Tidying Up Your Finances

You’ve probably seen or at least heard about the show “Tidying Up with Marie Kondo” which aims to help people clear the clutter from their homes.

Marie asks participants to assess each item and determine whether it “sparks joy” for them anymore. If it doesn’t, it goes to a charity shop or to the trash. By clearing the clutter in one’s life, Marie says it not only creates a better home environment, but it has beneficial effects on one’s mood, thought processes, and abilities.

The same exercise can be applied to your finances. Is your spending out of control? Do you have little to no idea how much you spend on food, clothes, or entertainment per year? Do you hate looking at your account balance because you’re afraid of what you’ll see? Then you may want to tidy up your finances. Here are a few ways to help you get started:

• Create a budget. Start by adding up all the monthly expenses you MUST pay for – rent/mortgage, utilities, gas/transportation, groceries, credit card bills, out-of-pocket health expenses, insurance. Deduct that from your monthly take-home pay. What’s left is what you can either save or spend on non-essentials. Nerdwallet has an online budget sheet https://www.nerdwallet.com/blog/finance/budget-worksheet/  you can use to make these calculations. There are also many free apps, like Everydollar.com and Mint.com, to help you stay on budget.

• Get rid of credit cards with high interest rates. Their huge interest charges make them harder to pay off. For instance, say you bought a coat for $400 (on sale!) on a credit card with 16.99% interest. If you only pay $25 each month, that coat will end up costing you $456 because of the interest. The more expenses you put on that card, the higher your interest charges will go. Apply for credit cards with low interest and transfer the balances on these high-interest cards to the low-interest cards. Pay more than the minimum or the entire amount whenever possible.

• Control impulsive shopping. Yes, that new [fill in your latest obsession] may “spark joy” at this moment, but is it really worth the financial stress it may create? Postpone the purchase for 24 hours and see if you still must have it.

• Save for big-ticket items. Instead of using credit cards for expensive items, plan ahead and save for them. Getting into a savings habit will help you live within your means and avoid the stress of deepening debt.

Copyright 2019 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.

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Couples start marriages in debt—then argue about it. How can you avoid financial fighting?

It’s not uncommon for couples to stress about money. According to an Ohio Credit Union League 2019 consumer survey, 38 percent of Ohioans say finances have been a main cause of stress in their romantic relationship.

According to a study published in the scientific journal Couple and Family Psychology: Research and Practice, 50 percent of divorced couples interviewed listed financial problems as a major factor that contributed to their divorce. That puts financial problems third on a list of 11 contributing factors—behind only “too much fighting” and “lack of commitment.”

Couples struggling with debt have a higher propensity to argue about money than those who aren’t. According to a study by Ramsey Solutions, 41 percent of couples who have consumer debt say most of their arguments center around money. By comparison, 25 percent of couples who are debt-free say they argue about financial matters.

In fact, money doesn’t make the top-five list of things in which debt-free couples argue.

Unfortunately, an increasing number of American couples are beginning their marriages in debt—and doing it, willingly. The OCUL 2019 consumer survey shows that 57 percent of Ohioans believe finances should be combined when a couple marries. That leads to more income and assets, but also more debt. According to the Ramsey Solutions study, 86 percent of couples married five years or less reported starting their marital lives with debt. That’s compared to only 43 percent of couples married more than 25 years ago.

However, there’s good news for those couples living in the Buckeye state—Ohio couples fair better than any other state. According to a Value Penguin study, the average Ohio household has only $5,446 of credit card debt—the least of any state.