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Be Cautious About Merging Your Money With Your Honey

By Michelle Singletary
Thursday, February 24, 2005; Page E03

The couples who are most successful in managing their money are those who communicate early and often about money, agree on goals and roles, and recognize that essentially they are partners in business together, says Joan L. Gulley, chief executive of PNC Advisors, a major wealth manager.

Oh, if only it were that easy. Clearly love does not conquer all when money is involved, as evidenced by the many questions I received recently during an online discussion for couples. Here are some of the questions I didn't get to and my answers:

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_____Column Archive_____
Embarrassment of Riches (The Washington Post, Feb 20, 2005)
Loan Terms Can Make It Hard to Climb Out of the Subprime Pit (The Washington Post, Feb 17, 2005)
Read Michelle's Past Columns

I have good credit, but my fiance has bad credit (collections, liens, judgments, late payments). Once we are married, he wants to turn over his paycheck to me to manage, so no concern there. My concern is my credit. I have a job that requires I have good credit. What do I do about getting joint credit cards? He is going to want to get joint cards, but I can't have him do that until he learns how to control his spending. He always just picks up and moves when things get bad financially.

First, plan on a long engagement. Don't merge your money with your honey until he's shown that he can handle his credit in a more responsible way, especially since your job is on the line. And turning over his paycheck to you once you get married won't necessarily end his bad financial behavior. You are headed for trouble if you don't resolve this issue before you walk down the aisle.

My new hubby has about $12,000 in credit card debt. He also has $10,000 in a certificate of deposit that we want to put toward a new house. Should we use that money to pay off the credit card debt or hold onto it and put it toward closing costs for a new home that we hope to buy sometime this year?

Use at least half the money to pay down that credit card debt. Why only half? Because you want to be sure you have some emergency money saved. Besides, you may get a better mortgage loan if you're not maxed out on credit. Perhaps you should put off buying the house this year. You have some more saving and debt reduction to do.

My husband and I are in the same line of business, and we are interested in embarking on a new business together. We have a business plan and could get a loan for the start-up. My dad has offered to give me the money for the business, provided I become the sole business owner for the first 10 years and simply give my husband a salary. We have been married only one year. I understand my dad's desire to protect the money, but I also feel like this is kind of an insult to my husband. What do you think?

I think you're not daddy's little girl anymore. Don't treat your husband like an employee when in fact he's your life, and potentially your business, partner. If you accept your dad's money under his terms, what you would be saying to the man you married is: "Honey, I promised to love and honor you, but my daddy says I shouldn't trust you." Tell Daddy Warbucks thanks but no thanks and get a loan from the bank -- unless his money doesn't come with a demand that you insult your husband.

My boyfriend and I have been living together for six months. He makes a good living, with no real debt. On the other hand, I have awful credit but a home with a lot of equity (owe $110,000 but house is worth $225,000). I pay the essentials on time but my (unpaid and delinquent) debt -- about $6,000 -- is sitting out there festering on my credit report. My boyfriend wants to buy a new home. He doesn't know how bad my credit is. Should I tell him or wait until we decide to try to purchase the house? A large portion of the sale of my house would go to the down payment of the new house, so I would be contributing something besides a poor credit rating.

What you're contributing to this relationship is dishonesty, and that's not how you build trust or a sound financial future. Come clean about your credit. Clean up your credit (as in, start taking responsibility for those delinquent bills). And think long and hard about whether you want to buy property with just a boyfriend.

In my next column, I'll announce the winners of the "Honey, I Need Some Money Contest."

Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com. Comments and questions are welcome, but because of the volume of mail, personal responses may not be possible. Please also note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.


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