Marrying Your Finances
Scottsdale, AZ - More than two million marriages take place in the United States every year according to the U.S. Census Bureau. "That means that over four million people merge their finances every year. I wonder how many of them think of marriage in those terms?" asks Kristy Welsh, author of Good Credit is Sexy.
Pragmatic Welsh knows from personal experience that marriage is more than a promise to love and honor. As far as lenders are concerned, it is also is a promise to pay each otherπs debts. Joint credit card accounts and a home mortgage are just two of the financial obligations that follow the honeymoon.
Welsh advises lovebirds to keep the following ten tips in mind before and after the wedding day.
- Talk about finances with your partner. Is he/she a spender while you are a saver? Does he/she want a Jaquar while you would be happy with a '93 Ford Escort?
- Use credit cards sparingly and wisely. Credit cards are the most expensive form of credit, charging as much as 21% interest. Merchants make it very easy to buy on credit but it can be hard to pay off balances that get too high. Making minimum payments will only pay accrued interest charges and wonπt reduce the account balance.
- Budget. No one really likes to budget, but it is a wise thing to do. "At least do a budget before a major purchase like a house and possibly once a year when you do your taxes. It's wise to know where your hard-earned money is going."
- Consider buying less house than you can afford. "Mortgage lenders will qualify you for the largest loan amount they can. Think about the payment amount you can comfortable afford each month, including property taxes and homeowners insurance, and shop for a house in that price range instead."
- There's more to buying a house than buying the house. Keep in mind that it takes money to purchase things for the new house furniture, window treatments, lawn mowers, etc,
- Consider the maintenance costs that come with the house. If the house has a pool, remember there is an on going cost involved in maintenance. Plan for minor recurring expenses such as pest control, paint, air conditioner maintenance along with longer-term maintenance costs that may come up. Will the roof need replacement, or the hot water heater?
- Talk about finances with your spouse. Do your budgeting and taxes together. "It can be a bonding experience," suggests Welsh. "Just as giving one spouse control over the finances can lead to big trouble down the road. Arguments over money are the number one reason for most divorces."
- Make sure each spouse has some credit in their own name. "It will probably to easier to get joint credit as young married people, but it is wise to establish credit individually as well. No one wants to plan for the day their spouse is no longer around, but it does happen."
- Check your credit history regularly. Pull your credit reports once in a while to see how the credit bureaus rate your financial history. Welsh advises doing this once a year to keep your credit history accurate and attractive to lenders. It is also a great way to prevent credit card fraud and identity theft.
- And, although most people would never think of doing this because it is so unromantic, Welsh strongly advises couples to share their credit reports with each other before they even announce their engagement. "Know the financial situation you are marrying into," warns Welsh. Many sad stories of love at first sight turning into years of financial hardship have come to her through her creditinfocenter.com Web site. One spouse's tax lien can prevent newlyweds from buying their dream home.
"When finances can make or break a happy marriage, it makes sense to start out on the right foot," says Welsh. "I know that I'm repeating myself here, but I can't say it enough--talk about finances with each other. It will be an integral part of your new relationship. Best wishes!"
Kristy Welsh has a background in the mortgage industry, one marriage in her past, and six years credit experience as Webmaster for creditinfocenter.com. Her book, Good Credit is Sexy, is available directly from www.creditinfocenter.com. In 263 pages, the book explains different forms of credit, how to use credit wisely and how to keep your credit attractive to lenders.