Posted on Thu, May. 08, 2008
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Making the most of your money
By GRACE JIDOUN
The Nest (www.thenest.com)
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As a new couple, it can be hard to make sense of money matters. And the transition to "our" money instead of "his" and "her" money can be a little bumpy, especially in this rocky economy. Here's some information to get ahead with a money strategy that won't leave you broke next year.
LIST YOUR SPENDING TO COME
Start tallying things you need to save for: Uncle John's wedding (October), Paris vacation (next spring), and then total up how much you'll need to have in the bank for each. From this figure, plan out a monthly savings goal so these treats don't bring you into debt.
If all of this combined takes you over your monthly salary, cut back on those incidentals and prioritize your fun stuff (can Paris wait a year?). Then think about where you can find the money. Go back to your cash flow and figure out where you can cut spending or ways to increase your income. Do you need a phone plan with overseas calling? Switch to a cheaper package. Can you bring lunch twice a week? Stop buying overpriced panini in the cafeteria (it's better for your health anyway). Is it possible to take on a second job or work overtime to bring in some extra dough? What about reviewing your investments and looking into more aggressive growth funds?
LIST YOUR GOALS
1. Buying a House
We know a good percentage of newlyweds who bought a home and put 0 to 5 percent down. We're not saying that's a good thing, but it's possible to own and build equity without going all in with a 20 percent down payment. Just remember that your mortgage payment shouldn't be more than 28 percent of your salary - and that you probably won't spend your golden years in your first house. If you can stand to live in a place that's not your "dream home" for a little while, you might build up enough money to upgrade after a few years.
- Consult a realtor about up-and-coming neighborhoods in the general area you want to be.
- Search the Web for a livable place in those areas. Keep in mind that you're just getting a feel for what the homes in those spots look like and cost.
- Play around with the mortgage calculator and learn how much you'd need to put down for specific houses. Add 2 to 5 percent of the home's cost for closing fees. This total number is your 2008 cash goal (for a similar house, of course). Break this up and see how much you'd have to save each month to reach it - even if it does take more than a year. (One way to save is to force both of you to live off of one salary, as long as it covers your necessities.)
For more stylish ideas and solutions, visit TheNest.com.
