Iím divorced and have a teenager who will be driving soon. What would be the best way to set up insurance for the child?
I suppose a break-up does change the dynamic somewhat, but with my kids I simply left the car in my name and paid the extra insurance cost for a little while. For me, still being in control of the car as a dad outweighed the additional money I was paying in premiums. Having a minor child running around in the world with his or her name on a car title is not a good plan.
Then, when they turned 18, I put each of their cars into their names. This, of course, was dependent on them behaving and acting responsibly. They were legally liable at that age too. Iím sure the insurance
costs went up, but at that point the financial risk and liability factors were on them, not me.
In this kind of situation, especially because thereís more of a potential for disagreements, I think Iíd do it that way. Just put it in your name for now, especially if youíre putting money toward the purchase of a vehicle
Where to put the 15 percent?
My employer recently stopped matching my 401(k) contributions. Together, my husband and I make about $100,000 a year. Should I continue to invest in this option, or should I put money into an IRA?
If possible, I would put 100 percent of my retirement savings into a Roth IRA
with good, growth stock mutual funds before messing with a non-matching 401(k). But remember, my goal if you follow the Baby Steps is to be debt-free except for your home, and have an emergency fund of three to six months of expenses, before you begin setting aside for retirement. These are the steps that allow you to be prepared for emergencies and free up your largest wealth-building tool, which is your income.
With your income, both you and your husband could open Roth IRAs and contribute $5,500 each in 2013. Thatís a total of $11,000 toward retirement
next year, and itís only 11 percent of your income. With this in mind, Iíd advise going ahead with your 401(k)s after your Roth IRAs are in place. That would flesh out the remaining four percent and give you guys 15 percent of your income going toward retirement!
Bankruptcy just for her?
My husband and I would like to buy a home in the next year or so. My credit is in pretty bad shape, so weíve decided to work on getting his credit in better shape in order to qualify for a mortgage loan. I have $104,000 in debt, and $92,000 of that is in student loans. He has $13,000 in debt, with $7,000 of that a repossession on a car for which he was a co-signer. Can I file bankruptcy on my debts only?
You canít file bankruptcy
on certain, specific items. By the way, student loans are not bankruptable. Even if you filed, you would still have all that debt hanging around your neck.
I want you to own a home, but I donít want your home to own you. Neither one of you have done very well with money so far, and at this point Iím afraid a house would be a curse instead of a blessing in your lives. I would encourage you to build a stronger financial foundation before you buy a house. In short, this means you need to get out of debt, save money, and start living on a budget.
Latrell, buying a house when youíre broke and deeply in debt is never a good idea. Iím not trying to be mean, but I really think youíre asking the wrong question. I donít want you to try and use bankruptcy as some kind of escape from this situation. Right now, I want you to change your behavior with money and get things cleaned up with a good, organized financial plan
in your lives.
The ever-changing budget
Should a budget change every month?
Yes, it should. Your life changes every month, and your budget should reflect the ebb and flow of your life.
Now, some things will stay the same. Your house payment or rent should fall into this category. If you have a car payment
, which I hope you donít, that would be the same too. There shouldnít be a big difference in the amount you spend on food most months though. You might spend more in this category during November and December thanks to the holidays, but overall it should remain pretty steady.
The biggest fluctuation you may see is in your utilities. I heat my house with natural gas, so the bill is much higher during the winter months. Itís just the opposite during the summer. We burn electricity to run the air conditioner, so the electric bill is higher in summer.
This is part of the reason I urge people to do a budget on paper, on purpose before the next month begins. You may look at the upcoming month and realize the kids have soccer pictures scheduled. There may be a school trip planned, or they may need back-to-school clothes and supplies.
When it comes to a budget, thereís no easy out. Things change from month to month, and you need to think, plan ahead, and itemize so your budget is an accurate reflection of your life!