Understand Your Spouses Financial Priorities

I think one common problem between a couple is that they may have quite different financial priorities and may not even realize this.    This can easily lead to tension and arguments because you both mistake how important some things are to the other.   Its important to have a clear idea of where your partners financial priorities are.    Their priorities may differ from your own priorities.   You may have an idea that your spouse considers some things more important than you but you may not have a clear idea of exactly how important they consider it.   Maybe you get into an argument about whether you should pay down a loan or put some money in the bank.  Its helpful to know if your spouse considers paying down debt to be their number one priority or if they think money in the bank should be the first goal.

Here is a simple way to get a clear picture of each others priorities : 

1. Each of you take a piece of paper and then write down your top 10 financial priorities in order of most important to least important.
2. After you've each created your lists then swap the lists and compare.

You may be surprised what your spouse considers higher priority.  Hopefully you're mostly on the same page as far as priorities but theres likely to be some notable differences.  After this exercise you should have a better understanding of your spouses reaction to some spending and saving decisions. 


I rarely delve into couples advice but I think this one is particularly useful.

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Debt Could Ruin Your Marriage

In an article in the September issue of Money magazine titled Is Money Pulling You Apart?  they feature this bit of data found by a researcher who analyzed 4,500 couples :

"Dew found that a couple with $10,000 in debt and no savings is twice as likely to divorce as a couple with no debt and $10,000 in savings"

A married couple that has debt and no savings will have more arguments about money then a couple with savings and no debt.    Money can cause a lot of friction in a relationship and lack of money causes the most friction.

Even if the couple doesn't argue about money per se their poor financial state will add stress to their lives which and then that stress could make the marriage more difficult.    Think about it this way:  Are you generally in a happy mood when you're in debt?  If you're not generally in a happy mood then is it more or less easy to get along with your spouse?   

Think about the married couples you know who are having financial problems and the ones that are doing well financially.   Which group has more happy couples?    You may find a pattern there.   A friend of my wife has had a lot of difficulties in her marriage and almost all of it has been due to their handling of money and the debts they have.   One of my friends just got a divorce after a short marriage and a lot of their arguments revolved around money.

Save 32% on a Diamond Engagement Ring at Costco.. only $1 million

On the front page of Costco.com I saw a featured item that caught my eye.

They have a 6.2 carat diamond ring for sale for a mere $1,000,000.*  

Even though its Costco they don't come in a volume pack of 12.  There is only one ring available for purchase.  The ring has an appraised value of $1,496,255 so with a price of just $1,000,000 its over 32% off!    I'd like to say its 1/3 off but 32.88% isn't quite 33%.  

The description of the ring:

• IGI Value: $ 1,496,255
• GIA #: 2135241967
• Metal:  900 Platinum 
• Diamond Shape:  Round Brilliant  
• Minimum Diamond Weight:  6.20 ct
• Diamond Clarity:  Internally Flawless ( IF )
• Diamond Color: Colorless ( D )
• Diamond Cut: Excellent
• Ring Size:  6.5 - Sizeable to any size  (Costco does not provide this service)
• Item available for purchase via wire transfer only

I like how Costco will actually sell you a $1,000,000 ring but they're not willing to have the ring sized for you.   I envision someone buying this $1,000,000 ring along with the 36 roll pack of of toilet paper and the jumbo 2 gallon container of mayonnaise, waiting in line at check out, piling the stuff all in a used card board box that was originally for cartons of Camels and then standing in line at the exit door to have your receipt checked by their receipt checker person.

If you're about to marry a Kardashian second cousin (a sister would require a larger rock) and you're in the market for a $1,000,000 diamond ring then this may be a great buy.   I haven't done much shopping for $1,000,000 rings though so I'm not really sure if this is a great bargain or not.  If you are in the market for a million dollar ring then you probably have a staff of assistants that could help you shop around.  


I assume that you'd also get 2% cash back on your Costco gold card so thats a nice bonus.  I didn't research this so its possible theres fine print somewhere that says you can't.  

If you're NOT a billionaire then I'd instead recommend you check out my older article discussing How Much You Should Spend on an Engagement Ring for more practical idea on what to spend.

Costco may be a decent choice for a reasonably priced ring but from what I've seen they don't have a large selection.    Their diamond solataire rings that they currently have for sale online start over $3,000 and go up.  So if you're not looking to spend that much then they won't have anything for you.   I found a 0.72 carat with a platinum band at Costco for about $3800.   I priced a similar 0.72 carat round VS1 with platinum band on Bluenile and it would be about $4,100 there.   But thats assuming you want that same specs as the Costco diamond.  Bluenile also has a 0.7 carat that is VS2 for $2500 and paired with a white gold band that would be around $2800 total. 

$3800 for a 0.72 carat VS1 platinum band at  Costco is better than $4100 for a 0.72 carat VS1 platinum band at Bluenile.    But is $3800 for a 0.72 carat VS2 platinum band at  Costco better than a 0.70 carat VS2 white gold band for $2800 at Bluenile?   Maybe it is and you really want platinum and having VS1 over VS2 is really important to you but for most folks I doubt you'd care that much to warrant spending $1000 extra.


*  I wanted to put in a commission link so that if one of you billionaires out there bought the $1M ring then I'd get a 1-2% referral commission but I sadly don't have any commission deals with Costco.  

Marriage and Divorce rate by State

You've probably heard that 50% of marriages end in divorce.  That number is a bit misleading.   For one it doesn't mean that any particular marriage has a 50/50 chance.   Many of those marriages ending in divorce are the 2nd, 3rd, 4th or later marriage for the individuals.  There are also a lot of other factors that go into the potential statistical survival rate of a marriage like demographics.    Marriage rates and divorce rates also vary from state to state. 

I got the marriage and divorce numbers from  Marriage and Divorce numbers from the CDC. and State populations from the Census The numbers are for the year 2009.

Note : I wouldn't read much into these numbers.   Higher divorce rate in a given state doesn't reflect on that state.  The differences could be due to demographics like different average ages or similar.


Here is the table giving the number of marriages and divorces per 1000 residents :

	marriages	divorces
Alabama	7.9	4.3
Alaska	7.9	4.8
Arizona	5.4	3.5
Arkansas	10.9	5.6
California	5.8	?
Colorado	7.5	4.2
Connecticut	5.6	3.1
Delaware	5.8	3.9
District of Columbia	3.2	2.2
Florida	7.6	4.3
Georgia	6.5	?
Hawaii	17.2	?
Idaho	9.0	5.0
Illinois	5.6	2.5
Indiana	8.2	?
Iowa	7.0	2.4
Kansas	6.6	3.7
Kentucky	7.7	4.6
Louisiana	6.4	?
Maine	7.2	4.0
Maryland	5.7	2.7
Massachusetts	5.6	1.9
Michigan	5.3	3.3
Minnesota	5.4	?
Mississippi	4.9	4.1
Missouri	6.6	3.9
Montana	7.3	4.0
Nebraska	6.9	3.0
Nevada	40.9	6.7
New Hampshire	6.4	3.7
New Jersey	5.3	2.8
New Mexico	5.1	4.0
New York	6.1	2.4
North Carolina	7.0	3.9
North Dakota	6.7	2.5
Ohio	5.6	3.2
Oklahoma	6.4	4.6
Oregon	6.2	3.5
Pennsylvania	5.1	2.3
Rhode Island	6.2	3.2
South Carolina	6.4	2.7
South Dakota	7.2	3.2
Tennessee	8.8	4.1
Texas	7.3	3.1
Utah	8.6	3.9
Vermont	7.6	3.4
Virginia	6.9	3.6
Washington	6.1	3.9
West Virginia	6.8	5.1
Wisconsin	5.4	3.1
Wyoming	8.7	5.2
Puerto Rico	4.7	3.8

Would You Prefer a New Car or 2 Carat Diamond Ring?

Over at The Simple Dollar there was a reader mailbag question from a fellow who was looking to buy an engagement ring.  He was talking about a "3 month" salary rule for the cost of the ring which in his case amounted to $13,750. 

It seemed most of the commenter's felt that the amount spent on a ring wasn't that important and spending that kind of money on a ring was a bad thing.   In the comments 15 people said what their ring cost.  The range was $8 to $3,500 and the average of about $850.    That is significantly less then the average spent on rings in the USA. But then some of those rings were bought decades ago when they'd be cheaper and the general audience on a finance blog such as The Simple Dollar is more frugal and practical with their finances.

One of the commenter's said they'd rather have a car than a $14k ring.  In general it seems that Americans consider spending $20,000 or more on a car normal but spending $10,000 or more on an engagement ring as unusual or even extravagant.   Why is that exactly?    Why do people value automobiles more than engagement rings? 

Would you rather have a new car for $20,000 and a $1,000 engagement ring or a $1,000 car and a $20,000 engagement ring?

Based on typical spending habits it seems that most Americans are much more likely to spend $20,000 on the car than the ring.  So it seems our nation has voted with our wallets in favor of the automobile.


There are many reasons why a car or a ring are good or bad things to spend money on:

A car provides transportation.
The engagement ring is a symbol of love.
The car will steadily depreciate in value until it is scrap.
A ring could be lost.
The car is a time saving convenience.
Engagement rings can be passed along to future generations.
The car has potential ongoing costs.
The ring is a symbol of a marriage that could end in divorce.

There are a lot of ways to argue that a car or ring is the better or worse option.

Of course many people would prefer to spend the $20,000 on other things.   Paying off debts, or taking a long European vacation or paying for a childs college tuition could easily have higher priority over a car or a ring.

Some people would like that ring and value it immensely while driving a broken down car and others would find that new car much more practical and attractive purchase compared to a piece of jewelry.

Bottom line:  It all comes down to individual priorities.   It isn't about right or wrong answers. 

Photo Books as a Frugal Wedding Album

When my wife and I got married we spent a lot on our photography.   That was one of our priorities for the wedding to have nice photos that would last.  So we chose to spend more on photos.   One of the things we bought was a professionally made photo album.   Photo albums from professional photographers can easily run several hundred dollars.   Costhelper cites medium prices for hand crafted wedding photo albums at $250 to $450 range.

You can easily get very nice alternatives to the wedding photo albums sold by the photographers and same yourself a lot of money.

A friend of mine was pretty  frugal with their wedding.  They had a friend take pictures and then got prints made online.   For their wedding album they got a hardcover photo book made.   The photo book is actually quite nice.  

Photo Books Options

The photo book my friend got came from Kodak.   To make such a book you upload your photos to the service's website then select the options you want for your book.   The photo books start with a certain number of pages (20 for larger books) but if you want more pages you can pay additional for extra.  You can get a good size hardcover starting around $25-$30 or a smaller softcover for $10-$15.


Snapfish has 8 x 11 hardcover books starting with 20 pages for $30.  Or a 5 x 7 softcover with 20 pages is $12.  See:  Snapfish photo books for more details on prices.

Kodak Gallery has a 9 x 10 hardcover with 20 pages for $30.   Their 5 x 5.75 paperback with 14 pages starts at $10.   See: Kodak photo book prices.

My Publisher via Costco  Costco members get 20% off of orders on My Publisher.    They sell an 11.25 x 8.75 hardcover with 20 pages for $30.   The 7.75 x 5.75 paperback has 20 pages for $12.95.   See base prices at My Publisher   

You can also check Retailmenot for promo codes with the following links  Snapfish codes, Kodak Gallery codes & My Publisher codes.

Build Your Own Traditional Album

 Rather than buying a photo book you could assemble your own traditional photo album to use as your wedding album.   There are a number of relatively inexpensive wedding photo albums for sale online.

I found the site AlbumSource.com which has a variety of nice albums.   Their Classic Wedding Scrapbook is 10 x 12 with 40 sheets for $35.00.   You could fill that with 20 8x10's and 60 4x6's from Snapfish for around 65 in print costs. So the total cost for such an album with pictures would be around $100.  

If your building your own album like this then it would help to have some artistic capabilities.  

Congratulations on your Marriage. .. Can I sell some junk to you and all your friends?

I know someone who is going to a bachelorette party in a while and she told me there would be a 'party' hosted where they can buy things for the bride to be. Of course the gracious 'host' of the party will certainly be happy to sell their wonderful wares to the other people at the party and not just the bride. The host is called a 'consultant' for the items being sold and they will help explain their use at the party. Of course if you don't buy something for the bride then you're obviously going to be thought of as 'cheap'. I'm sure people may end up feeling a bit of peer pressure to buy something for themselves as well. The genius who decided to crash peoples bachelorette parties to sell them junk was very clever and evil.

I know that 'parties' as a multi-level marketing sales tool have existed for a long time. I've heard of Tupperware parties and other kinds of parties for Avon or various household goods or beauty supplies. The marketing mechanism where people throw a party in someones home to sell stuff is called a party plan. Apparently Tupperware has been doing it since the 1950's. I'm not a huge fan of such parties since they do tend to rely on peer pressure from your friends to make sales. But at least with these parties the nature and intention of the party is very straight forward. Its a party to look at and consider buying Tupperware, Avon or some other product. If you don't want to go then you can decline the invitation. I'm sure for some people they enjoy the process and like the products so it has its place and isn't all bad. I've got nothing against Tupperware or Avon for sure.

But by inserting the sales party onto the bachelorette party is not something you can very easily opt out of in a socially acceptable way. So this concept is much more deceptive and intrusive. If someone is going to have a bachelorette party then it should be a bachelorette party and not a sales pitch.

If you feel the need to hold one of these sales parties then hold it separate from a normal party. Don't force a captive audience to attend a sales pitch for products they may or may not have any interest in. Make it optional and clearly separate so that people can opt out of the sales pitch and attend the normal event if they choose to.

I just hope there isn't an Timeshare presentation between the ceremony and reception.

How much should you spend on an engagement ring?

A conversation in the comments for the post Who Gets the Ring when an Engagement is Called Off? over at Free Money Finance raised the question from a commenter asking: How much should you spend on an engagement ring? I thought that was a good question. 

I think the most important thing is to spend an amount that is within your means. Look at your income and your savings and decide on an amount to spend that won't put you in debt or stretch your budget. If you can't pay for the ring out of pocket with cash then consider saving up for a while so that you can buy it without a loan.


The rule of thumb that I've heard is that you should spend 2 months of salary for an engagement ring. Making the value proportional to your income seems like a pretty good way to decide how much to spend, but why 2 months and not 1 month? While searching on this question I found that Get Rich Slowly wrote about the topic last year: Ask the Readers: How Much Should I Spend on an Engagement Ring? JD voiced the same opinion I have that the 2 month rule is probably an invention of the marketing and sales staff of the diamond industry. Don't let this "rule" push you into spending more than you can actually afford or make you think that you have to spend 2 months salary (or more) just to meet expectations.

How much do people actually spend? This site that says that the average cost of an engagement ring in the U.S. is $3,500 to $4,000, while this Slate article says the average is $3,200 and this CNN article from 2005 said it was $2,600. So the average is somewhere between $2,600 and $4,000.

Do people spend 2 months? The average age of marriage in the U.S. is 26. Median income for people 18-24 is a little under $31,000. If you take 2 month rule for $30,000 income would result in a $5,000 cost for the ring. Yet people on average are spending $2,500 to $4,000. So it appears that people spend closer to 1 to 1.5 months salary on engagement rings on average.

What is the average carat? When I was buying my wifes ring the salesperson told us that the average diamond sold is 1 carat. But this article says that the national average is 0.38 carat. You can buy a 1 carat weight diamond engagement ring starting at $2,600 on Bluenile.com to $2,800 on Amazon.com Bluenile has 0.4 carat rings for as little as $800 and on Amazon I found a .5 carat ring for $300. Keep in mind these are the cheaper rings I could find and they the diamonds have lower quality.

But again, don't let the amount that other people spend dictate how much you spend. You should figure your budget for the ring based on your financial situation.

Should you buy a big carat or a high quality stone? Figure the budget then buy the kind of ring and diamond that the future bride would value the most. Different women will value different things. So find out if the metal of the ring, the size of the diamond, color or clarity is most important and then look for a ring that gets you the most bang for the buck. So for example if the woman isn't as concerned about imperfections that are not visible to the naked eye then you could look for a diamond with some inclusions and get a larger or whiter diamond less money than if you bought a diamond with little inclusions.

The couple should discuss the topic in advance. This might be an awkward topic for some people. You aren't married YET. But it is a fairly important topic and I think discussing it before the purchase is the best idea. The man doesn't want to buy his future bride a ring that she doesn't like. Its not in the best interest of the couple to spend more than they can really afford. If you can't talk about finances or a topic like this with your girlfriend or boyfriend then I think this is something you need to work on if you plan to get married.

When it comes down to it, buying a ring is a personal choice. Some people will spend more or less on a ring than others. But my advice is that you should make sure you spend an amount that is within your budget and avoid going into debt to buy an engagement ring.


Photo by Somma
[edit May 27 2010 : had to fix a couple broken links]

Financial changes after Marriage

I've recently gotten married. Yay! Now that we're married there is a bit of paper work to do to update names and such.

Below is an After the Honeymoon checklist from CountryWeddings.com that I found which will help aid in the process

Name Change & Other Tasks
	Change bank account names
	Send out Change of Address Cards
	Change wills and insurance policies
	Change beneficiary information on retirement plans and investments
	Verify life insurance amounts and change beneficiary
	Change health and dental insurance plan information
	Change car insurance and registration information
	Request new Social Security card
	Change driver's license name
	Add name to utility bills
	Change passport name
	Re-register to vote
	Change property title / mortgage name
	Change tax records with your employer and accountant
	Change credit card information
	Change club membership information

Major items that I'll want to take care of in general priority order:

1. Add spouse to health insurance at work - This is the #1 priority since we want to get her on my coverage as soon as possible.
   
5. Shop around for car insurance policy - We'll combine our policy so that means canceling one or the other. Would also be a good time to shop around for good rates.
   
6. Set up a joint bank account - We will have joint finances. So we'll get a joint account. It may also be a good time to switch banks for me.
   
7. Get a Will - I know I should have one already but I don't. As a single person I wasn't that concerned. But now it is more important.
   
8. Investigate additional life insurance - I get 2x my salary coverage from my employer. We'll probably want to add some to that.
   

The marriage penalty

I found this article on MSN : The Myth of the Marriage Penalty. It discusses whether there is really a tax penalty for married couples over single filers. Check out the article it makes some interesting points. Basically it seems that with current tax law at least that there really isn't a penalty in general with some rare exceptions. But even before tax changes in 2001 the majority of people didn't have a penalty.

I was curious to check the numbers so I decided to compare taxes for a couple situations. I looked at combining equal incomes of $40k and combining disparate incomes of $100k and $40k.

Equal income: $40k + $40k

Lets compare two people who make $40k each. If single you would get a deduction of $5,350 and an exemption of $3,400 for a taxable income of $31,250. The tax bill on that for a single person was $4,293. So two people filing single would pay $8,586 on $80,000 combined income.
If those same two people got married and still made combined $80k then their taxable income would be doubled at $62,500. If married filing jointly the tax on that would be $8,589.

So in this case the income tax is virtually the same between single or married.


Disparate income : $100k + $40k

If there are two people with one making $40k and the other making $100k then their tax filing single would be $4,293 and $19,654 respectively. If those two people get married and file jointly with a combined income of $140k then the tax bill is $23,473.

In this case the tax bill is $23,947 separately and $23,473 joint.

So in both cases there is no penalty.

These are only a couple examples and they only use very plain tax circumstances with no itemization or anything but plain standard deduction. I'm sure other situations would differ.