‘Til debt do us part; financial tips for newlyweds

‘Til debt do us part; financial tips for newlyweds – Lifestyles

Melody K. Hoffman

Charles and his longtime girlfriend Mary decided the time was right to tie the knot. Love and excitement took over as they planned to embark on life’s journey together. As the couple made plans for the wedding, each had to be specific about his or her financial situation in order to save enough money for their glorious wedding.

In this, Mary became aware of how much money Charles made a year, which was a considerable amount less than she believed. Also, Mary was carrying a debt load of more than $20,000 of credit card bills and student loans. Needless to say, these weren’t exactly the kinds of surprises they were expecting.

Many couples face financial obstacles before and after they say “I do,” some similar to Charles and Mary’s. Disagreements over money matters can burden even the strongest marriages; however, couples don’t have to let this tear them apart. JET spoke with money experts who gave encouraging tips to newlyweds that will help you not allow debt and other stress about money destroy your marriage before your first wedding anniversary–or honeymoon.

* Communication Is The Key.

Though talking about money in a romantic relationship is taboo to some, experts emphasize that success begins and ends by clearly communicating with each other about your financial concerns and goals.

“Communication is the biggest asset to any union of two people,” says financial advisor Jesse B. Brown, author of 101 Real Money Questions, The African American Financial Question and Answer Book. “People are different. There is not only the man-woman difference, but there is the cultural and rearing difference as well. The two people could come from different homes and backgrounds. They may come from different cultures. The important thing is to talk to each other and get the goals of the relationship established early.”

When Derrick and Carise married, they didn’t even think to talk about each other’s financial situation. They were too much in love and thought it didn’t matter. A year later, the couple says their main stress comes from not having enough money and not being prepared for emergency expenses.

Brown says that it is vital to discuss finances before the wedding; that person not only becomes your spouse, but also your business partner. “Nothing breaks up a couple faster than money. Money is a stress-maker. It sometimes begins the day of the engagement. The first discussion is the cost of the wedding. Many couples spend too much money on the wedding and don’t have the first month’s rent taken care of The purpose of a marriage is to have a happy life together, not a stressful life,” says Brown, president and CEO of Krystal Investment Management in Chicago.

* Work Together To End Debt.

In today’s society, it is more than likely a couple will enter a marriage carrying debt in their baggage. Brown says the first task for the couple should be debt management. “Debt should not be merged. The couple should make an effort to eliminate the debt of each person and then keep it down. To create a plan together, they should first put down all of their debt on a piece of paper or maybe a computer program (including college loans, credit cards, car loans, taxes, child support, etc.) that clearly shows what is owed, interest rates, dates due and balance. Then trust each other’s judgment and work toward a plan of eliminating the debt.”

Financial advisor Cheryl Broussard, who with Michael Burns co-wrote What’s Money Got To Do With It: The Ultimate Guide on Hew To Make Love and Money Work in Your Relationship, suggests a formula for households: A couple should live off 70% of income and save the other 30%, which should be broken down 10% retirement account, 10% emergency and 10% should pay off credit card debt.

Also, it may sound simple, but another way to manage debt is not to incur any more of it. Bronssard says we need to learn how to say “No.”

“The ‘No’ attitude is simply saying no to any purchase you can’t pay cash for. Don’t put anything on credit cards, even if they say one year with no interest because most people will not pay it off within a year. If they don’t pay it off, one day after the due date the total year’s worth of interest will be added to the balance. We’ve gotten away from saving. Our grandparents didn’t have the luxury of credit, and as a result, they saved up for a major purchase. Buying a home is the only debt newlyweds should go into,” Broussard says.

* Plan Financial Meetings.

Newlyweds may have a designated movie night or date night, but Glinda Bridgforth, a financial expert and co-author of Girl, Make Your Money Grow, says a couple has to use that same consistency with financial meetings. “You’ve got to make sure you schedule regular family financial meetings,” says Bridgforth. “You have to do it like a standing appointment. The same way you schedule your appointment to get your hair done or go to the gym, you’ve got to schedule a specific time to meet together to talk about the financial situation in the household.”

Bridgforth adds that a couple should be open and honest and each other’s credit history to avoid any “surprises” while creating a budget or a financial plan. “If an individual in the relationship is not willing to do that, to disclose the assets and liability and doesn’t want you to see their credit report, then that’s a red flag coming up. And you’ve really got to take notice of the red flags. It may be that they have something to hide or maybe that they’re ashamed or embarrassed about their situation, but if in fact you don’t address these issues now, it’s basically like buying trouble, and it’s going to come up later on.”

* Three’s A Charm.

When DaKeesha and Jamal began their marriage a year ago, they opened a joint banking account. After each of them paid the household bills, they would buy items from the same account without discussing it with their spouse. In turn this caused overdrafts and bounced checks, because they were both trying to spend the “left money.

Experts strongly suggest a couple should operate from three separate banking accounts: My account, your account and our account. “This way expresses financial individuality,” says Burns, a California-based financial advisor. “It allows the person to buy gifts or experiment with stocks without having to account for every single penny to the other person.

Though each person has his own account, a couple should determine a set amount they’re able to spend without the partner’s ‘permission.’ This is not meant to keep tabs on each other, but to develop the habit of discussing major financial purchases with your partner.”

The household account or “operating” account is what should be used to pay bills and other joint expenses. Before marriage, this account could be used for both partners to contribute to wedding expenses. In either occasion, experts note that one person (the designated “bookkeeper”) can actually write the checks to pay the bills, but each person still needs to know what’s going to be paid.

* Know Your Styles Of Spending.

Leroy and Miyoshi recently got engaged and are starting to save for their future together. Though there is constant communication between the two, their styles of spending may get them in trouble–they both love to shop!

“Sometimes people know that they’re savers and there are other people who know that they are spenders,” says Bridgforth, the founder of Bridgforth Financial Management Group. “Before you start co-mingling your finances and so forth, each person should know their saving habits, spending habits, and what their attitudes and values about money. What are your financial goals? If each person knows this individually, then two people can be very clear on what it is that you’re dealing with as a couple.”

*Concentrate On Building Wealth And Assets.

After marrying, Abby and Don’s main priority was to purchase their first home and they gave themselves a year to save the hefty down payment. Abby says they both made a commitment to lower household expenses by any means necessary, which for them meant eliminating cell phone, cable and membership bills. The two met their goal, but if a mutual commitment was not present and they were not on the same financial page, they would have been working against each other, Brown says.

“The couple should be on the same page on every important issue. If home ownership is important to them, then they should set out a goal to buy a house. If the issue is children they should realistically look at the pros and cons of parenting including childcare and education costs. All of these things can be worked out if the couple plans. The worst thing is to go into any situation blindly.”

Through all of the new things that a couple will experience together, Brown also encourages lovebirds not to lose focus on saving money. A common rule of thumb is to keep three to six months of living expenses in a cash reserve. Also, look to invest your money and put together a retirement plan. “A couple should begin planning for retirement the day they get married. This requires discipline and patience and long term goal planning,” Brown says.

COPYRIGHT 2004 Johnson Publishing Co.

COPYRIGHT 2004 Gale Group