maybe there is something about the house we can’t see that makes people hesitant or uninterested?

Despite our lack of progress, we get mainly positive feedback. Positive, yet hesitant. “The house was great, yard not so much.” “House was great but wants the storage of a traditional basement” (Our home is a split level with tons of closet space. I take this to mean that these folks are weird hoarders who hang out in musty basements).

Stay Positive, “It’s Only Money”

Despite all this concern, I am staying positive. We haven’t even hit the Average Days On Market yet, and after all, it’s only money.

We are not underwater on the home and in fact, can lower the price quite a bit and still break even. We aren’t facing the problems many have every day, and for that I’m grateful.

Which brings me back to the point of the middle class – if you can’t have wealth, you might as well have fun. Now this could sound like excuse-making for those who spend wildly and rack up debt, and for many it is. I heard it before: “you can’t take it with you.”

Those who say that are right.

But it is also right to take responsibility for your life, pay off your credit cards and stop living like a drone for Procter and Gamble and Toyota. Take some time to make a monthly budget. Take some time to think ahead. Maybe invest in some dynamic mutual funds. If you change your expectations, can you retire early?

If I do some research, will I stop repeating the retirement garbage from the retirement-for-profit industry that tells you that you need multiple millions in your bank and coupled with a modest return rate and the right choices, you can die in twenty years with…almost exactly what you retired with?

What fun is that?

We buckled down for quite a few years and made a lot of sacrifices, but that was to get to a point where the problem of selling a home is not a crisis. Even if it doesn’t sell, I can attempt to rent it and cover expenses. I have enough cash saved up to pay on it for over a year before it becomes empty.

This is what financial freedom means. The ability to take a job and move on a whim, and not be tied to a job or a city because of money. The ability to work only when needed.

A wise man once told me: “It’s only money. You can always get more money.” I think that is some of the best advice I’ve ever heard, but it’s easier spoken by someone who has it. It does remind us of those times when we have it, and those times when we don’t. Sometimes life just rains on you and thousands of dollars are sucked out of your bank account for car repairs and broken furnaces.

But if you develop a philosophy of money that allows you to question the rules and motives of those making the rules, you can break free from money and it’s power of people.

Because when that older, wiser man was giving me that advice, it was in response to a story I told him about the mayor of our city killing himself because he squandered nearly a million dollars from his dead aunt’s estate, money that was supposed to go to a religious charity.

“You can always get more money,” he replied, shaking his head.

If you are living in America or Canada or Europe, you can probably always get more money. Our social safety net is not going to let you starve if you are a normal person down on your luck. That gives us the freedom to take risks with our money, or the comfort to punch a clock from 9-5 and retire without a great deal of needs.

If you think of life as a game, it’s more fun. If you play your cards right, you will probably get a great deal of 1-Ups and Respawns, but you will also get kicked in the junk quite a few times as well.

Make sure you take a moment to live your life. Take your vacation days every year. Reclaim your lunch hour. Sit in the sun and leave your smartphone inside on the desk.

Save money in advance for large purchases. Pay ahead of your credit card statement. Start thinking five years ahead, and stop thinking about your next paycheck.

Life is a game. Money is a game. But it’s a game where you can decide when you’ve won, so don’t set the goalposts too far or you’ll wake up one day like Ebenezer Scrooge, too frail to wheel yourself onto a filthy cruise ship for that vacation you never took. Set a savings goal, and once you get there, relax.

Feeling Mature about Your Family’s Finances

By Libby Balke on April 3, 2013 / Debt, Personal Finance / 11 Comments

We’ve been watching a lot of college basketball lately in our household, and one commercial has caught my attention. It’s for a financial services company, and the crux of the ad is “When did you know?” (I’m intentionally not naming the company, number one because this isn’t a sponsored post, and number two because I don’t remember the business’s name.) They’re basically asking consumers when they knew they were responsible adults; my husband and I both agreed that we started feeling like grown-ups when we were able to successfully manage our family’s finances. But we disagree on something to: exactly when that successful money management began.

My Husband’s Case

My husband believes we’ve been successfully handling our family’s finances from very early on in our marriage. We tied the knot during our last few months of school (grad school for me, undergrad for him), but by our eight-month anniversary, we were both gainfully employed, working full-time jobs with benefits. His version of success begins at that point.

My Case

I, on the other hand, think our successful management of our family’s finances started much, much later. Sure, we both had jobs with benefits eight months into our marriage; we bought a house 15 months in; we bought our first brand new car 27 months after tying the knot, and another one just shy of our fourth wedding anniversary – we also had debt, piles and piles of it.

Is that responsible money management? While it may be the status quo for most Americans these days, it’s not exactly ideal.

To answer the ad’s question, “When did you know?”, for me it was the month before our five-year anniversary. That’s when my husband and I sat down, looked at our family budget, and realized that we were wasting great gobs of money on things we not only didn’t need, but in many cases didn’t even want. We were spending over $1,000 a month on child care, while I felt like I was letting someone else raise my child; we were shelling out $200 a month for someone to clean our house, even though I found scrubbing toilets therapeutic. Examining our budget meant cutting out some luxuries, rethinking our priorities, and making some serious changes – changes that put me on the path to leaving my full-time job (the one with all those benefits that made my husband feel like a real grown-up) in order to ultimately become a work-at-home mom.

Over the next six months, we put our family’s finances into real order. We paid down debts; we shopped around for everything from car insurance to Internet providers; we redoubled our efforts to build our nest egg. When it was all said and done, I’d left the rat race behind and was able to find work/life balance doing my job out of my home office.

And that’s when I started feeling like a responsible adult.

What about you? When did you start feeling like a real grown-up? Would your spouse or partner agree?

Cars: Necessary Evil or Asset?

By John Miro on March 27, 2013 / Personal Finance / 14 Comments

I’ve written before about selling my car when I pondered the idea that a paid-for vehicle could be sold for quick cash in an emergency situation. While this would not be as ideal as having the same amount in cash, that isn’t always a reality for everyone.

Because my family and I will be moving in a few months – likely to a place with parking limitations – I am again thinking about selling a car and becoming a one-vehicle family.

The first question is, which vehicle stays?

We have two paid-for vehicles: a 2005 Chevy Cobalt and a 2008 Ford Escape. The small sedan has 130,000 miles on it, while the SUV has a few less. The older car is beginning to enter the darkness of old age. I just replaced all four knees and I need to put in a new A/C. The Ford seems to be okay.

Since we are moving to an urban area, we will likely have to rent parking spots in a garage or lot, but because we are moving to an urban area, I can take public transit to work every day. This means that for the first time in 16 years, since I started driving, I won’t need a car.

But that still leaves the original question: which vehicle stays?

The small car has the advantage of greater fuel efficiency and is easier to park in tight places. But it was a base model when I bought it, meaning it lacks some features like cruise control. I drive it 400 miles a week now and believe me, my right hip aches from pressing that gas pedal to the floor. Which brings up another problem – it’s losing any semblance of pep, and the acceleration is becoming weak. This is not what you want when you are getting dumped from an on-ramp going 30 mph into four lanes of 65 mph. With that being said, I must mention that the car has never had any engine trouble or malfunction, it’s just doing what engines do when the body falls apart around it.

The Ford Escape has the advantage of being younger and it still can accelerate rapidly if floored. And it has air conditioning, and cruise control! It has a taller cabin so the kids, well one of them, can stand up. It’s not much bigger than the car so it could still be parked most places, though it is not as easy to see what you are doing when you are parking.

Comparing them side by side, each car has its pros and cons for where we are going to live. But the Ford Escape has the potential to last longer, and doesn’t face repair needs totaling almost $1,000 like the Chevy. I believe that the Chevy will be easier to sell because it has a lower price tag, near $3,500 as compared to $9,000 or so for the truck.

We wouldn’t even be in this position if we drove vehicles with upside-down loans. If we were in that scenario, we would have to add another $100/month to our debt load to rent a parking space to keep a payment for something we no longer need. This is how debt traps us and inhibits our freedoms. Luckily we have lived with paid-for vehicles for more than a year, and that $700/month goes into our pockets.

I’ve written that an expensive car is the fastest way to get to the poorhouse. We’ve all seen cars parked in driveways of homes that were barely worth more than the cars. It is one of the few places where Americans collectively agree that we are going to demand and spend more than we need, an Anti Wal-Mart Attitude. People no longer blink at $30,000 loans for cars worth $23,000 as soon as they leave the lot.

The Financial Samurai has posed the 1/10th Rule for Car Buying, offering that your car purchase should be no more than a 10th of your annual salary. If you make $50k, you get a $5k car. This seems a bit tight, but I think it is close. To abide by this, you must accept that cars aren’t that cool, and that you will probably never afford a BMW.

Sam’s rule does create an interesting dynamic – it forces people to publicly display their income through the car they drive. I’m sure that rich people are getting annoyed that someone making $39k thinks he’s a baller driving a Mercedes. It’s getting to the point where these cars aren’t pure status symbols. The 1/10th Rule would put people in their economic places.

Evil or Asset?

Eight years ago I bought a new car and probably spent almost $25k on it over its lifespan. Same for the other car. That’s fifty thousand dollars in lost opportunities. But cars are a part of American freedom, and they allow us to live where we want to live and move by our own choosing. I’ve never owned a fancy car (unless you count the used Buick Riviera I drove in college that had a moonroof and tan leather), and I don’t aspire to.

So if we are moving to a place where cars aren’t needed, why not sell both? To be honest, that would be a big step that we aren’t ready for yet. Though we could still take the train back home to see family, we’d be completely dependent on family to pick us up and drive us around. I suppose we could rent a car one weekend each month, but that would probably be more expensive than keeping a car in a garage. Plus, with two kids, it’s easier to keep them corralled and safely transported in a vehicle when making daily trips to soccer practice, etc.

I guess that makes cars a necessary evil, but I am warming up to them again. Financial God once wrote that he envisions a future where cars are the mass transit solution, and talks about a giant fleet of driverless cars weaving about the thoroughfares of America. This struck me as an interesting picture, and as cars become more efficient. Is supporting something like this a guarantee that high speed rail will never catch on in America?

Sell the Cheap One

So I’ve decided to sell the cheaper car. It will be an easier sell and leave us with a vehicle that should last a few more years. It is nice to know that if something changes in the next few months, we could sell the one with more value.

One thing that has been bothering me is that I don’t have a car replacement fund. I am not setting aside a specific amount each month to save for a new car. Instead I am just saving cash in a general savings account. Maybe I’ll just gamble that the Ford Escape will last me until some point in the future where I am more able to do it.

The fact is, driving is a debt that is almost impossible to pay off. Even if you live somewhere that you don’t need a car, the cost of living will more than make up for any savings.

If any twentysomethings are reading this, take it from me: a nice car isn’t worth it. Resist the urge. Push your junker to the limit. Buy him some new shocks and struts. Change his oil. Save your money.

Living the “Home for Sale” Life

By John Miro on February 27, 2013 / Personal Finance / 6 Comments

By: John Miro, Co-Owner

The other night I got home late. I had been out of town three days for work. Though it was dark, the neighborhood glowed with the brightness of five inches of snow, which amplified all light sources.

My front yard also glowed, but it was the sign protruding from the frozen ground that was causing it.

FOR SALE! it said, catching me off guard.

Three days earlier we had put our home for sale, but seeing the sign in the yard for the first time, white with blue letters against the white background of snow, made it seem more real.

Though it was night, the inside of my house also glowed. As I stepped through the threshold into our mud room, I saw the house as a potential buyer might see it, bright and shiny.

That’s because we are now living the “Home for Sale” life.

What is the “Home for Sale” life?

If you’ve ever sold your house, you probably already know what I’m talking about. While the “for sale house” seems to be the same one you bought, it is markedly different. As human beings with busy lives, there’s no way to live every day as if you were expecting guests, but when you put your home on the market, you must wake up every day to a home that is ready for visitors who will be looking in every corner and judging everything.

In addition to keeping the house clean every day, we must also take great care to finalize all those little repairs and cosmetic upgrades we’ve been too busy to get to. Now that we are selling a home for the second time, I am again reminded of that feeling of “why didn’t I just make this upgrade when I bought it, that way I could have at least enjoyed it.”

When we push ourselves to finish all those little presale projects, we are improving our own home for someone else’s enjoyment. Waiting until you put it for sale to spend the money on upgrades doesn’t save you any money, it just costs you time and enjoyment.

So Why Do We Do It?

Maybe you didn’t have the cash flow for needed repairs when you bought it. Maybe you chose to prioritize your cash flow and make it work towards debt payoff. That’s what we did.

One of the main reasons we bought our house was because it was move-in ready and needed no major repairs. In fact, most of the house remains exactly as the previous owners left it.

To our advantage, they put in a sizable amount of cash making upgrades that the neighborhood would never allow them to recoup. It’s a nice neighborhood, but every street and every house has a ceiling of value. For many upgrades, you will never get the cash back when you sell.

So we are the lucky ones who were able to enjoy granite countertops, undermount sinks, newer appliances and fixtures, and a master bathroom and walk-in closet the size of a bedroom.

Although the previous owners bore almost all of the cost for our enjoyment, there is a price for us to pay.

You’ve probably heard the old adage “Never buy the nicest house in the neighborhood; better to buy the most affordable home in the nicest neighborhood.” Because we were so tired of working on the home we owned before this one, we violated the adage

The price we will pay for this is that the house will probably sell for very close to what we paid for it four years ago, meaning we won’t make much on the sale.

But I’m OK with that.

So How’s It Going?

As I type this, the house has been on the market for five days. We had one showing on the day it was listed, and our agent said it showed well. The next day we had five inches of snow dumped on us, so I imagine that people would rather stay at home until it melts away before looking at homes for sale.

At least that’s what I tell myself to feel better.

Part of living the “Home for Sale” life is that nagging fear that the home won’t sell. For us, we have to move in a few months for my job transfer. We have no desire to rent it out and be landlords, mainly because my wife doesn’t want to be a caretaker for someone else living in the house she loves. For that reason we chose to make a clean break.

While we would all love to live in the cleanliness and beauty of the “Home for Sale” life every day, with a clean sparkling house, that is a luxury only for the stay at home spouse or those who can afford live in help. The reality is that for a period of time, many of us will live differently in order to convince someone else that this is the house for them.

If You Are Struggling with Debt, Do Not Get Pets…

By Crystal Stemberger on February 20, 2013 / Personal Finance / 17 Comments

By: Crystal Stemberger, Co-Owner

My husband and I got our first pet together about a month after I graduated from college and 3 weeks after we got married, lol. It wasn’t the smartest financial decision we ever made, but it wasn’t the worst either. We were pretty broke but we did have a small emergency fund, our first real jobs, and we had really, really wanted a dog all through college.

Pets Can Be Expensive

We got lucky. Miss Doxie faked an amazing personality at the Houston SPCA and we took her 7 year old butt home before she ever showed any of her negative personality traits, lol. She ended up being a perfect fit for us – a fantastic apartment doggy with as few vet costs as possible for a living entity. She’s made it through 3 big moves, a few foster dogs, lots of guests, and even gets along okay with Mr. Pug, who we adopted in 2009.

We love our dogs, but you have to keep in mind that pets cost money. The basics are constant – food, supplies, meds, etc. Then there are accidents, bad luck, and deeper medical issues.

Miss Doxie had a few teeth that needed to be removed when we first got her and has had a lumped removed yesterday from her belly. Other than that, we’ve only needed to provide food, blankets, flea and heartworm meds, and a treatment once for pneumonia. Overall, I can only estimate that we’ve spent about $4000 on her in 8 years.

Mr. Pug was special. He’s a momma’s boy, came pretty healthy except for bad teeth like Miss Doxie, but then there were surprises. In late 2010, he developed crazy allergies and it took about $2000 over about 6 months to figure out what was wrong and the best way to treat it. Now he just eats special dried food and takes a cheap steroid pill every day. That said, we have still spent at least $3500 on Mr. Pug in about 4 years.

That means that we’ve spent at least $7500 on dogs in the last 8 years. That doesn’t seem so bad to me, but that is substantial money…

If You’re Struggling

Overall, if you are struggling to save money or pay off debt, pets may not be for you. Unless you have set aside money for weird emergencies that pop up, a major visit to the vet (or worse, an emergency vet clinic) can set you back thousands of dollars. That won’t help with your financial goals. I know it probably hasn’t helped with ours, lol. Pets are great companions, provide a billion little blessings like simply being happy to see you, but they aren’t usually financially helpful overall. Just something to think about if you’ve been considering getting a pet.

How much have your pets cost? Any great stories or surprises?

It’s Time Again – Shopping for Car Insurance

By Crystal Stemberger on February 6, 2013 / Personal Finance / 11 Comments

My car insurance premium goes up every 6 months despite the fact that I’ve never had any accidents in my life. They only try bumping it up by a few dollars a month, but it’s very annoying. So I now have a process to keep my rates in my budget.

Our Car Insurance History

I’m married and we have two cars. My car, a paid off 2005 Chevy Aveo, is only worth a few thousand dollars, so I just need liability coverage. My hubby’s car is a paid off 2007 Toyota Prius that we use for pretty much all drives together and he uses to get around for sports officiating. It’s worth around $9000-$10,000 still, so we do pay for full coverage on that one.

This means that at least in our area of Houston, TX, we will be paying $100-$120 a month for all of our coverage. The trick is keeping it in that range despite premium creep.

Get Multiple Quotes

It’s a pain in the butt, but every 6-12 months, I do start collecting quotes again. I call around or compare cheap auto insurance quotes online. Usually I can find a slightly better offer. Then I either take it to my current insurance company to match or switch companies if they refuse. It takes anywhere from an hour to several, but I consider it time well spent since I hate paying more than necessary for anything…especially insurance that I haven’t ever used.

Have Your Data Handy

The trick to getting fast quotes is having all of my data handy right up front. I want all of my quotes to be based on the same information, so I keep my current policy in front of me while I call around or type in my info online. I also ask reps if there are any discounts available to us that we may not know about. Our lack of accidents usually helps a lot and we take a defensive driving course every 3 years to get that discount too. Teachers, police, and military can also receive special discounts as well. It pays to ask.

Keeping our car insurance rates within my happy range is yet one more annoying errand, but try to be stubborn. It can save you money.

Do you shop around for car insurance quotes when your rates go up too?

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