I was a stay at home mom for six years. Prior to that, I worked as a divorce attorney. No one knows better than a former divorce attorney that any marriage, any relationship, can fall apart.

Regardless of how great things are for you and your husband or partner, if you don’t have an income, you should make sure you are protected in case something happens to your partner or to your relationship.

While this article handles traditional relationships where the husband is the breadwinner and the wife stays home, many of the points raised here apply to stay at home dads and to gay relationship. You can find specific advice for gay relationships here.

Don’t Underestimate Yourself

My first advice to you is to never allow anyone to imply that you “sit home and do nothing all day” (as a so-called friend of mine once implied). You are doing plenty around the house and with the kids, and your contribution is actually worth a lot of money. A recent survey shows that the average stay at home mom has a 94-hour workweek, and that in 2008, a full-time mother’s annual salary would come in at $116,805, if her work as a housekeeper, teacher, driver and psychologist was paid on the open market.

Sign a Fair Prenuptial Agreement

If you are asked to sign a prenuptial agreement, get a lawyer. Don’t sign anything that waives your right to spousal support or future spouse rights in the event of death or divorce. Make sure the prenup acknowledges your special status as a stay at home mom. For example, many of the agreements I drafted as an attorney stated that after a certain number of years, since the wife gave up those years of her career to raise the kids, the court should take that into consideration when determining her settlement.

The agreement can be very specific and state exact amounts (i.e. the wife gets $100,000 after 5 years of marriage, $500,000 after 10 years etc.) or it can be general and state a general intent to compensate the wife for giving up her career. This type of compensation can be in addition to whatever the wife is entitled to by state law or by being the legal owner of assets.

Plan For Your Retirement

Even if you no longer have a 401(k), you can save for your own retirement using a Spousal IRA. A nonworking spouse can make a deductible IRA contribution of up to $5,000 for 2009, as long as the couple files a joint return, and the working spouse has enough earned income to cover the contribution.

Stay In Touch With The Workforce

Stay up to date by by taking professional classes. Your resume can stay relatively fresh if you include some of the volunteering work you did during your years as a stay at home mom. Keep in touch with former coworkers on Facebook, Twitter and LinkedIn. Keep yourself in a place where, if you need to go back to work, you have professional connections to support your move back into the workforce. Many moms start a successful home business which provides extra income and can be a good safety net in case they need to make it on their own.

Have Your Name On EVERYTHING And Full Access To All Your Financial Accounts

Never let your husband be in charge of your accounts, only giving you limited access in the form of a credit card (that can be canceled) or a weekly “allowance.”

In Community Property States (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin) most property acquired during the marriage (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment or death. Joint ownership is automatically presumed by law in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property. The community property system is usually justified by the idea that such joint ownership recognizes the theoretically equal contributions of both spouses to the creation and operation of the family unit.

However, even in Community Property Jurisdictions, it’s always a good idea to have your name on everything you own as a couple, including the house, the cars, and of course bank accounts and investment accounts.

How do you handle your finances? Are both of you in charge or just one of you? Do you feel that you are going to be financially OK if the relationship ends?

—
I am an Israeli attorney. I am not licensed to work as an attorney in the United States. The advice given here is of a general nature. Please consult a licensed attorney regarding your specific situation prior to taking any action.

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Stay At Home Mom? Protect Yourself Financially

It IS possible to make money online.

I first “met” Stephanie Foster when she discovered one of my posts on Stumbleupon a few months ago. We’ve been following each other ever since, but it took me a while to realize she makes money online – as much as $5000 per month – from her websites.

This is significantly more than the average ANNUAL revenue for U.S. blogs ($5000), which is actually skewed by blogs in the top 1% who earn $200k+. The annual MEDIAN revenue for U.S. blogs is $200.

Stephanie’s websites are not high-profile. She doesn’t have 100,000 subscribers or millions of monthly page views. You don’t need any of these things to make money online. You do need to pick a good niche, work hard, be highly disciplined and ignore naysayers.

While numerous “make money online” so-called “experts” are claiming to make 6 figures and trying to scam people into buying their useless products, Stephanie actually makes money online, from her home, quietly and consistently.

Stephanie has agreed to answer a few questions.

What is your professional background?

I started working at home my last year of college, doing medical transcription. That’s what got me interested in the work at home field as a whole. Everywhere I went, when I mentioned that I transcribed at home, people would ask me how I got into that.

When did you start your websites?

I did my first site as a website design class project on a free hosting service, answering the question of how do you get into medical transcription. I figured I could kill two birds with one stone – credit for the class project and something to refer people to when they kept asking me the same questions over and over.

I started Home with the Kids in September 2003. I had decided to expand on the whole work at home concept because medical transcription is really not suited to everyone. It took me a while to realize that I could be earning money from the things I had been talking about for free. I eventually took my medical transcription stuff off the free host, updated it, and added it to Home with the Kids.

How much do you make? What are your sources of income?

My income ranges from $1000-5000 per month. The AdSense income is the biggest part, but some months I’ve done very well with other programs, breaking $2000 in a month in affiliate referrals. While Google AdSense is a major earner for me, I’m trying to dump it so that I have more control. I also do a little bit of ad selling, mostly featured links in the Direct Sales Opportunities directory on my site. It hasn’t been the focus for me that many say it ought to be. That’s just not one of my specialties.

Do you have any tips for getting started with making money online?

Of course!

1. Just do it. Don’t worry about making mistakes: I’ve made plenty of mistakes along the way and that’s OK.

2. Pick a topic you enjoy. Do not pick a topic solely on what you think you’re going to earn. You probably won’t earn that much for a long time. Keep at it and you might just get there. But if you aren’t enjoying what you’re doing, it’s probably not going to work so well. I’ve tried that path. I have a site on credit cards, and while it earns a little, it really has not been worth the time for me. Yet that’s one of the fields people talk about as having great income potential. It does, but it’s a tough one to excel in. My top two sites, on the other hand, are fun for me to work on and bring in more money.

3. Focus on one marketing tool at a time. If you’re blogging, for example, how are you going to promote your blog? You can do blog comments, article marketing, buying ads on related sites and so much more to start getting your traffic. Study that type of marketing as you build up at least the basics of your site or blog. You need something to be sending the traffic to.

It doesn’t really matter if no one reads your posts for the first month or two. Visitors aren’t generally impressed by a single page unless you’re selling just one item and that’s all the page is for. A site or blog that is growing is more attractive for most topics.

Start your marketing as soon as you think your site is ready for visitors. Just work that one marketing skill in the beginning. You’re better off mastering one marketing technique than jumping all around and understanding none of them. Once you’ve mastered one you can pick up another.

4. Do a lot of reading as you get started, and ask a lot of questions before you start any home business. Every single one has its pitfalls, challenges and scams. Even my original career, medical transcription, has plenty of scams.

5. Do not assume it will be easy, no matter the promises made by any person or website. Most of the earnings you see are the exception, not the rule. I earn an adequate living, lower than the best, but better than most who run their own websites.

6. Involve your family. If your children and your spouse aren’t supportive, it’s just that much harder to get things going. I’ve had to deal with naysayers even when I was a medical transcriptionist. My mother-in-law took years before she believed anyone could earn enough money from home for it to be worthwhile. It wasn’t until the first time I had a check higher than my husband’s paycheck that she really believed. But because I kept at it I was able to support my family even when my husband was laid off for six months starting last January.

7. Learn to identify work-at-home scams. I write about new scams periodically. There’s a work at home scams section on my site, as well as blog articles such as Keeping Your Ethics as You Work at Home. There’s also a forum where you can ask questions if you’re ever in doubt about a work at home opportunity.

Scams are actually very easy to spot online. I think it’s the anonymity combined with how cheap and easy it is to get started that brings them out in such hordes. I rarely name names when I talk about scams, not only because I can get it wrong sometimes too, but because they change names so often that it would be a waste of my time trying to keep up with most of them. Better to know the symptoms and to have your B.S. detector set on high.

Keeping up with a home business, even one you love, is a lot of work. But being able to accomplish so much while always being there for my kids has been quite worthwhile.

Thank you, Stephanie, for your tips on how to make money online.

As I said, this woman is worth following. She obviously knows what she’s doing.

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Women Who Make Money Online

An emergency fund is a safety net.

Case in point: HeatherB of BlogHer feels guilty about spending money during the recession.

My take: she shouldn’t feel guilty about spending, IF her emergency fund is well-funded.

When Heather says “I haven’t been worried and I’ve been one of those fortunate people with an excellent job and great benefits with no sign (KNOCK ON WOOD) of losing any of the above in the near future,” what she SHOULD be saying is “I haven’t been too worried because I’m one of those fortunate people with an emergency fund that can carry me through six months of unemployment.”

Who Needs An Emergency Fund?

Everybody needs an emergency fund. You need to be in a place, financially, where you can handle unexpected expenses such as the car breaking down, the roof leaking, an unexpected tax bill or an emergency medical treatment that’s only partially covered by your insurance.

You also need to be in a place where losing your job, which is more likely during a recession even if you think your job is “safe,” does not mean losing your home, racking credit card debt, or tapping into your retirement account.  Once you get on the credit-card-debt path, it’s extremely difficult to pay it off and build wealth. Tapping into your retirement account before retirement is a very bad idea since you will pay penalties, and taxes at your income-tax rate. A home equity line of credit is also not your best bet these days, since it might not be worth as much now because of falling home prices.

Even if you think you can’t afford to set aside money right now, you need to find a way to do it.

How Much Money Should I Keep In My Emergency Fund?

Most experts say you should have enough set aside to cover three to six-months’ worth of living expenses. Does that sound doable? It is if you build it slowly and consistently. No one says you need to do it all at once. Contrary to what you may think, you don’t need a huge income to be able to save. Being able to save is a result of careful planning and disciplined execution. It has nothing to do with how much you make. Plenty of people earn a high salary but spend it all on luxuries and end up in financial ruin when emergency strikes.

How Can I Save For An Emergency Fund? I Don’t Have Extra Money

Yes you do. The best way to start an emergency fund is to track your spending for a month, figure out where you can cut back and direct that money to your emergency fund. For example, if you spend three dollars, five days a week, on a Grande Latte at Starbucks, this little indulgence adds up to about $800 per year. We make coffee at home using a French Press and freshly ground Illy coffee beans. It’s fresh and tasty and costs a fraction of what we would pay for the very mediocre coffee served at Starbucks.

If you indulge in a weekly $20 manicure, or in a monthly $200 shopping spree, your annual savings could be even higher. Other areas where you can probably save are magazine purchases (especially stupid women’s magazines), cable TV (we pay for the basic plan. Several of my friends gave up cable altogether), giving up your land line and using just your cell phone, eating out less often, and shopping around for cheaper car insurance. We saved almost $500 per year when we switched our car insurance.

Where Should I Keep My Emergency Fund?

Keep your emergency fund in an FDIC-insured money market or savings account. You’ll get a very low interest rate, but your principal will be safe and your money will be accessible if and when you need it.

What If I Already Have Credit Card Debt? Should I Pay It Off First?

Experts are divided on this one.  While some say you should have at least a $1000 cushion to avoid being forced back into more credit card debt if an emergency happens while you’re still paying your debt, others think credit card interest is so high, you should do everything in your power to pay down credit card debt first.

According to Kiplinger, the best answer lies in separating good debt from bad debt. It’s almost always a good idea to get rid of credit card and other high-interest loans before you start setting aside cash. However, you probably don’t want to accelerate mortgage or student loans at the expense of saving for retirement.

Earlier this week my car wouldn’t start. It was good to know that the only worry I had was the hassle of taking it to the car shop and paying to fix it. There was absolutely no question of where would I get the money to fix it. This is exactly what emergency funds are for.

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Related Reading:
Surviving The Recession
Recession: How To Protect Yourself
Reasons To Build And Love An Emergency Fund
Escaping Paycheck To Paycheck

I am not a financial adviser. The information provided here is general in nature. Prior to taking any action, please do your own research or consult a financial adviser regarding your specific situation.

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Emergency Fund

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Surviving the recession is a challenge, financially as well as emotionally.

Your investments are losing value. Your job doesn’t feel so secure anymore. Watching the news every night is downright depressing. How do you deal with the recession? What should you do?

The best advice I – or anyone – can give you for surviving the recession:

DON’T PANIC.

Just like you, I check my financial statements these days and I don’t like what I see. It ain’t pretty. But I refuse to panic. I’m a long-term investor. The stock portion of my portfolio is spread over several mutual funds, a few ETFs and a few individual stocks. Each and every one of these holdings was carefully chosen, after thorough research. I believe in these stocks and funds. I consider them as my best bet in growing my money – LONG TERM.

But markets are volatile. Bear markets are part of the investing game. And even though they happen quite frequently, the good news is that LONG TERM, the stock market returns an average of 10% annually (that’s the S&P 500‘s historical average). And if you’re a long-term investor, and hold on to your assets for longer than a year, any tax you’ll eventually pay when selling these assets is long-term capital gain tax.

To me, the only way to calmly accept a bear market is to pretty much ignore my portfolio. In a bull market, I check my portfolio every day. It’s fun and thrilling. In a bear market, I check it once a week, if that. It’s kind of like checking your blog stats too often: not a good idea.

In other words, I agree with J.D. Roth, who says that it pays to ignore financial news, and adds “The daily fluctuations of the stock market are meaningless to me”. I also agree with Valerie Morrison, who said in her post Is Your Subscriber Count Showing?, “[it's] like my financial investments. I don’t want to see my portfolio every day.”

Just like Moolanomy, “I am holding steady and continuing to invest for the long-term. I can do this because I have the right asset allocation and investment mix for my investment time horizon and risk tolerance.” (Read more in his interesting post “Should I Get Out Of The Stock Market?“)

No doubt, the current economic meltdown is a major one. We still don’t know where it is going to lead us or how it will end. The comparisons to 1929 are scary.

Given the complexity and the magnitude of the current financial crisis, I do believe it’s important to make sure you have FDIC insurance for any funds that are not invested in the stock market. Any other type of insurance is useless right now. Another alternative is to buy treasuries. Of course, none of this will protect you if our financial system collapses or if uncontrollable inflation erupts, but assuming you’re not going to buy gold bullion and hide it under your mattress, this is probably the best you can do to protect your money right now.

Whether you’re invested in the stock market or not, a global recession – or depression – is going to affect you. I would love to hear your thoughts. How are you surviving the recession?

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Related Reading:
Recession: How To Protect Yourself
Recession Fears? Don’t Let The Whingers Get You Down
Savers Losing Out In The Current Economy
Not Plugging My Ears Or Covering My Eyes
The Financial Crises Will Be Harmless, Until It Kills Us

I am not a financial adviser. The information provided here on surviving the recession is general in nature. Prior to taking any action, please consult a financial adviser regarding your specific situation.

© All rights reserved. This post is from MomGrind and cannot be republished without express written permission. MomGrind ® is a registered trademark of VDL, Inc.

Surviving The Recession

As gas prices soar, gas stations are becoming more creative:

Ouch.

The solution:

Related reading:
Mrs. Micah doesn’t have to worry about paying for gas
Denise is worried about gas prices in Chicago
Miranda offers five tips for saving on gas
Gas Prices Make Working at Home More Appealing

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Gas Prices Soaring

If you are a U.S. investor, chances are you don’t have enough international funds in your portfolio.

I think you should hold at least 20 to 25 percent of your stock portfolio in international funds. In other words, I completely disagree with anyone who says that “a third of your stock stash seems a bit much. I’d say putting something on the order of 10 to 20 percent of your stock holdings in foreign stocks is enough.”

I hold about 25% of my portfolio in international funds and plan to gradually increase that number to 30%.

The main advantage to holding foreign stock is diversification: In 2007, mutual funds specializing in non-U.S. stocks returned 16%, while funds with diversified holdings in U.S. equities returned just over 6%.

The four basic rules of picking mutual funds:

1. Never buy into a mutual fund that has a front or a back load. Loads hurt a funds’ performance and cut into shareholders’ profits.

2. Always buy low-cost funds. Cheap index funds are a great investment tool, but I do own several actively managed funds. However, I only buy actively managed funds whose expense ratio is well below 1%. Higher expenses must be justified by spectacular performance, which is quite rare. If I hold the fund in a taxable account, I also look for a low turnover – no higher than 50% a year, and preferably closer to 20%.

3. When you buy an actively managed fund, it is a good idea to investigate the fund manager. Past performance generally doesn’t count, but if it is to count at all, it’s only when it belongs to the person who’s in charge now.

4. Full investment policy: look for cash reserves that are as low as possible – ideally, nearly 0%. Cash reserves hurt a fund’s performance.

International funds: my own five winning choices

Since these are all international funds, they obviously do not represent a complete, or a balanced, portfolio. With the exception of the Dodge & Cox fund, they are not core holdings. Some of them are risky and highly volatile. They did give me excellent results over the past few years, but you should keep in mind that I bought most of them during the 2000-2001 bear market, which might explain my good results.

However, I still hold all of them, and plan to keep doing so. I have also had plenty of losers in my portfolio over the years, but since the consensus seems to be that bloggers should post useful stuff, I will concentrate on the winners.

1. International fund: Dodge & Cox International Stock Fund DODFX – This fund has no load; expense ratio is 0.65%; annual turnover is 16%; cash reserves 2.1%; it boasts an impressive 5-year annualized total returns of 26%.

2. Japan Index Fund: iShares MSCI Japan Index EWJ – Expense ratio is 0.52%. 5-year annualized total returns: 16.12%. According to Morningstar, “Investors seeking a straightforward Japan play will find iShares MSCI Japan Index a worthwhile option”. You should keep in mind that this ETF focuses on large cap stocks; that it will overlap with the Japan portions of any other foreign fund that you hold; and that the Japanese market is not always a friendly place to be.

3. China Portfolio: PowerShares Golden Dragon China Portfolio. PGJ – Expense ratio for this ETF is 0.70%; 3-Year Annualized total returns are 29.46%. According to Morningstar, this ETF “warrants great caution”, which I completely agree with.

In fact, Morningstar analysts seem to dislike this ETF very much, despite its dirt-cheap cost compared with other Asia funds. But I like the low cost, the fact that it gives me good exposure to Chinese mid-cap companies, and the fact that it has been tax-efficient: it has not distributed any capital gains since its December 2004 launch. I handle the volatility by trimming it annually and making sure it remains just a small part of my portfolio.

4. European Stock Index: Vanguard European Stock Index VEURX. No Load. Expense ratio 0.22%. Turnover 9%, cash 0, 5-year annualized total returns 21%.

This mutual fund actually doesn’t provide much of a diversification against U.S. stocks, but I do like the companies in its portfolio. Recently, the dollar’s depreciation against European currencies boosted the value of the stocks in this portfolio, which is unhedged.

5. Emerging markets Fund: Vanguad Emerging Markets Vipers VWO. Expense ratio: 0.25%. 3-year annualized total returns: 33%. Annual turnover: 9%. Cash: 0.1%.

Despite the obvious risks, this fund gives me direct emerging-markets exposure at a very reasonable cost. Just like the China fund, I handle the volatility by trimming it annually.

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Common sense caution: past performance really is not a good indicator of future results; I am not a financial adviser; these international funds have worked for me but may not work for you; please do your own research before investing.

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International Funds: Five Winning Choices

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In this slowing economy, how can you protect your money from the four major financial risks associated with the an economic slowdown?

In this article, I will take a look at a few tips that were offered by Money Magazine, and add my own recommendations for mutual funds that have worked very well for me.

Inflation

Inflation erodes your investments and hurts your purchasing power. To protect your investments, allocate a percentage of your portfolio into a natural resources fund. I’ve been very happy with T. Rowe Price’s New Era PRNEX. Do keep in mind that the fund is not risk free, especially after gaining nearly 30% a year for five years.

Recession

A recession is loosely defined as six or more consecutive months of a slowing economy. The biggest risk in a recession is not necessarily to your investment portfolio – your portfolio should bounce back nicely in the bull market that will follow a bear market.

The biggest risk in a slowing economy is earning less, losing customers, or being laid off. The best way to prepare is by having a well-funded emergency fund. Three months’ worth of living expenses is a minimum. A full year makes a lot of sense during a recession. Money should be completely liquid, so a money market account is a better choice than a CD. Another option is a high-interest savings account such as the ING Direct Orange Savings Account.

Dollar collapse

The best hedge against a dollar collapse: a foreign stock fund. We hold at least 20% of our portfolio in foreign stocks. We’ve been very happy with Dodge & Cox International Stock Fund (DODFX). Again, no guarantee as to future performance. We also have some exposure to China, Japan and Europe, in addition to holding Vanguard’s Emerging Markets Vipers (VWO).

Credit Crunch

In a slowing economy, it is getting more and more difficult to get a loan – mortgage, car, even a credit card. If you are a homeowner and have enough equity in your home and a decent credit score, you can set up a HELOC (home-equity line of credit) now as a safety net for an uncertain future. Personally, I hope that a tightening credit situation will finally nudge Americans in the direction of borrowing and spending less, and saving more.

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I am not a financial adviser. Prior to taking any action, please do your own research, or consult a financial planner regarding your specific situation.

Related reading:
Surviving The Recession
Recession: How To Protect Yourself
Putting recession fears into perspective

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Slowing Economy: Protect Your Money

Luxury food can often be described as outrageous.

I mean, would YOU pay $40 for a bottle of water?

Well, Bling H2O water cost $40 for a 750 ml bottle. Seriously.
Samuel Adams’ Utopias costs $120 for a 24oz bottle.
Lambda olive oil costs $182 for 1,000 ml.

While many people are being as frugal as they can, there is a completely opposite trend of outrageously overspending on luxury foods that, some say, are no more than beautifully packaged and cleverly marketed basic food staples.

As the American economy slows down, and people struggle to creatively cope with ever-rising costs, the sales of luxury foods are up 17% over the past two years, compared with 4% for overall food sales.

Joel Stein thinks that while some of these gourmet foods are good enough that it actually makes sense to buy them if you can afford it, paying $40 for a bottle of water never makes sense.

I haven’t tried any of those luxury foods. But I wonder: if a food item is priced at ten times the price of a generic item, is it really ten times better? Is a $700 pair of Dolce & Gabbana skinny jeans 10 times “better” than a $70 Calvin Klein pair?

And how should we define “better” anyway? Better-tasting food? Higher quality clothes? Don’t these prices in fact represent a hefty premium that is paid for the designer label and fancy packaging? How much are people willing to pay for the designer label? And, if you can afford it, should you even care about consumerism or should you just spend away to your little hearts’ content?

I wish I had the answers, but I don’t. If I can’t afford something, I don’t buy it. That’s easy enough, and thanks to this approach, I never got into credit card debt. But in other areas, my personal choices are probably somewhere in the middle. I am not nearly as frugal as I could be, but I am trying to simplify, buy less and avoid paying “designer premiums.”

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Related reading: Organic Food

This article, Luxury Food, contains an affiliate link to Amazon. If you click over and make a purchase, I earn a small percentage.

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Luxury Foods Are Outrageous