Till Debt Do Us Part--Coming Clean Financially Before Saying "I Do"

Recipes for resolving conflict

With this ring I thee wed. I promise to love, honor, and assume all credit card debt, your unpaid student loans, and your penchant for buying a new car every two years. And, by the way, honey, how are we paying for the rings and the honeymoon?

Posthoneymoon checklist

If this sounds harsh, consider this: "Money matters tend to be the No. 1 reason for divorce," says Rudy Cavazos, director of corporate and media relations for Money Management International in Houston. And with half of all marriages ending in divorce, that's a lot of fighting about money. Wouldn't it be a lot smarter to sit down before you decide to set the date and have an open, honest conversation about money?

"Everybody has a money story," says Dr. Pamela York Klainer, author of "How Much is Enough? Harness the Power of Your Money Story & Change Your Life" (ISBN 0465037488). She suggests that couples take the time to write their own money autobiography that explains significant life events, how money played a role, and the impact it had. Exchanging money stories can help partners understand how each of them feels about money and the amount each needs to feel successful and safe. Understanding each other's money story also can help couples learn to negotiate compromises in the partnership.

Check with your credit union for information about interest rates, credit limits, annual or late payment fees, and cash advance limits.

Klainer says that money has a literal meaning—the means by which we buy goods and services—and a symbolic meaning—a "stand in" for love, approval, and power. When partners don't understand each other's money story it may be hard to distinguish whether the fight is about money's literal or symbolic meaning. "Coming to terms with your money experience can bring you to a much greater level of intimacy," says Klainer.

While opposites may attract during courtship—say he's very fiscally disciplined and she's a free spirit—things can change as the relationship develops, says Susan Zimmerman, author of "The Power in Your Money Personality" (ISBN 193164618X). "When they get married, it can be the root of some financial trouble. The conservative one sees too much money flying out the window, and instead of being thrilled, he or she is now resentful and angry." Unfortunately, money issues and values rarely are discussed before the wedding, which can lead to unpleasant surprises after the honeymoon is over.

Money talks
Before marriage, it's imperative that couples sit down and talk turkey about money:

Come clean financially. Both parties should list and share information about all their finances, including salaries, savings, investment, real estate, and debt. Depending on the assets they're bringing to the marriage, either or both parties may wish to first speak with an attorney about a prenuptial agreement.

As for debt, Cavazos encourages couples to pay off their individual debts before marriage whenever possible. If one partner has a troubled credit history, it will affect the other partner's as soon as the couple files any joint applications for credit. Also, new joint account activity will appear on each partner's individual credit reports in the future, so take care to pay all bills on time.

Set short- and long-term goals. These would include such things as vacations, additional education, buying and furnishing a house, and even dreams of an early retirement. Once the goals are set, couples can create a spending plan to reach them. A solid spending plan includes becoming money-wise, so check with your credit union for information about interest rates, credit limits, annual or late payment fees, and cash advance limits.

Plan for parenthood. Cavazos encourages couples who want children to discuss the financial issues early on. Will one spouse stay at home? Or work part-time? What are each person's expectations? Once you agree on the basics, establish a plan to make it happen.

Decide who will pay for what. Incomes may vary and so may expenses, so it's important to agree about who's responsible for what share of the bills. "Each part of the couple ought to have some discretionary money where they can do what they want with it," says Klainer. Couples may opt to maintain separate checking accounts for their "mad" money, but contribute a portion of their paychecks to fund a joint account that is used to cover shared expenses.

Before marriage, it's imperative that couples sit down and talk turkey about money.

Zimmerman says a couple needs to have an umbrella of understanding that each of them will live within an established boundary. For example, anytime one of the partners wants to spend more than a set amount of money, they'll first discuss and agree on it. But each person's discretionary spending allotment should be enough "so they don't feel so emotionally deprived that the urge to splurge takes over and sabotages your plan," says Zimmerman.

Decide who pays the bills. Whoever pays the bills should keep the other partner informed. Cavazos recommends that couples set aside anywhere from 30 minutes to 60 minutes one day a week to discuss money issues. "Treat it like any business meeting with an agenda. This is not the time to vent or point fingers, it's the time to check in on short-term goals, and any changes in the monthly spending plan."

Credit checkups
"Credit reports are a wonderful tool to find out where you're at financially," says Cavazos. He advocates that couples exchange credit reports before they get married, and thereafter order copies once a year to ensure everything is in order. Besides keeping each other honest, credit report reviews may turn up reporting mistakes and fraudulent credit card activity that can tarnish an otherwise solid credit history. It's especially important to verify information in your credit report before applying for credit to fund big-ticket purchases like homes and cars.

If you're denied credit due to information in your credit report, you can get a copy for free, otherwise there's a small fee. The three major credit bureaus are Equifax, Experian, and TransUnion.

Published May 20, 2002