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| || || | Improve Your Spouse's Credit by Adding Them to Your Credit Accounts Does your spouse have a low credit score, or one that could use some improvement? If you have a line of credit in your name, your spouse can improve his credit by doing what is called "piggybacking" in the credit industry. Piggybacking is when you use your own good credit history to help another individual. All your spouse has to do is jump on your back and enjoy the ride to a higher credit score.
- Enter your spouse's name, Social Security number and contact information on your credit application as an authorized user or joint user. By entering your spouse as an authorized user, it means he is authorized to use your credit line but is not responsible for payments. If you add your spouse as a joint user, then both of you will be equally responsible for ensuring the bill gets paid on time. If you have already established a line of credit, contact your creditor and ask that your spouse be added to the account.
- Refrain from giving your spouse access to your credit card if he is known to have poor spending habits. Although she is not using the credit card, her credit score will still benefit from your credit account.
- Make purchases, as normal, with your credit accounts.
- Submit your monthly payment on time in order to avoid late fees and negative items on your credit report. As you make your payments on time and handle your credit responsibly, your spouse's credit score will begin to increase, just as if the line of credit was solely his. This occurs because when your crediting company makes their report to the credit bureaus, your name and information along with your spouse's name and information are reported.
- Avoid being careless with your credit line. If you are careless with your credit, it will negatively affect your spouse's credit since she is listed as a user on the account.
Why Should I Ask Finance Questions Before Marriage?
Well, as the old saying goes you can't live on love, you need money to survive! Finance questions before marriage will help you and your future partner understand where you both are financially before marriage.
If your future spouse is not able to contribute financially, you will know this before you say your vows. That is why finance questions before marriage is so important!
How do I find out about my future spouse's finances? You can find out by asking your future spouse, some or all of the following questions:
How much money do you earn? Can I see a copy of your credit report and score?Do you pay your bills on time? What is the balance on your outstanding bills? Have you ever filed for bankruptcy and do you have any judgements against you?
Do you pay child support? Do you have a savings account,insurance,investments and a retirement plan? Once we get married, will we both be able to spend freely? If we purchase a home will we own the home jointly?
Discussing your finances before marriage is important for future spouses who are planning to get married. It is a difficult subject for couples to discuss, however, it is crucial in maintaining a good relationship. Finance is one of the most critical key components of a marriage. In many instances, marriages have dissolved due to the fact that couples have not discussed their finances prior to the marriage taking place.
Finance Managing After Marriage
Managing Your Finances Once MarriedBy Kelly Kennedy
It’s important to plan for your financial future beforehand so you have idea of what to expect. Once you get married, most newlyweds’ open a joint checking/saving accounts
Below is a list of 4 easy steps to take when determining your financial future.
- Determine your net worth
Net worth is the difference between assets and liabilities. Make a list to figure out your net worth, make a list of all the things that you own and assign approximate values to each one. Then make a list of all your debts. Subtract these two numbers and you will have your net worth.
- Family accounting
You will need to decide who is going to manage your accounting. Is one partner going to manage the finances or will this be a shared responsibility? Are you going to choose to handle the finances independently, if not you will need to create a system of whose going to pay the bills.
- Set goals
Statistics are showing that 95% of senior citizens can’t afford to retire. Set goals and start saving for your future today. Create short-term goals and long-term goals. Make sure when you set your goals that you are actually striving for them so they should be adjusted to your spending lifestyle
- Plan for adjusting your finances once married
Many couples get married without having a financial plan in mind. It’s very important to discuss your financial situation before tying the knot that way everything is out in the open. If you don’t want to deal with thinking of financial strategies get help from a financial planner for any needed advice.
Financial Mistakes Couples Make
IF YOU AND YOUR partner are like most couples, chances are, you fight about money. Numerous studies have shown that money is the No. 1 reason why couples argue — and many of the recently divorced say those battles were the main reason why they untied the knot.
While anyone will tell you that talking about money is the first step in resolving problems, talk alone won't do the trick.
- Merging the Finances
The Wrong Approach: United we stand, divided we bank.
The Right Approach: It's yours, mine and ours.
One of the first issues newlyweds face is how to handle their finances. "Couples struggle about this one," says Ruth Hayden, author of "For Richer, Not Poorer: The Money Book for Couples." Should you merge everything you have and earn into one joint account, or should you maintain individual accounts and open a joint one for household expenses?
For many newlyweds, the right choice may be somewhere in the middle. "You should have some autonomy money, I should have some autonomy money, and we need to learn how to practice being a couple together with our money," says Hayden.
The advice is different when one spouse enters the marriage with a high debt load. (See our next point below.) But assuming you both have a clean bill of fiscal health, finding a way to blend finances comfortably without feeling like big brother is watching every financial move you make can dramatically cut down on fights. Over time — once kids and mortgages come into play — many couples find that merging all their finances is simply easier. But unless you're both comfortable with the idea, there's no need to rush things.
- Dealing With Debt
The Wrong Approach: Your debt will ruin us; you must find a way to pay it off.
The Right Approach: It's our debt: Let's decide how to pay it off together.
"That's one of the places where couples have most disagreement," says Hayden. Couples often don't see eye to eye on how much debt is too much and which kind of debt is bad.
Compounding the problem: in many cases, one spouse enters the marriage with a lot more debt than the other. "We saw that more frequently than we anticipated when we began interviewing couples [for our book]," says Allvine. "It's almost unavoidable. Even if you manage to get to your 20s or 30s without debt, you hook up with a partner who's in debt."
What to do in situations like that? Like it or not, once you're married, your spouse's debts can become your problem. Granted, you're not legally responsible for the credit-card balances ran up before you got married, or for any loans opened in your spouse's name alone — provided you keep your finances completely separate. (Unfortunately, all bets are off should you get divorced. For more on that, click here). But even with separate finances, your spouse's credit score will affect your ability to get joint credit. "It's a public [credit reporting] system, and what you do will absolutely affect the other," says Hayden.
For those couples not yet married, it may be worthwhile to think about a prenup, just to make sure that assets that one spouse brings into a marriage will always be protected from the other spouse's creditors.
But those who've already tied the knot should find a way to pay down the debts as quickly as possible, and without any late payments. For help with this, visit our Debt Management center.
- Keeping Spending in Check
The Wrong Approach: I'm a saver and you're a spender. That's the problem.
The Right Approach: We both spend, but on different things. Let's budget.
Your husband keeps nagging at you that you spend too much — but then comes home one day with a huge smile and — surprise! — a 70-inch flat-screen plasma TV. He happily explains how he sealed the "terrific" deal. You're definitely not impressed.
Sound familiar? Spending is the second most common reason why couples fight. What usually happens, explains Hayden, is that one spouse gets labeled the "spender" and is blamed for skimming all the money out the checkbook. In most cases, however, that's not accurate. "Studies show that men and women spend the same, they just spend differently," she says. Women usually take care of most of the family's daily expenses: the groceries, the bills, clothes for the family — while men spend on large purchases like plasma TVs, cars or computers. "If you counted up your money, you would be spending about the same," Hayden says. "But because you spend so differently, the perception is different."
The solution here is to identify the real problem, Hayden says — namely, that you're both spending money on a tight budget. Then sit down and decide how much money you'll allocate to the "daily ness" of life, and how much to save for the big purchases. "What we're trying to do is get the 'Surprise!' out of it," she says.
- Investing Wisely
The Wrong Approach: You're a risk-taker, I'm risk-averse. Hands off our retirement savings.
The Right Approach: Let's think in time frames and take as much risk as our goals allow.
Fighting about how much risk to take with your investments based on how you feel about risk doesn't do much good. Rather, sit down and talk about your investment goals and time frames, says Christine Larson, co-author of "The Family CFO". "You could be completely risk-averse with money you need for next year, but you can be a huge risk-taker with money you're saving for retirement," she says. If that doesn't work for you, seek the help of a broker
Whatever your investment choices, review your investments together at least once a year and make sure that, overall, your portfolios balance each other out, suggests Wall. "I have one couple — they're in their 70s. She likes to take risks and it scares him to death, so they do invest themselves separately," says Wall. "We let her take risk with part of the money, but not all of the money."
Use our asset-allocation tool to help determine the best way to allocate your portfolio. Our retirement, college-planning and short-term-investing departments can help you save for specific goals.
- Keeping Money Secrets
The Wrong Approach: What my spouse doesn't know will never hurt him/her.
The Right Approach: Big financial secrets can ruin a marriage.
Among Hayden's clients is a family that first came to see her when the wife found out that her husband had lost a lot of money trading commodities. The real problem? She didn't know his little secret. "It got them in horrible trouble!" Hayden says. "He's very steady, he's a fabulous doctor, he's a great dad...but he had this other part of him that's pure gambler, and it almost brought the marriage down."
Will you be shocked to hear that most couples do keep money secrets from each other? While secret trading or gambling may not be that common, our survey saw 36% of men and 40% of women confess that they had at one time or another lied to their spouse about the price of something they bought. "It's the most common secret," says Wall.
Is it a big problem? Depends on how you deal with it. "Most people also lie to themselves about what they're spending, just as they lie to themselves about how much they're eating," says "The Family CFO" author Allvine. And let's face it, if your wife saved up the extra $100 for her "only $30" Givenchy scarf from her monthly mad money, it's not that big a deal. But if your spouse has been squirreling away thousands of dollars, it may be time to seek the help of a family finance professional. "If this happened in a company," Allvine says, "they'd call it embezzlement."
- Emergency Planning
The Wrong Approach: We're fine. We don't need to worry about money.
The Right Approach: Anything could happen. Let's plan for emergencies.
Even if you have a great career, earn a comfortable living and don't have to worry about debt, you could find yourself woefully unprepared for an emergency. "Couples today are under so much stress that anything could tip them," says Hayden. An unexpected pink slip, an accident, illness — anything could throw you off track if you don't have an emergency savings account.
"With the couples we interviewed, we found a tendency to panic [in an unexpected emergency] that could lead to the wrong decisions," says Larson. Bottom line? All couples should have an emergency stash of three to six months' worth of living expenses held in a safe place, like a money-market fund. Simply knowing it's there can reduce stress, since you know you're not walking a fine line between comfort and catastrophe.
Walking down the aisle will hurt your finances!
Falling in love after years of building wealth can make life complicated. Tying the knot can sometimes make it worse. “Money” magazine takes a look at whether marriage means happily-ever-after for your finances:
Michele Mann was doing just fine on her own, thank you. She had launched a successful interior design business, which now earns her about $100,000 a year. She'd nearly paid off the two-bedroom Phoenix condo she had bought for $450,000 in 1992. And she'd amassed a handsome portfolio.
Then, two years ago, the never-married Mann, now 56, met Charles Wally, 67, a divorced retired rancher and insurance executive who lives in nearby Scottsdale, and love changed the game plan. "We were on the same page about so many things in life," says Mann. This month they'll wed.
Mann and Wally are a conventional enough couple that not getting married never crossed their minds. But these days it occurs to plenty of other couples of a certain age and wealth who are put off by the risk and inconvenience of joining two financially mature households.
It's a matter of security and ease: Had Mann and Wally simply opted to live together, for example, they wouldn't have had to deal with sorting out the ownership of two homes, deciding on a succession plan for Mann's business or protecting the inheritance for Wally's four kids from his two previous marriages.
No wonder that over the past decade the number of unmarried partners over the age of 65 has increased by 70 percent. The decision to wed or not, of course, is between you, your intended and your conscience. But you should realize that, from a cold-hearted financial perspective, the U.S. tax code and Social Security rules don't necessarily come down in favor of marriage for people with a substantial amount of assets.
True, you'll automatically reap certain legal benefits from tying the knot, such as access to employee perks or a greater voice in health care decisions. On the other hand, you may find yourself paying a significant price, from lost income to higher taxes. So whether you plan to say "I do," or "Let's not," be sure to ask yourself these questions first.
Will marrying lower your income?
You no doubt realize that if you're collecting alimony from your ex, you'll likely give that up when you remarry. But you may not have considered the effect on your retirement income. Remarry before age 60 and you'll lose any Social Security income you're entitled to from a previous marriage. Ditto for a pension. "If you're retired or one spouse is widowed, you're often better off just living together," says Kirk Kinder, a financial planner in Bel Air, Md.
But matrimony may triumph in this regard: It entitles you to a cut of your new wife's or husband's pension and Social Security payment, and that sum may be larger than you otherwise would have collected. Get estimates for both scenarios from the Social Security Administration and your company pension-plan administrator.
Will marrying raise your taxes?
You may pay more income tax today if you file jointly, but much greater tax savings could come your way later. You can inherit all your spouse's assets tax-free, but an unmarried partner must pay federal estate taxes on any amount over $2 million through 2009. (In 2010 the estate tax disappears, and the exemption goes down to $1 million in 2011.)
If you plan to sell a home, you'll double how much of your profits are free from capital-gains taxes ($500,000, vs. $250,000 for a single person). Both own homes? Consider living in the place you want to sell and renting the other for two years to qualify for the $500,000 exemption, says Dallas financial planner Sean Monohan. After that, move to the home you plan to keep.
Will marriage increase your liabilities?
As a married couple, you'll usually pay lower auto insurance premiums. You may also do better by joining your new spouse's health insurance plan. As a self-employed person, Mann estimates she'll save $265 a month when she's added to Wally's retiree health insurance plan. On the flip side, being married can legally obligate you to shoulder some big expenses, such as your spouse's loan payments or credit-card debts.
Will it disinherit your kids?
If you have school-age kids, be aware that that your new spouse's income and assets will count in financial aid formulas, possibly lowering any help your children will receive. Adult children can pose a different problem: Because marriage would give your spouse first dibs on your estate, you'll need to draft a new will and possibly a trust with the help of an estate-planning attorney to keep your kids' inheritance intact.
For Mann and Wally, the hassles are a fair trade-off for building a financial future together. They have already made some changes to their wills — Wally is leaving Mann his house (worth just under $1 million) — and their life insurance policies. And the pair are seeking legal advice on how to handle their other assets and their estates. "On the way to the altar, there's yours, mine and ours," Mann says. "And there's trying to keep the romance alive during it all."
Choosing to marry has created some financial challenges for the couple. Monohan offers this advice for a lasting union of heart, mind and money.
- Decide if the business is theirs or hers. Unless Mann and Wally sign a legal agreement specifying individual ownership, the couple would share the income as well as any liabilities from Mann's interior design business. And half would become part of Wally's estate should he die while the business is running.
- Move to her house. Mann plans to sell her condo, estimated to be worth $1 million, eventually. As a single person, she can exclude only $250,000 of her $550,000 expected profit from capital-gains taxes. But if the couple live in the house for two years after they marry, they could keep $500,000 tax-free.
- Use insurance for bequests. Wally wants to leave money to his four children, and Mann hopes to provide for her niece and donate to charities. They could do so by updating their wills, but a simpler method would be to make their heirs, instead of each other, the beneficiaries on each of their life insurance policies.
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