Action Line: 5 tips can help couples merge their finances
BY PHIL MULKINS World Action Line Editor
Thursday, February 14, 2013
2/14/13 at 4:49 AM
Dear Action Line: Valentine's Day brings such cooing about "getting married and living free," but getting finances in order first is the only way to stay free. - B.H., Jenks
Financial planning may not seem as romantic as chrysanthemums and crawfish dinners on Valentine's Day, but it brings more peace and happiness to relationships. Bill Hardekopf, LowCards.com CEO, offers "Valentine's Day tips for merging finances" at tulsaworld.com/LOWmergingfinances
Keep no $ecrets: Make a list of student loans, car loans, credit card debt, loans to friends and parents, etc. Get copies of individual credit reports ( tulsaworld.com/acr) to share the financial past and accounts that you might have forgotten.
Peacefully uniting finances: Your spouse doesn't handle finances as you do: a common source of friction leading to a uniting system is separate, joint and a combination accounts of the two. Separate accounts give both spouses a little autonomy and are the easiest solution early-on, but they become complicated as your family and possessions grow. Joint accounts merge all income and expenses, which requires communication and agreement. It makes paying bills easier but also means less privacy and independence. Joint/separate accounts divide the expenses, but you have an account of your own to control. Both partners should have some money they can control and spend on their own.
Merging debt: One or both partners may come into the relationship with some debt. What type of assistance will be given by the spouse who has little or no debt? That has to be worked out first. Your spouse is not legally responsible for debts incurred before marriage, and it doesn't automatically become a joint debt. Whether you and your spouse are legally liable for each other's debts after marriage depends on if you live in a community-property or common-law state.
Dividing debt: "Oklahoma is an 'equitable distribution state,' meaning marital property will be split between spouses in a 'just and reasonable way.' The court decides what's just and reasonable based on how each contributed to the marriage and what each spouse will need to move forward after divorce. The division does not have to be equal, but must be fair," says Divorcenet.com ( tulsaworld.com/DivorceNetProperty). "Before the court can divide your property, it needs to know which property belongs to the marriage, which belongs to the spouses separately and how much there is of each. 'Marital property' is acquired or earned during the marriage, regardless of title wording."
Dealing with debt: Pay it down as fast as possible, avoiding late payments. Decreasing debt reduces financial stress. The faster you pay it off the sooner you start saving and building a strong financial foundation. When you get gift money, bonuses, second job or tax refund, use this to pay off debt. Making micropayments can help pay down your debt faster. Eat at home or use coupons and apply the money you saved to your credit card balance. If you have multiple cards with a balance, pay off the balance with the highest interest rate and then move to the card with the next-highest rate.
Original Print Headline: 5 Tips Can Help Couples Merge Their Finances
Submit Action Line questions by calling 918-699-8888, emailing phil.mulkins@tulsaworld.com or by mailing them to Tulsa World Action Line, P.O. Box 1770, Tulsa, OK 74102-1770.
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