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Today’s question – What’s the best way to combine finances when getting married?:

Bottom Line:  Yesterday’s question addressed a listener faced with an unfortunate divorce circumstance.  Today it’s the other side of the coin.  A gentleman who is preparing to get married and is wondering what the best way to combine finances is?  This is a great question and an important one.  The most common reason cited for divorce is based on financial stress.  My suggestions will also work for those who are struggling to find common ground with finances in an existing marriage. 

Best is subjective based on a system of what makes both of you happy.  I’m going to address two principals I think you should put in play and an examples of how to put them into practice. 

The Principals:

  1. Create a simple spreadsheet of all combined monthly expenses and include all debt
  2. Every month as you pay bills – do it together

The first principal is somewhat self explanatory.  No surprises that could cause stress in your marriage – especially a new one.  Additionally if you are making changes (buying a home, car, renting a new apartment,etc.) you’ll have a clear picture of what you can afford before you commit to something new that may not fit your combined budget.  The other advantage of this is to protect against someone hiding money or the perception by one of you that money is being hidden.

The second principal is just as important but is one we’re least likely to do.  In most relationships one party takes the lead role with paying bills and managing finances.  The inclination is for the other to disengage.  This is a mistake.  Even if you have to pull the other along to go through the bill paying process – it’s important.  Awareness of how much is coming in vs. what is going out is critical to prevent arguments over money.  The next steps are best practices that I use at home and may be useful for you.

Examples (best practices):

Everything extra after paying the bills each month has its place.  Here’s how I do it (feel free to adjust based upon your interests, needs, goals):

  • A certain % goes into investments
  • A certain % goes to pay down debt (if there is any – this includes mortgage debt)
  • A certain % goes to an account for big ticket items (cars, vacations, home renovations, etc.)
  • A certain amount (fixed amount) goes into an account just for Ashley that she can use for whatever she wants – no questions asked.  This is a fun money account and can be one of the most important in a marriage.  It enables her to spend on wants of hers without me questioning or stressing over what it is and how much was spent.

Hopefully this is helpful and congrats & best wishes on your marriage!

Broad based housing recovery occurred in 19 or 20 largest metros in 2012:

Bottom Line:  So the housing recovery was certainly broad based around the country in 2012.  The latest Case-Shiller home index, which studies the 20 largest metros in the country, painted a clear story of price recovery.  In 19 of the 20 metros price recovery did occur in 2012.  The only region that was negative last year was the metro hubbed out of New York. 

Our region, which is out of Miami, saw average year over year price increases of 9.9% (I’ll point out that in local data Palm Beach County and many Treasure Coast cities saw even bigger increases).  The raw data is in the link below:

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245346789031&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

 

Housing is recovering but homeownership rates are declining?  What gives:

Bottom Line:  So while we did see a broad based housing recovery last year, home ownership rates actually continued to drop (from 66% to 65.4%).  So how could this be?  There are three big factors:

  1. A record number of women are in the workforce.  Demographically women are more likely to rent than buy when they are single.
  2. Family formation is taking place later in life.  The average age of a 1st marriage most recently was 31.  That’s three years higher than just 2005.  Most 1st homes are purchased in conjunction with the starting of a family
  3. Credit and/or financial issues during the recession

The rental market has been booming so investors have been playing a large role in buying up property, including single family homes, and renting them out.  That’s how both of the trends can play out simultaneously. 

http://www.cnbc.com/id/100416547

 

Facebook app adds the ability to instant message voice & video:

Bottom Line:  So if you have the Facebook app on your Android or iOS device you’ll see an update in your store.  This isn’t you average update though.  Facebook has added two significant messaging features.  They are…  The ability to interest voice message and to instant video messages someone. 

It’s clear that Facebook saw the Vine video integration with Twitter as a threat they needed to answer.

http://www.engadget.com/2013/01/28/facebook-ios-update/

 

Facebook’s new – ask the Privacy Officer campaign:

Bottom Line:  And then there is this campaign.  Perhaps the most common complaint regarding Facebook.  Privacy and the ever changing policy…  So Facebook has a new feature.  Ask the Chief Privacy Officer.  If you have a question you’d like answered directly from the executive managing privacy for Facebook there is now a Facebook page that will allow you do so.  For more info click below:

http://www.engadget.com/2013/01/28/facebook-launches-ask-our-chief-privacy-officer/