Our approach to Valentine’s day: built on love, but not on “stuff”

Valentine's Day heartAJ & KJ: One of the key themes that we’re always searching for in a gift is for experiences and not stuff. We have been very fortunate to have enough stuff, and over the years, we have learned that it’s the experiences we spend together that will last us a lifetime. And thus was born our Valentine’s day tradition that’s been going strong since our college years. Some people loathe this Hallmark holiday, and others cherish the opportunity to build their collection of *stuff,* but we’re more middle-ground when it comes to our tradition for this particular holiday.

Keeping it simple
We don’t buy one another gifts or have really complicated plans for what we want to do on Valentine’s day to share in the special moments, but we do have a long-standing tradition of a nice, relaxing couple’s massage and then an all-you-can-eat churascaria extravaganza (read, lots of high quality beef on skewers at our disposal! – Texas de Brazil and Boi Na Braza among our favorites). It certainly isn’t one of the cheapest Valentine’s dates we could have, but it’s what we do each year to spend the day together and treat ourselves to a great experience that really matters. The exact day itself doesn’t really matter to us – as we often don’t celebrate on the actual day since our go-to restaurants can be quite crowded, but we always celebrate Valentine’s day and relax from our busy lives either the weekend before or the weekend after. We’re going for simple, and we feel that we’ve kind of found a sweet spot.

Building a tradition
Traditions are great and they help you build a nice foundation. You’re not trying to continuously compete against your prior gift and constantly do more, and more, and more (as chances are, you’ll never get to the point where you’ve done the *most* you can), so you learn to really sit back and appreciate the hours, the minutes, and the seconds – those special moments to reflect on your years together and to be excited for the years to come. In this fast-paced world, we have little down-time to truly relax and catch-up, and we’ve found that our nice little tradition has not only lasted years, but it’s something we look forward to.

Find value where you can
Just because it’s fancy doesn’t mean you can’t find value, so find value where you can (sorry for all the double negatives…)! Even though it sounds quite luxurious to have a couple’s massage and an expensive restaurant, we’ve always managed to keep it reasonable and find ways to stretch our dollars. For most years, we went to Massage Envy for a great, discounted rate, since as a non-member, you can enjoy a discounted massage once every year (at least that’s how it was when we last went), and we timed it with a special pricing at one of our churascaria go-to restaurants (as it always seems at least one of them is offering discounted dinner AND dessert!).

Set expectations
My favorite thing about how we do Valentine’s day is that the expectations are known. Give a thoughtful card, show appreciation, and settle in for a nice day together.

This year’s plan
This year, we’re changing our tune just a little bit since we purchased an all-in-one massage and lunch package from a silent auction at an annual gala of an organization we support each year, but the gist is the same. Massage and lots of food! Sure, there are probably feng shui reasons for not doing these back-to-back, but hey, it works for us and it serves a dual purpose – donating to an organization we’re passionate about and indulging in our favorite things. We also agreed to make cards for each other this year. Arts and crafts 101! I think it speaks to our overall priorities – showing each other appreciation and enjoying being together.

    What traditions do you have for Valentine’s Day?
    Do you hate Valentine’s Day or love Valentine’s Day?
    What holiday traditions have you built for you and your loved one for other occasions?

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The joy of compromise

AJ: We recently received a question from a reader that sparked an interesting conversation for us. We both willingly make sacrifices for the greater good, but what happens when sacrifices begin to outweigh each other or spending seems imbalanced? Chaos, obviously :)

Talk it out
AJ: As always, you HAVE to be in communication with your partner with regards to what you’re spending and sometimes even more importantly what you’re not spending! Kirby often has to remind me that I am not solely responsible for building our future nest egg and that killing myself today won’t ultimately make a huge difference in the long run. I’m like a budgeting martyr, I suppose, but sometimes I start to feel like I’m suffocating by limiting what I want so drastically. Oftentimes I don’t even realize the pressure I’m putting on myself until Kirby calls me on it.

KJ: Disagreements about money can often build up very significantly over time, and money is one of the leading causes of divorce, so why let something so toxic build up without speaking about it? Being open about your spending with your spouse is critical to developing a good, long-term relationship. Some couples have a dollar threshold that they consult their significant other with ($50, $100, etc.). We don’t exactly clear every purchase with one another, but we don’t have to. We set budgets for the month and our anticipated expenses, so if groceries, shoes, household items, gifts, etc. fit within the overall budget, then no arguments. For anything significant, we plan for the purchase, so there are no surprises. And, with our focus on saving, the unexpected items that come up don’t immediately push us over the edge and create tension.

I don't do compromise. I'm too cute.

Pick your battles
AJ: Kirby rarely splurges, but if he suddenly needs a $400 ladder, I’m not splurging on lavish meals and more expensive bottles of wine that month. If he decides he’s going out for guy’s night and spends $600, that might be a different issue!

The reader who wrote to us seeking guidance was struggling with this very issue. It can be hard to know when to hold and when to fold. Sometimes spending on something that’s generally good (a gym membership, a crop share, monthly charitable giving) still puts a strain on your overall financial situation, and you have to decide as a family what makes the most sense for you all collectively. If there isn’t an alternate option that would meet your needs at a lower cost threshold, can you sacrifice one thing here or there to make it work?

KJ: Knowing when to pick your battles is key to long-term success. Just because you feel the spending on an item for your spouse is “wasteful” doesn’t mean that they don’t have the same feelings about one of your favored expenses. Take a moment to step back and think about what it is that upsets or frustrates you about their spending. If the money wasn’t spent in that way, how would it be spent – saved for a joint goal, saved for gifting, allocated to another expense? That can help frame the discussion to help you approach your significant other.

Keep the balance
AJ: It’s not all about you. And it’s also not NOT all about you. Don’t be the one who refuses to spend or the one that always spends. Since we make everything work within our budget and refuse to put anything on credit month to month (that we can’t pay off), we have to make sacrifices. Some months we both have needs, and one of us has to bow out until the following month in order to maintain what we agree is right for our family.

Share the wealth
AJ: Just because you budget doesn’t mean you can’t be thoughtful. Find ways to alleviate pressure within the areas that you control. I often do this with our food and shopping budgets. Just because I ultimately maintain those categories for us doesn’t mean that it’s mine, it’s still ours and it’s crucial to not lose perspective of that. I control the outflow, but I’m not entirely responsible for the inflow, which can be a hard thing to keep in check.

KJ: If you’re in charge of a certain area of your finances (maybe you do most or all of the financial dealings in your house – though I would highly recommend splitting duties), then periodically let the other know what you’re doing and share with your partner – both your problems and your successes – but don’t always just focus on the negative aspect!

    Do you have any expenses that are only on you and not your spouse or significant other?
    Have you ever hid an expense from your spouse? Why or why not?
    Tell us about a time you disagreed about a purchase and what you did to resolve it.

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His, hers, and ours

20130818-223302.jpgAJ: We’ve mentioned this before but Kirby and I were very young when we started dating (18 and 19, actually), so we had the luxury of being completely broke together. We both had savings accounts that we began as children, both maintained part-time jobs at various points, and both had our own cars, but aside from that, we didn’t own diddly. We lived together for almost four years prior to marrying and maintained separate checking and savings accounts, splitting bills “evenly” based on our salaries. Kirby made more than I did right out of college but never let me feel like he was contributing more. The odds of a couple making the exact same amount of money and having exactly even expenses is beyond unreasonable. When I bought clothes or gifts for my family, they came out of my account, Kirby did the same and it worked beautifully. As our wedding date approached Kirby broached the subject of merging finances for all the standard reasons but ultimately the one that sold me was – it just makes sense.

But what if it doesn’t make sense? What if you’re not 18, have assets worth mentioning, and know that your partners’ views on money don’t at all align with your own?

I feel strongly that regardless of what you choose to do – merge or remain independent – that so long as you are honest about your spending with your partner and you communicate regularly about your independent and financial situations you will be just fine. A few recommendations on where to start looking for the right solution for you and your family:

One bucket

    AJ: Put all of your money into one big pot, agree to budgets by category and commit to staying within budget. Caveat: this requires that you all show each other complete respect when one person decides they want to spend money outside of the agreed upon budgets. I.e. just because one person thinks you NEED drapes does not mean the other person will agree that you NEED drapes in the same month that they NEED a lawnmower. For example. So be flexible. Buy one this month and one the next month without implying that one is more important or necessary than the other. Remember, you’re partners.
    KJ: For many couples, this is the best way to get on the same page about what they make and what they spend. The main drawback to this approach though is that you can often lose the ability to ‘surprise’ the other spouse with a nice gift. As such, you can lose some spontaneity or can encourage extreme creativity. Angela recently surprised me with a watch for Valentine’s Day using cash she had stored over several months to avoid me seeing any charges on the credit card. I was surprised and Angela loved that she pulled it off.

Completely separate

    AJ: Keep your money 100% separate. Yours, mine, no in between. You pay for dinner on Thursday, I pay for dinner on Friday. We each agree to have a salad, an entree and one drink at a similarly priced restaurant of our choosing. (Can you tell this option doesn’t really float my boat?) The problem I see with keeping everything completely separate is that you physically share space and stuff. You’re not roommates paying equal parts of the rent or a couple who is dating that can rely on whoever did the inviting to pay. This requires serious tracking and a dedication to holding each other accountable. If this works for you, please, please, please tell us how you’re doing it. I would love to know more.
    KJ: While some couples may be able to make this work, I have not seen too many instances where this is the preferred method. The main positive of this method is that it allows for independent goals (I want to save for that flat screen TV and Angela wants to save for the updated flooring) and secrecy in planning surprise gifts or gatherings, however, it often leads to secrecy and trust issues as one spouse is bound to spend more (and it may not be the one who makes the most).

Somewhere in between

    AJ: Find a middle ground like we did right out of college. If you make $30,000 a year and your partner makes $20,000 a year, you pay 60% of the bills out of your account ($30,000 divided by your combined income of $50,000), and your partner pays 40% of the bills. OR agree that one person pays for the bills and daycare while the other pays the mortgage and grocery bills. I’m personally fond of this solution because we had good success with this system. I think it allows for a certain level of freedom while still trusting the other to handle their equal share of the responsibilities.
    KJ: Having some independence as a couple is important, and this can be a way to find that middle ground. You identify your common goals, income, and expenses, and you allocate those scarce resources in an equitable manner..fair isn’t always equal though! Some couples keep a joint account and then each have their own separate account. As long as the foundation of having separate accounts isn’t to hide expenses or income, then this may be the happy medium you were looking for.

AJ: Regardless of which method you choose, you have to be prepared to compromise. When your washing machine dies unexpectedly, you have to agree to find the money to fix or replace it from somewhere and it can’t always be one person who is compromising while the other blissfully spends away your slush fund. Be the keeper of your own destiny: track what you spend, track what you save, and be prepared enough to know that you can’t prepare for everything.

When two people have very different money styles, sometimes this is the only way to have harmony and let each person retain some independence and autonomy.

KJ: The topic of finances can be very difficult to discuss with others. Most people would be more open to talk about their sex lives, the struggles with their ‘lost teenager,’ or the neighborhood gossip about so-and-so who did such-and-such. With the number one cause of divorce being money problems, it’s all the more important that when it comes down to it, working through your finances is something that should be done as a couple, regardless of how separate or together your assets are.

Sure, there are valid legal and planning reasons you may wish to keep some assets separate from others – maybe you inherited some money from a parent or grandparent that you would prefer to pass along to your children first – but that doesn’t mean you have to communicate any less about your assets. It’s when you work together that you find a cohesive approach that can work for the two of you, and my experience has been that those interested in saving for a goal and bettering their financial lives (so they can improve their personal lives too to live the life they want to live) do so by merging their finances. When you’ve come to the relationship with more than some Ikea furniture, please consider discussing with a licensed advisor the tax, legal, and planning implications of merging your finances.

    What do you and your significant other do with your finances?
    Are they separate, combined, or a mix of options?
    Tell us why you chose that method.

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9 ways to organize your financial life

KJ: Organizing your financial life can sometimes feel daunting, but here are nine ways to help you get organized and STAY organized.

Utilize Electronic Records
Keep copies of account statements. When you get those “pesky” e-mails saying you have a statement available, go and download it. If you want to save the environment and storage space, save it to a secure USB drive. If your USB or storage device isn’t password protected, then consider getting software that can encrypt your documents. “My Passport” 1TB External Hard Drive is my personal favorite, but more budget friendly products with much smaller storage like SanDisk 32 GB USB Flash Drive will also do the trick. There are few things worse than leaving yourself exposed to virtual identity theft that you may not even be aware is happening! Given the litany of statements that come my way, I make it a priority to set aside time after the 5th of the month to download the prior month’s files. Sure banks often keep statements online for YEARS, but what happens if you change banks and your login expires? You no longer have access to your statements: that’s what. Electronic storage can allow you to keep data far longer without having to waste a bunch of space. Who likes maneuvering around those cardboard boxes and carrying them up the stairs to the attic anyways?

Invest in Accordion Folders
These are great for storing receipts as well as storing coupons. Sort by expiration date, store or whatever method of controlled chaos you prefer. Check out Smead Expanding Folders, they’ve got a lot of different options. So does your local Dollar Store or WalMart, so if you’re really looking for a bargain, stop by on your next errand trip.

Communicate, Communicate, Communicate
Kind of ironic that I’m the one saying this, as I’m by far the lesser of the two communicators, but hey, when it comes to finances, the last thing you and your spouse (or significant other) should do is close the communication doors. You can’t stay organized with things you have going on if one person doesn’t keep you in the loop when purchases or updates are made.

AJ: Kirby and I are each responsible for separate aspects of our finances. Kirby pays the bills, decides which accounts receive savings monthly, and strategically keeps us on track for the long haul. I track our variable expenses: gas, food and groceries, miscellaneous expenses (gifts, pet food, hair cuts), so if we aren’t in lock step on communication, we could potentially go very far awry. See our post on creating a budget together. Kirby’s all spread sheets and I’m all old school: pen and a Moleskine Ruled Journal. Whatever method works for you, just ensure that you are regularly communicating and are working from the same numbers.

Take Inventory of Your Accounts and Assets
KJ:This would include accounts like: checking, savings, CDs, money market, brokerage/investment, and retirement. Periodically update the records to include information about login credentials, account numbers, values, etc. Due to the sensitivity of the information, this should be stored in a highly secure place that only your spouse (or a very close loved one) would have access to.

Take Inventory of Your Loans
Similar to #1 above, make a list of any liabilities you have whether it’s a student loan, home loan, auto loan, credit card, or line of credit.

Get a Will and Update Your Estate Plan
When was the last time you looked at your estate plan? Months, years, DECADES? If it’s been a while since you have updated your estate plan, it might be time to revisit. In particular, have you had any new additions to your family, are any family members now of legal age (I suppose you don’t need to specify a legal guardian for your 24 year-old son still living at home…), or have any family members passed away? It can be a good time to sit down and talk with your significant other if your goals may have changed too. Cousin Bobby isn’t getting any of my money anymore…but Bill & Melinda Gates will!

Update Your Beneficiary Designations
IRAs, 401(k)s, many other types of retirement plans, and certain types of bank accounts can pass to a survivor without going through your will. Therefore, check to see that you have the appropriate designations for a primary and contingent/secondary beneficiaries.

Meet with Your Financial Advisor
If you work with a financial advisor, then gather that list of questions you’ve been meaning to call about but haven’t had the time. Call him/her up and discuss any recent changes.

Secure Your Data
Don’t forget the most important advice: KEEP IT IN A VERY SECURE PLACE! I cannot emphasize this point enough. The last thing you need to deal with just after you’ve organized your finances is for someone to take the information and turn it back into a financial mess!

    What methods of organizing your finances work best for you?
    Do you have anything to add to this list?
    Is there anything you would remove from the list?

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Three money tips for a successful marriage

KJ: Attached to this post is a particularly interesting, short video(1) about the importance of talking about money as a couple (which extends in my opinion to both before and during marriage).

My wife and I have always been very open about money with one another: we discuss our incomes and monthly expenses several times per week. On a quarterly basis (while difficult for most individuals who do not have this particular expertise), I prepare a balance sheet (a listing of assets – what you “own” – less any outstanding liabilities – what you “owe”) to come up with our household net worth, year-to-date income and expense summary, and a performance summary of several of our investment and savings accounts (i.e. IRAs). While almost unheard of for two early-20′s to start this behavior, it has made sure we are transparent with one another on what our financial status is. The purpose of these “quarter-end” sessions is to be educational in nature, and it helps us both know where we stand should something happen (disability or death) to one of us.

AJ: When people hear about our “quarterly presentation” I feel confident they think we’re nuts, but Kirby is right. Were something drastic or tragic to happen to one of us, the other would at least know when to begin to look for our resources, and that’s a huge hurdle for a lot of couples. What makes a quarterly presentation for me is that while Kirby chooses many of the specific components of our portfolio (specific investments, account allocations, long-term strategy), we’re regularly saving for my goals in prominent ways, too, and seeing that quarter by quarter makes me feel equal in the decision-making power.

KJ: Our three recommendations to having an open discussion on money are:

1) Regularly prioritize what is most important to you TWO. The purpose of this exercise is to come to terms with one another about what is most important and valuable as a couple. Sure, there will naturally be items from time to time where you may disagree, but it’s most important to come to a mutually agreed upon solution. Think: have X now and Y later or part of each now and the rest later (if possible).

AJ: My two biggest priorities are living as full and meaningful a life as possible and saving for the long-term. Full and meaningful means travel, wine, being with my family, expanding our family one fuzzy, life-filled fur baby at a time and giving more than we take. Saving for the long-term means spending more thoughtfully and saving even more thoughtfully. Acting like raises and bonuses don’t happen, so that I can breathe a little easier when I think about retiring isn’t quite as fun as taking four vacations a year, but I rest well at night and know that my planning will afford us a comfortable lifestyle forever.

KJ: 2) Know where you stand. Track your combined income and expenses (whether the accounts are combined or separate is a different discussion point) through a tool like Quicken, Mint.com, Yodlee, or other resource.

AJ: Some weeks I ask Kirby the same question about our budget three times before I finally remember how much we have to spend in a certain category, but we talk about it in a healthy, ongoing way, which makes it more approachable. Kirby and I love Mint.com. It was the first tool that worked for both of us in a way that I could really use. Even still, though, I track our food and miscellaneous budgets in a spiral notebook along with my monthly menus and weekly grocery lists. It works for me to see it in two ways. Kirby gets REALLY confused with all of my lists, but at the end of the month, we always wind up in the same place and that’s what really matters.

KJ: 3) Identify what method works on how to own your checking accounts. For some couples, it is optimum to maintain separate checking accounts, while for others (and us) it’s better to have it all commingled in a single ‘pot.’ Neither one is inherently right nor wrong; it’s how well you communicate with one another on upcoming expenses (significant or not) that is most important.

AJ: What works for us now, isn’t what “we” always wanted. I did well maintaining my own checking and savings accounts, and I liked the independence. We began by sharing an “equal” budget comparable to our income percentages and that worked really well while we were dating.

When we were planning our post-wedding lives, it became very apparent that Kirby wanted to merge finances, and I really didn’t see the benefit. I heard a number of marriage-ending horror stories about sharing finances, and I wasn’t sure I knew how to prevent that from happening to us. The reality is that we’re better together through and through and sharing our finances has made us better friends and partners. I’m still not sure how to buy a gift in complete secrecy or save a little at a time for a huge surprise, but for the most part, sharing finances is a great fit for us.

(1) http://money.msn.com/money-video/default.aspx?from=gallery_en-us&videoid=d611200a-ef9b-4000-be78-bd31ca886544

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