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Innovative Wedding Payment Answers |
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By Scott Almeida, CPA, CEO and Founder,
Wedding Payment Plan
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Caught between shrinking disposable income and increased cost of living,
today’s couples are fast learning to be both financially conservative and
creative in this economy. Older, wiser and more technologically savvy than
their predecessors of even ten years ago, today’s brides and grooms are
empowered, self-sufficient, and know exactly what they want. Research has
shown that these couples are also picking up the tab for their wedding 60%
of the time.
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Future brides and grooms are reconsidering entirely depleting their
savings, spending their wedding gifts, maxing out credit cards, taking out a
“traditional” bank loans, borrowing against a home or 401K, or taking money
from families and friends — for good reason. Instead, engaged couples are
employing the most effective combination of a growing number of payment
options for their weddings to avoid making long-term, costly mistakes. Some
are opting for newer alternatives such as specialized wedding loans.
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While each couple has to determine which method or mix of
payment methods is best for their combined financial
situation, it is important to know all of the options
available, including their advantages and disadvantages. | |
Tapping into savings
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By all means save for your wedding, but not
at the expense of having liquidity or paying
down higher cost debt, such as credit cards in
advance of and after your wedding. Completely
exhausting savings is one of the worst things
engaged or newly married couples do. Having
savings available for emergency situations such
as car and home repairs makes for a healthy
financial situation. Imagine the stress of not
having the money to repair a furnace or car
brakes. Also if you hope to purchase a new home
it may require a considerable down payment.
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A gift was worth giving – Using your
wedding gifts to pay for your wedding
Another mistake couples make is to anticipate or
rely on wedding gifts to pay for their wedding.
Aside from paying for an extra hour for the
band, relying on cash gifts is risky. And,
nothing causes greater wedding day stress than
not having what you need when you need it.
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Recognize a family gift versus a loan
If Mom and Dad are willing to pay for a portion
of your wedding, congratulations! You owe it to
yourself to ask your parents whether or not they
expect repayment. If in fact, it is a gift, show
your appreciation by including them on the
wedding invitation and thanking them at the
reception. If however, they expect repayment,
don’t accept it because it is an easy fix.
Protect yourself and your family by getting the
terms of the loan in writing. If you have the
option of borrowing from close friends and
family, please consider all of your options
first and do it wisely, otherwise you will find
yourself regretting it.
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Taking out a new or ‘maxing’ out your
credit card
Credit cards’ low introductory interest rates
may seem like a great option in the short-term,
but in the long run, the associated revolving
debt will cost you as it lingers on and on
unpaid for months or years. Also, count on extra
fees and financial penalties for being over your
spending limit, late payments or not meeting
minimum payment criteria. And maxed out credit
limits show poorly on a credit report, something
to consider for those seeking to purchase a home
within a year or two (or more) of getting
married.
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Traditional or home equity loans
Traditional bank loans may be an option for some
brides and grooms. However, under most
circumstances, it will be difficult for a bride
to qualify for an uncollateralized loan for an
amount close to his or her actual average
wedding spend. Additionally, interest rates for
a non-specific, personal loan would most likely
be relatively high in today’s rate market. A
home equity loan or line would, on the other
hand, be collateralized and would warrant a
better rate, unfortunately often adjustable, but
most banks are highly scrutinizing, even
recapturing unspent funds these days.
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401K loans or withdrawals
Even though most employers allow their employees
to borrow against their 401K, this should only
be considered in case of emergency. A wedding
payment is not an emergency situation. According
to Christian Weller a Senior Fellow at American
Progress and an Associate Professor of Public
Policy at the University of Massachusetts
Boston, even a fairly modest 401k loan amount of
$5,000 in 2008 dollars, a worker’s retirement
savings could be substantially reduced. For
instance, a 401(k) plan participant who takes a
loan to smooth over an economic rough patch, and
makes only the loan payments, reduces their
total retirement savings between 13 percent and
22 percent.
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Specialized wedding loan
There are very few out there, but there are
specialized financial services companies that
offer
wedding loans to engaged couples and their
families. Research has shown that the newest
trend in weddings is for the couple to pay over
time with terms they choose. These loan products
are available at relatively low fixed rates and
with flexible terms ranging from two to five
years. All in all, wedding loans are a great
option for young couples because their repayment
process and terms are similar to those of
student loans to which they may be accustomed.
However, there are some companies that offer
these loans and charge extremely high rates
similar to credit cards so be careful in
selecting the right company and product that
works for you! |
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| It is a
tough time for couples to outlay large amounts of cash,
necessitating at least a second look at payment options
that may not have been available or considered
previously. Just as couples spend on average 12 to 18
months planning a wedding, so too should they plan for
how to pay for their wedding. The best option for a
couple may be to choose a mix of several payment methods
in order to accommodate a complex financial situation
and best satisfy long and short term goals. |
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| About
the Author |
Wedding Payment Plan, a first-of-its-kind
specialized wedding loan company, offers loans of up to
$25,000 to financially qualified couples, at low fixed
rates and with optional terms ranging from two to five
years, for use at preferred wedding venues across the
state. Testimony to the need and desire of engaged
couples,
Wedding Payment Plan’s volume has increased by over
500% from 2007 to 2008.
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Wedding Payment Plan is an idea whose time has come
based on today’s lifestyles and economy. The Plan
affords financial freedom, reduced financial stress,
lower rates and budgeting capabilities for engaged
individuals, couples and their families versus
traditional borrowing techniques.
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Wedding Payment Plan is based in Norwell,
Massachusetts and serves the financial needs of
consumers planning their weddings at distinctive area
venues.
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