Tag Archives: money

How-To: Plan for Your Financial Future When You’re Single

How to: Plan for your financial future when you're single This week’s Molly’s Money post goes out to the SINGLE ladies and gents out there. I’ve had a lot of posts recently geared towards the engaged or married couple dealing with finances… but I’ve done a disservice and neglected the single people. And for that, I am sorry, y’all!

I got this awesome question from a reader:

“So I’m single and so ready to mingle. What’s your thoughts on saving? (i.e. do you think it’s best to save for a new car rather than a house? Do you think it would be wiser to purchase a smaller house/unit while I’m single or to wait it out, keep saving and keep paying rent so that the money I’ve saved can just be there for the day future husband and I decide to go house hunting?) I’ve managed to get my expenses down a lot this year, which has been awesome living pretty much debt free and finally having the ability to save!”

Great question! There are a couple issues at hand here. And ALL of this is under the guise that you are essentially DEBT FREE.

First, the car situation. If you are in desperate need of a new car, then I would say saving for a new car is priority. But, if you have another 50K-100K+ miles left on the car you have, then what’s the rush in getting a new vehicle? I am a HUGE advocate of NOT leasing or financing a car. Save up and pay cash. I have done that for ALL of the cars I have owned and it is the BEST decision ever. Not having a car payment saves you SO much time, hassle, money, etc.

And remember, you don’t need a brand new car. There are PLENTY of awesome, certified pre-owned cars out there that will last you a long time. So, I say save up and pay cash for the car that will last you.

BUT, that’s all to say that a car is a priority need. If it’s not a priority need, then hold off.

Now, the housing situation. Now, I, personally, have never bought a house. I was lucky enough to meet and marry a man who had already saved and purchased a home. But, I made sure that I got educated on what exactly the mortgage situation was, how he bought it, etc. when we got married.

I wanted to know EVERYTHING about where we stood with our house.

So, before answering your question, I actually talked with my financial expert of a husband and we both agree in this area.

Do not buy a house until you can save enough money to put a 20% down payment on it. I REPEAT: DO NOT buy a house until you can save enough money to put a 20% down payment on it.

Putting 20% down on a house will benefit you for many reasons. Including, but not limited to:

1. Avoiding PMI. PMI (Private Mortgage Insurance) is basically insurance that the lender takes out on YOU in case you were to ever default on the loan. Essentially, if you stopped paying for whatever reason or were at risk of foreclosure, the lender (bank) that gave you the money for your house initially, has that insurance so that they don’t lose out on the money they lent you.

HOWEVER, instead of the BANK paying for that insurance, you end up having to pay for that insurance until you have at least 20% down on your house. So, that PMI is just an added expense that you just don’t need or want when you’re buying and paying for a house.

2. You have enough equity in the house that you have a money buffer. Putting 20% down is basically giving YOURSELF that insurance that the bank would take out on you if you were to NOT put 20% down. Meaning, if, for example, the market were to crash again, you would have enough equity in the house that you wouldn’t owe more than your house was worth. You could sell the house and not lose any money.

Remember the mortgage crisis and housing crisis of 2008? Well, that happened, in part, because so many people didn’t have nearly enough down on their house. So, when the market crashed, suddenly all these people owed way more than their house was worth. Thus, the housing / market problems.

Now, there are a few other things you should be thinking about and planning for when you’re single. Like, saving and planning for retirement. Yes, retirement.

First and foremost, if the company that you are working for offers a 401K plan, be sure to participate and contribute as much as you can up to the amount that the company will MATCH. So, for example, the first company I worked for that offered a 401K plan matched 100% of what I put in up to 6% of my salary.

So, right there, that was basically FREE money that doubled my investment in the time I worked there. If your company will match your contribution, that’s free money you don’t want to leave on the table, so take advantage of it.

Once you’ve got your 401K plan narrowed down, consider investing in an IRA. You will need to decide whether or not you want to invest in a TRADITIONAL IRA or a ROTH IRA.

Basically, a traditional IRA, is not taxed until you take the money out in retirement. A ROTH IRA is taxed NOW, but not when you take it out in retirement after the age of 59.

It’s like an immediate gratification versus a delayed gratification type of thing. There are certainly pros and cons to both. While it’s nice to not have to pay the taxes on the traditional IRA now, it’s basically a tax time-bomb. Who knows how much taxes will be when you retire?

Here’s a fun game. Let’s say you are:

25 years old
You invest $5,000 a year to your ROTH IRA for the 40 years of your working life
Your IRA grows at an average rate of 7%

Considering all of that… if you were to retire at age 65, your ROTH IRA would have $1,068,048 in it.

roth-ira-calculator-screenshot

Yeah, that’s over ONE MILLION DOLLARS that you would then have… TAX FREE.

So, I’d say I’m a fan of the ROTH IRA, but it totally depends on your situation.

Now, I know this is all somewhat complex stuff that can be super confusing (trust me, it is for me, too). Which is why I’ve tried to learn as much as I can about it so I can explain it all in way that is hopefully easy to understand and makes sense,

And, there’s definitely WAY more to all of this than I’m going over in a few paragraphs, but hopefully this is a good start.

What do you think? What other questions do you have?

And for others of you reading this: what advice would YOU have for my reader? Have any of you done any of the things I’ve suggested? Share your experiences below!

5 Awesome Money Saving (and Making!) Tips [Molly's Money]

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5 Awesome Money Saving (and making!) Tips!

As the husband and I are gradually preparing for the arrival of this baby, we are not only mentally preparing, but also financially preparing. Kids are expensive, yo!

Well, as we’ve been preparing financially, we’ve really been toying around with our budget and figuring out different ways that we can cut costs, areas we can save, and ways we can even bring in a few extra dollars.

So, I thought since this is something we’ve both been working on for a while, it would be a perfect addition to my Molly’s Money series. No? Yes!

Now, obviously, this should go without saying, but the number one way to save money is to MAKE A BUDGET AND STICK TO IT. Trust me, when you write down the dollars you bring in and the dollars you spend, you will find areas to save. Do that first.

You can also check out the last post I did about saving money when you don’t have money to spend! That post also has some great money saving tips on there, as well.

1. Money Maker – Sell Your About-To-Expire Coupons!

What? Sell your coupons? Yeah, I had no idea either! So, I will randomly get some coupons in the mail for stores that while, yes, I love, I know I won’t use the coupon. For example, I recently had a 10% off coupon to Crate + Barrel. Now, I LOVE Crate + Barrel, but there just isn’t anything I need from there right now that I can A) justify buying or B) really need.

Well, some coupons like that could be super valuable to someone who was maybe planning on buying furniture from C+B (or another large-ticket item). Well, you can go on eBay and list your coupon and you don’t even have to ship it to them – you can just e-mail the highest bidder your coupon code.

Sure, you won’t make $20 off of it, but I have seen about-to-expire coupons sell for as much as $10 or $15 at the right time.

And Crate + Barrel is just one example, I’ve seen plenty of other coupons go for $20-$30 before! Crazy!

2. Money Maker – Sell Your Gift Cards!

Do you have a gift card sitting in your wallet that you just know you aren’t going to use? Maybe you got it for Christmas or your birthday or something and it’s to a store where you just won’t or don’t need to shop? Or maybe you used part of a gift card and just don’t have use for the rest of it?

You can SELL your gift cards on sites like eBay, Cardpool, and Plastic Jungle. You won’t be able to get the FULL value of the card, but you can definitely sell it for a good portion of it!

3. Money Saver – Call Your Insurance Companies!

So, one thing on my to-do list this month was call all of our insurance companies and make sure we were getting the best rates possible. PLUS, I got quotes for having my husband and I combine insurance on a couple things (like auto insurance – right now, we have separate auto insurance policies).

Well, I was able to find out that as of May 24th, I am eligible for a couple discounts and they can remove a ticket from an accident I was in a few years ago off my record and off my insurance. Thus saving me… $60+ a month! AND if John comes on to my policy, we would BOTH save almost $100 a month on car insurance. Yeah.

But you see, my policy would have stayed at about the same rate if I hadn’t called and checked.

We also did the same thing with a few of our other policies recently and we were able to knock off around $10-$20 a month on a couple of them. It’s no guarantee, but it DEFINITELY never hurts to ask.

4. Money Maker – Sell Your Books + DVDs!

So, I am an AVID reader and movie lover. I could spend HOURS in Barnes & Noble and my idea of an awesome Friday night is sitting on the couch watching a good movie.

Over the years, I’ve collected HUNDREDS of books and a whole LOT of DVDs.

But the truth is, with my books, it is rare that I read a book and then read it again. 95% of books I read, I never read more than once. I have to REALLY love a book to read it more than once.

And with DVDs, SO many of the DVDs I own are on Netflix, I just am not watching DVDs like I used to.

Now, I am a HUGE proponent of donating books to a library or school or something like that – and that is something I do A LOT, but when you are in need for some cash, this is a great way to add to your wallet.

Look in your area to see if there are any used bookstores that will buy your old, gently used books from you. There’s a GREAT one in this area called Nice Price Books & Records. They will buy your books AND DVDs. Now, sure, they’re not going to give you a TON of money for them, but I’ve been able to walk in with a bag of books and walk out with $20-$40 cash before.

Also, if you have a Plato’s Closet in your area, they too will buy relevant books and DVDs from you.

And, when in doubt, go to eBay. I have sold a lot of seasons of TV shows on eBay for good money! In fact, back in January, husband and I did a big DVD cleanout and made almost $100 selling seasons of TV shows on eBay.

Just another thing to consider!

5. Money Saver – Save1.com!

I found Save1.com* back in the fall and I have used it quite a few times! What is it exactly? Well, it’s basically a coupon website – but for online shopping. BUT, there are literally HUNDREDS (if not thousands) of retailers listed on their website.

You can just search for the store you want to find a coupon for in the search bar on the homepage, OR you can search by category. They also list the CURRENT best coupons and best deals on one section of the site.

They have coupons for EVERYTHING from apparel to accessories to computer ink to batteries to cooking / online groceries to web hosting and domains! I mean, there is basically a coupon for almost anything. So, the next time you need something or you are looking for something, you can search Save1.com to see if there’s a coupon that can save you some money!

BUT wait, there’s more… no seriously. One of the things that caught my eye when I first discovered them, is that for every coupon or offer from their site that is used, they provide a meal for a hungry child. Yeah, amazing! To date, they have provided over 97,000 meals to hungry children across the world. You can read more about their story here and also about their commitment to financial integrity here.

But seriously, I’ve used the site for a lot of random things over the last eight months or so since I discovered it, and it’s one of my go-tos when I am planning on doing any shopping online.

What are some awesome or creative ways that YOU save (or make) money?!

*this post is sponsored in part by Save1.com – but I really do use the site regularly and I really do love it. All of the opinions about Save1.com are all mine.

Ask Molly: “How do I share my debt issues?” [Molly's Money]

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molly's-money-graphic-sharing-debt If you’re new here, Molly’s Money is a personal finance series I write talking about getting out of debt, how to maintain a budget, etc. and I also love to answer your personal finance questions. You can check out all my previous posts here.

Dear Molly,

I have $25,000 in dumb credit card debt. I am so ashamed of it and as a teacher in WV I have limited money as well. I am engaged to a wonderful and financially responsible man and I haven’t yet told him how much debt I have. I want to believe I can handle it myself but I also don’t feel right keeping him in the dark. I don’t want him to share the burden of my bad decisions with me and I am afraid at this point telling him be even harder. Any tips or advice? I could really use some. I dream of debt free and maintaining my dignity while doing it. Thank you!

-M

Hey M,

I was once RIGHT where you are – but not engaged (yet, at the time). When my now husband and I were dating, I had this huge cloud hanging over my head – and it was a cloud of shame and debt. I was terrified to tell him about it in the fear that he would leave me or break up with me. He, like your man, is extremely financially responsible, and I was so ashamed and embarrassed of my issues, I avoided telling him for MONTHS.

BUT, once the THOUGHT (read: THOUGHT) of marriage came about, I knew before things went any further that I had to tell him.

So, I did.

I sat him down and I told him everything. I showed him every document and gave him the skinny on where I was financially. I also showed him where I started and how far I’d come in my debt payoff process. I won’t lie – I cried a lot. It was terrifying. But my husband (then boyfriend) was so supportive, so understanding, and instead of running away, he sat down with me and helped me continue to figure out how I was going to get out of debt. And I was blessed enough to get out of debt and become debt free only three weeks after we got married – so it was only “our debt” for a very short period of time.

Why / Why did I do this?

Because, if we were to decide to get married, I didn’t want ANY secrets and because once we said those vows, the debt would no longer be MY debt, it would become OUR debt. Read this post about combining finances after marriage.

That is something that is REALLY tough for some people to grasp, but it is SO important to address is quickly and EARLY.

Now M, you’re already engaged, and I will be honest, you’re a little behind – so the time to tell him is now. Like, seriously. Now.

Just know and understand this: once you say, “I Do,” the debt is no longer YOURS and YOURS ALONE – it is now “OURS” and “OURS TOGETHER.” This isn’t a bad thing or a negative thing – it’s one of the best things about marriage. You’re a team and you have a partner who is there to support you every step of the way.

But when you’re a team, you have to communicate EVERYTHING to your teammate. So, sit him down, be honest with him, be open with him, and tell him everything. He will love you for it and he will appreciate you for it.

You CAN be debt free and you WILL be debt free, but it’s so important to share your struggles and be honest and transparent with your fiance NOW. Don’t be scared, this is a HUGE first step towards open communication with your husband and creating a cohesive team.

What advice do YOU have for M? Have you experienced anything similar?

Do you have a personal finance question for me? You can leave it anonymously in the comments below OR you can email me – molly@stillbeingmolly.com.

[Molly's Money] How To: Deal With Debt Worry

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molly's money: how-to deal with debt worry

We are back for another edition of Molly’s Money. If you’re new here, Molly’s Money is a personal finance series where I talk about debt, debt issues, getting out of debt, etc., and also where I answer your finance questions to the best of my ability!

I received this question from a reader yesterday and it’s one that I get all the time, so I thought it would be perfect for a post!

Hi Molly,

I am in A LOT of debt and I cringe every time I think about it. I accrued my debt because it was “good debt” and my entire family encouraged it – student loans. I took out student loans for undergrad and grad school and I have upwards of $90,000 in debt. I recently found Dave Ramsey and I have read his book and plan on using the debt snowball, but I was wondering if you could help me with my worries surrounding paying off my debt and having other things to worry about paying for – such as a wedding, honeymoon, house, car… I find myself not only worried about paying off my debt, but how I will pay for my wedding and honeymoon…

For reference, I am graduating this May from my masters program in Social Work and I have not found a job yet.

-R

Dear R,

This is something that EVERY single person that is in ANY amount of debt worries about. And that’s what it is: it’s debt worry. Worry whether or not you can pay a bill, whether or not you’ll be able to ever get out of debt, worry about how you’ll “do it all,” etc.

First thing’s first.

And, as a side note, this is just a notice to, basically everyone: there is no such thing as “good debt.” Debt is debt is debt is debt. Sure, some debts are easier to tackle than others. But in the end you are the borrower and the borrower will always be slave to the lender (no matter who the lender is) and you don’t ever want to be a slave.

But back to the topic at hand: debt worry.

First: know that you can and you WILL get out of debt. I know it seems like a lot now, but if you put your mind to it, you won’t be in debt forever. Remember that you didn’t get into debt overnight and you won’t get OUT of debt overnight, but you will get out of it. It can be done. It’s hard to see the light at the end of the tunnel, but know it is there.

Second: have a plan. If you’re doing the debt snowball etc., have a written out plan with achievable goals. Make it realistic. It is SO important to have this plan written out and done in a way that you can track your progress, make adjustments where necessary, AND reward yourself when you hit milestones! (READ: go out to a nice dinner when you hit a milestone!) By having a plan, you are able to actually see that there is end in sight (SEE THE FIRST POINT).

Third: keep looking for a job, but don’t let the search for the “relevant” job or “dream” job stop you from getting a “meantime” job. This is often really hard to swallow, especially for someone with a masters degree. When I was getting out of debt, I took up to FOUR jobs at a time to earn extra income. I waited tables, I ran food, I did freelance work, I worked retail, I worked. I worked. I worked. You CAN get a job now and before you graduate – get one at a restaurant, or retail store, or SOMETHING that gives you paycheck while you look for something more permanent or relevant to your degrees. Income is necessary (I don’t think I need to emphasize that any more than I have).

Fourth: when you’re getting out of debt, that’s not necessarily the best time to buy a car or a house. I mean, if you need a car, get a clunker – now is NOT the time to get a brand new car and accrue a car payment. Buying a car and buying a house can wait.

Fifth: the wedding and the honeymoon CAN be done while you’re getting out of debt, but you HAVE to have a strategy. I was in the process of getting out of debt while my husband and I were saving for our wedding and honeymoon. We had a plan and we committed to it. We looked at our monthly income, we figured out how much needed to go to debt, and then we split the “excess” up into two sets of savings: “wedding savings” and “life savings savings.” We didn’t have a $40,000 wedding. We did A LOT of things ourselves. We bought our honeymoon package through a Living Social escape deal. We saved a TON of money that way. Also, talk through ALL of this with your husband-to-be. You are BOTH in this together (and the debt will become BOTH of yours once you are married… so you need to be on the same page).

The key to all of it is: patience. patience. patience. And TRUST ME, I know how hard that is because it’s so hard. But know that you’re NOT alone and it can be done. There is no perfect solution, but the right attitude and the right plan can make ALL the difference.

I hope that helps! Let me know if you have ANY other questions. And trust me R, YOU CAN DO IT!

What other advice would you offer R? Are any of you in a similar situation?