My Personal Finance Journey

Category Archives for Relationships

Is Debt A Deal Breaker for Marriage?

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The following post is by MPFJ staff writer Travis. Travis is a customer blogger for CareOne Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.

Imagine finding the person of your dreams.  You swoon at the very thought of them, and over time, fall madly in love with them.  The relationship progresses and builds up to a very special event.  There is romance, a question, and talk of forever.

Except there’s just one catch:

There will be no wedding until you are out of debt.

That’s the situation of a person that commented on a post of mine on another website earlier this week.  She had apparently accumulated some debt during college, and her fiancee didn’t think he should have to pay for her spending indiscretions.  She stated that my post had encouraged her to do something about her debt.
For the groom to be, her debt was a deal breaker for a life of wedded bliss.
I couldn’t help but wonder to myself, how I would I feel about marriage if my significant other came with the baggage of debt and I did not?

The Meaning of Marriage

Marriage is two people with separate lives joining together.  You accept your partner for their strengths and their weaknesses.  You will promise to love them for better or worse, in sickness and in health.  If a person decides to marry someone with debt, you are accepting them, and everything that comes with them.  It would be wise to know exactly what you’re getting into before you make that commitment.

Debt Is (can be) a Temporary Situation

A person can find themselves in debt for many reasons.  They could have student loan debt from an education that they are actively using to make a better life for themselves.  They could have medical debt from a situation that was no fault of their own.  Or, they could have racked up credit card debt over years of bad decisions.  However the debt was accumulated, it can be eliminated a variety of ways including cutting spending, increasing income, or debt relief programs.   The fact is, debt is simply a number, and we need to dig deeper to make an educated decision.

Overspending is a Behavior

Someone that doesn’t handle their finances well may overspend and find themselves in debt as a result.  They may not have admitted that they are headed towards financial disaster, and have no desire to change their habits.  I would be concerned if the person I was proposing to fell into this category.   Finances are the number one reason that couples argue, and this would be starting off a life together with the potential for an immediate and constant strain on the relationship.
On the other hand, the love of my life may have accumulated debt by any of the means mentioned above, but now has a clear plan to get rid of that debt.  They could be actively working towards achieving that goal.  This kind of situation would not be a deal breaker for me.

Conclusion:

For me, debt alone wouldn’t be a deal breaker for marriage.  I would have to look past the number and look at the what the other person’s attitude and actions are in regards to that debt, and their finances in general.  The most important thing to me would be a healthy attitude towards handling finances, and working to living within our means.  As long as we have the same viewpoint on how to handle our finances from that point on, the debt wouldn’t matter.
How about you all? Would debt be a deal breaker for marriage for you?

Share your experiences by commenting below!

Jacob’s Thoughts – I think I am in the same camp of belief as you on this one Travis. Someone merely having debt would not be a deal breaker for me, provided that they are doing their best to pay it off and have or are correcting any spending behavior problems that may have lead to it. Of course, if they still had the spending behavior problem in the first place, I likely would not have been attracted to them during the dating stages anyway…

    ***Image courtesy of photostock / FreeDigitalPhotos.net

    Make 2013 The Year You Step Outside Your Own World and Do for Others

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    The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans, where she shares her family’s journey to healthier living and paying down debt.
     
    If you look at most people’s New Year’s Resolutions, they are extremely self-centered.

    My guess is that the top two resolutions are to get in shape/lose weight and to gain a handle on finances, whether that means making more money or paying down debt.  These resolutions are about me, me, me.

    Unfortunately, most people fail within the first month or two of making resolutions, yet they continue making the same ones every year.  As Dr. Phil says, “If you keep doing what you are doing, you are going to keep getting the same results.”  Instead, why not make 2013 the year you reach outside yourself and give willingly to others?  You may be surprised by the difference it can make in your life.

    Giving Is Selfish, but It Benefits Both Parties

    I read another blogger say that volunteering and donating are selfish acts.  I had to do a double take and re-read the line, but after some consideration, I had to admit that he is right. Volunteering and donating are selfish acts because we enjoy the way we feel when we do something good for others.
    However, these so called selfish acts come with benefits on both sides.
    Every year, Jacob bikes for MS.  Sure, he enjoys biking and donating to charity, but the MS Foundation also benefits from the donations he is able to raise.  Essentially, both sides benefit. If you have a boat that you no longer use, you can donate it. The organization that accepts the boat will sell it at auction and give the money to a pre-approved charity. In return, you not only receive the satisfaction of knowing that your generosity helped those in need, but also a tax receipt in the amount for which the boat sold. This is a true win-win situation because your donation provides everyone involved with some benefits.

    Giving Cultivates Gratitude

    There is something about volunteering and donating that can change your own behavior.
    For years, my husband and I had talked about sponsoring a child through World Vision, but we were never sure if we had the money to do so.  This year, even though we have debt, we decided to sponsor a child who is 8 years old, just like our son, and born on the same day as our son.
    Two amazing things happened.  First, my son, who is never really good about doing his chores even though they are attached to monetary payments, suddenly started doing them regularly because he wanted to use some of his money to help sponsor the boy, Janvier.  Now, he regularly donates about $5 to $10 to help pay the monthly sponsorship fee.
    Second, my work, which I had been hoping to increase, suddenly increased and continues to do so.  It is almost like by opening our purse strings a bit and giving, the world gave us more.   (Of course, I am not saying there is a correlation or that this will happen to everyone, but many people speak of this phenomenon.  As they give, they get more in return.)  While initially we weren’t sure we could afford the monthly sponsorship fee, we now know that we can.
    Giving can change your life, largely because you step outside yourself.  Humans tend to be very self-centered, and by doing for others, you often realize how good you have it.  While you might bemoan the fact that you “only” have $300 to spend on Christmas gifts, if you take the time to donate a basket of food to a needy family, you will see how grateful they are.  Suddenly, the $300 you have seems like more than enough.
    It is easy to get caught in the trap of envying those who have more than you, especially if you watch television and see the lavish lifestyles others lead.  However, if you look at your own life, you will see that you probably have more than enough.

    Donate and Volunteer As You Can

    If you are looking to make a difference by donating or volunteering, you don’t have to make a commitment for years as we did with our sponsored child.  Instead, you can choose one time donations such as donating some of your extra dry goods to the local food pantry or serving in a soup kitchen one day.  Make it a goal to do one act of good at least every month.
    As New York City Mayor Michael Bloomberg said, “We’re put here on this earth to share and to help each other. . .and nothing I will ever do – or you or anybody else that’s generous – will give you as much pleasure as you get when you look in the mirror just before you turn off the light and say, ‘Hey, you know, I’m making a difference.'” (Christian Science Monitor).
    You may find that as you step outside yourself, your own financial issues begin to resolve themselves.
     
    How about you all? Do you volunteer or donate regularly?  What has been your experience?


    Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/usdagov/6550470383/sizes/l/in/photostream/

    Recycle Your Old CDs to Help a Dog in Need

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    The following is a guest post. Enjoy!

    Recycle Your Old CDs to Help a Dog in Need

    The next time you hear a magpie (an English bird, and one of only about 5 animals that have passed the self-awareness mirror test) chirping away outside your bedroom window, think music.

    Many sites have partnered with the RSPCA (Royal Society for the Prevention of Cruelty to Animals in the UK) to help support canine awareness through a recycling program for old CDs. A portion of the recycled proceeds of each CD turned in to companies will be used to support RSPCA programs. The spay and neuter programs, and care of pooches waiting for their forever homes are funded through donations to this worthy charity. Indeed, this is a great way to free up space and clear out drawers and closets in your home. It is very simple and is also a great community event to reuse, repurpose, and recycle unwanted or damaged CDs, while helping a loving companion dog.

    Get Involved!

    Organize a CD drive in your local community or with the visitors at a local dog park. Here are the simple steps to create community awareness and support the RSPCA:

    1. Contact your local RSPCA office and reach out to the volunteer or fundraising coordinator.
    2. Present your fundraising plan. They won’t turn you down, as they always need more money.
    3. Initiate your awareness campaign.
    4. Prepare for collection date(s).
    5. Send your collected CDs to the company.
    6. The RSPCA receives a check for all your efforts.

    The Plan

    Create a fun and innovative fundraising plan involving community leaders, local school students, veterinary offices, kennels, pet shops, and pet suppliers. Get everyone in on the action – the more, the merrier, right?! Decide if you want your campaign to include drop off locations that will accept CDs for a period of time or if you want to have a big one-day event. Call the local papers, television, and radio stations; they are generally pretty good about publicizing these types of non-profit community events. Using a word processor, create flyers for distribution at local businesses. Ask a printer within your community to donate their printing costs to the cause, in turn for free advertising.

    When the big day arrives, ask a local television station if they would send a news reporter and camera operator to cover a few minutes of the event. This is great public relations for a community event. Consider partnering with a local recycling or environmental group for added support.

    Contact several companies for mailer envelopes and assemble your small army of volunteers to count, scan and mail your collection. The company will do the rest. Once they receive your CDs and have tallied your donation value, they will forward a check directly to the RSPCA.

    Pitfalls

    Volunteers not showing up can be a big problem, so insure campaign success by checking in with them often. Remind your volunteers they are an integral part of the success of the campaign and that without them, it simply wouldn’t be the same.

    Plan for bad weather if you scheduled for a single collection day and have a backup plan in the event of rain or snow. Coordinate with a local retailer to use a corner of their store for the big event. They will surely appreciate the extra traffic an event like this can drive into their store. Best choices are dog friendly locations, such as parks or pet shops.

    Don’t get overwhelmed and assemble a great group of volunteers to assist with tasks such as emptying collection boxes, delivering mailer envelopes to the post, counting the collected CDs, and creating a record keeping system.

    How about you all? Have you ever participated in a CD recycling program such as this? Have you participated in any other events that have benefits SPCA’s/animals? If so, which ones?


    What other fundraising causes are you involved in throughout the year? Personally, my big one that I do each June is a 150 mile bike ride to raise money for Multiple Sclerosis. I’ve never personally heard of people recycling CDs in order to raise money for animals. However, it sounds like a good cause! It should be interesting to see how this program turns out!


    Share your experiences by commenting below!

      ***Photo courtesy of http://farm3.static.flickr.com/2705/4455844306_b54edc3fd0.jpg

      May 2011 Financial Goals Update – Short Term, Mid-term, and Long Term

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      Back in January of this year, I laid out my short term, mid-term, and long term goals for the 2011 year. I do this once every year as part of my goal to create what author David Bach calls a Purpose Focused Financial Plan. The goal of this system is to employ money in your life in a way that matches your life values and dreams.

      You can read more about my journey to create this system at the following links – Creating a Purposed Focused Financial Plan & My Personal Finance Journey’s Investment Strategy.

      As part of making this system work, I wanted to give an update on how I’m doing so far this year with the goals I established. Overall, I feel that I am doing a satisfactory job. I got semi-behind on these updates (had to give a bulk one for the months of January-April, but this past month, I am much more on top of things! 🙂 Let’s keep our fingers crossed to keep this up! 


      Short Term (< 1 year) Goals:

      • Contribute $5000 (or $420 per month) to my Roth IRA with Vanguard this year (maximum allowed) – Have contributed $3,550 so far this year. This puts me a little ahead of my target of $420 per month, but that’s all right. Only need to contribute $1,450 more to reach my target for the year. At the rate I’ve been going, this should be accomplished in the next 1.5 months. At that point, I will then begin pouring any extra money at the end of each month towards my condo home loan. Nice! 
      • Reach net worth target for this year (not displayed here) – Ongoing – getting closer and closer! Requires 20% increase in net worth. May not be possible to obtain, but will attempt.
      • Maintain target 6-9 months of expenses in cash reserve fund in Dollar Savings Direct account – Correct for this month, but ongoing.
      • Rebalance mutual fund portfolio to meet asset allocation target %’s (75% equity, 25% fixed income overall) – Correct for now, but ongoing.
      • Obtain 15% ownership / equity in condominium – Ongoing – currently have 10.7% ownership.
      • Put together a will and have it reviewed by a lawyer – Will completed. Not yet reviewed by lawyer.
      • Continue to save money for trip to Grand Canyon – Ongoing – need to figure out when to take this.
      • Upgrade condominium with investment in stacked washer/dryer combo – $1000 for unit, $1000 for labor/installation – Currently saving $87.50 per month for home maintenance and upgrades – Ongoing, but on track. By September of this year, I will have accumulated 1% of my home value in my home maintenance savings account. After that, I will be able to begin accumulating the $2000 that it will cost to get the washer/dryer in my condo. I’ll probably just keep the auto-transfer of $87.50 from checking to savings to accumulate this money. 
      • Invest $500 in Microloans for Latin America in 2011 ($41.67 per month) –Ongoing – Have invested a total of $208 this year so far to working poor fund in Peru. This comes with a pretty nice 3% interest rate.Note: I use Microplace.com to invest this money. It seems to work well and be dependable. I just logged in to my account, and it says that my money has been used to help 30 people down there! Pretty cool stuff if you ask me!
      • Donate $1,300 to Multiple Sclerosis Foundation in 2011 (5% of income) –Done. So far, I have raised approximately $5000 to support finding a cure for this disease (with the help of company matches). If you’re interested in making just a $10 donation to my ride, click here.
      • Save 3% of take home pay each month (after taxes) for Dream Account.On target – Have an automatic transfer each month from my Bank of America checking account to my ING Direct high yield savings account.
      • Save ~30% of blogging income (if any) in a high yield online savings account in preparation for 2010 taxes. I have been very bad at doing this so far. I have a pretty large cash reserve built up, but it is all earmarked as emergency fund money. Thus, I need to get started doing this so I am not surprised come tax time in April of 2011.


      Mid-Term (3-5 years out) Goals:

      • Continue contributing $5000 to Roth IRA each year
      • Reach intermediate net worth target (not displayed here, but is 2X my current net worth)
      • Own a rental property by 2016.


      Long-Term (>5 years out) Goals:

      • Obtain a net worth of $1,000,000
      • Own a home free of mortgage payments
      • Own a vacation home in the mountains somewhere remote
      • Accumulate enough funds not have to work, but will probably anyways because I would get bored. 

      How about you all? How have the months of April and May been for achieving your goals? What are your next milestones? 


      Share your experiences by commenting below!

        ***Photo courtesy of http://farm3.static.flickr.com/2622/4207563765_954cd50863.jpg

        Help a Reader – Can You Skip Out on Federal Taxes and Donate Income Directly to Charity?

        Recently, a reader and friend asked me if I had ever investigated much in to donating money to charity.
        As soon as she asked me this, I was thinking to myself, “This shouldn’t be too hard to answer the follow-up questions, seeing as how I had investigated this topic on several occasions throughout the year.”

        Note: To view the previous posts I have written on charitable contributions, click on either of the links below.


        However, as I constantly am reminded by her follow-up question, I most certainly do not have all of the answers. Not by a long shot!
        What she was wondering was if it was possible to legally bypass paying a large portion of federal income taxes up front, and donating the would-be tax amount to a registered charity instead.
        “This is a very good question!” I said, and mentioned that I would start looking in to it.
         So, in other words, my friend is wondering if she can donate money pre-tax to charity, similar to a payroll deduction on a pre-tax basis for your 401k retirement account.
        Results of Investigation
        After searching around for a while, the closest article I could get to answering this question is the one from EchoDonations.org, at the link shown below.
        EchoDonations.org – Is it Possible to Donate with Pre-Tax Dollars
        The article states that charitable donations are not listed as an eligible pre-tax deduction by the IRS (a list of eligible deductions is shown below), and therefore have to be subject to Social Security and Medicare taxes before being eligible for donating.
        Eligible Pre-Tax Deductions
        • Dental Insurance
        • Medical Insurance
        • 401K Contributions
        • Vision Insurance
        • Flexible Healthcare Spending Accounts



        So, after looking at the evidence, it is looking like I will have to report to my friend that she cannot contribute to charities with her pre-tax funds.

        Two Other Interesting Findings


        As I was searching for an answer to my friend’s question, I came across two other interesting things that are worth sharing:

        • First, I found an Austrailian website, CareAustralia.org, that says that charitable gifts to help their efforts are made on a pre-tax basis.
          • Therefore, it makes me think that donating money pre-tax is possible in other countries. Does anyone have experience with this?
        • Second, I found that if you are over the age of 70.5 years old, you can make a Qualified Charitable Donation from an IRA using your pre-tax funds in the account. See the link below from Ameriprise for more information about this.
          • Ameriprise.com – Charitable Tax Donations
        How about you all? 



        Have you tried and/or been successful at donating money on a pre-tax basis? Did you meet any obstacles? Are any of the ex-United States readers out there able to do this?

        Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.

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        Related articles about taxes and donations/charitable contributions at several of my favorite personal finance blogs:
        ChristianPF.com – See the Impact When You Donate to Charity
        Smartmoney.com – Investigate Your Charity Before You Donate

        My New Favorite Financial Organization System

        As most of you know, I am big fan of David Bach’s Finish Rich book series.
        Note: If you are interested in learning more about these books, click on the link below to read my previous post on David Bach’s Automatic Millionaire book.
        Or, click on the links below to purchase a cheap, used copy of any one of David’s books on Amazon.com. All are very good!
        Start Over, Finish Rich
        The Automatic Millionaire
        Start Late, Finish Rich
        Fight For Your Money
        Smart Women Finish Rich
        The Automatic Millionaire Homeowner
        Recently, while reading a section highlighting the importance of a good financial organization system in David Bach’s book titled, “Smart Couples Finish Rich,” I realized that I very much needed to improve my current financial filing system.
        Like the majority of young people, I started out in college with no financial organization system. After all, why would you need something like that? College students are too young, right?
        As I progressed through college and became more interested in finance, I began to accumulate statements and documents from additional bank accounts, checking accounts, credit cards, bills, IRAs, college tuition/scholarships, paychecks, tax returns, tax forms, and brokerage stock trading accounts. In other words, my finances got a whole lot more complicated, as tends to happen to most people as they become adults.
        What was my solution to storing all of these documents as they flowed in? I purchased a single accordion-style folder case similar to the one show in the picture at the top of this post (the one I bought was brown and the labels were named with various generic personal finance categories). I figured that would take care of storing all of my financial records! Well, I was wrong.
        As the documents continued to come in each month, week, or year, I would simply thrown them in to any pocket in the folder, completely ignoring the labels. This created a huge mess.
        You might be asking yourself, “Why did I not put the documents in the correctly labeled pocket?” While I do not have a precise answer for this, I do have several ideas as to why it occurred.
        • First, the way the pockets were labeled did not fit my specific personal finance needs.
          • In other words, since I was not able to customize my filing system to make it logical and Jacob-user friendly, I was very unmotivated to follow it.
        • Second, the flap that comes over the pockets to protect them and keep things from falling out was a hindrance to having quick access to my files.

        Regardless of my excuses for not having a good financial system, I realized when I was reading David’s book that I needed to start over and follow a new organizational mantra.

        Using the guidance in Bach’s book, I was able to create a user-friendly and effective financial organization system of which the setup I will describe below. To follow along with me, click on the link below, print yourself out a copy of the two-page excerpt, and read on!

        David Bach’s Financial Organization System

        Note: In this post, I will give a quick summary of each file folder category and/or comment on the contents that I place in them. To read the complete details of how to set up the system, click on the link above.

        Creating David Bach’s Effective Financial Organization System

        • Go to the office supply store and purchase 25 hanging folders, a cardboard box in which to hang them, and 50 manilla file folders to place inside of the hanging folders.
        • Label 13 hanging folders, as described below:
          • Tax returns – In this folder, place 7 manilla file folders – one for the tax returns and tax documents for each of the last 7 years. Since charitable contributions are included as a line item on my tax returns, I place my donation reciepts in this file as well.
          • Retirement accounts – In this folder, place 1 file folder for each of your retirement accounts (IRAs or 401k).
          • Social Security – In this folder, you should place your most recent Social Security Benefits Statement. Refer to the following link for more information – My Money Blog – Discover Your Future Social Security Benefits
          • Investment accounts – In this folder, place 1 file folder for each of your non-retirement investment accounts (stocks, bonds, ETFs, mutual funds, etc)
          • Savings and checking accounts – In this folder, include a separate file folder for each of your savings or checking accounts
          • Household accounts – In this folder, include separate file folders labeled as follows – “house title,” “home improvements,” and “home mortgage.” In addition, I found it useful to include a separate file folder for each of the 2 apartments I have lived in in the past 2 years.
          • Credit card DEBT – In this folder, include separate file folders for each of the credit cards you have.
          • Other liabilities – This folder would contain subfolders for all other liabilities that are not housing or credit card related. For me, I also created a subfolder for the personal loan I took out in college to help build credit. For more information on that topic, click on the following link – My Money Blog – Build Your Credit Score From Nothing.
          • Insurance – This folder should contain separate folders for each of your different insurance accounts.
          • Family will or trust – This folder should contain the most recent copy of your will that you create with your lawyer (not by yourself).
          • Children’s accounts
          • FinishRich inventory planner – This folder should contain each of your semi-annual updated versions of the Financial Inventory Sheet (shown at the link below) to keep track of your net worth. I also keep the historical and most recent copies of the worksheet (at the 2nd link below) that helps you track where your money is going.
          • Career/Jobs – This hanging folder is not included in David Bach’s system. In this folder, I created a separate file folder for each of the jobs I have held. In them, I place paystub information and various additional job-related information I want to hang on to.

        David Bach’s Financial Inventory Sheet

        David Bach’s – Determine Where Your Money Really Goes Worksheet

        Well, it’s that simple! You have now created a powerful, custom-built financial organization system that you will be more likely to use than any other (because, hey, you created it). As you get new statements in periodically, simply place them in the appropriate file, and it will make producing historical records a breeze!

        This is just one of the very powerful messages in David Bach’s book, “Smart Couples Finish Rich.” I would highly recommend that you purchase a copy for yourself and read it cover to cover several times. More posts to come soon on my numerous learnings from it!

        What Percentage of My Donation Goes to Funding Operating Expenses of the Charitable Organization?

        Recently, one of my friends and I were talking about several issues related to charitable donations. At one point during the conversation, she mentioned that every time she donates money, she always wonders what percent of her donations go to fund operating and fundraising expenses that charitable organizations incur.

        It then dawned on me that in my previous post about donating money to charity (see link below), I discussed many topics related to donations such as the reasons/benefits, how to find worthwhile causes, and recommended donation quantities. However, I accidentally excluded the operating expense aspect of charitable donations. This topic will be the subject of today’s post.

        My Money Blog – Donating Money

        To begin, let’s review the basics.

        What are charitable organization operating expenses? What do they include?


        Essentially, operating expenses are any expenditure that the charitable organization pays for that does not directly relate to funding programs in support of the principle operating purpose of the organization. This also includes expenses relating to raising additional funds (aka fundraising).

        For example, the following expenses would be operating expenses for the National MS Society (I am planning to do the MS150 bike event in Virginia this year):

        • Expenses for running the annual MS 150 bike events held throughout the country. This is fundraising.
        • Salaries for employees.
        • Administrative expenses – electricity bills for their office buildings, cars for the Society, travel expenses, printing paper, computers, etc.
        The following expenses would not be considered operating expenses for the MS Society:
        • Running clinical trials for a new compound aimed at preventing the myelia degradation that causes multiple sclerosis.
        • Patient support programs.

        What percent of funds typically goes to supporting operating expenses within these organizations?


        By doing a quick Google.com search, I found the article at the link below about charity operating expenses. In the article, it states that many organizations now use approximately 50% of their funds for operating expenses. This is quite high! Furthermore, it states that the best quality organizations use 20% or less of their funds for these non-program related expenses.

        Charitable Organization Operating Expenses

        Armed with this guideline of the top-notch charities using 20% or less of funds received for operating expenses, we can then apply this in an attempt to evaluate the organizations to which we donate.

        How to find out the percent of your money going to operating expenses in the organization you have chosen?

        While knowing these general % levels is good, what really matters to us are the specifics of the organizations we have selected to donate money to. Luckily, there is a very good resource to use for finding out how much your selected organization spends on operating expenses.

        The resource is Charity Navigator, and it can be found at the link below. After clicking on the link, type in the name of your organization in the search bar near the top of the page, and you can access all of the operating details of the organization in the blink of an eye.

        Charity Navigator

        As an example, let’s see how several of the organizations to which I have recently donated measure up. To determine the total % of funds committed to operating expenses, just add up the “fundraising expenses” and “administrative expenses” percentages listed under the “Organizational Efficiency” header. You can also view the percent of funds that go towards the charity’s intended programs.

        The total operating expenses % for each of my recent charities are shown in the table below:

        As we can see in the table, the way funds are used varies pretty significantly between organizations. However, all of them (with the exception of Goodwill) are under 30%, meaning that they are run responsibly, but not in a stellar manner, judging by the 20% criterion from above.

        Use this same sort of approach to evaluate the charities that you support. I would suggest that if they commit more than 40% of your funds to operating expenses, you probably want to look for another organization.

        Remember, there are MANY great causes out there!

        Keep on learning!

        Jacob

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        I’m Getting Married. Should I Do A Prenuptial Agreement?

        Today’s post comes as a reponse from a reader request to learn more about prenuptial agreements. And, since this is sort of a taboo subject that involves and good bit of controversy between couples, I figured that it sounds like a perfect thing to write about! 🙂
        So, let’s get started.

        What exactly is a prenuptial (I just found out it is not spelled with a -ual on the end – amazing!) agreement?

        Well, as you may or may not know, marriages are not only emotional and physical unions, but financial unions as well. Prenuptial agreements are contracts between the marrying couple spelling out exacting what happens to the assets in the event of divorce or death of one of the parties.

        Why should I think about getting a prenuptial agreement?

        According to the article at the link below from Bankrate.com, 33% of first marriages end up in divorce, and 50% of second and third marriages end in divorce. These are difficult odds!

        BankRate.com – Everything You Need to Know About Prenups

        And, if you live in one of the nation’s nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin), the law says property accumulated during the marriage will be divided equally. In all other “equitable distribution states,” assets are divided according to what the court deems appropriate. Prenuptial agreements are a way to keep the court out of the decision about how the marriages’ assets are divided! Seems to make senese right?

        Who should think about getting a prenuptial agreement?

        As it turns out, prenuptial agreements are not just something for the rich. You should also consider drafting a prenup if you fall in to one of the following categories:

        • You have IRA, 401K, mutual fund, or stock assets from before you were married that you feel should be yours in the event of getting divorce.
        • Either the woman/man is much more wealthy than the other.
        • You are currently taking classes to earn a lucrative degree, such as training to be a lawyer or a doctor.
        • You have children from a previous marriage.

        Setting Up and Maintaining a Proper Prenuptial Agreement

        The key here is to approach the subject early on in the relationship, preferably before you get engaged. Once both parties decide that it is all right, sit down to generate a list of your assets and talk about general ideas of how the assets would be divided if a separation were to occur.

        Once you both have a general idea of how you want to proceed, you have to make it legal by hiring separate lawyers in order to ensure an enforceable agreement.

        After the prenuptial agreement has been created and made official, you will want to make sure that it is maintained on a fairly frequent basis so that it captures the current financial state of the marriage assets.

        I hope this helps to shed some light on a somewhat “sensitive” subject. As always, please let me know if there are any questions, and keep up the post requests!

        Keep on learning!

        Jacob

        To receive updates on topics such as this one as soon as they are published, click on the link below to subscribe to My Money Blog:

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        Donating Money to Charity

        So far, on this blog, I have spent a lot of time talking about beneficial ways to make and save money. However, another very important piece of the puzzle of financial success is making donations to charitable organizations.

        Reasons to donate your money

        In my mind, donating my money is perhaps one of the most fulfilling things about HAVING MONEY. It’s fulfilling because I get to decide where to distribute the money so that it will do the most good for what I am interested in.

        If the very fact that you get to help out worthwhile causes of your choosing doesn’t appeal to you, let me appeal to your more greedy side. (**Evil laugh**)

        In a book I read several years ago by T. Harv Eker titled, “Secrets of the Millionaire Mind,” the author reveals the following characteristic/secret of rich people: Most, if not all of them, donate money to worthwhile causes. He does not delve in to the reasons behind this. However, his main point is that if you want to have the mind of a millionaire, you might as well start donating money NOW to get used to the idea. Quite an interesting concept, and it is one that I definitely took to heart.

        Note: click on the Amazon link below to pick up a cheap, used copy of T’s book. Definitely worth the quick read that it is!

        How much to donate

        In 2001, the average percentage of personal income donated to charity was 1.58% (see article link below). However, in T. Harv Eker’s book, he states that the rich donate approximately 10% of their personal income to charity.

        Average Percentage of Income Donated to Charity

        My advice to you? If you don’t currently donate money to charity, pick the 1.58% number and start from there. The key takeaway is that donating ANY amount to charity is great!

        How to donate

        I would recommend either paying by credit card or check. Both of these methods will provide a written record of your payment that can be tracked in case your donation is ever questioned. I personally prefer to donate by credit card because I get cash back when I use my Chase FreedomSM Credit Card (see link below to cash back credit card post)

        My Money Blog – Favorite Cash Back Credit Cards

        Finding Worthwhile Charities

        There are several easy ways that you can find worthwhile charities to which you can donate money and/or personal property.

        Church / Tithing – Tithing is basically donating to a church to help them with their programs, salaries, etc. While I do not personally tithe, I do believe that this a great cause. My parents tithe every week.

        Interesting fact I came across –
        According to the link below from nj.com, data collected by The Center of Philanthropy at Indiana University has found that 37 percent of churches nationwide saw an increase in donations in 2009 and only 7 percent of churches surveyed were forced to lay off full-time employees, despite the recession conditions.

        Church Tithing Statistics

        I searched extensively to find the total yearly donation amount to churches nationwide, but I could not find such a number. However, I did find that in New Jersey, the Archdiocese of Newark, which supports 1.5 million Catholics in Bergen, Essex, Hudson and Union Counties raised $9.6 million in 2009.

        The Internet – The internet has made it extremely easy to find charities that you are interested in. I use a website called Charity Navigator because it has a great category search feature. Since I am a big fan of health research charities, I just select the Health category at the top of the main screen, and the link below resulted. I can then find all sorts of charities to evaluate!

        Charity Navigator Health Charity Category Search

        Fundraising Events – This is probably the most common manner that I donate money. I receive many emails each year from my friends requesting funding support for a charity event they are doing. Examples include such events as the Multiple Sclerosis 150 Bike Ride, Walk for Babies, Leukemia and Lymphoma Society Half Marathons, and others. All are great causes that I like!

        A great thing about giving money in support of friends doing these events is that they often return the favor by donating money to support me during the fundraiser I do in June each year. An added bonus!

        Update on 9-Mar-2010 – I have now registered and gotten my personal donation page updated for this year’s National Multiple Sclerosis 150 Mile Bike ride event. This takes place in June of this year, and proceeds will go to support MS research and support programs.

        If you are interested in making a tax-deductible donation, click on the link below!

        Donate to Support My Ride to Get Rid of Multiple Sclerosis

        Company Matching

        By now, you’ve realized the benefits of donating, found a charity, and donated money using your cash-back credit card or a check. What’s the next step? See if you can request a match for your donation from the company you work for!

        These days, many private companies have very generous matching programs because they get tax write-off benefits from donating money. You should definitely take advantage of this!

        The best way to do this is to call your Human Resources department at the organization you work for, and perform the following steps
        • See if the company does donation matching
        • If they do, find out if the charity you donated to is eligible for company match.
        • If the charity is eligible, fill out the matching donation forms either online or hardcopy, and submit them.
        • Be patient. It may take several months to be processed. But, eventually, it will go through, and the charity of your choice will have even more funding! Viola!

        How to Deduct Donations On Your Taxes to Lower Your Taxable Income
        At a high level, you have two options for deductions to your taxable income.

        • You can take the standard deduction, which was $5700 for Single (non-married) individuals in 2009 (see link for standard deduction amounts Standard Deduction Amounts)
        • Or, itemize all of your deductions using IRS Form 1040, Schedule A.

        Note: You are not eligible to take the standard deduction if you do not meet certain income and other criteria. It also would not be wise to take the standard deduction if your itemized deductions are greater, since itemizing your deductions will result in paying fewer taxes.

        If you do decide to itemize your deductions, download a Schedule A form (link can be found below), and fill it out.
        Download a Schedule A Form and Itemize Your Donations

        For a great, comprehensive list of eligible expenses that you can itemize on your IRA Form 1040, see the link below:
        Comprehensive List of Tax Deductible Expenses for Form 1040
        Well, I hope this post gets you started on the great exercise of donating your money! Remember, the key is just to get started, even if it is a small amount!

        Keep on learning!

        Jacob

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