Setting up a savings account for each goal you have at ING DIRECT is easy and it will help you really see how much you have saved toward a particular goal. If you will need your money within the next five years or so, the steps outlined in this article will help you get your savings moving.

Before Miss Soon-To-Be-Mrs. Frugal and I met, we both had ING DIRECT Orange Savings Accounts. Back then, the interest rate was about 5% , but it’s fallen quite a bit since then.

Although whatever ING DIRECT is offering will be higher than you’ll get in a bank account, as I write this it’s not a whole lot. But I still encourage people to sign up for an ING DIRECT Orange Savings Account because these accounts make it incredibly easy to set money aside for specific goals and there’s no minimum deposit required PLUS your money is FDIC insured.

Similar to other banks, ING DIRECT provides you with one login that has access to multiple accounts. To create your first account, click here to go to ING DIRECT’s account sign-up page.

Once you go to ING DIRECT’s site, you will be asked to fill out information about how your self and how you want to transfer money into the account. There is a verification process you’ll need to through so ING knows you have access to the bank account you’re transferring money from.

After everything is set up (it may take a couple of days), log into your ING DIRECT account and and find the link that says Open Another Account:

When you click on that, it will take you to a screen that asks what kind of account you want to open. You want the Orange Savings Account.

You will then be asked what ownership you want for the account (if you want it to be an individual account or a joint account). Select what you want and click Continue.

Finally, you will be asked what you want to name the account and how you want to fund it. You will need to start the account with an opening balance, so select what account you want the money to come from (it will either be your existing ING DIRECT account or it will be your other checking account). Finally, choose how much you want to put in the account and click Continue.

This will take you to a confirmation page. Review the information and click Continue.

Once you have this all set up, you can go back to your accounts page and you should see the new account.

If you would like to set up an automatic deposit into this account, simply click AUTOMATIC SAVINGS PLAN (above your listed accounts) and tell the system how much you want deposited automatically into your accounts, where the money should come from, and how frequently you want deposits made.

To get started with this excellent tool ING DIRECT provides, click here to go to their home page.

As people have been signing up for The Frugal Couple’s newsletter and becoming more involved in the site, a question has come up frequently and I think it would be good to address it.

The question? What to do when one person brings more debt to the relationship?

Most often, this question comes up during engagement or the first few years of marriage. During these years, the likelihood of both partners working and earning money is high, so this article is going to address the issue with that assumption.

There really are only a couple of options on how to deal with a partner who has more debt than the other: Take the debt on as a couple, or Require the debtor to pay off his/her own debts with “his/her” money.

Taking on the debt as a couple
Hopefully the two of you sat down during your engagement and talked about each others’ financial situation. Assets, debts, income, and expenses should be included in this conversation. You don’t want to get to a situation where you’ve been married for a month or two and when going over your budget one person is surprised to find that the minimum payments on the other partner’s credit cards is $300 each month.

In taking on the debt as a couple, you simply factor in the debt payments as a part of your budget and go on your merry way.

Requiring each partner to be responsible for their debts
Let’s take Tom and Mary. Each of them takes home $2,000 per month after taxes. Their combined expenses are about $3000 per month and they save $400 each month into savings and investment accounts. This leaves about $600 per month for “extra” expenses.

Tom has $10,000 in credit card debt and Mary has $1,500 in credit card debt. The monthly minimum payment for Tom’s cards would be about $200 and Mary’s would be about $30.

In this case, if the $600 per month were split up between the two partners to spend as they liked ($300 to each partner), Tom would end up with $100 per month after paying the minimum payments on his cards and Mary would have $270.

If the two of them said, “This is our debt and we’re going to tackle it together,” The $230 would be added to the couple’s expenses and they would split the remaining $370 (giving them $185 each).

I (Mr. Frugal) feel that when you marry someone, you decide to take on the bad with the good and it’s best to simply attack the debt as a couple. If Tom and Mary were to put a combined total of an extra $50 per month toward their debt, they would save a total of over $1,900 (assuming the credit cards had 15% interest rates and they paid a fixed amount rather than the declining minimum payment) and they would pay off the debt 21 months sooner. (Click here to go to The Frugal Couple’s credit card calculator.)

Take a moment and share with us how you have handled this in the past in the comment section of this article.

I read Trent’s thoughts on his first memory of money over at The Simple Dollar and it helped me to start thinking about things. In my financial planning practice I have begun asking couples to discuss their first memories of money and I’ve realized that our first memories of money can be important to helping us understand why we spend the way we do and how we value money.

Why is this memory important?
The first memory may seem trivial, but for some reason it wasn’t at the time. It lodged in your memory. For some people, it may be a controlling parent. For others, it might be the loss of something valuable and not being able to afford the purchase of a replacement. Or it may be a happier thought…perhaps receiving a gift that was valuable or earning a quarter for a job done around the house.

A controlling parent may cause us to hoard or hide our finances from a spouse. Remembering that a parent never had a steady job may lead someone to not want to take career risks, and even prevent their spouse from taking steps toward an entrepreneurial venture.

My first memory is realizing that people shop at different stores based on how much money they have. As a five year old, I didn’t quite get that some people live in poverty, but I did realize that the more money you have, the nicer the things you can buy.

Soon after I learned this, I began working around the house (and eventually the neighborhood) doing odd jobs in order to buy whatever stuff a young boy would buy.

Talking with your partner about their first memories may help you understand their spending better. Rarely does a couple see eye-to-eye when it comes to spending. One spouse wants to spend more than the other, leading one partner to feel controlled and the other restricted. When we know why our partner wants to spend (or restrict spending) we can make adjustments that help strengthen our relationship.

Share your memory with others
I would love to have some of you leave comments on your first memories of money in the comments section. We’ll have Dr. Dilley dissect some of them in our next podcast and talk about what you’ve realized and what lessons others can learn from them.

This is the second article in a series on setting financial goals with your spouse.

Yesterday I gave tips on how to figure out what’s important to you (link). Although it sounds simple, it’s a difficult question for some. Perhaps their finances have been on auto-pilot or they’ve been so busy taking care of others that they haven’t had time to ask what’s important to them. Whatever the case, it’s essential that people make time to deliberately think about their finances.

This article will give some tips on how to define goals that you may be able to reach.

Set One or Two Specific Goals
When setting goals, specificity is essential. If one of your goals is to retire, you should have a pretty good idea of the following:

• At what age do you want to retire?
• Where do you want to live?
• What type of lifestyle do you want? (Do you want to travel to see your kids who are around the country? Do you want to play as much golf as possible?)

If you and your spouse are 35 years old and want to stop working at age 65, you have 30 years to plan. If you have $150,000 in your retirement accounts today, want to have the equivalent of $2,000,000 in today’s dollars at retirement, and expect to earn 10% on your investments per year, you would need to invest $993 per month to reach your goal.

If investing almost $1,000 per month is too much of a stretch, sit down and think about what is more reasonable and adjust some of your other expectations. By working another two years, the amount you would need to save each month drops to just under $700.

If you are able to lower your expectation of what you would need in the future by $500,000 to $1.5 million (in today’s dollars) and you’re willing to work until age 67, the amount you would need to save drops again to a much easier-to-handle $200 per month.

What gives this type of planning a greater chance of success is the detail. Knowing your specific goal (dollar amount, time horizon, etc.) you have something to aim toward. With your target in mind, then you can determine what steps you need to take to meet your goals.

By going through the process of thinking about defining specific goals and the steps needed to achieve them, you will be far ahead of the rest of the pack when it comes to goal setting.

Part Three (Taking the Right Steps to Get to Your Goal) can be found through this link.

Everyone has different questions when they hear someone is getting married. When Mrs. Frugal and I got married, the questions tended to revolve around the ceremony and reception. (The most asked questions were, “Where will the wedding be?” and “How many people are you inviting?”)

There are far more important questions, and since this is a blog about finances, I’m going to focus on some of the important financial questions. Being that Mrs. Frugal’s sister is getting married in the next month, I thought it would be good to put some thoughts about marriage down.

One Checkbook or Three?
It sounds like a silly question, but it’s important. I’ve written about this topic before, but it is worth re-visiting.

When Mrs. Frugal and I got married, we joined all of our finances and paid for everything from one checkbook (rather than having a joint checkbook and our own individual accounts). We recognized that finances are a topic that can divide couples and we did not want to begin our marriage with a mentality of this-is-mine and that-is-yours.

I would recommend the one checkbook approach to almost everyone.

After our first year, we wanted to buy each other Christmas presents without the other person knowing what we had bought. We decided to take money out of our joint account and put it in individual accounts.

When we set up our individual accounts, there were a few things we made note to do. First, each of us took equal amounts out of the account. Second, we took money out of the account after agreeing on an appropriate amount to take out and decided on a monthly amount we could continue to take out as an allowance.

Too many couples that keep both individual and joint accounts have their own salary deposited into their account and then pay for joint costs by writing a check to the joint account. I can’t see any quicker way to divide a couple in the financial aspect of their life than to do this. Feelings of inequality are bound to creep up. The idea of managing your joint finances this way is much more like an arrangement between roommates than one between two people who have decided to be partners through life.

Keep Your Finances Simple
My finances were more complicated than they needed to be. Over the course of our first year together, I automated almost all of our payments and wrote out directions that explained what needed to be done each month.

Meet Regularly About Your Finances
We decided to meet once a month to talk about our finances. At the end of the month I would prepare a report detailing our income and expenses.

Set Goals
Set financial goals for yourselves. I did a podcast (on another podcast, link to the show notes found here) on goal setting. Briefly, the goals need to be specific, attainable, and with steps outlined on how to reach them. Once you have an idea of how much you’re spending you should begin to see expense categories you can tweak in order to save money.

Remember You’re Teammates
Finally, remember that you’re in this together for the long-haul. Both of you may make unnecessary purchases in your years together, but you should remember that you are trying to reach the same goals.

Mrs. Frugal and I bought a condo in the Los Angeles area a few months ago. We looked at about four other places before we settled on the one we purchased. Here are a few lessons we learned (with the help of our Realtor, who happens to be Mr. Frugal Sr.

1. Location matters. One of the places Mrs. Frugal truly loved was in an areat that Mr. Frugal wasn’t too comfortable with. It was an adorable house that was decorated and painted, it was built a few years ago, and it had a little yard where we dreamed of having our (future) kids play. We saw it on a Saturday and thought for a few days about whether we should make an offer on it. A few days after we saw it, there was a shooting about two blocks away from the house. It totally changed our view of the neighborhood.
2. You pay a premium for a home that is already dolled-up. We found a home that we liked a lot. It had great paint, great furniture, and it had a good location. In looking at other places in the area, I figured that the premium for the decorations was probably about $25,000 or so. One of the lessons we learned from my father was that you make most of your profit on a property by buying at the right price, not expecting to sell into a hot market.
3. To tag onto the point of home #2 being a bit too expensive, when buying a home it is important to think about how the cost of the home fits into your monthly budget. One of the lessons many people are learning right now is that even though a bank will give you a loan doesn’t mean you can afford the loan. Sit down and think about how much this home will cost over the next five to ten years.
4. Further tagging on to the budgeting issue, before buying a home it is important to have a firm grasp on what you can afford. If you don’t know what you’re spending on a monthly basis, you aren’t in the position to buy a home right now. You need to know what your current budget is in order to know how much home you can afford and whether it makes sense to buy.
5. The home we ended up purchasing needed quite a bit of tender loving care. Parts of it were straight out of 1975. The dining area was surrounded by mirrors. The guest bathroom has gold butterflies on the wallpaper. It was also very dark. Overlooking these cosmetic flaws allowed us to buy it at a very good price. The home was vacant and the owners lived in another state. The home had also  been on the market for several months without any good offers. We placed a low offer and the owner accepted, in part to our ability to buy without a loan contingency. (In fact, when the lender had an appraisal done on the home, it appraised for 10% more than we paid for it and the lender asked why we had gotten such a good price on it.) We had a bit of work done on the bathrooms and a few other cosmetic things taken care of to lighten the house up and we’re putting in some of our own sweat-equity to paint and do some other minor things.

By sticking to time-tested principles like staying true to your budget and buying a homely home in the best area you can afford, hopefully you will be able to avoid some of the traps many new homeowners fall into.

It’s always interesting when clients come to us with the following situation:

They have saved quite a bit in their retirement accounts through work (either their 401k or 403b), but their finances are in slight disarray. Often, they may have an IRA of some sort that had been set up at a brokerage, but the IRA was never fully funded. In addition, they don’t have much saved in their emergency fund and they may have some debt, or worse, late charges on their credit report.

At first I wondered how people are able to save so much in their company retirement plan, yet everything else is all fouled up. The only explanation I can come up with is the power of auto pilot.

The automatic deductions from a paycheck into the retirement plan have been their saving grace.

Now, let’s take a look at how to get everything on auto pilot

Credit Cards

Most banks offer auto pay for their credit cards, but often the only option is to pay the minimum payment. Mrs. Frugal and I pay off our credit cards each month (with the exception of a couple that have very low interest rates). So I use a free email reminder service to tell me when to pay the card. The one I use is called Memo to Me.

After setting up an account, you are able to set up reminder emails on a daily, weekly, every x weeks, monthly, or annually basis. I am reminded on the 22nd of each month to pay off my cards via email.

Saving

Mrs. Frugal and I have set up automatic deposits into our ING Orange Savings account. These, too, can be set up on a specific frequency (weekly, bi-weekly, or monthly).

ING has a nice feature. You are able to set up several accounts under the same login and name them whatever you want. We have several accounts (auto, travel, gifts, emergency fund) that are funded based on our budget. Since auto expenses, gifts (especially around Christmas), and travel expenses are irregular.

In order to set up extra accounts:

1. Log in to your account.
2. Go to “Open an Account” on the left near the top.
3. Choose “Open Now” under “Orange Savings Account” (near the top left of the main part of the page).
4. Select the type of account you want to set up.
5. Give it a nickname (auto, gifts, etc.) and define how you want to fund it (you can select either an external account or another ING account).
6. Agree to the terms and condition and click “Open Account.”

In order to set up automatic deposits:

1. Click “Transfer Money.”
2. Enter the amount you want transferred.
3. Select where the money comes from and into what account you want it deposited.
4. Under “When” select “Automatic Savings Plan.”
5. Then define the frequency and when you want the deposits to start.
6. Click “Transfer” and the deposits will begin on the date you defined.

This needs to be done for each account you want to deposit into.

By paying your credit card bills and saving automatically, you will soon be on your way to having some control in your financial life.

Six months ago (almost to the day) Melanie and I walked down the aisle separately and up the aisle together. We thought we had our finances all figured out. Although we had some school and credit card debt, we had a plan to pay it off, as well as the resources to do it (once I landed a job).

Fast forward six months and our debt has been reduced a little, but we feel as though we need to save more and spend less. We both like to think of ourselves as savers with the occasional unplanned purchase. Unfortunately, these unplanned purchases have been more frequent than we would have liked. Some purchases have been necessary (Melanie needed a new car when hers was totaled in an accident), and some haven’t (like an external hard drive I bought to back up our computers). I suppose the hard drive is debatable, but I bought a very nice laptop, but justified it because insurance money had paid for 90% of it.

This week, we decided to cut back our spending. With the help of Trent over at The Simple Dollar, I have used some of his tips and I feel as though we’re on our way.

One of the first things I did was look over our credit card bill to see what subscriptions were being charged monthly that we didn’t need any more. I was able to remove $17 worth of monthly subscriptions with visits to two websites and one phone call. One of the websites even credited back this month’s payment ($7.95).

I think the hardest thing for us will be thinking about every purchase, whether it is fifty dollars or fifty cents.

So here we go, and I hope you enjoy the trip with us.