GMR 15: Common Financial Questions Part 1

Episode 15
In this episode of Getting Money Right, we’re answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.

Show Notes:

1. How does the overall economy affect your personal finances?

• Global economy - what happens anywhere in the world can impact our economy.

• National Debt impact on the economy.

  • If the U.S. is unable to pay its debts.

  • A rise in interest rates.

  • Drop in the value of the dollar.

• Student loan debt impact on the economy.

  • Slows down their contribution to the economy.

  • Live with parents.

  • Put off having kids, buying a house, cars, etc.

  • All these factors will affect the health of our economy since a large part of our economy is based on people spending money.

• Inflation

  • Hurts your buying power. It means you have to pay more for goods and services.

• Consumer confidence affects how much people spend

  • If they feel the economy is strong they’ll spend.

  • If they feel the economy is weak they’ll save.

• Oil Prices

  • Affect everything not just gas at the pump.

  • High oil prices drive job creation but also increases the cost of manufacturing and travel cost.

  • Low oil prices benefit manufacturing through lower costs but can also affect jobs in the oil and gas sector.

The health of the economy affects your personal finances because it directly impacts how much things cost, from interest rates to the price of gas, and jobs.

• Supply & Demand

• Housing

• Jobs

• Unemployment rate

2. Should I have joint or separate bank accounts with my spouse?

• If you’re married, definitely yes! If you’re dating, definitely no!

• The benefits of combining accounts:

  • No temptation to hide money from your spouse.

  • Open communication catches financial issues early.

  • Two heads are better than one, having your spouse see the balance will help catch any errors.

  • You can easily pay bills from one location, making it easier to plan and budget the automatic expenses in your life.

  • Both spouses have access to the accounts in case something happens to one person, the other person can still access the money.

  • I tragically had a woman in her 50’s whose husband passed away and she couldn’t access any of their money for funeral expenses and common house needs for quite some time

  • The most important thing about this is the unity, this is “our” money, that “we” spend “together,” based on a plan that “we” created, and “together” we’re going to manage these finances.

• Reasons not to combine bank accounts:

  • It’s harder to separate the rest of your lives if you combine finances in case of a breakup.

  • Dealing with an addict or someone who clinically can’t control their behavior.

  • This means it’s time for professional help.

  • Gambling addicts should not have full access to the accounts whenever they want, they should be portioned just enough cash for meals and gas etc.

  • Their online access should be shut down. This goes for pornography addicts, alcohol or substance abuse addicts, and for manic-depressive or bipolar disorders.

3. I’ve heard about Good Debt, what is that?

• Debt is considered good when you’re able to borrow (leverage) money from a lender such as a bank, to purchase an asset that has potential to produce a profit, either through regular income or growth in equity (value). Ex. business, real estate.

• Difference between assets and liabilities

• Assets put money in your pocket

• Liabilities take money out of your pocket.

• Borrowing to buy assets is better than borrowing to buy liabilities. However, using too much leverage and owing a lot of debt is unwise.

• Debt, even when used for assets should be minimized and not be a lifestyle.

Resources

Budget Forms and Tutorials
Spending Guidelines
Envelope System Video