When to Move to Joint Financial Accounts

The joint accounts for couples. It’s one of those age-old hot personal finance topics. When do you know if it’s the right time to do it? Is there ever a right time if you’re not married? 

I will tell you what worked well for my wife and I. However, I realize that I might somewhat be in the minority on this one (particularly amongst married couples). There’s really three options:

1. Shared everything. All funds go into one share account.
2. Everything stays separate in individual accounts.
3. Shared account for shared expenses, individual accounts for individual expenses.

How my Wife and I have Chosen to Integrate our Finances

First off, we both work and have zero children. We have decided to have a shared joint account in addition to separate accounts.  Here’s how it works.

• Joint Account: We have a shared joint savings/checking account. In this account, we direct deposit a little more than we need for all basic shared expenses: mortgage, utility, insurances, food, etc.
• Separate Accounts: At the same time, we also have separate bank accounts. All funds that don’t go into our joint expenses account are direct deposited into these separate accounts. From the separate accounts we pay for individual expenses. My wife pays for student loans. I pay for expenses to run this website, for instance. When I bought a car, I paid entirely for the car (I have since sold it and bus to work).

Pros to the Joint and Separate Account Option

• It forces you to be frugal. If you buy things together above and beyond your joint monthly budget, you have to transfer funds over from our individual accounts. It’s a constant reminder of what you’re spending.
• It forces you to be accountable for our own spending habits. There’s no animosity about what your joint bank account looks like.
• It forces you to budget for larger expenses like vacations, education, vehicles, etc.
• This is a great way to combine finances if you are living with your partner, but are not bound by marriage. If the relationship ends, you split the joint account that you’ve contributed equally to and go your separate ways.

Cons to the Joint and Separate Account Option

• It doesn’t account for periods in a relationship when one partner has significantly higher income than the other. For instance if one person stays home to raise children or becomes unable to work, there’s not much alternative than to completely combine finances.
• It’s not as easy. It does require a lot more communication. For us, this is a good thing. For other couples, it might not be.

At some point (probably when we are forced to due to life circumstance), I expect that we will fully combine our funds. But for now, if it ain’t broke, we won’t fix it.

Discussion:

• If married or in a committed relationship, what type of financial account setup do you have?
• What problems or benefits have you seen from that setup?

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Do you guys want to hear more about the business side of iwillteachyoutoberich?

I’ve been thinking about this a lot and I want to get your feedback.

For a while now, behind the scenes, I’ve been working on a bunch of projects to create several in-depth projects/products for you that I’ll be rolling out over the next few months. These are specific projects with more scripts that you can use to dominate, techniques for earning money (like the earn money bootcamp I hinted about), recommendations for the best accounts, etc. Some are free, some will be paid.

Believe it. Amazingly accurate cartoon (and brilliant marketing strategy) by the guys at Creditcardfinder.com.au

So…

I was just planning to announce them when they were ready, but I just realized you might want to see stuff like:

• How I come up with product ideas
• How I decide when to charge (e.g., with The Scrooge Strategy and my book) vs. offer stuff for free (blog, Twitter, YouTube, newsletter, etc)
• How to set pricing
• How I do market analysis and craft a marketing plan — including online and offline
• When to hire other people vs. doing it yourself

Stuff like that.

This is more related to entrepreneurship than personal finance, but I think it’s relevant to iwillteachyoutoberich readers: It demonstrates how to take a simple idea (personal finance for young people) and build a business (and income) around it.

Leave a comment to let me know if you’re interested in seeing what I’m doing behind the scenes. If you guys are interested, I’ll do some occasional posts on the business side of iwillteachyoutoberich.

If not, no hard feelings. Just let me know in the comments!

Are you Taking Advantage of the First-Time Home Buyer Tax Credit?

The first-time home buyer tax credit is something that I wish would have been around when I purchased my first home. Not only are home prices lower now than they’ve been in a long time, but you get $8,000 to boot. Recently, there has been talk that it might be extended through at least the early part of 2010 (as of right now, you must close on the house before December 1, 2009).

The first-time homebuyer credit specifically targeted the demographic of readers of this blog. So, it begs the questions:

• Did you buy your first home this year? If yes, were you motivated by the credit?
• If you didn’t buy your first home this year, would you do it if the credit were extended?
• If you don’t plan on buying a home to get the credit, what are you waiting for?

Take the Poll!

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

If you found this article helpful, subscribe to my free RSS feed, or sign up for free email updates! You may also find the following article of interest:

You May be Ready to Buy your First Home if…

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“Ugh, why don’t fat people just eat less?”

If you’ve heard an ignorant comment like that, you’ve probably been to any of a thousand online forums.

People love to demonize others for overspending and overeating, especially behind the anonymity of online commenting. Nothing drives me crazier than people who ignore decades of research to judge others for their supposed lack of willpower.

This is why you’ll see the personal-responsibility zealots who repeatedly chant, “Ugh, let’s talk about personal responsibility,” as if that simplistic argument explains why people who genuinely want to spend and eat less simply cannot.

This superb New York Times article offers more evidence of ancillary factors in behavioral change:

“I have grave concerns about how many of these television shows stigmatize overweight people by making them a spectacle,” said Kelly D. Brownell, director of the Rudd Center for Food Policy and Obesity at Yale. “They suggest that if you only try hard enough you can be thin. A far better message is that it’s hard to lose weight and that it’s not just willpower and personal responsibility, but that both biology and the environment are players.”

I’ve written about the similarities between food and personal finance before.

Former FDA commissioner David Kessler has written a terrific book describing how food companies systematically engineer foods to overeaten (including designing foods that can be swallowed quicker so we can consumer more and more in one sitting). These are tested, refined, and optimized processes, not mere accidents.

Most importantly, behavioral change is not simply about trying harder. Yes, effort is important, but whether it’s passive barriers or the variety of other reasons that illustrate how personal finance is not about more willpower, let’s be real: Behavioral change is incredibly complex and difficult.

Anyone who believes people overeat and overspend simply because of a lack of willpower is simplistically ignoring decades of research so they can ideologically mislead themselves.

Retirement, why people don’t .

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Ways to Minimize the Material Impact of E-Clutter

Material clutter is not the only ‘object’ that we become indebted to. These days, it’s just as easy to feel overwhelmed and stressed out by a different type of clutter. I’m talking about electronic clutter (or E-clutter). You can’t touch it and you won’t need a Two Men & a Truck to move it around, but it’s there. And it’s controlling your life – if you let it.

Kind of ironic, isn’t it? Living in a digital world takes no substantive material ’space’, yet it can have such a profound overbearing impact on our ‘mental space’. For some of us, it might make the battle with material clutter seem easy. I’m going to highlight a few of the biggest types of e-clutter and how to fight them. 

Email Clutter

Using your inbox as a to-do list? We’ve all been guilty of it. Keeping emails around as mental reminders. Well, those reminders are like having post-it notes all over your house. They are there until you get rid of them. Here’s a few tips on how to limit email clutter – which may be the worst kind of e-clutter of all:

• Use GMail. GMail is where it’s at. I made the switch from Yahoo about 3 years ago, and I’d never look back. I’m not going to list all the benefits here, you’ll just have to trust me on this one. GMail makes email organization soooo much easier.
• Archive Everything: Seriously. Just do it. If it was important enough to require a response the first time around, it will come up again. This is particularly effective after coming back from a vacation. Scary? Yes. Effective? You bet.
• Auto-Archive: Have permissive spam that you get from retailers you like or non-profits you work with? Auto-archive it so that it skips your inbox. Check it when you get free time.

MP3’s 

I have a simple rule here. If I always skip a song when it comes up in the play list, I delete it. Some songs you just grow away from with time. It’s OK to acknowledge it, remove the nostalgia, and move on with your life.

RSS

I need some help on this one. RSS is incredibly addicting. I subscribe to over 30 blogs/websites and try to at least skim through every post that comes through. It’s time consuming. Please offer your tips on this one! My best strategy thus far has been to delete the feeds that I always skim through and never stop to fully read. I’ve also organized my feeds into topic categories: work-related, fun, personal finance, self-help, etc. Still, I’m struggling on this one.

Documents

I’ve found that the best way to get rid of old documents is to sort by ‘date modified’. Anything you haven’t modified in two years most likely needs to be updated or you can just delete it. Important docs that I always access have found a shortcut on my desktop. Also, uploading docs to Google Docs has become an effective way to have everything in the cloud, and it’s all searchable.

Facebook/Twitter

E-clutter at its finest. There are a few apps out there designed to make these two productivity killers more efficient, yet they can still dominate your time. A best practice here is to follow or friend only people that you are truly interested in getting updates from. I think that we feel compelled to follow someone who follows us or to accept every friend request. You don’t need to do it. If you find yourself always skipping over someone’s updates, unfriend them.

Discussion:

• Have you tried these strategies? Did they work? What problems did you run into?
• What’s been the most difficult type of e-clutter to get control of?
• What’s a worse problem for you – e-clutter, or material clutter?

If you found this article helpful, you can subscribe to the 20somethingfinance RSS feed, or sign up for free email updates. You may also find the following articles of interest:

3 Simplistic Strategies for Conquering Material Clutter

Why Getting Rid of Clutter is so Dang Hard

5 Easy Steps to Eliminate your Junk Mail

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