Master Your Card

I got the oddest request today. A couple came in and wanted me to notarize their prenuptial agreement. It was drafted by them with no help from an attorney and it was only a page and a half long. As a general rule, I don’t read documents I notarize because a notary is only saying they witnessed your signature. I didn’t read this one, though I was kind of curious about it. Perhaps they didn’t have a lot of money and assets, but prenups are also supposed to cover any future plans of wealth, as well.

But, since it came up, I thought I’d discuss it with you guys to see where you stand. Most people I talk to about prenups don’t think they need one. They believe that they and their respective partner will never break up. While I think that’s a naive way to look at things, I do believe that some people feel it’s more a matter of trust in the person that you want to spend the rest of your life with then it is that they’ll never split up. Still, a prenup protects a lot more then you think.

What does a prenup cover?

A prenup can cover pretty much anything you want it to cover, both present and future. You’ll want to adhere to state laws and ensure that the agreement is fair to both parties or you may find that the courts will rule against it in the event of a divorce. You also need to understand that you can’t opt out of child support, and in most cases, alimony with a prenup, so don’t try. Here’s but a few things a prenup can protect for each party.

# 1 – Property

This is pretty standard. Generally speaking, property refers to land and/or homes. The prenup states how the asset(s) are to be divided amongst the divorcees, or if it is to be sold, how much goes to each respective party. This is a particularly important clause if you wish to keep a family home within the family, or if you have property that you wish to have passed to children from a previous marriage. This clause can also go into personal property such as cars and household goods.

# 2 – Debts

Many a person’s credit has been ruined because they’ve failed to plan for the amount of debt one spouse has at the time of divorce. A prenup can ensure that if one spouse racks up a ton of debt the other is not responsible for it after a divorce. This gets tricky with cards and loans that are jointly held, so it’s important to be very clear about the debt loan expectation during discussions before marriage, as well as, in the prenup.

# 3 – Assets for Children

In today’s society divorce is a common and acceptable practice. If two people cannot genuinely make their marriage work, divorce is the order of the day. However, in many cases, there are kids involved and getting remarried can seriously affect them and what they may be entitled to if something happens to their parent. A prenup can specifically carve out certain assets for children from a previous marriage and ensure they are provided for if something were to happen to the parent.

# 4 – Businesses

If there are family businesses or partnerships involved, then a prenup can keep those intact. Each party would need to list their percentage of ownership and what it is that they expect to receive out of it if they were to split, or it can simply be that one person signs the rights over to the other. Whatever the decision, it has to be fair to both parties.

# 5 – Future Assets

Maybe your portfolio isn’t very big right now, but you have plans to grow your income. Well, you can include a clause within the prenup to protect that as well. This can cover anything from planning to be a doctor to making it big in Hollywood. If it’s something that could bring you an asset and would need to be divvied up in the event of divorce, then you’ll want to include it. This also covers unexpected windfalls and/or inheritances.

How to go about a prenup?

If after talking it over with your intended, you decide that a prenup is for you, the best thing to do is for each party to begin making a list of their current assets. You don’t have to list things like dishes and towels – just list them as household goods – but you do want to be as accurate as possible. Also include the value of each asset you list.

The next step is to discuss with your intended what you think would be a fair way to divide the assets up. Discuss what’s being left to kids, what goes to other relatives, and what goes to each other. Once you have an idea of how you’d like to divvy the assets up, it is recommended that you each hire separate attorneys to finalize the discussion and draft the actual document.

Some key points to note, try to do this about three months out from the wedding to make sure each party has enough time to reflect and consider the decision carefully. Judges do not look favorably on prenups when they’re done right before the wedding because it could be an indication that it was signed under duress. Additionally, if one party cheats, judges are less favorable to holding up the prenup agreement. You may want a clause that states the agreement is not null and void in the event of cheating, or you may wish to include that it is. It’s a tough topic to bring up, but when there’s a lot of money involved you really want to protect yourself.

Finally, it’s recommended that there be a severability clause within the agreement. This basically means that if one clause within the agreement is stricken, the rest remain intact. This keeps the contract as a whole valid, even if one section is deemed unsuitable by the courts.

Should you DIY?

It depends on the situation and the couple, I suppose. But, if you decide to do it yourself, you should definitely do your homework. You have to understand state law regarding prenups. Again, certain states won’t allow certain clauses, so the more you know the better off you’ll be. Also, lawyers are more liable to be impartial to the task. You may think you’re being fair, but sometimes your view is biased. Even if you draft the document yourself, I’d still recommend a lawyer consultation to review the document.

My thoughts…

I’ve told you guys before that I’ve seen a lot of bad things happen to people and their finances over the years. Perhaps this has negatively colored my view of how I would handle my finances in a joint situation; however, I believe in protecting yourself, no matter how much you trust the individual involved. To my way of thinking, this isn’t an issue of trust so much as it is being prepared for every eventuality. We have insurance for health, life, cars, homes, etc. We do this not because we expect bad things to happen, but because we want to be prepared just in case. Well, I sort of look at a prenup as insurance against divorce. It may not happen, but if it does, you’re covered.

What do you think? Are prenups important, or does it only matter if you have a lot of money? If you feel like sharing your prenuptial stories, I’d love to hear them!

Hello all! Hope your weekend was good! Mine has been extremely busy, but I did manage to sneak in Transformers 2…awesome movie! A little long, but overall not bad. It’s got action, intrigue, comedic moments, and some touching ones. That’s a lot of emotion in one movie, so it did alright with me. Any one else catch it?

Before I get down to the round up, there’s a little news I need to share with everyone. You may have noticed that my posts have been a bit more sporadic than normal, as have my comments on your blogs. Summer is one of the busiest times of year for me with work and going into the fall semester I have a pretty heavy workload. Because I want to be fair to Jonathan and you as readers, I will be going to a part-time basis with MYC. I’ll have a post about once a week and you will likely see a little less of me on your own blogs. I apologize for this, but the schedule I’d been keeping was too much and I needed to scale back a little. Jonathan has been gracious enough to let me stay on part-time, though, so rest assured…I’m not going away completely! ;)

Alright, with that out of the way, let’s get into the good reads, shall we?

- Brip Blap talks about financial behaviors being set in stone. It’s funny, we all have our own little things that we refuse to change, and we all view things very differently most of the time. But, that’s what makes personal finance personal, so if I’ve got some habits set in stone, they’re because they work for me. What about you?

- J.D. @ Get Rich Slowly discusses the first three steps to financial freedom. A lot of the same if you’ve been in personal finance for awhile, but if you’re venturing into the murky waters for the first time, this is a good beginner’s post!

- Ginger @ Girls Just Wanna Have Funds reminds women that marriage isn’t just about romanticism. This has been a topic of much debate lately, but what it comes down to is this. While love is important, it is equally important that you are financially compatible or you’ll be finding trouble in paradise a lot sooner then you think!

- Broke Grad @ Broke Grad Student has an older post that I believe I somehow overlooked, regarding whether or not having a second job is worth it. In this economy and from a monetary perspective, probably. But, it’s a lot of strain and wear on your mental health and happiness. Would you rather have more time to spend with loved ones and just cut back on expenses, or would you rather have more money and never see anyone? I’ve been here and I prefer to cut my expenses and suck it up. But, this really depends on individual situations.

- nickel @ five cent nickel has an awesome guest post that lays out four ways to ruin your investments. By a show of hands, how many have done at least one thing on his list? Yeah, me too!

- SVB @ The Digerati Life rates the stress level of financial events. Pretty interesting…and you wonder why money is one of the biggest reasons for divorce in the U.S.

- Kelly @ Almost Frugal asks her readers how they judge success. This is such an important question, yet one we think very little of in the long run. How do we know when we’ve reached the level of financial security we set out for? When do we know we’ve achieved that goal? Is it when the debt is gone? Is it a certain dollar amount? I challenge you to consider your goals and take it a step further. How do you determine you’ve achieved that goal?

- Trent @ The Simple Dollar gives us the lowdown on why we need credit at all. Credit is important for everything….car insurance, rent, mortgage, all your big purchases not made in cash. Having good credit gets you the best rates. You don’t have to use credit cards, but you do need to build a credit history…they just happen to be one way to do it. Check out Trent’s article for more!

- FB @ Fabulously Broke has a great article on how being a lady is a lost art. This post has nothing to do with finance – at least not directly – but I really liked it and know a few women who could do with a good reading of this post. In FB’s usual way, it’s highly entertaining and too true!

That’s all I got this time, but hope you find some that you like! Until next time…

Happy Reading!

I’ve been in a bit of a Jane Austen reading mode lately, mostly Pride and Prejudice as it’s one of my favorites. But, in reading the books and watching the films, it struck me that we’ve come a long way in terms of marriage. In Austen’s time, marriage was simply a business arrangement. People married for money and the family connections it provided, very often foregoing any sort of affection for one another. The result was infidelity.

Having love, and not money, be the basis of a marriage is actually a fairly new concept. Although it did happen in Austen’s time, that was not the norm and was certainly frowned upon in polite society. But, if such arrangements are entered into today, the benefiting party is often referred to as a gold digger. This seems to suggest that polite society has flipped it’s assessment of marriage and now frowns upon marrying for money – though I’m sure it still happens in family circles that have something to offer one another.

In any event, I came across a story not to long ago that talked about an ad from Craigslist. To paraphrase, a woman who is a self-proclaimed beauty is frustrated by her lack of being able to find a husband who earns at least $500k per year. She has recently noticed that women much less pretty and intelligent than herself have managed to land these rich husbands and wants to know what it is she is doing wrong. Her particular story is the classic case of making a business arrangement as a marriage rather then seeking love. But, she got one response to her ad that seemed to garner a lot of attention, and it’s something I wanted to share with you here to discuss.

The Response

Dear Pers-431649184:

I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament.
Firstly, I’m not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here’s how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here’s why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here’s the rub, your looks will fade and my money will likely continue into perpetuity…in fact, it is very likely that my income increases but it is an absolute certainty that you won’t be getting any more beautiful!

So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you’re 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!
So in Wall Street terms, we would call you a trading position, not a buy and hold…hence the rub…marriage. It doesn’t make good business sense to “buy you” (which is what you’re asking) so I’d rather lease. In case you think I’m being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It’s as simple as that. So a deal that makes sense is dating, not marriage.

Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as “articulate, classy and spectacularly beautiful”
as you has been unable to find your sugar daddy. I find it hard to believe that if you are as gorgeous as you say you are that the $500K hasn’t found you, if not only for a tryout.

By the way, you could always find a way to make your own money and then we wouldn’t need to have this difficult conversation.
With all that said, I must say you’re going about it the right way.
Classic “pump and dump.”

I hope this is helpful, and if you want to enter into some sort of lease, let me know.

Ok, so after reading this response, do you think he was being too hard on her? What are your feelings in general about marrying for money, is it wrong? Can affection and love grow from a relationship that began merely as a business deal?

My Thoughts

The idea of marrying for money alone has always been something I’ve looked at as impossible for me to commit to. The idea of not having love seems heartbreaking to a romantic such as myself. However, I think there’s something to be said for finding a partner with similar attitudes toward money.

When choosing a marriage partner it is best to find someone compatible with you in all things, money included. Otherwise it makes the relationship harder and sometimes not even love is enough to sustain it. I’m a big believer in communication and working on a relationship before just throwing in the towel; however, I’m practical in that I believe sometimes you have to realize a dead venture when you’re faced with it. That’s the business side of me coming out.

In regards to the reply on the CL ad, I don’t think he was out of line. Women who offer nothing more then their looks in trade for money are asking for such responses because he’s absolutely right, she’s bringing nothing else to the table. When the money is gone, so is she. Her looks will fade over time and the rich guy is left holding a depreciating asset he can’t trade in for a newer model because divorce is expensive and she’d take half his money anyway. That “transaction” needs to go both ways.

I’ve pretty much resigned myself to the fact that, while I love the period in which Austen wrote – the manners, the address, the formalities, and style – I would not have made my family very happy. I would be too headstrong and willful, and I would refuse to marry for money alone.

So there are my thoughts on the matter. What are yours?

I’m not normally a big fan of Miley Cyrus, but today I wanted to talk about her new song ‘The Climb’. If you haven’t heard the song, I highly encourage you to listen, not because she’s a phenomenal artist – though I think she has potential when she gets older – but because the words themselves are so moving. And, while I think these words are great for every day struggles, I’m a pf blogger so I see the potential for this applying to personal finance.

Let’s dissect the song, shall we?…my sincerest apologies to Miley Cyrus, of course!

I can almost see it
That dream I’m dreaming
But there’s a voice inside my head saying
You’ll never reach it.

I’m sure that many of us in the quest to get out of debt have heard that voice. It’s the little nagging nay-sayer who tells us working to get out of debt is pointless because we’ll end up right back where we started, or it tells us we don’t have the willpower to stop spending, or any number of other negative phrases.

Every step I’m taking
Every move I make feels
Lost with no direction
My faith is shaking

But I gotta keep trying
Gotta keep my head held high.

I’ve said before that perseverance is a necessary quality when trying to get out of debt. Actually, I think it’s necessary with most things in life, but the point is, you have to be willing to pick yourself up and try again. Along the way you’re probably going to stumble, but that’s ok. No one’s perfect. You just have to keep trying and remember this…

There’s always gonna be another mountain
I’m always gonna wanna make it move
Always gonna be an uphill battle
Sometimes I’m gonna have to lose.

Guess what? You didn’t get into debt overnight and you’re certainly not going to get out of debt overnight. But more then that, personal finance is ever changing so the phrase “there’s always gonna be another mountain” can very aptly be applied to it. Once you master one area, there’s something new to learn and master. Once you get out of debt, you’ll find new goals to reach for and then you start over and work your way towards those goals. Sometimes, along the way, we find that what we thought was important really isn’t, and we have to let those things go. Sometimes we simply discover we can’t beat everything and we have to choose what’s more important. You may want to get out of debt in three years, but perhaps sending your kids to a private school is more important to you. While I don’t like Miley’s choice of the word ‘lose’ she makes the point that we’ll never have everything go the way we hoped or planned.

Ain’t about how fast I get there
Ain’t about what’s waiting on the other side
It’s the climb, yeah.

At the end of the day, money is just a tool. Our life is what’s most important and the choices we make define how we choose to live that life. Our goals are always going to be important to us, even the monetary ones, but it’s what we learn and the choices we make in life that really matter…that really define us. Personal finance is a huge part of our lives and I strongly encourage you to build good habits. But if your road getting there is a little slow-going, don’t worry. It ain’t about how fast you get there…it’s the climb!

Hello, hello blog friends! I’m a little late with round up I know. My apologies. I had the opportunity to go see Dane Cook live in Houston and so I spent most of Saturday in a car driving. But, the show was amazing. I know Dane Cook isn’t everyone’s cup of tea, but he is mine and seeing him live was something on my bucket list. So, I had a great time. I hope everyone’s weekend was equally as exciting!

And now on to the round up then. These oughtta start your week on a positive note!

- Dawn @ Fighting Foreclosure gave some good reasons to get to know your neighbors. I’ve never bothered in an apartment complex, which is more just a time factor on my part than any reluctance to meet new people, but still. Dawn does have a point…

- Patrick @ Cash Money Life discusses the difference between conscious and unconscious spending. Spending money isn’t our problem…it’s how we think about it that is.

- SVB @ The Digerati Life shares her story about her business credit card being closed. Many people are feeling the effects of the new credit card reform already. Check out some signs to watch for!

- Living Almost Large asks whether or not larger people should pay for two seats. Touchy subject for a lot of people, but as someone who spent a lot of their life overweight, I’d say that for the sake of everyone’s comfort, yes. Either pay for two seats or upgrade to first class where the seats are roomier.

- Jeremy @ Generation X Finance explains how your car is making you poor and what you can do about it. Cars are expensive, to be sure. And sometimes they’re a necessary evil. But, Jeremy gives some great pointers to consider when you’re thinking of buying your next car.

- J.D. @ Get Rich Slowly had a guest post this week on estate planning. It’s not a fun topic, but it is necessary, no matter that you think you’ll live forever or that there will be plenty of time. You never know. I have a member whose mother died in a car accident and he’s fighting with lawyers over the estate because there was no will. It’s not a pretty situation to leave a grieving family member in. So, bite the bullet and make a plan.

- Trent @ The Simple Dollar reminds us that avoiding spending is not the same as saving. It’s an important step, but it’s not the only thing that leads to saving money long-term.

And there you have it! Enjoy your week and I look forward to reading this week’s articles!

Happy Reading!