Sunday, November 16, 2008

Over 25 and Single?

Maybe it was the fumes from painting my living room mixed with boredom at 2 in the morning, but I decided this was something everyone might not know, and they really should. This is directed to no one in particular. If you think this is for you- then it is. I wrote it for everyone, no matter what your age is or what your life situation is like.

If you consider yourself more sentimental than sensible- stop reading right now. Go find some flowery poetry to read or a good Jane Austin or Nicholas Sparks movie to watch. If you consider yourself just a "big kid" then go find a freakin' comic book to read or some dumb Family Guy or South Park cartoon to watch. This article will only frustrate and infuriate you. Good common sense cannot be observed while wearing rose-tinted glasses or beer goggles, especially when matters of the heart and cold hard cash are concerned.

If you are still reading this, congratulations! You will be armed with free wisdom beyond your years, well-conceived advice and a list of goals to achieve in the next few days/ months. Hopefully this helps even one individual or saves a single person from completely avoidable grief.

If you are a single person who is at least 25, and does not have any children, BEFORE YOU CONSIDER MARRIAGE OR EVEN A LONG TERM RELATIONSHIP YOU SHOULD HAVE:

· No debt. That's right. If you have a credit card and make a purchase with it- and you pay off the full balance within the next month- then technically you are debt-free and do not incur debt. If you have a balance you don't pay off, but pay TOWARDS- you are in debt. Being debt-free also includes not having: student loans, debts to parents or friends. Owing money on a car or a house is a fact of life. But if you owe both… and the car is new and you intend to keep it- roll it over into your mortgage or pay it off!

If you are a Doctor, Lawyer or Rocket Scientist and have debt from student loans, then you're in a different category. But obviously you should be paying that off as quickly as possible!

· A steady job. How much you make is not as important as that you HAVE a job. You can change jobs, get promotions, etc. but if you have no job- you have no source of income. People with no money should not be planning to get into a committed relationship or get married any time soon!! And parenthood? FORGET IT!

· A retirement account.
You heard me. If you are at least 25, you should be putting some percentage of your income towards an Individual retirement account EVERY month, or the minimum amount you're allowed per year. You don't have to have a retirement account with your job. You can walk into just about any bank and if you have between $500- $1,000 in hand, in the form of a check or from a transferable account- most establishments will allow you to open a retirement account. Then you just make deposits into it the same as you would any other bank account.

Anyone who is 25 or younger getting a jump start on a retirement account will be blessed beyond their wildest dreams by the time they hit middle age! Anyone who is 40 or older and doesn't have any kind a retirement account is three steps from screwed! Getting a retirement account at an earlier age in those years in between-are what separate the really smart people from the basically NOT stupid people. Yes, this is harsh, but remember this is your LIFE and HAPPINESS we're talking about here. How important are those things to you??

· At least $5,000 in a savings account. This is totally separate from your retirement account and it doesn't come with a debit card or check writing options. You never know when this money will come in handy. It's best if you don't touch it though. If you think you'll be tempted to dip into it for Christmas, to help out a buddy, spending for a vacation or a new car or anything short of a life saving emergency- put it into a high interest rate CD or Certificates of deposit. The bank or credit union will guarantee you'll make money on it but won't let you touch it from anywhere from three months to 2 years. Most of them "roll over" the account unless you tell them to do otherwise. Put it in there and FORGET ABOUT IT! Most banks expect you to open one with at least $100, and usually the more money you can open it with, the more money they'll pay you per period for keeping it there.

You should be stashing away 10% of EVERY paycheck into your saving account. Trust me- it's worth it. Even if you think you really, really want those new shoes or to upgrade your phone- if it's a choice between saving or spending…THIS IS MORE IMPORTANT! Don't think that pouring money into souping up your car or remodeling your house is an investment either! This oncoming hurricane season is a perfect time to remember that a car can get totaled, a house can burn or thrashed to the ground- but money you have in a savings account is able to save your bacon no matter what natural disaster or fate dumps on you!

· A "spending" savings account.
This is the account you get to have fun with. Figure out what your bills are monthly and then AFTER paying towards your retirement account AND your forgotten savings account- you put whatever is left in THIS account. This is where you save for Christmas, vacations, that new electronic toy or new whatever-floats-your-boat. Again, this doesn't have check writing abilities or comes with a debit card. You have to physically go into the bank and make a withdrawal for it. It will make you think twice about spending it on something stupid.

· A checking account. This is where you put your money to pay your bills. This account comes with a debit card, check writing abilities and hopefully on-line banking options. If you can do your banking and bill paying online- so much the better! This GREATLY REDUCES the number of checks you'll bounce; it will get your bills paid ON TIME and let you keep track of how much money you have at any given hour, of any given day. It's a beautiful thing and I highly recommend it. You'll still want to get paper bills, so if the computer system goes down or gets a glitch or whatever you still have your information on something you can physically SHOW the bank, a court or the DMV. Online banking is the route to go so long as you have regular and reliable internet access! You should have a checking account though even if you don't know what a computer is!

· A credit card. Unless you have done something terribly wrong to your credit in your past, you should be able to get a Credit Card with an available balance of at least $400 and an APR of 12% or less. The *smaller* the APR or Annual percentage rate number is the better! If the offer says 0%- make sure you READ THE FINE PRINT! Make sure that it doesn't say "introductory rate" and then changes to 24% in three months!!! If you get an offer for a credit card with an APR of 15% or higher- throw it away faster than if it burned your hand! Better yet- shred it! You don't want to have to every 30 days pay the credit card company that percentage of your card balance! That's how you spell credit disaster!

If you don't have any credit, or have bad credit, start off with a secured credit card. This means if the available balance is $250- you have to GIVE them $250 first and then they'll loan it back to you. It may sound crazy, but this is a much better option than getting a credit card with a high APR or having no credit. Regardless of what kind of card you have or get EVERY month that you buy anything with your credit card- pay OFF the balance. If you can't send the credit card company $100 at the end of the month- DO NOT spend $100 with your credit card. Ignore the minimum payment! That number is the one they use to decide how to screw you over the best! Laugh at whatever the minimum payment suggestion is and if you have more debt then you can pay off at one time- at LEAST DOUBLE the minimum payment every month. Seriously! If you are able- TRIPLE IT! Get that sucker paid off ASAP and keep it at a manageable amount- preferably 0!

You don't want to have more than three credit cards unless you are a business owner and use it for that business. You also don't want to use more than about 1/4 of your available credit, or your credit score will take a huge dump and that can only mean bad things!

· A car. Unless you live in a city like New York or Tokyo, you cannot get by in America without your own transportation. If you don't have one- stop eating out, stop buying $250 crap you don't need and put that money into your "spending savings account" to save up for a car! It doesn't have to be beautiful. It does have to drive!

· Medical insurance.
Whether you get medical benefits from your job, or you're covered by your parents or you have Health insurance or Medical insurance with a third party company, if you are 25 and do NOT have medical insurance- if anything happens to you- you are SCREWED!!! DO NOT STOP PAST GO- DO NOT COLLECT $200- This is how debt that will follow you for the REST OF YOUR LIFE happens. Google it, talk to people you know, negotiate for it at work, but somehow get some basic medical coverage. Make sure you can handle the "deductable"- the amount of money you have to pay out of pocket if you see a doctor or go to the ER- BEFORE your insurance company will pick up the tab. Be realistic. If it is more than a couple hundred dollars, you are almost as bad off as not having insurance.

If you are 25 or older and you have even one child you should also have:

· Life insurance. No one wants to think about dying before your child is an adult and able to take care of themselves, but it happens somewhere EVERY DAY! Don't let it happen to your child! Your best bet is a Term life insurance policy and make sure it's for at least $250,000. A funeral is amazingly expensive and even if you go the cheapest route and get cremated and have a family member keep or spread your ashes- you want there to be something left over to give to your child. If you have more than one child- you should have $250,000 PER KID! I kid you not. (no pun intended) This is especially important if the children have different mothers/ fathers. This may sound like a lot of money, but I promise you no matter what the amount is- it will not be enough. You child will only get the amount of money that is LEFT over AFTER your bills are paid, your debt is paid off and your medical/ funeral expenses are paid. This amount disappears astonishingly fast!

· A Will. Even if this means you write out on a piece of paper and sign it (this is called a Holographic Will and IS valid in court!) you OWE it to your child to state in your will and testament what will happen to them and all your stuff if you should die. Pick out someone you trust to raise them- check with them first and then include that in the Will. If you don't decide what happens to your child/money/possessions- the court WILL DECIDE FOR YOU and you probably won't like it!! You want to state in your Will WHO will get to raise your child (pick a second person in case the first person can't or the court won't let them) and then say in your Will that you want the life insurance money for that child (after funeral expenses and bills are paid off) or at least half of that money be put into a TRUST for the child and they and NO ONE ELSE cannot touch it until the child turns 21.

DO NOT let the guardian of the child be the one who is charge of the money. Chances are they will decide wrong about taking the money out sooner and then when your kid is 21- they will have nothing. You really want someone with investment knowledge and financial advice access to decide this. The court can appoint someone and that is probably better than a relative who might get greedy or with best intentions take it out for some "necessary" crap.

The best Wills are done through a lawyer, they're called a "Living Will" which is odd since you only need it if you're dead. But either way- second best, hand write your Will (and for crying out loud, make sure you spell everything correctly and your handwriting is readable!). Hand write TWO COPIES of this, then take them both to a bank and have a "notary" watch you sign them and then they will "notarize" it. This will probably cost about $5 but it proves that YOU wrote the Will and you had someone with some legal influence witness you signing it. This can make all the difference in court!

After this is done- seal each copy in a different envelope, write on the front what it is and date it and put one in a safety deposit box at your bank or a fireproof safe in your house. The second copy should go to whoever is supposes to be the future guardian of your child. If they don't put it in THEIR bank safety deposit box or fire-proof safe, you might want to think about picking a different potential guardian! If at any time you have to re-write that Will or change something on it, make sure that you write on the new Will "I hereby denounce any previous Will and consider invalid any Will written before this one" or "this amendment changes the terms of the old Will and the new terms will be considered the correct ones"- if you don't do that- whatever you wrote in the old Will could be done instead of what you're writing in the new Will. If you write a totally new Will- destroy the old ones. Build a little bonfire or shred them, but don't leave them lying around to confuse the heck out of whoever is trying to make sense of your life- after you are dead.

To be REALLY kind to whoever you name as the person in charge of organizing your stuff after you die (does NOT have to be the same person as who you chose as the guardian for your child)-  

List on a separate piece of paper to staple to your Will:
· your social security number
· your birthday
· any passwords someone might need to know
· where to find copies of your keys/ safe combinations
· what banks you have accounts with, what the account numbers are and the current balances
· Also if you have any assets (stuff that can be sold for cash) state what it is, where it is and how much it's worth.
· Include a copy of your birth certificate (you can order this from the city you were born in, online. Google it).
· A photo copy of your driver's license

If you sell any major assets before you die, close a bank account, open a new account, get a drivers license in a new state, get married, get divorced etc. you have to change this in your Will. Remember this information will be sealed up in a manila (large orange) envelope so no one will ever find out this information unless YOU DIE- at which point THEY'LL really, really, appreciate you having done all this.

So there you have it. If you are 25 and older and have done all these things you are at least financially mature enough and savvy enough to get into a commited relationship and consider marriage and parenthood. Keep in mind that WHOEVER you want to get into a relationship with should have completed this list too!!!!

If you are 25 or older and DO NOT have these things done… you should by all rights NOT even be able to consider yourself an adult! Get your life together BEFORE you try to join your life with anyone else!!! I recommend you print out this article and hang it on your fridge until you complete them all! Seriously.

A person can say that if someone loves them they won't expect them to come into the relationship debt free and financially secure- but the fact is- if YOU love someone, you would not GO into a relationship with them expecting them to swallow your debt and deal with your irresponsible behaviors. RESPECT them enough to have your crap together first! They should do the same!

Keep in mind that issues and problems related to money are one of the BIGGEST reasons people break up and get DIVORCED. Save yourself the heartache and alimony.

Know that most people have to have lived the better part of a century to figure this all out, or pay for this kind of advice. I'm giving it to you for free. You just have to have enough sense to know what to do with it.

~Best of luck~

Oh, and before you get too pissed off at me… know that this list is going on MY fridge…and I'm over 25 and single… :)

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