Marriage Debt and Accounts

There is so much to know and so many lies to be reveled concerning how debt will be reviewed once married.  The first myth I want blow is that your debt becomes his/her debt.  That must be put into context, yours spouses debt is only yours when you pay them together monthly from your joint budget.  If your spouse had credit card debt, tax debt, real estate debt, car debt, and so on prior to marring you then legally that debt is not your financial responsibility.  That is good news if your spouse passes prior to the debt being cleared, you are not responsible unless your name is listed as co-owner.  The draw back is they can come after the estate, if there is one and the spouse is listed. 

The second myth is your credit takes on the same effects as your spouses.  The truth is your credit doesn't become his/her credit unless you are purchasing a large dollar item together.   They need to view both your reports to make a decision, but it still is not the same information.  It doesn't mean that prior debt has now been absorbed by you, it just means they are looking at your numbers together to see who is the weaker link and who should be named first, which is the person with the higher FICO score.If you and your spouse do not share credit than your scores will be different and will require different attention.  Sharing credit means you made credit application requests together.  If a purchased items is only in one persons name than the other will not benefit from the on time payment, nor will they suffer for the late payments.  This is why it's important to know before purchasing large dollar items who should apply or both.  

Another myth is having a joint account requires both signatures to pull out all the money, it may to close the account, but not to move the money. You will need to verify that with the bank prior to adding a person or opening the account.If one spouse owes creditors and a bank levie is approved then a joint account can be seized.  In the event that happens there are steps you can take to clear it up, but be prepared to wait.  So, didn't think that just because your name is on it as well they can not accomplish this.  You would have to go through legal means to get it resolved as far as what belongs to the other spouse.  Also, all names on an account at the same financial institution allows for right of off set for the bank.  Meaning, if one account holder over draws an account and their name is listed on another they can clear the negative balance with the position account; as long as the funds are available.  If there is the possibility of this issue arising you may want to consider having separate accounts until it is resolved.  You will always have the option of adding your spouse to your account as a beneficiary.  Meaning, they will have access to the money in the event something happens to you.

The same applies to tax liability that was already existing prior to the marriage and that which occurred during the marriage.  You are only financial responsible for tax debt when you file joint, otherwise you are only responsible for your own debt.  Filing a joint return says that you accept responsibility for that tax year only, but there is a way to avoid this by filing separate or you will have to seek advice from a tax attorney to prove the tax debt was not personally yours.   I will get more in dept with this topic in a later post.

I hope you get the jest of what I am saying when it comes to making financial decisions.  You must know your rights as well as know how to utilize credit.  I have a blog coming soon to explain why it is important to establish credit.

Why do I need credit?

I have been asked this question so many times I have lost count.  Many people are so afraid of debt that now they are questioning if they should establish credit.  Well, the answer is yes, you need credit because all major purchases requires it, jobs consider it, and insurance companies utilizes it.  At some point you are going to want a car, house, or another big ticket item.  You must have credit established to be considered worthy of making major purchases, unless you have saved all the cash you will need for the purchase.  Even if you don't use the credit for purchases they now look at your credit report for jobs and insurance to determine if you are responsible.  What you must understand is that just because you have a credit card doesn't mean you have to use it.  You really only need major credit cards, due to department store cards only have the one purpose and usually the interest rates are awful.  If you must have a department store card I would say Wal-Mart due to you can get food, clothes, home and office supplies, and fix your vehicle. 

When selecting a credit card check to see if there is an annual fee as well as if the provider will close the account if there is no activity on the card.  Some providers will close your line of credit if you do not utilize the card, which forces you to make purchases during the year.  There are other providers which will only close your card upon your request or due to non payment.  Establishing credit is not to be taken lightly, it is a major step and you must do your homework as a consumer.  Do not just apply for credit due to the merchant is offering a discount from the bill, due to you will most lightly not pay it off at the end of the month or you will keep using the card.  These cards usually carry a high interest rate and you don't know what limit you were approved for or the interest rate.  If you don't pay off the card you may very well offset the discount you received with the interest you will accrue.  Credit can be your friend or your enemy, depending on how you treat it.

Relationships and Money

There are some many directions to go with this topic, but I will try to stay the course.  I believe this to be a very important topic especially in these financial times.  I'll begin with a question as to how you handle your finances in your home?  Do you know how much money your spouse makes?  Do you know how many credit cards your spouse has and what is the outstanding balance?  How much of a  payment does he/she make toward debt monthly?  Do you know how much it takes to run your  home financially?  I ask those questions, due to some many people do not know the answer to any of them or they may know the answer to one of two of them.

Lets break it down by each individual question.  How do you handle the finances in your home, is important to address; is it individually or a group session in your home?  In an effort to limit the amount of stress on one partner, how money is spent should be decided together. They have a saying, which says, "whoever controls the money has all the power."  That doesn't seem like a even scaled marriage.  Who wants to feel underpowered in a relationship that is to last a life time?  To keep everybody in the know and the level of power equal handle your home finance together.  That does not mean you have to have a joint account, but you should both know how to work the budget.

Next, Do you know how much money your spouse makes?  This is a strange question for me to ask personally.  During my career I have come across men and women who had no idea of how much money was actually coming into their home.  I do not understand how you could live with someone and not know how they handle money or how much money they make.  You must know the answer to this question in order to credit a budget and to create the best financial future possible for your family.  How can you build an emergency or savings account when you don't know how much is really left over at the end of the month.  You are unable to plan for college or much of anything else.  This should not be a secret among partners, because partners share. 


This is a big one, How many credit cards and what is the outstanding balance for your spouse?  It is shocking to me that many couples have no clue to this question either.  You can see how this would go hand in hand to knowing how much money is actually coming into your home.  If you knew the answer to the the prior question, you should be able to answer this one.  There are couples where one spouse has two cards and another has 20, but the other spouse has no knowledge.  During a financial counseling session is not a good way to find out this information.     Unknown debt can cause undue stress in an other wise good marriage.  This includes student loans and tax obligations. 

What if you knew how much money your spouse made, but when you got married you didn't see it.  You should have asked this questions: How much of a payment does he/she make toward debt monthly?  It makes no difference it you know the answers to the other questions if you don't know this one.  If you or your spouse are struggling by yourself more often than not you will struggle together, especially if there is no budget made.  The only area of the budget that will be freed up when two becomes one is the loss of one paying rent and utilities, but then other bills may increase when bringing a family together.  You may need more space, which means a higher payment, which takes some of the money you just saved in moving in together.Be aware of how much the monthly payments are prior to marriage or at least as soon as somebody becomes frustrated.  You can not have two homes operating as one financially under the same roof, there will be confusion and separation.

The last question is, Do you know how much it takes to run your household?  If only one person is handling the money then your answer will be no.  You must think ahead, what if something were to happen to the one handling all the financial issues, how will the other spouse handle the new position.  Are all the the bills handled online and if so where and what are the passwords.  Does it take both incomes to keep all the necessities operating?  You must sit down as a couple and pay your bills in order to keep the harmony and stress spread out evenly.  Doing so will also help you to answer the other questions I have asked within this post.  Be realistic when creating your family budget and be willing to sacrifice for the bigger picture, based on necessity not wants.

There is no more coming together than to do it with the family finance.  Doing it together keeps the pressure off only one spouse and it could keep many money arguments down.  If you both are in agreement and aware of what is happening then there should not be a lot to argue about in that area.   During this economy many marriages have suffered and I would hate to see a marriage fall apart due to money and the stress it can bring.  You must discuss, prioritize, and budget together, while sticking to your decisions and if there are changes to be made do them together.  Preferably you discussed all this before you got married and if not please start now, but if your already married it is never too late.  Don't wait for the tide to come before you buy the boat or life vest.