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Talking About Money Before & After You Marry

No money secrets should stand between the two of you as you wed.

 

Provided by MidAmerica Financial Resources

 

No married couple should suffer from financial infidelity. If you hide debt, income or assets from your spouse, it can lead to a fight and possibly even an impasse in your relationship.

 

Communication & transparency are essential when it comes to money. That truth should be recognized by every couple tying the knot, or even just cohabitating. Yes, financial matters can prove hard to discuss – but if you can’t talk about them together, that’s already a serious problem.

 

That problem may affect more couples than we realize. In 2013, 7% of engaged individuals who answered a National Credit Counseling Foundation poll said that if they discussed money issues with their fiancé, it would prompt a fight; 11% felt such a talk would uncover financial secrets, and 5% said it would “cause us to call off the wedding.”1

   

On the bright side, 32% felt a conversation about financial matters would be “a productive and easy conversation to have.” The most frequent response (45%) was that a money discussion would be “awkward,” but also necessary for the health of the marriage.1

   

You have to tell your future spouse about your debts. Do it before you get married, not after. That debt will become your spouse’s financial concern as well as yours. The two of you should plan together to pay down your individual debts in the coming months or years. Again, this represents a shared commitment. Don’t put your name on your deeply indebted spouse’s credit card. Attaching your name to that account will have minimal impact on your FICO score, but you don’t want to pay a (literal) price for your spouse’s runaway financial impulses.2

 

If you have six credit cards between the two of you, see if you can slim it down to three or four – the ones with the lowest fees and best rewards programs. Or see if you can just use those three or four and let the other accounts lie dormant. That might be a better move than just canceling the excess credit cards – that could hurt you, especially in the case of older accounts. About 15% of your FICO score is based on the duration of your credit history, so if that was good history, you don’t quite want to say goodbye to it.2

 

Think about a new joint credit card account for the two of you. If you feel your spouse needs debt counseling before you can make that move, don’t be shy about requesting it. Even if your spouse has been living on plastic, think twice about leaving him or her without a credit card. You want (and need) to show some credit history. 

 

You will have to compromise. The most valuable verb in marriage is also really valuable when it comes to your shared financial life. Maybe you’re a good saver, a future “millionaire next door” – and yet your spouse is a comparative spendthrift. If you can’t compromise on a “money policy,” then maybe you can find a middle ground by saving for a special experience. Or, maybe each of you can set aside a bit of money per month to spend or save purely at your discretion.

   

You may want to pay the bills proportionately. If one of you earns 70% of the household income, then maybe that spouse should pay for 70% of the household bills and expenses. To many newlyweds, that seems entirely fair.

 

Build retirement savings & an emergency fund together. Financially, there are few better ways to signify your long-term commitment to one another.

 

Wait on a big purchase. Consider waiting 24 hours (if you can) before going through with it. Or, alternately, set a dollar limit on such purchases – give each other limited financial autonomy I making major purchases that ends at X hundred or X thousand dollars. If the money exceeds that limit, then you both have to discuss it before it can occur.

 

Make a budget. In fact, strive to make a zero-based version, a budget in which income minus expenses comes precisely to zero each month. This is a way of accounting for each and every dollar spent (actual or projected) and a way to pinpoint potential monthly savings or redirection of income toward expenses.

 

Watch those taxes. Should you file your taxes jointly? Not necessarily. That is wise for many couples, but if your incomes vary greatly it may be better to file separately. Consult a tax preparer for an answer. Also, look at your W-4 at work. It may be time to adjust your withholding status. If your spouse isn’t employed, you get to add another withholding allowance. Assuming he or she is employed, you can turn to irs.gov to learn how many allowances you are due in total. Then, you can divide that total by two. You and your employer need to follow the instructions on the W-4 so you don’t withhold more or less than you should.

 

Talking about money isn’t always pleasant, but candor, communication and full disclosure can lead to clarity in your financial lives.

     

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@natplan.com.

www.mid-america.us

  

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.   

  

Citations.

1 - nfcc.org/press/multimedia/news-releases/two-thirds-of-engaged-couples-express-negative-attitudes-toward-discussing-money/ [5/31/13]

2 - washingtonpost.com/news/get-there/wp/2014/09/23/for-richer-or-poorer-a-financial-plan-for-newlyweds/ [9/23/14]

 

 


Holiday Wrap-Up

HOLIDAY WRAP-UP 

 

A look back at 2014 thus far


Presented by MidAmerica Financial Resources

 

The year in brief. When 2013 ended, few Wall Street investment strategists had high hopes for the market – the thought was that the S&P 500 would post a single-digit advance for 2014. In fact, a Birinyi & Associates survey of said strategists produced a consensus forecast for a 5.8% gain for the index this year. Well, here we are with 2014 drawing to a close and the S&P has doubled that expectation – on the eve of Thanksgiving, it was up 12% YTD. The U.S. economy looked pretty good in comparison to many others this year, and Wall Street outpaced quite a few of the overseas markets. The dollar strengthened, which hurt the broad commodities market. The housing sector (inevitably) cooled off, but sales were still up year-over-year. Investors ended up worrying more about the Ebola virus than the end of the economic stimulus provided by the Federal Reserve.1,2

Domestic economic health. 2014 brought a notable reduction in unemployment, healthy job growth, and renewed consumer spending and confidence. It also saw the Fed wind down its third round of quantitative easing under a new chair, Janet Yellen.

In the 12 months ending in October 2014, U.S. payrolls expanded by an average of 222,000 hires per month. The jobless rate – 6.7% at the end of 2013 – fell further to 5.8% by October. The U-6 rate (measuring the unemployed and underemployed) declined notably as well in those 10 months, going from 13.1% to 11.5%.3,4

Two respected consumer confidence barometers have seen big improvements. Year-to-date, the Conference Board’s consumer confidence index is up 10.6 points, ending November at 88.7; the University of Michigan’s index of consumer sentiment gained 6.3 points on the way to a final November mark of 88.8.5

Personal spending – the great driver of the economy – rose 2.5% in the second quarter and 2.2% in the third quarter after a poor Q1. Those spring and summer gains contributed to the best six months the economy has seen in a decade. U.S. GDP reached 4.6% in Q2 and 3.9% in Q3.6,7

According to the Labor Department’s Employment Cost Index, wages had increased 2.1% over the 12 months ending in September. That wage growth outpaced the Fed’s PCE index, which measures inflation in terms of prices tied to consumer spending; the PCE index was only up 1.4% in a year as of October, well below the central bank’s 2% annualized target. Falling gas prices also effectively put more money in consumers’ pockets; on November 24, AAA calculated the mean price of a gallon at $2.81, a 4-year low.6,8

Global economic health. The economies of China and the eurozone regularly failed to meet expectations during 2014, and Japan slipped into another recession.

As fall arrived in Europe, the United Kingdom was looking at 3% annualized GDP but the economies of Germany, France and Spain were seeing less than 2% growth. European jobless rates ranged from 5% (Germany) to more than 25% (Greece). Deflation risk and the threat of another euro area recession began to emerge. By October, eurozone yearly inflation was down to just 0.4%, even as the European Central Bank cut interest rates to 0.05% and bought covered bonds.9

Disappointing GDP and manufacturing index readings from China triggered several down trading days this year. The Chinese economy appeared headed for its poorest year since 1990, with annualized GDP slowing to 7.3% in Q3. In November, Chinese manufacturing activity failed to expand for the first month in six. After shrinking a disastrous 7.3% in Q2, Japan’s economy unexpectedly contracted another 1.6% in Q3.10,11  

World markets. Just before Thanksgiving, a Wall Street Journal snapshot of global stock indices showed the S&P 500 outperforming many European indices but being outpaced by key Asia Pacific indices. In Europe, the DAX was up just 3.2% YTD, the CAC 40 just 2.0% and the STOXX 600 just 5.5%; Russia’s RTS index was down 26.9% for the year. The S&P was also ahead of Canada’s benchmark S&P/TSX index (+10.7% YTD) and some notable emerging market bourses – the Bovespa was +7.9% on the year, the IPC All-Share +4.0% and the Dow Jones Americas +10.2%. In the Far East, the truly subpar indices were Australia’s ASX (-0.3% YTD) and Korea’s KOSPI (-1.5% YTD). India’s Sensex was up 33.9% YTD coming into Thanksgiving, the Nikkei 225 6.9%, the Shanghai Composite 21.3%, the KSE 100 (Pakistan) 23.6% and the PSEi (Philippines) 23.7%. On the other hand, the Hang Seng was only up 2.3% for the year and the Dow Jones Asia-Pacific just 0.3%.12  

Commodities markets. From this past New Year’s Eve to Thanksgiving Eve, the U.S. Dollar Index gained 9.5%. With the greenback showing such strength, most commodities had it rough this year. Oil was not only hurt by the dollar, but by a sustained lack of demand. The day before Thanksgiving, a barrel of West Texas Intermediate crude was worth just $73.69; the price had dropped 21.3% in 12 months. There were also huge 12-month descents in the prices of heating oil (21.6%) and gasoline (24.9%). Natural gas prices were up 12.4% year-over-year, aided by concerns over supply disruption through pipelines headed through war-torn Ukraine.13,14 

By Thanksgiving, gold futures were down 3.7% from a year earlier, with the yellow metal worth $1,196.60 an ounce on the COMEX. Silver was at $16.55 an ounce, down 17% in 12 months. Copper had lost 8% over the past year, platinum 10.4%. Coffee was the huge winner among all marquee commodities, with futures jumping 76.7% across 12 months. Other ag futures were looking at the following annualized gains and losses: wheat, -13.2%; corn, -9.5%; soybeans, -21.5%; cocoa, +4.5%; cotton, -24.6%; sugar, -7.0%.14

Real estate. Year-over-year sales gains and price gains had slowed by the fall, but mortgage rates declined again. National Association of Realtors data showed a 2.5% annualized rise in resales as of October. The median sale price was $208,300 in October; the year-over-year gain in that category has averaged 5.8% so far in 2014 compared to 11.5% in 2013. NAR’s October pending home sales index revealed a 2.2% annualized rise.15,16

Annual price gains moderated sharply: by November, the latest 20-city S&P/Case-Shiller Home Price Index (September) showed only an 4.9% advance across 12 months, as opposed to 12.4% in the March edition released in May.5

As of last month, new home buying was up 1.8% on an annualized basis with the median sales price at $305,000. Housing starts were up 7.7% year-over-year as of October.17,18

The average interest rate on a 30-year home loan fell to just 3.97% in Freddie Mac’s November 26 Primary Mortgage Market Survey. Contrast that with a 4.53% average interest rate on those mortgages on January 2 and you can see why many real estate analysts see a pickup in home buying in the next few months.19

Looking back...looking forward. Right now, just a few Wall Street strategists have announced their market forecasts for 2015, and they don’t expect a great year (as was common in 2012, 2013 and 2014). On average (according to Birinyi & Associates), they see the S&P 500 rising 4.8%. They could be proven wrong once more. To prove them wrong, the market has to overcome a couple of significant and ongoing challenges. Can it keep its momentum in the face of presumptions that the Fed will presently raise interest rates? Can it shake off the economic disappointments that regularly seem to arrive from the eurozone, Japan and China? If so, you may see another solid year for equities.1

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@natplan.com.
www.mid-america.us

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 


 

 

Citations.

1 - blogs.wsj.com/moneybeat/2014/11/23/a-sign-of-health-for-stocks-cautious-2015-forecasts/ [11/23/14]

2 - money.cnn.com/data/markets/sandp/ [11/26/14]

3 - ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx [11/7/14]

4 - portalseven.com/employment/unemployment_rate_u6.jsp [11/26/14]

5 - investing.com/economic-calendar/ [11/26/14]

6 - businessweek.com/news/2014-11-26/consumers-in-u-dot-s-dot-stay-within-means-as-spending-matches-income [11/26/14]

7 - nasdaq.com/article/ignore-the-all-time-highs-the-outlook-is-still-good-cm417004 [11/25/14]

8 - bls.gov/news.release/eci.nr0.htm [10/31/14]

9 - economist.com/blogs/graphicdetail/2014/11/european-economy-guide [11/14]

10 - reuters.com/article/2014/11/20/us-global-economy-idUSKCN0J407V20141120 [11/20/14]

11 - reuters.com/article/2014/11/17/us-markets-global-idUSKCN0J101320141117 [11/17/14]

12 - online.wsj.com/mdc/public/page/2_3022-intlstkidx.html [11/26/14]

13 - online.wsj.com/mdc/public/npage/2_3050.html?mod=mdc_curr_dtabnk&symb=DXY [11/26/14]

14 - money.cnn.com/data/commodities/

15 - haver.com/comment/comment.html?c=141120E.html [11/20/14]

16 - forbes.com/sites/erincarlyle/2014/11/26/pending-home-sales-down-1-1-in-aoctober-but-still-up-year-over-year/ [11/26/14]

17 - 247wallst.com/housing/2014/11/26/new-home-sales-rise-especially-for-most-expensive-homes/ [11/26/14]

18 - haver.com/comment/comment.html?c=141119A.html [11/19/14]

19 - freddiemac.com/pmms/archive.html?year=2014 [11/26/14]

 

 





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