Financial Advice - Page 2 - Talk About Marriage
Financial Problems in Marriage When financial times are tough, it adds to the stress we deal with on a daily basis. This section is for talking about how financial problems affect our relationships and ways to cope.

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post #16 of 34 (permalink) Old 09-03-2016, 10:59 PM
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Re: Financial Advice

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My Dh agrees with you about paying off the smallest loan first. We both have insurance coverage. The baby will have insurance for sure. He/she will be our very first child. I heard it costs like 5k to have a baby in the hospital with insurance. I don't know so we saved about 10k for the baby. We can pay off the 8K car loan right away, but it is too risky because it will decrease our emergency fund. I try not to touch it unless it is absolutely neccessary. The baby fund gives us hope and motivation to work hard. Debts are obligation. It is not fun to work to pay for debts, but it is a must.
Don't use the baby money to pay off the auto loan. Your baby is too important of a life event to put on hold now.

I would put all the extra that you are putting on the mortgage to pay off the car. Like said earlier, that way you will reduce the amount of monthly outlay more quickly. That gives you more current cash to save or pay off the house.


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post #17 of 34 (permalink) Old 09-04-2016, 04:38 AM
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Re: Financial Advice

I think someone else mentioned a midwife. We had home births with a midwife for 4 of our 5 kids. It was around 2k instead of the 5k or so that you mentioned is the usual cost in the hospital.

We paid out of pocket the first two times, and insurance picked up the last two. The 3rd child was born in the hospital (too big a child for the midwife to feel comfortable doing him at home), and insurance of course picked that up.

Some people do a home birth for the cost. We did it to avoid standard hospital procedures and possibly even requirements like episiotomy. And it was wonderful having the midwife come here instead of our having to pack up and go to the hospital and follow all their rules.

I was able to labor and deliver in the comfort and familiarity of our home. Our kids were able to be nearby and not have to go elsewhere. No exposure to possible hospital infections. Our own food to eat. I highly recommend it.
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post #18 of 34 (permalink) Old 09-04-2016, 08:20 AM
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Re: Financial Advice

I'd do the car loan first, at the rate you are going it will not take long. plus, the mortgage is at least tax deductible.

And btw, do not let anyone talk you in to refinancing. With that low a balance and making triple + payments evry month, not worth a refi...
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post #19 of 34 (permalink) Old 09-04-2016, 11:08 AM
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Re: Financial Advice

Also, both of you need at least $500K in 20-year or 30-year term life insurance, which should be pretty cheap if you are in good health. Disability insurance is also important if you can get it at reasonable rates, which will depend on your occupations and health status.

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post #20 of 34 (permalink) Old 09-04-2016, 11:37 AM Thread Starter
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Re: Financial Advice

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Don't use the baby money to pay off the auto loan. Your baby is too important of a life event to put on hold now.

I would put all the extra that you are putting on the mortgage to pay off the car. Like said earlier, that way you will reduce the amount of monthly outlay more quickly. That gives you more current cash to save or pay off the house.
I will not touch the baby money. I know at the end of my life, money will not mean anything to me, but my children will. I cannot wait anymore because I am closer to being 30's and if something went wrong, I would not have enough time for treatments.

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I think someone else mentioned a midwife. We had home births with a midwife for 4 of our 5 kids. It was around 2k instead of the 5k or so that you mentioned is the usual cost in the hospital.

We paid out of pocket the first two times, and insurance picked up the last two. The 3rd child was born in the hospital (too big a child for the midwife to feel comfortable doing him at home), and insurance of course picked that up.

Some people do a home birth for the cost. We did it to avoid standard hospital procedures and possibly even requirements like episiotomy. And it was wonderful having the midwife come here instead of our having to pack up and go to the hospital and follow all their rules.

I was able to labor and deliver in the comfort and familiarity of our home. Our kids were able to be nearby and not have to go elsewhere. No exposure to possible hospital infections. Our own food to eat. I highly recommend it.
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Home birth sounds nice. I would consider it if I have a normal and healthy pregnancy. If there is a slight chance of complications, I would definitely choose the hospital.
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post #21 of 34 (permalink) Old 09-04-2016, 11:44 AM
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Re: Financial Advice

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My DH and I have two debts:

1. 49K mortgage debt: I have to pay about $330/month with 4.875% interest rate.

2. 8K car loan. The payment is $272/month with a very low interest rate.

My Dh likes to give me some extra money to go to shopping or to have fun when his business does well. He also likes to buy bigger TV or other unnecessary items for pleasure but I told him I would rather use the money to pay off our debts. I will enjoy vacations more if we are free from debts.

I make $1330 monthly mortgage payment. The extra 1k is to pay toward the principle every month. I make extra payments whenever I can and I do it quickly before my temptation for spending takes over me . We can afford to pay another extra 1k toward our debts this month. My Dh wants to pay off the car loan first, but I can tolerate 8k better than 49k. I think we should pay the mortgage because it has higher interest rate. We have not decided yet.

We have an emergency fund. My Dh and I plan to have a baby next year so I need to learn to be smart with money. Please give me some advice:

Should I focus on paying off the mortgage first or the car loan first?

How much do a regular couple need for rainy days in America? (I need a goal to save) The living cost in our state is not high. I am glad we do not live in California or New York.

How much fund is adequate for having a new baby added to the family?

My Dh told me he is not good with finances so he wants me to manage it, but I only know how to handle basic finances such as trying not to live beyond our means or to pay things on time. When people talk about IRA, 401k, or stocks, I feel so lost . I saw people who are in their retirement years struggling with money and need assistance for food or medications. I feel deeply sorry for them, but I feel scared for my own future. Where should I start?

Thank you in advance for any input.
A general target for savings is 6 months of household income. That's in liquid savings that you can get your hands on, not savings tied up in retirement accounts. As for retirement accounts, if you can afford it, pay in the max allowed for tax deferments and if your companies match your contributions definitely the max they'll match. Do that even before you pay extra on debt. Your debt isn't very much. I have a $600K mortgage that I only own about $150K of, 3 cars all over $40K that I don't own, and 1 motorcycle over $30K that I don't own.

Debt/income ratio is a relative and different thing for everyone but if you want to pay down debt there are two schools of thought.

First, work on the highest interest debt first. Dump all extra money into that one thing, don't spread it around to multiple debts. Another school of thought is go after low hanging fruit first. Pay off the lowest balance debt, when it's gone then you can pay the same amount plus the payment of that paid off debt on the next lowest hanging fruit. That has a snowball effect as you go forward.
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post #22 of 34 (permalink) Old 09-04-2016, 12:12 PM
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Re: Financial Advice

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Also, both of you need at least $500K in 20-year or 30-year term life insurance, which should be pretty cheap if you are in good health. Disability insurance is also important if you can get it at reasonable rates, which will depend on your occupations and health status.
Insurance is an important topic.
Do not rely on the life and accident insurance you get from work. Just take whatever life & accident insurance that your employer gives you free. Then go out to the open market and buy the rest of your insurance out there.

The reason I say this is that when you buy good policy on the open market, at your age you will get it at a low price and the price will probably stay the same for the rest of your life.

I retired from my job recently. I had a $350,000 policy through my work. When I tried to convert that policy, through the same insurance company that has held that policy for 18 years, they now want about $1,200 a month premium from me. Clearly I cancelled the policy.

I wish someone had told me about this a long time ago.

One of my brothers bought a $350,000 policy about 20 years ago on the open market. His premium is $50 a month. It will never go up. As long as he pays that small premium he will have the insurance. He has some serious health issues right now so he will not be able to get any new insurance. never again. He is looking to get on disability permanently now. He will lose the life and accident insurance he has at work because the premium will skyrocket once he quits his job.

Do not rely only on the life/accident insurance you get through work.

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post #23 of 34 (permalink) Old 09-04-2016, 12:35 PM
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Re: Financial Advice

candle100,

About the cost of a pregnancy and child birth.

Have you talked to your insurance company to discuss what they consider the normal cost, what they cover and what your co-pay will be?


Most hospitals have child birth packages. They can tell you the cost of a birth that has no complications. When I did this, I got an apparently with the hospital OB/GYN staff. They gave me a tour of the hospital birthing facilities. They showed me the type of room that I would be in... itís a private room that looks like a home bedroom with a few medical amenities in it. Itís set up for the comfort of the mother and family as much as for the medical issues of child birth. They also offered the option of either having a doctor or a midwife. Most hospitals today have midwives on staff.


They gave me a cost for the package. So I knew exactly what it would cost if there were no complications. If you go into something like this, you will know the cost and you can check with your insurance to find out what they cover and what your out of pocket cost will be. I would think that your out-of-pocket would be a lot less than $5,000.


Also, if you and your husband both work, I wonder if you can be on your own policy at work and your husbandís policy at his work as well. If you do that, the overall cost of it will be lower since you would have only the premiums. With 2 insurances, you would have very little, it any out-of-pocket costs. Plus, if something catastrophic happened, it would be covered.


What I liked about the hospital option is that the room did not feel like hospital room, I could have a midwife if I wanted one instead of a doctor. And if anything went wrong, the operating room was right down the hall. If you have a baby at home and something goes wrong, any intervention has to wait until an ambulance arrives, they get you to the hospital, get you checked in and into whatever hospital room/operating room is needed. A lot of bad can happen in that time.


When it came time the child birth, I needed the emergency medical care and the operating room. I would have died had I not been in the hospital. (Sorry, not trying to scare you. Just trying to give you a bit of reality about child birth. When all goes well, itís wonderful. When there is a problem it can go bad very quickly.)

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post #24 of 34 (permalink) Old 09-04-2016, 01:37 PM
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Re: Financial Advice

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One of my brothers bought a $350,000 policy about 20 years ago on the open market. His premium is $50 a month. It will never go up.
I very much doubt this, because there is no such thing as a whole life policy with that low a premium. Thus, this must be a term policy that will end at some point in the future, or will have to be converted to a whole life policy at a big increase in premium.

I'm not saying there is anything wrong with term insurance, because it is the best type for most people. But your brother needs to look at that policy to find out when the guaranteed premium term ends, so that he isn't shocked when that happens.

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post #25 of 34 (permalink) Old 09-04-2016, 06:48 PM
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Quote:
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Quote:
Originally Posted by EleGirl View Post
One of my brothers bought a $350,000 policy about 20 years ago on the open market. His premium is $50 a month. It will never go up.
I very much doubt this, because there is no such thing as a whole life policy with that low a premium. Thus, this must be a term policy that will end at some point in the future, or will have to be converted to a whole life policy at a big increase in premium.

I'm not saying there is anything wrong with term insurance, because it is the best type for most people. But your brother needs to look at that policy to find out when the guaranteed premium term ends, so that he isn't shocked when that happens.
I have a whole life policy purchased when I was pretty darn young and my premium is $107 a year. Yes, year.

And yes, it is whole life not term.

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post #26 of 34 (permalink) Old 09-05-2016, 10:24 AM
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Re: Financial Advice

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I have a whole life policy purchased when I was pretty darn young and my premium is $107 a year. Yes, year.

And yes, it is whole life not term.
What is the face amount?

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post #27 of 34 (permalink) Old 09-05-2016, 10:56 AM
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Re: Financial Advice

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Who gets a car loan at an interest rate lower than a house mortgage? Is it one of those loans where you paid the car double of what it was worth?

It does not make sense.
Manufacturers often incentivize dealers to move cars that have sold slowly, or to get them out of the way for next year's model.

Depending on the car and the type of buyer the manufacturer wants to woo, I have seen them offer lease deals that are cheaper in the long run than buying the car at dealer invoice. I have seen zero percent loans, even if the car is purchased at dealer invoice.

I just can't get myself to borrow money for anything, so I've never done the zero percent or even a lease. I've only bought one car new (for my wife) and we got that at:

Dealer invoice
Minus $500 (CostCo negotiated price)
Minus $4500 (60 day promotion on 2015 Toyota Prius, only if you paid cash - Toyota wanted to run out of them to create a vacuum in the market so the 2016, when it came out, would sell like crazy).

When I was single, it was common for me to negotiate a new car deal, mostly for women I knew who didn't want to get beat up on price by dealers. Typically, we'd get the car for dealer invoice, and sometimes that with zero percent interest on a loan.

Dealer invoice is not the dealer's final price for the car. The faster a dealer moves a car, the bigger the incentive check the dealer receives from the manufacturer..in general. But they always get something when they sell the car.

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post #28 of 34 (permalink) Old 09-05-2016, 11:00 AM Thread Starter
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Re: Financial Advice

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candle100,

About the cost of a pregnancy and child birth.

Have you talked to your insurance company to discuss what they consider the normal cost, what they cover and what your co-pay will be?


Most hospitals have child birth packages. They can tell you the cost of a birth that has no complications. When I did this, I got an apparently with the hospital OB/GYN staff. They gave me a tour of the hospital birthing facilities. They showed me the type of room that I would be in... itís a private room that looks like a home bedroom with a few medical amenities in it. Itís set up for the comfort of the mother and family as much as for the medical issues of child birth. They also offered the option of either having a doctor or a midwife. Most hospitals today have midwives on staff.


They gave me a cost for the package. So I knew exactly what it would cost if there were no complications. If you go into something like this, you will know the cost and you can check with your insurance to find out what they cover and what your out of pocket cost will be. I would think that your out-of-pocket would be a lot less than $5,000.


Also, if you and your husband both work, I wonder if you can be on your own policy at work and your husbandís policy at his work as well. If you do that, the overall cost of it will be lower since you would have only the premiums. With 2 insurances, you would have very little, it any out-of-pocket costs. Plus, if something catastrophic happened, it would be covered.


What I liked about the hospital option is that the room did not feel like hospital room, I could have a midwife if I wanted one instead of a doctor. And if anything went wrong, the operating room was right down the hall. If you have a baby at home and something goes wrong, any intervention has to wait until an ambulance arrives, they get you to the hospital, get you checked in and into whatever hospital room/operating room is needed. A lot of bad can happen in that time.


When it came time the child birth, I needed the emergency medical care and the operating room. I would have died had I not been in the hospital. (Sorry, not trying to scare you. Just trying to give you a bit of reality about child birth. When all goes well, itís wonderful. When there is a problem it can go bad very quickly.)
I read my insurance booklet today and it gave me an example of the cost for having normal delivery. The patient pays $2800 and insurance covers the rest. C-section costs more so I will plan to pay 5k or more.

I spoke to my Dh about home birth. He does not like the idea because he wants to have the fastest medical care in case of emergency.

My Dh actually just got him a new insurance from his work because mine is too expensive. It saved us $200/month. We should have done it earlier.
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post #29 of 34 (permalink) Old 09-05-2016, 11:21 AM
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Re: Financial Advice

It's difficult to know what the right thing to do is with only part of a picture.

In the US, money can be a Big Fat Deal, but it doesn't have to be. If you decide to live a lifestyle now known as "voluntary simplicity", two minimum wage incomes are adequate, as long as you don't live in an expensive city (most larger cities on the coasts).

Your $49k mortgage debt is very small, especially for someone not yet 30. You either have a very inexpensive house or you've been paying down at an admirable rate. Either is fine - once the mortgage is gone, and as long as you save for cars instead of using loans, life can be inexpensive.

Having evaluated spending of several thousand families during my days of credit counseling, I have drawn opinions (mine - others will have different opinions) that it is not the big ticket items that wreck a family financial plan - it is thousands of small things. The mere choice of using disposable items versus long-lasting, such as paper towels instead of cloths, disposable dusters (e.g. Swiffers) instead of washable feather dusters - for a family that's persnickety about house cleaning, I've seen this bump an annual spend by $3,000! To remain comfortable at low income, you have to shun most trends, because most trends are created to stimulate the economy.

All these decisions are possible, and to make the marriage last, you and DH must be on the same page. Make sure you have discussed it. Is he OK to buy the cars 5 years old instead of new? Satisfied with a 32 inch TV until it actually fails, rather than needing to upgrade to a 50 incher? Prefers borrowing movies for free from the library instead of subscribing to Netflix or cable?

What you earn is a factor. Have the two of you agreed on whether one or both of you works? Are you interested in comparing your income to the average for your age? This is useful - if your income is below average, then you probably want to also average older cars, fewer doo-dads and such, than average.


Regarding some of your specific points and quesitons:
Which loan to pay off first? The answer that works to psychology is "the one that can be paid off fastest". Probably the car loan. Psychologically, the idea is that it feels good to get that monkey off your back, and you'll attack your debt reduction plan with renewed vigor. It also gives you an added $272/mo to throw at the mortgage. BTW, unless you're trying to live on a min. wage job, your debt load is really small for your age, so give yourself a big pat on the back.

Baby: My baby days were decades ago, so I don't know much about today's expenses. In the 1970s, the cost of cloth diapers and a diaper service were 1/3 of using disposables...I'm told the difference is moderate now. Back then, "everybody knew" that you always got hand-me-down clothing, buying new was reserved for the grandparents to spoil the kid. And...you're not yet 30? You have many, many years to work on the baby creation, even if problems beset you. One of my best pals and his wife chose to begin when she turned 41. They went through a lot, all but $5k of it paid by insurance, ended up doing in vitro, they were born when mom was 44, the triplets are now happy, healthy and 19 years old. Thanks to modern medicine, being almost 30 really doesn't mean you have to fret too much.

Most important overall is for you and DH to agree on all this...before and after baby.

Good luck.

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post #30 of 34 (permalink) Old 09-05-2016, 03:06 PM
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I need to weigh in on the kid thing. While many women can successfully have children into their 40s, not all can. For some, fertility and egg quality decrease rapidly after 30. Again, for some, the chances of the baby having various disabilities grows a lot with every year. Not everyone is lucky biologically. Just keep it in mind.
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