When I caught my breath and was finally able to say “YES!” to my wonderful fiancé’s proposal, the dreaming of the day began!  Like visions of sugar plums dancing in my head, I saw my dress, the flowers, families and friends.  He proposed at 8:30pm on Christmas day and by 7:00 a.m. the next morning, without a wink of sleep, I had nearly planned the entire wedding!

The next day we went to tell my parents the exciting news.  My mother cried (tears of joy, of course) and my dad was ecstatic.  Almost immediately, my mother began down the wedding planning path: We need to go dress shopping, how about New York City?  Shouldn’t we book the reception site?  Start working on the guest list! As my mother’s mind was reeling with what we need to do, need to buy and need to shop for, I saw my father instinctively thrust his fist into his pocket and clutch his wallet with a death grip.

In all of my dreaming the previous night, the one thing I neglected: The budget.  What bride really wants to be bothered by a budget?  Although it would be nice to not worry about finances, the truth is the budget has become as much of a certainty as death and taxes (and about as much fun). 

My father has always been complimentary of my spending habits; after all, he’s the one who taught me.  And my father knows me very well.  So when he laid out the terms of the budget, he knew exactly what he was doing.  The terms are:  He will give us $X.  We must be in agreement on all decisions. Here’s the kicker:  What we don’t spend, we get to keep.  The game has changed. 

Dad leaned back with that grin of his, as he knew we were about to get one of the biggest lessons in being married: Financial responsibility.  The game of needs versus wants.  How badly do we want the “wants”?  It is appearing that planning a wedding is a microcosm of financial planning for life just packed into 10 months and with more sparkle!  As a newly engaged couple, we have to prioritize what’s important to us.  Do we go for a less expensive wedding and use the excess to pay down debts?  Spend it on the honeymoon?  Or do we throw the wedding of our dreams?  (Okay, so more like the wedding of MY dreams). 

We don’t have it figured out yet.  We are trying to prioritize what’s important to us.  Our rankings seem to be more like moving targets at this early stage.  What we have agreed on, is that this is ultimately about our happiness, becoming a family, and sharing the day with those we love and admire.  The rest are just details; details that can add up quickly!

Dress shopping in New York City?  We made it as far as Kansas City and found the perfect one!  Dad’s other condition to the budget:  He gets to choose the scotch.

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The success of the Greek debt restructuring is likely to have significant repercussions in the euro zone area. If the private creditors who hold the existing bonds are not treated somewhat well, they and others will be very reluctant to purchase any bonds in the future.  On the other hand, Greece could very well have to default on its debt if they are unable to get their creditors to accept these new terms. Furthermore, the bondholders of other countries in the euro zone area will be watching intently as this saga plays out.  The risk of a Greek default is still real and would likely create a great deal of turmoil in the euro zone area.

The European Central Bank, the ECB, is obviously following these negotiations closely.  Also, the ECB has channeled hundreds of billions of Euros to the region’s banks through a new program offering three-year loans at cheap interest rates.  Banks are able to borrow at 1% and use this money to invest in government debt at much higher interest rates.  This has increased liquidity in the banking system and brought down the cost of borrowing for many euro zone governments.

This is perhaps the most critical period of the Greek debt crisis and is being watched closely by investors.  The odds seem to favor a debt restructuring that will, although not completely satisfying to either side, enable Greece to avoid defaulting on its debt and allow private creditors to salvage some value on their investments.  Hopefully, this coupled with the stimulus from the European Central Bank, will allow the euro zone area to embark on a path to better financial health.

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The rising costs of college make the task of saving for children’s education a daunting task. Many parents become overwhelmed with the worry that small amounts of savings won’t come close to being enough for future expenses. While these are valid concerns, the old advice of saving early and taking advantage of compounding still holds true (no matter how small the savings may be). Just take a look at the numbers:

• Saving $100 per month and earning 8% average return over 18 years: $48,009

• Saving $200 per month and earning 8% average return over 9 years: $31,486

In addition to shouldering some of the savings burden themselves, parents should also consider getting creative. One way to do this is by having a discussion with family members about helping save for the child’s education.

1. Ask for 529 contributions in lieu of gifts (at least while the kids are young enough not to know the difference). For example, for my nephews’ birthdays and Christmas (ages 4 and 2), I give them a small gift but the majority of their gift is a check to their respective 529 plans (education accounts). They have so many toys already so I feel good knowing that I am helping contribute to their future education (rather than their overflowing toy boxes).

2. Encourage family members to use online savings websites such as www.upromise.com and www.babymint.com to earn money for college while doing their regular shopping. (See previous blog article titled “Shop…and Save for College!” http://www.claytonfsiblog.com/shop-for-college/)

3. Recruit your kids to help save for their own college. Once the kids are old enough to understand some basics about money, start talking to them about the importance of college and also about the costs. Brainstorm with them about ways they can help with future college costs:

• Have them save a portion of their allowance for college

• Help them research possible scholarships online and look at the requirements. What things could they start doing now to increase their chances for scholarships in the future?

The main goal is to start saving early and make this process as low stress as possible. By recruiting family members to help with the task it can relieve some pressure but also make it a group affair that can be fun. Also, remember to celebrate your results. Recognize the effort your child and family members have put in to help and show your appreciation for those efforts.

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Last month my younger brother died at the age of 54. It was not totally unexpected because he had a long list of health and lifestyle issues that would shorten even Superman’s life.  Still, I figured he’d at least make it to age 60. As the only sibling within a 600 mile radius, a portion of the funeral arrangements fell on yours truly. Fortunately for me, the cost of cremation was divided with my brother and sisters because my deceased brother was indigent.

My father died in 1992. He was cremated and his ashes were put into a niche in a cremation wall at a local cemetery (near the duck pond). Cost of cremation in 1992 was approximately $750. Five years later my mother died, and her ashes were put into the same niche as my father. The cost of cremation in 1997 was approximately $1,200.  Now let’s fast forward to December 2011: The cremation costs for my brother were approximately $2,800. Total costs actually exceeded $2,800 because of the cost of the obituary, death certificates, and Celebration of Life party, which were all in addition to the cremation expenses. For a more apples-to-apples comparison, the same niche in the wall that I mentioned earlier has now risen to $1,900.  Over the last 20 years, these expenses have risen faster than inflation for many reasons. That is not the issue I intend to discuss here. Today, I want to tackle a question I often hear from clients: “Should I pre-pay for funeral arrangements to lock in the expense and prevent future cost increases?”

Before I write about pre-payment plans I do want to strongly recommend that if you are over age 50, and you care about what happens at your funeral, you should pre-arrange (please note that pre-paying and pre-arranging are 2 separate and different items). You can do this informally with a file folder containing your instructions in your desk at home, or more formally with a completed questionnaire provided by your local funeral director.  Your spouse and/or your family will benefit greatly from you writing down what music you’d like, where you’d like to be buried or cremated, and what your obituary should say. Other things you could list would be your favorite flowers, pall bearers, limo arrangements, etc.  As you can imagine, it is very difficult for survivors to read your mind, and very stressful for them to guess “What would (fill in the name) have wanted?” I also suspect many survivors spend more than the deceased would have wished.

Prepayment is a little more complex. If you have lived in the same town and had the same spouse for the last 30 years, you definitely know where you want to be buried (or your cremated remains placed), and are at least 70 year old, then I would recommend you strongly consider pre-arranging and pre-paying. Pre-paying can be a difficult decision because life expectancy is getting longer, residency is fluid, re-marriage common, acceptance of cremation greater and funeral home ownership changes plentiful, all factors that create too many variables and scenarios to adequately quantify. While good rules of thumb are hard to come by, if you meet my 30 years of stability and 70 years of age rule, then pre-payment often makes good sense. In addition, if you believe there is a chance that you may end up broke in a nursing home, it would likely be best for you to pre-pay. Also, if you have the cash and don’t plan to be alive in the next three years then go ahead and pre-pay.  For everyone else that falls outside of my parameters listed, it would be my recommendation for you to have a sinking fund (assets or life insurance proceeds) to cover the costs, versus signing a long-term contract with a funeral home.

Obviously, you don’t want to burden your children or other family members with decisions and bills. Make it your New Year’s resolution to take care of the business of dying. Everyone, including your financial advisor, will be glad you did.

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Here we are in January 2012 already. This can only mean one thing: It is time to make New Year’s Resolutions! Alas, by March I’ll likely be muttering and sputtering about how I resolve not to make resolutions ever again, but for the time being, I’m going to give it my best shot. While I intend to continue this year with my never-ending resolution to trim some measurable amount from my waistline, I also want to do some “trimming” of a different sort in 2012. My resolution is to trim the fat not only from my waistline, but from my budget! My ultimate goal: Increase savings.

So, my husband politely reminded me during a recent shopping trip that money does not grow on trees. You’d think he would realize that a financial planner knows where money comes from, but alas, he continues to remind me of this fact from time to time.  I don’t consider myself a spendthrift but with the flurry of the holiday season I will admit that I’ve been a little less than thrifty with my spending habits as of late. My guess is after reviewing a couple months worth of bank statements, I’m likely to find issues in the categories of eating out and entertainment; these would be the typical “problem areas” for many people. Admittedly, I also enjoy spending on my children; probably a little more than I should from time to time.

Don’t get me wrong here; I have no intention of living and dying by a budget day in and day out for the next 365-ish days of the year. That would most certainly be unrealistic for me and I’m trying to set myself up to succeed here! My real goal is to get a better handle on exactly how much I’m spending and where it’s going. With this information in hand, I hope to be more budget-conscious when contemplating purchases.

Maybe after creating a plan of action for trimming my budget, I should start on the details of how I intend to trim my waistline! Good luck on achieving your resolutions in 2012! Best wishes to you and yours in the New Year!

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