From the amount of shoes it's 'necessary' to have, to how the word 'clean' is defined, experts say men and women think differently about many things, including money and credit. What’s the best ways to keep money matters from becoming a pain in the heart? Gerri Detweiler, personal finance advisor for Credit.com has some advice on how to co-mingle happily.
Q: Love is supposed to be forever, but just in case it isn't, what's important to remember going into a relationship when it comes to co-mingling finances, bank accounts and credit cards?
A: Gerri Detweiler, personal finance advisor for Credit.com
Keep at least some of your credit separate. If you want to have a joint credit card for joint household purchases, that’s fine, but consider keeping at least one credit card in your own name. If you live in a community property state, remember that any debts incurred after you marry become community property. That’s true whether you cosign or not.
Set ground rules for joint accounts. Is there a certain dollar amount above which you must discuss purchases before making them? Who is responsible for making sure bills are paid on time? How will you make sure ATM withdrawals or debit card purchases are entered into the checkbook? Review these ground rules periodically to make sure you both agree.
The worst situation is when one spouse takes all the responsibility for handling the money, and the other one doesn’t have a clue. At a minimum, it can lead to resentment or burn out. In worst case scenarios, one spouse is left in a complete tailspin if something happens to the other – whether it’s a medical emergency or an affair.
Q: Finances and money are one of the top problems couples often fight about. How can couples communicate constructively without causing World War 3?
A: Gerri Detweiler, personal finance advisor for Credit.com
Let’s face it. If you are both very compatible in your approach to money these conversations will be easy. But if you are very different, then discussions about money are going to be tough. If you are conservative with your spending and your credit, but your partner isn’t, there’s a really good chance you are going to come across as the one who is spoiling their fun. (And the vice versa can be true as well.)
I recommend investing in some counseling together. If you prefer one-on-one help, you can work with a Financial Recovery Counselor or a financial planner who specializes in money issues. If you are on a budget or would like to work with others on this, sign up for a course like Dave Ramsey’s Financial Peace University. Either approach can go a long way toward taking some of the pressure off you and make it easier to learn how to talk about these issues more objectively.
If you can’t get your partner to agree to either approach, then at least head to the library and pick up Olivia Mellan’s book Money Harmony, and Mary Hunt’s book, Debt-Proof Your Marriage. Try to start a conversation around what you learn in those books. Focus on the positive: what you’d like to accomplish together, and see if you can’t find some common ground.
Q: Sometimes after a divorce one or both partners is left with a financial disaster. How much can an ex affect a person's finances and credit long after a break-up?
A: Gerri Detweiler, personal finance advisor for Credit.com
If you’re not careful, your ex’s credit problems can affect your credit long after he is gone.
- If you have joint accounts that one of you can’t afford to pay off and close when you split up, you may instead have to divvy them up in the divorce, as in “he pays the MasterCard, she pays the Visa.” The problem is that your divorce decree doesn’t erase your contract with the creditor. Until those accounts are paid in full and closed, you are both responsible for the balances. That means any late payments will affect both your credit reports. (Tip: Monitor those accounts to make sure they are paid on time, and if your ex starts missing payments, consider stepping in to protect your credit.)
- If your spouse declares bankruptcy and includes joint accounts, your credit should not be affected as long as you continue to pay the bill on time. But if you can’t afford to pay it, and it becomes delinquent, your credit will take a hit.
- Even if both of you pay your bills on time, joint accounts left over from your marriage can affect your credit. Let’s say, for example, you both cosigned for a vehicle. He keeps the vehicle and continues making the payment each month. It’s paid on time, so that’s not a problem, but legally you’re still on the hook for the debt. That means it will affect your credit and could become an issue if you try to get your own vehicle loan. (Tip: Talk with your attorney about putting a stipulation into the divorce decree that he refinances the vehicle in his own name, or sells it, within a certain period of time.)
Q: Can it be hard for a partner with a bad credit history to be honest about the situation when entering a new relationship? What are ways to explain and talk about it?
A: Gerri Detweiler, personal finance advisor for Credit.com
Few couples share credit reports and scores before they marry. It’s not terribly romantic. But if there is nothing to hide, then there’s no reason not to review your credit reports together. And if one of you does have bad credit, it’s going to come up sooner or later. You might as well get it over in the early days when it’s actually easier to discuss it and you’re more motivated to help each other find a solution.
Go to AnnualCreditReport.com for your free credit reports, and to Credit.com for a free analysis of your credit scores. Pour a bottle of wine if you must, but take the time to do this.
