Editor: Crass Cash

There are nine community property states.  They are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.  Alaska gives you the option to opt out or not.  What this means in basic terms is that anything acquired jointly during a marriage is considered to be owned equally by both.  This however, doesn't apply to property that was acquired prior to the marriage.  

During the Tiger Woods divorce proceedings his wife was trying to get the divorce done in California because that's where Tiger Woods was from, but their homestead was in Orlando, FL.  Note that this would have given her right to half of everything he made while they were married.  Considerably more than their prenuptial of $10 million.  This is what I read in the newspapers, so it's up to you as to whether it's true or not.  

As always check with a divorce attorney in your home state prior to marriage for more detailed information.  I'm not a lawyer! 

Editor: Crass Cash

When I was in college I took a real estate class that was taught by a lawyer.  He was an excellent professor and I learned a lot from him and the class.  He made a comment though that proved to be a prescient statement.  One day in class we were talking about how people can deduct mortgage interest and how it could be a savings for American families.  He told us how it's become a trend for families to keep "trading up" for bigger and bigger mortgages since they could get a deduction.  He told us it was a bad idea, but that it seems to be popular and people are getting rich off of it.  Then he shrugged.  

That was 3 years before the market crashed.  It's still a bad idea!  I've explained before how little money you actually save compared to if you had no mortgage interest deduction.  I save a good bit of money because of my mortgage interest.  However, when I compare it to if I didn't have one at all, it saves me about $850 a year at most.  YOU SHOULD BUY A HOME ACCORDING TO YOUR NEEDS, NOT YOUR WANTS!

Contrary to what everybody tells you, your home is not an asset, it's a cash flow drain if you're like most Americans. By constantly trading up you're taking away more and more money that could be used for investing.  "But more leverage means more return, right?".  Yes, but people forget about all of the other expenses that come with a house.  The bigger the house the more expensive it is.  

Your home should be as small as possible to fit your needs.  Nobody with a family of 3 or 4 needs a 5,000 square foot home.  You maybe need a 2,000 square foot home.  And I use the word "need" liberally.  Back when my grandparents were my age the average family of 3.33 lived in a 1,000 square foot home.  Now it's 1,500 sq ft and 2.22 people on average live in it.  Both served the same function just as well, yet they usually paid off their homes in 10 years, not 30!    

Editor: Crass Cash

The media puts out these numbers all the time and it never surprises me.  The fact that 1/4 of the population of the wealthiest country in the history of man doesn't have any savings at all is quite simply unacceptable.  If you find yourself in this situation you need to change it immediately.  It's a ticking time bomb that will eventually blow up in your face in the form of lost job or illness.  

I've talked extensively about emergency funds on this blog and this is even below that status.  They have NO savings whatsoever.  The easiest way to go about reconciling this situation is to go and open a savings account.  Then have the bank or your employer start to automatically deposit funds.  You'll feel a crunch at first, but then you won't even notice it after a month.  You'll make adjustments to your lifestyle in order to reflect the changing bank balance.  While you're at it cancel your credit cards because you probably have a debt problem.  When the account gets to $1,500 then open another account and start putting money into that new account for 6 months worth of expenses.  That new account will be your emergency fund, forever and always.  Don't touch it unless it's a true emergency (job loss, deductible that your other account can't handle, etc.). 

Once you've proven that you can do it you'll have the confidence to save for a down payment on a home.  Get started today!