Should I Lease Or Buy A Car: First Time Car Buyer Tips

Should I Lease Or Buy A Car: First Time Car Buyer Tips

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Should I lease or buy a car? To finance or lease….that is the question. This is probably the hardest, most basic thing to understand as an adult. Honestly, until recently, I never understood the difference between the two, the benefits or pitfalls. I also didn’t realize how much of a depreciating value a car has. That is, until I fell into the pitfalls myself and had to dig my way out of it. I wish I knew some first time buyer tips so I could have made an educated decision.

Surprisingly neither college nor high school prepared me for these kind of basic and normal financial decisions like should I lease or buy a car. Kind of crazy, right? We’re expected to just know these things when we go to the car salesperson, and if they fail to disclose all the pros and cons then we’re sh*t out of luck when things turn out pricier than we expect. As a teen, I never thought about my parents car payments or what it meant to finance something. A lease didn’t seem like a huge commitment. And since it was on my parents dime, a car really didn’t have a major cost to me.

But oh, did I learn…..

Here is what I learned for my first time car buyer tips :

A car is a forever depreciating asset. It will RARELY ever gain value and only if it’s a collectible. There will always be a cost associated with owning a car whether it’s leasing a new car, financing a new car or maintaining an old car. How much in cost can vary between those three typical options.

What most people want to do is minimize their cost for owning a car as well as the maintenance while still holding value.

Leasing:

When my husband and I got our first car, my father in law insisted that we lease. He had leased 2 of his cars and he and his wife had a total of 4 cars, each with light usage.

So we thought, his dad has a lot of experience and leasing works for him, it should work for us. We were WRONG!

Leasing did not work for us, at the end of the lease we owed $3K in overmileage fees! I knew it was coming but it didn’t make it less painful.

Leases have a set # of mileage that they allow for in the lease term. We signed up for a 36,000 3 year term lease which was a 12,000 per year allotment. This is standard. The issue was that this was our ONLY car, my husband drove this car to and from work every day and then we’d also use it for weekend errands. He didn’t work close either. It takes him an hour to drive to work in NY traffic so the mileage added up. We literally hit our mileage limit around 1.5 years into the lease. Here’s one of my favorite first time buyer tips, don’t sign for a lease until you have researched how far you need to go to work.

What made the lease attractive to us at the time was the low monthly payments. Our lease payments were $220 a month. (Don’t judge me, everything in NY area is stupid expensive including car leases). Financing would have been $400 a month, a price that was a stretch for us. Leases tend to be cheaper than financing.

So short term, the monthly payments were great, but in the end it cost us nearly as much as financing would have anyway.

At the end of the lease the dealership gave us the option to buy the car. This price was negotiated when we initially signed the lease, believing that we were able to keep under the miles restriction. So MSRP was $19,500, the negotiated rate after the lease expired was $13,850. So what we had was a 2017 Honda Civic with 55,000 miles on it. At that point it wasn’t even worth the $13,850 that we would have had to FINANCE at 6.9% APR!

I wouldn’t finance a house at that rate, let alone a car.

So leasing didn’t work for us because we drove it too much. I could definitely see leasing as a practical option for people that don’t drive very far on the regular basis and want to have a nice car for low cost.

People that constantly lease are able to get the best technology, the coolest specs, and the sleekest finishes. Since cars lose the most value in the first 3 years, leasers are able to enjoy the newness of the vehicle without the commitment or cost.

Financing

When our lease ended, we considered re-leasing but after our whole over mileage situation I realized it just didn’t make sense. Like I mentioned, they did offer to allow us to to buy out the car but the deal made no sense. With all the initial lease payments, the $13,850 buyout option and the 6.9% APR over the 6 year payment period, overall costs were expected to be closer to $27,000 for what was a severely depreciating asset that had an MSRP of $19,500.

Financing the car we leased seemed like a mistake. So we shopped around at another dealership. For us, it was really utttimportant to get a reasonable deal. We were already $3000 in the hole because of this huhthe over mileage.
Huh
We opted for a $22,500 u and hdue to great credit we were able to get a 2.9% APR rate. That’s over 1/2 hthe rate for the lease buyout option! It made more sense to finance a new car with little to huno mileage. The payments are going to be $500 for 5 years. At the end of the 5 uh we expect the car to have some value left. Our hope is that the car will still be well runningu so we can keep it after the payments are done. The 2.9% APR also saves us severauso getting a 5 year, 100K mile warranty on the car so at least then we had a good sense of what the maintenance cost would be at least for the first couple of years.

Long term, financing the new car seemed like a better deal than trying to salvage our 3 year old car by buying it out.

Leaving A Lease And Getting A Totally Different Brand Of Car

We could have considered paying out the end lease fees and overmileage and going with a different car brand other than Honda. But we were sure they wouldn’t be able to waive any of the fees or over mileage and I was concerned that when it came to the maintenance work that needed to be done that we would be over charged for damages.

For us, this option didn’t make sense since we already owed Honda $3000 in over mileage. I mean, the car was in OK shape, but had some dings courtesy of my husband. Those costs would have to come out of pocket now. We estimated total lease end costs to be $4000-5000 depending on what they found in the inspection. Then we’d have to go to another dealership, put down $2000-$4000 down to finance elsewhere. Negotiating in our position was only going to take us so far.

Leaving a lease and getting a totally different car brand seemed too costly for us because it would be a LOT of money up front.

Also staying brand loyal to Honda meant that certain things could be waived like the $900 lease end fee, some of the mileage (we got $400 back), and the upfront payment. We were also able to roll over the $3000 over mileage charges into the finance deal so it wasn’t going to be such a large up front payment.

As you can tell the $3000 over mileage really screwed us over and kept us from being able to take advantage of other options.

Best case scenario.
Personally I believe the best way to buy a car is to buy a used car all cash with no financing. Financing is a huge waste of money because you’re essentially paying interest on a DEPRECIATING ASSET over time at the same price for when it was new and full value.

The issue is that not everyone has a good chunk of cash (more than $10,000) to put down at once. It’s literally probably the best option out there for car owners but, honestly, hard to attain. Most people just don’t have that kind of liquidity and end up just financing out of the necessity of their transportation needs.
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So should you or I lease or buy a car? Overall, the car buying experience is very personal and for most people it’s quite pricey. A majority of Americans actually never buy off of a new car dealership, that’s how much of a luxury a new car is. I do feel lucky to be able to share this experience and my findings as someone who had NO IDEA what car buying entailed.

For my Husband and I, we started off on the wrong foot with getting a lease but at least moving forward we’re able to understand the significance of our purchase, how cars can add to your transportation costs, the value we’re getting, and the financial effects of our our decisions. Hopefully these first time car buyer tips keep you from making some of the same mistakes I did.

If you like “Should I Lease Or Buy A Car: First Time Car Buyer Tips” check out my other posts:

The Rent vs Buy Argument

Working For Yourself? Self Employed vs Employed

Lessons On How To Be An Entrepreneur & Salesperson

The Meaning Of “Always Be Hustling” & Why It’s Important

Always be hustling a second income

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As a salesperson, I understand the importance, of constantly selling. The phrase “Always be hustling” is what comes to my mind. So when I took on my boring corporate job I realized quickly that this company: 1) only saw me as a number and 2) only cared about my output in terms of dollars. At first I didn’t realize the importance of having a second source of income.

The first two years I did everything… EVERYTHING to make sure I was recognized as a hardworking employee. When the company asked me, “please work 6 days a week while we work to hire extra staff,” I jumped at the opportunity to show off my hard work and determination. But in reality, there were things outside of my control that hurt me in my job: my manager was badmouthing me, my personality didn’t scream “go getter”, I was too quiet, etc… And once these perceptions were set in place, it was impossible for me to turn around.

Despite being a good performer and getting great evaluations, I was overlooked and my talents were unnoticed. When an opening came up that I could be promoted to, I wasn’t even considered. I learned the hard lesson in life that sometimes you just don’t get credit or recognition you deserve. And working hard for a company doesn’t always translate to dollars. It’s now very clear to me that even if you have a secure and reliable job, you should always have a side hustle. Life is just too unpredictable.

Then my worst fear came true, my company added another agent for us to share commissions with but didn’t adjust our base salary. Three people are now sharing a pie that used to only feed two. Now we’re squabbling over deals like our lives depend on it.

Moral of the story is that things can always change at work financially for you, the income you have today can easily be changed tomorrow if the company so chooses.

Good thing I have a side hustle going on. I’ve been reselling like crazy. Doing the whole buy cheap as possible at liquidation auctions and selling as high as possible. Poshmark, Mercari, EBay, Depop, Facebook Marketplace, Vinted; you name it, I’m on it.

My motivation comes from my favorite entrepreneur: Gary Vanderchuk. If you don’t know him, he’s hustled his way into millions. First with his father’s wine business, then building a content marketing and social media management agency. He does these YouTube episodes called “Trash Talk” where he goes to all these garage sales and finds things to flip. I felt inspired that a self made millionaire would be so humble to take the time to show how easy it is to make money online.

So here I am spending my nights and weekends trying to build something real so I can get out of my 9-5 job that only gives me a 3% raise every year, if that.

Today I’m here to remind you that IF YOU’RE NOT HUSTLING A SECOND INCOME, THEN YOU’RE ONE EVENT AWAY FROM POVERTY.

I don’t know about you, but even with a solid income and array of benefits, even with a partner who contributes to the finances: I still find it hard to save money for a house or save for retirement. THIS IS WITH ME BUDGETING AND TRACKING EXPENSES EVERY MONTH! It seems like I’m either going to have to work twice as hard now, or twice as long. Personally, I’d rather work twice as hard while I’m young and still have the energy.

I think about what if I lose my job? That’s easily a possibility. I mean, they’ve already cut into my commissions without remorse. What if my husband or I become disabled? Of course no one wants to think about these terrible scenarios but let’s be honest, tragedy hits families every day and then they have to figure it out.

For me, the biggest reason to have a side hustle is to save enough of my second income and create a barrier to protect my family from financial tragedy.

If I lost my job, it would only take a total of 3 months before I had to go in the red and start relying on credit cards. Having worked since I was 18, I just don’t find that acceptable at my age to feel that insecure. So here I am, trying to rub two dollars together and make a twenty.

You don’t necessarily have to resell to have a side hustle but I consider it to be a pretty fast way to build capital. Here are some other ideas on how to make money and always be hustling:

1)Uber driving
2)Tutoring children and babysitting
3)Blogging and monetizing the traffic
4)moonlighting and taking on extra shifts at work or a 2nd job bar tending
5)Social Media- becoming a content creator and monetizing the following once you reach 100K followers.

I like reselling because it’s flexible, easy and fairly cheap to get into. If you have a thousand dollars to spare, that can buy you a lot of inventory. And, if you’re smart, at least 200 pcs.

Side hustles aren’t meant to be glamorous. They’re meant to create financial buffers to keep you from ruin and help make a plan for the future. A lot of people make the mistake, because they make $25 or $30 an hour, of thinking that making less per hour at a side hustle as not worth your time.

That’s a huge mistake because even if you only make an additional $100 a week for your effort, that will easily translate to $5000 a year and over the course of 10 years that adds up to $50,000! I don’t know about you but I could use an extra $50,000. That would pay off the balance of my student loans and would be a sizeable enough down payment for a home. That kind of money can do a lot! Or, if you invest it wisely, it can grow even more!

Impatience tends to be the killer of dreams and keeps you from the “always be hustling’ mindset. For many, the thought of spending their nights and weekends building a business or saving some money is too hard of a commitment. Impatient people are too dependent on their guilty pleasure like reality tv, candy crush games and mindless social media scrolling. Seeing the long term game in life and playing to win long term will be the difference between living with wealth and living on the edge of poverty.

So I definitely believe that being a forever hustler is key to having stability, changing your life, meeting your financial goals and overall happiness. A healthy second income won’t buy happiness but it can definitely solve some problems. So always be hustling.

If you like “The Meaning Of ‘Always Be Hustling’ & Why It’s Important” Check Out My Other Posts!

Lessons On How To Be An Entrepreneur & Salesperson

Working For Yourself? Self Employed vs Employed

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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.

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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! 🙂

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.

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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. 🙂

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

Working For Yourself? Self Employed vs Employed

Book Review: “The Total Money Makeover” by Dave Ramsey

Should You Go To College? Is A Good College Degree Enough?

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:

Should I Lease Or Buy A Car: First Time Car Buyer Tips

Help! My Husband Doesn’t Help Around The House

I Married A Gambler
Money problems in a marriage.