Monday, May 13, 2013

My Best Friend's Wedding

I really enjoyed watching My Best Friend’s Wedding. It was a perverse pleasure watching my wife’s disappointment as the annoying Julia Roberts character lost her man to Cameron Diaz. Weddings are the first big expense a young couple will face. It is an event that may set patterns of spending that could affect the rest of their married life. I first ran into the idea that young people need to plan and save for a wedding in I Will Teach You to Be Rich by Ramit Sethi (a book I strongly recommend to well educated, ambitious young people). My initial reaction was, “This is some kind of weird Indian thing.” Ramit constantly jokes about his upbringing in an Indian immigrant home. In the good old days the father of the bride postponed retirement by a couple of years to give his little princess the wedding of her dreams. In continuing to research this problem, I have discovered things have changed a bit since the good old days.

The average cost of an engagement ring is $5,200! Folks are we crazy! The only way most young men can handle that kind of expense is with some kind of “same as cash” payment plan offered by the jewelry store. If you pay less than the full amount or are late on even one payment here is what will happen. (The Crazy World of Engagement Ring Financing).

Jared: 0% interest if paid in full within 12 months; up to 24.99%.

Kay Jewelers: 0% interest if paid in full within 12 months; up to 24.99%.

Shane and Company: 0% interest if paid in full in 6 months; 27.99%

Zales: 0% interest if paid in full in 6 months; 23.73% to 28.99%

Pay cash for your engagement ring. If you see a wedding on your radar, start saving today. If your hormones can’t wait, buy something you can afford. If that isn’t good enough for her, you now have a good reason to look for a wife somewhere else. I bought an engagement ring for $440. I found the receipt. It was all I could afford. Today, that same stone is worth about $1,500. I discovered that a few years ago when we took the ring in for some repairs. My wife has worn that ring for 38 years. I guess it did its job.

There are many tips on saving money on an engagement ring. None of them are particularly romantic. Strangely, rings just under some threshold are much cheaper than rings that meet some criteria. For example, a 0.96 carat stone will cost considerably less than a 1.00 carat stone. You pay a high price for bragging rights. The Internet is a good place to find a bargain. Also estate sales are a place to find some serious good deals. The article recommends always buy the stone and the setting separately. This not only saves money but allows you the opportunity to inspect the entire stone. As always, don’t be afraid to negotiate. Jewelry is one of the most overpriced products sold in our culture.

OK. You bought the ring. She said yes. Now what? The average American wedding costs $26,989. According to Brides magazine 1/3 of all brides overrun their budget. Sigh, well at least they had a budget. Unless daddy can foot the bill, bride and groom need to sit down and draft a budget. There are wedding calculators on the Internet. Ramit explores some aspects of wedding math in his book. His big surprise take away is that sometimes fixed costs are more important than the number of guests.

Brides, be nice to your bride’s maids. Do not pick out a $4,000 dress they will only wear one time. The same could be said about your dress. Use your connections if possible. Do you know a struggling talented photographer that is trying to go professional? This could save you a ton of money. Even if all the photographs are less than perfect, it really doesn’t matter. You will pick out a couple for display in your home and your parents' home. The rest will sit in an album in a dresser drawer. They will probably never see the light of day until they are discovered by a curious child exploring your bedroom. Ramit recommends putting the cost of the honeymoon on your bridal registry. Suggest that your friends can donate frequent flier miles rather than buy designer pillow cases at that BBB store.

Wedding math is really scary. You and your intended must have a budget. Do not buy whatever strikes your fancy with a credit card. This is not a good way to start a new life together. In “Engaged, 5 Moves to Make” by Aaron Crowe, the author recommends this is the first time a young couple should open a joint account. The wedding account is the exception to the rule. Do not mix your financial accounts until after the wedding. Remember, there may not be a wedding. Once you have set a budget and opened a wedding account, begin to save. The math is simple. $20,000 divided by 12 months is $1,667.67 a month. That could be difficult but with a little help from friends and family you can beat those numbers down.

Ramit suggests that young people start saving for their wedding before a suitable mate appears on the horizon. Chances are you will get married. Wouldn’t it be nice if the cost of the wedding was not your first opportunity for a major disagreement over finances?

Ready? OK?

Wishin’ and Hopin’ and Thinkin’ and Prayin’

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