WEDDING EXPENSES Borrowing thousands for the big day is common
An average wedding on the low end is $15,000 for 200 people, one planner said.
For couples planning for wedding expenses, "something borrowed" is often cash -- thousands of dollars.
Stephen Iaconis started saving for his June wedding 10 months before the big day.
"It would be terrible if all of a sudden June arrived, and [I] said, 'Oh, I've got to pay for this,'" Iaconis said.
At 26, Iaconis has the details planned with his bride-to-be, Ashley Wright, 23.
Borrowing for weddings is the way to go for many couples or for their parents who are doling out the cash.
The cost of each wedding and the amount a couple needs to borrow can vary by each wedding, but borrowing thousands of dollars is common, financial advisers said.
The average wedding on the low end is $15,000 for 150 to 200 people, said Ann Creasman, a wedding planner in Hoover, Ala.
Advisers say a year is needed to set an overall wedding budget -- which can lead directly to the need to borrow.
Major wedding components -- such as the ceremony location, the reception location, the photographer and the florist -- must be handled at least six months out, Creasman said.
Iaconis works as a certified financial planner at First Financial Group of the South in Mountain Brook, Ala.
One way to pay
For his own wedding, he said he plans on paying for the reception for more than 200 people on a credit card.
It would be difficult for his fiancee's parents to pay for all of the event, he said.
He plans to pay the money off within 30 days to avoid interest charges, but he'll receive a 3 percent rebate, one of his card's perks.
Big-buck borrowing is often a necessity for young couples, because most people in the wedding industry require payment -- or at least a substantial deposit -- up front, Creasman said.
Such wedding providers want their full payment two to four weeks before the wedding, Creasman said.
"The florist has to order the flowers from the wholesaler, and they have to be paid up front," Creasman said.
The most common method for borrowing is to take out a home equity line of credit, financial advisers said.
Money on a home equity line of credit can be taken out as needed -- not just as a lump sum. But the home equity line of credit can have drawbacks.
Financial planner Randy Barnes says a sizeable loan can complicate the newlyweds' already tight budget.
"A lot has to do with how much you've borrowed," Barnes said. "If you only have $10,000 equity in (your house), and you need to borrow $8,000, I would be careful with that."
A couple could lose their home, "but normally, if you've got enough equity built in it and you don't borrow against the entire equity, you're not in much danger of losing it," Barnes said.
Most young couples don't have equity in a home to borrow against, Iaconis said.
That's where Mom and Dad come in.
"I've found that more and more parents (of the bride and of the groom) are doing the home equity loan ...," Creasman said.
For borrowing in smaller amounts, such as $2,000, Iaconis suggested a second loan method: a credit-card loan, such as the one he is using.
Credit-card interest rates on that money can run high, as much as 21 percent, compounded over time, making that $2,000 loan a payback of $2,500. That could be a cost of $500 for this small loan.
"Just make sure you pay it off before the interest starts," Iaconis said.
If a borrower pays that money back within the period before interest accrues, it's like having a savings account, Iaconis said.
Several advisers say that using credit cards is a terrible idea: It forces payback at a high interest rate, it enslaves young couples to early debt and it promotes the buy-now-pay-tomorrow philosophy.
"That minimum payment is too tempting to a lot of people, and it would be tempting to a younger couple [getting started]," Barnes said. "The interest accrues unbelievably."
Creasman's best bet: "Try to plan far enough ahead so you ... don't have to take out a loan."
That would be one less detail in planning for the big day: dealing with loan consultants.
Wedding planning can turn into money saved or lost.
"Plan as far ahead as they can; that way we're able to work with florists, to dicker with them, to get our best price," Creasman said.