10/18/04 Posted Highlights
A Man is not a Financial Plan: Women and Today’s Issues
Presented by Debi Kuehn MBA
Kuehn Financial Education Services LLC
623.580.9293
www.kuehnservices.com
Copy Right by Debi Kuehn

Greetings. I am truly excited to be here. I am honored to be a forum panelist for a second time. I vividly remember how much fun I had in 2003. I looked so forward to our gathering today because it provides an opportunity for me to express, “a man is not a financial plan!”

I want you to think differently about your money by the time you leave this auditorium. I am a curious person. Being here indicates you are curious also. Money is a great subject to be curious about. Because money is juicy, exciting stuff! Money touches us every day … and yes, money is emotional. So let’s satisfy our curiosity of personal finance with knowledge.

I will chat with you about issues that echo the interest and concerns of my clients along with personal reflection. We will swiftly discuss five topics under a Man is not a Financial Plan: Women and Today’s Issues:
1) Should spouses merge their money?
2) Joint credit cards: the pros and cons in Arizona, a Community property state.
3) Divorce: What you need to know so that you sever the relationship with your spouse and not your financial future.
4) Home sweet home: the difference between being approved for a loan and being able to afford it.
5) Two of life’s major financial events: retirement and saving for our children’s college … what if it is not practical to fund both. Which do you choose and why.

Let’s begin.

Your attitude and beliefs … that is the answer to the question, “Should spouses merge their money.” If you distrust your spouse in any way your attitude will be “I am going to protect my money.” That is a valid attitude. However, if this is your belief, are you benefiting from it? And if you are not benefiting from the attitude, is it possible to work on your relationship to create positive change?

I believe it is appropriate and beneficial to keep separate savings accounts, along with a joint savings account … if that is what you and your spouse decide. But, I don’t believe it is advantageous to keep separate accounts to pay household expenses that are jointly procured. As a matter of fact I think it is an utter mistake to be in a marriage and say, “these bills are yours and these bills are mine” … and that is that, end of story. Why? It breaks down communication. Couples must talk about money. Talking about money is as important as saving it. I have worked with couples that blame and shame a spouse for not being able to pay “their portion” of the household expenses.

I keep an individual savings account for the nest egg I accumulated prior to marriage. However, my husband, Dan Liberator, is welcome to know at any time the account balance. Also, this money has also jointly served us. For example, it went to help build our home and financially assist Dan’s parents. Yet, the money stays solely in my name and control.

Bottom line in regard to merging money: if you are communicative about your financial arrangements keeping separate savings accounts should not be threatening. And conversely, if the marriage fails you have an established account in your name.

I want to make a special point: if you are remarried and have money set aside from the divorce settlement for your children those funds should not be merged with the new life you are creating with your current spouse.
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Now what about joint credit cards? Please be aware that my advice is specific and applies to credit cards. As a resident in a community property state you must understand that during the marriage all that you have is your spouse’s and all your spouse has is yours. The term joint credit is self -explanatory, both people are held responsible for the debt.

So, if you are attempting to establish credit or rebuild poor credit, a joint account is helpful. Because the spouse with the stronger credit history qualifies for the credit at a better interest rate.

On the negative side, if your spouse mismanages credit then your credit report is injured. Debt collectors will hound you as much as your spouse. Finally, if a divorce occurs dealing with joint credit can be a night mare. We will discuss this more under the topic of divorce.

Please realize there is no need to hold joint credit cards. If you are married and have good credit, I recommend your credit cards are individual user accounts and if you are single, never and I mean never get joint credit cards with your partner. I was thirty upon marrying. I had individual credit cards prior to the union and have only opened individual credit card accounts during.
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Divorce … here are five actions you should do to sever the relationship with your spouse and not your financial future.
1) Establish good credit in your name prior to the divorce. If you are not in an abusive situation and you don’t have credit in your own name or your credit is poor, ask yourself, “is it possible to delay the divorce until I reach this goal?”
2) Pull your credit bureau reports. Know the account status of each debt. Individual, joint and authorized user are the types of accounts. Also, clean up any errors that appear on the credit reports.
3) Pay off balances on all joint credit cards. You can not truly close that account until the balance is zero. Also, realize if your spouse is ordered by the court to pay off the credit card debt and he or she does not, then those credit card companies will contact you and hold you responsible. Also, if your spouse continues to charge on those cards or pays late, this will reflect on your credit reports. Even if it is a decade after the divorce, if those accounts are still open as joint, then it will appear as part of your credit history. You and your ex-spouse are still joined in the eyes of the creditor.
4) If you don’t have an individual bank account, open one.
5) Consult a professional divorce planner to equitably allocate assets.
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Women view their homes as more than four walls and a roof. It is where we live out a wonderful portion of our day. However, too many families purchase homes that don’t allow them to meet other financial goals. Their income is exhausted on the mortgage and home upkeep.

A couple of months ago, on a Sunday afternoon I walked into my den and proclaimed to my husband, “Today we would be approved for the mortgage of our home.” But, would we struggle to afford it and our other goals? There are specific reasons I say this. Dan and I have an objective to pay off our home by our mid-forties. We have a 15 year mortgage and make an extra annual payment. In 2005 due to home appreciation a 15 year mortgage on our home would have a substantially higher monthly payment. With our additional income paying off a piece of property, could we meet our other financial goals?

Realize, just because you are approved for a loan does not mean you can afford it. Especially with so many creative loans offered, which typically are good to get folks in a home, but not so good at keeping them there if the financial picture changes.

If you are lagging in retirement planning, have children with hopes of paying some of their tuition, are caring for an elderly family member, or want to start a business, then you must evaluate how to meet these needs before becoming house poor.
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Earlier I stated, “Money is emotional.” This is glaringly evident if you are one of millions that need to make the decision to divert scare savings to fund your golden years or your child’s higher education. If you need to choose one or the other, in my opinion fund your retirement. For some people that rings harshly in their ears. “What do you mean choose my security over my child’s future?” I understand your emotion. However, college students can apply for student loans, grants, and scholarships. They can attend a state or community college for more reasonable tuition. They can work to pay for college costs.

Too many retirees face the risk of outliving their assets. So, please have a conversation with your child at an early age discussing his / her role in affording higher education.
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I realize a decent portion of my message today is geared for middle to upper middle class women. If you hold family together and earn a lower income, you may be saying, “I only wish I had the decision to save for retirement or my child’s college. Or it’s my dream to be able to afford a home, let alone one that is a dream home.” I am sensitive to that and I applaud you for the sacrifices you make to manage your money on a daily basis. My advice, please prepare a budget. Even if the budget is negative, meaning you owe more than you earn, you have a clear picture of what is coming in and going out of your house. Share this with your children so they understand. And educate yourself on all the resources the community has to offer. God bless you.

If you would like to grow in your financial knowledge, you are welcome to visit my website, www.kuehnservices.com and sign up for my free e-newsletter, Footsteps Along the Path. I have also provided a couple of resource handouts in your information packet. If you are watching by television and want the additional material please contact me. Finally, a copy of my speech will be listed on my website within 48 hours. Please go to the Education Center page and click on the link for Presentation Notes.

My time with you has been a pleasure. I trust you are already thinking differently about your money. In closing, I want you to know that you are worthy and able to successfully manage money. I believe if you build on your own skills, increase your range of knowledge and get help when you need it … you are the investment that will succeed above all others.

Madame Moderator …

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