Thursday Wedding Tip: Cut Your Biggest Expense

Once you start planning a wedding, everyone will tell you the same thing: food and beverage will be your biggest expense. Whether you have a big or small wedding, aged steak or backyard barbecue, you will spend the bulk of your money on your caterer. So what is your biggest path to huge savings? Cutting your guest list. This is a taboo area for many people. We don’t want to offend our friends and family. We don’t want to make people feel left out and we want to follow etiquette. But at what point does making things right by our our friends and family cross the line into doing something that is harmful to us?

I have no interest in the “this is my day” rhetoric of self-centered bratty brides. I do, however, have a lot of interest in making sure that people do not take on more than they can chew. What purpose does it serve to spend more than you can afford so other people can be happy? All your guests and their flavor of the month +1 are not vested in your life past the point of celebration. When you return from the honeymoon, your utility bill will still be waiting for you. (One month, well before our solar days, when we had electric heat our bill was $620. Thanks National Greed Grid!) You still need to put food on the table, and you still need to save for retirement.

Sure, there are some people who will say: “If you can’t afford it have a smaller wedding!” or my absolute favorite: “Don’t get married!” Of course. I will put off getting married until I am able to pay for your sister who I haven’t seen in 10 years or spoken to in 5, to come to my wedding. /snark

People just love to make brides and grooms feel guilty about setting boundaries by using negative terms such as bridezilla or by calling people selfish. But is the couple really the source of issue? Because, if you think about it, what other kind of event do you go to where you think you can demand to bring people? What other events do you go to where you call the host and find it acceptable to suggest changes to the guest list? None. Your job’s Christmas party? You tend to find a babysitter or you stay home. If your neighbor invites you to a barbecue, do you say “my sister was wondering why she wasn’t invited” or do you just go?

The point of a wedding celebration is for the couple to celebrate the beginning of their (hopefully) lifelong journey with those who are the closest to them. It’s not a block party. Most importantly, as the hosts, they decide the guest list. Not you. You don’t have a say unless you’re writing checks. Period. It is extremely disrespectful, entitled and self-centered to think that you can dictate how others spend their money.

In an attempt at guilt-tripping you into doing their bidding, people will even go as far as giving you the following friendly reminder: “Don’t let this go to your head. Do you really want to ruin friendships over a one-day party? If you were really my friend, you would invite my neighbor’s cousin’s dog along with the litter of new born puppy from Forks, WA.” (Twilight reference FTW!) In those cases, you have my blessing to tell them: “Do you really think I’m dumb enough to let a one-day party put me in a financial hole? If you were really my friend you would be more respectful of my boundaries and be appreciative that I consider us close enough to invite you.”

Why should you cut your guest list? Let’s do some math:
Say you’re inviting 210 people at $100 a piece. But you decide to cut out 10 of them. That’s not just $1,000 in savings. There are administrative fees, for me they were 19%, ($190), there are taxes (6.25% where I am which means $74.38 since the administrative fees are taxable), non-taxable automatic gratuity 15% ($150). 10 less people means 1 less table, therefore, 1 less centerpiece. Centerpieces can range anywhere between $50 to $150. I’ll put them right in the middle at $100. That’s another $106.25 saved with the florist (keeping the same tax rate of 6.25%). Cake costs up to $6 a person if you want anything above basic scroll work (i.e. fondant, fresh flowers etc.), so that’s $63.74 for cake including tax. Don’t forget to budget for favors at $3 a person so there goes another $31.87. If you want those nice chiavari chairs, they will cost between $7 and $10 to rent depending on where you are and who you’re getting them from. But for to avoid complicating this any further, let’s assume all that good stuff is already included in your $100 package (it’s not but humor me).

Have you been keeping track? You can check my math if you want but I’m up to $1,616.24. “It’s just 10 more guests!” doesn’t sound as trivial if I remind you that this is probably a month’s rent for a lot of people, does it?

Advertisements

Path to a Million: 2017 Q1

8

This is my first update since the initial posts (announcing the start of the series and the pilot post). Things are going well, maybe better than I expected because a great thing happened: tax season! *eyeroll* (take some time to read this post about why it’s not a windfall you should rejoice in).

However, in my case I can rejoice just a little. Part of my big refund had less to do with my lax W4 allowances, but because we had some credits for energy efficient updates, primarily in the form of solar panels and we were able to use the cost of depreciation to offset our rental income.

Tax season came through for some serious debt reduction which had a snowball effect on our net worth. It will reduce our liability (once I get around to actually making the large payment) and free up cash that was normally going to satisfying my monthly student loan payments, to put towards investments/savings. This really does show the positive effects and importance of eliminating debt. Of course, we continued to pay down all our other obligations as well, but using our refund to all but eliminating student loans will make the most significant impact.

 

NW

 

Last quarter, I recorded my net worth at $369,922. This time, it’s $389,213, up $19,291. This represents an average increase of just under $6,500 every month. Although most of that is achieved by reducing debt, it’s a start, and a very good one. Debt plays significant role in our financial struggles and if we can consistently decrease our debts over time rather than add to them, we have the right attitudes and the necessary tools to build wealth, because the idea is that, once the debt is gone, we can use the same disciplined approach towards investing to gain even more speed towards financial independence.

*See Pilot post for more info on loans.

Frugal Fridays: Reception Details

This is my version of throw back Thursday: Some of the best finds from my own days of wedding planning.

reception

It’s the little expenses that creep up on us. That’s what every couple is told to watch out for. You budgeted $2,000 for your dress but the slip is $120, the bra is $80 and a veil is $300. Oh you think that garter is cute? That will be $30. It never ends. And that’s not just your dress. The reception costs will sneak up on you as well. Your keepsake box will run you $15 to $30. Don’t forget taxes, shipping for the things you can’t get in town, etc.

I couldn’t allow the unexpected to bust my budget, so I hunted for deals like a man lost in the Sahara hunts for water. Here are some of my deals:

1) Small gift bags for my favors: less than $70 for 100 from Amazon
2) Matching color tissue papers to stuff them: $9 for 100 from Amazon
3) ‘Mr. & Mrs.’ wood chair hangers: $15 (50% off sale) from Amazon (I never actually used those as I forgot I bought them!)
4) Personalized hanger* – $3.99 (+$10 for shipping). This was a one-day sale. These are usually $19.99-$25.99. from Etsy

*All items except for the hanger were shipped for free, saving me a lot of money as well. 

Wedding Finance Tips: Getting Hitched in the Black

I live in the northeast and spring has officially started, although you really can’t tell just looking at the weather (it’s supposed to be a brisk 25 degree day today). Unlike our more favored friends in the south, true wedding planning doesn’t begin until spring as many brides do not like planning for winter weddings. Because of that, I decided that the change in season should help usher in some new topics: Weddings! At the very least, they will be in season, at most they are expensive and you might find some tips to help you save thousands.

wedding budget

The average cost of a wedding in the US is approximately $25,000. It certainly doesn’t help that, we are not taught to haggle for anything unless we’re buying cars or houses. We see a price tag and we are sure that we either have to pony up or find a store we can afford. However, that’s what the sales people want us to think. If we don’t haggle, they make more money so they’re not going to tell us that we can get any kind of discounts. When it comes to weddings, things are even worse. They play on our emotions to better deplete our bank accounts (or for the more impulsive among us, inflate our credit card balances).

There are many thrifty wedding blogs out there. However, I struggled to find advice that was sensible. It seems that there was very little balance between having a nice wedding and having a cost effective wedding. Some of the advice ranged anywhere from “don’t invite any of your cousins” to “make your own wedding dress”. I felt that some of the tips were not always helpful. What if I like (most of) my cousins and I am not crafty enough to make my own place cards, let alone a wedding dress? Wanting a cost effective wedding doesn’t mean I have to walk down the aisle with paper flowers or ask my guests to bring their own cakes. Furthermore, most people will tell you that what you save in the little DIY projects is not enough to offset the stress of time constraints and the million other things you can’t outsource. The truth is, while weddings are big business, couples still have leverage and that leverage can be used to hold on to some of our hard earned money.

1) Negotiate yesterday, negotiate today, negotiate tomorrow. No price is set in stone. Everything you pay for can be negotiated to a better price or something else of value can be added to your package. Here are some things I negotiated for and got:

  • 10% off the catering
  • Complementary up lights from the venue
  • My photographer had a Picture/Video/Photo booth package. I didn’t care for the photo booth and requested he replace it with a DJ. (He never said that was an option, I asked.)
  • I negotiated for a bigger flush mount album
  • The baker was offering 10% off for anyone who booked their wedding on the day of the wedding show

2) Look for packages. They want and need people to come and spend money. So if you do the leg work for them they will reward you.

  • My groom gets $40 off his tuxedo for every adult rental. There are 7 males in my wedding party. With only 1 boy, the 6 men add up to a free tux for him.
  • My make-up artist will give me a discount for every one of my girls.

3) Remember that you’re not the only one who needs a break. Weddings are expensive for everybody. Not just the bride and groom. Remember that your attendants have to spend a lot of money to be a part of your special day and they are doing you a favor. Be kind to their budget.

  •  My female attendants got 20% off for buying their dresses at the same store I got my dress.
  • I told them what color but I did not impose uniform shoes on them because I wanted them to be able to use what they had in their closet if that option presented itself.

4) Learn to say ‘No’. Unless someone is financially contributing to your wedding, do not allow them to dictate what happens on your day. Many people do not have boundaries and will try to give their 2 cents regarding who should or should not be invited. How this centerpiece would look better than that one, etc.

5) In direct contradiction to #2: be careful with the packages offered. It is important to consider the packages. However, not all of them will be for your benefit. Some packages need to be assessed against other non-wedding related options. Wedding stores tend to have a huge mark up on everything. While something like a bridal gown can’t really be found elsewhere, other things like your shoes and jewelry are easy to purchase from a non-wedding vendor. Because I wasn’t hasty, I was able to discover that the 20% discount offered on accessories from the store I got my dress from was not the best deal in town. I ended up finding my accessories for 1/2 of what the dress maker sells them for.

6) Give yourself time to shop around. We waited too long to get the MOB dress so my mom ended up paying a surcharge for a rush order. On the other hand, I shopped around for my dress, tried them on and knew exactly what I wanted. But because I had time, I was able to wait until there was a tax-free week-end in my state to make the purchase. This tip not only gives you time to find options, but it also gives you the bargaining power. Being pressed for time will stress you out and the people you deal with could take advantage of your situation to upsell you on things you don’t really need.

The tax rate in my state is 6.25%.

7) Remember that some things will only be used for a few hours and are really not all that important. *GASP* Did I just say that there might be something in your wedding that may not be that important? Yup! And I’d say it again. Do you really need to spend $50-60 on a card box? You will use it only for the purpose of collecting congratulatory cards from your guests. Unless Bill Gates is one of your guests and you know his renown generosity might attract a thief so you’re looking to get a finger print scanner hooked to that thing, what’s wrong with a $15 one? Keep it close to you and have one of your parents drop it off in a secure location for you. Once you’ve made your rounds and closed the box it has no more value. Same goes for a garter that your new husband is going to throw at a bunch of guys tackling each other for a piece of your undies. It serves no other purpose and you shouldn’t get anything over $12. There are many small expenses like these that can add up, be mindful.

8) There’s a right way and a wrong way to borrow for your wedding. If you’re putting your wedding on credit, stop. Just. Stop. You probably can’t afford it. Consumer debt is a huge problem in a consumer-driven society. People continue to get things they can’t afford at the expense of necessities. So far I’ve paid for everything on my credit card BUT a) I pay the balance in full every month (resulting in no interest) and I get 1.5 points for every $1 I spend. After 25,000 points (which take 5 years to expire) I get $250 in cash deposited into the account of my choice. So I’m essentially getting paid to use my credit card. If you are getting charged interest at the end of the month and/or you don’t have an incentive from your credit card company, you’re doing it wrong and the wedding is costing you more than you think.

The interest rate on credit cards can be as low as 7% for those with good credit and as much as 21%+ if your credit is not that great.

9) Know your (artistic) limitations. Overconfidence can make you penny wise and pound foolish. The people on etsy and pintrest, make it look easier than it is. Just because you think you can follow instructions from youtube on how to do that elaborate pop-up invitation doesn’t mean it will look the way you want it to. If you end up buying high end paper, ribbons and an industrial grade laser printer only to turn around and have to place a rush order for your invitations because your product was hideous, you end up spending more than you would if you had simply purchased the invitations to begin with. If you got a lifetime membership card to the talentless club at birth like I did, cut your losses and don’t attempt what you most likely cannot do.

I was able to save $150 on my invitations. I talk about that a little more in this post.

10) Cut out transportation costs. If a place of worship is not critical to your wedding proceedings, or if your religious officiant is willing to go anywhere you request, you can eliminate the need for your limo by having your ceremony and reception at the same place. Some places charge you an additional fee for the ceremony set up, so you can probably try to negotiate a further discount on your venue by asking if they will offer you a package deal/price.

Most limo companies run packages between $375-450.

These are you 10 tips for today. I hope they serve you well. They’ve certainly helped me. I am having the wedding I want to have, while savings thousands. Saving doesn’t mean I have to “settle” for things I don’t want. Ultimately, this is a one-day celebration of your love. The rest of your life is what matters most, don’t start it in the red.

Savers Rejoice!

federal-reserve-seal

Your time has come. After nearly a decade, long suffering frugal people are on track to be rolling in the though again. Not exactly, but pretty much. Sorta… Yesterday, the Washington Post reported that the Federal Reserve raised interest rate by another 0.25%. Just to be clear, the FRB does not set interest rates. However, their rates drive consumer rates because Fed rates are often used as a benchmark for overall market interest rates. Although rates on deposit accounts are not going to go up as quickly as borrowing rates, us savers are one step closer to escaping the 0% interest rate of money market accounts.

In case you were thinking that 0.25% is small, I’m going to put this in perspective for you. The first rate hike since 2007 was in 2015. The next one was in 2016 and this hike is following 3 months later. This could potentially be setting the ground work for 2 more rate increases this year. The interval between hikes is shortening.

For those of you who are still borrowing, especially those who still have ARM on their balance sheet, be careful to not get caught with your pants down…

10 things everyone should do before 30 to improve their financial lives

image

Whether it’s due to helicopter parenting, growing up in rough economic times, or some combination of both, millennials are not thriving economically. It is becoming such a problem from older millennials like myself who have been out on their own for a number of years, that people are actually cashing in on our generation’s lack of preparation. I was listening to an NPR piece about an “adulting school” where young adults can enroll in classes to learn basic skills like folding fitted sheets (seriously!), creating a budget, cooking basic meals, understanding banking, etc. People enroll in those courses because they don’t know where to start. So today, I’m offering you a starting point: a list of what you should have a handle on to ensure a smoother ride. At least, if you do decide to enroll in adulting school, you’ll know exactly what classes will fit your needs.

  1. Have emergency savings of at least $1,000
  2. Be free of credit card debt
  3. Have concrete goals for the short, intermediate and long term
  4. Start saving for retirement
  5. Learn to cook 5 nutritious meals
  6. Learn investment basics
  7. Have a budget and stick to it
  8. Be adequately insured
  9. Give up instant gratification
  10. Improve your credit score

 

Selecting the Right Investment Property

reversemortgage

I’ve brought up real estate a number of times. It is a great tax saving tool, appreciating asset and source of income. I’ve also brought up the role that real estate plays in my life, whether it’s through me getting a good deal on my primary residence, helping clients with their real estate transactions or being on a quest to find a good rental property that will increase my household income without requiring too much more of my time. However, knowing that real estate is a wealth building tool is only the first step. To be successful, you must know how and when to select the best property to maximize your dollars. I will give you some of my tips for choosing the best investment properties. It doesn’t mean that’s all you’ll have to do. Buying real estate is an important step. But these are going to be some of the most basic things to consider to avoid what could certainly be a disastrous choice.

Location – Location for the house you’ll rent out is not going to mean the same as location for the house you intend to rent out for income. You need to determine what will work for most people because it’s a numbers game. You don’t want to reduce your pool of potential tenants because your location is too restrictive. Buy in an area that is convenient to accessing the biggest city or town in your area. Whether it’s quick highway access, availability of public transportation or a walkable neighborhood, you need to make sure that your tenants can go to work and get their errands done with ease. Safety also makes a difference. A questionable tenant who is up to no good himself or a police officer might not mind a bad part of town, but young professionals, particularly women, and young family will cross you off the list.

Size – You want to pay attention to what is renting in the general area. You also want to be careful with the price. Personally I think 2-3 bedrooms are best. Those sizes make it easy for a wide variety of tenants to afford the rent: young working roommates who want to split a 2 bedroom, a couple with no children who want a guest room and/or office space. A young family who might want to rent a 3-bedroom. If you go with a 1-bed or a studio, you may inadvertently reduce your pool because you’re pricing people out of the apartment. For example, a 1-bed in the most affordable part of Boston can cost $1,500. However, a 2-bed will run between $1,800-2,000. A pair of roommates can split the 2-bed and pay $900-1,000 each, $500 less than each would in a 2-bed. Once you start going any larger than that, you run the risk of not having a large pool of tenants because most people who need to live in a 4-bed are usually looking to buy by the time they get to that point. At least in my area, that’s how it is. Large rental homes (4-beds+) usually perform better in the parts of town that are walking distance to a university. Anything of that size further away will struggle.

Price – Being a landlord is a business. Your goal is to maximize profits. While you set your rent price, the most realistic rent is mostly dictated by the market. That means, you can only ever charge so much. The only other way of increasing your margin is by controlling your expenses. You need to make sure you are at least breaking even on your monthly expenses (including variable and estimated incidentals) with the lowest possible rent in the area. Don’t let your mortgage be equal to or greater than average rent, let alone more with the expectation that you’ll get top of the market rent; because, if that doesn’t happen, you could be in serious trouble.

Maintenance Needs – Know what you will need to meet your city or town’s habitability standards and to provide adequate service to your tenants. Some properties are cheap for a reason. If you save $15k but it will cost $25k to make it an adequate residence, the property might not be such a good deal.

Quality – One of the worst things you can do is price yourself out of the rental market. The way to make that mistake would be to either buy the best house in the worst neighborhood, or to spend an great deal of money turning a property into the best house in a bad neighborhood. Your potential for rent will be limited although you need a certain amount of money to recoup your costs. The quality of the property should be reflective of quality of the neighborhood.