Archive for the ‘Relationships and Money’ Category

Should We Retire With Our Spouse?

By: Kristina | Date posted: May 24, 2011 (7:30 am)

Good Morning Green Panda Friends, and welcome to the last post in our Retirement Planning for Young 20 Something Investors series.  Before we decide to get married it is very important to talk about our finances with our spouse.  We have to decide if we are going to merge our finances or keep them separate.  We have to decide if all of our assets and debts will become joint, or if we will each contribute our own share.  It is important to make sure that we are on the same financial page as our spouse; otherwise our divorce could really impact our retirement plans as well as our personal finances.

 

How Can I Protect My Retirement Plan in case of Divorce?

People should leave a marriage with everything that they brought into it.  I personally do not feel that personal assets should be split during divorce unless they were accumulated together.  However, my opinion is not the law.  In an ideal world couples would keep their assets separate during a marriage and equally contribute to all purchases and expense.  This ensures that all personal assets such as personal retirement plans and personal pension plans remain sole assets of the individual who contributed to them.  However, this is in an ideal world; it is not the law, nor is it reality.

Very often is the case that one spouse in a marriage earns a higher income than another spouse.  Therefore, one spouse may contribute a higher percentage to the monthly expenses and purchases than the other spouse.  Although it is advised that all contributions towards expenses are divided equally among both spouses, this is not always possible.  Upon divorce the spouse who contributed more towards the expenses may ask to be financially compensated for their contribution over the years.  Monthly expenses include housing costs, the utility bills, as well as the grocery bills.  Expenses are considered anything that is intangible and/or shared equally by both spouses.

Equally splitting purchases is not as important among spouses.  Upon divorce the spouse who paid for a purchase can take the item with them.  Purchases include household furnishings as well as vehicles and personal items.  Purchases are tangible items that we can physically possess and take with us when we leave the marriage.

 

What Happens to my Retirement Plan in Divorce?

Usually all assets accumulated during a marriage are split equally among both spouses.  However, this may not always be the case.  It is important to inquire on your state or provincial laws prior to getting married, this ensures the security of your personal assets and personal retirement plans.

It is important to note that some states and provinces allow us to split our income with our spouse during retirement.  This means that the spouse with the higher income during retirement can allocate some of their income to the other spouse.  This is a very tax advantageous retirement strategy for couples who retire together.

The best way to protect our retirement plan in case of divorce is to have a pre nuptial agreement.  This will ensure that any retirement savings accumulated during the marriage will not be split equally among spouses during a divorce.

 

The 5 Most Expensive Celebrity Divorces in History According to Forbes:

Kevin Costner and Cindy Silva.  After a 16 year marriage Kevin paid his ex wife an $80 million settlement upon divorce.

Harrison Ford and Melissa Mathison.  After only 6 years of marriage Harrison Ford paid his ex wife $85 million in their divorce settlement.  Melissa Mathison also receives a piece of the future earnings and royalties from the films that Harrison Ford made while they were married.

Steven Spielberg and Amy Irving.  Spielberg paid his ex wife $100 million after only 4 years of marriage because Irving contested their prenuptial agreement.

Neil Diamond and Marcia Murphey.  After 25 years of marriage Marcia Murphey filed for divorce and was awarded $150 million in a divorce settlement.  This amount represented approximately half of Neil Diamond’s net worth at the time.

Michael Jordan and Juanita Jordan.  Although their divorce is not yet finalized, it is reported that Michael Jordan earned over $350 million during their 21 years of marriage.  If Juanita Jordan is entitled to half of Michael Jordan’s fortune she could receive approximately $175 million in her divorce settlement.

 

Here are the Other Posts in our Retirement Planning for Young 20 Something Investors Series:

How Often Should We Review Our Retirement Plan?

What is a Financial Planner?

Saving For Retirement: An Easy How To Guide

What Are Your Retirement Needs?

Start Planning Retirement in Your 20s

 

I Do…But First, Let’s Talk Finances.

By: Kristina | Date posted: December 06, 2010 (2:34 am)

This past week Yahoo published an article from Flare Magazine called “10 things to know about your partner before getting engaged.”  I was surprised to learn that personal finances and money management were not even in the top three criteria on the list.  I personally believe that similar interests and philosophies regarding personal finances and money should be at the top of the list. 

If we share similar interests, philosophies, and goals regarding money with our spouse then we will also share other similar interests.  If our spending habits are similar to our spouses spending habits, we must also share similar life interests and other common thoughts.

Sharing complementary interests was on the top of the list at number one.  We spend our money on our interests and therefore, the relationship will be a lot easier if we share common interests with our spouse.  It would be hard to have one person in a couple who always likes to stay at home, while the other person always likes to be out on the town.

Having similar personal goals was number 3 on the list.  I agree that it is very important to share future goals because we should always be working towards something.  Personal goals should include financial goals such as buying a home and planning for retirement.  My boyfriend and I couldn’t be more opposite in this category.  I always like to be working towards a goal such as saving to buy a new condo, or planning our next vacation.  My boyfriend is very happy paying one monthly bill as we rent our apartment.

Financial views finally made the list at number 4.  I personally think that this should have come in at number 2 on the list instead of family baggage.  Similar spending habits can make or break a relationship.  I had a client come into my office this past week and remove her husband from all of their joint savings, checking, and investment accounts because he was excessively spending money.  In my opinion, financial trust is just as important as fidelity and commitment.

Is your spouse supporting kids from a previous relationship? Was the question asked at number 5. Child support and alimony payments can account for a large portion of a person’s monthly income.  We may be resentful if our spouse is spending money on his previous family, instead of saving for his future with his current family.

Sex, Ethics, and Addictions were also all factors that we should consider about our spouse before we get engaged.  Can anyone guess what question came in at number 10? We should inquire if our future spouse has a past criminal record.  This would definitely be on the top of the list for me. When I saw this I asked myself, when does sexual behaviour take precedence over having a criminal record? I would personally like to know about my boyfriend’s criminal past, (especially if it included anything such as identity theft fraud or money laundering) before I would like to know about his likes and dislikes in the bedroom.

Do you and your spouse have similar financial interests, goals, and money management habits?

 

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I hid money from my boyfriend. Am I a bad girlfriend?

By: Kristina | Date posted: November 30, 2010 (8:00 am)

My boyfriend and I have been together for a long time, 11 years to be exact, and we always split all of our expenses 50/50.  We earn approximately the same salary.  However, I work in finance and a significant portion of my income is commission based.  Therefore, in the last couple of years his income has been greater than mine.

The only time we don’t split our expenses 50/50 is when one of us wants something personal that the other person does not also want.   A perfect example of this is our cell phones.  My boyfriend always has to have the best new phone with the most expensive monthly phone and data plan. I on the other hand, have a very basic monthly cell phone plan and I never go over my monthly minutes.   Therefore, we don’t share a family cell phone plan; we pay for our cell phone individually. 

Another expense (and hobby) that I don’t share with my boyfriend is his love of sports, specifically NBA basketball and NFL football.  From August to January my boyfriend orders the NFL Sunday Ticket sports package, this adds approximately $55 onto our monthly satellite bill. Since this is not a shared luxury, it is not a shared expense. I do not pay half of the monthly expense for NFL Sunday Ticket because I feel that football is a total waste of time.

This past week I had an extra $100 of disposable income and I did not tell my boyfriend about it.  Honestly, I feel guilty about keeping the secret from him.  I don’t know why I didn’t tell him, he wouldn’t have cared.  Usually we don’t feel bad about spending our own money on ourselves. We work hard for our money, so if one of us wants to spend some extra money on ourselves it is ok.

I think that I didn’t tell him about the extra money because I didn’t want to share it with him.  I wanted to spend it on myself.  Is that totally selfish of me?  

If I spent the money on takeout food I would also have to buy food for my boyfriend, because I would never eat out and not offer him some food. But when I pay for my boyfriend’s dinner it more than doubles my bill.  I could eat out 3 times alone, or I could eat out once with him. I know it is probably selfish, but I just really wanted to spend the money on myself. Even as I write this I still can’t explain it. I did it, it’s not a big deal, but for some reason I feel bad about keeping this money secret.

Do you and your boyfriend/girlfriend keep your money separate or do you merge it all together?

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Do Your Friends Influence Your Money Habits?

By: Green Panda | Date posted: October 13, 2010 (5:00 am)

College is a time where are spending a good deal of our day with peers. Many times we tend to pick habits up from those closest to us, including friends. Have you thought about how your friends affect your finances? Has it been for the better or have you been struggling with your money?

The Unofficial Taboo on Money

It can be hard to avoid trying to keep up with all the movies, games, and gadgets people are buying. Even if you have some extra money from financial aid, you might want to pass on spending money with you buddies all the time.

Some of your classmates have access to financial support that you might not be aware of, such as parents. Your friends may be deeply in debt even before they graduate. Most times, you don’t know because people tend to avoid conversations about finances. It’s not just a phenomena with college students, many people feel uncomfortable talking about their budgets.

Video Games - Spending to Keep Up?

If you’re tempted to keep up with your friends, here’s an example of what you can do to reduce your spending. Let’s look at video games – they’re popular on campus and you probably can name someone who has all the latest games. They buy the games the week they come out. You’re tempted to buy some of them because you don’t want to

When debating on whether to get a game, ask yourself some questions:

  • How often am I going to play it? – Admit it, a lot of games are good for one play through.
  • How am I going to pay for it? – If you have a job, how many paychecks will it take to buy it?
  • Will getting the game affect my grades? – I’ve been guilty of rushing a few papers because I was deep into a game.

Factor in the time you spending playing it and working to buy it, it’s usually not a good deal. You may want to just hang at your friend’s place and play the game.

If you don’t want to seem like a mooch, here’s what you can do – when you come over your friend’s place, bring pizza, Chinese food, or drinks. I have not met a college student who has too much food. (By the way, make sure you get your stuff on special or with a coupon.)

It’s a win-win situation and you can save some money while doing it.

Planning for Life After Graduation

While being focused on school is commendable, you should go ahead and have a financial system created for your life after college. It doesn’t have to be complicated, you just have to have some basic accounts open.

Here are three ideas to get you started:

  • Checking Account-This account is your hub and it will handle all your bills.
  • Savings Account- Once you graduate, you’ll probably need some cash to help you move, get an apartment, and start your first job with some good work clothes.
  • Roth IRA- Thanks to the power of compound interest you don’t need to start off with a ton of money, you just need to start early.

If you can get started while you’re in college, the better prepared you’ll be when you come out.

Thoughts on How Your Friends Influence You

What about you? Have you noticed that your financial habits are similar to your friends’ or are you different? Have you used peer pressure for good?

Fake It Until You Prove It

By: Mike | Date posted: September 21, 2010 (5:00 am)

Have you ever met a successful person? The funniest thing about them is that you never know if they have really made it and if so, since when have they had it made. I have worked in the financial industry for the past 7 years and I have worked with several independent advisors. I have noticed one golden rule in this business; fake it until you prove it.

But I realize that this rule is not exclusive to the financial world, it is related to just about anything you do in life! Having doubts? Here are a few examples you can apply;

Fake it until you prove it at school

When I did my MBA, a colleague of mine always used to dress professionally the first week of class. He was quiet, asked intelligent questions and took copious notes (or pretended to do so ;-) ). He was doing this to show the teacher that he was an “A” student. He was convinced that if he could convince everyone in the class that he was an “A” student from the very first day. He would benefit from the halo effect and everything done in class would be perceived as “quality”.

I don’t know to which extent he was right or not, but he finished the MBA with an A average ;-) .

Fake it until you prove it at work

After 7 years of work, I keep doing it; I always say that I am doing well, that I am working hard and that numbers are coming in. This puts me in a positive environment, people tend to talk to me and help out more easily and my boss gives me more flexibility with my schedule.

The result? I have all the cards in hand to be a successful employee and this is exactly what is happening. I guess some refer to the laws of attraction, I call it psychology 101. If you firmly believe that you are a good employee and you come to work with a good attitude, others will perceive you as such and will do everything they can to help you achieve this (objective) reality. It is incredible how we do things unconsciously to reinforce our first impression!

Fake it until you prove it with girls/boys

I have never experienced this rule with the ladies as I have been with my wife since the age of 15. However, I have noticed that the most attractive people are the ones that are the least interested. The less they try to get a phone number from someone, the more it works! It’s incredible! I guess it is all related to the offer/demand principle; the more you make yourself “available”, the more you become “common” or “less special” ;-) .

Why you should fake it until you prove it…

There is a limit to use this rule. If you push your luck all the time, you won’t be seen as a successful individual but more like a BS’er ;-) . You have people that showoff during their whole lives but have nothing to back it up, this is a very risky game. However, when you are good at something, there is a nothing wrong being upfront that you are a pro. This will actually help you becoming even better!

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Enjoy The Small Things While Saving Money

By: Mike | Date posted: August 23, 2010 (5:00 am)


I’m on vacation for 2 weeks. I really like the end of August to take a some time off. The first reason I wait so long before taking my vacation is that most people went already and this leaves me with more time and space to do my things.

Last week, I took a full day to work on my land. I was actually planning on setting up a fireplace so we can enjoy a nice fire with a few marshmallows with the kids.

Since I live in a remote area, my yard is big enough to take a 20’ x 20’ spot to install a nice setup for a fire. I wanted it pretty big so I started my project early in the morning and dug a hole.

I asked my kids to gather small rocks and dry wood for the fire. They were all excited and they were running all over our yard to find what I asked for.

Building the whole thing cost me $40 since I wanted to place nice small rocks all around the fireplace. I used rocks and big pieces of wood to make a place to sit and I have gathered all the big rocks I could find to make a circle around the fireplace.

At the end of the day, I noticed how great my day was:

#1 I spent quality time with my family

#2 I got my share of exercise for the day

#3 I have a nice fireplace

#4 I felt proud of myself since it is now “my” fireplace.

This is when I realized that sometimes you don’t need much money to have fun. That you can find a lot of fun in the small things that don’t cost much. And, more importantly, spending time with my children makes me very happy and this, doesn’t cost a penny!

Tomorrow, we are heading towards Montreal to have a picnic in a park downtown. We will also go to a Museum and visit a labyrinth near the old port of Montreal. Then again, this vacation day won’t cost a thing but will definitely be enjoyable!

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Should I Borrow Money From My Family?

By: MD | Date posted: July 29, 2010 (6:00 am)

Loaning money from family– the post that you need to read. Us young people have a lot that we want to do and we want to do it right now. Once college is done it feels like it’s time for us to take over the world. We all would like to have the money to:

  • Start our own business.
  • Pay off debt.
  • Travel the world.

The only problem is that it feels like it takes an eternity to save up for any of these above options. This is when a loan seems like an excellent idea. Unfortunately, it’s extremely difficult to obtain a bank loan for traveling or starting your own business (and the interest rates aren’t the greatest). The only way to alleviate some of the stress of student loans is to consolidate your student loans.

The next logical step to ponder for many, is a loan from a family member– yes loaning money from family, a very sensitive topic but somebody has to cover it. Before you make any decisions regarding family and money, you need to consider the following questions:

How strong is our relationship?

How long have you known this person? Would the awkwardness that goes along with creating a lender-borrower relationship make it difficult to hang out? Everything could be perfectly fine with this person until money comes in the way. You need to take an honest look at your relationship and if money would hurt it. Chances are that yes it would. I know that’s not the answer that you want to hear, but it’s unfortunately more common for money to hurt relationships than strengthen them.

Who is this person to you?

What is your relationship with the lender? Your rich Uncle Fred will have an easier time loaning you a few thousand dollars, than your middle-class cousin Steve. You need to truly comprehend who this person is to you before you decide to ask them for money. You really don’t want to put anyone in an awkward position. You also don’t want to shed a negative light on yourself by asking someone for a loan that you really shouldn’t.

What if I can’t pay back this money?

This is a very sensitive area. You’re loaning the money with the greatest intention in the world to pay it back. However, what if life turns into a roller coaster and paying the money back within a specified deadline becomes impossible? Is there a backup plan? How will the lender deal with this?

There needs to be a contingency plan in place. You could offer to pay the individual the money back in set intervals. You could also offer to pay the money back through offering your services. Whatever the contingency plan is, it must be clearly identified and agreed on by both sides before you borrow the money.

One last final note– even though you’re dealing with family, you still MUST get everything down on paper, with the signatures of a few witnesses. You need to put emotions aside for a few minutes and agree to the terms of this financial agreement. A handshake agreement might work when you buy someone lunch, but not when thousands of dollars are at play.

My take on financial agreements between family members?

I wouldn’t do it. I stay away from this at all costs. I have loaned money to my younger brothers in the past, without expecting to be paid back (more of a gift). Maybe I will get paid back one day down the road, but I knew going in that I didn’t want to create a lender-borrower relationship with someone close to me. When it comes to anyone that’s not a parent or a sibling, I wouldn’t even entertain the idea. Nothing good could come out of it. I’m not telling you to turn your back on someone with financial woes, but you really do need to protect the relationships that matter to you by not getting money involved.

What’s your take on the issue of family and money? Have you been involved in such an agreement before? How did it pan out?

Img Source: Robby Virus

Finding The Balance Between a Sideline and a Day Job

By: Mike | Date posted: April 28, 2010 (6:26 am)


Since I earned my very first buck, I have wondered about how to make more. I wake up in the morning and dream of being an entrepreneur. I really would like to own my own business and be my own boss. Not because I have a power trip or because I absolutely want to manage a company; just because I am always thirsty for freedom!

We all have financial obligations. Some bigger than others. However, it all comes down to the same thing; we are afraid to quit our day jobs to pursue the dream of becoming an entrepreneur. I would hardly leave my day job at a bank to work on my own knowing that I am the only bread winner in the family.  My wife and 2 children (and my mortgage!) count on me to bring home the bacon.

So the solution I found as a compromise was to create a sideline (my online company) so I can keep my day job and still increase my income significantly (I have replaced my wife’s income with my online income). Finding balance between day job and my sideline is not always that easy. As requested by a fellow blogger, Financial Samurai, I am sharing how I was able to balance my sideline with my day job while keeping both at a high performance standard.

Finding the money

We started our online company very slowly because we didn’t have any money to chip in at first. The hardest part about creating a additional income stream is that it usually requires a cash injection to start. My partner and I thought of starting websites as it doesn’t require much money (a server at first and that’s about it!). Therefore, we were able to start something at a very low cost. At first, I thought it wasn’t possible to start a small business with $100… but we did it!

Finding the time

Time was and still is probably the biggest issue we have to manage. While you don’t want to lose your day job (we both still need it!), you want your company to grow at a decent rate (after all, we’re not in it just for the giggles  ;-) ).

I established a fixed schedule as to when I work on my company and have made it fit into my existing schedule. I think the key point is to seriously consider your sideline and to invest the time required to get results as it was for your day job. Don’t under estimate the power of a sideline. My wife was able to stop working because I have replaced her income with my online company revenues; everything is possible! However, you must remain disciplined about your project.

Don’t start by “doing it when you have the time”. The truth is that we don’t have extra time for anything. We have to make it a priority and do something with it!

My Schedule

In order to manage more than one blog at a time, I have created a fixed writing schedule. The time of day when I am the most productive is in the morning. This is why I write for a solid 30-45 minutes every morning. I prepare a list of topics I want to write about so I have don’t have to seek inspiration at 5 AM every morning!

In order to keep up, I have also kept Laura as a writer on Green Panda and I am looking for another writer at the moment. This should free up  enough time to concentrate on promotion and general improvement of the blogs.

Motivation

If you start a sideline that doesn’t motivate you, it will difficult to succeed. Like every other other field, the internet is a rough market and it is not always easy to grow your sites. It requires time, effort and if you don’t love what you do, you will quit at one point or another.

Final thoughts

If I had 3 “magic” rules to creating a sideline and balance it with your day-to-day life, they would be:

#1 Find something you love

#2 Take it seriously

#3 Blend it into your schedule.

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