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Personal Finance Tips For Newlyweds

Written by Brett McKay

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When a couple gets married, they’re not only joining lives, they’re joining bank accounts. Each person brings to the relationship different attitudes and ideas about money. One of the key’s to a happy and successful marriage is to get on the same page with your spouse about finances.

Here are 5 things that a couple thinking about getting married should consider before getting hitched.

1. Review your credit history and debt together

Before you get married, sit down and look over each others’ credit report. One person’s bad credit score, is bad for the couple. You don’t want to find out when you apply for a loan that your lovely husband racked up thousands of dollars in credit card debt to pay for a video game habit while in college. By then it’s too late. Finding out each others’ credit score before you apply for a loan can help you decide whether to leave the person with the crappy score off the loan application so you can get a good rate. If you don’t do this, you’ll end up like this guy:

The guy is kind of a douchebag when he says he wouldn’t have married his wife if he knew her credit report. But the commercial gets across the point that it’s important to know each others credit report before getting married. It will help you make decisions when taking out a loan.

2. Discuss financial goals

Find out each others’ financial goals and attitudes about money. Is your wife a spendthrift or a frugal monger? Does your husband want save for a down payment on a house or does he want to be a renter? You can preempt money tension down the road by getting your goals and attitudes out in the open from the very beginning of your marriage. If one of you likes to spend and the other likes to save, your marriage isn’t doomed, you’ll just have to come to a compromise. Make this compromise at the beginning of your marriage.

3. Decide whether to have joint or separate accounts

The choice to have joint or separate accounts is entirely up to your personal preference. Each has their benefits and drawbacks. It also doesn’t have to be either/or. Many couples have a joint account for home expenses and maintain separate accounts for personal ones.

If you do decide to open up a joint account, make sure you both are aware of how much is in the account. You don’t want to have pay unnecessary overdraft charges.

4. Draft a budget together

Budgets aren’t sexy. It’s tedious and boring. Creating a budget with someone else makes it even harder because each of you have different priorities on spending money. While you might want to allocate more money for entertainment, she might want more money for personal care products.

But creating a budget together is vital. It will help bring your spending habits more in-line with each other. It also makes BOTH of your aware of what’s going on in your finances instead of just one person being in the know.

What do you all think? Any other tips that you’d give newlweds? Drop a line in the comment box and add to the conversation!

Image by Allele

Everything I Need to Know About Personal Finance I Learned From Carlton Banks

Written by Tony Marrone

If there is anything that insomnia and not finishing your reading until 1:00 a.m. teaches you, it’s that The Fresh Prince of Bel-Air reruns constitute the best programming on TV. Period. Fading off to sleep last night, I heard Carlton lecturing Will on the merits of opening some kind of investing account with a sum of money Will had stumbled into. Carlton’s rant piqued my interest because I finally realized that wrapped up in all the nerdiness and awful Tom Jones impersonations, were several lessons about managing your personal finances.

1. Your Education Is Invaluable

Carlton reminds me of myself at a young age. Always focused on where he would go to college, and being successful in life, that he very often missed out on being a kid. That’s alright though because Carlton transferred into Princeton (in real life you can’t do that) and probably went on to become a successful lawyer just like the Big Guy.

2. You Are Never Too Young to Plan Ahead

This ties in with Carlton’s educational planning, but relates solely to finances. While his big sister Hilary was out spending the family fortune, Carlton was investing his graduation money in his Roth IRA. Carlton frequently lectured his family members on the merits of financial investing and saving, and is a voice for frugality in a household that spends lavishly and foolishly (i.e. Geoffrey the Butler).

3. It’s Cool To Be A Nerd

Carlton’s nerdiness paid long-term dividends. Even though most boys probably idolized Will for his arrogance and outgoing personality, Carlton benefited largely by just being a juxtaposition to Will. Where Will could impress people with his good-nature, Carlton could impress them with his knowledge and sizable bank account. Carlton made it cool to read the Business section of the Times on Sunday mornings. He showed us it’s ok not to listen to Jazzy Jeff, but to jam out to Tom Jones.

4. Gambling Is Dangerous

Carlton had a highly-publicized affinity towards gambling. Every time he and Will were near a casino Carlton would forget everything he usually preached, and blow all his money at the tables. For such a cautious guy, this weakness can only be seen to point out the hubris that sometimes accompanies such frugality. Lesson: there’s a little bit of Carlton in all of us.

5. It Is Nice to Be Born Rich

Carlton arguably had it easier then many of us, and it is harder to respect someone who ascends from family wealth. However, Carlton continued to persevere in spite of his family money, unlike Hilary, and always seemed like he wanted to accomplish more than his parents.

6. It Is Nicer to Want to Become Rich on Your Own

Tying in with the previous point, it is clear to me now that Carlton’s ambition is what makes him so likable. There was never any incentive for Carlton to push himself to achieve great things, and in fact, it always seemed that the Big Guy appreciated Carlton’s accomplishments less than he did for all the other kids. Carlton still pushed himself to achieve, and that should be the greater message we glean from his goofy dances and incessant ramblings about personal finance.

It’s helpful before the semester starts to put things in proper perspective and maintain a sense of humor both about law school and about life. As we begin to get caught up in the everyday monotony of class and work, think about Carlton Banks and the lessons he taught us all during the formative years of our youth.

What To Do With Those Loan Refunds…

Written by Tony Marrone

Most of us have the great burden of having to finance our own higher education, and based on the rising cost of private graduate education, many law students are graduating with student loan debt reaching or exceeding the $200,000 mark.

The demanding course-load most law students endure makes it difficult (read: impossible) to go to school and work full-time. In order to help pay monthly expenses and survive with a decent standard of living during law school, I depend on my student loans refund at the beginning of each semester to help the fiancee and I survive.

The question is, how should you allocate the funds?

The Frugal Law Student’s Guide to Getting the Most From Student Loan Refunds

  • Step One: Budget your refund. You’re going to need to decide at the outset how much of your money you can allocate to expenses each month, and make sure your total expenses are less than your refund. I personally use You Need A Budget, I like the fact that it works on both Mac and PC (I use a MacBook, but the fiancee uses a Gateway and an HP). Whatever you decide to use, you won’t get far into the semester if you haven’t budgeted at the outset.
  • Step Two: Place the bulk of your money in a high-interest savings account. ING is running a promotion where you get $25 instantly placed into your account, when you open an account with an initial deposit of $250. (See link here). I use ING because I like their customer service. There are certainly plenty of other banks out there that offer higher interest rates.
  • Step Three: Take advantage of opportunities for free money from banks for opening accounts. The math is simple here: if ING is offering $25 for you to open an account by depositing $250, and Etrade is offering $25 for you to open an account by depositing $100, and you have well over $1,000 in your checking account “doing nothing”, go ahead and open an ING and Etrade account. Most of the promotions only require you to keep your cash in the bank for 30 days if you decide later to close the account.
  • Step Four: Only borrow what you need to live on. I’m not advocating you max-out your Grad Plus and Stafford loans so that you can invest your money in a 4% savings account. Based upon the time-value of money and the high-interest rates we pay on education loans, borrowing more than you need is a losing proposition. Even if you borrow excess money through your loans and invest aggressively and are successful, you’re really only talking about a nominal return, not even taking account the true value of the money you are borrowing (i.e., adjusting for inflation).

You need to plan ahead and be conservative when deciding how much money to borrow to finance your education costs. However, it is even more important to store the borrowed money wisely (not in canisters or buried inside your mattress) so that you can ease the pain that will later be brought on by high-interest rates during repayment.

Save Time By Depositing Money Through Your ATM (or Who In the Hell Deposits Money in an ATM?)

Written by Brett McKay

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I love ATM machines. Whenever I need cash, my money is just a few clicks away. But there’s one service on ATMs that I haven’t taken advantage of: deposits. And it looks like I’m not alone. While a staggering 90% of American households use ATMs to withdrawal money, only 29% take advantage of the deposit service at ATMs.

I don’t know what it is. Something about putting my cash or a check from my grandpa in an envelope and placing it in a machine gives me pause. What happens if I deposit money and some jerk drives a beat up Chevy van into the ATM in order to steal my birthday money? I don’t think I’m the only one who has that fear. However, like most fears, I’m sure it’s irrational. I haven’t read about any ATM busts in the paper since…. come to think of it, I’ve never heard of an ATM deposit heist. I guess the robbers think no one else uses ATM deposits either.

Another reason I think people don’t take advantage of the ATM deposit service is that their money won’t be available as quickly if you do your deposit with a flesh and blood teller. Thankfully, banks are working on technology that should speed the time you deposit money into an ATM and the time it appears in your account.

I really need to get over my angst over ATM deposits. I hate going to the bank. Whenever it’s open, I’m busy and whenever I’m free, it’s closed. When I do get a chance to get over to the bank, the line is huge. So, I wait 20 minutes so I can do a transaction that takes 2 minutes. Depositing at an ATM could really save me some time.

How to make an ATM deposit

OK, we all want to make deposits using the ATM. How do we do it? Here’s a short little guide to losing your ATM deposit virginity.

1. Find which ATMs have deposit service. Because so few people take advantage of ATM deposits, many banks have limited or completely gotten rid of the service. Call your bank to find out if they still have the service at their ATM’s and if so at which ones.

2. Swipe your ATM card and enter your PIN.

3. Instead of selecting WITHDRAWAL, select DEPOSIT. I know. It’s going to be hard after years of muscle memory training selecting withdrawal. That’s why focus is so important here.

4. Get an envelope and fill out the requisite information.

5. Insert cash in envelope.

6. Place envelope in deposit compartment.

7. Select complete transaction.

8. Walk away.

Total time: 2 minutes. 3 if you accidentally hit WITHDRAWAL the first time.

So, I’m curious. How many of you make use of the deposit service at the ATM? Please take part in this little poll I’ve set up:

{democracy:2}

Image by m.gifford

15 Minutes Could Save You 15% or more…

Written by Tony Marrone

On your next cell phone, cable, internet or home phone bill.

Like any good frugal law student, I’ve been crunching the prospective numbers for 2008 and determined that I pay far too much for all of the above services. In light of the upcoming wedding and our desire to be in a new house before graduation next year, it seemed that it was time to dust off the old negotiating tactics and take to the phones.

Cut Back on Your Cable/Internet/Home Phone Costs
First up on the list was good ‘ole Time Warner. The media conglomerate has been charging a monthly fee which hovers dangerously close to fraud-like levels. After haggling with the representative and vowing to switch my cable/internet/home phone service to a DirectTV/Verizon Fios combination, I finally was rewarded by having my monthly bill reduced 27% and only giving up four HD channels we never watch.

Streamline your Cell Phone Bill
After conquering Time Warner, I moved on to Verizon in an effort to lower our wireless bill. I chose to take a non-confrontational approach with the Verizon representative. After a brief review of the usage numbers, we were able to reduce our monthly cell phone bill by approximately 22%. However, when I asked if she could throw in some free text-messages for the next couple of months, the representative admitted that if I had called and threatened to cancel my service, she could have done this no problem. Who says it pays to be kind?

Eliminate Pesky Old Accounts via Technicality
Finally, I was prepared to begin what I felt would surely be a battle to cancel two old Sprint PCS lines that have been hanging around. BFP posted today about cashing in on a great offer usually only distributed to Sprint employees. Unfortunately, the great offer is not available to existing Sprint customers, and the two lines remaining of what used to be my family plan are not eligible for conversion to the cheap SERO plan.

However, there is a loophole for all of you wanting to get out of your Sprint contracts without paying the hefty $200 early termination fee. Sprint sent a letter to its current customers about fee changes effective January 1, 2008. What Sprint does not disclose in the letter is that the cancellation of the Federal E911 fee of 40 cents per line and the Federal Local Number Pool and Portability fee of 15 cents per line and the addition of the two new fees actually results in a “net increase in fees”. Technically under most contracts, the net increase in fees creates a loophole which allows you to cancel your contract and forces Sprint to waive the Early Termination Fee.

After I went back-and-forth with the representative, she agreed I was right, and could get out of the two-line account and save the $400 in Early Termination Fees, but would have to call back when I received the bill in order for her to apply the credit. I made sure to get the representative’s identification number before I hung up.

All told, with a little bit of time on your hands and the willingness to have customer service representatives try to convince you why only Time Warner can deliver you the best in high-speed internet or ESPN HD service, you can successfully trim your cable/internet/phone budget by at least 20%. That’s not bad for just 15 minutes…

Tax Refunds Will Be Delayed: Plan Accordingly

Written by Tony Marrone

If you’re like me, you would be monitoring the mail every single day waiting for the W-2 from your summer employer. The painful memory probably still creeps into your mind, you opened your first summer paycheck to find that the federal government had taken their share from your meager earnings. Thankfully, most students do not have much income, even those among us with cushy summer associate positions, so we are likely to receive most of the money withheld from our payroll check back this time of the year when we file our taxes.

However, as I noted at my other blog, The Taxman Cometh the IRS is experiencing serious delays in updating its computers to accommodate several forms that were revised at the end of the year, one of those forms being the Education Credit Form 8863 that most students will fill out in order to reduce their taxable income and qualify for a tax rebate.

What you should plan for if you are usually timely with your taxes (because you want the cash back) is to not be able to even file your federal returns until February 11th. Then, the IRS is cautioning that any rebate may take several weeks longer than usual to process.

There is good news amidst all this inconvenience, and it involves saving money. If you are in the habit of purchasing TurboTax or some other tax-preparation software each year in order to navigate through the myriad of deductions and exemptions you claim when filing your taxes, do not purchase the software this year. If you earned less than $54,000 in 2007, the IRS will help you file your taxes for free at their website. This should save you the cost of purchasing the software (generally at least $30) plus the fees the software providers charge in order to file your returns electronically (generally at least $20).

The pitfall with this plan is that most states that have income taxes (like New York) do not offer a corresponding free filing for state taxes. I recommend using an inexpensive tax preparation software; Complete Tax is the cheapest I could find ($14.95 with free e-filing).

The lesson in all of this is that students should definitely take advantage of the FreeFile offer by the IRS, but don’t count on your refund coming to your bank account electronically within 10 to 14 days. The delay could extend several weeks or months, depending on when you file your taxes.