The Rent vs Buy Argument

With my whole mold dilemma going on it has me revisiting the idea of buying.

I’ve been in the real estate business for about seven years now doing mainly rentals and I’ve always thought that buying and renting are personal decisions. For the most part they are, but with everything happening in my life right now, I’m leaning towards buying.

I’d say it’s also heavily dependent on your financial situation. For some, renting is the only option.

Here Are The Benefits Of Renting.

1)It’s Flexible.

I like the idea of having a lease that’s short term. Either 6 months, 1 year or 2 years, it’s nice to know that you’re not fully committed to a property. I can leave at the end of my lease if I’m unhappy or if it becomes too expensive. You can usually leave mid-lease if you’re able to find a takeover tenant that qualifies. Overall, I believe that the flexibility is great for people who travel for their job, relocate or need something that offers financial flexibility. (Example: if you work on commission and earnings change year to year)

2)Initial Costs Are Low.

Most of the time you can find an apartment without a broker by contacting the property management directly. Websites like Apartments.com, Zillow and Trulia make this possible.

Even if you have to pay a brokers fee, it’s usually no more than 1 months rent. Up front fees include security deposit which could be as low as $500 to 2+ months of rent.

Compare that to your closing costs which are 2%-5% of a homes value plus a 20% down payment! Not everyone has that kind of money available.

3) Allows You To Stay Liquid.

And that brings me to my next point, if you’re you’re able to put together a down payment and closing costs, that means you have the financial opportunity to pursue other investments.

Generally it’s said that a home isn’t a good investment. The only value you really get is a roof over your head at a somewhat stable cost. It gains an average of 4-6% value each year depending on your location and that’s with inflation plus the updates you’ll need to put into it. Compare that to the stock market, the Dow Jones historically has gained 8-9% each year. So stock would be a better return but is more volatile than buying a home.

Pitfalls To Renting

1) Neighbors

Generally, you’re not in control of who your neighbors are and they are a lot closer to you when you’re renting. Renters usually are in apartment buildings where neighbors are sharing walls and tight living quarters. If you buy, you can choose the neighborhood and even a property that is more isolated with less risk of a nuisance neighbor.

2) Absentee Landlord.

The owner of a rental is obligated to make the apartment habitable and make reasonable repairs to the apartment. Somehow that doesn’t motivate some management companies to act correctly and do basic work like fixing leaky pipes or sealing drafty windows. I would say most landlords, even those with massive wealth, would rather wait for the attorney letter demanding repairs than make major repairs of their own free will. Repairs tend to cut into their profit and they hate that.

The Benefits To Buying

1) Tax Incentives

The tax incentives for buying a home and getting a mortgage are pretty nice. It’s almost like a rebate on part of your purchase, that’s how good of an incentive it is. You can write off your closing costs, mortgage interest, and any major repairs on your house. My dad once told me his housing tax incentive was equivalent to a $6000 tax credit.

It’s also a great way to shield your income from tax obligations if you’re in a higher tax bracket.

2) Control Over The Property

As I learned with my whole mold situation, I have no control over my environment as a renter. Mold is literally growing underneath my floorboards and I had no idea and no control. When issues arise, the landlord can choose how they want to fix problems and sometimes they go for the quick fix.

By owning a home, you have complete control over the property. And can choose the best and most efficient option to repair. You can do your own repairs, if you’re skilled enough, and you can make changes to the finishes as you wish.

3) Building Equity

Like I mentioned before, buying a home isn’t the best option for an investment when you’re looking for a high return but you’re still building equity and personal wealth by paying off the principle of your mortgage.

There is some flexibility if you want to increase your liquidity for investments or capital ventures but they involve more risk. Once you’ve paid a significant enough percentage of your principal balance, you can apply to refinance and get a personal loan, apply for a line of credit against your home or for a second mortgage. This is a bit more risk, since defaulting could result in foreclosure, but this allows banks to lend money to you at a better and lower interest rate.

Pitfalls To Buying.

1) Fluctuating Costs

The nice thing about renting is that you always know what your rent is going to be. It’s not a surprise and any repairs that need to be done, the landlord is supposed to be able to fix. Housing costs for a renter should remain stable.

Compare that to a home, which depending on the condition you bought it in, may have some major renovation costs down the road.

My parents have owned their house since 1991 and I’ve watched them pour money into it like it was a bottomless pit. Over the 30 years they’ve owned their home they’ve done a bathroom renovation, built a bathroom out, windows replacements, insulation installments, kitchen demolition and renovation, roof work, landscaping each summer, boiler replacement, basement refinishing, installed backyard and front yard pavers, tree removal, central air installation and bought new laundry appliances. This is an exhaustive list.

After all that work, I don’t feel like my parents came out with much of a profit. There were definitely months where they had to go into debt or take loans to make these payments. They bought their home in 1991 for $190K and it’s probably worth $450-500K at this point. But with 30 years of inflation and renovation costs, it’s not a particularly great deal.

2) Less Flexibility

Because the initial costs to buy and sell a home are so high, including closing costs and broker fees, buying a home is impractical if you plan to move within 5 years.

A home is more of a long term investment just to break even with the costs.

If you’re a person that’s constantly relocating or unsure of where you’ll be in 5 years, renting is a better option.

———————–

Overall, for me the choice seems to be leaning towards buying. The uncertainty of renting is starting to wear on me.

Buying is one the biggest financial decisions of your life so take your time and weigh all the options.

Here’s a great buy versus rent calculator. You can find out which is a financially better option. I’ve always used it to consider whether my apartment was a good deal.

Happy real estate shopping! ūüôā

I’m Saving Money On Groceries! 6 Tips to Reduce Food Bill

I'm Saving Money On Groceries! 6 Tips to Reduce Food Bill
I’m Saving Money On Groceries! 6 Tips to Reduce Food Bill

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I remember being a kid and my mom dragging me around town to 3 or 4 different stores hunting for a deal. She was so knowledgeable on what things cost and what was expensive, I can still envision her picking up an item at the store, furrowing her brown in complete disgust and saying, “oh no this I too expensive.” Or embarrassing me by haggling aggressively with the cashier, insisting that the orange juice was $.50 less. She’d just shrug her head and say “I’m saving money on groceries!” She always has an eye on how to reduce her food bill.

Even now when she stays over to help me with my kids, the first thing she does is ask whether I need groceries. She definitely loves saving and helping others save. Considering groceries make up a major expense right after mortgage/rent and transit, saving groceries and saving money on food shopping is big deal. It’s a controllable expense that fluctuates.

So here are our best tips on saving:

Price comparison shopping

The key is to know what’s on the market that week. The best way to find out is through the circular or save on food weekly flyer. You usually get the weekly circular on Sunday in the Pennysaver. Nowadays most stores also post it online. She’d get CVS, Walgreens, and a bunch of local supermarket circulars and compare pricing. I was never really that great at this since you need a strong memory to write down the lowest price and where the item you want to buy is. She would compare 4-5 stores and just know which one had the best sale.

Her keychain is full of those shopper club cards. Her goal is to get those in store discounts. She signs up for all of them. So after combing through each and every circular, determining what to buy from each store and creating a list, she sets out to make her purchase. There’s no greater satisfaction than swiping your shopper club card at the register and seeing all the saving deducted from your total. She can easily save $10-$15 by comparison shopping. My mom even goes as far as returning items, if she finds out another place offers a better deal. It’s one of the best ways to save money grocery shopping.

Couponing

Couponing is another way to save on groceries if you’re able to do it consistently. The weekend Pennysaver would include the PG saver which included exclusive coupons from Proctor Gamble. She would collect all her manufacturers coupons and keep it in a binder organized in folders by expiration date and ALWAYS remember to use them before that date. You can find most of these coupons online too. Checkout these websites for grocery coupons, just click and print.

https://www.coupons.com

https://www.pgeveryday.com/offers

https://www.retailmenot.com

My mom also knew which stores would double coupons, meaning the actual store would match the coupons savings. That way she could double the savings. If you’re unsure of which stores do this just ask at the register.

Some pitfalls to couponing would be buying more than you need or buying things you didn’t need just because you had a free coupon. I remember eating the most random food because she had a coupon for it. It would sit in our refrigerator because no one wanted to eat it. Or we would have stocked up on certain items because she had several coupons for them and they go bad or expire before they’re used. You kind of have to keep an eye to avoid wastefulness and not get too coupon happy for things you don’t need.

Shop off brand

For things you don’t have coupons for, you can always shop off brand to save here and there. Things like cereal, ice-cream, household products etc. My Husband hates when I shop off brand. There’s always been an association that off brand items are lessor quality and that’s not necessarily true. A lot of them are of equal quality to the branded items. Really, they are the same but something like Frosted Flakes has gone through a lot of marketing to make it more profitable but also more expensive. And even if it is a little lesser quality, you generally get more quantity for what you pay for. Considering how much less off brand is, buying it consistently will save you a lot over time.

Bulk Shopping

I love Cosco and BJs. Buying in bulk is literally my favorite thing to do. I can get lost in those stores. For a small membership ($59) a year, you can buy wholesale size everything. I really don’t think you can ever have too many paper towels and toilet paper. Usually the wholesale shopper clubs also have the monthly coupon books, so between the coupons and the wholesale value, there’s a lot of savings to be had. One caveat is that you can easily find yourself overbuying or buying things you don’t need at these stores. Self control and budgeting is a must. Besides that, definitely a good option to shop non-perishables.

Subscription purchases

I love Amazon a little too much and am part of their prime membership like most people. Recently they launched a subscription service for repeat purchases. Certain household items you can buy in repeat with a 5% discount. If a shipping order has 5 items that you subscribed to, then you get 15% off. For baby items ??, you get 20% off if they are in a shipment with 5 other subscription. So I pretty much use this service for most of my household stuff, dish detergent, lotion, shaving cream, baby wipes etc. And considering that Amazon pricing is already competitive, these subscription prices are basically a steal. The subscription order comes once a month and you can adjust how often the products come, whether they come every month or every 2 months, etc. I absolutely love this service and would highly recommend it for moms unable to make it to Target or Cosco.  Click the link below to try a 30 day trial and get started on subscriptions.

Meal planning

This one is a huge way to reduce your food bill. And if you can’t do any of the other cost saving techniques, I would advise to follow this one. Because if you don’t plan your meals, you won’t have food and you’ll be more tempted to eat out. Eating out frequently becomes very expensive. Trust me. Meal planning is basically cooking in bulk once or twice a week so that there is always dinner to choose from. You might make a big crock pot meal and a big pasta meal. ¬†You can store it in the fridge and then divide it into portions for dinner and lunch the rest of the week. Planning for your meals rather than cooking on the fly is much more productive and less frustrating than waiting until the last minute to cook when you’re already hungry. Perfect things to make in bulk: stews, chili, and pasta. You can roast a whole chicken and then pair it with rice and vegetables the rest of the week, then take the chicken scraps or dark meat at the end and turn it into a soup. You can make lentil soup or split pea soup in bulk. The possibilities are endless but planning your meals will save energy, time and money

—————————-

It’s amazing how much money reduce your food bill. Groceries make up 10% of a household’s expenses. Me and my husband we easily spend $7200-$8500 a year on groceries alone. It doesn’t feel like that much when your spending $60 here and there over the weeks, but we can definitely use the savings. My mom taught me these tricks so now I’m saving money on groceries too!

But you can also use saving time and investing in Instacart as an option for the time strapped mom. Couponing and comparison shopping is not for the weary but for those in a financial pinch, you can use these tips and watch the savings stack up.

If you like, “I’m Saving Money On Groceries! 6 Tips to Reduce Food Bill” check out my other posts.

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Tags: Bulk buy food, bulk shopping online, where to buy in bulk, grocery coupons, discount codes, save a lot prices, how to extreme coupon, I’m saving money on groceries, reduce food bill

How To Pay Off Student Loans Fast & Repay Student Loans In Full

How To Pay Off Student Loans Fast & Repay Student Loans In Full

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I have major student loan regret. ¬†I’m not going to lie, looking back, I was not well educated on how loans worked. ¬†I didn’t understand the financial repercussions of signing on for those loans. ¬†In my mind, they were a necessary part of getting an education. I was a person that needed a lot of student loan debt help. I needed to learn how to pay off student loans fast and repay my student loans in full.

Actually, everyone was getting loans, so to me it wasn’t anything out of the ordinary.

I didn’t understand how much I had until graduated undergrad with about $20K in loans. ¬†At the time, that seamed like a behemoth amount. ¬†But it would only grow as I went off and took a risk going to law school for 1 year.¬†By the end of that year, I finished with 49K worth of loans.

Still, I was in denial of how much in loans I owed.  I paid off a little here and there and sat on some unused loan money for a few years, while I was trying to build a safety net of emergency funds.

From the age of 18-24, I was not smart with money, I didn’t know how to pay off my student loans fast.

From 2011-2014, I was making small $200-$400 payments, it wasn’t until 2015 I realized I couldn’t forebear any longer and made my mind up to commit to the 10 year payment plan. ¬†By that time, my debt had ballooned to nearly $60K. Mind you, the student loan payment for a 10 year payment plan for the average overall student loan of $25K is $280.

Until now I’m still paying a minimum of $871 towards my principle and interest. ¬†But I’m working towards pushing and paying off my loans in bulk. ¬†Earlier this year I paid off a $10K loan in full!

I’m lucky, I’m at $24K-25K in remaining debt, down more than half after deciding to get real about my student loan debt. ¬†And in 3 more years, if not two, it will be completely gone.

Here are some tips to live with student loan debt. ¬†Sometimes it’s inevitable to have to take out loans but we can at least minimize the shortfalls and reduce college debt.

  1. Pay Off Your Loans While You’re In School:

I had these stupid minimum wage jobs that brought in a couple hundred here and there. If I put at least 150 a month towards my loans, starting day 1, do you know how much of a dent that would have made in principle and future interest? ¬†Whoosh, I don’t even want to think about it. Probably closer to 10K but I’m here not to regret and feel sorry for myself but to hopefully wake up a few other people who are still in dreamland about their loans!

2. Stop pretending you’re loans aren’t that bad.

Whether you have $1000 in loans or $200K in loans, you need to face them as soon as you’re financially able to. ¬†Make a plan on how to pay or at least minimize your loans.

My sister is a great example of understanding how deep of shit she was in. ¬†She went to two Ivy League Schools, Cornell for Undergrad and Columbia for Grad. ¬†She was a smarty pants in many ways, and got a practical degree in engineering. ¬†Still, her $70K salary doesn’t seem like enough to pay off her $125K in student loans from 6 years of Ivy education.

She was smart in the sense she worked during those years and put whatever she could working paid internships and hosting at restaurants towards her loans.  She saved herself thousands by doing that.

Though she makes a decent salary, she still lives below her means and drops 2K a month towards her loans. ¬†That bad boy is going to be paid off in 5-6 years. ¬†Considering the size of the loan, that’s incredible!

3. For Godsake, go to college for something practical!

I had a friend that started for speech pathology in college and spent two years pursuing that. Then she changed direction and decided to do performing arts, even though our school wasn’t a performing arts school. ¬†She then transferred to another private college, lived on their Manhattan campus and finished her schooling there. ¬†She finished with a liberal arts degree, because the other school she transferred to wasn’t a performing arts school either.

She worked a few years, then decided to go back to school for teaching.  She went back for another 3 years of undergrad or grad and is finally a teacher.

But OMG she is in too much debt.  Nearly $200K worth of debt with only a $50K salary?  Like how was this ever going to work for her? What was she aiming to do with all these changes and all these expenditures?

My friend is just one gleaming example of all the people I know who weren’t practical in choosing or at least funding their degrees. ¬†I have nothing against less practical degrees like art, liberal arts, and philosophy. ¬†But did she really need to spend $200K to get that? ¬†Wouldn’t it have been better for her to just go to a community college first and then transfer?

I’m not perfect and I’m one of those people who didn’t think about the practical nature of my degree, Legal Studies. ¬†But I made the most of it and got my real estate license through the course I took.. ¬†I realized that I couldn’t keep running from the hardness of finding a path and managed to carve one out through an opportunity provided from my education.

4. Live Frugally to Save and Repay Student Loans

For me, living very frugally felt like punishment.

“I can’t afford certain things because I made this bad choice and collected all these loans.”

Still to this day, I struggle with frugal living BUT you can take small steps to at least spend your money wiser.

I’ve stopped buying coffee outside like at Starbucks or DD. $1.95 3X a week for a cup of coffee adds up. ¬†Over a year, that’s exactly $304 a year just on coffee. ¬†With that money, you can buy a $30 coffee maker and 2 years worth of coffee grinds! ¬†It just didn’t make sense.

I stopped buying frivolous things like random makeup and clothes to build a wardrobe that was already big enough. ¬†I stopped going out to drinks on every occasion. ¬†My socializing cut back a little bit, which kind of sucked. ¬†But I invested in spending time with people who didn’t need to spend money to have fun, like my parents and sisters.

Cutting the non essentials was a hard change, but putting it towards my student loans was liberating and helped me pay off my student loans fast.

5. Work a side hustle

I’ve never had a chance to tackle this but I would encourage this in anyone who has the free time or talent.

Taking on a 2nd job like Uber or working at the pizza place down the street can definitely help you.

Imagine taking on a part time holiday position on top of your 9-5 full time job.  If you earn an additional $600 a month, you can put all of that towards your loans on top of the payments you usually make.

This can help you make a nice dent in your loans and help you repay student loans faster. I’ve heard of people paying off their large five figure loans in just a few years with this method. ¬†Combine that with all the other methods we just discussed and that could be the way out of debt.

________________________________

Overall, I hope this post has helped you to realize that even though we had to take these godforsaken loans to get ahead, there’s no reason why these loans should keep us behind financially.

Wishing you all prosperity and financial wellness to help repay student loans. ūüôā

If you like “How To Pay Off Student Loans Fast & Repay Student Loans In Full” check out my other financial posts

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Money and Marriage: Avoid Money Problems In Marriage

Money problems in a marriage. Money and Marriage

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When we think of marriage, we think of wedding bells and dresses, flower girls and ring bearers, and a couple expressing their everlasting love to one another. We don’t think about money and marriage. We never even consider that this can cause money problems in a marriage.

No party is as fun as a wedding and very few life experiences can alter your life in such a meaningful way.

I’ve written a few posts on love and relationships but I don’t think I need to remind anyone that there is a financial consequence to marriage. ¬† In fact, I think most of us consider FIRST the tangible benefits of being with a partner more than the intangible aspects like character, honesty, integrity etc.

A perfect relationship is a balance of the two. A perfect compromise of tangible and intangible benefits. I’m going to talk about the financial pitfalls and benefits that come from marriage. ¬†In this post, I’ve discussed some of the more intangible benefits. ¬†Sometimes money and relationships can mix like oil and water.

Benefits:

1. Sharing expenses in a relationship and couple finances:

Definitely something couples discuss when moving in together but when married, you need to take it to the next level. It goes beyond utilities, rent and groceries. It’s time to talk about retirement, spending habits, saving and buying a house.

Two people are better than one in this type of division.

To give you an example, imagine this scenario:

Jim lives on his own, he rents a $1400 one bedroom right outside of NYC. He has one car. He pays $300 between payments and insurance. Groceries cost him about $200 a month but he orders out a lot so it adds up to an additional $200. His utilities for electric and internet cable are $150. On the weekends, he likes going out to dinner/drinks with friends. His entertainment spends are around $300-$400 a month.

Jim works as a IT tech earning 75K annually or $6250 monthly. After taxes he brings home $4275.

Take home income

$4275

Minus

Expenses

-$1400 apartment

-$300 Car

-$400 Food

-$150 Utilities

-$400 entertainment

-$600 Misc.

Net savings to go toward personal savings, 401K and Medical savings accounts.

$1175

*This is a very simplified budget but you get the picture.

Now let’s look at Jane and Sam.

They are newly married. Jane works as a teacher and makes 40K. Sam works in construction and makes 60K between hourly and overtime. They live in the same apartment building as Jim and pay 1400 for rent. Actually their spending is almost identical. They spend 600 on food, share a car for $400, $150 on utilities and spend 600 on entertainment and $600 on misc.

Together they bring in $8333, after taxes it’s an estimated $5,833.

Take home pay

$5833

Expenses

-$1400 apartment

-$400 Car

-$600 Food

-$150 Utilities

-$600 entertainment

-$600 Misc.

Net Savings for personal savings, retirement and medical savings:

$2083 or $1041 per person.

The point of this example is that even though Jane and Sam both make less then Jim, their still able to save roughly at the same rate each because they are pooling together for their major expenses and budgeting as a couple.  This is one of the best financial things to consider when either moving in or marrying.  The couples budget is everything and couples who are able to leverage their joint spending will come out on top in the long run.

2. Sharing Manpower.

They say two people are better than one.  And I would say that when it comes to domestic tasks, couples find that they are able to get more free time by splitting it up. In this case money and marriage mix well together. Working as a team will definitely help you avoid money problems in your marriage.

I’m not sure this is the biggest financial benefit to being married but it can definitely pinch a few pennies and save a lot of hours. ¬†Having an extra pair of hands ¬†for 1) doing laundry, 2) cleaning, 4) grocery shopping, 5) cooking meals for the week, 6) bargain shopping can add up to a lot of savings.

A single person only has so many hours available them, they have to either do these tasks themselves and lose some free time or pay a 3rd party to handle these tasks like a housekeeper, or eating out/ordering in, wash/fold services, and food delivery like FreshDirect.  They can either keep their free time to themselves to do other endeavors or pay for these conveniences.

3. Spousal Employment Benefits.

One of the biggest is insurance. ¬†You can’t really quantify how important insurance is until you don’t have a job that offers it to you. ¬†Then you’re either paying hundreds out of pocket just to get simple blood work done or you’re paying $500+ premium for a private insurance for married couples that still has a large deductible or copay.

One benefit of being married is that health insurance for married couples is generally cheaper than paying health insurance for two single people.

Being able to add a spouse to your work insurance is amazing and something only allowed for immediate family members/dependents by most insurance carriers.

For my Husband and I, we’ve always had insurance that covered us through work. ¬†But there was this one year that we had to go without and that was the sketchiest year I ever went through. ¬†We never went to see the doctor because it was too expensive and we prayed neither of us were ever involved in an accident because how could we ever pay?

My job also has some married life insurance benefits that if I die, K get’s X amount and if K dies I can get X amount. ¬†It’s comforting to know that we’ll have some fall back if (God Forbid) either of us ever pass away.

Pittfalls

1) Spending habits

Sometimes people can get so caught up in the love and the connection they have for the other person, that looking at habits like spending can seem like a non-issue.

You might look at someone who never seems to wear the same piece of clothing twice and never wonder how they can afford to such a large wardrobe. Shopping addictions can 100% cause money problems in a marriage.

You might see someone drive an Audi and not realize that their car payments are near $500 a month and it’s a squeeze with all their other expenses.

It’s not until YOUR money is commingled with your partner’s that you start to realize how small spending habits can add up to big expenditures. Avoid money problems in your marriage by talking about your spending habits FIRST.

For a long time my husband liked to play poker with his friends. He became so good his friends stopped playing with him. It was always, “maybe next time.” They were scared to lose money to him. ¬†Eventually he joined some poker clubs in the city and played there once or twice a year. Then he found some casinos near us that offered poker comps and he would go occasionally there too. He loved the game of poker but it was bleeding us $500-$1000 every time he lost.

Thankfully he doesn’t play anymore, we had a pretty serious conversation about his gambling and now I have complete control over the cash. But it just goes to show how a small insignificant habit can turn into a ravenous expense.

The same story could be told with shopping addicts or forever entrepreneurs who can never seem to get their business off the ground.

The solution is to think long range about how your finances with your partner would work and weeding out financially incompatible partners out. In my case, I nipped out early what was potentially a serious gambling addiction.

I would recommend financial planning for couples before getting married. ¬†Sometimes when things feel out of control, it’s great to consider a financial planner for financial help with married couples.

Expensive Wedding and Even More Expensive Divorces

“My husband and I, fight over money.”

People spend an average of $27,000 on a wedding. ¬†Those are pretty expensive parties. ¬†I don’t have anything against big fancy parties to celebrate the joining of a couple but when we start to look at divorce rates, those big weddings start to look like a waste. ¬†It’s estimated that nearly 40%-50% of marriages end in divorce. ¬†According to an article written by CNN, couples that spent more than $20K had a divorce rate of 1.6X more than those who spent only $5K-$10K.

In some ways marriage is a crapshoot, you can never know if some devastating skeleton is going to come out of your partner’s closet and change your whole relationship with them.

It’s when you consider that the average divorce costs $15K, marriages have a risk of being a financial hole once everything is said and done.

Then Add Children and Divorce

If your divorce included children, then there will likely be one party that pays child support.  There will still be an increase in housing costs because the divorced couple will need separate places for themselves and for their children.

It can be very costly and difficult to manage your time and finances when expenses increase and resources are nearly cut in half.

Unfortunately in some cases, divorce is the only option for two people who turn out to be incompatible to stay sane and happy.  But children can definitely make divorce messier and more expensive.

I’m not writing this section to make children sound like a burden but for the most part, nobody has children to make a profit. ¬†They have children for the generational and personal wealth that it brings to a family. ¬†We grow our family to keep tradition and create memories.

Nothing brings a family together like children, but nothing makes it harder to separate and divorce cheaply than children. When trying to break up a marriage, money is usually at the forefront of discussions.


 

I would say marriage comes with a lot of different types of benefits but something we should never take our eye off of is the financial outcomes that can result from saying “I Do.” ¬†Ignoring that important fact can lead to marriage troubles over money.

On the other hand, marriage can be a blessing that can pay itself back in ways that can’t even be accounted for. ¬†For many, the risk is worth taking.

I hope you read this with hope in your heart and practicality in your mind.

If you like, “Marriage And Money: Avoid Money Problems In Marriage,” feel free to read my other relationship posts:

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No Retirement Savings At 65: Retirement Planning Guide

No retirement at 65 retirement planning guide

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I was on Reddit r/PersonalFinance last week, I was just browsing when I came across this ¬†quote: “There’s no insurance, no loans for retirement.” Most people have no retirement savings at 65 and need a retirement planning guide.

If you’re short on cash to retire, well then you’re just SOL. ¬†Straight up, prepare to be homeless if you don’t have family to help you out or are unable to continue working through your 60s and 70s. ¬†It’s a rude awakening for so many of our elderly population. ¬†I see older homeless people all the time and I wonder, “Why???”

When I think of my own retirement, I think about living in Florida, poolside somewhere in some assisted living luxury community. ¬†I don’t think about the reality of just trying to keep my food costs down so I can pay the taxes on my house and not end up homeless.

The truth is that so many American families are living hand to mouth, check to check, that they are forced to decide between eating and saving for the future. ¬†Where is the extra disposable income they can put in their 401K or IRA? So it’s comes as no surprise when people have no retirement savings at 65.

Here are some things to consider when trying to build a retirement fund.

Social Security Will Not Be There:

There are still some people holding on to the idea that Social Security will be enough. STOP IT. ¬†There is not enough social security. ¬†It is a Ponzi scheme. ¬†And to be honest, to be a real conspiracist, Social Security’s main role is no longer to provide financial support for the elderly and other people unable to provide for themselves. ¬†I mean, maybe that was never the purpose. ¬†Social Security and their designated numbers are a means to track you for tax collection purpose.

I work with many elderly people to get them apartments and when I see their social security statements, I can’t even consider that income for the purpose of qualifying them for the apartments. ¬†It’s a pitiful amount.

The other day my client Jenn had 1.4M between annuities, 401K and other investments. ¬†She was sharp, I could tell she had been working her whole life. ¬†She was earning $819 dollars a month from Social Security! ¬†Try living in NYC with $819 a month, you wouldn’t last a week! ¬†This is someone who probably paid into Social Security $100K+ over her lifetime and now when its time to collect she’s getting $819 a month? Something isn’t adding up… Had she relied only on social security she would have had no retirement savings at 65.

Start Early.

Everyone tells you this but OMG this is the best and greatest financial advice anyone can give you. ¬†At 18, nobody’s really thinking about their retirement. ¬†They’re thinking about the future, “what career path will I choose, what will I major in at school?” But even putting $100 a month towards your retirement is a HUGE jump start.

I played around with a retirement calculator and here’s what I found:

When I was 18, I was working a shit job selling pretzels at Auntie Annes, working minimum wage. ¬†I was lucky if I earned as little as 600-700 a month in pocket money. ¬†If I started putting $100 a month into an IRA or 401K from the age of 18- 67, ¬†I would have roughly $500K saved by the time I’m ready to retire. ¬†And that’s ASSUMING, I don’t increase my contributions as my earnings increase over the years. ¬†Not enough to retire. ¬†But not a bad figure to start with.

Now let’s consider someone a little older:

“Life got me good and I had all these expenses, children, a mortgage, an expensive marriage, an even more expensive divorce. ¬†I wasn’t able to get it together until I’m 40 to start saving for retirement. ¬†I would have to contribute $500 a month at the age of 40-67 in order to have roughly $500K saved by the time I’m ready to retire. ¬†But that’s still not enough to retire with and at 40, time is no longer on my side. ¬†I’ll need to double down and make monthly payments of $1100. ¬†That’s the only way I can save enough so I have at least 1M available when I want to retire at 67. ¬†I still don’t think that’s enough to retire on but you can work with that.”

Moral of the story: If you’re able to start young (most people can) and save a modicum amount, you are still in a much better position than someone who is older and needs to play catch up. ¬†Compound interest is a bitch like that. Rule # 1 of this retirement planning guide, always use compound interest in your favor.

Get a Side Hustle:

Money doesn’t grow on trees. ¬†If you don’t have the money now to set aside for retirement, when will you? Having no retirement savings at 65 is no fun.

“If you always do what you did, you’ll always get what you got.”

In this type of scenario, somethings gotta give. ¬†You’ll need an additional source of income. ¬†A lot of people reading this now are going to start shaking their heads thinking, “I don’t have money and I don’t have time.”

Well, make time because old age don’t feel so good when you’re broke. ¬†The time to make a move is when you’re young and capable. ¬†It might be hard, it might be challenging but side money is the kind of money you can put ASIDE for retirement.

Here are some ideas on low cost ways to make money:

  • Uber- Drive and get paid. ¬†You already have your own car so thats already taken care of. ¬†Keep track to mileage, maintenance and gas costs. ¬†Hustle for tips.
  • Work a 2nd job. ¬†Any job. ¬†Work at the McDonalds across the street. ¬†Let your kids hang in the seating area quietly if there’s no one to watch them. ¬†Don’t worry if you get fired, it’s only a side job, so speak up for what you need and hustle until it works ¬†for you.
  • Blog and Youtube- this is actually a very long process to build income off of. ¬†I would only recommend this if you have the time and the means to do this.

Mortgage vs Retirement vs Kids College

The truth that none of the other retirement gurus really are able to touch on is that  99% of us will only be able to makes so much money in our life time.  Most of us are on a fixed income of salary and paying off fixed expenses.

A lot of us are still paying off student loans, we have mortgages, car payments, insurance costs and the list goes on and on.  This is just a reality for most Americans.  There might be some left over to save, but is it enough?

Probably not.

In this case it’s important to prioritize the most important needs first.

Mortgage- when deciding to buy a house, there are so many factors to consider. I’m not going to go into buying vs renting, that’s for another post, but here are my top tips on how to make sure the mortgage burden does not overtake the other financial responsibilities.

  • Live in the cheapest, smallest apartment you can comfortably manage. Of course you wanted the nicer and bigger house in the better neighborhood but you need to really consider your reasons for wanting that home. ¬†Is it ego? ¬†Is it an expectation you had for yourself? ¬†Is it maintaining the lifestyle you had as a child? ¬†It’s time to reconsider and evaluate your expectations. Times have changed, money don’t flow like it used to.
  • Only consider a more expensive neighborhood if it means a better school district for your children. ¬†And even then, consider a cheaper neighborhood with the option of a good private school. ¬†Compare the costs.
  • Small is good. ¬†You can dress up small. ¬†Trust me, I’m a real estate agent in Manhattan. ¬†There’s no such thing as too small. ¬†I’ve actually seen some charming 400sqft studios! ¬†But more importantly, small is cheap. ¬†You don’t need the extra bathroom, it’s just more space to clean.

Retirement: As I discussed earlier in my post, retirement is the main priority. ¬†Make it so. Focus on maintaining a retirement fund that will at least allow you to maintain the same quality of life you’re used to.

Kids College: As someone who had to spend 12+ years paying student loans, I don’t think I want my children burdened with that same issue. ¬†At the same time, I don’t think it would be fair for me to burden my children with my living costs if I don’t have adequate retirement funds. ¬†Paying for the kids colleges is the least important financial concern you should have. It’s nice if you can afford it but the kids can take out student loans or go to community colleges, there’s no loan for retirement.

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To cut to the chase retirement is something we need to think about NOW.  Pensions and social security are out the window. They can be considered supplements but not a fall back.  Make efforts to educate yourself with a retirement planning guide on what you need to do to meet your financial goals.

Wishing you the best of luck!

If You Like “No Retirement Savings At 65: Retirement Planning Guide” Check out my other posts:

How To Get To Early Retirement: FiRE and LeanFiRe Strategies

Book Review: ‚ÄúThe Total Money Makeover‚ÄĚ by Dave Ramsey

Why Multiple Streams Of Income Are Absolutely Necessary

retirement plan guide