Help! My spouse won't stop spending

July 24, 2014

By Dan Rafter | Money Rates Columnist

You're a saver. Your spouse is a spender -- maybe even a big-time spender. Is your marriage doomed?

Not necessarily.

Financial experts say that communication is the key to crafting a successful marriage -- even when one spouse would rather sock away money and the other prefers to spend it until it's gone. The worst case? When the spending spouse and the saver don't talk about their financial issues until a giant credit-card bill forces them to address the problem.

"It's all about communication," says Leslie Tayne, founder of Tayne Law Group, PC, a law firm based in the New York City area that specializes in debt assistance. "Too often, spouses hide their spending because they don't want to deal with the repercussions. The other spouse is taken by surprise when they receive this huge credit-card bill. That's not the way to handle the situation. This can put great stress on a marriage."

The better approach? Spouses need to talk out their financial problems before they can resolve them. And those spouses who are spending so much that they're building an insurmountable pile of debt? They need to identify why they are spending so much and take steps to stop their dangerous financial behavior.

The power of communication

Tayne suggests that married couples meet once a week for an hour or so to discuss finances. This holds true even if spouses generally agree on how money should be spent. In cases where one spouse wants to spend more than a partner is comfortable with, these meetings become even more important. If both spouses are honest during the discussions, there at least won't be any surprises on future credit-card bills.

But what of those spouses who hide their spending until it's too late? Brenda Hendrickson, author of the book "How to be a Frugal Millionaire," says that it's important for married couples to determine why one spouse is spending so much.

Maybe a spouse is lonely or bored, and spending money at the mall is an outlet. Maybe the overspender has too much free time and not enough to do with it. Or maybe the spending is a result of a deeper psychological issue.

"There is always some reason behind all the spending," Hendrickson says. "It's important to get at that reason. Otherwise, it's not easy to stop the spending."

Maybe the couple lives too close the mall. This might make it too easy for one spouse, especially if that spouse has plenty of free time, to spend too much.

Resolving these issues comes back to communication. Spouses must be willing to talk about their financial habits and challenges. If they aren't, the overspending will only continue, Hendrickson said.

Some spouses might not even understand that their free-spending ways are causing financial pain. This happens when one spouse handles all the money issues and doesn't share the numbers. Again, this is something that can be resolved if couples agree to hold regular talks on financial matters.

"Money issues can damage a marriage," Hendrickson says. "Financial stress is one of the leading causes of divorce. If couples don't address it, they can put their marriages in jeopardy."

Tackling a spouse's overspending

Once a spouse's free-spending ways are exposed, what can couples do? Tayne suggests a common-sense resolution: The spouse who doesn't overspend should handle the weekly grocery or regular clothes shopping.

"If you have someone who can't get through a Target without spending hundreds of dollars, that person shouldn't be in charge of the shopping," Tayne says. "Instead, put the person who can run down a list and only buy those items on the list in charge."

Hendrickson suggests that overspenders put the credit cards away and try to rely only on cash for purchases. Too many spenders don't think of credit cards as real money, Hendrickson said. They don't think about the consequences of running up their credit-card balances until their monthly statements arrive in the mail.

Hendrickson recommends that spenders use debit cards instead of credit cards. This way, they can only spend money that they already have.

"You'd be surprised at how many people never think of credit cards as cash," Hendrickson says.

Couples need to study their credit-card bills and bank statements too, Hendrickson says. This way, they can determine what kinds of purchases are prompting their partners' overspending. Maybe a credit-card bill is filled with fast-food lunches that add up to hundreds of dollars a month. That might be the sign of more serious food issues that should be discussed.

The ideal approach

Elle Kaplan, founding partner and chief executive officer of LexION Capital Management in New York City, says that ideally partners will discuss their finances long before they get married. That way, there won't be any unpleasant financial surprises after the honeymoon is over.

These money talks will also give future spouses the practice they need to discuss serious financial issues after they are married, Kaplan said.

"Spenders often marry savers," Kaplan says. "That's OK. It doesn't mean that a marriage can't last. But there will be problems if savers and spenders don't talk over their finances and set some ground rules."

A wise approach is for couples to create a realistic household budget. A budget, as Hendrickson says, doesn't have to be rigid and inflexible. But one that allows for entertainment and shopping spending -- to a point -- can give couples a blueprint they can follow to financial harmony.

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6 signs you're behind the financial times

July 16, 2014

| Money Rates Columnist

There's a lot to be said for tried and true financial practices. However, many of the money habits of your youth may have outlived their usefulness by now.

If any of the following statements ring true for you, it may be time to seek easier, more convenient or more profitable ways to manage your money. Here are six signs you're behind the financial times -- and why you might want to catch up.

1. You still prefer checks

So you write still checks at the grocery store? You're certainly not alone, but that doesn't mean it's wise.

"Certain people still love to write checks," says Keith Klein, CFP and owner of Turning Pointe Wealth Management, a Phoenix-based firm serving clients nationwide.

Rather than fumbling for a pen in the checkout lane, why not swipe your debit card instead? Money pulled from a debit card comes from the same place as the funds for your check, but using your card offers a few distinct advantages. Most banks and merchants offer free debit card transactions -- saving you the cost of checks -- and choosing this payment method allows your transaction to show up more quickly in your electronic records. Even better, you probably have built-in fraud protection on your transactions if your debit card sports a Visa or MasterCard logo.

2. You ignore online bill payment services

Bill pay services are a beautiful thing. They make it simple to pay for everything from the mortgage to an eBay auction item.

"Online bill payments can be done automatically or one at a time," says Tim Shanahan, explaining why they can be used for virtually anything.

Shanahan, president and chief investment officer for Compass Capital Corporation, an investment firm in the greater Boston area, suggests you look beyond your financial institution to non-banking payment options as well.

"PayPal is virtually riskless and instant," Shanahan says. "It makes so much sense if you have the account and your counterparty has at least an email address."

3. You are scared to bank outside of the branch

You're making your life harder than it needs to be if you refuse to bank outside of the presence of your favorite teller.

"Some people refuse to use an ATM," says Klein. "Maybe it's a fear of getting robbed or the fear of not being face-to-face with a teller."

It's hard to find updated data regarding the number of robberies that occur at ATMs each year, but a 2002 report from the Department of Justice pegs robberies at one per 3.5 million transactions. So the biggest thing you realistically have to fear at the ATM is the outrageous transaction fee you may be charged.

Besides, there are plenty of other ways to bank without using a branch or the ATM. You can even deposit checks at many institutions by snapping a photo -- a method Klein says makes sense since it is basically what banks do to process physical checks today.

4. You maintain a bottomless pile of paper statements

Keeping accurate records is essential for sound money management, but that doesn't mean your financial statements need a room of their own. Rather than storing physical statements, scan and store them in the cloud. Even better, ditch the paper statements completely and have them sent electronically.

If you use a financial firm to manage your accounts, check to see if they'll do the legwork for you.

"We aggregate everything, whether (our clients) do their investments with us or not," says Klein. "Then when they need a mortgage or loan, we can fill out an application in five minutes."

5. You pay someone to do your taxes

Another old-school financial practice Klein says many people can ditch is paying someone to do their taxes.

"Accounting software can let many people get their tax return done for free," he says.

Of course, those with complex tax situations may want to hire a pro to navigate the tax system for them. But if you only have a W-2 and an annual income less than $58,000, you should check out the Free File options on the IRS website.

6. You haven't shopped for better rates since ... um ...

Whether we're talking about your mortgage or your savings account, interest rates can change radically over the course of a few short years. A mortgage may take some work to refinance, but there's no reason to leave your money in a savings account that pays 0.01 percent annually in interest.

"With Internet log-ins available on virtually all bank accounts, it's easy to move funds either in real time or on a scheduled basis from checking to interest-bearing money market accounts," says Shanahan.

However, to make the most of your money, you'll have to get over your need to visit a branch, Shanahan says.

"Most of the highest rates are paid by Internet-only banks that do not have to support the cost of a branch system," he says.

Being old school may work if you're Converse shoes or the Rolling Stones, but your finances are different. Dumping the outdated money management practices of your youth can help you discover easier and more profitable ways to handle your funds.

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Daughters are a bargain? Not necessarily, say parents

July 9, 2014

| Money Rates Columnist

A study released last month by Yodlee Interactive and Harris Poll found that adult women are 32 percent less likely to need financial support from their parents than adult men are. Shortly after the release, a spate of headlines touting the financial virtues of daughters appeared across the Web.

However, because the study only looked at adult sons and daughters, it did little to answer the question of which sex is less expensive to parent in the long run. A 2010 study from found that, between the ages of 5 and 18, boys are actually cheaper to raise than girls, primarily due to the more costly hobbies and activities girls tend to adopt (at least in England, where the study was conducted).

In terms of hard data, the debate over the relative costs of sons and daughters seems muddled at best. But if you turned to parents who have children of both sexes for answers, would a clearer answer emerge?

“This is not a difficult answer”   

Given how many costs can arise when raising a child, gauging the overall expense of a son or daughter – even on an approximate level – requires some financial attention-to-detail.

Bradford Pine, a wealth adviser and president of the Bradford Pine Wealth Group in Garden City, New York, makes his living scrutinizing financial details. He also happens to have a son and a daughter who are both in their teens.

When asked which of his children has been more expensive to raise to this point, Pine doesn’t hesitate.

“This is not a difficult answer,” says Pine. “It was my daughter. By a boatload.”

Pine reels off a list of expenses when asked what drove his daughter’s cost higher than his son’s.

“Designer clothes, nails, hair, cosmetics, birthday parties, concert tickets for teenage heartthrobs, prom dresses, weddings,” he says. “(Sons and daughters) both have college, but you usually pay for the wedding with a daughter. My daughter’s not married yet, but I foresee (that expense).

Pine says he thinks this pattern holds up in lots of families – in between recalling the extra expenses his daughter required.

“I don’t know if all kids are that way, but I think it’s common knowledge (that girls are more expensive),” Pine says. “Oh, and American Girl dolls. It just goes on and on.”

“It’s like having another grown woman to pay for”

Kristin Marino has a 14-year-old daughter and a son who is a year away from completing college. Marino, an editor for a website on higher education, says that the extracurricular activities her daughter took on as a teenager sealed her fate as the more expensive of her two children.

“They both have expensive extracurriculars, but dancing really put us over the top for her,” writes Marino in an email interview. “Each style of dance requires its own shoes – four to five pairs per season – and to be en pointe for ballet requires $80 shoes every six months.”

But her daughter’s costs didn’t stop there, says Marino.

“Clothes are more expensive for girls and they need more of them,” Marino says. “Once girls hit puberty they require lots of upkeep, including hair, skin (dermatologist plus skin care), makeup – even their underwear is expensive (a different bra depending on the sport, activity or sort of outfit she’s wearing, just as one example). It’s like having another grown woman to pay for once they hit 8th grade or so.”

And her son?

“My son is good with a couple of pairs of shorts, a few T-shirts, face wash and a package of underwear from Walmart,” says Marino.

Still, should the results of the Yodlee/Harris poll give parents of soon-to-be-adult sons pause? Will they soon see their sons make up for their frugal childhoods by leaning on their parents for financial support as adults?

Pine isn’t especially worried about his son – or his daughter, for that matter.

“They’re both on good settings,” Pine says. “They’re both very smart and motivated. But we’ll see.”

The greater truth

Regardless of which sex your children are, it’s likely they will cost you a staggering amount over the years. The USDA estimates that it will cost parents $241,080 to raise a child born in 2012 through age 18.

That figure doesn’t include college. According to The College Board, the average annual cost for that now is $17,860 (for a public school) or $39,518 (for a private school).

Pine, whose daughter is now in college, says that 529 plans – tax-advantaged accounts that are designed for educational savings – are something that all parents should begin using as soon as they can.

“Use them systematically and don’t stop,” Pine says of these savings accounts. “Do it every month and it’s no big deal. Her school is $48,000 per year. Don’t procrastinate. It’s the best advice I can give you.”

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7 tips for managing Alzheimer's costs

July 1, 2014

By Lucy Lazarony | Money Rates Columnist

Today one in three seniors dies with Alzheimer's disease or another form of dementia, according to the Alzheimer's Association. Yet Alzheimer's -- which can last anywhere from two years to two decades -- is rarely at the center of most discussions on retirement finances.

How can you help a stricken loved one cope financially with this chronic and often long-term disease? Here are seven tips that can help ease the process.

1. Avoid denial

With Alzheimer's disease, patients and their families can face a long, difficult journey as the disease progresses. Mary Barnes, executive director of Alzheimer's Community Care in West Palm Beach, Florida, says that acceptance of the disease is a crucial first step to dealing with it.

"(Alzheimer's) disease can last two to 20 years, with the average being 10," says Barnes. "It is so important for family to reach out and learn what the resources are and not be in denial."

2. Tap local resources

Reaching out to local support groups, senior resource hotlines and the Alzheimer's Association can help you find the best care for a loved one.

Alzheimer's Community Care runs nine dementia-specific day centers in South Florida. Family nurse consultants are available to counsel families, and social workers visit the families of every Alzheimer's patient enrolled in the day centers. Scholarships are available to Alzheimer's patients of limited means.

"It's an ongoing process because we not only have to go with the progression of the disease with the patient, we have to worry about what's going on with the caregiver," Barnes says.

There are many care and financial decisions to make for an Alzheimer's patient as the disease progresses, but qualified professionals can help guide patients and their families through these difficult choices.

3. Plan ahead

Don't wait to create a financial plan for caring for a loved one with Alzheimer's disease. Because of the potential length of the disease, it's important to minimize expenses from the beginning to limit the disease's overall cost.

"One of the best tips is don't wait until something happens," advises Mari Adam, a financial planner based in Boca Raton, Florida. "We urge people to plan ahead and think ahead. First, what can (Alzheimer's sufferers) still do? What are they having difficulty doing that they shouldn't be doing?"

Planning for future needs in the early stages of the disease can help prevent financial shortfalls down the road.

4. Check for spending irregularities

Review an Alzheimer patient's recent financial records carefully. These documents can reveal errors or signs of fraud that have previously gone undetected.

"Is someone paying for magazine subscriptions 10 times? Did they pay homeowner's insurance twice? (Alzheimer's sufferers) can be very vulnerable to fraud," Adam says.

"You want to pull together a list of what they own, what they pay," she continues. "Step into their shoes. Take a close look at monthly income and expenses. Add them up and see what needs to be paid. Make sure all the bills are legitimate."

5. Carefully compare care options

"You want to think strategically of where (an Alzheimer's sufferer) can receive care. Because (all options) all have different price tags," Adam says. "The most common mistake is not thinking ahead. What is Plan B and Plan C?"

Adams recommends consulting a geriatric care manager for advice on care and living options in your area.

"If someone doesn't have any money at all, it's figuring out how to pay for it. Do they have VA benefits? Do you have to go on Medicaid right away?" she says.

While home care may seem like an attractive option, it's not always a viable choice, says Adam.

"Don't assume home care is the best option. It's not always the best and it's often financially difficult," she says.

6. Get family members involved

Whenever possible, involve family members in the care-giving decisions for an Alzheimer's patient.

Skip Fleming, a financial planner at Lodestar Financial Planning in Colorado Springs, Colorado, drafted several care plans for his mother-in-law, who recently passed away from Alzheimer's disease, by having many discussions with her and her adult children.

"We were fortunate in that all family members cooperated in drafting each of the care plans and were able to reach a consensus before her faculties started to diminish," Fleming explains. "Up until a year ago, she was an active participant in most of the decision-making, (including) interviewing the caregiver we hired to assist during the daytime."

7. Be prepared to change your care plans

Caring for a loved one with Alzheimer's disease is a challenging and time-intensive job. Be sure to give family caregivers a break when needed and be willing to change care options if a family member feels overburdened.

"You have to be careful not to burn out. When you do that care-giving, you have to put yourself first," Adam advises. "You can wear yourself down. You have to step back."

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Graduating? These financial pros would like a word

June 20, 2014

By Dan Rafter | Money Rates Columnist

Robert Minasian has a simple message for his two adult children, both of whom recently left college behind: Save as much money now as you possibly can. Those major purchases that you think you need to make? Don't buy that new car or start looking for a home until you've built enough savings to steer you through a job loss or other financial disaster.

"Given the realities of our nation's precarious financial stability, I advise my children that they must plan on a future that may be substantially different than our past," says Minasian, a financial consultant with Personal Wealth Management LLC and Novus Investments LLC in Commerce, Michigan. "In other words, buckle down now. Sock the cash away and forgo that which you think you need."

Recent college graduates may find this to be timely advice. The job market is still challenging. College debt levels are climbing. The price of everything from apartment rent to gas is rising. Graduates face plenty of financial hurdles once they leave the world of academia, especially when those student loans come due.

Here are some critical tips for new college graduates from financial professionals across the country. Recent college grads who follow it might ease some of the stress of their journey to the working world.

Learn the difference between wants and needs

Rakesh Gupta, a professor of Garden City, New York-based Adelphi University, teaches the "Your money AND your life" seminar for freshman at the school. He knows the financial challenges that college students and recent graduates face.

His advice is simple: College grads need to put a budget down on paper, listing their monthly expenses and income. They then need to spend less than what they make, putting their savings in an interest-bearing account.

Finally, graduates need to think twice about purchasing large-ticket items, Gupta says.

"Is it something you want or is it a need?" he asks. "If you must have it, use your savings rather than a credit card."

Harness the power of rewards

Beverly Ladley, client segments and solutions executive at SunTrust Bank in Atlanta, says that recent graduates must find a reward that will motivate them to save money. Ladley recommends that graduates sign up for direct deposit with their employers and earmark a portion of their paycheck for automatic deposit to savings accounts.

But there's a twist to Ladley's advice: She recommends that graduates create several different accounts and label each with a tangible reward, calling the accounts anything from "new car" to "bachelorette party" to "weekend with the guys."

"Set up different accounts for different goals and meaningful experiences," Ladley says. "This establishes good financial habits motivated by tangible rewards."

Know the value of a plan

It's easy to save when you're making a lot of money. But Dean Obenauer, assistant director of financial aid for financial literacy at Creighton University in Omaha, Nebraska, says that even more important than a big income is a good financial plan.

Obenauer's plan for college graduates is simple but effective. First, graduates need to pay themselves first, making saving money a priority. Second, even though student-loan payments generally don't start until six months after graduation, recent grads should build their loan payments into their budgets immediately, perhaps setting aside the $500 a month they'll owe in an interest-bearing savings account. This helps grads get a jump on starting an emergency savings account before their regular payments come due.

Obenauer also recommends that grads contribute as much as they can from each paycheck to their employers' 401(k) plan or other deferred-compensation matching plan -- something that will help them prepare for retirement, even though retiring seems far off.

Obenauer advises those graduates who no longer want to live with a roommate to make sure that they understand the expenses involved with getting their own apartments before they sign a lease.

Finally, recent grads might want to hold onto that old car for a while. Monthly car payments can be an unwelcome financial burden, Obenauer says.

"The moral of the story? You don't have to have a lot of money to be successful," Obenauer says. "You just have to have a plan."

Form a relationship with your bank

In this day of ATMs and online banking, it's tempting for consumers to handle their banking without ever forming a relationship with the financial advisers, lenders or counselors at their local bank. Charlie Crawford, president, chief executive officer and chairman of Private Bank of Buckheard in Atlanta, says that this is a mistake.

He's currently teaching his son, who will graduate from college in two years, to develop an in-person relationship with the financial professionals at his bank.

"While it might be tempting to do all of your banking online, keep the long-term picture in mind," Crawford says. "Realize that you may at some point need your banker's counsel. It's best to establish a relationship like this before you need it. You don't want to meet your banker for the first time when you are asking for a loan."

(An earlier version of this story mistakenly identified Adelphi University as being in New Jersey.)

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