Assumes that the two people earn the same - with kids in tow, even. We made decisions about how we wanted our children to be raised that affected both of our respective salaries and earning power. Because I chose to be the one to give up more, professionally, should I be punished because my earnings are less and have no say over the money? Our marriage is a LOT more than money and giving money that much power (ie - something that has to be measured individually and kept separate above all else) doesn't fit in with our whole-istic view of our partnership. Might as well assign us one kid each. "Hey, our son looks more like you honey, so I'll leave him for you, and I'll take care of our daughter." Or maybe divide the house up room by room....
The thinking of separate but equal is totally outdated. There are situations where it may be appropriate but as a blanket statement for any couple it just does not fit.
Our marriage is a partnership and we work as partners in everything, even money.
As for the first part of the article though, that I totally am on board with. There is no requirement for every relationship you have to merge finances.
just like you and most the people posting, i have my own sob story.
my wife and i bought our house 2 1/2 years ago, using the bubble to sell our 1600 sq ft house that we purchased at 123k for a tidy sum of 255k, we paid off all debts, credit card, car...etc. and then purchased a nice home, 2400 sq ft on a corner lot, for 207k. fast forward to the present, in the middle of a divorce, was in a motorcycle accident 1 1/2 years ago and now am on disability (not ssi, through a policy from work) and i looked a couple days ago and within a 1 block radius there are 8 bank owned for sale signs and 11 short sale signs. i had a real estate agent pull comps and my house that we bought for 207k, and owe 180k is now worth roughly 130k. and since we did everything right, even with the spousal support ordered by the court and being on a fixed disability income, i can still afford the mortgage. can't afford to go to the movies, but can afford my house. so what the hell do i do? i've thought about trying to purchase a 70 to 90k house somewhere else and then letting them foreclose on this house, thought about finding a rental home that takes pets (i have 3 dogs) and letting them have the house, doing what you have mentioned in the article, or just plugging along without enough money to even travel the 250 miles to see my parents. i don't know if it's a moral decision to honor my obligations, a matter of pride that i would prefer to just struggle along, or just stupidity, but i'd prefer to stay. am i a fool? should i accept a bailout? or help pay for other morons? right next to me, across the street and within 5 houses each way are 6 houses for sale...any suggestions?
My ex and I drifted into the separate finances thing organically by getting married after living together for several years of using our own separate accounts. It was lack of communication and failure to have shared money goals that ultimately killed the marriage, and the separate account setup that you describe served to facilitate that situation.
Sure, a "real together" couple could make it work, but I can count those types of couples I know on one hand. Given that these arrangements are frequently negotiated by the young and inexperienced I'd strongly suggest to anyone who has the chance to choose or change their joint financial situation to take the advice of the above poster and combine finances. You can always give each other an allowance that can be used for whatever you like, but otherwise your joint finances need to be completely transparent. Each partner needs to be part of the budgeting and bill paying process. This forces communication about money and goal setting. Separate accounts tend to facilitate separate lives, not strong marriages.
Also, it may be that credit companies can't come after someone who isn't specifically listed on an account, but debt acquired by either party during the marriage in the state I live in (and I would wager that most states are the same) does "belong" equally to both partners when dividing assets and debts during a divorce or dissolution.
In other words, if one partner goes wild with the credit card spending during the marriage without the other partner knowing about it, the innocent partner may still be burdened with half of that debt by the court during the divorce proceedings. Instead of directly paying it back to the credit card company, they may just lose that amount of assets to the other partner.
Funny how a divorce completely changes your views on marriage and money! :-)
It seems like more and more people are suffering from the credit crisis than ever before. There are a lot of people out there that believe the new presidency will fix all of this for us.
I believe that we as consumers need to fix our own credit. I help people with their credit, but I always say that each individual needs to be responsible. This article stated that you should look at your statements. Oh yeah, look at your statements, see if there are any changes and be an advocate for yourself. That is the only way you are going to survive in the next couple of years.
We are defined in this country by our credit and if you do not have credit because you feel it is unnecessary than that is just as damaging as having a bad score. You are entiled to know why you get turned down for a loan and you can get your credit reports for free once a year. DO IT, get your credit reports and look over them with a fine took comb so you can know where you stand.
I couldn't disagree more that married couples ought to keep separate accounts. Part of being married, the main part, is that two individuals become one flesh. If you can't trust your spouse with your finances, why on earth did you marry them in the first place?
My husband and I don't have separate money. After the wedding, we immediately opened joint accounts and have been working on that basis for the past 20 years very successfully. I'm not saying we don't have conflict over funds - of course we do, but neither of us has ever used the phrase 'it's my money' because it's not his money or my money. It's our money. When one of us screws up, as we do because we're human, we work it out together, just as we would work out any mistakes we made in other areas.
Of course people shouldn't be comingling funds or credit with boyfriends and girlfriends - there is no legal protection in most of those situations, but marriage conveys legal obligations and should be viewed as a lifelong commitment, different from living with someone. I think it's sad that we've come to a place in this society where marriage and what used to be called 'shacking up' are treated as equivalents.
I don't want to hear any sob stories. We all know that we need to plan ahead for an emergency. My husband lost his job last year and was out of work for 6 months. At the time, we had a 10 month old baby.
However, we also have a little thing called COMMON SENSE and we had an emergency fund. 4 years ago we bought our house, and bought less than what we could afford. The bank wanted to loan us $280k. We borrowed $120k instead. At the time we had one car and it was paid off. We recently paid CASH for a second car. We do without a lot of things. I grew up in a poor household and we got WIC but no foodstamps or welfare.
Somewhere along the line, Americans became greedy little bastards thinking we deserve this, that, and the other. It's not the little guy who's going to be helped by the bailout. It is yet again another example of those of us who are repsonsible for ourselves, also having to be responsible for everybody else who has no brains. From the people who bought McMansions they couldn't afford to the CEOs who ran off with hundreds of millions, they are all responsible for this mess. We ought to, as a country, seize ALL those assets in the name of the government and redistribute the wealth to those of us who are responsible.
An economic collapse leads to lower consumption which leads to less environmental destruction. Also, not everyone loses in a bad economy, some people actually profit.
My husband and I share the bank account where the bulk of our money is, but we have some other structures that help us:
1. We each have a separate account for our own allowance, which we can spend as we see fit.
2. Any purchase over $100 must be discussed. Even if it is with your own money. This helps put a stop to crap piling up.
3. We plan our savings goals.
4. We have joint and separate credit cards. Joint for group purchases, personal for personal.
A couple caveats: we are both engineers and we make about the same amount of money. This means there is a lot of logical reasoning about our money and little desire to hide purchases since we both have the same amount of money to work with.
Definetyl bullshit. so i was sitting on the just visiting space and i rolled. it said i rolled 10. but it only moved me 9 spaces. thus preventing me from winning the shell refillible gift card
Okay...this post made me really sad. I can see why, in some situations, you might not want to share bank accounts with your spouse (history of debt, history of really poor financial management, etc). However, I've found that sharing an account with my husband has been overall a great thing. We have strengths in different areas of financial management (He's a smart investor, I'm good at managing the day-to-day expenses), and it's really been beneficial to have discussions about money.
I have a relationship with my husband based on openness, trust, and respect, and we've worked hard to get it that way. We went through over a year of counseling before we got married- believe me, there were no surprises when we tied the knot.
Do I think people should instantly merge finances with their latest significant others? Absolutely not. But don't discount the positive relational benefits that real discussions about shared money can bring.
I know it's a dirty word to most folks, but prenups are not just for the rich. Why? Because imagine if Scott and Sheila had gotten married and Sheila had run up a separate -- not joint -- credit card after they got hitched that Scott didn't know about. Then, years after their divorce when Sheila stops paying on her credit card because she's flat broke -- and because Scott managed to scrape a little money together since their split -- suddenly her credit card company comes after him for her credit card debt! According to Suze Orman, this happens all the time. For more reasons to get a prenup, see "Who Needs Prenups?" at http://shanelyang.com/2008/07/11/who-needs-prenups/
I do the exact same thing. In fact, we have kid's birthdays right after Christmas as well and we recylce any candy that does not look like Halloween or Christmas candy for use in the stockings at Christmas and for the birthday party treat bags as well. The other thing I do (as we have 3 kids and lots of candy) is donate extra candy and trinkety toys to our church to give as prizes in Sunday School.
I didn't include a 60/40 split, but if you identify yourself as a Moderate investor, a 60/40 split either way between fixed income and equities would be suitable. I just split the difference and called it 50/50.
In regards to time frames, I also agree that 6 years is a risky time frame if all other signs point to putting the majority of your money into the markets. Personally I would prefer a 10+ year time frame, which is indeed a safer bet for large equity investments.
Regarding the person above who paid out of pocket when they were sick with a high deductible plan. I have a High Deductible plan and my youngest daughter has congenital heart defects. She had surgery this year and we only paid $5K out of pocket. This includes our prescriptions which is a huge savings compared to the other plans available to us.
My husband has a high deductable plan, and he loves it for all the reasons you've listed - he's never sick, so he doesn't mind paying for an office visit once every three years. HSA's are awesome, too.
I have a standard HMO. While I'm healthy, I do buy two prescriptions each month - generic birth control and allergy meds. Neither raised my premium because they are generic... but I would have to pay out of pocket until I hit $5,000 if I had a high deductable plan.
These plans are GREAT for some people - but do the math yourself, and request several quotes. I'm paying $10 more per month to get $40 more in pharmacy benefits.
As a side note - spouses can use their spouse's HSA. We use his money to fund the account, and it pays for all of our expenses - from my meds and contacts to his ocassional doctor visit.
For all the fussing about the mortgage bail-out that is going on, it's frustrating to me that we're talking about individual homeowners, and not the only people who have actually been bailed out so far, huge financial institutions. Certainly, if anybody should have been able to see the problem, it should have been these experts.
One big part of the problem here is that banks had more financial institutions who wanted to buy mortgage-backed securities than they had people who wanted to borrow money for houses. So lenders came up with crazy gimmicks like the liar's loan (we don't actually check your income) and the choose your payment loan (we'll just add thousands to your principle) and the low interest rate, then huge interest rate (gotcha)loan.
Another big part of the problem is that the actual loan officers dealing with home buyers had great financial incentives to get deals done without regard for the quality of the loan. They were rewarded on sales volume and dollars loaned. These loans were quickly sold to third parties, so the bank making the original loan took no risk. As a result, many lenders became willing, even eager, to give loans they would not have made if they were planning to hold the that loan until maturity.
I know of one retired man of modest means who walked in to take out a $15,000 home equity loan (to fix his roof) and walked out with a $300,000 second mortgage with a balloon payment. Was he smart to get talked into it? Of course not, but he was leaned on pretty heavily. When he asked about the balloon payment, the answer was, "Don't worry, you'll just refinance it then, and the loan officer started hammering him with "low initial payments." "You've worked hard all your life, and you deserve a break." And "Wouldn't it be nice to take a cruise?"
He would have been all right, too, if the market bubble had not burst, but when it did, he was unable to refinance, the balloon came due, and he lost his house. Sad AND stupid. Yes, his fault. Yes, also the fault of the unscrupulous loan officer who saw a big bonus in his future, and nothing else.
Yes, of course the people taking out the loans should have known better, but many were not adequately informed about the terms of their loan. (Did you read and understand every last line of the contract on your last mortgage? I didn't.) Unfortunately, many people still think that if the bank is willing to lend you the money, then you must be able to afford the loan.
So far, not one single home owner has been bailed out, only the financial institutions. They may never get any help, and as I understand it, most will only get a chance to renegotiate so that they can afford to make their payments. That sounds good to me.
Yes! We need a puerile simplistic libertarian solution! Too much thinkie-thinkie going on in government!
Assumes that the two people earn the same - with kids in tow, even. We made decisions about how we wanted our children to be raised that affected both of our respective salaries and earning power. Because I chose to be the one to give up more, professionally, should I be punished because my earnings are less and have no say over the money? Our marriage is a LOT more than money and giving money that much power (ie - something that has to be measured individually and kept separate above all else) doesn't fit in with our whole-istic view of our partnership. Might as well assign us one kid each. "Hey, our son looks more like you honey, so I'll leave him for you, and I'll take care of our daughter." Or maybe divide the house up room by room....
The thinking of separate but equal is totally outdated. There are situations where it may be appropriate but as a blanket statement for any couple it just does not fit.
Our marriage is a partnership and we work as partners in everything, even money.
As for the first part of the article though, that I totally am on board with. There is no requirement for every relationship you have to merge finances.
just like you and most the people posting, i have my own sob story.
my wife and i bought our house 2 1/2 years ago, using the bubble to sell our 1600 sq ft house that we purchased at 123k for a tidy sum of 255k, we paid off all debts, credit card, car...etc. and then purchased a nice home, 2400 sq ft on a corner lot, for 207k. fast forward to the present, in the middle of a divorce, was in a motorcycle accident 1 1/2 years ago and now am on disability (not ssi, through a policy from work) and i looked a couple days ago and within a 1 block radius there are 8 bank owned for sale signs and 11 short sale signs. i had a real estate agent pull comps and my house that we bought for 207k, and owe 180k is now worth roughly 130k. and since we did everything right, even with the spousal support ordered by the court and being on a fixed disability income, i can still afford the mortgage. can't afford to go to the movies, but can afford my house. so what the hell do i do? i've thought about trying to purchase a 70 to 90k house somewhere else and then letting them foreclose on this house, thought about finding a rental home that takes pets (i have 3 dogs) and letting them have the house, doing what you have mentioned in the article, or just plugging along without enough money to even travel the 250 miles to see my parents. i don't know if it's a moral decision to honor my obligations, a matter of pride that i would prefer to just struggle along, or just stupidity, but i'd prefer to stay. am i a fool? should i accept a bailout? or help pay for other morons? right next to me, across the street and within 5 houses each way are 6 houses for sale...any suggestions?
My ex and I drifted into the separate finances thing organically by getting married after living together for several years of using our own separate accounts. It was lack of communication and failure to have shared money goals that ultimately killed the marriage, and the separate account setup that you describe served to facilitate that situation.
Sure, a "real together" couple could make it work, but I can count those types of couples I know on one hand. Given that these arrangements are frequently negotiated by the young and inexperienced I'd strongly suggest to anyone who has the chance to choose or change their joint financial situation to take the advice of the above poster and combine finances. You can always give each other an allowance that can be used for whatever you like, but otherwise your joint finances need to be completely transparent. Each partner needs to be part of the budgeting and bill paying process. This forces communication about money and goal setting. Separate accounts tend to facilitate separate lives, not strong marriages.
Also, it may be that credit companies can't come after someone who isn't specifically listed on an account, but debt acquired by either party during the marriage in the state I live in (and I would wager that most states are the same) does "belong" equally to both partners when dividing assets and debts during a divorce or dissolution.
In other words, if one partner goes wild with the credit card spending during the marriage without the other partner knowing about it, the innocent partner may still be burdened with half of that debt by the court during the divorce proceedings. Instead of directly paying it back to the credit card company, they may just lose that amount of assets to the other partner.
Funny how a divorce completely changes your views on marriage and money! :-)
This is a slamming article, Linsey.
I too would love to know more about which Walgreens items are HSA related. Are you by chance planning a follow up post?
It seems like more and more people are suffering from the credit crisis than ever before. There are a lot of people out there that believe the new presidency will fix all of this for us.
I believe that we as consumers need to fix our own credit. I help people with their credit, but I always say that each individual needs to be responsible. This article stated that you should look at your statements. Oh yeah, look at your statements, see if there are any changes and be an advocate for yourself. That is the only way you are going to survive in the next couple of years.
We are defined in this country by our credit and if you do not have credit because you feel it is unnecessary than that is just as damaging as having a bad score. You are entiled to know why you get turned down for a loan and you can get your credit reports for free once a year. DO IT, get your credit reports and look over them with a fine took comb so you can know where you stand.
I couldn't disagree more that married couples ought to keep separate accounts. Part of being married, the main part, is that two individuals become one flesh. If you can't trust your spouse with your finances, why on earth did you marry them in the first place?
My husband and I don't have separate money. After the wedding, we immediately opened joint accounts and have been working on that basis for the past 20 years very successfully. I'm not saying we don't have conflict over funds - of course we do, but neither of us has ever used the phrase 'it's my money' because it's not his money or my money. It's our money. When one of us screws up, as we do because we're human, we work it out together, just as we would work out any mistakes we made in other areas.
Of course people shouldn't be comingling funds or credit with boyfriends and girlfriends - there is no legal protection in most of those situations, but marriage conveys legal obligations and should be viewed as a lifelong commitment, different from living with someone. I think it's sad that we've come to a place in this society where marriage and what used to be called 'shacking up' are treated as equivalents.
I don't want to hear any sob stories. We all know that we need to plan ahead for an emergency. My husband lost his job last year and was out of work for 6 months. At the time, we had a 10 month old baby.
However, we also have a little thing called COMMON SENSE and we had an emergency fund. 4 years ago we bought our house, and bought less than what we could afford. The bank wanted to loan us $280k. We borrowed $120k instead. At the time we had one car and it was paid off. We recently paid CASH for a second car. We do without a lot of things. I grew up in a poor household and we got WIC but no foodstamps or welfare.
Somewhere along the line, Americans became greedy little bastards thinking we deserve this, that, and the other. It's not the little guy who's going to be helped by the bailout. It is yet again another example of those of us who are repsonsible for ourselves, also having to be responsible for everybody else who has no brains. From the people who bought McMansions they couldn't afford to the CEOs who ran off with hundreds of millions, they are all responsible for this mess. We ought to, as a country, seize ALL those assets in the name of the government and redistribute the wealth to those of us who are responsible.
Why not reward those who do it right?
An economic collapse leads to lower consumption which leads to less environmental destruction. Also, not everyone loses in a bad economy, some people actually profit.
Economic Collapse Winners and Losers
My husband and I share the bank account where the bulk of our money is, but we have some other structures that help us:
1. We each have a separate account for our own allowance, which we can spend as we see fit.
2. Any purchase over $100 must be discussed. Even if it is with your own money. This helps put a stop to crap piling up.
3. We plan our savings goals.
4. We have joint and separate credit cards. Joint for group purchases, personal for personal.
A couple caveats: we are both engineers and we make about the same amount of money. This means there is a lot of logical reasoning about our money and little desire to hide purchases since we both have the same amount of money to work with.
i guess Scott (especially) and Sheila never watched Judge Judy - she says the same you did in a little more forceful way.
Thanks for sharing.....
internet marketing course
get on them for chemical properties, but dents don't get out this way!
actually, that is not how hail is removed
Definetyl bullshit. so i was sitting on the just visiting space and i rolled. it said i rolled 10. but it only moved me 9 spaces. thus preventing me from winning the shell refillible gift card
I sure hope that was some good sex.
Okay...this post made me really sad. I can see why, in some situations, you might not want to share bank accounts with your spouse (history of debt, history of really poor financial management, etc). However, I've found that sharing an account with my husband has been overall a great thing. We have strengths in different areas of financial management (He's a smart investor, I'm good at managing the day-to-day expenses), and it's really been beneficial to have discussions about money.
I have a relationship with my husband based on openness, trust, and respect, and we've worked hard to get it that way. We went through over a year of counseling before we got married- believe me, there were no surprises when we tied the knot.
Do I think people should instantly merge finances with their latest significant others? Absolutely not. But don't discount the positive relational benefits that real discussions about shared money can bring.
What a great article. Thanks, Nora. This is a very important issue to consider.
LOL cute clip art
I know it's a dirty word to most folks, but prenups are not just for the rich. Why? Because imagine if Scott and Sheila had gotten married and Sheila had run up a separate -- not joint -- credit card after they got hitched that Scott didn't know about. Then, years after their divorce when Sheila stops paying on her credit card because she's flat broke -- and because Scott managed to scrape a little money together since their split -- suddenly her credit card company comes after him for her credit card debt! According to Suze Orman, this happens all the time. For more reasons to get a prenup, see "Who Needs Prenups?" at http://shanelyang.com/2008/07/11/who-needs-prenups/
I do the exact same thing. In fact, we have kid's birthdays right after Christmas as well and we recylce any candy that does not look like Halloween or Christmas candy for use in the stockings at Christmas and for the birthday party treat bags as well. The other thing I do (as we have 3 kids and lots of candy) is donate extra candy and trinkety toys to our church to give as prizes in Sunday School.
I didn't include a 60/40 split, but if you identify yourself as a Moderate investor, a 60/40 split either way between fixed income and equities would be suitable. I just split the difference and called it 50/50.
In regards to time frames, I also agree that 6 years is a risky time frame if all other signs point to putting the majority of your money into the markets. Personally I would prefer a 10+ year time frame, which is indeed a safer bet for large equity investments.
Thank you for the comments, all!
Regarding the person above who paid out of pocket when they were sick with a high deductible plan. I have a High Deductible plan and my youngest daughter has congenital heart defects. She had surgery this year and we only paid $5K out of pocket. This includes our prescriptions which is a huge savings compared to the other plans available to us.
My husband has a high deductable plan, and he loves it for all the reasons you've listed - he's never sick, so he doesn't mind paying for an office visit once every three years. HSA's are awesome, too.
I have a standard HMO. While I'm healthy, I do buy two prescriptions each month - generic birth control and allergy meds. Neither raised my premium because they are generic... but I would have to pay out of pocket until I hit $5,000 if I had a high deductable plan.
These plans are GREAT for some people - but do the math yourself, and request several quotes. I'm paying $10 more per month to get $40 more in pharmacy benefits.
As a side note - spouses can use their spouse's HSA. We use his money to fund the account, and it pays for all of our expenses - from my meds and contacts to his ocassional doctor visit.
For all the fussing about the mortgage bail-out that is going on, it's frustrating to me that we're talking about individual homeowners, and not the only people who have actually been bailed out so far, huge financial institutions. Certainly, if anybody should have been able to see the problem, it should have been these experts.
One big part of the problem here is that banks had more financial institutions who wanted to buy mortgage-backed securities than they had people who wanted to borrow money for houses. So lenders came up with crazy gimmicks like the liar's loan (we don't actually check your income) and the choose your payment loan (we'll just add thousands to your principle) and the low interest rate, then huge interest rate (gotcha)loan.
Another big part of the problem is that the actual loan officers dealing with home buyers had great financial incentives to get deals done without regard for the quality of the loan. They were rewarded on sales volume and dollars loaned. These loans were quickly sold to third parties, so the bank making the original loan took no risk. As a result, many lenders became willing, even eager, to give loans they would not have made if they were planning to hold the that loan until maturity.
I know of one retired man of modest means who walked in to take out a $15,000 home equity loan (to fix his roof) and walked out with a $300,000 second mortgage with a balloon payment. Was he smart to get talked into it? Of course not, but he was leaned on pretty heavily. When he asked about the balloon payment, the answer was, "Don't worry, you'll just refinance it then, and the loan officer started hammering him with "low initial payments." "You've worked hard all your life, and you deserve a break." And "Wouldn't it be nice to take a cruise?"
He would have been all right, too, if the market bubble had not burst, but when it did, he was unable to refinance, the balloon came due, and he lost his house. Sad AND stupid. Yes, his fault. Yes, also the fault of the unscrupulous loan officer who saw a big bonus in his future, and nothing else.
Yes, of course the people taking out the loans should have known better, but many were not adequately informed about the terms of their loan. (Did you read and understand every last line of the contract on your last mortgage? I didn't.) Unfortunately, many people still think that if the bank is willing to lend you the money, then you must be able to afford the loan.
So far, not one single home owner has been bailed out, only the financial institutions. They may never get any help, and as I understand it, most will only get a chance to renegotiate so that they can afford to make their payments. That sounds good to me.