The first outlay for the rest of your life

Summer is here. With children and grandchildren out of school, planned vacations, gas prices climbing faster than the temperature and everything else that comes with more sunshine, there are plenty of opportunities for you to fuel our country’s economic recovery with your hard-earned cash. Of course, if you’ve read this column before, you know that’s not where we’re going.

We’re heading in the opposite direction. In the past, we’ve discussed making smart graduation gifts and pulling off frugal vacations, but as we talked about ideas for this month’s column, we set our sights on a bigger target: weddings. The beginning of summer is the peak of wedding season, and frankly, a lot of families will spend a lot more money this year on weddings than on graduation gifts and vacations combined. In fact, tracks wedding costs and says the average American wedding is ringing in at nearly $28,000. Talk about a single-handed attempt to jump-start the economy.

While we’re not here to squash anyone’s patriotic financial moves, we do think there are some solid alternative uses for 28,000 pieces of paper bearing George Washington’s portrait. They may not knock your socks off, but they’re definitely sound.

Clean the slate. Instead of adding to your debt load to pull off a big event, focus that $28,000 – or some part of it – on eliminating credit cards and other debts that could be a real drag on your combined finances. Imagine spending the first 42 years of your marriage paying off your credit-card debt. That’s the scenario if you decide to make only the minimum payments every month. Getting rid of debt will do a lot more for your new marriage than a $28,000 party.

Put down some roots. From a long-term perspective, low interest rates and home values at their 2003 levels make homeownership an attractive option for some newlyweds. That $28,000 could be a down payment, closing costs, and even a slush fund for curtains and extras.

Buy that minivan now. You may not need it yet, but transportation without a monthly payment could free up cash flow for a lot of other worthy goals. There is something invigorating about driving down the street in a car that’s all yours.

Make a financial planner smile. Sure, this is a pipe dream – our pipe dream – but if you took that $28,000 and invested it with an average return of 6 percent (this is a hypothetical rate, not a specific investment offering), when your focus shifts in about 
40 years to making your retirement years golden, you could have a tidy $419,284 set aside. Now that would be very cool.

We’re sure there are some folks out there for whom money is truly no object. If that’s your situation, go for it and pump up our economy. For the rest, maybe a small gathering of family and friends – combined with an effort to fuel the newlyweds’ financial future– would be a better approach.

June Walbert and J.J. Montanaro are certified financial planners for USAA, The American Legion’s preferred provider for financial services. Submit questions to them online.

This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers. USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.