Budget: Finding the Money, Part II -- The Big Stuff

Welcome to the second part of the series "Finding the Money," discussing how to find the funds for your wedding (or other large purchase) without needing a major windfall. (See the first part here: Part I -- The Small Stuff.)This part will focus on some of the bigger moves you can make to find the money you already have available. Remember, I'm not an accountant or any kind of financial adviser; these are things for you to think about, but always consult a financial planner or adviser if you're unsure before making any drastic changes to your assets. They can save you lots of headaches and heartaches, not to mention they can tell you more ways to tighten up your finances.

I've broken it down into two ways to do these Big Moves. One deals with the way you live; the other, with the way you do your finances. It's up to you which one you pick, but make sure you're ready for the change. Like I said, these are Big Moves, and if you're doing them right, you will have to change yourself as drastically as you do those aspects of your life.

Lifestyle Changes
These might be the hardest of all to consider, much less actually do. Considering how drastic many of these are, before you actually decide to do them, rethink what you want to do for your wedding: are you doing this solely to pay for all the frivolous extras, or are you using it as a catalyst to change your life? The second is preferable, of course, but it's worth it to carefully consider what you're doing.

*Consolidate your households. If you're fine with living together before you get married, consider doing so in order to get rid of all the "extra" payments you may be making. When you get right down to it, you don't need two refrigerators, stoves, TVs, or toasters, and you especially don't need double the "base" cost of keeping those items up and running. Not to mention that by moving in together, you'll cut out the extra rent or house payments, possibly cut down on gas (not having to go back and forth between them, or consolidating errands or work commutes), and maybe make a small dent in the grocery bill. This can be absolutely unacceptable to some people of certain religions, which is certainly fine. But if you're willing to go for it, you may be able to save a significant amount of money. (Alternatively, if you're young, you could both live with your respective parents if they're okay with the idea. If you pay them a certain amount of rent, they can cut their costs as well -- everybody wins!)

*Downgrade your house. Living in a large, expensive house can really take a toll on your finances. In some cases, it can even lead to living beyond your means; thus a part of the housing crisis evident in the US today. If you're able, selling your house and choosing to move into a smaller, more affordable home is a good way to free up some of your assets, rather than putting all your money towards the upkeep of your house. All this "extra," even if you could afford it before, can go towards your next large purchase... or even towards savings. This might be a good thing to do, even if you're not looking to pay for your wedding.

*Eat like you're in grad school. I'll be experiencing this one really soon! Some of you probably still vividly remember the days when you were eating practically nothing but ramen and the occasional bowl of mac 'n' cheese. That's not to say that you should be that frugal; I don't think I could be healthy on that kind of diet. Instead, cut back on the foods that consistently cost you more money; try vegetarian foods (meats are expensive), stop eating prepared frozen meals, quit eating out, and find recipes that consistently save you money instead. Your diet can cost you a surprising amount of money; take it back by choosing less expensive foods.

*Quit shopping. I know a lot of women love to shop as a hobby. If you want to save money, STOP IT. I know, it's not easy for a lot of you... and coming from someone who hates to shop, it might sound a little crazy. But if you think about it, shopping for the sake of shopping is costly -- you're already using gas, and more than likely you'll find something you want to buy. Take away that opportunity, and you'll spend less money. It may be a little harder if you're used to shopping online, but break it like any bad habit: Find a way to replace it. Love perusing eBay or Amazon? Switch to coupon-clipping sites or finance advise pages. (They'll both save rather than cost you money.) Yes, you can still buy things that you need. But evaluate your criteria for "need." Is it really just "want," only in a different form? Then you don't need it. Sure that old sofa is raggedy. But you don't need a new one. Skip it, and save that $1,000 instead.

*Find alternative entertainment. Most people I know spend quite a bit of their monthly income on personal entertainment, things like movies, restaurants, games, and cable TV. None of these are necessary, and it's definitely possible to find alternatives that are just as fun but not nearly as costly. Cutting out 90% of your entertainment budget will hurt in the short run, but save you quite a bit in the long run. Check out your local newsletter or website -- most towns and cities have tons of free stuff to do, especially on the weekends and during the summer. Play outside. Watch broadcast TV instead of cable. Make some crafts (you guys are good at that, right?). Find new ways of having fun with your significant other. You'll probably be happier, and you'll have more money to boot.

*Sell your extras. Have two cars? Sell one and carpool to work. Extra knick-knacks? eBay 'em away. A coffee table you haven't used in 5 years? Put it on Craigslist to find a willing buyer. Or, alternatively, host a big yard sale (or join your neighborhood sale) and sell anything you don't need any more. This is a great thing to do, too, if you're considering consolidating or downsizing households; by getting rid of a bunch of old stuff, you'll be able to see more clearly what you do and don't need. (Donate anything that doesn't sell to your local charities. It's a good thing to do, and you can get a tax break for it.)

Financial Changes
I'm not an expert by any means on finances. Please take the time to look up information relevant to your situation, either by browsing the Internet (see a couple sites I found below) or by grilling your financial adviser.
Mind Your Finances
CNN's Money 101
Forbes Personal Finance (a bit busy but worth checking out)

*Taking out a loan. This is probably something you should do only as a last resort. Personal loans are pretty risky unless you're absolutely sure you'll be able to pay them back. That said, they can be a better option than putting everything on a credit card, which usually has high fees and interest rates, if you need a bit of an "extension" on your finances between paychecks. Just pay them back as soon as possible, and make sure you can pay extra each month to reduce the principal. I still wouldn't go for this option if it can be avoided. If you do this, go for a low interest rate, and only borrow what you need. Any little bit extra will balloon quickly into "a lot" extra.

*Ask your financial adviser about good investments. If your assets include a checking account, a savings account, and little else, now is a good time to talk to a financial adviser about other investments you can make. There are many possible ways to invest, some more risky and higher-yielding, and others less risky and with lower yields. Decide which ones are right for you, with the help of a real finances person, in order to maximize your earnings. I won't put any specific suggestions here because I'm not really the right person for it; do your own research, though, because you'll probably find something right for you.

*Look at a higher-interest account such as those from ING, which offers both checking and savings accounts at a higher interest rates than "traditional" accounts. There is one catch, however: these accounts are not FDIC insured, which means in the event of a crash that leaves the company out of business, you have little resource to get your cash back. Keep some money in a traditional, FDIC insured bank, but it might be worth it to keep "extra" money in an ING account, earning (sometimes) more than double the normal interest rate.

*Consolidate the loans you already have especially if those loans are student loans. This is easier if you took out several loans from the same company, but it can be done even if you have several different ones through different lenders. Most lenders will offer a lower interest rate on consolidated loans, thus saving you money; if you have extra during a month, you can pay towards the combined principal. Consolidating loans will usually save quite a bit over the life of the loans, but read over the terms carefully, and consult your financial adviser about your choices. You don't want to end up with a consolidated loan that's more costly than the originals.

*Cut up your credit cards or at least all but one of them, keeping one only for emergencies. Pay off the balance as soon as possible if you're carrying a lot of debt. The high interest rates and late fees on credit cards make them poor options for "lending" money to yourself. Credit card debt is one of the leading ways Americans dig a debt hole for themselves; you don't want to be another one owing more than $4,000 on a credit card. That's painful -- and costly too.

*Whatever you do, DON'T take it from your retirement accounts. Not only does this cost the future you the amount you're taking out, it costs you the interest you could have earned as well, not to mention the taxes and fees leveraged in some cases on the money if you take it out early. Taking money from your retirement accounts early should only be done in cases of extreme need -- an unexpectedly sky-high medical condition not covered by insurance, or something equally drastic.

Don't go into serious debt to fund your wedding. A wedding is really not that necessary. If you're thinking about doing so, you need to seriously reevaluate -- scale back the wedding, postpone it, do it at the courthouse, anything but going into lots of debt. That's no way to start your life together. Start it instead on a positive, solid financial footing. You'll both be thankful, and you may even learn how to live in a better way in the process.