Saturday, August 27, 2016

Kickfurther: My Current Results

A few weeks ago, I posted a bunch of statistics about the Kickfurther platform as a whole.  Someone on Kickfurther's subreddit asked how I was doing.  This post is an attempt to answer that question.

Total Offers

While Kickfurther  has funded about 360 offers (I'm not going to count them again, but I know there have been some in the last two weeks), I have invested in 105 of them.

Cancelled Offers

About 6% of the offers have been cancelled and collection procedures of one sort or another instituted.  11 of mine have either been cancelled, or I don't think there is any hope for them, so my stats are worse than average in that regard. I have seven more offers that are substantially behind on their payments but which I think have a good chance of paying eventually.

New Offers

I have eighteen offers which have not paid anything because payments aren't due yet. Kickfurther has about 100 offers that haven't entered payback stage yet.  That means my portfolio is weighted toward older offers.  There are two reasons for this:

  • I've withdrawn about $550
  • Kickfurther has moved to a "pack" system which generally means I invest more than my previous $50 standard in each offer.

My Returns

If you add up my profits on completed offers (while Kickfurther considers part of each payment to be profit, I don't consider it a profit until I've gotten back more than I put in), and subract what I've lost or anticipate losing on cancelled or bad offers, the total is -$124.66. Yes, my aproximately $3,000 investment, most of it initally invested last summer, has lost money--at least before you add in the refunds Kickfurther has issued.  My refunds total $173.13 so as of this moment, I have gained 48.47, minus my $8.30 in withdrawal fees.

A Little Hope

The merchandise has been repossessed on two of my failed offers.  Kickfurther said they'd sold some of the Mulberry Silk Comforters and were in the process of figuring out how to divide the money, but they didn't say how much money they had.  Still, it should mean a bit more money in my pocket.  Also they have the Baboon Bamboo drawer trays.  They are trying to sell them in a variety of places, including Amazon.  You can get one here.

Baboon Bamboo Utensil Drawer Organizer
The Risks of Kickfurther

Any investment has risks, and a new investment platform is likely to have more risks that something that is established.  The trick to any form of investing is to figure out what the risks are and how you can mitigate them, and to make sure the possible rewards make up for the risks.  When I started with Kickfurther, I saw the risk as being that the merchandise would not sell.  If figured that most merchants would manage to sell some of the products; and so few if any offers would be total losses. I was mistaken.  While Baboon Bamboo and Mulberry Silk Comforters have worked that way--neither was able to sell all the merchandise and both promptly turned the unsold product over to Kickfurther for liquidation, most of my other failed offers have paid very little and none have easily returned the merchandise to Kickfurther.  


Clearly, at least at this point, Kickfurther is for money you can afford to lose.  Kickfurther is a work-in-progress; they are in the process of refining their legal documentation of these offers. They say they are refining the vetting process to get stronger companies involved.  They are strengthening the link between sales and payback.  Hopefully those things work to eliminate some of the fraudulent deals and make it easier to recover something on deals that go bad.  

My Plans

My plans are to withdraw funds from Kickfurther unless the rates go up or the defaults go down.  According to my count, about 1/6 of the offers go bad.  If you assume that failed offers end up being a 100% loss, and if you assume investors want at least  a 7% return on their money annually, then offers that pay need to average about 2% per month, and Kickfurther's rates now aren't that high.  If you assume a 50% return of investment on bad offers, you'd need about 1.5% per month on the good offers.  This means that at the current default rates, a six month Kickfurther offer would have to pay between 9 and 12%. Most don't, and those that do fill in seconds.  Unless the rates go up or the defaults go down, this is not a good investment.  
Disease Called Debt

Wednesday, August 24, 2016

Kickfurther Merchant of the Week: Wild Mantle


Founder Avi Loren Fox wearing the Charcoal Alpaca Mantlet


Today I'd like to welcome Avi Loren Fox to Racing Towards Retirement.  Avi is the founder of Wild Mantle, which got some financing from Kickfurther.  As my regular readers know, Kickfurther allows ordinary investors to finance inventory for businesses and earn a profit for doing so.  

Q:  Tell me a little about yourself--where are you from, where did you go to school and what did you expect to be doing at this point in your life?

A:  I was born and raised in Narberth, Pennsylvania, a small town just outside of Philadlephia on the Main Line. I was homeschooled from second to eighth grade, giving me an early dose of what it's like to be independent and have agency over my path in life. I then attended Lower Merion High School and went on to graduate from the Honor's Program at Temple University. Growing up, when I pictured my life, I don't remember picturing the "career" aspect of my life. Whenever I tried, I got a total blank. I realized in high school that perhaps the job I would have wasn't invented yet. In hindsight, this turned out to be true as I went on to start my own company and create a job for myself. But when I was younger visualizing my future and where I expected to be at this point (I turn 30 in October), I remember thinking more about the lifestyle I wanted to have and also what kind of woman I wanted to be. I had a lot of strong female role models growing up and I sort of took my favorite virtues and characteristics from each and decided that that was the woman I wanted to be. Although I'm a work in progress like anyone else, I very much am living into this woman that I visualized years ago. 

Q:  Give us a short conception and birth story about Wild Mantle

A few years ago, I made a hooded-scarf out of some beloved old cashmere and wool sweaters. It felt cozy and warm, and when I put it on, I felt a quiet sense of comfort and courage. When I wore it out into the world, people noticed, and they’d ask “What is that? I want one!” I heard the same thing from each person who tried it on: “it feels like a hug" and “I feel like a warrior.” I decided to call it the MANTLE, and before I knew it, I was making them for lots of other people. You see, the word MANTLE not only means a loose fitting hood or cloak, it also means your role or responsibility in the world. I decided I would design all my mantles to deliver a hug of coziness and courage. And in turn, the MANTLE would be an invitation to think about what mantles one carries and how they can step into more of an empowered role in their world. 

After demand exceeded my capacity to make the mantles in my hometown, I launched a Kickstarter campaign and raised nearly $40,000 to produce our flagship Alpaca Wild Mantle at a B-Corporation artisan knitting mill frozen in time in the Colorado Rockies. This past May, I launched a second Kickstarter and raised nearly $50,000 to produce our premier Summer Collection. Now, we are growing a community of women around the world who can relate to this idea of "taking up your mantle" and want to come together with other women over topics such as sustainability, empowerment and adventure. I host events for these women in the Philadelphia suburbs, and I'm excited to grow this in the future as we get bigger. 

When 8 women get together to make vision boards, there are a lot of smiling faces at the end of the night ❤️ #women #dream #vision @nikki_maloney @gracefulphilly @laieasmith

Q:  Which of your products is your favorite, and why?

The Charcoal Alpaca is my favorite. It's the first color of alpaca we made during our first Kickstarter campaign. We are actually currently sold out because it is so popular (don't worry, we're making more for this fall and you can currently reserve yours via pre-order on our website!) and I love how it has become such a classic amongst our other newer styles. It's the one I wear pretty much every day in the winter; inside with the hood flipped down as a cowl and then outside with the hood up to help maintain my core warmth. 

Charcoal Alpaca Mantle

Q:  As a woman entrepreneur do you believe you have run into any problems that your male counterparts have not?  Do you believe being a woman has given you a leg up on the guys in any way?  

We live in a time where women stepping up in the work force is not only encouraged, but also highlighted and celebrated. My parents raised me to believe I could be anything I wanted to be. For example, when I was a kid, I remember thinking about running for president when I grew up. It never occurred to me that I couldn't do it because I was a woman, it was more a thought like "I'm probably not going to run for president someday because being in the political system isn't the game I want to play....but if I did...what if I won? Wouldn't that be cool?" Entrepreneurship is the game I want to play, and I haven't, to date, run into any problems (that I know of) that my male counterparts have not. I have received support from organizations specifically targeted at women, and I do feel very supported by my community because I am a woman entrepreneur. 

Wild Mantle Dreamer
Q:   I notice that you have done a lot of crowdfunding of your business via Kickstarter and Kickfurther.  Is there any reason  you have chosen this type of funding?

A:  Kickstarter was an obvious and fun way for me to get started, as it enabled me to test my idea among the community and only manufacture orders that were previously placed. It is an amazing way for a new entrepreneur to test their proof of concept, build a customer base, and also get through the inevitable first round of learning experiences that come with launching a new product. We've successfully completed two Kickstarters and one Kickfurther. I also received a loan from Kiva and the Tory Burch Foundation, both of which are paid back. 

Manly Mantle
Q:  Where did you first hear of Kickfurther, and why did you decide to use them?

A:  After I did my first Kickstarter successfully, I started getting emails from companies eager to help with the next phase of funding. Kickfurther caught my eye, and I decided to use them because the immediacy of the raise was advantageous to my timeline and I liked the idea that backers might turn into future customers, as they did on Kickstarter. 

Q:  You successfully finished your first Kickfurther campaign a month early, which I'm sure made your investors happy.  Are you planning to use Kickfuther again anytime soon?  Why or why not?

A:  Yes, I hope this made them happy! I am not planning on using Kickfurther again. While I really like the team and concept, the interest rates are really high and I'm currently switching to a line of credit. Additionally, I didn't find that the backers on Kickfurther translated into customers or helped at all with sales (as was the case on Kickstarter) so from a purely monetary standpoint Kickfurther no longer makes sense for me. 

Wild Mantle Kickfurther

Q:  Would you recommend Kickfurther to other business owners?  Why or why not?

A:  I would recommend Kickfurther to a business if their needs matched what the platform delivered. I've referred a few friends to date, actually. 

Q:  Have you tried Kickfurther from the investor side?  Why or why not?  Would you recommend it to friends or family who have money to invest?

A:  I am an investor on Kickfurther. When I decided to launch my campaign, I wanted to know what it was like to both sides. I would recommend it to friends and family with caution. Most of my investments have gone really well, but one person completely dropped off the planet and I'm still waiting to see how that will work out. It is probably the case that the money I'll make in the investments that went well will equal the money I will lose on the one that went bad. So in the end, although a good learning experience, it will probably not be a financially lucrative experience. 

Q:   Would you like to offer a giveaway? 
A:  Sure, how about we do a $20 gift certificate to my website?

I'd like to thank Avi for joining us today and for offering a $20 gift certificate.  You can visit Wild Mantle at their website, They are also on Instagram, facebook, Twitter, and Pinterest.  

 If you want to know more about Kickfurther, click the "Kickfurther" label under this post.  I've written extensively about Kickfurther and my experiences with it.  If you would like to invest with Kickfurther, use this link and you get $5.00 off your first investment.  If you have a business which needs money to purchase inventory, if you use my link, I get referral credit, and bloggers have to eat too!



a Rafflecopter giveaway
Disease Called Debt

Friday, August 19, 2016

Keeping Your Bookshelf (Real or Virtual) Full Without Going Broke

Do you remember your first favorite book that you were able to read all by yourself?  Mine was "Ann Likes Red" but I quickly moved on to better and bigger books.  Reading has been my favorite pastime for my entire life.  Luckily, as hobbies go, reading can be relatively inexpensive.  Below are some ways readers can save:

Use Your Library

Public libraries today are far more diverse than they once were, so before saying "the library wouldn't carry that kind of book", check.  No, they won't carry extremely graphic erotica or pornography, but they will carry books featuring people of color, books from various religious traditions and books about people with varying sexual indentities and expressions.  Libraries in larger cities will often have a better selection than ones in small towns, but even in small towns, inter-library loan is often available.  The main problem with libraries is that if you want to read the latest best-seller you may be on a long waiting list.  Don't forget, your library probably offers more than hard copies of books.  This article talks about modern public libraries.  

Shop Garage Sales

Especially if you like romance novels, garage sales can be a great way to pick up books inexpensively.  Lots of people buy books and eventually most people get tired of keeping them.  

Your Library Used Book Sale

Many libraries have yearly (or more often) sales where they sell their discards along with donated books they do not want to add to their collection.  This can be a great source for books that were popular a year or two ago, since the library no longer needs all its copies of the book, and they probabaly have donated copies too.  

Used Book Stores

Many used bookstores allow you to trade your old books for "new" old books.  Amazon allows you to sell your books through them, but you have to package and ship them.  Used book stores are a way to get rid of books you no longer want and a way to get books you do want.

Free E-Books

Most of the classics are available free from Amazon as e-book downloads.  Amazon also has thousands of other free e-books.  Some are the first in a self-published series, clearly designed to give you enough of a taste so that you want to buy the rest of  (or at least next book in) the series.  Sometimes established authors will offer a book from their backlist free not long before a new book is released.  While there is a lot of trash to wade through, you can probably find something to pass a pleasant afternoon if you try.  This list will give you the current 100 best selling free books on Amazon. When I checked the list it included a book by Bella Andre and one by Kristen Heiztmann.  G.K. Chesterton also had one on the list.  The rest of it was dominated by what appears to be self-published romance novels but it can't hurt to take a look.  There are several services that send you daily newsletters about Amazon freebies.  Robin Reads is one of them. 

Book Swapping Services

Bookmooch and Paperback Swap are two of the most popular swapping services.  Once you register on the site, you list books you are willing to give away.  Members are able to search the inventory for books they want, or they can create wishlists.  When someone wants a book you own, you mail (and pay postage) the book to them, and get credit in return.  You use that credit to order books other people offer, and they pay to mail them to you.  I find these services to be a good place to get assigned summer reading books--"everyone" around here wants a copy so the library runs out of copies; yet the books are popular enough that there are lots of used ones floating around other places.  The cost to mail one book is a little over $2.00, so you can compare that price to buying used on Amazon or other places.  

Become a Book Blogger

If you like to read and to write, you may want to consider becoming a book blogger.  You can set up a free blog on Blogger or Wordpress.com and start to review books you read, whatever the source.  Participate in a few weekly link-ups like Mailbox Monday or Its Monday, What Are You Reading and people will discover you.  Make sure your blog has your contact information and eventually, review requests will come.  My book blog is called This That and the Other Thing.  

You can also sign up with book review groups.  Here are a few:
  • Blogging for Books is a Penguin Random House service.  Bloggers can request books in a variety of genres and once they post a review, they can request another.
  • Booklook Bloggers is for Harper Collins Christian books.  They require that bloggers have at least 30 subscribers and they provide free hard copies or ebooks for review.
  • Litfuse organizes blog tours for Christan books.  Bloggers who particpate in a tour receive a free book.  In return, they publish the tour materal and, usually, their own review.
  • iRead Book Tours is another company that organizes book tours.
  • Bostick Communication  is used a lot by self-published authors.  They send out emails about books that are availble for review and bloggers can request copies.  
Besides those services which offer a rather limited number of books, there are two large sources of e-galleys, NetGalley and Edelweiss.  Most of these are released prior to the publication date of the book, and before the last editing has been done.  Nevertheless, differences between these books and the final copies are relatively insignificant, and you would probably only notice it if you did a page-by-page comparision of the two (I did this with a book relevant to one of my cases at work and a few things were re-arranged but the content was pretty much the same). 

With both NetGalley and Edelweiss, bloggers register for the service and complete a profile.  They are then able to browse the available books (right now NetGalley has 5266 books available and Edelweiss has 5143). While a few are auto-approved, most of the books are set so that you have to request to review them.  The publisher reviews your application and decides whether to approve you, or not.  I'm hardly a big-time book blogger but I find that the overwhelming majority of my requests are approved.  

While bloggers are not required to review books from these services, failing to review many of the books you request may result in few approvals for books you want to read.  

The final way book bloggers can get free review copies is through publicists or authors.  If you have contact information available on your blog, the publicists may find you.  If you participate in the book haul link-ups and you see a blogger getting books you would like, it is ok to ask who sent them--but some bloggers are tight-lipped about their sources.  On the other hand, the book haul link-ups (Mailbox Monday, It's Monday, What Are You Reading, Stacking the Shelves etc.) can give you leads on other ways to obtain review copies.  

One terrific thing about reading is that it doesn't have to cost a fortune.  What are some ways  you reduce the costs of your favorite pastimes?  
Disease Called Debt

Wednesday, August 17, 2016

Kickfurther Merchant of the Week: Silikids

This week's Kickfurther Company of the Week is Silikids, which makes silicone kitchen ware.  I have the pleasure of interviewing the co-founder and CEO, Stacey Feeley.  For those who do not know, Kickfurther is an innovative source of financing for companies that need money to purchase inventory.  Kickfurther investors (people like me, and maybe you) crowdfund the inventory purchase and then return the inventory to the company, which sells it on consignment.  As the inventory sells, investors are repaid, with a profit.

Q:  Tell me a little bit about your company.  When did it start, where are you located?

A:  Silikids was formed in 2006 in Los Angeles, CA.  Its main offices are now located in Traverse City, MI.  Silikids is the first mom-founded brand focusing on children’s products made out of SILICONE. The company combines need-based innovation with the technological advantages of SILICONE, offering an alternative to plastic wares found in the kitchen. Silikids' designs are safe, modern and practical.  SILICONE products offer superior function, while being easy to use and clean.  The Silikids mission is to be the alternative to plastic, and to bridge the gap between great design and affordability so as to  improve the way we live! A win-win for all!

Q:  I notice on your website that your team is all women.  Did you all know each other before Silikids?  Do you think that the fact that Silikids is women-owned and women-operated makes a difference?

A:  Giuliana (also a co-founder) and I have known each for 16 years and were friends prior to forming Silikids.  Matt Dawes, VP of Sales joined our team last year and has been a great addition to a team of mostly women.  Being a women-owned business has proven to have its benefits and challenges and overall it just fell into place that the team members were mostly women.

Q:  So, why is plastic bad, and silicone good?  I notice that you are putting silicone tops and covers on glasses.  Is that really safe for kids?  If I don't  want to use glass, can I put your tops on plastic cups? 

A:  I believe there is a time and place for plastic, but not necessarily at the table.  Plastics contain toxic chemicals (such as BPA and BPS, which are endocrine disrupters that mimic estrogen-like hormones linked to heart disease, cancer, autism, diabetes and many more diseases) that can leach into the foods and liquids we consume.  They have the most adverse affects on young children whose bodies are still developing and have a harder time eliminating substances from their bodies.  While some plastic items are now BPA-free, the chemical used to replace BPA in those plastic items, known as BPS, has proven to be just as harmful.

There are also serious environmental impacts due to plastic use.  Americans alone throw away 35 billion plastic water bottles a year and only a small portion of those actually get recycled. Silicone has the benefits of being non-toxic and incredibly easy to clean.  It it does not harbor bacteria or mold, it’s hypo-allergenic and has an extremely high temperature resistance (meaning it won’t break down like plastics). It  does not fade or scratch, it is microwave safe, freezer safe and dishwasher safe.  It is also extremely durable and meant to last so that it can be reused over and over again.

For those parents who do not want to use plastic sippy cups or drinking cups, we have some items (such as our glass cups) that have a silicone sleeve with built in shock absorbers and silicone tops that are assembled onto a glass to give the glass inside added protection.   This is a great way to transition kids to a "big kid" cup.  We have also released an all silicone (minus the glass) sippy cup and cup set as well.

Q:  Your website says you will recycle your products once a consumer is finished with them.  How long can I expect your products, for example your universal straw tops, to last in normal usage?  Also, can I put them in the dishwasher?  
A:  All items are dishwasher safe. If you find you have outgrown one of the Silikids items and would like to recycle it we can do that for you.  Most recycling facilities are not set up to recycle silicone; however we work alongside specific recycling facilities that can. Our Siliskin Tops (if used properly) should last forever. We have since gone through a few versions to improve durability and strength.

Q:  How did you first hear about Kickfurther, and why did you decide to use them?

A Kickfurther team member reached out to us last year.  The platform seemed like a great way to help finance inventory needs that were backed by PO’s.  The steps were pretty simple and we could set our own terms which was very unique.

Q:   So far, do you think it was a good choice?  Would you recommend it to other businesses?  Why or why not?

A:  Yes, it was a great choice for us and I would recommend it as a great tool for PO / inventory financing. 

Q:  From the viewpoint of a business, do you see any downside to Kickfurther financing vs more conventional methods?

A:  The difference (not necessarily a downside) is that you have to keep the backers up-to-date and build out a campaign.  Pretty easy to do!

Q:  Have you considered, or do you use Kickfurther from the investor side?  Would you recommend that friends invest via Kickfurther?

A:  From an investor standpoint, it's a much better return than what you’d see in a savings account etc.

Q:  With companies like yours it surely is, you've paid promptly.  So, I  understand you are sponsoring a giveaway.  What products do you have for our winner?

A:  We can do a giveaway for the following:

2pk Siliskin Cups
Siliskin Straw Tops
Siliskin 6pk of Reusable Silicone Straws
Siliskin Snack Bags


Q:  I'd like to thank Stacey for being with us today.  You can learn more about Silikids on their website.  You can check out their facebook page or follow them on Twitter or Instagram.  If you want to invest and support a company like Silikids, use my link and you get $5.00 toward your first investment.  If you have a company that needs money to purchase inventory, use my link and I get referral credit.  Good luck to everyone with the giveaway!

Friday, August 12, 2016

Financially Savvy Saturdays: I'm Co-Hosting!

If it ties into personal finance, we want to read it! Financially Savvy Saturdays Blog Hop with Disease Called Debt and Broke Girl Rich
Racing Towards Retirement
This weekend we're excited to welcome back Ruth Ann from Racing Towards Retirement, where she writes about, you guessed it, life closer to retirement and how to prepare for that next step in life. Tweet about it. You can use #finsavsat when tweeting about the party! Concerns about SEO? Recently many bloggers have decided to stop participating in events such as Carnivals. If you're worried about how participating in this link-up could effect your SEO, I'd encourage you to check out this article. Interested in co-hosting? Co-hosting is fun AND easy. If you’re interested, you can email us via brokeGIRLrich(at)gmail(dot)com or info(at)diseasecalleddebt(dot)com with any questions. Or if you're ready to take the plunge, you can sign up on this Google doc. If you’ve co-hosted before and enjoyed it, please consider doing it again! If you’re interested but nervous about getting involved, please email one of us, we love talking to new bloggers and would enjoy explaining how blog hops work and getting you more involved!

Feature of the Week

As this week's visiting co-host, Ruth Ann has selected her favorite post from last week's blog hop to be this week's feature - The Money Talk for College Students by Money Professors! 

The Money Talk for College Students 

 If you submit a post, you could be featured in next week's party!

We do have a couple of rules for participation. Those who don't follow the rules will have their link taken down.

1. Your post must be written in the past seven days, related to personal finance and not be solely a giveaway. 2. Be sure to include a link to one of your hosts by copying and pasting the html in one of the boxes below into your linked up post. You have the option of the button or a text link. 3. Follow your hosts. You can follow brokeGIRLrich on Google+, Facebook, Twitter, Pinterest, OR by subscribing to her RSS feed and A Disease Called Debt on Google+, Facebook, Twitter, Pinterest, OR by subscribing to her RSS feed. Also, you can follow Racing Towards Retirement on Twitter, Pinterest OR Bloglovin. 4. Comment on at least one post before and after you that have joined the party. 5. HAVE FUN!

Please copy and paste this button into the post you link up:

Disease Called Debt

OR copy and paste this code for a text link:

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Some Kickfurther Statistics

My regular readers know that I invest via Kickfurther, an online platform that crowdfunds inventory for businesses.  The way it is supposed to work is that a company makes an offer on the platform for a certain return over a certain length of time for use of the investor's money to buy inventory.  In theory anyway, the investors buy the inventory and then give it to the vendor to sell, and once it is sold, the vendor repays the investors, plus gives them their profit.

I have been pretty active on Kickfuther for over a year now and tonight I sat down and crunched some numbers on the platform.  I may have missed a couple or otherwise not have this completely accurate but hopefully this information is worth more than what you paid to read this blog.

Since its inception, Kickfurther has funded 353 offers.  Of those, 69 were paid back before they were due, 41 paid out in equal scheduled installments over the length of the agreement, 22 were late repaying investors and 21 contracts have been cancelled for non-payment.  That means almost 6% of the contracts on Kickfurther have been cancelled.

Kickfuther contracts are written with differing amounts of lead time, depending on the business. Since these are consignment sale agreements, the company needs time to acquire the merchandise and sell it before Kickfurther gets paid.  Of the 353 contracts ever signed, 98 of them are too new to have a payment due.  42 companies are paying timely, four started paying before the contact called for them to do so and are ahead, 26 are behind where they should be but are paying regularly.  6 started making payments but have stopped along the way and 8 should have made payments but have not done so.

What about the cancelled contracts?  Kickfuther refunded invesor's money on seven offers.  Kickfurther has the inventory from three companies and is trying to liquidate it.  On the other contracts they are negotiating, filing lawsuits and engaging in other collections activities.  However, it does not appear that the merchandise was there for Kickfuther to seize.  Hopefully the recent change to the "pack" system will make it easier for Kickfurther to track the merchandise and to make sure its investors get paid promptly.

If you would like to invest via Kickfuther, use my link and you get a $5.00 bonus and I'm eligible for prizes. If you have a business and are looking for financing, use this link and I get something

Friday, August 5, 2016

How Do You Manage Family Finances?

Managing family finances


Once upon a time, people in their late teens or early twenties moved out of their parent's homes when they were in their late teens or early twenties and married the person down the street.  About a year later, they had their first baby and eventually, one of them buried the other.  Step-children were the result of the death of parent, not divorce and out-of-wedlock births were rare (though out-of-wedlock pregnancies were not).  Men were the head of the family and handled all the finances; if women were lucky they had a little "egg money" or "pin money".  Today young adults establish lives and careers of their own, and generally move away from their parents' home (s) long before marriage.  Divorce is not rare, nor are children born and raised out-of-wedlock.  No longer do men control all the family finances.  In fact, deciding how to handle family finances is one thing on which couples need to agree before they move in together or get married.  Let's look at some of the options.

One Pot, Handled Jointly

This is the almost old-fashioned way, and being a rather old-fashioned woman, it is the way I think should be the default choice--the choice that is made unless there is a particular reason for another choice.

With this method, all the family money goes in one pot and the couple decides jointly how to spend it.  There is no "yours" and "mine" with the possible exception of a small amount of pocket money.  If her company has better health insurance, the health insurance comes out of her check; if his company generously matches 401k contributions, then the retirement savings are in his name.  The cars are in the names of the one(s) who had time to go register them.  Both paychecks go into the same checking account and leftover money is invested in both names. In their wills, both spouses leave everything to the other.  It doesn't matter who makes more money; the standard of living is the one supported by the family income and if one spouse can't afford it, neither can the other.

One spouse may take primary responsibility for researching and making investment decisions, but that doesn't make that spouse the owner of the assets any more than cooking dinner means that the spouse who did so had any more right to eat it.  

If members of a couple have very different financial values (not worth, values) and spending styles this in probably the method that will cause the most discord in the marriage.  The thrifty person may hurt every time the spendthrift spends, and the spendthrift may always feel constrained by the thrifty one.  On the other hand, having to talk about their values and decide how to spend the family income can be an important part of changing from "you and me" to "us".  

Together and Apart

With this method, the couple decides what expenses are joint and what expenses are separate.  They work out how they will contribute to a joint household account to cover the joint expenses.  They can either contribute the same amount (works well if incomes are about equal) or a percent of income (works well if one spouse earns much more than the other).  Other money remains the property of the one who earned it.

This method is popular in second marriages, particularly if one or both spouses have children from those previous marriages.  It allows both partners the financial advantages of having someone with whom to split the bills and makes it possible for them to maintain assets they possessed prior to marriage so as to pass them to their own children.

The problem with this method with young couples is that it does not force them to set joint goals and work together to achieve them. It also can mean that one spouse has money to do things the other spouse does not.  However, some people find security in knowing that they have money their spouse can't touch.  

I'm in Charge; You Get an Allowance

Often used by couples who have a great disparity in income/earning potential and/or age, the person earning the most money makes the financial decisions and controls the spending.  While this person may be generous to the spouse, the spouse is clearly "given" money and "allowed" to spend it.  The problem with this method is that it keeps the grantee in an almost juvenile position rather than allowing her (or him) to be an economic equal in the relationship.  If the person being given the money doesn't understand the total family financial picture he or she may resent efforts to economize when necessary and see requests to spend less as an imposition.

Every couple has to decide how to handle family finances.  What method do you use?  Is it the same one you've always used?  Why did you pick the method you did?  If you've changed, why?
*Part of Financially Savvy Saturdays on brokeGIRLrich and, Disease Called Debt* http://brokegirlrich.com/accountability-july-2016/ 1. Accountability: July 2016 http://wp.me/p6ZzsH-73 2. My Current Debt Situation http://femmefrugality.com/can-i-afford-it/ 3. Can I afford it? This app tells you in an instant.