So you’re engaged. Or thinking about it. If you’re really serious about spending the rest of your life with another person, it’s time to get some of the tougher issues out in the open.

Somewhere near the top of your list should be MONEY.

Conflicts about money issues can stop a relationship before it has a chance to be successful. Unless each of you understands the other’s money habits and spending preferences, an unhappy relationship can be created, eventually leading to the big D – divorce. Trust me, there are a lot of other things to fight about rather than money. You’ve got the toothpaste tube, who sleeps on which side and whose turn it is to do the laundry.

Talking about your financial situation is often considered taboo. Many couples tie the knot without knowing a thing about how much their partner spends, saves or charges.

Discussions about money can be emotionally charged and you may find it difficult to raise the subject. Use this article as a springboard to get things going. By talking about money now, you’ll be setting yourself up for a much happier relationship in the future.

Another important reason to talk about money now is so your spouse’s finances do not surprise you once you get married. How will you feel when you discover your new spouse has $50,000 of debt he or she never told you about? Yikes! If you suddenly have kids, who may not be planned, the repayment of that “new” debt will fall on your shoulders.

When you get married you not only get new family in-laws, you also get debt in laws. The first time you go out to dinner as a married couple you can hand the waiter the credit card and say, “I’d like to introduce you to my new American Express in-law.”

One guy even said that he was afraid to marry the love of his life after seven years of engagement simply because he was embarrassed to tell her about his bad credit and debt. His girlfriend could not understand his reluctance to get married and gave him an ultimatum, “After seven years of being engaged, we either get married or I’m leaving.” He could never bring himself to be honest with her. She left him and he was brokenhearted because he could not bring himself to tell her the truth about his finances.

The Big Day

Before maxing out your credit cards or taking out loans to pay for a dream wedding, think about it carefully. Do you really want to start your life together with huge debts? Starting a marriage with this added burden will be very trying on your relationship.

Keep the cost of your wedding to a reasonable level so you don’t bring a boatload of debt into your marriage. It is very easy to get carried away when planning your big bash. Set aside time to sit down with your future spouse and make a list prioritizing every aspect and expense of the wedding. Each of you should make a separate list so that you both feel happy that your ideas for the perfect wedding were heard. Eliminate those things that are a low priority for both of you.

Work together to plan a wedding that you can afford and enjoy without putting yourself deep in debt. (Check out “Bridal Bargains,” by Denise and Alan Fields at windsorpeak.com.) If you plan your wedding carefully you may begin your new journey with little to no debt.

Plan the wedding at least a year in advance, so you have time to start saving a little each month and can look for bargains. Both of you should save a specific amount each month in a money market fund, savings account or certificate of deposit. The more time you give yourself, the more you can save.

Who’s paying?

Today it is no longer clear who pays for what.

Traditionally, the bride’s parents paid for thewedding and the groom paid for the honeymoon. Today, many couples are paying for their own wedding and honeymoon.

Because the rules are no longer rigid, it is important that everyone be open about costs. If parents are willing to pay for a specific item, like flowers, let them know how much flowers really cost. The stress level will be high for all involved anyway, don’t compound it by surprising family members with an expense they weren’t expecting (and may not be able to afford). And keep in mind that they will probably have specific ideas as to what type of flowers they want to buy.

If you both agree you have to take on debt to pay for your wedding make sure you have a solid plan for paying it back in no more than a year. You will have many new expenses and challenges as you start your life together. Don’t let yourselves be weighed down by debt.

Expect Differences

Even in the most blissfully happy marriages there are disagreements, and you’re likely to disagree about money more than anything else. It is, after all, the number one source of conflict between couples.

Before you marry, take the time to sit down and learn about each other’s attitudes toward money. You should discuss where each of you currently stands financially, your individual goals, the kind of lifestyle you want, your saving and spending habits and your personal needs. It is important that both of you are open and honest. Hiding something at this stage will only cause problems later on.

This should not be a critical session of one or other person’s spending habits. This does not have to be a one-session deal. If you need time to think about your differences before you attempt to reach a definitive resolution, take it. Just agree that you will both look at the situation objectively in order to find the best way forward for you both in your new life together.

Discuss what kind of lifestyle you expect to have. You may be surprised to find that your partner considers one or more of your “necessities” as a luxury. For example, do you expect to travel to the Caribbean every year? Do you want a big house? How about a new car every year or so? Discuss how important having money is to both of you.

The following questions can give you an idea as to what issues are important:

• How much of your income do you want to put in savings?
• What kinds of financial risks are you and your partner comfortable taking when investing?
• How will you handle debts you both bring into the marriage? Are you willing to use some of your income or savings to pay off your partner’s debt and vice versa?
• If you have been married before and are bringing substantial assets into the new relationship, you might want to think about a written agreement about exactly how you would handle those assets if you ever split.
• How will you decide how much spending money each of you should have?
• Will you have a spending limit above which you will need to let the other person know about the purchases before you make it?

Understanding your future partner’s perspective on money is very important. If you can’t talk about it now, it will become worse after you marry and have to share expenses. Make sure you pay attention to important cues when you’re dating. If your loved one seems to be lavishly spending more than his or her income, but you never like to take on debt yourself, you’ll want to start working on a compromise now. Lavish spending while dating may seem very enjoyable if you are the recipient of such attention, but it may be a sign that your significant other’s spending may be out of control. If that is the case, financial troubles may be in your future. Trust me, individuals with such spending issues rarely rein in their spending on command.

Spending Behavior

Compare spending behaviors and identify where they are the same and where they differ. You will have to compromise and make sacrifices if one of you is a big spender and the other isn’t, or if you are both big spenders but like to spend money on different items. The last thing you want is to have the “spender” lie to the “saver” about how much he or she spent on an item. Interestingly, spenders often attract people who are savers and savers attract spenders.

We often look for mates with the traits we subconsciously wish we possessed. This can lead to marital conflict later, once the initial romantic blinders have worn off and you start to see your spouse clearly. So it’s best to tackle these difficult financial issues before you tie the knot.

Reviewing these issues should give you a good start:

• How often does each of you use a credit card?
• What do you use credit cards for?
• Do you use a debit card for impulse purchases? If yes, do you record your withdrawals so you know exactly how much money is being sucked from your account?
• Do you pay off your cards every month, or only use them for big-ticket items and pay off the balance over time?
• Should your spouse get your approval before making an extravagant purchase, such as a $500 dress or new set of golf clubs? If so, what level should you set as “extravagant?”
• What would you do if your spouse didn’t approve of your making an extravagant purchase?

Managing the Cash Flow

There are generally three ways to handle the finances:

1. Pool all money into one joint account.
2. Keep separate accounts and divide the bills between you.
3. Keep separate accounts, but also have a joint account for joint expenses.

If you are going to become marital partners you should prepare to become financial partners as well. Maintaining separate accounts can be the first step towards keeping financial secrets from each other and leaving you in the dark regarding your spouse’s finances. We’ve talked with many couples who have never been honest with each other regarding their finances and the fact they maintained separate accounts never let them have a clear understanding of their current financial state of the union.

It is so sad to talk with couples who discover one of the partners in the marriage is way over their head in debt, and their spouse never had a clue. They get blindsided and the illusion of what their world was is suddenly replaced with financial conflict, strife and pain.

The old excuse that each spouse needs to maintain separate accounts in case they are going to purchase a gift for the other is just that, an excuse to maintain separate accounts. There is little logical basis to support this behavior.

The third approach is the one that many couples want to start with. They fear giving up their independence and want to cling to what was theirs before the knot was tied. Don’t assume your spouse-to-be will agree. Your betrothed may feel upset that you don’t want to share everything. Decide ahead of time which approach you’d like to try.

If you decide to use a joint account for joint expenses, decide how much money each person will contribute. If one of you makes a lot more than the other, it may make sense to have that person contribute a larger share. And don’t forget to decide what will be considered “joint expenses.” Her dry-cleaning? His boat payment? Both of your long-distance phone calls?

Divide up the Chores

Unless you keep totally separate accounts, someone is going to have to take responsibility for paying the bills. Usually, this task falls to the spouse who feels more comfortable handling money. But that may be a mistake. Both spouses should know about the bills and that there are other expenses that occur each month. If you just let one person handle it, the other may end up with an unrealistic view of the family finances, or worse yet, not know what is happening at all.

One of the biggest mistakes couples make when it comes to finances is not talking about the little things before they become big things. Consider holding a monthly “meeting” where you can pay bills, talk about your financial progress and goals, and discuss any issues or problems that have arisen during the month.

A great idea is to share the responsibility. One month one spouse will pay the bills and the following month, the other.

Put money in its place: Money is simply a tool to help you achieve your goals. If one of you starts using money to control the other person, as a “drug” to make you feel better about your life, or if one of you develops a problem such as a gambling addiction or secretly running up debts, seek help together. Money should help improve your life together, not make you miserable.

Credit Advice for Couples

Another decision you’ll have to make is how many credit cards you plan to have and whether to have joint or individual credit accounts with your spouse.

So you have decided to have joint credit accounts. Before you use those cards, decide who will use which card, if the two of you will carry the same cards and how you will communicate when the cards have been used. If you don’t communicate about the purchases on the cards, you may exceed the credit limit, which will cost you more.

Another idea is to have a joint credit account you use for joint credit purposes. But if you want to maintain an individual account – you know how we feel about that – do it. If you do use a joint credit card, decide together what kinds of limits you want to place on it so one of you isn’t surprised with a bigger bill than you expected. Also, decide whether you will pay that bill in full each month or if you feel comfortable carrying balances.

If one spouse has good credit and the other has damaged credit, it is especially important that you don’t merge the bad credit onto the report of the other one. You can avoid that by keeping those accounts separate. Do not add the name of a spouse onto an account with a poor payment record or that information will hurt the credit report of the other person.

Here’s the rule of thumb:

Individual accounts should not be reported on your spouse’s credit report. Only joint accounts, or accounts with the “authorized user” status, should appear on both of your reports.

Before either of you considers the issue of individual versus joint credit, you should each get a copy of your consolidated credit report and review them together. You can get a consolidated credit report from GetOutOfDebt.org. It will show you what the three major credit-reporting bureaus say about you. You’ll be surprised how much difference there will be between credit bureaus. That’s why it is so important that you get a consolidated report rather than one that just shows a single credit bureau’s file on you. Your credit reports may determine whether you will be able to buy a home together, how much you’ll pay for auto or homeowner’s insurance or whether you’ll have to put up deposits for utility or cable service.

For women, you’ll have another decision: do you want to change your name on your credit accounts when you marry? The federal Equal Credit Opportunity Act gives you the right to maintain credit in your maiden name, your married surname or a combination of both. If you decide to go with your married name, notify all three major credit bureaus (Experian, Equifax and Trans Union).

What if one person comes to the marriage with a lot of debt?

If that’s the case, it’s important you work together to reduce the debt, without just “rescuing” the over-spender. After all, most people get into debt by spending more than they earn. To get out of debt, you have to learn to live within your means and deal with the issues that got you into debt.

Make sure the person who racked up the bills makes a serious effort to change his or her ways. Otherwise, if the spender continues to spend, you may both end up in trouble.

You should both track your spending and come up with a spending plan that includes paying off the debt.

Lifestyle Choices

Home buying:

If buying a home is your next priority after the honeymoon, here are a few steps you should take:

If you have debt, and feel it may keep you from buying your dream home, consider decreasing and/or paying it off. The less debt you have, the larger the mortgage payment you’ll be able to afford. Focus on paying down debt as rapidly as possible, and then you can start saving for a down payment. With little debt and a decent credit report, you may also be able to find a mortgage with little money down.

If one of you has damaged credit, take steps to improve and repair your credit as soon as possible. It won’t happen overnight, but it will improve with time and effort.

Children:

Talk about having children, how many children you would like and how you’ll raise them. If you decide to have children, will one of you stay home full time or will you use day care? How will you afford those options? Do you want to create a college savings fund? How much do you need to save and where will you find the money?

If your goal is for one of you to stay at home and look after the children, you need to prepare now to live on one income. Talk together about what you will sacrifice.

You might be surprised to find that losing the second income doesn’t make as much a difference to your bottom line as you thought. There are considerable expenses to having children if you both keep your jobs — higher taxes, higher FICA and Medicare taxes, Social Security (although you may lose Social Security income opportunities), a second car, increased auto insurance premiums for commuter driving, gas, parking fees, maintenance costs, a second career wardrobe, bigger food bills if you eat out, child-care expenses and parental stress of not being able to be with your kids as much as you want, etc. It may be that the second wage earner is adding only a small net amount each month.

Savings:

The average American family saves very little money and many people end up deeply in debt at some point in their lives. Once you’ve paid down debt (if there is any), get in the savings habit. Together, you should find a method that works for you. You might have money taken from your paycheck for savings or investments. You can write a check each month, just like a bill, to a savings account. Come to an agreement about what that money can be spent for, though, so you don’t sabotage your efforts.

Your savings strategy should include an emergency fund that can cover between three to six months of living expenses. Those savings can be kept anywhere that gives you easy access to the money, such as a savings account, money market fund, certificates of deposit or treasury bills.

You should also have long-term savings for future expenses like a car, house and, most of all, retirement. That’s right, your company sponsored 401(k) or 403(b) may not be the only cash you’re going to need in your golden years.

Prenuptial Agreements

It may not sound very romantic, but for some people, prenuptial agreements are important. First, they are an excellent tool to force a couple to discuss where they are now financially and where they want to be. It is especially useful if you are getting married for a second time, if you have kids, if you are older and have built up savings, or if one partner has a lot of money and the other does not. A prenuptial agreement is usually not legally enforceable unless it is made before the wedding. Talk to an attorney about preparing a prenuptial agreement if your situation requires one.

After the honeymoon is over

Insurance:

Research your respective insurance policies and decide how you can merge them to your benefit. In particular, look at the following:

• Auto Insurance is usually lower for married drivers. Let your insurer know when you get married so you’ll get decreased premiums on a joint/family auto insurance policy.
• Health Insurance. Look at your respective policies. If one is better than the other, merge into that plan. Don’t forget to look at the premium costs
  each month; your deductibles, if any; your co-payments; the quality and type of coverage; and extras, such as dental, optical and prescriptions. Consider child care if you plan to have children.

• Disability insurance gives you monthly payments to replace the insured person’s income if he or she can’t work because of an accident or an illness. If you pay for your disability insurance with after-tax dollars, your disability insurance benefits could be tax free when you receive them. For this reason, you probably need disability insurance to cover 60 to 70 percent of your gross income. Figure out exactly how much disability insurance you need based on your monthly expenses — food, shelter, transportation, clothing — plus other expenses that may increase due to your disability, such as medical expenses. Also, keep in mind how much of your savings you are willing to use before relying on insurance.
• Life Insurance pays a certain amount of money to the beneficiary of the policy in the event of the named insured’s death. Life insurance is necessary if you have children or expenses like a mortgage and one of you couldn’t meet the expenses alone. The amount should be enough to cover immediate expenses in
  the event of your death (funeral costs, for example) as well as longer-term financial obligations, like paying the mortgage. If you plan to have children, you will need to update the amount again to make sure it covers the cost of raising and educating your kids.

  If you are young, it is preferable to get term life insurance. Term policies only insure you for the period of time for which you need the insurance and are cheaper than whole or universal life insurance. Whole and universal life insurance policies build cash value and cover you for life. If you are an older couple, however, term insurance is more expensive.

  If you already have life and/or disability insurance, make sure you update the beneficiary information. Your policies will only pay out to the person(s) named.

• Homeowner’s and/or renter’s insurance protects your property against theft, fire, floods and other hazards.

  Check your policy to see how much it covers for your belongings and your “loss of use,” which includes your temporary living expenses while your home is being repaired. Your insurance needs will change when you get married, as your personal property will increase in value as you merge your belongings.

  Often insurance companies recommend taking pictures of, or videotaping, your personal property, to substantiate any future claims that may arise.

  If you have certain expensive items, like silver or expensive jewelry, you may want to get extra insurance to cover the actual worth of those items, since it won’t be reflected in your regular homeowner’s insurance policy.

  For example, you may want to get insurance for wedding and engagement rings. You will have to decide how much loss you are willing to pay out of savings and how much you want the insurance company to assume. People generally insure between 80 and 100 percent of the replacement cost.

Documents:

• Write a will. Because each state has different laws regarding wills, you should consult an attorney licensed in your state.
• Prepare a power of attorney. Powers of attorney give a named person authorization to act on your behalf should you become incapacitated. Without a power of attorney, your spouse may have a difficult time taking care of your affairs should you become incapacitated.
• If you change your name, make sure you legally change your driver’s license, social security card, income tax forms, voter registration card, passport, bank accounts, credit cards and insurance policies.

Taxes:

Think about whether you should file your taxes jointly and whether you should adjust your tax withholding. Most couples are better off filing jointly but it doesn’t always pay to do so.

If both of you have been claiming one exemption, one of you may want to reduce it to zero. Consult with a qualified tax professional for other helpful tips and questions you may have.

Retirement:

“Waddya mean I have to think about retiring? I just got married!”

The best time to plan for retirement is NOW! People are living longer and have more leisure years to fund. The sooner you start saving for the future, the less it’s going to cost you each month to generate the cash you’ll need.

Generally you should plan to have enough capital saved to provide you with an annual retirement income to pay your monthly expenses and still put money into savings. If you’re unsure about how to invest for your retirements, get the advice of an independent financial adviser licensed in your state.

If you already have a 401(k) plan, or other financial holdings, make sure your spouse is named as your beneficiary on those plans.

Happy ever after

Despite the alarming divorce statistics, it is possible to stay together forever. There are plenty of success stories out there. Openness, honesty, planning, cooperation, compromise and an enormous sense of humor will help you write your own fairy tale ending.

Marriage and Money Questionnaire

Take the time to discuss these questions before you get married:

• How will you pool your money? Separate accounts, joint accounts, a combination?
• Will you be able to cover your living expenses, such as rent or mortgage, utilities, car payments, food, cable, etc? What about discretionary spending like travel, entertainment, clothing or personal expenses?
• How often will you eat out or travel, and how much will you spend?
• What are each person’s top three financial goals? How will you reconcile different goals?
• What do your credit reports look like? How can either be improved?
• How does each of you feel about carrying debt? How much are you willing to have? What type (mortgage, credit cards, car loans and unsecured loans)?
• What is your investment tolerance, high risk, medium risk or conservative?
• What is each person’s strength when it comes to finances? Weakness?
• Who is going to manage the finances at home or are you both going to share the responsibility?

Other Related Articles to Read

• How to Survive a Job Loss
• Do It Yourself Guide to Credit Reports: 10 Ways to Improve Your Credit
• Identity Theft: How to Protect Yourself and What to Do If You Are a Victim
• Can I Take Money Out of One IRA, 401(k), 403(b), or Roth IRA and Roll It Into Another Account? – Dave
• My Active Duty Military Husband Says We Should Not Start Investing Till He Returns From Being Deployed. – Barbara
• Gerri Detweiler and I Talk Honestly About Debt
• I’m an Independent Recruiter, Living With My Girlfriend and Way in Debt. – Bill
• Money Saving Strategies for New Parents
• We Have a Lot of Debt, But Not a Lot of Savings. – Ann
• My Husband and I Are Just Barely Making the Minimum Payments. – Janet

Read the full article at GetOutOfDebt.org, click here: Marriage and Money: How to Talk to Your New Spouse About Finances

“Dear Steve,

Currently we have a lot of debt. We are making this the year to pay a lot of this down. We don’t have much of a savings. Our current debt is this: a first mortgage = 170K, second mortgage that = 35K, first credit card = 17K, second credit card = 5K, and a truck that equals 25K. We want to pay this down because we struggle making the high monthly payments on each one of these.

Should we use the snowball effect? Would it also help at all to make an additional $10-$15 weekly payments to the debt on top of the monthly payments?

Ann”

The Answer:

Dear Ann,

I find that applying the debt snowball approach really helps to keep people on track and motivated to get out of debt. You will see that what you will do is pay minimums to all creditors but minimum plus all the extra money you can send to the highest priority creditor in your debt snowball reduction.

Just remember, the best way to get out of debt is to reduce the amount of debt BUT save at the same time. Open a regular old boring savings account and put at least $50 a month into the account. Unless you save money for emergencies you will only have to turn back to the cards when a surprise expense comes up and that will erode the progress you mad in reducing your debt.

Big Hug!

@GetOutOfDebtGuy

Other Related Articles to Read

• Marriage and Money: How to Talk to Your New Spouse About Finances
• Should I Use All of My Savings to Pay Off My Credit Card? – Hal
• A 12-Step Plan to Get Out of Debt Fast!
• Saving Money is Important When Getting Out of Debt
• Where Do I Put My Judgment in Line For My Debt Snowball? – Bret
• Can We Afford the Debt Snowball to Get Out of Debt? – Julie
• We Can’t Seem to Make Ends Meet and Save. Is Bankruptcy Right For Us? – Matt & Patti
• You’ve Paid Off Your Debt, Now What?
• I’ve Never Missed a Payment But I Have No Savings and Not Really Getting Out of Debt. – Brian
• Teresa Writes In “I Have Too Many Credit Cards”

Read the full article at GetOutOfDebt.org, click here: We Have a Lot of Debt, But Not a Lot of Savings. – Ann

“Dear Steve,

Hi, I am a middle school teacher. I have 80K in student loans and 10K in credit card loans. I am trying my darndest to pay down the credit cards as fast as I can. I think (HOPE!) they will be paid off by the end of the next school year–May 2010. Then I can start attacking the student loans for the next ten years.

My colleague says that I should be saving more for retirement than just the public employees retirement fund. Should I delay paying down my credit cards to save for retirement, or should I just pay them off and start saving next year? He says that if I waste any time I am costing myself lots of money in the long run. I contend that I should get rid of the high interest rate “dumb” debts first.

Chris”

The Answer:

Dear Chris,

Well it is true that if you delay retirement savings that it will be much more costly in the long run and it is true that if you delay paying off credit cards it can be more costly that way. I bet you never expected one of those tricky word problems to come back and bite you on the bum in adulthood, did you?

I think both goals are admirable and there is no reason why you can’t achieve both goals at the same time. You don’t need to take an all-or-nothing approach. In fact, if you don’t have a savings account that is increasing in balance I would suggest that you consider my law of thirds as yet another approach.

Using your leftover cash, after paying credit card minimum payments, send 1/3 to pay off additional credit card debt, use 1/3 to save for retirement and put 1/3 in a savings account. Rinse, lather and repeat, month after month.

It will take you a bit longer to eliminate your credit card debt and save for retirement this way but you don’t have to sacrifice one goal for another, plus you’ll have cash in the bank you can easily get to in case of emergency.

By the way, teachers are heros to me.

Big Hug!

@GetOutOfDebtGuy

Other Related Articles to Read

• I’m a Teacher But I Can’t Afford My Toyota Camry Payment. – Sloane
• Wow! Free Help With Investing, Financial Planning, Retirement, Entrepreneurship, Executive Benefits or Insurance Issues is Now Available Here.
• I’m a Teacher in Debt And Not Sure What to Do Next. – Colleen
• Building Your Financial Future: Advice For 20-Somethings
• I’m a Teacher. How Can I Get My Federal Stafford Student Loans Forgiven? – Aimie
• What’s the Best Way to Get Out of Our Debt in Five Years? – Peter
• Marriage and Money: How to Talk to Your New Spouse About Finances
• An Intriguing Approach to Easily Saving With Higher Returns for the Future – Betterment
• We Have a Lot of Debt, But Not a Lot of Savings. – Ann
• Substitute Teacher Lives in Shelter Instead of Paying Rent. – Tim

Read the full article at GetOutOfDebt.org, click here: I’m A Middle School Teacher And Not Saving Money. – Chris

Only the rich need to worry about having people manage their money, right?

Wrong!

With a handful of credit cards, checking, savings and retirement accounts and lots of different bills to pay we all need money managers. The difference is if we aren’t wealthy, the money management responsibility usually falls on our own shoulders, rather than someone else’s.

While most of us think money management is just paying the bills and staying one step ahead, there are actually nine key components to managing money well.

Follow these steps and you’ll be right up there with the pros!

#1 Read Your Statements

When you get your bank or credit card statements, do you read them? Or do you just look at the bottom line to see how much you have or owe? You should be reading them carefully to make sure you’ve actually made all the charges listed.

Credit and debit card fraud costs us all billions of dollars each year. Unfortunately, some people pay for fraudulent charges without even realizing it.

One company, for example, placed small charges of just $19.95 on people’s accounts for merchandise they never ordered or received. Many people didn’t even notice and the company made millions before it was caught.

Double billing, incorrect charges or altered checks can cost you a small fortune if you are not careful.

Check your bank statement and compare it with the checks you’ve written to make sure it is accurate. If you find any mistakes on your credit card or bank statements, dispute them immediately and put your complaint in writing.

#2 Pay Your Bills on Time

It wasn’t too long ago that late fees on credit card payments were rare. Those few banks that did charge them usually gave people at least 10 days after the due date before a fee would be assessed.

Boy, have times changed!

Now, you can get hit with a significant late fee if you’re just one hour late with a payment. You may also pay expensive fees if your mortgage, car payment or utility bills are late.

Even worse, your late payments may be reported to a credit reporting agency and stay on your credit report for up to seven years! These days, most credit card companies monitor their customers’ credit reports and a history of late payments can trigger many of your unsecured creditors to raise the interest rates they are currently charging you.

Many of us lead busy lives, however, and it’s easy to fall behind a few days no matter how good your intentions are. When it comes to paying your bills on time, it’s the date your payment is received that counts, not the postmark date.

Be on the safe side and mail bills as soon as possible at least six days before they are due to make sure they arrive on time. Better safe than sorry.

#3 Make Sure You Have Funds Available

Bounced checks can cost a small fortune by the time you pay the merchant a bounced check fee and your bank another fee. And you will still have to come up with the amount of the check.

If you bounce a payment to a lender, such as a credit card issuer, you will have to pay the interest that continues to build up as well as the bounced check fee and, probably, a late charge.

Even overdraft lines of credit, designed to protect against overdrafts, can be expensive at interest rates of 18 percent or more.

Make sure you have the funds available to cover your checks and enough to pay your bills. That means keeping track of your bills, your spending and your available funds.

And simply checking your balance at the ATM or online doesn’t cut it: it may not reflect checks or withdrawals that haven’t cleared yet.

#4 Balance Your Checkbook

When it comes to checking accounts,I have heard all kinds of creative ways to manage them from rounding up every check to the nearest dollar, to closing and starting a new account every year. Some people never record any check they write because they think the bank will contact them if they run out of money!

Unless you take the time to reconcile your checking account, you’ll never know exactly where you stand and you risk bounced checks or even fraud on your account.

The good news is that online banking has made it much easier for people to balance their accounts. An up-to-date statement can be available at the click of the mouse, making it easier to reconcile your account when you want or need to, not just when the bank sends you a statement.

#5 Plan Your Spending

The biggest trap people fall into is not knowing how much they can spend after all the bills are paid.

To figure this out, take the time to create a realistic spending plan one that takes into account all your usual monthly expenses plus expenses that occur occasionally, like semiannual insurance premiums or annual property taxes.

Your plan will work best if you approach it as something that gives you the opportunity to decide how to spend your money and not something that restricts or limits your life. To be accurate, you need to keep track of how much you spend and what you spend it on, so you don’t leave out important items or categories when you create your plan.

One way is to simply keep a notepad handy and use that to jot down purchases as you make them. Categorize your spending at the end of the day or week and use that to help create your spending plan.

The best part of creating and sticking to a plan is that once you’ve taken into account all the bills and regular expenses, plus some savings (see Step #8), you don’t have to feel guilty about spending whatever is left over.

#6 Handle Your Banking

Does your paycheck stay in your wallet or purse until you can get to the bank, sometimes a couple of days later?

When you need cash, do you just go to the nearest ATM, even if it costs you $3 in fees?

Banking fees have risen dramatically over the past few years and you may be paying more than you realize as much as hundreds of dollars a year in some cases.

Find out if your employer will allow you to have your paycheck deposited directly into your checking or savings account. Not only will this save you a trip to the bank, but as a bonus, some financial institutions will give you a break on checking account fees if you use direct deposit.

Many banks are now paying interest on checking accounts, so the sooner you get your paycheck deposited, the sooner it can start earning you interest.

When it comes to ATM fees, be careful. If you take out $20 and pay a $1.50 fee, that’s the equivalent of a 7.5 percent cut for the bank ouch!

You can minimize ATM fees by using your own bank’s ATM whenever possible or choosing a free ATM (though your own financial institution may still charge you for using a “foreign ATM”). When you do withdraw cash, withdraw more so you’ll have to stop at the ATM less often.

Also, be careful when using your debit card to pay for groceries, gas or other purchases where you swipe the card yourself. If you select “debit card” you might get charged a “foreign ATM” fee. If your card has a VISA, MasterCard or other credit card symbol on it, always select “credit card” when you swipe it. The money still comes out of your account in the same way as using your debit card normally, but you won’t have to pay any fees.

Also watch out for other “nuisance fees,” including fees for using a live teller, low balance fees, fees for using the bank’s deposit slips instead of the ones that come with your checking account, etc. These little fees can easily add up to big bucks.

Shop carefully for a financial institution, and don’t hesitate to speak to the branch manager about fees you don’t think are appropriate.

#7 Pay Off Debt

It’s easy to get into debt, but tough to get out.

The hardest part about paying off debt is trying to fit payments into your budget. When money seems tight, it’s easy to just fall back onto the minimum payment and let things slide for another month.

If you have a clear plan for paying back your debt, however, you’re much more likely to be able to stick with it and succeed.

You’ll be more motivated if you have a specific date by which you’ll be debt-free and know exactly what you have to do to achieve that.

#8 Save

Even tougher than getting out of debt is saving money!

You’ve heard the old adage about paying yourself first. But actually doing it is much easier said than done.

If you want a secure financial future, you’re going to have to bite the bullet and start saving now, though it doesn’t have to be too painful.

Look for ways to make saving automatic. Does your employer offer payroll deduction for savings?

Can you have your bank or credit union transfer a fixed amount (even if it’s small) to a savings account each month? Just make sure the account isn’t easy to access. If you can withdraw the money using your ATM card, it might not stay there very long!

Start saving even a few dollars every month and the habit will become addictive. It’s a great feeling knowing that you have some money put away to cover things like emergency car repairs, unexpected medical costs or even holiday and birthday presents. Not having to turn to your credit cards for these unexpected but inevitable expenses will keep you out of trouble.

And to help increase the amount you put away each month, take a look at some of your regular expenses, like your electric and gas bills or your telephone bill.

Thanks to competition in these industries you can save a small fortune every month just by switching suppliers. Shop around for the best deal.

#9 Check Your Credit Report

Your credit report is a key component of your financial life.

A good credit report can help you get better rates on insurance, credit cards, mortgages and other loans. Make sure yours is accurate and up-to-date by obtaining a copy each year.

You can order a copy through any of the major credit reporting agencies.

@GetOutOfDebtGuy

Other Related Articles to Read

• Credit Reports, Credit History, and Credit Scores in Hiring and Job Performance. Is It Even Fair?
• Is It Illegal for a Creditor and Collector to Report The Same Account? – Josh
• Will My Husband Be Able to Check My Spending Habits on the Credit Report? – Rae
• Saving Money is Important When Getting Out of Debt
• Should I Pay Credit Cards Down or Create Emergency Fund With My Tax Refund?
• Credit Scoring is a Scam and a Fraud
• Having An Emergency Fund
• True Cradle Robbers – Stealing Credit From The Cradle
• Creditor Keeps Reporting I Owe a Balance on My Credit Reports When I Paid It Off. – Mard
• Why Does My Old Debt Still Show on My Credit Report? – Sherri

Read the full article at GetOutOfDebt.org, click here: Nine Essential Steps to Successfully Manage Your Money

Hal

“Dear Steve,

I have an outstanding credit card balance of $ 8,288.76 at 18.99% APR. We are paying roughly $500 a month, which is about 300 over the minimum. However, the finance charges costs about $138, seems to me to be a losing battle. I have 13K in a savings account that is making just over 1.3% interest. Just about 9k should cover 3 months worth of expenses.

I want to know, what many others seem to want to know…Should I pay off the card which costs me ~$130 a month in interest with money from my savings that earns me about ~$70 a year if lucky? The monthly credit card payment would then be applied back to the savings account to rebuild that.

Most of your past advice seems to lean towards keeping the savings…are there any situations in which you would recommend paying off the credit card if this is not one such case?

Hal”

The Answer:

Dear Hal,

I know, my position has been a perplexing conundrum. Mathematically, it does not make sense. But emotionally and prudently it is a better solution.

So let’s say that you do elect to wipe out the savings to pay off the high interest rate credit card. That leaves you out of debt (Ahhhh!) but without a safety net. So why is the safety net so important.

These days it is not unheard of to have a credit card issuer cancel a credit card. If you drain your savings and then are counting on the credit card to save you if you have a financial emergency, what happens if it is cancelled or interest rate raised even higher in the meantime?

If the savings is drained but the card is not cancelled and for some reason you are laid off or need supplemental cash where will you turn? Would you take cash advances from your card that is now paid off? The interest rate for those is sky high? And if you had to charge expenses just to get by, you are right back in debt again.

If you wanted to leave the savings at the level it is at, fine. Use all your available extra money to pay down the debt as you are.

Basically it all boils down to this. The interest you are paying is essentially an insurance policy that if some wild ass crap hit the fan for you you’d have cash in the bank to pay for it rather than drive you back or deeper into debt. Nobody ever found themselves in an emergency or accident with too much cash in savings.

If you are a risk taker by nature, you think I’m dead wrong, or you like math better than a safety net, do it.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Other Related Articles to Read

• Marriage and Money: How to Talk to Your New Spouse About Finances
• We Have a Lot of Debt, But Not a Lot of Savings. – Ann
• Saving Money is Important When Getting Out of Debt
• We Can’t Seem to Make Ends Meet and Save. Is Bankruptcy Right For Us? – Matt & Patti
• You’ve Paid Off Your Debt, Now What?
• I’ve Never Missed a Payment But I Have No Savings and Not Really Getting Out of Debt. – Brian
• I’m an Independent Recruiter, Living With My Girlfriend and Way in Debt. – Bill
• Do It Yourself Guide to Credit Reports: 10 Ways to Improve Your Credit
• Lowen Wants to Know “Can I Budget My Way Out Of Debt?”
• Should I Still Save Money Even When I’m Trying to Get Out of Debt? – Lisa

Read the full article at GetOutOfDebt.org, click here: Should I Use All of My Savings to Pay Off My Credit Card? – Hal

“Dear Steve,

I am 75,000 in debt. All are credit cards. Last year I lost a job of 20 years but was able to get a job at about 20,000 less income. I was able to convince myself that I had my debt under control because I was able to pay it.

I have been fooling myself and now have gone through all my savings to stay current. In the meantime I realized that I was becoming more desperate and although I have always liked to gamble I now find I am gambling more, hoping to get money to help.

I have raised 3 children by myself so I would say half my debt is related to their needs but the rest is gambling. This month will be the first month that I will not be able to pay most of my bills(credit cards) My income allows me to keep curent on living expenses. I have never considered bankruptcy but I am so stressed out .

Yet I can’t seem to make that step. I always paid my bills and had good credit. I don’t know if they would even forgive some of this debt since it is related to gambling. So that also stresses me out. After I pay my normal bills and food I have about 200.00 left over. What do you suggest? I can’t even get a second job due to the economy.

Should I consider bankruptcy?

Janet”

The Answer:

Dear Janet,

Rest assured that I will do what I can to help you through this situation.

I’m not at all surprised that your gambling brain kicked in a bit as things got tough. What you describe is almost classic progression through the three stages of gambling addiction.

1. The Winning Phase
   The person starts gambling as a social pastime, experiences the euphoria of winning and this fuels further gambling behaviour.

2. The Losing Phase
   In this phase the gambler starts to lose control and becomes impulsive. He tries to win back his losses. If losses accumulate, he will lie and cover up to escape detection.

3. The Desperation Phase
   At this phase, life is out of control as losses become unmanageable. Gamblers feel powerless, remorseful and desperate. Source

I think that we are at the point where desperation and wishful thinking meet reality. It is an uncomfortable junction but one that must always be crossed to reach the other side.

Your instincts are correct, bankruptcy is certainly worth exploring. The questions you have and the concerns about part of the debt being related to gambling can be answered for free by a local bankruptcy attorney. Call up and asked to schedule a free bankruptcy consultation.

The gambling issue aside, bankruptcy is the most logical solution in your situation. Without any replacement income there is a reduced expectation that with the reduction in income that you would be able to afford a continued repayment plan.

The second issue is the pursuit of gambling. On one hand you probably talked yourself into increasing your gambling activity so you could magically find a way out of the mess. Gambling also gave you an emotional escape during a difficult part of your life and that allowed you to reduce your stress and relax. That relief is not going to be available as your credit cards are closed down.

While bankruptcy can address the numerical debt issue, it can’t relieve you of the addictive burden you carry from gambling. For that you will need to seek treatment. If you are willing to admit that you have a gambling addiction and you want help for it, I suggest at least attending a local Gambler Anonymous meeting for support.

Big Hug!

@GetOutOfDebtGuy

Other Related Articles to Read

• I Have Borrowed Money From Some Very Bad People. I Am a Problem Gambler. – Robert
• In California About Half Report Funding Gambling on Credit Cards
• I Used My Home Equity to Gamble at Casinos and Lost. – Fred
• I’m Thinking of Killing Myself Because of My Gambling and Debt. – Christie
• Sally is in Debt Because of Slot Machines and Gambling
• Gambler Debt Soaring to Crazy Heights and Climbing. Blamed on a Hopeless Economy.
• Absolute Poker Payment Processor Pleads Guilty To Fraud
• I Am a Problem Gambler With a Lot of Debt. – Dontwanttosay
• Another MetLife Employee Strikes Again!
• I’m Addicted to Gambling and Casinos. I Also Have an Abusive Husband. – Sherry

Read the full article at GetOutOfDebt.org, click here: I Have Gone Through All My Savings and Gambled to Try to Stay Current on My Bills. – Janet

Here is a great news story that gives you a real look at some of the recent small business failures and what the court documents tell us. It helps to put a real face on what would otherwise be just another tick in a column.

Court documents offer a window into some of the struggles of these entrepreneurs. The following vignettes were gathered from paperwork filed in bankruptcy court this summer and fall. Owners of these businesses either declined to comment or could not be reached:

• Brad Echeverria started his Boise home-building company, Echeverria Construction Inc., in 1998. The company shut down in January 2008, and Echeverria has been working as a subcontractor for Steed Construction in Eagle since then. He and his wife filed for Chapter 7 bankruptcy protection on Aug. 28. They plan to surrender a $300,000 home on Diamond Ridge Way in Nampa to pay off Washington Mutual, which is owed $220,000 from a mortgage loan issued in 1997, and Wells Fargo, which is owed $66,000 from a second mortgage issued in 2004. Liabilities total $673,000, while the Echeverrias have assets of $313,000. Liabilities include a $28,000 business debt to Arenas Plaster of Eagle for masonry and stucco provided in 2006, $23,000 to Eagle Custom Wood Products of Emmett for cabinets and more than $100,000 owed on business credit cards.

• David Cullison operated his Boise construction and remodeling company, Cullison Construction, from June 1994 until July 2008. He and his wife owe $290,000 and have $111,000 in assets. Their real property assets include a 50 percent interest in a home in the Country Club Manor development near Hillcrest Country Club, though they owe $205,000 to Countrywide Home Loans for the property. Other debts include $25,000 in wages they owe themselves and $55,000 related to a breach of contract lawsuit.
• Kirk Carpenter of Boise has operated his own business for most of the time that he’s also served as a Nampa firefighter over the past 10 years. His company, Open Door Home Building, also known as Concore LLC or E4 Developments, has built homes since October 2000. For the past two years, Carpenter has also worked as a realtor for Idaho Properties GMAC. On Oct. 6, he and his wife filed for Chapter 7 bankruptcy protection with $149,400 in assets and $1.4 million in liabilities. Their $278,000 home on Riva Ridge in Boise was returned to the lender, HSBC Mortgage Services, on Sept. 3. They also lost possession of a home on Ardyce Street in Boise in January, when it was returned to Wells Fargo. Debts include $322,000 owed to Syringa Bank for construction loans issued in 2006; $150,000 to Darrell Wiseman, a private investor in Meridian; $225,000 to Kenny Lee, a private investor in Nampa; and $60,000 for a business loan from Wayne and Dru Carpenter of Baker City, Ore.
• Chambers Construction of Meridian reported gross income of $42.3 million in 2006, which plummeted to $2.4 million in 2007 and $283,000 this year. The company, led by president Gary Chambers, filed for Chapter 7 bankruptcy protection on Oct. 7 with $1.1 million in assets and $1.8 million in liabilities. The assets consist of four properties, including a $424,000 home on Commander Street in Meridian, plus two additional properties of unknown value. Liabilities include four construction loans totaling $680,000 from Banner Bank issued in May and June 2008, a $464,000 construction loan issued by Provident Financial in May 2008 and a $218,000 construction loan from Action Mortgage issued in May 2008. Other unsecured debts include $8,600 owed to subcontractor Metric Industries Inc. of Boise, $28,000 to supplier Evans Building Center of Eagle, $30,275 to subcontractor Prestige Fence and Lands of Star and $18,300 to supplier Dale’s Floor and Granite Inc. of Nampa.
• Scott Carroll closed his Post Falls painting company, Scotts Painting, in September after more than five years in business. He and his wife filed for bankruptcy on Oct. 17. The only major asset they possess is a $168,000 home, though they have $229,000 in liabilities. They plan to retain their home and pay CitiMortgage Inc. the $147,000 that’s still owed after the conclusion of the bankruptcy process. Most of the rest of their liabilities consist of medical bills, a car loan and credit card debt.
• Boise home builder and contractor Russ Iverson filed for Chapter 7 bankruptcy protection on Aug. 29. Iverson and his company, Outlook Homes, will surrender five properties in the liquidation process after being in business from May 2003 to August 2008. Iverson and his wife have $1.2 million in assets and about the same in liabilities. The assets mostly consist of the five homes that will be returned to lenders, including their own $285,000 residence on Outlook Avenue in Boise, two duplexes in Nampa and two other mid-range homes. The liabilities largely entail the mortgages on the homes, taxes and credit card bills.

Slowdown nails contractors: Dozens of Idaho small business owners … Idaho Business Review, United States - 2 hours ago Most of the rest of their liabilities consist of medical bills, a car loan and credit card debt . · Boise home builder and contractor Russ Iverson filed for …

Click Here for Credit Card Debt Help

Source: Slowdown nails contractors: Dozens of Idaho small business owners

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• All About Bankruptcy – Chapter 7 Bankruptcy – Chapter 13 Bankruptcy
• Do I Have to Pay My Second Mortgage Home Equity Loan After My Bankruptcy? – Julie
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• As Economy Slows, Lenders Begin to Curb Credit Cards
• YOUR VIEW: Charles Merlis
• Root Canals and Appendectomy Were Expensive and Landed Me in Bankruptcy. – Ray
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• Scott Writes Me and Asks For Help – “We Are Behind And Overwhelmed”
• Collectors Called Constantly Scared of Foreclosure, What Can I Do? – Roy
• I Can’t Figure Out My Chapter 13 Bankruptcy Payments – Helpless

Read the full article at GetOutOfDebt.org, click here: Slowdown nails contractors: Dozens of Idaho small business owners