Savvy Ladies Community

Marriage and Money

One of the most common reasons women call me up is that they are dissatisfied with the way their husbands handle finances. They would therefore like to learn more, so that they can take over this crucial part of the household management. I had three of those calls just this morning!

It is true indeed that the topic of money always land near the top in surveys about what makes couples fight – and ultimately split. The good news is, much of this damage is preventable. Even more so if you address the following topics before you walk down the aisle.

1. Financial goals. What are your expectations for the future in terms of wealth, work-life balance, retirement, etc? Don’t be alarmed if your hubby-to-be’s goals differ slightly from yours. This is normal – and natural. As long as you are aware of where your partner stands, you can make compromises that you are both comfortable with.
2. Financial freedom. Some couples merge everything from their credit cards and bank accounts to stock trading accounts and Blockbuster cards. Others keep their finances separate to avoid fights about different spending habits. Still others keep a joint account for household expenses, and the rest separate. Find the solution that works the best for you.
3. Existing debt. In today’s society, few people are completely in the black. A bit of debt is therefore not a red flag, as long as you can craft and commit to a plan to eliminate it.
4. Risk tolerance. If you prefer CDs and bonds while your husband likes to speculate with biotech stocks, chances are you will end up hating each other before you know it. Find a compromise that works for both of you – and stick to it.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Shopping Triggers and How to Curb Them: Depression

At a seminar today, a woman desperate to take control over her finances confessed that her worst shopping trigger was depression. Whether she was feeling lonely, overworked, fat, poor, or just blue in general, the only way she could cheer herself up was through shopping. While this may sound ludicrous to some, her problem is far from uncommon. When everything else goes wrong, we reason, can I at least have a Dior lipstick? And for many of us, shopping does create a buzz not all that different from a glass of wine or a divine bar of chocolate. We do feel better, as owners of that gorgeous lipstick that makes us look so special. But just as with any short term high, the problem is, when the warm fuzzy feeling disappears we are worse off than we were before. Because the next time we are feeling lonely/overworked/far/poor/blue, we need to add to the equation that we are also in debt.

In a way, shopping to cure depression can be compared to drinking to cure depression. Sure, our chances for liver failure are significantly smaller, but credit card debt can be a major hassle – and make you feel a whole lot worse. There are other ways to cheer up and lose those gloomy feelings: exercise, spending time with friends, meditation, choosing better foods, etc, etc – and these are things that will help you in the long term as well. Next time, opt for one of those.

Stacy Francis, Savvy Ladies

www.savvyladies.com

What Size Allowance Should I Give My Child?

At the park today, the moms were discussing allowances. At what age should a child start to receive them, and how much is appropriate? All at once they stopped and asked me, “You are the expert, tell us what to do!” Talk about pressure. I took off the mom hat and put on my financial planner thinking cap.

There are almost as many theories for this as there are experts in the field. The most common system seems to be to give the child $1 per week and years of age. Meaning, for instance, that my son would receive $3 per week, and my friend’s six-year-old daughter $6. But of course, the right amount will also depend on other factors such as

1. Your child’s attitude toward and awareness of money. Before he or she appreciates it, there’s little point in throwing cash his or her way.
2. What sorts of expenses your child is expected to cover in exchange for the money. If he or she, for instance, needs to cover friends’ birthday presents and some or all of his or her own clothes, he or she will need a lot more than he or she would if the money were for entertainment only.
3. How much you expect your child to save. Many parents take care of their children’s savings for them, but if possible, I always recommend that you give him or her enough money to set some aside and watch it grow. For many children, this is an invaluable lesson.

Of course, both the sum and the level of responsibility will change as your child grows older. The most important thing of all is therefore to keep an open mind and constantly rework your allowance system as your circumstances change.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Taxes: Should You File Jointly or Separately?

Even after tax season has come and gone, one of the main topics of discussion at a recent seminar was: what are the benefits versus drawbacks associated with married couples filing separately? An excellent question. However, just like with so many other excellent questions, the answer will depend on the circumstances. Below are a few examples of cases where it may be a good idea to keep this one aspect of your life together separate:

1. You or your hubby has made little money and had lots of medical expenses. By filing separately, the proportions of the two may work out so that you or your hubby can itemize the medical expenses and save well-needed dollars.
2. Your partner uses questionable techniques for keeping his tax dollars to himself. While tempting, such actions are illegal, and if you sign the same tax return, you, too, are responsible. If you file separately, your chances of arguing that you didn’t know in front of a jury are much better.
3. Your marriage is crumbling. If you are fairly certain that your twosome isn’t going to last, you may want to file separately in order to minimize the paperwork you need to do together later. It is also important to file separately if you are concerned that he is not being 100% on his tax reporting

Last but not least, it is imperative that you stay up to date with the newest rules and limits for the different tax brackets. Taxation is a complicated matter – but you do have options. When you add knowledge to the pot, you can make an informed decision.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Shopping Triggers and How to Curb Them: Hobby Shopping

A friend called me up last night. “We are getting the old gang together,” she said, “for some shopping.” Would I care to join them?

This last shopping trigger (for now, anyway) is also one of the most common, and one of the most encouraged by all sorts of media, from mainstream movies and TV shows to books – not to mention magazines. The explanations for why so many women list shopping as one of their favorite hobbies vary. Some say it is in our DNA – that women have always been gatherers and shopping is the modern version. Others say we are trying to attract men by looking good, and yet others say c’mon – shopping is fun! Whatever the reason, this hobby can have a devastating effect on your finances, both in the long and the short term. Because not only do we hit up shopping malls even when we may not need anything – when we shop together, we encourage each other to spend more. Because how could you possibly resist buying a pair of designer jeans when four of your best friends are staring admiringly at you, telling you your derriere has never looked better? It is even worse if you go shopping with friends who have more money than you do, or ones that tend to overspend.

I am not trying to be the party pooper (ok I will be honest that I am probably the only woman on the face of the planet that does not like shopping), or tell you that you shouldn’t meet your peeps at the mall. But take a look at your finances first, use cash only, create a budget for yourself, and stick to it. If your friends truly care about you, they will respect this and you will have a lovely day without getting in over your head.

Stacy Francis, Savvy Ladies

www.savvyladies.com

The 10% Rule

Yesterday, I went shopping with a colleague of mine. (Yes, I know I advise against hobby shopping, but if kept under control it can be a great way to bond with your peers.) Everything was lovely, until she found a suit she liked, determined that it fit, and promptly started to bargain with the shop assistant. Wasn’t this button a little loose? The stripes a little off on this arm? The stitching starting to come loose in this particular spot?

I was dumbfounded at first. When the shop assistant went to fetch a manager, I asked my colleague what she was doing. Did she like the suit or not?

She replied that her parents had taught her that just about every shop assistant is authorized to knock 10% off purchase prices in order to make a sale. If you make sure to save this 10% on every purchase you make, by the time you retire, you will have saved more than $200,000.

While I am not sure how pleasant of a money saving trick this would be – to you or to the staff in the stores where you shop – I thought it was creative and worthy of a mentioning. And for major purchases like computers, TVs and cars, it could – depending on the circumstances – most certainly be worth a shot. Hey, if you don’t ask you will never get it.

Stacy Francis, Savvy Ladies

www.savvyladies.com

When Your Account Is in the Red

A lady I met last night while I was waiting for my husband to arrive at a restaurant was intrigued that I am a financial planner. As usual I typically get questions about their personal investment and/or finances. This case was no different. She confided in me that the red in her investment account is keeping her up at night. “What,” she asked, “am I supposed to do? I can’t sell because my investments are all down, but they just keep falling. It’s a total nightmare.”

“What you’ve got to ask yourself,” I told her, “is how you feel about your stocks and funds. Do you think they’re going to do well in the long run, or have their fundamentals changed so that you no longer believe in them?”

Because when it comes down to it, holding equals buying. With any investment, historical prices are irrelevant. It doesn’t (or shouldn’t, anyway) matter whether the stock you own that is trading at $5 per share was $1 last week, or $30. If you would buy it at today’s price, you should hold it. If you wouldn’t buy it at today’s price, you should sell it. If the reason for your lost shuteye is that you no longer believe in the company, sell it, and chances are good you’ll find that lost peace of mind. If, on the other hand, you still like the company, and the reasons you trusted it with your money are still there, try to look at it from a wider perspective. Both the economy and the markets go through cycles of ups and downs. If the company of your choice is truly great, sooner or later your investment will pay off.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Finding and Understanding Your Credit Score

“Now that real estate prices are falling,” a woman told me over the phone today, “I would like to buy a town house or a condo. But I hear you need really good credit these days, and I have a feeling mine may be pretty bad.”

I asked her what her score was, and she replied that she had no idea. She had never seen her own credit report, and she was not aware that this information is available to her. After some research, it turned out her credit wasn’t bad at all, and she decided to find herself a real estate agent. For the rest of you, here’s some basic information on the very much dreaded credit score.

There are three major credit-reporting agencies: Experian, Equifax, and TransUnion. The information on their reports tends to vary slightly. You can get your credit report for free from www.annualcreditreport.com

Once you have your reports, you should check them for accuracy. If you see anything that shouldn’t be there, make sure you contact the reporting agency/agencies to dispute it.

Looking at your reports for the first time can be something of a cold shower, as they will list every single late payment you have ever made in your life, as well as how late it was.

The actual score is a snapshot of your creditworthiness at any given time. It is calculated by a machine, and influenced by many factors such as available credit, outstanding debt, length of credit history, and late payments. As these variables vary, so does your score. So the good news is that when you clean up your report, make your payments on time, and reduce your outstanding debt, over time your credit score will be better and better.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Shopping Triggers and How to Curb Them: Plastic Instead of Paper

Yesterday, a dear friend invited me to a pre-sale event in a major department store. There would be free champagne, she told me, excellent service, fun music, wonderful people and above all – of course – some killer outfits, just off the catwalk. Now, the thing is, this has been quite an expensive month for me, with vacation times along with some unforeseen expenses. So I told her that unfortunately, I’d have to pass because of money.

“Why,” she asked, “don’t you just charge it?” I nearly gulped out loud! Doesn’t she remember that I am a financial planner? That is like telling a dietician to start living only on a diet of McDonalds!

This leads us to our next shopping trigger: those wonderful, glistening, magic little cards that are sometimes able to bring us so much pleasure. Because, we reason, why would we pass up fabulous deals and pay more for the things we want later, when we can just seal the deal by charging them, and then pay them off when we do have the money?

The answer goes a little deeper than the obvious one of the financing charges that make most personal finance experts recommend that we double the sum of each purchase we charge but do not intend to pay off the same month, to get an idea of the actual cost. It is also this very behavior-- to seal the deal fast by putting up the plastic -- that gets so many of us in debt, severely damaging our financial futures. Instead, think about how much better of a deal it is to pay cash when you actually have the money, and stay clear of the murky depths of credit card debt.

Stacy Francis, Savvy Ladies

www.savvyladies.com

Saving Money on Groceries: Does Hitting Up Five Different Stores Really Pay Off?

In a teleconference last week, a woman shared that her credit card debt was very much weighing on her, and that she wanted to take on an extra job for a while to pay it down. The problem was, she had no time whatsoever to spare. It all seemed to get eaten up by housework and errands. Her grocery shopping alone took over four hours, every week.

Puzzled, I asked her how that was possible. She replied that because she was in so much debt already, she couldn’t afford to pay any more than the cheapest possible prices. To obtain this, each week she had to hit up five different stores, cashing in coupons and buying for less.

To some this may sound crazy, but the truth is, she is far from alone. With the economy crumbling, people are penny-pinching like never before. The question is, does it make any sense?

This is one of those lovely albeit rare decisions where you can get a reliable, clear answer with just a pen and a paper. First, calculate how much you really save – the total difference between what you pay now, and what you would pay if you chose the store with the lowest prices overall. Then, compare this with the gas you use when you drive to the different stores, as well as any other expenses or opportunity costs relevant to your case (such as money you could have made spending three of those hours at an extra job). Putting these numbers together, you can learn what is really the best option for you. You may be surprised!

Stacy Francis, Savvy Ladies

www.savvyladies.com