Till Debt Do Us Part
Mary Staton, co-author of Worry-Free Family Finances®, is interviewed by the Charlotte Observer, June 6, 2005, Amy Baldwin.
Learn Some Lessons from 4 Young Couples on How to Handle Finances Without Straining Your Marriage
June. The month we associate with wedding bells. But when the honeymoon is over, a major source of marital discord often is money. You know how it goes. He's cheap. She's frivolous. Budget? What budget? Too much debt, not enough savings. Stress. Angst. Arguments. I caught up with four young couples - three of them married and one about to be - and asked them to share how they handle their home economics. Then I turned to experts in matters of the pocketbook to offer their opinions. The lessons learned: There's no right way. If one approach isn't working, try something different. And, talking to your partner about your money and financial goals - well, it's priceless.
Breaking Up Is Hard
Nobody likes to think about divorce. But let's face it, lots of marriages end that way. Here's how division of property works in the Carolinas. (It made me hope I am never divorced.)
Equitable Distribution of Assets: When a married couple in N.C. or S.C. splits and needs help dividing their property, one or both members can ask the court to apply a law called "equitable distribution of assets," said Tia Hartley, a lawyer who focuses on divorce at the Charlotte firm Browne Flebotte Wilson Horn & Webb.
In layman's speak: Most everything acquired during the marriage is split down the middle, 50-50. And it doesn't matter who's name is on the asset, such as a house, stocks and savings, or liabilities, such as car loans and credit card debt. "Everything gets put in this big pot," Hartley said.
Remember, you have to ask for this treatment. It's not automatic. If you don't and only your husband's name is on the beach house, then he gets to keep it.
Assets and debts acquired before the marriage can be excluded. For example, student loans - for schooling before the marriage - are excluded, which is why finance experts advise against consolidating loans with your spouse. If you split, that loan dates back to your marriage - not before it - and you could be on the hook for half the total loan even if your portion was smaller.
If you owned a house before you got married, you could seek to exclude it. But it's tricky.
BUT : There are about a dozen factors that can skew the equitable distribution. Among them: whether one spouse helped the other spouse go to college and whether the parent with custody of the children is raising them in the house the couple jointly owned.
And, there are two types of assets - gifts and inheritances - that don't count as marital property and are not divided among the two parties.
Kurt and Erin Culbert
Married September 14, 2002
Their Financial "I DO'S"
The Culberts, both 27 and public relations executives who live in Salisbury, maintain joint checking and savings accounts. Before buying nonessential items that cost more than $75, they get the other's OK. He does the budgeting. She pays the bills and reconciles the checkbook. They strive to save between $300 and $500 a month. Most important, she said, they talk about their finances. "We both know where our money goes and that gives us peace of mind," said Erin, who works for the Catawba Lands Conservancy. They've never had a "knock-down drag-out" fight over money, she said. "Fortunately, both of us are relative savers," she said. "We don't have a lot of complications."
Third Party
"It sounds like nirvana to me," said Brent Dees, a certified financial planner at Brent Dees Financial Planning in Charlotte. "They are doing it the right way. They are discussing what they are doing, like major expenses. Seventy-five dollars might be major to some and minor to others. The number is not important. It is that they have decided on what is a major purchase and what isn't. There needs to be discussion between couples."
Robi and Lauren Lawrence
Married October 25, 2003
Mondey - His, Hers and Theirs
At first, the Charlotte couple combined all their money. But it was hard to get a handle on their spending, said Lauren, who's 30 and handles corporate client complaints for Wachovia Corp. They'd forget to tell each about their purchases, such as how much they'd spent on groceries or gas. "Each month it was like, 'Why are we running out of money?,' " she said. Starting in January, the Lawrences tried something different. They now have three checking accounts: two individual ones and a joint account for household expenses. Most of their money goes into the joint account, which funds all the bills. For individual discretionary purchases - from clothes to lunch - they use their own checking accounts. She puts $225 from each paycheck into her checking account, while her husband, 31 and a mortgage closer HMBI Inc. in Charlotte, gets $275 because he drives a Ford Expedition. They each contribute $125 a month to a joint savings account and are on track to meet their goal of saving $3,000 by year's end.
Third Party
"They have found what works for them. They have clearly recognized that it works best that they split their personal money, always ensuring there is enough in the joint account to pay the household expenses," said Eric Clark, certified financial planner with Rinehart & Associates in Charlotte. "It is all about figuring out what works for the individual couple and executing."
Brian and Tricia Crenshaw
Married March 18, 2000
Their Financial Merger
The Crenshaws, who live in Belmont, recognize their individual strengths and weaknesses. Brian, 31, is a spender. Tricia, 29, is a saver. What works for them: having a joint savings account but separate checking accounts and divvying up expenses. Brian, an account manager at Carolina Public Relations, pays all the fixed bills, such as the mortgage, from his checking account. Tricia, a chemist at Milliken Chemical in Blacksburg, S.C., handles all variable costs, such as food and entertainment. "She is the stronger person, who can say, 'We don't have any more money. We have to eat Ramen noodles for the rest of the month,' " he said.
The Crenshaws, who are expecting their first child in the fall, also are working to build a nest egg. They each have 401(k), traditional individual retirement accounts and Roth IRAs. And they try to put away $500 a month in savings.
Finally, they each get $150 a month for "no questions asked" spending money.
Third Party Perspective on their Union
"They seem to understand each other's personalities, which is really smart for a couple. Most couples go into a relationship with different styles. The $150 no-questions-asked money - I love that. Everybody needs some mad money," said Mary Staton of Charlotte, who along with husband Bill Staton wrote the book, "Worry-Free Family Finances," published in fall 2003 by The McGraw-Hill Co. "And, they are putting money aside for their future. That is really great."
Will Holman and Jenny Pruitt
Will marry October 21
Their Dollars and Sense
Soon after the couple - both lawyers in Charlotte - became engaged two years ago, they merged their checking and savings accounts. They say it gives them a clearer idea of how much money they have to spend and how much they can or should be saving. "It works better because we see everything we spend. It has helped us increase the amount we put into savings. I would say, 'Oh my god, you spent $16 on lunch today,' " he said laughing. " 'It just feels like we are spending each other's money.' " But Holman, 28, knows his intended also has a good case about his spending. He recently underestimated how much new suits would cost them. (They've vowed to discuss advance purchases that are expected to exceed $200.) Holman's suit bill: $2,200. "We estimated $800 to $1,000. I knew he needed the suits. I didn't know it would be quite that much," said Pruitt, 27.
Third Party
"I agree that one account is easier to track. It is much easier to reconcile and usually costs less," said Cynthia Anderson, a certified financial planner and head of Anderson Financial Planning Inc. in Charlotte. "They do need to set some kind of limits and stick to them. I disagree that someone should feel bad about a $16 lunch because it is the other person's money. I like their idea of if it is over X dollars, they need to talk about it. I am surprised that when he wanted to spend $800 on suits that ended up running $2,200 well, I would have expected a call saying, 'This is running a lot more. Is this wise or not?"
