… and money on my mind.
I’m lucky, for a combination of reasons, we don’t have to worry too much about money. Good job, generous family, and any number of other things mean that we don’t have to stress about the essentials. Sure, the value of our house has probably dropped (ack, we bought at the tip top of the peak in summer 2005!!), but we have no immediate plans to move or sell, and we have a good rate on a fixed 30-year mortgage, so it’s all good. We’re just not big spenders, either, so thankfully we haven’t had to work too hard at managing our money in order to make ends meet. And we did plan ahead for me being a SAHM. From the time that we got married, we changed the direct deposit so that my (much smaller) salary would go directly into our savings account. It allowed us to “practice” living on one salary, but the money was right there in case we needed it. A good tip for newlyweds if you’re considering one person not working after kids are born…
No, the aspect of money management that is crowding my brain today is more about consolidation and long-term planning. I know, so exciting, right? But it’s one of those not-so-glamorous things that you really need to do, and no one talks about because they’re boring. Well, money needs to be talked about, especially if you’re married, getting married, or having kids. Spouses need to have a plan, know where they stand, know how much money is where. Talking to a financial planner to cover the finer points is on my list, but first I want to make sure I know where all of the accounts are and what they’re up to. So, here’s what we’re (and I do mean the royal we) doing:
Consolidating old retirement accounts. You know how it goes, you switch jobs, the new place does their 401(k) at a different company, etc. They’re all over the place. As I’m not working at the moment, I’m taking my old pre-tax retirement stuff and rolling it into a Traditional IRA. At least, as soon as M gets around to having his signature notarized on the form. Yep, your spouse needs to be in on that, too. M could stand to do some consolidation, too, but at least all of his happen to be different accounts with the same investment company.
Consolidating other investments. My mom and M’s grandparents had given us gifts of stocks over the last however many years. Again, all over the place. Half of mine still have my maiden name, M’s have his name misspelled in a few different variations. And they’re all these little, individual pieces that are hard to keep track of, especially at tax time. We have a little custodial account that will hold all of those, so we only will have to look in one place for them. That is, as soon as I manage to get my name changed on them, anyways. Ugh. More notarizing.
College accounts for the kids. Compounding interest, people, compounding interest. The sooner you start, the better you’ll be. $50 now could be way better than $100 later. We opened two different types of accounts for our kids. A 529 plan, because it has tax advantages, and the money can be used for (and only for) educational expenses. It doesn’t have to be a 4-year college, but it does have to be educational expenses. We also opened up a UTMA account, which does not have the same tax advantages as a 529, but use of the money is more flexible. We have them set up, but they do need to be better invested. My dad’s rule of thumb growing up was to not do individual stocks, but just buy a market index fund. For the first 13 years or so, he put roughly 80% of the money in stock index funds, and 20% in more conservative bonds. And just let it hang out, no need to fuss when you’re planning long-term. When I hit high school, he swapped the balances, so 20% was in the riskier stocks, and 80% in the conservative bonds, since it was going to start being used in the shorter-term. If you don’t know much about investing, that’s a good, easy balance to remember. 80% riskier if you’re doing long-term, 80% more conservative as you approach the time when you want to use it.
Moving our checking and savings. We have regular old checking and savings accounts at one of the big banks that has bought plenty of the other banks. That’s fine, but it’s not doing anything for us. We aren’t getting charged, but we aren’t making money, either. So we’re moving to a Schwab checking account. I’m sure other investment companies have similar deals. This one is linked to an investment account, so we can do more with our money than have it sit in a savings account and earn pennies in interest, but it’s still readily accessible if we need to get at it. And the checking account earns interest on its own, and though they don’t have any of their own ATMs, they refund all ATM fees. Not bad! Might as well have the money doing something for us, other than just sit there. And I don’t believe there’s a minimum balance requirement, so it’s not like you have to be rolling in the dough to do something like this.
Anyways, that’s the exciting things I’m doing on our summer afternoons: getting things notarized! Wohoo! Next up, wills. I know, Marci, I know. I still haven’t done it. I will, though, I promise. Shame on me for having nearly 1-year-old kids and no will! Ack!