• Posts Tagged ‘marriage’

    To Love, Honor and Financially Obliterate

    by  • July 15, 2010 • Tagged: , , , , ,  • Comments

    underwaterhouse.png

    (photo: lionheartphotography)

    “A lot of people wonder how you know you’re in love. Just ask yourself this one question: ‘Would I mind being financially destroyed by this person?’”

    I first came across that quote hanging on my friend John’s fridge, soon after he started dating fellow friend Fahmi. Since Fahmi was on the verge of trading in her lucrative IT consulting job to head back to grad school, it wasn’t an idle question.

    Happily, Fahmi got her degree, John and Fahmi got married, and they’re now cheerfully bonded and financially stable.

    But for an illustrative example of just how literally that quote should be taken, there’s the tale of Dawn vs. The Leech.

    Dawn (not her real name) has been one of my best friends for a decade. About five years ago, comfortably before the housing boom’s peak, she and her live-in boyfriend decided to buy a house together. It was a pretty good deal: a recently foreclosed, two-bedroom place in a Western city for a tad over $100,000. Dawn had a stable job and could comfortably manage the monthly mortgage payment; her boyfriend, aka The Leech, was a contractor who could handle the house’s badly needed renovations. They bought the house on an ARM, planning to finish the upgrades and refinance the house before it reset.

    You see where this is going.

    Over the next few years, Dawn and The Leech got married and worked on the house, but the renovations never quite got done. Time management is not one of Leech’s strong suits. To finance the renovations, they tapped a home-equity credit line, which added a second mortgage to the house’s debt load.

    Then the economy tanked. The Leech wasn’t getting contract work the way he used to. At the same time, the ARM on the house reset, and the interest rate zoomed past 11%. Once-affordable payments were suddenly a big struggle. Like millions of other Americans, my friends were being bankrupted by their house. Somewhere in here a third home-equity credit line snuck into the mix.

    It’s easy to point fingers (“An ARM — what were they thinking!?”; “Never buy a house unless you have enough money saved to make the payments for uppitygazillion years without an income”; etc etc.), but as they say, hindsight is 20/20.

    Here’s where the situation gets really sticky. Dawn came up with a clever solution to the ugly financial math: move. She’d worked in NYC before moving out West, and had a job offer that would pay about twice what her local job did. With that extra cash, she could afford to keep up the house payments and also get a rental in NYC. So, after extensive discussions with Leech, she moved back East. The plan was that he would stick around for a few months, finish the house and rent it out, then join her in New York.

    It was a pretty cool plan. One that got blown to smithereens a month later when Leech moved his new girlfriend into the house. (Here’s the part I like best: He didn’t want to get divorced. He was pretty happy to stay married to Dawn, keep her on the mortgage … and live with the new chick. Logical thinking is *also* not one of Leech’s strong suits.)

    Now, all of this still could have worked out if Leech had the income to support the house he wanted to stay put in. But he doesn’t.

    Dawn — who was far nicer to him than I would have been — took a fair stab at weaning him off her financial support. They drew up an agreement under which she would keep paying into the mortgages for most of a year, while he got his act together. Which she did.

    A year later, shock of shocks, Leech was still broke. He promptly fell behind on the mortgages, obliterating his already-shaky credit rating and Dawn’s excellent one.

    So Dawn is now caught in an epically nasty situation: She’s getting divorced but is still on the mortgages for an underwater house she isn’t living in and can’t sell without the consent of the house’s co-owner, Leech. The full face value of the loans on the house sits at around $200,000. The house’s market value is maybe 75% of that.

    This has to be a pretty common situation these days, but all the researching Dawn and various lawyers have done turns up basically no good way of dealing with it.

    No lender will refinance the house notes into Leech’s name alone; it’s underwater and his credit is shot to %@$!. The best option is to sell the house, but a) that requires Leech’s consent, and b) it’s probably going to be a short sale, which won’t fetch enough to clear all the notes. The second and third lienholders have little incentive to agree to that — and even if they do, they could then still pursue a deficency judgment for the shortfall.

    So for now, Dawn is stuck taking a credit hit every month that Leech fails to make payments, and remains on the hook for a life-destroyinging giant sum of money. She’s been waiting for more than a year for one of the three lenders to finally get fed up and foreclose, but every time that seems imminent, Leech chucks the lender a small payment and manages to stave it off a bit longer.

    I know the advice, before you co-sign a whopping loan with anyone, is always to be really, really sure you know what you’re getting into. But how can you? Very few people get married expecting to get divorced, and yet, almost half of us do. Neuroscientists keep pointing out that we’re hardwired to be overly optimistic, make irrational choices, and stay in bad relationships.

    So on top of all the many, many ways we now know that buying a house can turn into a debacle, add this one: That mortgage can be more like a marriage. You might end up bound to the ball and chain till death — or something else equally unpleasant — do you part.

    Warm Hands = Warm Finances?

    by  • November 3, 2008 • Tagged:   • Comments

    Brrr! It’s cold outside and the American economy is freezing. But a new Yale University study might help us warm things up a bit. This study showed that simply holding a warm beverage in your hands can help you to think more positively of others. In fact, it can even help you feel that someone is “generous, sociable and good-natured.” So if you and your sweetie are sitting down to have a serious financial discussion this winter, it can’t hurt to make some hot cocoa beforehand!

    Tips For Changing Your Name in Chicago

    by  • October 22, 2008 • Tagged:   • Comments

    Changing your name due to marriage is tedious, but you can limit your frustration by doing things in the correct order and bringing the proper documentation with you. Here are some things I have learned from the process this fall.

    Start at the City Clerk. You’ll need multiple official copies of your marriage certificate. You’ll also want to make photocopies of the marriage certificate, since you’ll be sending copies to lots of institutions.

    Next stop, Social Security office. You’ll need your official marriage certificate and social security card, plus identification. You’ll have to wait about two weeks to receive your new social security card in the mail.

    While you’re waiting for your social security card, change your name on credit cards, magazine subscriptions, professional organizations, etc. These places usually only need a copy of your marriage certificate.

    Once you get your new social security card, head to the DMV. Bring your marriage license, driver’s license, state ID, car title, and registration. They’ll issue you a new registration and license on the spot, but you’ll have to wait for your car title to come in the mail.

    You’ll also want to take your new social security card to your Human Resources department, where they will change your name on your paycheck and tax forms. They will also notify any employee benefits providers such as insurers or banks.

    Once you have your new driver’s license or state ID, head to your primary bank where you have your checking account. They’ll issue you new checks, debit cards, etc. It may take a few weeks to receive your new documents int he mail.

    Once your name has been changed at your primary bank, change your name at any additional bank accounts that are linked to your primary account (such as retirement accounts, online banks, etc.). You may need to mail them a voided check bearing your new name.

    After you or your employer has notified your insurance provider and you have received your new insurance card, call your health care providers and change your name in their records. That will prevent the insurer from rejecting future claims due to your name not matching.

    Do you have any tips for breezing through a name change?

    Newlywed Money Management

    by  • October 15, 2008 • Tagged: , , ,  • Comments

    In the last post, Her did a good job of listing the emergency/insurance financial aspects of being newlyweds. In addition to those tasks, we also have many money management issues that need to be worked out. They are as follows:

    • With the very large student loan payment gift, we’re now left with how we should tackle the remaining loans.
    • We haven’t contributed to any non-employee sponsored retirement plans this year. Maybe we should change that?
    • What are we going to do with the cash we have saved?
    • Since we’re not saving for a wedding anymore, how should we divert the extra cash we have on hand?
    • Taxes! We’re definitely going to have to change our withholding and maybe have to take some last minute financial actions to avoid paying hefty taxes this year. I think I messed up my earlier estimate of our tax situation. We’re also unsure about the large gift we did receive and its tax implications. We’re definitely going to have to see a tax guy.
    • What are our short (1 year), intermediate (5 year), and long term (10+ years) financial goals?

    Ugh, lots to think about. We’ve already been answering some of these questions, but need to make some final decisions. I’ll be posting about the details of each decision in the next few weeks.

    We’re Newlyweds! Now What?

    by  • October 13, 2008 • Tagged: ,  • Comments

    Since we got married, we’ve realized that we have a huge list of financial tasks to complete. Now that we’re a family we need to take steps to plan for and protect our future. There is a lot to do and it’s pretty overwhelming, so we’re going to take baby steps and approach one thing at a time. Here is our task list, which will probably take the next year to complete:

    • Change Her’s last name on all our financial documents. Make sure we are the beneficiaries of each other’s existing insurance policies.
    • Review our current insurance policies. Determine what kind and how much coverage we need, and purchase new coverage if our existing policies fall short.
    • Write wills and living wills. Choose an executor and notify that person.
    • Rent a safety deposit box. Figure out what is supposed to go in it, and put those things in it. This has actually been on our to-do list for about three years, so we need to, ya know, do it.
    • Create a “Just in case” binder of information that would be necessary if one of us were incapacitated or killed.
    • Re-balance our investments to account for changes over the past year.
    • Create a family emergency plan and kit, and notify our families of our plans.
    • Discuss our burial wishes, and plan for the purchase of a plot.

    I got started today by blocking out time this weekend to go to the bank and open that safe deposit box. Baby steps, folks!

    What Financial Turmoil?

    by  • September 30, 2008 • Tagged: , , ,  • Comments

    We’re finally back from 2 weeks of a Mediterranean honeymoon, and apparently our country’s, even the world’s, financial foundation is in deep trouble. Admittedly, it was disconcerting to hear about the economic turmoil when we were abroad.

    But here at home, things couldn’t be better. We’ve received a generous gift of a student loan payment. We have received a boatload of cash gifts from the wedding. We’re enjoying wines and other delicacies from our honeymoon.

    When we returned, I looked at our account and noticed that my most recent salary deposit was higher than the previous ones. While we were gone I received my yearly salary adjustment – a nice increase of 9.5% For those of you who are counting, my salary has increased by 72.5% in just 4 years!

    In the upcoming weeks we’re going to work on a new budget and some new goals now that we’re officially married. Exciting times are coming!

    Two Styles, One System: Communication and Money

    by  • September 24, 2008 • Tagged: , , , , , ,  • Comments

    Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.

    Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.

    If you share openly and honestly your thoughts and feelings with your fiancé or spouse, you are missing out on a great opportunity. Relationships are mutually defined and both need to share to make it work.

    Here are a few examples of how my husband and I handle money in our relationship. Is it perfect? No. Does it work? Yes, because we’re willingly to talk about our common thoughts and our differences.

    Budget

    We keep a Google Spreadsheet to display and organize our monthly bills. This allows us to see what our joint bills are and gives a snapshot view of our individual accounts. I can see how much he puts in his 401(k) and he can see my Roth IRA deposits.

    He’s great at setting up the spreadsheets and I love playing around with them.

    Goals

    Some of my personal goals are to pay off my car loan and my student loans. We also set aside money in our budget for saving. We’re working together: our ‘extra’ money goes to joint savings and to paying down the car loan.

    Investing

    My husband puts aside money for retirement, but is only semi-interested in following his accounts. When he changed jobs and was rolling over his old 401(k) to an IRA, he asked me to look at investments to put them into.

    I get a kick out of learning new things about index funds, stocks, ETFs, etc. While I explained why and how I came up with my suggestions, he just agreed and made the changes. He’s more conservative with his money and his investments are a reflection of that. I tend to invest more in international funds than him, but the volatility is within what I can handle.

    Credit Cards

    I have two credit cards (I’m closing one) while my husband has no credit cards. After learning the hard way about high credit card interest rates, I’ve paid my debt. I generally pay it off each month.

    I use credit cards mainly for convenience and rewards. I normally keep it at home with me. If we go on trips, I use my credit card. He is very adverse to debt and has not found a credit card that ‘he likes yet’. He generally saves until he can buy it, like his car.

    Paperwork

    I’m the paperwork queen. It basically falls to me to organize bill payments and documentation requests. Due to our basic system, it doesn’t take up to much time (5-10 minutes). If there are any issues we’ll discuss in the evening.

    I show him where I keep the files, in case something happens and he needs quick access.

    Conclusion

    It’s an imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for you two.

    Talking it out can help you to understand your partner so much better and help you to build a stronger foundation on future communication, not just with money. Remember also that you’ll discuss these issues as your circumstances change. It’s not set in stone.

    Keeping each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a stronger system.

    How different are the two of you? What do you two agree and disagree on?

    “Mine” vs. “Ours” — A Newleywed’s Case Study

    by  • September 17, 2008 • Tagged: , , ,  • Comments

    Thewriter lives in Chicago, just got married, and writes about money and writing over at The Writer’s Coin.

    For the most part, my new wife and myself have done pretty well when it comes to adjusting to the financial side of married life. We created a joint bank account and the first few months have worked really well — we’re living our lives and we’re putting away a good amount of money. There have been some hiccups along the way, we aren’t the Brady Bunch or anything (nevermind the kids part, that’s a whole other ballpark). We’ve had our fair share of disagreements over things like emergency funds and semantics about targeted savings accounts, but overall we’re good.

    This past month, something new came up that had us clashing again. It’s interesting that such minor things can cause such a lack of understanding between two people that love each other so much. The issue: I get paid twice a month but M gets paid every Friday, which means she’ll have four “extra” paychecks over the course of a year. When I got paid every two weeks, I had the same problem and I just treated it like found money — it went straight into my ING savings account.

    M, however, didn’t see it that way. She would rather have it accounted for throughout the year and taken into full consideration when we budget out how we spend money on a day-to-day basis. This way would give us a bump in the amount of money we have to spend every month. Which is understandable because if you don’t count that money, on paper it looks like she’s not “contributing” as much to “our” finances (marriage invites the liberal use of quotes and air quotes — get used to it) than she’s actually making. So she wanted our budgeting spreadsheet to reflect that money.

    I wasn’t thinking about that and stressed that this was a great way of saving even more money (me being greedy and cheap). Instead of bringing it into the budget (where it would likely get spent, I’ve learned), I wanted to shoot it straight into our joint ING account.

    Then things got defensive. I kind of understood her point, but I still wanted to “win” the argument, prove I was right and get some extra saving going into our coffers. It wasn’t “my” money being accounted for, so what did I care? She could tell and wasn’t going to give in easily. It was late and her last attempt to foil me was to say that she would “forget” to transfer new money over on months where there was an extra paycheck. I countered with this jewel: “I’ll remind you.”

    Now, it was late and we had just gone through our budget, so things were a little tense. So we left it at that and let it soak in for a few days. The next week was an extra paycheck week and I brought it up. We had cooled down a little — I wasn’t out to “win” and she wasn’t out to stop me from winning. We both realized that, in the end, it’s “our money” (there is that beautiful phrase single people dread to hear) and it doesn’t matter how we account for it as long as we end up deciding it together and being responsible about it.

    The lesson? Money makes us defensive and edgy because what used to be “mine” is no longer. Not just with money, with everything. Sharing isn’t easy, especially when it comes to such a contentious thing as money. But that’s the lesson learned here — that money, like everything else, is no longer “yours.” When you marry someone everything becomes “ours” and the sooner you realize that, the easier it’ll be for you to let this kind of this just roll right off your back.

    #1 Financial Priority After Marriage

    by  • August 20, 2008 • Tagged: , ,  • Comments

    Our wedding is coming up and today we had a long talk about the future of our financial priorities after marriage. While we have many financial goals, we feel it’s best to focus on just one in order to make rapid progress. With the recent payment a relative made on Her’s private student loan debt, paying that off has suddenly become feasible in the short term (as opposed to the 29 years left on the loan, we can now imagine paying it off in under TWO years). So that will be our very first financial goal as a married couple. What was your first financial goal as a twosome?

    State of Our Union: How We Talk About Money

    by  • March 30, 2006 • Tagged: ,  • Comments

    He and I rarely argue over money. Instead, we deal with the big issues in a “State of Our Union Address” a few times a year. Every few months when we have a quiet moment, one of us will propose that it’s time for a State of Our Union address. We’ve been doing this for years. We take turns discussing all the big picture issues, like money, values, sex, goals, and relationships. This week we had a State of the Union Address and of course finances came up. Here’s what we discussed.

    Issue: Our consumption does not always support our values. We value environmental and social responsibility, but consumption hurts the environment and uses people. We discussed the range of consumption (from monks who own nothing to millionaires who own a lot) and agreed that maybe we are higher on the scale than we should be. We’ll look for ways to consume less.

    Issue: While we are slowly achieving our long-term goal of eliminating our debt, it doesn’t feel like we are making much progress because we haven’t set up short term goals. We’ll work on setting short term goals so we can feel successful along the way.

    Issue: We didn’t know each other’s plans for retirement and goals for net worth at retirement. We discovered that our plans for late retirement are in synch, which means we’ll have longer to grow our net worth.

    For couples who fight about finances, these issues might sound tough to tackle. But these discussions help us learn about each other and work together, which strengthens our relationship. Here’s how we get through it:

    We often start with a non-threatening, open-ended question.
    He started our Address with, “Have you ever thought we consume a lot?”. This enabled me to form my own opinion and see his perspective, so I felt unhurried and respected.

    We use open body language.
    We usually sit cross-legged, facing each other. These talks can go on for hours, so we usually move around a few times – maybe we start in the kitchen, then move to the couch, then lay on the floor. We try to stay at the same level (both sitting or standing) so we feel equal. If feelings get hurt, we comfort each other by holding hands or giving back rubs.

    We create a comfy environment.
    We might grab a blanket or some snacks, or bring the cats over and pet them while we talk. We turn off the TV and lower the lighting.

    We talk respectfully. We don’t yell or talk over each other. We try to frame things as, “This is the situation” rather than “Look what you’ve done!” We give each other time to think before answering. We gently remind each other when one of us has dragged in the kitchen sink, so we can stay on topic.

    We keep it open. We agree to continue the discussion later if we get too emotionally exhausted. Then we actually do continue the discussion later.

    We hug it off. At the end, we always have a good hug. It helps diffuse any tension.

    Cheap Sex

    by  • January 19, 2006 • Tagged: ,  • Comments

    Sex is fun, and even more so when it’s cheap. We use the birth control pill to stay safe and get giftcards. Yep, giftcards! A lot of pharmacies (CVS, Walgreens, Dominick’s, Target, and Kmart are some in our area) are in competition with each other and are offering coupons for a free gift card (ranging from $10 to $25) with each new or transferred prescription you fill at their pharmacy. The coupons come in weekly mailings, the Sunday paper, and coupons that print with your receipt. If you can’t find them you can always buy them on ebay for a couple bucks each. So every month we refill my prescription at a different store and earn a giftcard for that store. In the last year we’ve accumulated over $200 in giftcards from my prescription purchases! Cheap sex rocks.

    the Value-Based plan

    by  • January 19, 2006 • Tagged: ,  • Comments

    Having read the same article on wealth and marriage (see below), I wanted to add my take on it. For me, it isn’t so much about the consolidation of expenses that leads to extra savings for couples. During the awful experience of finding out how deeply in debt I really was, my fiance and I bought some personal finance books. David Bach, author of Smart Couples Finish Rich, recommended writing down a list of your values, then converting these values into a value-based financial plan. Together we identified our individual and couples values. Our list of values included Good Health, Personal Growth, Quality Time Together, and Financial Security. Notice that “$500 shoes” was not a value on either of our lists! With this in mind, we were able to prioritize our spending. Instead of wasting our money on things we don’t value we now try to spend on things we do value. For us, the recent expense of a $700 health club membership for my fiance was a reasonable part of our financial plan. Before we created a value-based plan, spending $700 on a health club would have been hard to justify.

    So this brings me back to the article about net worth and marriage. I think that an important reason why we are saving a lot more money now than when we were single is that now we are both spending and saving towards our goals. This double-sided approach helps us see both our expenses and savings as part of our net worth goals. We remind each other regularly of our values so instead of feeling deprived of new shoes, we feel stronger in our relationship. It’s nice when money is a source of strength rather than conflict.

    Marriage = wealth?

    by  • January 19, 2006 • Tagged: ,  • Comments

    According to a recent article on CNN Money, research shows that married people build more wealth than their single counterparts.

    Well, duh.

    “I think it’s really one of these really simple stories that two can live cheaper than one,” said Zagorsky, a research scientist at the Center For Human Resource Research at Ohio State.

    Theoretically, all of the bills get halved: mortgage/rent, utilities, water, cable. Everything is shared: food, furniture, pets. Sharing goes a long way towards saving.

    The other thing that couples have that singles don’t: accountability for bad money decisions. Let’s face it, all of my friends are in their 20′s, and for the first time are getting large paychecks. They like to party. They like vacations. They like playing poker five nights a week until 5AM. I don’t think that the fiancée would be so kind if I blew more than $100 on poker. On the other side of the coin, if the fiancée came home with $500 in shoes (whether it be one or more pairs) I’d be pretty disappointed.

    When it is more than your own personal finances at stake, you tend to be much more careful where the dollars go.