Newlyweds have a great opportunity to start their financial married life on the right foot, provided they learn God’s way of handling money. When you first get married, you have hopes and dreams of your future together.
Each person brings into the marriage their assets and their liabilities. Let’s say that both individuals combined have about $7,000 in debt. They are in their early to mid-twenties and both are employed. They have been saving a small amount each month, but nothing really significant.
Their dream is to one day own a home and have children. The wife wants to be able to stay at home and take care of her children. Let’s say that she earns about $25,000 a year and he earns about $35,000. Their combined income is $60,000. Their apartment with utilities included runs about $650 per month.
The best way for this couple to ensure that they can one day fulfill their dreams of children and home ownership is start by learning to live on one salary from the beginning of their new life together.
This couple needs to learn to live on the recommended percentages. The husband’s income is $35,000 before taxes.
2013 Bi-weekly Pay of Annual Income of $35,000.00 based on 52 weeks per year.
| Amount | |||
| gross pay | $1,346.15 | ||
| federal income tax | $107.08 | ||
| social security tax | $83.46 | ||
| medicare tax | $19.52 | ||
| state income tax | $0.00 | ||
| city income tax | $0.00 | ||
| deductions | $0.46 | ||
| final pay check | $1,135.63 | ||
For the sake of this post, let’s say they are lucky and live in one of the states that do not have a state income tax. Therefore, the net or take-home pay would be $1,135.63 every two weeks. (Note: To calculate your gross biweekly pay, take your annual income and divide it by 26. If you’re paid monthly, divide it by 12. If you’re paid semi-monthly (say the 15th and 30th) divide by 24. If you want to calculate your exact amounts including state income tax, click on the title for the Bi-weekly pay chart. This site allows you calculate your amounts online.)
The housing expense is within the recommended percentage (600/2271.26=26.41%) We are using the monthly amount to calculate the percentages not the bi-weekly.
By applying the percentages their expenses will be:
| Category | Recommended % | $2,271.63 |
| Tithe & Charitable Gifts (Gross Income) | 10% | $269.23 |
| Savings | 10% | $227.16 |
| Housing | 26.41% | $599.94 |
| Utilities | 0 | |
| Food | 10% | $227.16 |
| Transportation | 10% | $227.16 |
| Clothing | 5% | $113.58 |
| Medical/Health | 5% | $113.58 |
| Personal | 5% | $113.58 |
| Recreation | 5% | $113.58 |
| Debts | 11.738% | $266.64 |
Our couple will be debt-free by October 2014. I am assuming an interest rate of 7%. Their minimum monthly payment on the $7,000 is actually $266.64. They will have paid $329.09 in interest on this debt. This uses all of his income. Their savings is actually more because we are saving the wife’s income. They are saving $1,884.70 ($1657,54 + $227.16 per month.) However, our couple wants to payoff their debt fast, so they are going to apply the husband’s savings amount to their debt. They are going to paying $493.80 each month to their debt to pay it off.
| Payment No. | Payment Date |
Payment | Principal | Interest | Extra Payments | Balance |
| 1-Aug-2013 | $7,000.00 | |||||
| 1 | 1-Sep-2013 | $313.41 | $272.58 | $40.83 | $222.46 | $6,504.96 |
| 2 | 1-Oct-2013 | $313.41 | $275.46 | $37.95 | $222.46 | $6,007.04 |
| 3 | 1-Nov-2013 | $313.41 | $278.37 | $35.04 | $222.46 | $5,506.21 |
| 4 | 1-Dec-2013 | $313.41 | $281.29 | $32.12 | $222.46 | $5,002.46 |
| 5 | 1-Jan-2014 | $313.41 | $284.23 | $29.18 | $222.46 | $4,495.77 |
| 6 | 1-Feb-2014 | $313.41 | $287.18 | $26.23 | $222.46 | $3,986.13 |
| 7 | 1-Mar-2014 | $313.41 | $290.16 | $23.25 | $222.46 | $3,473.51 |
| 8 | 1-Apr-2014 | $313.41 | $293.15 | $20.26 | $222.46 | $2,957.90 |
| 9 | 1-May-2014 | $313.41 | $296.16 | $17.25 | $222.46 | $2,439.28 |
| 10 | 1-Jun-2014 | $313.41 | $299.18 | $14.23 | $222.46 | $1,917.64 |
| 11 | 1-Jul-2014 | $313.41 | $302.22 | $11.19 | $222.46 | $1,392.96 |
| 12 | 1-Aug-2014 | $313.41 | $305.28 | $8.13 | $222.46 | $865.22 |
| 13 | 1-Sep-2014 | $313.41 | $308.36 | $5.05 | $222.46 | $334.40 |
| 14 | 1-Oct-2014 | $313.41 | $311.46 | $1.95 | $22.94 | $- |
I will continue further with our couple on another post.
I must apologize for some of the computation errors I made yesterday. You see the tithe is based on our gross income and not our net income. Yesterday, I incorrectly calculated it on the net. Also, I said that the total interest they paid was over $2,000. Actually, that was the extra payments they made. They will have paid-off their debt by Oct. 2014. Sorry for the confusion. I have made the appropriate corrections above.
