There is saying that mentions how opposites attract, and the idea could not hold to be truer in regards to relationships. However, there are many things two people, especially a married couple, must agree on, and finances is often one of them. When newlyweds agree overall about money, there’s less of a chance their marriage will end in divorce. Kansas State University (KSU) conducted a research in 2012 and found that arguments, namely those regarding money was the prevalent predictor of marriages that ended in divorce.
Want to make sure your marriage doesn’t end up like so many already have? Here are four tips to keep your marriage and money intact.
Have a Money Conversation Tying the Knot
Before you down the aisle, you need to talk through any personal financial situations you might have first. It would be a shame to find out any serious money situations post-wedding. It’s better to come clean to your partner first if there’s any debts or other financial situations you’re in. Hopefully, there can also be a talk if there are any plans in place to help decrease the amount of debt.
What’s Mine, What’s Yours, and What’s Ours
The percentage of couples that are deciding to hold off on getting married today is at its peak compared to any time in the last hundred years. A 2015 report conducted by the US Census Bureau showed that both men and women are getting married later in life. They’re also choosing to have separate incomes in place and have an independent view in regards to spending, investing, and saving their money. Implementing personal finances like this allows couples to give themselves more time to think through how they will manage their finances. Taking this route is often better over immediately co-mingling all assets into one. Instead, it may be a better idea to think about making a joint account solely for any stated and agreed expenses such as utilities, property taxes, and rent or mortgage. A separate and personal account should be kept for all other expenses.
Create a Plan
After a couple successfully settles on where they are in regards to money, they should attempt to shift their focus to their financial future. Examples of what to discuss include current lifestyle, having children and retirement goals. Whatever your goals are, make sure you have a good plan in place. The start of these plans often being with coming up with a household budget that is based on your income that can comfortably cover all expenses. The next part of the plan would be to make short-term goals such as paying off any student loans, credit card debt, or setting up an emergency fund account. The same steps should also be taken into consideration for any long-term goals as well such as deciding to open a savings accounts for retirement and paying for other expenses like childcare.
Money Can Buy You a Lot of Things, But It Can’t Buy Love
Some may feel money or other materialistic things can buy love for people, but it will not. It takes a lot to know you sincerely love a person and accept them for all that they are. Hanging out with your loved one for a few hours or days is one thing, but living with them is an entirely new subject. Once you marry someone you have to be willing to compromise, includes personal finance. Sitting together with your partner and talking it out first, or whenever you can, is a better idea than keeping it bottled in or leaving it as a surprise. Getting any money management differences out in the air allows couple the chance to create a better sense of appreciation and understanding of each other’s approach to personal finance.
The sooner you can do this, the better. Once both of you can understand any differences early on, it’s easier to work with and find a plan. Couples who do this improve all odds and avoid personal or painful arguments concerning money later down the road. If there are any financial difficulties you are having with a partner, work on making a plan today and see where it can take you. Of course, change will not happen overnight, but if you’re both committed, then you’ll definitely see a bright future.
Washington State OKs Some of the Nation’s Toughest OT Rules
SEATTLE — Washington state is adopting some of the nation’s most aggressive overtime rules, restoring protections for hundreds of thousands of salaried workers and taking what supporters say is a crucial step toward rebuilding the middle class.
The Department of Labor and Industries finalized the rules Wednesday and will phase them in by 2028. By that time, salaried workers making up to about $83,400 a year will be entitled to time-and-a-half pay if they work more than 40 hours per week.
Workers making more than that could also get overtime unless they are certain types of professionals — such as those with higher degrees — or unless they are truly managers or executives, as demonstrated by their ability to and fire, direct other people’s work or make significant business decisions.
Many job categories will be affected, including shift managers at restaurants and retail establishments, office managers, some medical workers and other white-collar staff, officials said.
“We need to make sure the middle class shares in our state’s prosperity,” Washington Gov. Jay Inslee said in a news release. “Overtime protections ensure workers are fairly compensated when they work more than 40 hours in a given week — time that would otherwise be spent with their families and in their communities.”
Employees who are paid hourly have long been entitled to overtime. But salaried workers have generally been entitled to it only if they make less than a certain amount: about $23,660 under federal law, or more where state laws are more generous.
Those thresholds may have worked decades ago, when they meant that nearly two-thirds of salaried workers nationally were covered by overtime protections. But after a recession in the 1970s, lawmakers largely stopped updating them. Washington’s has been stuck at $13,000 since 1976.
As people’s salaries rose with inflation, they found themselves no longer eligible for overtime. Businesses have also been able to convert hourly workers into salaried ones who make just more than the threshold as a way to avoid additional staff or paying overtime.
In other cases, workers have been classified as managers when their actual duties more closely resemble those of hourly workers, officials said.
By some estimates, as few as 7% of salaried workers across the country are now entitled to overtime.
The federal government and several states, including California, New York, Pennsylvania, Colorado, Michigan and Massachusetts, have recently updated or started to update their overtime rules, but none have adopted a target threshold as high as Washington’s, said Paul Sonn, state policy program director with the National Employment Law Project.
The rules adopted by the Trump administration will raise the threshold to cover workers making up to $35,308 a year — a significant cut from the $47,000 limit proposed by the Obama administration.
“The overtime threshold is to the middle class as the minimum wage is to low-wage work,” said Nick Hanauer, a Seattle venture capitalist whose think-tank , Civic Ventures, advocates for progressive economic policies. “It is the indispensable labour protection for middle class people.”
Business groups in Washington have agreed that the state’s rules needed to be updated, but they criticized the plans as drastic. The Association of Washington Business, warned when the proposed rules came out in June that they would be a shock to many businesses and that they could particularly hurt nonprofits.
The organization warned that many businesses might convert salaried workers to hourly ones, reducing scheduling flexibility.
After hearing extensive public comment, the department added two years to the phase-in period. The threshold will increase incrementally until it reaches 2.5 times the minimum wage — about $83,400 — by 2028. The rules will phase in more slowly for businesses with fewer than 50 employees.
The department estimates that by the time they are fully implemented, the new rules will give overtime protections to about 260,000 workers who don’t have them and strengthen overtime protections for about 235,000 others. Affected workers will also become eligible for sick leave and retaliation protections.
At a news conference Wednesday, Labor and Industries Director Joel Sacks gave an example of one type of worker who will be protected : a shift manager who makes $40,000 a year but is expected to work 60 hours a week.
Under the new rules, that worker will be paid overtime for the additional hours, or the business will need to additional staff.
“It’s fair, it’s right and it’s long overdue,” Sacks said.
Among those who might be helped is Victor Duran, a co-manager of a sports apparel store south of Seattle. He said he makes about $52,000 a year and doesn’t get overtime, but is required to work at least 45 hours per week — and up to 60 during the holidays.
“We say bye to the family at the beginning of the season and say we’ll see them after Christmas,” Duran said.
Is There a Lesser Evil Between Buying and Renting?
Most people are excited to move out of their parents’ home and gain a little independence. The only major downside is having to pay a mortgage or monthly rent. The big question is whether to buy or rent. No matter which you go for, the rule of thumb is always to keep your housing costs to no more than 30% of your monthly income.
Harvard’s Joint Center for Housing Studies states that over 21 million tenants who rented in the last year spent much more than 30% of their monthly income. About a quarter of these people experiences a higher degree of a financial burden because over half of their monthly income goes to rent. In those cases, these individuals have to compromise the remainder of their budget. The study states the result is a 55% drop in healthcare spending and a 40% in grocery shopping to compensate. The primary reason that so many people are struggling is rental prices are climbing higher than ever while wages are on the decline.
From 2001 until 2014, the average household income decreased by about 10% while rental prices inflated 7%. Last year, the average apartment cost $1,380 to rent, which is a 25% increase compared to prices three years ago. Even so, there is still an incredible demand for apartments, and the national vacancy rate has been pushed to a 30-year low. Nowadays, low-income households are not the only ones struggling; about 20% of middle-class households find themselves in the same predicament. As if things couldn’t get any worse, experts, like chief economist of Zillow, Svenja Gudell, speculate that prices will only go up over the next year, by about 3% to 5%.
Still, not all hope is lost for those that are looking for something cheaper. Interestingly enough the head of strategic marketing at Zumper, Devin O’Brein, states that prices will be more leveled out in metro hot spots like New York City, San Francisco, and Boston. O’Brien believes that there will be price gains in Oakland that will outpace those in San Fransico in 2016. He also suspects that there will be an increase in growth around Dallas, Miami, Austin, and Houston.
Is there a lesser evil between buying and renting?
If you had to make a smart move between one of the two, it might be a better option to purchase a house this year. Although mortgage interest rates are also expected to climb for the first time in about a decade, there is still a chance you might find a bargain on a home. House prices are expected to drop this year; the opposite of rentals. If you have been contemplating purchasing a home, but you have been stuck in the wave of high prices, it may be your only chance for a while to find a deal.
Around six million homes are projected to be sold from April through September alone this year, and not everyone will be able to take advantage of what is out there. Jonathan Smoke, chief economist at Realtor.com, stated the slowdown in home prices will push more homeowners to list their houses, which means you will have plenty of options. It is also believed that new home markets will climb next year with builders keeping a watchful eye on both starter and middle-range homes. There will likely be a significant amount of homes listed, so the amount of bidding will decrease.
With increased interest rates on the way, the window for record low mortgage rates will soon end. Higher rates will push up borrowing costs and monthly mortgage payments. If you are considering to buy or have a rental contract that is almost up, it won’t hurt to look into becoming a homeowner. Housing Economist at Trulia, Ralph McLaughlin, stated that mortgage interest rates would need to rise as high as 6.5% for the cost of buying a home to equal the cost of renting. Are you happy where you currently live?
Not All 401k’s Are Alike: How to Recognize and Fix a Bad 401k
Most people believe that a 401k is beneficial. This type of investment can provide the same percentage of a retired person’s income that pensions once provided. However, there are millions of people haven’t a clue whether their 401k plan is a good one. Many have inadequate funding options and excessive fees.
It could end up causing you to lose hundreds to thousands annually. The costs associated with a plan will range, making it a complicated ordeal to find out what you are paying. According to an AARP survey, there are not many who catch that they are in fact paying someone to invest into their plan.
What Do the Fees Look Like?
There is a lot of confusion around the charges these plans can have. The largest of three standard fees is known as the investment management fee. The costs can vary from up to 2% to 3% of assets for actively managed funds down to 10 basis points for institutional shares of index funds. There is also a plan administration fee paid to businesses that run day-to-day management of the plan. Expect to pay around $100-$200 if it’s out of pocket. The last of the three is the 12b-1 charge – a recurring fee used to fund commissions for salespeople and brokers.
On top of these three main fees, count on an individual service fee for additional services, like loans from your 401k or for using a brokerage window.
David Walters, CPA and certified financial planner with Palisades Hudson Financial Group said that altogether, the charges can range from 50 basis points (which is half a percent) up to 3%. He believes people should be suspicious of those that ask over 1%. He also noted that it could make a significant difference in what workers get to spend when they retire.
A report by the liberal think tank Demos found that married couples who invested consistently and never made withdrawals would have lost up to $154,000 in fees, about a third their entire savings.
Are There Any Stats?
It may not always be possible to get the best plans out there. Small companies, in particular, have more fees as they don’t have any negotiating leverage to reduce them. They often do not in-house experts to research plans and find the best deal for the employees.
Yoav Zurel, CEO of FeeX, says one shouldn’t assume that working for a large company means you will have minimal fees or optimal investment options. He adds that only about 40% of the largest companies have optimized their 401k.
The good news is that according to BrightScope, 401k charges have been dropping annually since 2009, and the pattern is expected to continue.
This is most likely because more people are learning to pick the best plans possible for them. Brooks Herman, Bright Scope’s director of research, said that it’s because of the rise in plan sponsor awareness. In 2012, the Department of Labor mentioned that companies are to disclose fund fees to their customers each year.
Rick Meigs, president of 401khelpcenter.com, said that even with that, few people ever take the time to read over their plans. Still, he commented there is always that one individual from the pool of employees that will take the time to read it and when they take the time to do go through it, it benefits the majority.
Is it Possible to Make a Bad Plan Work?
FeeX has researched and analyzed annual reports and individual plans. They suggest alternative investments within each plan to lower charges.
Even with new disclosures, some workers may still be stuck with less than ideal plans. If you are in that predicament, Walters believes it’s best to find workarounds to place yourself in a better financial position.
You can begin by using index plans as they often have lower charges and 88% of plans include them. However, don’t think that’s the only answer. S&P 500 funds can charge 80 basis points when you can get the same thing from Vanguard for only five basis points. Nearly 50% of 401k plans have brokerage windows that allow you to invest in any mutual fund, exchange-traded stock or fund which is available at any brokerage. Doing so may also help with lowering costs as you have access to an entire universe of low-cost fund options and exchange traded funds.
It’s time to start taking financial matters into your hands. Start talking to your spouse about it if you are married, and sit down with your boss. Talk to your boss about improving the plan for the company as a whole.
If you are currently working in a small business, the company owner will likely be the plan’s biggest participant and shouldering a majority of the charges. Keep that in mind and remember to tread gently when bringing up the topic. Zurel, of FeeX, says you should never accuse your employer of anything, and instead, believe that they are doing the best that they can. After all, they too have the same interest as you and would like to have lower fees themselves.
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