Kevin Kill and his fiancée, Julie Kaluzinski, are starting the greatest adventure of their lives. It's going to be an expensive one.
The pair, both 24, plan to marry in September. They aren't looking for a Hollywood-style, sumptuous affair, and they're willing to cut some corners.
"We would really like to get married in downtown Chicago, but prices are ridiculous," Julie says. "So we're sticking to the suburbs, which are more reasonable."
Even with a less expensive location, they're experiencing some serious sticker shock. The estimated cost of their big day? Between $20,000 and $25,000 for 225 guests, and that's without all the bells and whistles.
And the wedding isn't their only financial challenge as a couple: They have some debt to whittle down, they'd like to buy a condo, and they need to agree on a joint budget.
Getting started: Where to cut
Before the pair can tackle a wedding budget, they need to reduce their daily expenses and create a spending plan for their future.
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They've already cut back on dining out on weekends, and they bring their lunches to work more often. But they are still prone to buying DVDs and video games, which Kevin guesses add up to $400 a year.
How much are they spending at bars?
Step 1: For two months, they need to save the receipts for every penny they spend, then tally them up. Or they could keep small spending diaries in their wallets so each time they reach in to take out money, they can record what they spent.
They should also keep a list of their regular expenses: rent, cable, groceries, cell phones and so on.
Step 2: Once they account for all the money they spend, the couple should identify areas where they can cut back. Some suggestions:
- Buy more store-brand items to save money on groceries.
- Cook at home. Prepared meals may be convenient, but they are more expensive.
Add it up: Calculate sandwich costs
- Limit shopping stops. More trips to the store mean more spending: Shoppers making a "quick trip" spend 54% more than planned because of impulse buys, according to the Marketing Science Institute.
- Rent DVDs and video games. They should also check out the local library, where those items could be free to check out.
- Hold off on big-ticket upgrades such as a new car or a flat-screen TV, which Julie and Kevin have their eyes on.
Next: Set a plan for the wedding
To pay for their wedding, the couple have a plan; they just need to fine-tune it. They hope to contribute $12,000. They also expect to get $5,000 to $6,000 from Kevin's parents and some from Julie's parents.
Blog: Guide to planning an affordable wedding
To save up their part, Kevin has set up an automatic withdrawal from his checking account to his savings account each month, and Julie should, too.
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How much should they be saving each month? They've put away about $5,000 already for the wedding, so they need to divide up the remaining $7,000 by the months left until their wedding and save that much per month to make up the difference.
Meanwhile, a plan to eliminate debt
When Kevin and Julie pool their income, they make a decent living. They set aside money in their 401(k) plans and savings accounts. They have moved into an apartment together, so they save even more by paying one rent.
But they still owe a chunk of money.
Kevin racked up a balance of about $3,500 on the 0% interest credit card he used to pay for Julie's engagement ring. He owes an additional $1,000 on a credit card with a 9.99% interest rate, which he used to purchase season tickets to Chicago White Sox baseball games.
Julie doesn't have any credit card bills, but she owes $2,000 on a car loan.
And they both have student loans, which total about $43,000.
What should their priorities be as the wedding expenses pile up? As part of their monthly budget, the two should continue to pay their school loans through direct deposit.
Kevin must also keep making his monthly credit card payments and keep an eye on future finance charges on the 0% card. Or he could try to borrow the money from a family member, such as his dad, to pay off the plastic. (Kevin jokes that his father has his very own savings and loan, as he has a history of making loans to his kids and charging interest, all with a payment plan.)
Finally: Start the condo fund
Kevin and Julie have enlisted their siblings to help them buy a home because most of the couple's money is going toward the wedding.
Kevin's siblings want to invest in whatever property Kevin and Julie decide to buy by contributing most of the down payment. Kevin and Julie would pay the mortgage and maintenance expenses. This arrangement would be a partnership, not a loan or a gift. The siblings would get back the percentage they invested when Kevin and Julie eventually sell the property.
It sounds like a great deal, but the pair need to make sure they draw up the proper legal documents to establish ownership and that they answer important tax questions: Who gets the tax deductions for property taxes? Who can write off the interest payments on the mortgage?
After the wedding, Kevin and Julie should use whatever money they have left from gifts to pay down the credit cards first, then other debts. They should continue to save a set amount monthly; once they are married, they can put it toward the condo.
A final rule for the couple before they walk down the aisle toward their financial future: Once a week, starting immediately, they should have a short meeting to discuss bills, savings, debt and their goals to make sure their new partnership includes decisions about money.
Producer's note: Do you have a financial emergency that you'd like help with? If so, e-mail your story to Karin Price Mueller at money911help@hotmail.com.
Published Feb. 11, 2009
