Smart Couples Finish Rich: Step 8 Review

November 9th, 2007

Each Friday for ten weeks I am reviewing a chapter of David Bach’s Smart Couples Finish Rich. The introduction can be found here, the review of step 1 here, step 2 here, step 3 here, step 4 here, step 5 here, step 6 here, and step 7 here.

Have you made one (or more) of the ten biggest financial mistakes couples make? I am hoping that my spouse and I haven’t as I explore Step 8: Learn to Avoid the Ten Biggest Financial Mistakes Couples Make. I’m figuring that our lack of money might both help us and hurt us here - we don’t have a lot of money saved or invested, but we also haven’t had a lot of money to play investing games and take big gambles with. I figure - we’ve either made very few of the mistakes… or we have made a whole lot of them. I’m hoping for very few. So what does Bach consider the ten biggest mistakes couples make?

Having a 30 year mortgage.
Not taking credit card debt seriously.
Trying to get rich quick by day-trading.
Buying stocks on margin.
Not starting a college savings plan soon enough.
Not teaching your kids about money.
Neglecting to sign a prenuptial agreement.
Not having a greater purpose than the two of you.
Not figuring out who’s responsible for what.
Not getting professional financial advice.

So a lot more “not’s” in there than “do’s” - basically the take home message to me was the biggest financial mistake a smart couple makes is to neglect to act. The book goes into detail on why each of these is a mistake and steps on how to correct it. Which mistakes have we made?

1. We have a 30 year mortgage. The book says if you already have it, keep it and accelerate the payments. But not yet, because…

2. We did not take credit card debt seriously enough in the past. Which is why we have so much of it still today. But we’ve learned our lesson on that one!

10. Not getting professional financial advice - well, we haven’t. Maybe we will when we’re out of debt and have something past that to talk about.

We’ve never played the market so no on 3 and 4, 5 is questionable because we have college accounts but I haven’t made smart moves with them yet and opened 529s, they are in ING savings accounts right now. And 7 doesn’t apply to us - we both came into marriage with no assets. can’t take nothing away from each other! Heh.

You may not agree with all 10 - I know that a lot of people think 30 year mortgages are grand (I am undecided on the issue as of yet), but the list did make me take stock of a few things and reflect on a few as well.

Next week we finish the book with Step 9: Increase Your Income By 10% in 9 Weeks. Well, if some employment pans out for me in 9 weeks… that’d be easy. Heh. But I doubt that is what will be in the chapter. I think my spouse is supposed to ask for a raise. See you then!

7 Responses to “Smart Couples Finish Rich: Step 8 Review”

Anne Says:
November 9th, 2007 at 1:01 pm

You shouldn’t dismiss a prenup because you go into a marriage broke. Actually, assets you take into the marriage are not the biggest concern, because in most states those remain premarital property and are yours to keep in the event of divorce. A prenup is really for determining who gets what was accumulated during the marriage, and for sorting out other issues that become hot buttons in a divorce such as maintenance (alimony).
plonkee Says:
November 9th, 2007 at 2:03 pm

I wouldn’t agree that those are all financial mistakes. They are the sorts of things that are a mistake if you don’t know what you are doing and/or you haven’t gone through all the implications.
paidtwice Says:
November 9th, 2007 at 2:33 pm

@Anne - I couldn’t even have guessed in what ways our lives would change over the past 5 years to write a prenup about what should happen if we got divorced - I would hope that there are ways to decide that sort of stuff after marriage too and not just before. We both came in with no assets and our own incomes and now we have some assets and one main income. Life is curvy.

@plonkee - I know that many of the “mistakes” wouldn’t be considered mistakes by many, but I liked thinking about them
Mrs. Micah Says:
November 9th, 2007 at 3:22 pm

While it’s not professional, I feel that sometimes you get better advice in the blogosphere than from a finance professional. Possibly because the professional is often trying to sell you something. Also, they’re just one person and don’t offer all the perspectives.
katie Says:
November 9th, 2007 at 4:40 pm

I feel like the proffessional advice bit is a plug for their own proffessional. It seems like all financial advisors who write books recommend hiring a financial advisor. I think I’ve done pretty well doing research and reading on my own. I’ve also talked to people who’ve had financial advisors, and it seems like a service for the lazy and hands off. If you have the cash lying around for one, I suppose you can try it out. But you’re still more likely to do better for yourself. No one cares about my money as much as I do.
FourPillars Says:
November 9th, 2007 at 11:06 pm

I think this list is too specific - more general things like “spend more than you earn” are probably more appropriate.

I agree with the other commenters about financial advisors - if you need them, that’s ok but they are just commissioned salespersons - nothing more, nothing less.

Mike
Jerry Says:
January 11th, 2008 at 12:22 am

I was with him on everything except the prenup. I just don’t believe in it. I just fully believe it sends the wrong message. I know that may sound crazy but just be REALLY sure of who you’re marrying is my thought. There’s certainly no insurance policy for marital bliss but maybe I’m just a hopeless romantic. I’m going on 14 years and it’s worked out well so far! Oh! I forgot! The financial advisors. They are always selling you something. Do your homework!

Jerry

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Anne Says:
November 9th, 2007 at 1:01 pm

You shouldn’t dismiss a prenup because you go into a marriage broke. Actually, assets you take into the marriage are not the biggest concern, because in most states those remain premarital property and are yours to keep in the event of divorce. A prenup is really for determining who gets what was accumulated during the marriage, and for sorting out other issues that become hot buttons in a divorce such as maintenance (alimony).

plonkee Says:
November 9th, 2007 at 2:03 pm

I wouldn’t agree that those are all financial mistakes. They are the sorts of things that are a mistake if you don’t know what you are doing and/or you haven’t gone through all the implications.

paidtwice Says:
November 9th, 2007 at 2:33 pm

@Anne - I couldn’t even have guessed in what ways our lives would change over the past 5 years to write a prenup about what should happen if we got divorced - I would hope that there are ways to decide that sort of stuff after marriage too and not just before. We both came in with no assets and our own incomes and now we have some assets and one main income. Life is curvy.

@plonkee - I know that many of the “mistakes” wouldn’t be considered mistakes by many, but I liked thinking about them

Mrs. Micah Says:
November 9th, 2007 at 3:22 pm

While it’s not professional, I feel that sometimes you get better advice in the blogosphere than from a finance professional. Possibly because the professional is often trying to sell you something. Also, they’re just one person and don’t offer all the perspectives.

katie Says:
November 9th, 2007 at 4:40 pm

I feel like the proffessional advice bit is a plug for their own proffessional. It seems like all financial advisors who write books recommend hiring a financial advisor. I think I’ve done pretty well doing research and reading on my own. I’ve also talked to people who’ve had financial advisors, and it seems like a service for the lazy and hands off. If you have the cash lying around for one, I suppose you can try it out. But you’re still more likely to do better for yourself. No one cares about my money as much as I do.

FourPillars Says:
November 9th, 2007 at 11:06 pm

I think this list is too specific - more general things like “spend more than you earn” are probably more appropriate.

I agree with the other commenters about financial advisors - if you need them, that’s ok but they are just commissioned salespersons - nothing more, nothing less.

Mike

Jerry Says:
January 11th, 2008 at 12:22 am

I was with him on everything except the prenup. I just don’t believe in it. I just fully believe it sends the wrong message. I know that may sound crazy but just be REALLY sure of who you’re marrying is my thought. There’s certainly no insurance policy for marital bliss but maybe I’m just a hopeless romantic. I’m going on 14 years and it’s worked out well so far! Oh! I forgot! The financial advisors. They are always selling you something. Do your homework!

Jerry