spouses

How a New Marriage Can Survive Student Loan Debt

Matt Bell — Tue, 29 May 2018 08:30:47 +0000

It's a very common scenario. Girl meets boy, they fall in love, and decide to get married. They're excited about starting their new life together, but they're also weighed down by student loan debt — a lot of student loan debt. As they drag that heavy ball and chain into the future, what steps can they take to tilt the odds of marital and financial success in their favor? If that's your situation, read on.

1. Understand the details

Good communication is essential to the success of any relationship, and while money can be a tough topic, you'll get your marriage off to a great start by getting accustomed to talking about your finances. You might as well dive right in and start with your debt.

No matter which one of you is bringing debt into the marriage, both of you should know exactly how much debt. You should also be clear about the interest rate, the monthly payment amount, and how long those payments will continue.

That will help you to both manage your expectations about when you might be able to buy a house, how much you can spend on vacations, and all the rest. (See also: The 7 Worst Money Mistakes Married People Make)

2. Be one in debt

Marriage is about oneness, unity, and teamwork. You're not becoming roommates; you're becoming husband and wife. So, if one of you was wealthy and the other was not before getting married, after you get married, both of you will be wealthy. By the same token, before marriage, if one of you had debt and the other did not, once you're married, both of you will have debt.

When my friends Scott and Karen Coy got married, Karen had more than $50,000 of nonmortgage debt. Scott jokingly referred to it as "a reverse dowry." After getting married, Karen often expressed how bad she felt about "my debt." But from day one, Scott would correct her, saying it was "our debt."

It took them six-and-a-half years to become debt-free. All that time, they rented even though they would have preferred to buy a house. It took great patience and perseverance.

Karen says she will always remember the day they made their last payment. It was as if a huge weight had been lifted from their shoulders. And looking back, she says the way they navigated the journey — together — created an inseparable bond in their marriage.

3. Consider being two in taxes

If you were using an income-based repayment plan before getting married, how you file your taxes after you get married will matter greatly. If you file jointly, your payment amount may go up. That's because income-based repayment plans require you to "recertify" each year by submitting your income tax returns to your loan servicer, who will now make decisions based on your joint income. So, you may want to consider filing separately, in which case most student loan plans will use just the borrower's income as the basis for recertification.

However, filing separately may make you ineligible for certain tax credits, so proceed with caution. It would be best to consult with an accountant or run some what-if scenarios with tax-planning software.

4. Figure out the implications for your budget

Before deciding where you'll live after you get married, create a post-marriage cash flow plan. What works best is to fill in your financial commitments first. How much of your joint income will you save and invest? How much will you give to charity? And how much will you need to devote to debt repayment?

Then you can see how much you can afford for rent or a mortgage. I usually recommend committing no more than 25 percent of monthly gross income to the combination of your mortgage, property taxes, and homeowners' insurance. If you rent, devote no more than 25 percent to your rent and renters' insurance.

A student loan payment, however, changes the math. I recommend that the combination of your housing and your student loans together make up no more than 25 percent of your monthly gross income. So, you should figure out what percentage of your monthly gross income your loan payment amounts to and subtract that from 25 percent. The answer is the percentage of gross income you could devote to housing while you have student loans.

If your student loans amount to an especially large percentage of your gross income, that may end up being overly restrictive. So, you'll have to adjust other spending categories downward, such as entertainment, clothing, or vacations. (See also: 3 Simple Ways to Split Bills With Your Spouse)

5. Prioritize early payoff

The early years of your marriage present a great opportunity to speed up the process of getting out of debt. If you want to have kids one day, your pre-kid days will be the most financially flexible time you may ever experience. Make the most of it by making extra payments on your loans.

Debt can be a roadblock in the pursuit of financial goals such as buying a home, and it can be a hindrance to a happy marriage. So, consider building your lifestyle on just one income and putting most of the other paycheck toward your student loans. By living an especially frugal life in the early years of your marriage, you'll be setting yourselves up for long-term success. (See also: 7 Ways Paying Off Student Loans Early Can Boost Your Finances)

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This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways Couples Can Tackle Money Goals Together

Denise Hill — Wed, 02 May 2018 09:00:08 +0000

The "relationship goals" meme revolves around the idea that — at least in the world of social media — your relationship is envied by singles and mediocre couples everywhere. And whether you realize it or not, a big part of having a successful marriage and reaching that "goals" status is figuring out the financial aspect of your relationship.

Money itself isn't a homewrecker. It's other issues — like communicating about money, your relationship with it, and your values associated with it — that cause problems. Establishing a strong money management system within your marriage can be tricky. Here are a few things you and your spouse can do to set and achieve financial goals as a couple.

Establish financial core values

Like it or not, your spending habits directly reflect your values. You say you want to save and get out of debt, yet you eat out five nights a week and upgrade to the latest gadget as soon as it hits the market, despite the cost. And while you may feel that lack of discipline is to blame — and it is to some degree — the truth is you don't value saving enough to actually do it.

As a couple, you should sit down and write out the core values that will govern your lives together. Most of these values may not directly relate to money, but they all relate indirectly. For example, if you value open and honest communication, that should trickle down to your finances. You have to commit to communicating openly and honestly about spending habits, earnings, debts, etc. And you shouldn't "hide" money from one another.

Be honest with your spouse and yourself when establishing your value system. Some things sound nice, but they may not be a part of your value system. And that's OK. If your spouse values something — such as saving — that you don't, be flexible and compromise a bit. The same is true if you have a "spender" spouse who values spending money on entertainment. You've got to give a little. You value what you value. There shouldn't be shame or judgment attached to it. The key is finding balance and learning how to get your spending habits to accurately reflect your value system. (See also: 8 Things I Learned About Money After Getting Married)

Have joint financial goals

The second thing you and your spouse should do is establish financial goals together. An easy way to do this is to look at your life goals — long- and short-term. Align your finances with those goals.

As a couple, what do you want to accomplish? Do you want to retire early? Live a debt-free lifestyle? Have a small army of children? Travel the world? Care for aging parents? Start a business? Go on a second honeymoon? Once you've established your life goals, your money goals will emerge naturally. You and your spouse just have to fill in the details.

How will you save to afford that Jamaican getaway? Will you get side gigs, cut back, or follow some other plan for saving? The key here is to align your financial goals with your life goals. And then work diligently to achieve them. (See also: The 7 Worst Money Mistakes Married People Make)

Assign money management roles

After you've established your core values and set some financial goals, it's time to address the details of handling your money. A great way to relieve tension and help ease the financial power struggle is to assign money management roles within your marriage.

One of the best things about marriage is that you have a teammate. In most marriages, one spouse enjoys certain activities, while the other spouse doesn't. One may be a cleaner and the other one loves to cook. One loves yard work and the other is a decorator. One may be a planner and the other one likes to live spontaneously. The point here is to make the most of each other's strengths and preferences.

Assigning roles and tag-teaming your finances is a great way to make each other feel valued and quickly accomplish your money goals. If you are a shopper and your spouse loves to budget, allow them to manipulate the numbers while you make it work in the grocery store. Both tasks are equally important. Shopping — which is different from just buying stuff — is an underrated skill. Budgeting, saving, and shrewd shopping are the trifecta of good financial stewardship and will accelerate your journey to achieving your financial goals. (See also: 3 Simple Ways to Split Bills With Your Spouse)

Have at least one joint account

Having a joint bank account is more intimate than sex for some couples. It's a big step and the ultimate sign of trust. It puts you in a place of vulnerability. And being that vulnerable can be tough.

The key is to take baby steps toward your goal of sharing the same account. It begins in your own mind. Examine fears, perceptions, and past experiences that have left you skittish in this area. See what you can do to talk yourself into being open to the idea.

Once you're open to the idea, it's time to engage in honest communication about it. It can be a very difficult subject, but you have to have the conversation.

Once you've heard each other's fears and misgivings, you can move forward and establish ground rules and procedures. You could create an account together just to pay bills or strictly for saving. See how that goes and move forward from there. There is no one-size approach to mixing love and money, but you do have to be open-minded and at least give your partner an opportunity to earn your financial trust.

Sharing an account can do wonders for your marriage and help you reach your financial goals much quicker. When done correctly, it creates an atmosphere of transparency and accountability. It also promotes the team concept.

If you've established your core values, established long- and short-term financial goals, and have clear roles, making the step to sharing an account will be much easier. Again, this is a difficult bridge to cross for a lot of couples. Remain patient with yourself and with your spouse. And do what is best for your marriage and situation. (See also: 6 Things You Should Know About Joint Checking Accounts)

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why You Should Stop Keeping Your Money Problems to Yourself

Max Wong — Thu, 05 Apr 2018 09:00:06 +0000

It's hard to talk about difficult money problems. But keeping it all to yourself makes it harder, and more costly, to get out of debt. Don't believe me? Here are some things you are missing out on by staying silent.

An honest marriage

Secret bank accounts are not just for Don Draper. In a 2017 poll by CreditCards.com, 5 percent of respondents confessed to financially cheating on their partner in the form of secret bank accounts and credit cards. When extrapolated to the entire U.S. adult population, that means 12 million people are hiding secret accounts.

Obviously, getting caught in a financial lie by your romantic partner is going to breed general mistrust. And even if your spouse isn't technologically savvy enough to suss out your money dalliances, if you ever need to file joint taxes or pool your resources to secure a mortgage, all your secrets will be laid bare during a routine credit check or audit.

A lack of transparency can thwart your relationship and your goals. Squabbles over money are the number one reason for divorce, and unfortunately, new romances rarely begin with a discussion on how to save for retirement. Many couples discover each other's debt only when it becomes an obstacle too large for one person to manage.

Lying about your money problems prevents you from working as a team and efficiently leveraging shared assets. Couples who communicate regularly and honestly about money not only have a better shot at maintaining a happy union, they have a better chance at achieving financial goals because they are on the same page about things that can dramatically impact their lives — like saving for their kid's college fund or paying down a home loan. (See also: 5 Painless Ways to Manage Money With Your Partner)

A community of friends

If you keep your financial problems secret, you deprive yourself of moneymaking or money-saving opportunities your social network could provide. A lot of people get tremendous pleasure out of helping others. Let those people help you by giving them a problem to solve. For example, someone you might know may have the perfect job for you.

If outing yourself to your friends and family as a poor person is too hard, reach out to like-minded strangers. The internet is full of websites, blogs, forums, and other communities that are great for sharing resources. More importantly, an active community can come up with solutions custom-tailored to your situation.

Mental health

There are numerous ongoing studies that show the link between poverty and mental illness. But if you have ever been poor, you don't need scientific proof that poverty degrades mental health or that money really can buy happiness. You know first hand that poverty leads to depression that, in turn, makes it harder to rally against poverty. It's a vicious cycle.

Self-care groups like Debtors Anonymous can help with managing the stress that comes with financial dysfunction. In addition to providing a safe place to emotionally vent, these groups also offer targeted programs for small business owners, people who have financial problems due to under-earning, or compulsive shoppers. (See also: 9 Ways Money Does Buy Happiness)

Debt reduction

Be proactive about calling your creditors. Your creditors already know all about your debt, so there is no downside to reaching out to them. Actual, feeling humans work at credit card companies, insurance agencies, banks, and even the IRS. Let those people help you find a path back to creditworthiness.

Talking honestly with creditors lets them know the context of your financial problem and also your willingness to pay down your debt. Debt collectors are more likely to go soft on someone who they know is paying down debt from a self-inflicted disaster than they are on someone who won't answer the phone.

Beyond peace of mind, letting bank fees and fines stack up just makes it that much harder to get out of debt. Even if you can't break your cycle of poverty immediately, often you can get a little relief just by calling and asking for help. Did you get dinged with a $35 overdraft charge? Call your bank. Most banks give a once-a-year opportunity to erase one bank charge. Screw up your tax paperwork? Call the IRS. If your money woes came from an honest filing mistake, IRS workers actually have a lot of leeway when it comes to reducing fines, sometimes back to a zero dollar amount. (See also: 5-Day Debt Reduction Plan: Pay It Off)

An authentic life

Ask yourself: Are your problems with money really about the money? I have many friends, who, even though they make a much larger salary than I do, are never happy. They spend an inordinate amount of time fretting about how much less they have than our even richer friends. They also waste a ton of money purchasing the trappings of wealth rather than actually investing their money to build actual wealth.

Personally, I am willing to admit that I get a little emotional lift when people compliment my too expensive, but so adorable shoes. Sadly, I never feel the same burst of satisfaction when my tax accountant compliments my 401(k). So, I know the tyranny of sameness, and that sick desire to match the (often imagined) wealth of the people around me. (See also: 4 Money Lessons You Can Learn From the Joneses)

Are you keeping yourself poor? Not just financially poor, but emotionally, intellectually, or even spiritually poor? Would an honest conversation about your finances actually destroy relationships with your friends and family? Would taking a pay cut to take a job that you love make you feel more stressed than keeping a higher paying job that you hate?

Even if life has dealt you a bad hand, what do you gain from suffering in silence and isolation? Nothing, which can make your debt burden all the more difficult to bear.

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This article is from Max Wong of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

3 Reasons Taking a Loan For Your Wedding Is a Bad Idea

Denise Hill — Wed, 14 Feb 2018 09:01:05 +0000

Imagine standing at the altar on your wedding day. Staring deep into your beloved's eyes, suddenly, you are struck by the thought that this one "priceless" moment is costing you over $30,000. And that doesn't include the five-day, four-night honeymoon in Cancun. What have you done?

According to The Knot, the national average for the cost of a wedding in 2016 was a whopping $35,329. And since most couples don't have that kind of cash upfront, many turn to loans to finance all or some portion of it.

Technically speaking, there's no such thing as a "wedding loan." A wedding loan is just an unsecured personal loan where the interest rate is based on the creditworthiness of one or both potential spouses. But kicking your marriage off with debt is a recipe for unnecessary stress and hardship. It can set you back financially before you even gain any momentum in what should be a new, exciting chapter of life.

If you are contemplating using a wedding loan to help you pay for your big day, here are three key things you should consider.

1. You squander your money's opportunity cost

Every dollar comes with an opportunity cost — meaning there are infinite ways that one dollar can be spent. Once you spend the dollar, you lose all of the other potential things you could have purchased with it.

Taking out a loan for a wedding is financial double jeopardy. Not only do you lose the opportunity cost for each dollar you've spent, but you also limit what you could have strategically used your credit for — such as purchasing a home or starting a business.

There are so many ways to spend money, and shelling out copious amounts of cash to pay for a one-day event is a bad investment. Starting your life together with a huge amount of unnecessary debt adds more stress to a naturally stressful endeavor. Marriage is tough. In lieu of investing in a single day that won't appreciate in value, take that money and invest in your life with your partner.

2. You drastically increase the cost of your wedding

We've already established that having an expensive wedding is a bad investment, but taking out a loan to pay for a wedding is asinine. Let's say you take out a $20,000 personal loan for your wedding at an annual percentage rate (APR) of 10 percent. And because you and your fiancé both have student loans, car payments, several thousand dollars in credit card debt, and are looking to purchase your first home, you opt for a 10-year repayment period.

Your minimum monthly payment is going to be $264.30 per month for 10 years. During that time, you will pay over $11,000 in interest. Your $20,000 wedding just skyrocketed to $32,000. Think about that for a second. Ten years of your life and $32,000 spent paying for a five-hour event. That money could have been a down payment for a home.

What's more, according to the U.S. Census Bureau, first marriages that end in divorce do so within an average of eight years. That means if happily-ever-after comes to an end before your loan is paid off, you'll be paying for your wedding and your divorce simultaneously. (See also: How to Save Big on Everything for Your Wedding)

3. Spending big leads to more big spending

Spending big on an extravagant wedding establishes spending expectations. This big spending attitude can quickly seep into all financial decisions and an attitude of entitlement can emerge — because you deserve "the best," which is usually defined by people with extravagant tastes. Now the honeymoon has to be lavish with no expense spared. Your home has to be opulent and in the fanciest neighborhood. Your kids have to wear the trendiest clothes, attend the most prestigious private schools, and belong to all of the "it" clubs. The cycle can consume your marriage.

If you and your spouse-to-be can find a way to be creative and have a wedding that is meaningful, intimate, and budget-friendly, you will establish a better foundation. You will be setting a tone of living within your means and valuing quality over size and quantity.

The essence of marriage is appreciating the little things and making the daily grind adventurous. When you pressure yourself and your spouse to continuously "go big," you add a mountain of undue stress — both emotionally and financially — on your marriage. (See also: People Are Still Spending Too Much on Their Weddings)

A $40 wedding story

I recently celebrated my 22nd wedding anniversary. As I look back and recall my wedding, a smile slowly creeps across my face. We spent $40 on the ceremony and had our reception at Applebee's. Our best friends were there and we had the time of our lives.

Over these past 22 years, I've never looked back and wished we had done things differently. In fact, we have renewed our vows twice since then (we do it every 10 years) and each time it's been a quiet ceremony in our pastor's office. The only people who attend are the pastor and my husband and me. It's intimate, private, and special.

I am not saying you should forgo a large wedding. You have found and are marrying the love of your life. That level of commitment should be honored. But before you pull out all the stops and plan the wedding of the century, pause and assess how you are spending that money. Do you really need to spend $2,000 on flowers? If something isn't important to you and your fiance, don't borrow money to pay for it.

Marriage is a marathon, not a 100-yard dash. Try shifting your focus from having the perfect wedding day to building your life together. Chose to invest in you.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Money Fights Married Couples Have (And How to Avoid Them)

Emily Guy Birken — Tue, 13 Feb 2018 09:30:08 +0000

When a couple first gets married, while the newlywed glow is still bright enough for strangers to see, it can seem as if nothing can ever get in the way of true love.

But if you fast forward a few years, many couples will find that money has a seriously unpleasant effect on that love. Whether you are shouting at each other over a credit card bill, or living in chilly silence because of one spouse's financial decision, you may wonder why your love for each other is not enough to smooth over the jagged edges of your money disagreements. (See also: 8 Steps to a Blissful Matri-Money)

According to a 2014 poll by Money Magazine, money is the most common reason married couples fight, ahead of household chores, togetherness, sex, snoring, and what's for dinner. These financial fights often seem to follow similar patterns, no matter who the spouses are, how much they make, or where they live.

That means it's possible for married couples to anticipate common money fights, and avoid them altogether. Here's what you need to know about four of the most frequent money arguments, and how you and your sweetheart can avoid them.

1. Disagreements over spending

It's a tale as old as time. One of you is a spender, and the other one is a natural born saver. When the spender comes home with brand-new gadgets and gizmos galore, the saver is likely to blow a gasket. What ensues is an argument about who is a buzzkill and who is irresponsible.

How to avoid this argument

Many individuals make the mistake of avoiding this argument by simply not telling their spouses about their spending. Money Magazine's poll found that a full 22 percent of spouses have spent money that their partner doesn't know about. But while keeping your spending secret might keep the peace for the moment, such secrecy causes much bigger problems down the road.

Instead, couples should commit to having separate fun money funds. This is a great way for each of you to make purchases the other might see as unnecessary, without it becoming an issue.

As long as you and your partner can agree on a budget amount for important-to-me purchases, this strategy will allow you to buy stuff that matters to you without having to fight about it with your spouse. (See also: 5 Money Conversations Every Couple Should Have)

2. Power struggles over money

In many relationships, one partner will believe he or she has the last say on financial decisions. Often, this comes about because of who is the higher earner, although these types of power struggles can also be rooted in beliefs about who is better with money — either because of gender stereotypes or the couple's specific relationship history.

Unfortunately, these sorts of power struggles can really undermine the love between a married couple. When one partner wants to be the ultimate financial authority in the relationship, his or her actions can negate the equality between spouses, which can foster resentment and anger.

How to avoid this argument

It's important for spouses to recognize they are both on the same team when it comes to their money. To do that, they need to start viewing all income as "our money" and all decisions as "our decisions."

If the power struggle stems from the fact that one spouse brings in more money, one way to view things more equally is to sit down together and make a list of what you each do for the overall health of the relationship.

This is a peacekeeping tactic that many marriage counselors advise for dealing with housework squabbles, but it works just as well for dealing with money imbalances. Once the higher-earner sees that the other partner does all the grocery shopping or laundry or airport drop-offs, it can help to put the high income in perspective. The high-earner would be keeping less of their income if each of those nonfinancial contributions by the low-earner had to be contracted out.

If power struggles are rooted in a belief that one person is better with money, consider what would happen if either one of you died. If only one spouse takes care of the marital coffers, the other one will be vulnerable in the event of widowhood. Thinking through these kinds of worst-case scenarios can help spouses recognize the importance of each partner having financial responsibility and buy-in on financial decisions. (See also: The 7 Worst Money Mistakes Married People Make)

3. Reactions to risk

Opposites often attract, particularly when it comes to risk tolerance. Often, the risk-averse, better-safe-than-sorry type and the risk-loving adrenaline junkie fall for each other, because Mr. Safety grounds Ms. Risky while she helps him expand his horizons. Unfortunately, these love matches can cause friction when it comes to financial decisions.

For instance, one spouse may want to invest their savings into the business she is trying to get off the ground, while her husband would prefer to keep that money safe in the bank in case the business fails to launch. Such a couple might find themselves arguing over whether or not he believes in her, and whether or not she cares about his financial anxiety.

Even couples who are both on the same page when it comes to the relative importance of a steady paycheck can strongly disagree about how much risk they are willing to accept in their investments. If he wants to chase returns with every no-fail promise of a tin mine in Bolivia, while she is happier to leave it all in CDs, savings accounts, and maybe a bond or two, there will be some serious fights about the future of their money.

How to avoid this argument

The best way to calm the fears of a risk-averse spouse is to make sure there is an upper limit to the amount of money that will be "risked." For instance, an entrepreneurial spouse might promise to invest no more than 20 to 25 percent of their savings into the new business, which will give some room for growth while also providing the cushion that the other spouse needs to keep from breathing into a paper bag.

Similarly, having a plan of action for investments can help a couple navigate their differing risk tolerances. Such a plan could design asset allocation that will mitigate risk and encourage growth — and potentially leave a small percentage available for the more speculative investments that will please the risk-taker in the couple. (See also: 5 Painless Ways to Manage Money With Your Partner)

4. Disagreements over helping family

One of the toughest arguments between couples happens when a family member asks for money. Whether it's a one-time request because of a truly difficult situation, or it's a family member who regularly wants to borrow money from you, this can cause major stress for a couple.

Often, these types of fights go further than just disagreements about the money — they can become arguments about each other's families and each spouse's expectations of dealing with them. Many a spouse has spent a few nights on the couch because of a loan to a family member.

How to avoid this argument

The best way to avoid this kind of disagreement is to talk about it ahead of time. After you have been asked for money or have already given money to a family member is a bad time to hash out how you each feel about family loans. In particular, the issues you need to agree on are these:

Can you consider any money you give to family in need as a gift rather than a loan?
If it has to be a loan, can you agree to have a legal loan document written up to make sure you are reimbursed?
What is the maximum amount of money you are willing to give or loan to family in an emergency?
Is there a maximum number of times you are willing to help the same family member?
Are there nonfinancial ways you can offer to help if giving or loaning money is not in the cards?

Getting on the same page on these issues before a relative asks for money can help ensure that your bond with your spouse stays strong, no matter how often your shiftless cousin Lenny asks for a couple hundred dollars. (See also: The 16 Cardinal Rules of Loaning Money to Friends and Family)

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Reasons Average People Should Consider a Prenup

Emily Guy Birken — Tue, 13 Jun 2017 08:30:17 +0000

Prenuptial agreements are pretty standard when the rich and famous get married. Considering the amount of wealth these high-profile couples have, it makes perfect sense why prenups are as common as their giant engagement rings.

But what about us common folk? Are prenups a good idea for people without millions of dollars to protect?

Depending on your finances and relationship, a prenup might be a good idea for you and your sweetheart. Here are six reasons why people without multimillion-dollar net worths might choose to sign a prenup before saying "I do."

1. If either of you have children from a previous relationship

As of 2013, 40 percent of new marriages include at least one spouse who has previously been married. Couples who have been down the aisle before are more likely to bring children into their new marriage, which adds a level of financial complication to their union. These parents often want to make sure children from their previous relationships will be financially taken care of in case of either death or divorce.

A prenup can help parents protect assets for their children, especially in terms of estate planning. For instance, state laws generally consider marital property to belong solely to a surviving spouse after one partner dies. A prenup could ensure that a portion of that property, or assets that the parent brought into the marriage, would go to the child of a previous marriage or relationship rather than the surviving spouse.

While wills can cover this same ground, having just a will that leaves your spouse less than an elective share of your estate (between one-third and one half) does not necessarily preserve assets for your children, since your spouse can make a claim against your estate for the elective share. Having a prenup that spells out what assets go to children of a previous relationship, along with a will that cements the terms of the prenup, will be a much more solid method of protecting your children.

2. If either of you has a great deal of debt

We tend to think of prenups as being a way of protecting our wealth, but they can also protect you from your partner's debts (or vice versa). If you are entering into a marriage with a great deal of individual debt, a prenup can delineate who has responsibility for the debt payments during the marriage, as well as how the debts will be handled in the event of a divorce.

3. If either of you is an entrepreneur

Figuring out the specific valuation of assets, such as closely-held business interests or stock options, can be tricky. These things can cause a messy delay in the event of a divorce. If either spouse is an entrepreneur or small business owner, drafting a prenup that spells out exactly how these kinds of assets will be valued will save you a great deal of heartache, time, and lawyer's fees if you ever need to split them up in a divorce.

4. If either of you plans to get an advanced degree while the other works

It's common for one spouse to financially support the family while the other gets an advanced degree or other higher education. The problem with this division is if the marriage does not survive.

The fallout can happen in a few ways. Maybe, for example, the degree-seeking spouse ends up much better off financially because their new education helps advance their career. Meanwhile, the supporting spouse may be stuck toiling away for a lower paycheck. Or, in another example, maybe the supporting spouse makes good money, but the degree-seeking spouse is unable to find a job or is crippled by student loans post-divorce.

A couple who knows that one partner will work to support the family while the other goes to school may want to draw up a prenup that will make sure both of them will be financially OK if the marriage does not last.

5. If either of you plans to be a stay-at-home parent

A spouse who stays home with the children may not be bringing in a salary, but he or she is certainly saving the family money. According to a 2016 Salary.com estimate, stay-at-home parents are saving their families over $143,000 per year by doing all of the work that would otherwise have to be contracted out.

Unfortunately, there is no real way to quantify those cost savings if a marriage dissolves, which can leave the non-paycheck-earning parent at a distinct disadvantage. A prenup can do a great deal to protect both of the spouses.

6. If you live in a community property state

In the nine community property states, which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, everything purchased during the marriage is split 50/50 in the event of a divorce, no matter who made the purchase.

For most couples in these states, there is no problem with the community property laws. However, suppose one spouse purchases property on her own during the marriage? For instance, a real estate developer marrying someone outside of the real estate business might use her own funds to purchase properties as part of her business, even after they are married. If the developer wants to make sure those properties remain under her control should the marriage dissolve, then a prenup would be a good idea to protect that property.

Making sure your prenup is mutually beneficial

There is a stigma to prenups, which is part of the reason why they are often seen as just being for the uber-wealthy. We tend to think of them as proof that spouses are not committed to their relationship.

However, a prenup should be mutually beneficial, and it can be a way for you and your beloved to show your commitment to each other. You should both be satisfied that you will each be taken care of in case life doesn't turn out the way you planned.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Smart Ways to Boost Your Social Security Payout Before Retirement

Damian Davila — Wed, 12 Oct 2016 09:00:06 +0000

According to the Employee Benefit Research Institute, 84% of U.S. workers expect their Social Security benefit to be a significant source income during retirement. So, let's plan ahead with these six smart ways to boost that monthly Social Security check before retirement:

1. Check Reported Earnings on Your Social Security Statements

In September 2014, the Social Security Administration (SSA) began mailing Social Security Statements to workers at ages 25, 30, 35, 40, 45, 50, 55, and 60 and over, who aren't yet receiving Social Security benefits and don't have a my Social Security account. You should receive those statements about three months before your birthday at each one of those ages.

Once you receive one, check your reported earnings for each year to make sure they match your W-2 forms. The SSA uses your average earnings over your lifetime to calculate your benefit amount, so any errors on reported earnings may alter the benefit to which you're entitled. Since you may have many employers during your lifetime, you're the only person who can look at your earnings history and know whether it's complete and correct.

If any earnings before the previous year are missing or shown incorrectly, contact the SSA right away at 1-800-772-1213 (7 a.m. to 7 p.m. on your local time). Have your W-2 or tax return for those years available when you call.

2. Sign Up for a my Social Security Account

There's no need to wait five years before getting your next Social Security Statement. By creating you're my Social Security account at www.ssa.gov/myaccount, you'll be able to check your reported earnings once a year to verify that those posted amounts are correct.

Additionally, you'll receive updated estimates of your future retirement, disability, and survivors benefits. If you meet certain requirements, you'll also be able to request a replacement Social Security card through the my Social Security online portal.

3. Reach Full Retirement Age

When you have earned the necessary 40 credits (individuals with disabilities, recipients of survivor benefits, and some minors may need fewer credits) to qualify for retirement benefits, you can start receiving those benefits as early as age 62. Whether you receive a digital or paper copy of your Social Security statement, you'll receive an estimated benefit of your retirement benefits at age 62.

You'll quickly realize that the estimated benefit at age 62 is much lower than the one at your full retirement age. For example, if you were born between 1943 and 1954, your full retirement age would be 66. If you were to start getting retirement benefits at age 62, they would be reduced to 75% of what they would be four years later. For every month that you delay retirement past age 62, you would gain an additional 0.4% in retirement benefits until you reach your full retirement age. Depending on your birth year, your full retirement age ranges from 65 to 67.

4. Obtain Delayed Retirement Credits

According to estimates from the SSA, about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. If you have a family history of longevity, consider delaying retirement until age 70.

Individuals born 1943 or later receive an extra 2/3 of 1% increase on their retirement benefits for every month that they delay retirement past full retirement age. If your full retirement age were 67, you would increase your retirement benefit to 132% by waiting until age 70. You can only gain delayed retirement credits until age 70.

5. Evaluate Spousal Benefits

Spouses can claim retirement benefits based on their own earnings record or receive up to 50% of the higher earner's benefit, whichever is higher. For example, if your own retirement benefit and your spouse's were $600 and $1,800, respectively, you would receive $900 (50% of $1,800).

However, taking the spousal benefit as early as age 62 reduces your payout. A spousal benefit is reduced 25/36 of 1% for each month before full retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month. For those born 1960 or later, a $900 spousal benefit would be reduced to $585 when taking it at age 62.

If you're divorced from a marriage lasting 10 years or longer, remain unmarried, and have a retirement benefit smaller than the one you would receive from your ex-spouse, then you can receive spousal benefits on your ex-spouse's record even if he or she has remarried. However, you'll only be able to keep collecting benefits if you keep single. To learn more details about spousal benefits for divorced spouses, consult the SSA website.

6. Plan Ahead With Your Dependents

Talking about relationship updates later on in life, keep in mind that you can receive additional Social Security payments when you have dependent children under age 19 living with you during retirement.

As long as your biological child, adopted child, stepchild, or dependent grandchild is unmarried and under age 18, then he or she can receive up to one half of your monthly retirement benefit. The benefit can extend until graduation date or two months after the 19th birthday of a dependent who is a full-time student (no higher than grade 12), whichever is earlier.

While each one of your qualifying dependent children can receive a benefit, generally the total amount you and your family can receive is about 150% to 180% of your full retirement benefit. Depending on your child's age, you may find it advantageous to retire earlier than you originally planned to take advantage of a higher total family benefit.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Can Your Spouse be a Dependent on Your Taxes?

Kat Tretina — Fri, 23 Sep 2016 10:00:07 +0000

It's a common scenario: One person in a relationship brings home a much higher salary than the other. For couples in this situation, the higher earner typically handles the majority of the expenses.

To lower their tax burden, some may want to claim their lower-earning spouse as a dependent. In other situations, the earner's spouse is disabled and unable to contribute to the family's income. However, while you might think that labeling a spouse as a dependent is a smart decision, it's actually not allowed by the IRS.

What the IRS Says About Dependent Spouses

According to the IRS Publication 17, your spouse can never be claimed as a dependent. Other people, such as siblings, children, or other relatives can be dependents, but no matter the circumstance, your spouse cannot.

In the IRS' eyes, a dependent is defined as a child or qualifying relative. The person does not have to be related by blood — they just had to live with you for the year and not have gross income.

Spousal Exemptions

While a spouse cannot be a dependent, you may be able to claim an exemption for your spouse, thereby lowering your tax burden. You can go this route if you are married, and your partner has no gross income to report.

If your spouse is physically challenged, you may be able to claim credit for expenses related to the care of your spouse. This option would be a possibility if you needed to hire help to care for your spouse so you could go to work or search for employment.

Marriage and Taxes

To minimize how much you owe on your taxes, it often makes the most sense to file jointly, rather than separately. To encourage couples to file together, the IRS gives joint filers some of the largest standard deductions, allowing them to deduct a big amount from their taxable income.

Joint filers can typically claim two exemptions and more easily qualify for other tax credits, including:

Earned Income Tax Credit
Child and Dependent Care Tax Credit
American Opportunity and Lifetime Learning Education Credit

If you file jointly, there is also a higher threshold for taxes and deductions, meaning you can qualify for more credit and tax breaks for a higher income than if you filed separately.

When It Makes Sense to File Separately

Filing separately only makes sense in very specific circumstances, such as in the case of large out-of-pocket medical expenses. Because the IRS only allows you to deduct 10% of your adjusted gross income (AGI), filing separately can help you save more money.

While you may hear some professionals recommend claiming your spouse as a dependent, it is not permissible by the IRS. Instead, you can claim your partner as a personal exemption in particular circumstances. To lower your tax burden, consult with a tax professional to make sure filing jointly makes the most financial sense for your situation and get all of the deductions and tax breaks you are entitled to.

This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Happens to Your Debt After You Die?

Damian Davila — Thu, 28 Jul 2016 10:30:09 +0000

"In this world nothing can be said to be certain, except death and taxes," wrote Benjamin Franklin back in 1789. However, more and more Americans are including "debt" in that famous quote. In 2015, one poll found that 21% of Americans believed that they would be in debt forever, up from 9% in 2013 and 18% in 2014. But what happens to that debt when you die? The answers may surprise you.

First — What Is an Estate?

Your estate includes all of your assets, including real estate, investments, insurance, and any other assets or entitlements. Since your debts and liabilities are also part of your estate, qualifying assets are liquidated upon your death to cover your debts before your beneficiaries can see any funds.

Establishing a clear will is key to ensuring your estate is managed as you wish. Even when a will is available, executing an estate and administering a will is serious business. So, it's best to hire a legal professional to cross all t's and dot all i's. (See also: Don't Get Screwed: 3 Surprising Times When You Need a Lawyer)

So, what happens to the debts in your estate?

Credit Card Debt

Recent estimates put average American household credit card debt at $15,762, for those households with credit card debt. But unless your family or friends co-signed a credit card with you, they're all off the hook in the event that you pass away and your estate is too small to cover it. Even when your spouse is an authorized user on your credit card account, they won't be responsible for paying if they didn't cosign at the time of application.

However, your survivors shouldn't be surprised if debt collectors still try to get a spouse or child to pay for the debt. The federal Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices to try to collect a debt. Let your spouse, children, and beneficiaries know that they can file a complaint against abusive debt collectors with the Federal Trade Commission (FTC). (See also: 4 Annoying Things Bill Collectors Can't Do — And How to Stop Them)

Of course, you and your family still need to refrain from tricky tactics, such as taking a $20,000 cash advance days before a death, or continuing to use the authorized credit card after the primary cardholder has died, that could provide a credit card company recourse to legally pass on the debt to the surviving relatives.

Mortgage

There are three main scenarios to consider with a mortgage.

In the first, you were either required by the company issuing your mortgage or decided that it was a good idea to buy life insurance for the remaining balance of the mortgage. In this scenario, your death benefit clears the mortgage and the property goes to the beneficiary listed on the will or to the surviving property owner.

In the second, there is no life insurance, and you and your spouse were "tenants in common," meaning that each of you owned a stated share of the property. To be eligible to receive their share of the property, your spouse would need to first check that there is enough money in your estate to clear your debts and thus no need to sell the property to cover them. If there is enough money in your estate, your spouse would receive your share and take over the mortgage, if applicable.

Finally, there are scenarios in which there was no life insurance and you and your spouse were "joint tenants," meaning that both of you owned the entire property. In this scenario, upon your death the whole property passes automatically to your spouse. But again, the estate must clear any property-related debt first.

Student Loans

Besides credit card debt, student loans are another type of liability that is rapidly increasing among Americans. According to one estimate, the average student loan for a Class of 2016 graduate is $37,173!

In the event of your death, your federal student loans, including direct loans, Federal Family Education Loan (FFEL) Program Loans, and Perkins Loans, will be discharged. Additionally, Direct PLUS loans are discharged in the event that the parent or student on whose behalf the loan was obtained passes away.

But private loans are another matter, and your estate may be responsible for covering any balance. And if anybody co-signed a private loan with you, they'd be on the hook for payment.

To learn more about what would happen to your liabilities upon your death, consult a lawyer.

Have you ever take on debts from somebody that passed away? Share your experience in the comments below.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Signs You're Committing Financial Infidelity

Tim Lemke — Fri, 01 Jul 2016 10:00:04 +0000

It's often said that honesty is the key to a good relationship. But are you totally honest with your spouse or partner when it comes to money?

Lies about finances can be some of the most damaging in any relationship, but they are surprisingly common. Two out of every five Americans have admitted to committing financial infidelity in the past, according to a February survey from the National Endowment for Financial Education. That's up from one-third just a couple of years ago, even though 75% of survey respondents admitted the dishonesty had a negative impact on their relationship.

Here are some clear ways you are being dishonest about your finances with your partners — and tips on how to get back on the right track.

1. You Have Secret Bank Accounts/Credit Cards

There are different trains of thought about whether couples should combine their finances or keep separate accounts. But one thing that's definitely not okay is having bank accounts or credit cards that your partner isn't aware of. Depending on where you live, your spouse could be held liable for debts you incur during your marriage, even if they are only in your name.

It's best to be honest about the accounts and credit cards that you have. Literally lay them out on the table for your partner to see. Come up with a plan to pay off those with the highest interest rates. Then, together, decide on which credit cards you plan to use.

2. You're Using Cash and Not Recording the Purchases

I will admit to being guilty of this. Cash has its advantages, but when you use cash to pay for things, there's no easy way to track your spending. Your partner may know you withdrew cash from an ATM, but is probably not going to interrogate you on how you plan to spend the cash. So you're more or less free to buy lunch, drinks, or any other sundry items you wish.

To break this habit, use a debit card or credit card for most purchases, so it's easy for you and your partner to track your spending, budget appropriately, and keep each other in line. As long as you're honest about what is being spent, it's even okay to give each other a small amount of "fun money" on a monthly basis that you can spend on anything you want.

3. You Have a Gambling Problem

It may have started with a couple of horse races, or a fantasy baseball league or two. Then it expanded to big bucks bets on games, with money in offshore accounts and bookies calling your cell phone. Soon, checks are bouncing and your spouse can't figure out why.

Time to 'fess up. Your partner will want to know about your gambling problem, but more importantly, they'll want to know that you have a plan to stop. Gamblers Anonymous is one major resource that's been proven to help people stop. It may also be worth talking to a mental health professional to learn how to deal with compulsive behavior.

4. You're Investing Without Talking It Over With Your Partner

Your partner may be vaguely aware that you have an investment account, but do they know what you are invested in? If you are buying and selling stocks frequently, is it part of an overall strategy that you discussed together? If not, this is a form of financial infidelity. While it may be common for one spouse to be more investment-savvy than the other, it's not wise to place money in the markets without discussing your goals.

Are you saving for retirement, or for something in the nearer future? Are you placing money in a college savings account? Do you have the same tolerance for risk? All of these questions should be answered and discussed with your partner before you invest.

5. You're Hiding a Job Loss

It's understandable. You're hurt, maybe even humiliated, that you've found yourself unemployed. But continuing to act as if you still have a job is not going to make things better. For one thing, your partner will eventually wonder where all of your income went. And they'll be furious when they learn that you've lied.

If you find yourself jobless, remember that even the best of people lose their jobs for reasons beyond their control. And any respectful partner will understand this, and will want to play a role in ensuring your family remains financially stable while you look for a new job.

To keep this situation from occurring, establish a pattern of talking to your partner about your career. If your company is in trouble, or if you are at risk of being downsized, that's information you should share. This communication will make it less of a shock when the hammer drops.

6. You've Kept Outstanding Debt a Secret

This can really be a relationship killer. Imagine entering a relationship believing that your finances are in good order, only to find that your partner has thousands of dollars in debt you didn't know about. This could impact everything from your ability to pay for a mortgage, get a decent rate on an auto loan, and invest and save for the future.

If you're guilty of this, it's time to 'fess up. It's also time to recognize that your partner can play a supportive role, both financially and emotionally, in helping you pay off the debt. Having debt doesn't make you a bad person, so there's no reason to hide it.

7. You're Not Being Honest When You Rationalize Purchases

You say you bought tickets to the basketball game to "entertain clients" when that client is really just an old buddy of yours. You convince your partner that your smartphone desperately needs to be replaced, when it fact it's working perfectly fine and you just felt like buying the newest version. Even if you aren't hiding purchases from the ones you love, you're committing financial infidelity if you're making up reasons to buy things you don't need.

To remedy this problem, start being more honest with yourself when you have the urge to buy things. Before any purchase, ask yourself: Do I need this item? More often than not, the answer will be no.

8. Your Partner Has No Idea What You Earn

You may like the idea of having separate accounts, but when one person in a household doesn't know what the other is earning, it makes budgeting impossible. What if your spouse assumes you earn more than you do and then makes a big purchase? If you are planning for things like buying a home or cars, financing children's education or your own retirement, it's imperative that both partners know what the net household income is.

The easiest way to avoid this problem is to operate using joint accounts. But if you decide to keep money separate, at least share account statements, paystubs, and tax information.

Have you ever been victimized by these — or other — acts of financial infidelity?

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Things I Learned About Money After Getting Married

Mikey Rox — Tue, 24 May 2016 09:30:21 +0000

Marriage comes with its fair share of life lessons, and money is among the most prominent of these. Here's what I've learned about money while being married — for better and worse.

1. Credit Scores and Debt Should Be Laid Bare While You're Still Dating

Money is a taboo subject, in general, and couples — especially new ones who are still navigating the muddy waters of a blossoming relationship — don't like to talk about the financial predicaments they may be in. But these conversations are necessary.

My husband and I were sort of forced into the conversation as we bought our first home before we got married, but even if that's not on the horizon for you and your partner, it's still good to assess the credit score and debt situation so you both know what you're dealing with. That's not to say that you should dump somebody because their financial standing isn't as great as you might have hoped it would be, but it's certainly a factor to consider as you plan your life together.

2. Discuss Future Financial and Investment Goals Before Saying "I Do"

Before I got married I had plans for my future, but those plans changed (at least a little) when I decided to get hitched. I adapted my strategy to accommodate my husband — but I didn't derail it altogether, and I don't recommend that you do either. It's about compromise — it's beneficial to discuss your specific plans and goals ahead of your nuptials. Your partner may not want to open that new business, or carry the potential financial burden that comes along with it. On the other hand, your spouse may be totally on board with how you've mapped out your financial future and/or investments, and vice-versa. But you won't know until you discuss it.

Lay it all out on the table before getting anywhere near the altar so you each have a clear idea of where your relationship is headed financially (in theory, at least) once you're joined in holy — and legally binding — matrimony.

3. Schedule Uninterrupted Time to Discuss Your Finances in Depth

The only way my husband and I stay on the same page about our finances — and, specifically, the money that's coming in and going out on a constant basis — is to schedule time to discuss where we're at financially. We usually have a dinner date once a month where at least part of the conversation is about our budget, expenses, debt, and increases or decreases in expected income.

We also have an annual meeting at the end of the year to discuss what we anticipate the next year's expenses to be, and how we plan to meet them. While it's not easy integrating another person into the mix financially — and it can sometimes be stressful for you if you've overspent or missed a bill and you don't want it to result in an argument — it's needed so that you can both stay on track and repair snags together.

4. Keep Your Family Out of Your Finances — Period

In a perfect world, we'd all be rich and nobody would want for anything. That's not the case, however, and sometimes family and friends come knocking for a loan. My general rule is to not provide this type of financial support to anyone, as it rarely turns out well — and most people will tell you that. My husband, on the other hand, views this subject differently, and there's been at least one time where there was zero discussion about providing the loan to a family member, and I didn't find out about it until after the fact.

I wasn't particularly bothered by the amount of the loan or to whom it went — it was his money and he could do what he wanted with it — but rather that I wasn't included in the conversation. Even though I wasn't contributing to this particular loan, it could have affected our ability to purchase or finance something we needed down the road, and I felt as if I had the right to be informed.

5. You're Morally and Legally Obligated to Help One Another Financially

Whether you like it or not, whatever happens to your spouse financially also, in a sense, happens to you. This could mean a moral obligation to get out of whatever money pickle you may have gotten into, or, worst-case scenario, it could be a legal obligation, like if you file joint taxes and owe the government money. The IRS debt may be the result of one or the other's financial status — like if you have taxes taken out automatically each pay period from employment, but your spouse is an entrepreneur (like I am) who pays estimated taxes — but legally you're both on the hook for the debt. Not being prepared for this situation, or how to handle it responsibly and fairly, can lead to resentment and loads of other issues that you're better off without.

6. Keeping Separate Accounts Can Help Maintain Some Independence

My husband and I keep a joint account for shared purchases, like vacations, but we've also always maintained our own separate checking and savings accounts. For some couples this may seem odd, but for us it's helped us keep a part of our individual independence intact. While we consult each other on major purchases, we don't have to ask one another if we can buy some of the smaller things or little luxuries that we want, which in turn helps us to avoid nitpicking each other about things we don't think the other one should be buying.

I can only imagine how couples who co-mingle all their money argue about how many coffees or beers each is buying per week, the 19th pair of new shoes she's bought this year, or the new video game he brought home. The bottom line for us is that the bills get paid and we're still able to save; we're allowed to treat ourselves every now and then without having to ask permission or fear retribution.

7. Debt Can Destroy Your Relationship — If You Let It

A few years ago I discovered a substantial amount of debt that my husband racked up, and I was completely gutted over the situation. How, why, when, where? So many questions went through my mind, not the least of which was, how are we going to pay this off? I was lucky in that regard as my husband took full responsibility for it and promised to pay it off himself — and he has. But it may not work out like that for everyone.

If your partner isn't capable of paying off the debt, you, in fact, may be responsible for it too if it's attached to a joint credit card or another joint account. When that happens, it will likely put a major strain on your relationship. Old debt is one thing, but new debt — that is, debt acquired singularly by one partner while you're in the relationship — has a much more damaging and lasting effect. We were able to get past this and get back on track, but it's not easy. It definitely puts stress on the marriage, which can further worsen an already rocky relationship.

8. Money Doesn't Buy Happiness

All the houses, nice cars, designer clothes, and luxury goods in the world will not make you happy in a relationship you don't want to be in. When you're sitting among all your beautiful things and you wonder why you seemingly have everything but still aren't satisfied, you need to look beyond the bling. There's a deeper issue for which you're trying to compensate. Talk about it; make decisions. Your mental health is worth more than what's in your bank account — always. Remember that.

What has marriage taught you about money?

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

3 Simple Ways to Split Bills With Your Spouse

Mikey Rox — Tue, 15 Sep 2015 17:00:23 +0000

Even the happiest couples have arguments: Disagreements on how to raise the kids (I vote for boarding school), how to divvy up household chores ("Oh no, honey, let me clean that for you… again"), or even where to live (like as far away from the in-laws as possible). But those arguments are child's play compared to the mother of all head-butting in a relationship — money.

Managing dual incomes and household expenses gets tricky, and there's no one foolproof strategy that'll work for everyone. If one spouse works while the other stays home, there typically isn't an issue of who pays what and how much they contribute — the working spouse usually handles it all. But when both spouses work and split expenses, coming up with a fair and reasonable plan is important if you want to prevent financial resentment and money fights from ruining your relationship.

1. Take Inventory

I think it's funny how some spouses can talk about everything under the sun, yet clam up when the discussion turns to money. Sometimes I just want to shake 'em. If I'm talking about you, listen up: You can't keep your head stuck in the sand. For a happy financial life with your spouse, you have to get candid and have these conversations, even though they may be uncomfortable. This isn't the time to be embarrassed about your credit card debt or the fact that you bring in considerably less. Before you can even think about splitting bills, you have to know what's coming in and what's going out.

"Sit down with your spouse and take inventory," says Ashley Feinstein Gerstley, CPC Certified Coach. "While some bills will be different each month, you should be able to come up with a realistic range." This includes adding up your combined income, plus the total cost of fixed and variable household expenses, such as the rent/mortgage, utilities, groceries, transportation, insurances, etc."

In this discussion, you also should decide which expenses to include in the split. You might agree to only split household expenses and make each of you responsible for your own personal expenses like student loans, credit cards, haircuts, or manicures. Which I recommend, by the way. You'll resent your spouse the first time he or she holds these expenses over your head if they're the one footing those bills. Cut back or man up; those are the only two choices you have.

2. Have Realistic Expectations

When splitting bills with your spouse, problems can arise when there are unrealistic expectations. It might seem logical to have a 50–50 split, with each spouse contributing an equal share to joint expenses. But this approach only works when both parties earn similar incomes. Think about this: If you earn $7,000 a month, your spouse earns $3,000 a month, and your shared expenses come to $3,000 a month, splitting the bills down the middle doesn't make a whole lot of sense. This approach ends with your spouse spending half of his or her income on household expenses while you only spend 20% of your income.

David Bakke, a personal finance expert at Money Crashers, recommends a different plan.

"A more fair way to split bills is for each spouse to pay a percentage according to how much they make," he says. "If one spouse makes 65% of the total household income, that's how much of the bills he or she is responsible for."

This strategy ensures there's enough cashflow to cover household expenses, but allows each spouse discretionary income for personal expenses and building their personal nest egg, whether it's preparing for retirement or increasing their personal savings account.

3. Shared Expense Account or Separate Bills

Once you decide how much each person will contribute, the next step is deciding whether you'll have a single account for shared expenses, or pay your own set of bills from your own personal accounts. There's really no right or wrong way to handle this.

With a shared expense account, you both contribute a set percentage and pay all bills from one account. It can work — just know that having a shared expense account means a lot of back-and-forth communication. There has to be enough money in this account at all times to cover your bills, and you must trust that your spouse doesn't take from this account unnecessarily, which can result in insufficient funds and overdraft fees.

Another strategy, which can be just as effective, is deciding which set of bills you're responsible for, and then paying these bills from your own account.

"Under this strategy, each person maintains his or her own separate account and identifies which expenses each spouse will be responsible for, thereby, keeping a black curtain over accounts and maintaining maximum financial independence," says Andrea Rizk, founder and CEO of Risk Public Relations.

This doesn't mean you're out of the loop with regard to expenses you don't pay. Some couples avoid this strategy because they feel financial problems can easily fall under the radar. If their spouse gets behind on a utility payment or the car payment, they want to know as soon as possible. This is perfectly understandable.

So that you don't have any surprises later on, you and your spouse can agree to have your own set of bills, but also agree to manage all shared expenses online. You'll both hold the passwords to these accounts, giving you the freedom to check the payment status of accounts at any time.

Do you split bills with your spouse? How do you make it work in your house? Let me know in the comments below.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Worst Mistakes Good Spouses Make

Sarah Winfrey — Thu, 09 Apr 2015 13:00:02 +0000

Marriage is hard. Almost anyone can tell you that. It takes constant effort to nurture this relationship so that it remains close, connected, and dedicated as the years pass.

"But," you say, "I'm a good spouse. I don't cheat. I love my partner. I accept their faults and I work on my own. Won't my relationship last?"

Well, I don't have a crystal ball, but I do know this: Even good spouses aren't perfect. Even with a huge amount of love and the best intentions, it is easy to make mistakes that can hurt your relationship.

But the first step is knowing what to look out for. Specifically, this list of the most common mistakes that good spouses make.

1. They Stop Putting in the Effort

When you feel lovey-dovey about your partner, it's easy to do the little things that make them happy. Maybe you prep his coffee pot for the morning, or bring her a glass of wine in bed. With that loving feeling, these things seem to come naturally.

Fast forward a couple of years down the road, though. Your job is hard. Your spouse is stressed about money. Even the best spouses have days when they come home and collapse on the couch. When this happens, not only are you not thinking about the coffee or the wine, but you don't even want to make dinner.

When you're stressed and tired, it's easy to let the little kindnesses, the things you do just because they make your spouse happy, slide. However, while you may not be able to do all the things you once did for your partner, you can still put forth the effort to show them that they're valuable.

Be the one who offers to make (or pick up) dinner. Set an alarm on your phone so you remember to make the coffee. Surprise your spouse, even if it's only with takeout from their favorite restaurant. These little efforts remind your spouse that they are important to you, even when things are hard and busy.

2. They Speak Disrespectfully

Good spouses respect their partners. They listen when their partner speaks and they honor what is said, even when they disagree.

Even good spouses, though, can lose respect for their partner in the middle of a heated conversation. This comes through in the tone of voice they use, the things they say about their partner or their partner's ideas, and whether or not they can give their partner the benefit of the doubt. It can even come through in what they say about their partner to other people, later on.

Even if the argument is really and truly over and you're exaggerating or kidding around later, talk to and about your partner respectfully. If you can't do so, ask for a break until you feel like you can again.

Even if you do respect your partner and you're just upset, speaking disrespectfully can harm your relationship. It can cause your partner to doubt your respect for them overall, and if that becomes a habit, it can change the way you think about your spouse in general.

3. They Believe Their Happiness Depends on Their Partner

Sure, you're close to your spouse. After all, you're a great partner. But there's a difference between being close and depending on someone else for your own happiness. Whether you feel like you need your partner to change in order for you to be happy, or you feel like everything is chugging along just fine until your partner falls into an illness or a depression; giving someone else that much control over your happiness is never a good idea.

Instead, focus on yourself. Who do you want to be? What do you want to do? Work towards your own goals and you will be happier than if you hand over control of your satisfaction to someone else.

Also, being in charge of your own happiness makes you an even better spouse. Your partner won't feel like they have to be someone or something they're not just for you. And they will know that, whatever happens, even if they get depressed or seriously ill, they won't take you down with them.

4. They Wait Until They Feel Like It to Have Sex

Sure, you like sex. Sometimes you even love it. And you're a great spouse, so you make sure your partner enjoys it, too. But the longer you're with your spouse — even when you love them dearly — the easier it is to let other things get in the way of physical intimacy. And it's even easier when you tell yourself that it's better to wait until you're in the mood.

However, physical intimacy is important to a marriage. While it doesn't feel romantic to approach your spouse (or let them approach you) sexually when you're tired, stressed, and really just want to watch TV, your marriage will be better if you do it.

Remember that you enjoy sex, even when it's not the first thing on your "Want" list, and choose to engage your partner on this level. Take it slow, and you may find yourself enjoying it a lot more than you thought you would, even if you weren't in the mood.

5. They Let Arguments Get off Topic

Even good spouses get upset sometimes. I mean, anytime you have two people together in the same space for longer than a couple of hours, they're likely to disagree. The fact that you and your spouse sometimes argue has nothing to do with how good of partners you are or how much you love each other.

When you do argue, though, try to stay on topic. Work through one issue at a time. If things are so heated that you or your partner keep bringing up other issues, step back for a while to cool down and refocus.

If things come up that you really want to talk about, write them down. Then you can bring them up after the original issue is settled, or later on when things are cooler between the two of you. It's perfectly fine to talk about all of your issues, but best not to talk about them all at once.

Do you consider yourself a good spouse? What mistakes have you made in your marriage?

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This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

20 Frugal Ways to Brighten Your Spouse's Day

Mikey Rox — Mon, 21 May 2012 10:36:07 +0000

With everything that my husband and I have going on in our lives, it’s often easy to forget about each other.

I don’t mean that we forget that the other person exists, but it’s not uncommon to get so wrapped up in our work and other responsibilities that we neglect our relationship at times.

I know we’re not alone in this. There are lots of other couples out there in similar situations. The good news is, letting your spouse know that they’re on your mind isn’t hard (and it doesn’t have to cost much either).

To help you show your sweetie that he or she is still the one for you, here are 20 frugal ways to bring a smile to their face today. (See also: 21 Frugal Ways to Reward Yourself Right Now)

1. Write a Love Note

Tell your sweetie how much you love them in a quick note that you put in their lunch, briefcase, or bag. If you prefer the tech route, tweet the love note in 140 characters or less for all your followers to see.

2. Draw a Heart on the Bathroom Mirror

Express yourself when your partner isn’t looking, drawing a heart when the glass is all fogged up from the steam.

3. Take on a Chore

Do something that your partner normally does, like take out the trash, walk the dogs, wash the dishes, or clean the bathroom. I sincerely hope my husband reads this entry.

4. Serve Breakfast in Bed

Who doesn’t like breakfast in bed? Eating in your undies is the best! To make the breakfast even more special, use a heart-shaped cookie cutter to mold pancakes or cut a heart shape out of toast.

5. Give a Massage

Tell your partner take a load off while you rub their back, neck, and shoulders for at least five minutes.

6. Make a Special Playlist

A special playlist doesn’t have the same appeal as a tangible mix tape, but the sentiment is still there. Steal your partner’s iPod and upload a few songs that let him or her how you feel.

7. Stop by the Office for Lunch

Pop into your partner’s office at lunchtime and surprise them with a quick bite to eat at a nearby restaurant.

8. Give a Compliment on a Physical Attribute

Guys are notorious for never noticing that their partner got their hair did. Make up for it by letting your partner know how great they look in a new outfit or that their diet/exercise routine is working well.

9. Wash the Car

Break out the bucket and soap, and make your partner’s car shine.

10. Dedicate a Love Song

Call the radio station that you partner listens to and dedicate a song.

11. Declare Your Love on Facebook

You probably post a lot of nonsense on Facebook. Make at least one status update count by letting all your friends know just how special your man or lady friend is.

12. Make a YouTube Video

Record a video letting your partner know those things about them that make your heart flutter and post it for the world to see.

13. Run a Bubble Bath

Did you partner have a long day at work? Run a bubble bath and set up the tub with a glass of wine and a magazine.

14. Slow Dance in the Living Room

Turn on a slow jam and ask your partner to dance. Yes, right inside your house.

15. Pick Up the Phone to Say "I Love You"

Do you talk on the phone anymore? I don’t. I prefer texting. Which is why sometimes it’s nice — nostalgic even — to pick up the phone and call your lover just to say that you love ’em.

16. Turn Off the TV

Don’t pretend like your TV isn’t on when you’re having adult time. Turn it off so you can give each other the undivided attention you want and need.

17. Plan a Picnic

Make a few sandwiches, grab a blanket and a couple of board games, and head to the park for a relaxing afternoon filled with quality time.

18. Pitch a Tent

You don’t have to go anywhere. Pitch the tent in your backyard so you have the romance of camping but the convenience of home.

19. Cook Your Partner's Favorite Dinner

Make that special meal that makes your partner melt. The key to a person's heart is through their stomach, after all.

20. Leave Your Partner Alone for a Few Hours

I love spending time with my husband, but sometimes I just need a few hours to myself. Give your partner the space they deserve by exiting the house on a Saturday or Sunday so you honey can relax however they want to.

Have even more ways to brighten your partner’s day in a low-cost way? Let me know in the comments below.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Tax and Financial Concerns for Cohabitating Co-Owners

Barbara Weltman — Thu, 08 Dec 2011 20:21:32 +0000

Link:

http://www.openforum.com/articles/tax-and-financial-concerns-for-cohabitating-co...

It’s not uncommon for spouses and significant others to go into business together. Obviously, the arrangement entails many personal issues that need to be addressed. However, there are also tax and financial concerns to be aware of. Here are some key points to consider.

Arranging Ownership

While marriage ideally is a 50-50 arrangement, business ownership by spouses or significant others need not be equally divided. It depends on what each person brings to the table. When fixing ownership interests, consider capital contributions, skills, and the impact on the relationship of having one person as a “junior” partner.

In some cases, one person is the owner of the business while the other is an employee with no ownership interest. Usually this occurs when one spouse is the star of the business while the other merely serves in a supporting role. This arrangement may have certain benefits when the business is unincorporated:

The business deducts wages and payroll taxes for the employee-spouse;
Health insurance premiums for the couple can be a business deduction rather than as an above-the-line personal deduction. As long as the spouse is a bona fide employee, the owner can provide health insurance for employees (including the spouse) and employees’ spouses (including the owner) and dependents, and deduct the premiums as a business expense.

Reporting Profits and Losses

Profits and losses are divided according to ownership interests. Whether the business is run as a partnership, limited liability company, or S corporation, profits and losses are allocated to each owner on a Schedule K-1.

Special rule for husband-wife partnerships. Instead of filing a partnership return and two Schedule K-1s to allocate partnership items to each spouse, the couple can opt to file separate Schedule Cs. Each spouse reports his or her share of partnership items; each pays self-employment tax on the share of net profits. This option can be used only if both spouses materially participate in the business. This option is not available to same sex spouses, domestic partners, or other significant others in business together.

Spouses in community property states and domestic partners as faux business partners. Even though only one person owns an unincorporated business—a sole proprietorship or one-member limited liability company—federal income tax rules split the income between the parties:

For spouses in community property states, each spouse reports half of the net income or loss on a Schedule C; only the owner pays self-employment tax on all of the net earnings from the business.
For registered domestic partners in states such as California, Oregon, and Washington, each partner reports half of the net income or loss from the business on a Schedule C; each registered domestic partner owes self-employment tax on half of the net earnings of the business.

Planning for a Split

A business partnership is like a marriage that theoretically lasts until death. As a practical matter, however, a partnership is as vulnerable to a split as a marriage. Therefore, plan ahead for possible problems. Just like having a prenuptial agreement, spouses should have a partnership agreement or shareholder agreement that spells out what happens if:

The couple cannot agree on business decisions but want the co-ownership arrangement to continue;
The couple divorces. Sometimes couples can continue to work successfully together in the business even though their marriage ends;
One spouse wants to leave the business;
The couple wants to bring in an additional owner or owners.

Crafting a partnership or shareholder agreement at the start of the arrangement, when feelings and expectations are at their highest, is the best time to act. However, if spouses are already in business, it’s never too later to address concerns by creating or updating a partnership or shareholder agreement.

Final Word

Any couple that wants to work together and be co-owners of a business should review their arrangement with tax and legal advisors. For interested couples, the IRS provides information on husband and wife businesses.

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This article is from Barbara Weltman of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: