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Romance & Money

Special Issues For Military Families

Review and revise your budget

Nancy in Portland, Oregon:
"Since our engagement six-months ago my fiancé and I have been celebrating. Neither of us ever has been very good about budgeting, and we've been going out to dinner several nights a week, shopping, pampering ourselves, and traveling. It has been the most exciting time of my life. But we have charged a lot on our cards (over $10,000.00) with the intention of getting down to business and paying them off this spring.
It seemed like a good plan until two weeks ago. My fiancé is a software engineer and also in the reserves. He has been ordered to ship out to the Middle East next month. His job will be here for him when he gets back, but he won't receive his salary while he's gone. My salary barely covers our living expenses and my personal expenses. We have a joint mortgage ($120,000.00) with a monthly payment of $1200.00 (7.5%) and excellent credit. I want to protect our credit and meet our obligations while he is gone. But I am also concerned about having a healthy financial future if he is gone for very long. What can I do?"


Nancy, congratulations on your engagement and your celebration. What a blessing for the two of you to have such a fun time together. But now, it's time to buckle down and get serious.
Many couples are finding themselves in the same uncomfortable situation. While your fiancé is making this sacrifice for our country, you, too, must make adjustments. It's time to reconcile your habits (past and present) with your income (past and present) so that you both can have a future in spite of your past spending and present situation.
Errol Flynn (1909-1959) once said, "My problem lies in reconciling my gross habits with my net income." Wise man. He never succeeded in doing this, but you can.
Before your fiancé leaves, take a look at refinancing and restructuring your debt. If you have any equity in your home, you can refinance to a lower rate, for example a 5/1 ARM with a rate of 5.5%. Consolidate your credit card debt into your mortgage, and pay it on time. If you increase your mortgage by approximately $10,000.00 and reduce your rate, your monthly payment still will be lower than what you are paying now, with the added advantage of eliminating the credit card debt. Now, put the charge card away unless it's an emergency.
The next step is to look at your budget and spending habits. Revise where necessary. If you don't have a budget, then develop one you both can live with. Review some of my past columns for budgeting ideas.
If you shift your thinking about budgeting from a negative to a positive, then you have a much better chance of achieving the future you both envision. A good spending plan doesn't have to restrict you; it allows you to have the things you really want.
There are five additional steps you should take to protect your financial future:
1.) Get life insurance. Nobody likes to think about it, but anyone who doesn't have mortgage-free property and lots of money in the bank should have it to protect those left behind. Both of you need life insurance. NOW!
2.) Restructure all debt while rates are low. In addition to the mortgage and credit cards, refinance car and student loans. Take a look at all debt, and reduce the interest you pay.
3.) Close unnecessary credit accounts. Retail clothing accounts are not necessary and usually have high interest rates. Close them and eliminate temptation.
4.) Write it down! Keep track of what you spend every day. Write it down in a spiral notebook and add it up at the end of the month. Shift your thinking about budgeting from a negative to a positive. Budgeting, like dieting, is successful only if you can live with the plan. Think of it as surviving and planting fiscally responsible seeds while he's gone. Together, you can reap the reward upon his return.
Please tell your fiancé thank you from me personally for serving our country in this difficult time. My thoughts and prayers are with him and all the others until their safe return.

Additional information on this topic:

 

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Important Financial Help Websites and Phone Numbers
mindy@overcoffeenotary.com


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