Can I afford to get married at this time?

This is not a very uncommon question. Dating, going steady and even living together may have all been fun. Getting married is a big step. There a lot of questions that you get that are unrelated to finance. But if you wonder if you make enough to support another person, or your combined income is enough, you are not alone. However, the situation is not so bad.

While we don’t have answers to the last minute jitters or cold feet for the wedding etc. Mofinto can help with financial planning.

In general, if both the couple are working, then the incomes can be combined to compensate for the doubling of expenses. There are also additional financial benefits like being able to file tax returns jointly with spouse that will give bigger deductions. This means more money in one’s pocket.

The toughest one to get a handle on is the expenses for the wedding and post wedding. Start by making a list of wedding expenses followed by post marriage living expenses.

Remember marriage is in a way the beginning of life for the two of you. It’s every bit exciting. You just need to plan well.

Mofinto makes it easy to do this. Simply create a new plan in Mofinto. Then pick “Get Married” from goal types, pick the target year and target amount for the goal.

Mofinto walks you through series of questions about your income, your spouses income (you can specify not only base salary, bonuses but you can also specify expected promotions, stock options and/or stock awards etc.), your expected wedding and post marriage expenses. You will even be able to itemize these expenses which helps most people.

Once you answer all the questions, Mofinto will simply do all the calculations including taxes, inflation etc. to figure out if you will be able to save the goal amount or not.

You can even get details of inflows and outflows of money (called cash-flow) for every year.

You can add multiple goals – say in couple years if you want to buy a house and later start a family by having  children etc.

Don’t let the words finance or planning scare you. LetMofinto help you.

Is financial planning only for the wealthy?

That’s a good question. If you look at the top financial advisors they charge hefty fees and also only take as clients who are high net worth individuals usually above $1M. However, everyone needs basic planning.

Young graduates who just started making money, but carry college loans, newly weds who have extra expenses to deal with, those that have credit card debt need advice and planning but can’t afford to find it.

It also starts with education and understanding of money management. Also a really good knowledge of risk vs reward dynamics will help avoid pitfalls in investing.

Basic planning involves understanding money flow. Cash you earn is positive cash flow. Cash you spend is negative cash flow. Usually positive cash flow is what you make in your job. If you have investments like stock, fixed deposits, or bonds the interest or dividend they generate year over year also adds to the cash flow.

Most problems arise because we spend more than we earn. This may seem like a simple problem but in reality it’s more complex. What you take home from your pay check is usually much less than what you are paid. This is because of income tax, pay  roll deductions etc. Also if you have credit card debt, car loan or mortgage on the house, all of these need to be considered before you figure out what your take home pay is.

Life is pretty good at throwing curve balls at us. Your car may unexpectedly give up on you and needs attention. In my case, I experienced sudden expense only last week. My son lost his glasses and we had to rush to the eye doctor to get a new pair of glasses. The whole thing with deductibles etc. cost me $250. Something a good plan should expect to have happen from time to time.

Also you work hard for the money and you deserve to have fun. So if you are planning on that vacation to Hawaii or want to take your kids to Disney World, you need to save up for that trip. How much do you expect to spend and when?

If you plan ahead for regular expenses as well as irregular ones, you will realize that it’s easy to get out of debt and/or stay debt free.

If you can afford a financial advisor that’s great for you. If not, use a tool like Mofinto that walks you through your goals, expenses, income, investments etc. Mofinto automatically calculates the taxes etc. so that you have a good idea of your cash flow for several years to come. It will also predict how much of a chance you have of making your goals.
Using a tool like Mofinto, makes you realize planning is not a chore but rather interesting. You can try different scenarios to see which plan works best.
Best of all you can’t beat the price. It’s totally free. Sign up and give it a try.

College education loans have just become more expensive

Due to a stalemate between congress and senate, starting July 1, the Stafford college loan interest rates have doubled from 3.4% to 6.8%. Average student graduates with $30,000 debt. With employment situation not looking much better than it did last couple years, the increase in interest rate means students need to think harder.
When senate comes back into session, they are most likely going to discuss paring down the interest rates back, but as it stands it’s become pretty hard for parents and children to plan for college.
There are several questions that need to be thought through before embarking on college education. If things work out in favor of going to college, by all means, you should do it right away. If not, postpone it for a few years and revisit the decision when things are a little easier.

1. Is the high cost of college degree going to be offset by the income you are going to make when you get a job? The answer depends on the college and the degree you are seeking.
2. Can you borrow from your parents at a lower interest rate? There are ways to make this official.
3. If you are currently employed and would waiting for a couple years help you save up enough for college?
4. Are there alternative financial institutions that give the same or similar degree at much lower cost? Some colleges are more expensive than the others.

and many more…
You don’t know the answers until you actually model what happens using a tool like Mofinto. You might actually find that you can afford the loan if you cut down expenses, able to secure a good job after the college education etc.
With a college degree you are investing for the long term and it’s a very important decision. It’s critical that you educate yourself about all the options and clearly map out the alternatives by trying out ‘what-if’ scenarios.
Hopefully, politicians in Washington, will reverse the increase and bring the interest rates back down to 3.4% or below. Good luck!

Who needs financial planning?

Do you plan your trips or just hop on plane to a random destination and hope that you will have a good trip? Just as a successful vacation or trip requires knowing ahead of time where you are going, how you will get there, what you will do when you get there and how you are going to return home, good and careful planning helps make the most important journey we all embarked upon, a success.

Irrespective of what you do, you need financial planning. Whether you are a student, just started in a job, mid way through career or about to retire, the most important step is to understand your goals for money and have a plan to achieve these goals.

Goals can be as simple as take a vacation in couple years or important steps like get married or start a family. The first step is to determine what your goals are over the next 1,2, 5, 10, 20 years or longer than that.

Next step is to list out expenses per year, income per year, savings, investments like stocks and bonds. Income and growth on investments and savings will help augment the income from your job. It’s also important to take into consideration credit card debt, car loans, mortgages etc. that all add to the cash outflow.

If cash inflow is greater than cash outflow, you will not end up in debt.

In a very simple plan with the only goal of being debt free, this is all you need to do.

However, as the goals expand so does the complexity of planning but tools like Mofinto can make it really simple.

Also it’s important to update the plan at least once a year or more often so that the plan can be kept up to date and react to changing circumstances.

Mofinto offers an easy to use quick start functionality that makes it easy to start with simple plan and expand as your needs grow. Did I mention that it’s totally free!