Personal Banking E-Newsletter - June 2011

Marriage: Entering a New Investment Life

There are a lot of issues that couples need to think about when tying the knot — wedding preparations, family, and, of course, finances. Addressing personal finance and investment issues before the big day may help improve your odds of being together years later. Here are some financial issues that you should consider when embarking on a matrimonial journey.

Discuss financial styles before marriage — Start your marriage off on the right foot by having an honest discussion about financial habits and objectives. Are you a saver, but your prospective spouse lives paycheck to paycheck? Do you prefer investing heavily in stocks, but your fiancé’s portfolio is filled with bonds? What are each of your short- and long-term financial goals?

Think holistically — Consider each spouse's investment portfolio as part of a whole. For instance, if both you and your mate contribute to 401(k) plans and IRAs, see how your investment choices match up. Depending on your goals for retirement, one or both of you might want to invest more aggressively. Or you might find that your combined portfolio is more exposed to risk than the two of you can tolerate. Either way, you can rebalance your asset allocation by shifting money from one asset class (stocks, bonds and money market instruments) to another or by adding new money to the underrepresented asset class.

Review documents — Along with other legal documents, remember to update your beneficiaries on life insurance policies, IRAs, employer-sponsored retirement plans and pensions. Also, be sure to either create or modify your wills.

Determine your tax status — Once married, you'll need to decide whether it's best to file your taxes jointly or separately. Usually, the "married filing jointly" status results in a lower tax liability, but in some instances — depending on deductions and income earned — "married filing separately" may be more advantageous

Meet with a professional — Make a date with a qualified financial professional to discuss your financial goals, such as buying a home or investing for retirement. Then, after making sure that all of your financial bases are covered, relax and enjoy the beginning of your life together.

© 2010 Standard & Poor's Financial Communications. All rights reserved.

Build the Backyard of Your Dreams

Creating a paradise without breaking the bank

It is summertime, and our activities aren’t the only things that have migrated outdoors. Likely, the attention you gave your aging bathroom or shabby carpet over the winter is now being turned to the yard you’ve been meaning to fix up but just haven’t had the time or money. Limited only by your budget and your imagination, you can be well on the way to the backyard of your dreams this year.

Flowers and plant life

Many homeowners are looking for things they don’t have to work too hard to maintain, according to Will Spiegelberg, owner of Spiegelberg Landscape Design in Chicago. Many people are looking for native plants, not only because they’re environmentally friendly but because they need virtually no maintenance by the homeowner. Many don’t even need to be watered. Rain collection features can also be incorporated into a landscape design to help plants get the water they need without dipping into a well, he said.

An extension of the home

Outdoor living spaces are all the rage on home improvement TV shows, and those who can afford to go all out will do so, regardless of how cold it gets during the winter, according to Spiegelberg.

Outdoor kitchens, complete with plumbing and a sink and even features like a pizza oven, are popular among those who can afford it and will use it often. Special outdoor-friendly televisions can be installed. Those who don’t want to get too warm can install sheltering for shade or even misters. And to lengthen the period during which homeowners can enjoy their outdoor spaces, outdoor heaters are available, like the ones restaurants sometimes have on their patios.

Because those items can be a hefty investment, those with more modest budgets can modify their plans and get a great backyard retreat for a lot less, according to Rick MacRoy, owner of Landscape Creations in Lombard, Ill. A high-end stainless grill, a nice patio set and a fire pit can make a great outdoor space for someone who can’t afford (or won’t use) the fancier amenities.

Vegetable gardens

Vegetable gardening has taken off in the past few years as well, according to MacRoy.

Vegetable gardening gives a homeowner a sense of pride, not to mention ultra-fresh food. And once a garden is planted, it can be relatively low-maintenance. MacRoy has even installed drip irrigation systems, so homeowners can enjoy the bounty without even having to worry about watering.

A landscaper can integrate a vegetable garden into the overall picture of the backyard so it is not only practical but beautiful. Herb gardens are quite popular, as are heirloom vegetables, Spiegelberg said. Heirloom vegetables are varieties that grow as they were grown a few centuries ago, and the taste can be markedly different than today’s varieties. Heirloom flowers are quite popular as well, Spiegelberg said.

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In Debt Before Graduating High School

The new debt epidemic

"Sign up for a credit card and get a t-shirt” tables have become almost as familiar on campus as long bookstore lines on the first day of classes. What parent doesn’t want their college, or even high school student to have a card “for emergencies”? But it’s critical for parents to make sure students understand that “credit” means “pay back later,” not “buy whatever I want with no consequences.” Here are some ideas to make sure your high school or college kid graduates with an education and not a debt burden.

Under 21? Co-signer needed

Students who are under 21 now need a co-signer or proof that they can repay a loan, thanks to the 2009 Credit Card ACT. They also must opt-in to get prescreened offers rather than just receiving them randomly.

Make sure your student understands the, and how their behavior now will impact them later, including the fact that as soon as they open a line of credit, even as a co-signer, they're going to be building a credit history that will be used later to evaluate their creditworthiness if they apply for a loan for a car, house or even another credit card.

Advise them to build up responsible behaviors like:

  • Spending within their limits. Encourage students to see credit as a loan that must be repaid. It is their responsibility to manage debts and to keep their commitments with lenders. Warn them to avoid reaching a credit limit or "maxing out" cards.
  • Pay at least the minimum, and pay it on time. Be aware that as a co-signer, you will be held accountable as well for the debt, so a skipped or late payment will affect your credit score as well as your student's.
  • Read the fine print. Make sure they read applications carefully before signing and are aware of variables like interest rates, credit limits, grace periods, annual fees, terms and conditions.
  • Keep credit card numbers private. Warn your graduate never to give out credit card or personal information in a transaction they haven't initiated. Make them aware of identity theft and phishing scams that ask for credit card numbers. Make sure your student knows about identity theft and has strategies to stay protected.

Here are 3 simple questions they should ask themselves before any credit card purchase:

  • Do I have to buy this with credit?
  • Can I pay off the entire purchase when I receive my monthly statement, and if not, do I really want to pay interest on it?
  • What will this really cost me, including fees and interest?

Once your student graduates and moves on to the working world, make sure they understand how important it is to monitor their credit to watch for inaccuracies or signs of fraud activity. It's critical for their financial health that they know their ability to get low rates on mortgages or car loans is determined by their credit score and the history on their credit reports.

Are You Wasting Money?

Hidden ways consumers do it every day

We’ve all heard the line, “Money doesn’t buy happiness.” For most of us that’s probably true, but wasting the money that you’ve worked hard to earn certainly isn’t a recipe for bliss either.

If you’re like many Americans, the money from your paycheck often disappears quickly. Even if you’re not living paycheck to paycheck, money always seems scarce, especially these days. Consumers most often waste money by making poor buying decisions or simply neglecting to take advantage of easy and obvious savings opportunities.

But there are ways to save money – sometimes lots of money – without sacrificing your lifestyle.

Do this: Buy a used car.
Not this: Buy a new car. Cars depreciate fastest during the first three years. And you can increasingly find quality used cars that are only a year or two old – at considerable savings over a new model.

Do this: Pay your bills on time and stick to your contracts.
Not this: Pay unnecessary late fees or early termination fees. Paying your bills on time makes sense. But also avoid terminating contracts early and incurring fees, especially for cell phones or cable. And, if possible, pay down credit cards early to avoid unnecessary interest charges.

Do this: Compare prices for home owners and auto insurance.
Not this: Pay what you’ve always paid because it’s too much hassle to switch. Insurance rates can vary widely from company to company for comparable coverage. Compare rates, even if you’ve always gotten a good rate from your current company. And take advantage of discount opportunities, such as buying multiple policies from the same company.

Do this: Apply for rebates.
Not this: Throw away the rebate form. Marketing firms estimate that 50 to 60 percent of buyers fail to submit rebate forms. Waiting six to eight weeks to receive a rebate is unpleasant, but the money back makes it worthwhile.

Do this: Clip coupons.
Not this: Throw out the ads from your newspaper without looking at them. And be sure to look for coupons online. More and more retailers are discretely placing coupons on their Web sites, and discerning shoppers can save a bundle by checking ahead of time for the latest deals.

Do this: Participate in your employer’s flexible spending account (FSA).
Not this: Figure it all costs the same and forget about it. Not using pretax dollars for medical expenses is throwing money out the window. Consult your employer’s HR professional to better understand how to maximize these benefits.