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Color of Money Book Club: Love and Money

Personal Finance

Michelle Singletary and Jeff D. Opdyke
Washington Post Business Columnist and Author of Love & Money: A Life Guide for Financial Success
Wednesday, February 16, 2005; 12:00 PM

This month's selection for the Color of Money Book Club is "Love & Money: A Life Guide for Financial Success," by Jeff D. Opdyke (John Wiley & Sons). According to Michelle, Opdyke offers up stories "about his own struggles with managing money with his wife of 13 years, Amy. Opdyke skips the technical stuff you often find in personal finance books aimed at couples. If you are fighting about money, you don't need a book to tell you which mutual fund to buy."

Opdyke joined Michelle online on Wednesday, Feb. 16, at noon ET to answer questions about dealing with money issues with your partner. A transcript of the discussion is below.

_____Michelle's Column_____
The Color of Money

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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washingtonpost.com: Read Michelle Singletary's recent column on Opdyke's book: "Love and Money, Hard to Uncouple."

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Michelle Singletary: Welcome folks. Sorry for the delay. This is a hot topic so let's get going.

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Rockville, Md.: How can I convince my husband to put more than $50 into our savings? He makes over $150k a year and feels that socking money away in his 401(k) is enough. I tell him that he should pay himself first...or better yet pay "us and our future" first but he seems to never get around to it. Any convincing argument to tell him, because it seems that i have tried them all.

Jeff D. Opdyke: Saving in a 401(k) plan is the smartest thing any worker can do, assuming you have access to one. If your employer matches part of your contribution, you're getting free money. you can never beat free money.
but the problem with relying on a 401(k) plan solely is that this is money you cannot/should not tap in emergencies. but if you don't have an emergency savings account, you end up having to raid your only source of immediate savings: your 401(k) plan. That will impose taxes and penalties on you if you're under 59 1/2 years old. thus the best argument for getting your husband to save $50 a week (or more if you can afford it) is to ask him: What happens in an emergency and we need cash and the only thing we can tap is your 401(k)? How are you going to feel about that?
saving in a 401(k) is necessary. Saving outside a 401(k) is mandatory.

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Woodbridge, Va: Hi Michelle,

My name is Tia and my boyfriend and I have been living together for seven months, and we live paycheck to paycheck. We hardly have enough money to pay our bills on time. I go grocery shopping every two weeks because lately I cannot afford to go weekly. I've been stressed out about this issue for a while. I'm in the process of finding a second job and trying to go back to college to get my degree. I don't know what to do about our financial situation, Please help me in this matter.

Thanks,

Tia

Jeff D. Opdyke: Tia, consider a "spending plan." most folks would call this a budget, but budgets tend to be too confining, particularly mentally, because people feel like their budget is telling them what they can and can't spend on. With a spending plan, you're in control. you write down each month exactly how much money you have coming in. then you write down the fixed bills you have to pay (rent/insurance/electricity/etc). The remaining cash is your discretionary income. and you get to decide how you want to spend it. you allocate it to what is most important in your life that month. the benefit of this approach is that it gives you back control over your money because you get to make the decisions on what to spend. if you really want three lattes a day at the local coffee house, that's fine, so long as you recognize you can't buy pizza every monday night, too. better yet, it will give you a very immediate grasp on how your money is flowing through your life and that can give you good insights on where you can cut spending.

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washingtonpost.com: Stay tuned. We're having a few technical difficulties.

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Sacramento, Calif.: Hi Michelle and Jeff,
Hope you can help me. My boyfriend has about $10k in credit card bills. I have no debt other than student loans. We're talking marriage, and I'm wondering what is the best way to deal with this debt. I'd like to have the conversation now rather than later. I have money in a 401(k) that I could take out (I'm only 25 so I have time to make it back, but know I'd lose money in taxes) to pay off his debts. Bad idea?

Michelle Singletary: First what a great girlfriend you are to want to help your honey. But (and you must have known there would be a but) the two of you really need to talk about this debt issue. I believe if you do get married then it's a joint problem. But girl, it's not your problem to solve until you are married. Help your boyfriend find resources to pay down his debt but DON'T USE ANY OF YOUR 401 (k) even if you do get married.

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Bethesda, Md.: Congratulations on your book, Jeff.

How would you handle a situation where one spouse is a good saver, but the other spends money like there's no tomorrow?

Jeff D. Opdyke: this goes back to the spending plan i mentioned in a previous post. the spending plan forces financial honesty onto a couple because it requires both partners make known their financial needs/wants each month. that will force a profligate partner to see his/her spending demands in relation to the couple's income. that realization on a month-to-month basis speaks far louder than your admonitions.

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Richmond, VA: Ms. Singletary:

I appreciate your articles and look forward to your work like a letter from a wise friend!; I am a pastor and during premarriage counseling with dual income couples I tend to recommend Yours, Mine, and Ours bank accounts. What is your opinion about this? Any potential drawbacks?

Michelle Singletary: Well hello and thank you so much. Now can I fuss? My pastor only preaches "our." Remember it does say in Genesis 2:24: "Therefore a man shall leave his father and mother and be joined to his wife, and they shall become one flesh."
Become one flesh. There's no qualifier in that statement. One flesh. One everything, including financially.

So I believe and so does Jeff in his wonderful book that couples should merge their money. And why? Because far too often (tho not always) separate accounts means people don't fully disclose what's going on with their money. Spenders continue to spend unwisely and savers continue to worry that his or her honey spender isn't saving enough. Of course merging your money means you MUST communicate for it to work.

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Washington, DC: I am a recent newlywed who has been struggling with the concept of a joint checking account. A joint savings account is fine, but when it comes to checking, how can you effectively manage an account with two people drawing from it?

Thanks!;

Jeff D. Opdyke: In my opinion, joint checking is the only way to go. With my wife of 13 years I have tried every permutation known to this world, and the joint account is the easiest, most efficient and most honest when it comes to relationships. they are easy to manage. you just have to realize that you can go buy a $1,000 pair of Jimmy Chu pumps just because they go well with a new dress. And your spouse can't go spend a grand on some oversized golf club just because it will help shave a stroke off the golf game. don't raid the account each week via the ATM. each person can be responsible for $x amount of personal dollars each week, or X% of their income. but the couple must talk about expenses beyond that. this way, you always know how much is the in account, and how much is likely to be there if you both used every penny of your allotted money each month.
it really does become second nature after a while and neither of you will pay much attention to it. and your finances and relationship will be stronger for it.

Michelle Singletary: See pastor. Jeff agrees!

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Washington, DC: This is for the first poster who can't get her husband to invest in a savings account. The easiest way to do this is by a second payroll direct deposit into a separate account such as a money market. Psychologically the easiest time is when he gets his next salary increase. He won't miss what he hasn't been seeing.

Michelle Singletary: I like this answer except make the deposit automatic into the joint savings account. But you are right that making savings automatic (by having the money taken out before you get your hands on it) it the way to go. And ditto on the raise thing. That's what I do everything I get a raise.

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Chicago, IL: Hi Michelle & Jeff:

I am a stay at home mom of two boys. Six months ago, I presented to my husband a detailed spreadsheet of our actual expenses by month. He was surprised to see that the cash withdrawals he was making each month equals approx. 15% of his monthly take home pay. He spends it all for his own personal spending. He makes 100k/year. He said he will try to cut down on his spending and even give me receipts for items he purchases. Up to now, there has been no changes. I have been living like a miser to compensate for his spending and he sees that. Can you suggest ways to approach him about his spending habits?

Thanks for your advise.

Jeff D. Opdyke: Again, this goes back to the spending plan. but both people have to buy into it. you might have the best spending plan in the world, but if your husband doesn't keep up his end of the bargain, then it's all for nothing. there is something else going on. he might be exerting his power through his paycheck and his spending and feels since he makes the money he's responsible for how it's spent. he might not say that directly, but he has to step up and take responsibility for his own adherence to the family's spending plan. since you're a stay-at-home mom, you're earning your pay by caring for the kids and the house...that pay is part of his paycheck. he has to realize that, and realize that he is spending your income as well.

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Great Crossing, KY: My wife and I both work outside the home and have settled on a very simple financial plan that seems to keep us from fighting about money. It goes something like this...what is mine is hers and what is hers is hers. Since we have taken this approach, I get the peace I crave and she can't complain about not having enough money because aside from the monthly bills which I pay.....she has it all!;

Michelle Singletary: Yup -- except a husband. She's really got a daddy :). So I'm half kidding you. But maybe it's time she grew up and realized what's hers is yours and what's yours is hers and then you guys can begin to use the "our" word when it comes to your finances.

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Washington, DC: Michelle, I'd just like to share my story. My fiance and I are living together (I know, you disagree!;), and we plan on joining our finances when we get married in a few months. But before that, we decided to input both of our finances into the MSMoney tracking software and create a joint budget. It has been a true learning experience, and has helped us build trust and a level of comfort in making the big leap. We know where our funds go, and it requires us to have the difficult conversations about spending, goals, etc. We both have come from different family and financial backgrounds, and this experimenting with budgeting has really allowed us to find a comfort zone before we sign on the dotted line. Thank you so much for your advice and positive voice!;

Michelle Singletary: Wow. You are so nice even knowing I preach against shacking up. Seriously, I appreciate that you see my goal is just to give good advice (not pass judgment). So now go get married. (and don't you dare spend a fortune on a wedding.) You are already having your cake :)

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Rockville, MD: Again, I tried this one too and you know what he did? Called me a "controlling -----" and took out MORE per month. No, he NEVER told me when he made withdrawals too.

I presented to my husband a detailed spreadsheet of our actual expenses by month. He was surprised to see that the cash withdrawals he was making each month equals

Jeff D. Opdyke: There are serious underlying issues of control at play here. he is exerting his power passively by taking more money. this is a situation for a financial counselor to get involved and hold a mirror up to the relationship so that your husband can see what he's doing. he is diminishing you by exerting control over what he sees as "his" money. that's unfair.

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Fort Washington, Md.: What is the best question people should ask themselves (and their significant other) before marrying, moving in together, co-mingling financial affairs?

Jeff D. Opdyke: as romantic as this is, get a copy of each of your credit reports/credit scores. the information is a great way into discussions about consumer debt and saving. if there are numerous instances of late payments or there's a low credit score, talk about why that's the case and how you can both work together to improve the situation. But DO NOT belittle or mock a partner's financial shortcomings on these reports. it will only lead to defensiveness and force your partner in the future to be very leery of discussing finances with you.

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Bethesda, Md.: Can you recommend key topics for discussion and decision for a young couple?

Jeff D. Opdyke: key topics: How do you feel about taking on debt? how do you feel about saving 10% of your salary? what does your credit report look like? how do you feel about managing family finances from a single checking account? if you came into an unexpected $5,000, would you save it or want to take a trip or buy a new car? how can we begin saving for a house now?

Michelle Singletary: Don't forget to discuss how tithing, charitable giving, etc. might play in your budget. And how you each might handle requests from friends and family for money.

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Boone, NC: My wife advocates purchasing a long-term care insurance policy. I believe the policy is too need-specific. A better plan for our "twilight years" is a well funded retirement program with diverse investments - 401k/403b, pension, rental properties, no debt at all, and proper estate planning. Can you save/invest your way past needing a long-term care policy or is it a requisite like medical insurance ?

Jeff D. Opdyke: Yes, you can save your way past LTC need. but the question is, how much can you really save given your age and years to the point when you'd likely need LTC coverage? most folks don't need LTC until they're in their late-70s,early-80s. but at that point, that need is great, given that the costs of care that LTC covers are HUGE. if you have a nut big enough to cover it, great. if not, you're in for some very trying days financially. i would talk to a trusted financial planner...one without a sales agenda...and gauge their thoughts on this as it relates to your particular situation.

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Alexandria, Va.: Ms. Singletary,

I listen to you a lot when you are on WHUR. Question: My husband and have been married for 4 years and we have no savings. We have a 21 month child and I want to start saving for her college. I have a pension plan on my job but I know that's not enough. Where should I begin?

Michelle Singletary: Thanks. I love doing the segments on WHUR and Stephanie is wonderful to work with. As far as saving you are right to be concerned but don't despair. The important thing is to develop a spending plan and in that plan -- plan for your retirement first. Then look for money to put in a college fund. Your retirement comes first because baby can borrow for college, you can't for retirement. So, I would suggest you take a long, hard look at your expenses and start cutting without cutting out too much of the fun. Trust me it can be done. Jeff has some tips in his book and I have a ton in my book (Spend Well, Live Rich). And if you don't have the money to buy the books go to the library. Go on the Web. In fact, try going to www.choosetosave.org. There are some wonderful calculators and saving tips on the site. Good luck.

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Tucson, AZ: Bull. A woman should always have some money that is her own. All accounts should not be combined. Women need to learn to spend, save and budget on their own. Most will be single for a part of their life and a huge percentage of women retire in poverty. How can you advise combining all accounts in a partnership?

Jeff D. Opdyke: Tuscon is right. i should add a caveat to the joint account concept. I spell this out in my book further, but ALL WOMEN should have at least a credit card in their name solely. just in case a divorce happens, if can be a chore to re-establish credit in your own name when for years it's been in your husband's name. use the card occasionally and pay it off completely. that way, you will have pristine credit in your name in the event the worst happens to you relationship.

Michelle Singletary: Is it polite to disagree with your guest just a little. It's not bull to merge accounts and there is no need for a caveat. I just had a long conversation with the folks that created the FICO credit score that most lenders use and it's not hard for a woman to establish credit after a divorce. If you have joint accounts that have been in good standing the credit scores generated from your good handling of your those joint bills don't go away in the event of a divorce. Women don't need a separate credit card. The joint card and the record of how you handled it as a couple stays on your credit file after a divorce. So for example if you had a 700 credit score individually because of joint accounts, you still will have that score after a divorce. Also, it only takes about three to six months to establish a good credit record. Now if you do get divorce you should close the joint accounts and open a card in your own name to prevent credit abuse from your ex.

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Dallas,Texas: I am a stay at home mom who does not work outside the house. My husband has a 401K at work. Any suggestions for me to secure my own monetary dependency? Right now I am so dependent on him due to a disability.

Jeff D. Opdyke: As a stay-at-home mom, you work INSIDE the home. the point being: you work. as such, your compensation is part of what your husband earns. this is extreme, and not likely to happen, but how much would it cost the family to hire someone to care for the kids, to do the laundry, the cook the meals, the ferry kids to school and back, to clean the house, and shop for food? those, i imagine, are your jobs during a given day. they deserve compensation, no? as such, maybe you deserve a "salary" so to speak, a portion of your husband's income that you can use for yourself and to fund an IRA. even though you don't have "earned income" under IRS rules, you can still contribute to a retirement plan based upon your husband's earned income. talk to a financial planner about this.

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Helena, Montana: Hi Jeff, Love the weekly WSJ column. In the context of trying to save money wherever possible, when is your book coming out in paperback?

Jeff D. Opdyke: Helena, Mont....i have no clue, honestly. I haven't talked to the publisher about this. but if you look on Amazon.com, you can find some very low priced used copies.

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Buffalo, NY: I love reading both your columns. Thanks for this
real-time chat.

What do you think of pre-nuptial agreements as an effective way to REALLY talk about money before you're married? That's probably the best approach I've heard to presenting the idea to your honey, but I wonder if you think so, too.

Jeff D. Opdyke: Pre-nups are loaded topics. they immediately dredge up feelings of resentment and distrust. but they can be very necessary documents for reasons that have nothing to do with the relationship. you might have an injured sibling you want to care for in the event something happens to you. no future spouse should ever be able to argue with that. maybe you have children from another marriage you want to care for in some way; again, that is a wish a future spouse should respect since it's an obligation you took on before the future spouse was ever around.
now, to you ladies out there who i know often despise these things. consider this: women often get dragged around from city to city as hubby chases his career. in doing so, you miss out on the opportunity to save in your own 401(k) accounts, and when he runs off with the stewardess from Singapore Airlines you don't have a well-funded retirement plan. well, wouldn't a pre-nup be a good way to be sure that if this were to happen that you will be compensated for your years of service to his career? pre-nups can work both sides of the street. so don't fight about them; be strategic and open-minded about what they can accomplish for both partners.

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DC Metro: Hi. Same advice about a joint checking account for a gay couple? We don't have the same survivor rights.

Michelle Singletary: In your case I would recommend separate accounts and be sure if you have any jointly owned property to get all financial understandings in writing and that the agreement is looked over by an attorney.

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Fairfax, Va.: My fiance and I have a difference of opinion regarding the need for a regular cash savings account. Both of us have good jobs, no debts, and money invested in mutual funds, bonds, etc. My fiance believes we do not need a cash savings account. He keeps several thousand dollars available in a low interest bearing checking account. If we need ready cash in an emergency, he would take it from one of his mutual funds. He is also assuming that most cash emergencies could be paid by credit card so we would have several weeks to get the money from a current investment. I, on the other hand, think we should have a small cash savings account at a credit union. What are your thoughts?

Jeff D. Opdyke: I'm split on this to a degree. I agree with your husband that you don't need a ton of money in emergency reserves since you say you both have good jobs and no debt. you can always pull from your investment accounts in an emergency. in the meantime, the money you're saving in investment accounts vs. an emergency savings account will grow much faster, making your retirement more comfy.
still, you need enough so that you BOTH feel comfortable financially. my wife and I had this discussion, and i spell it out in detail in my book, but for her, comfort is $30,000 in savings. way too much for me. but that makes her feel like the family is financially sound. so, we have a bit more than $30,000 in savings. both partners deserve to feel their lives are financially stable.

Michelle Singletary: A bit more than $30,000 in savings just for comfort? Can you adopt me? I don't eat much :)

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Rockville, Md.: Ha-ha-ha.

Listen, joint accounts are fine--but when one spouse is MENTALLY ILL you are an IDIOT to have anything but separate accounts.

My husband has borderline personality disorder and has threatened to kill me, my pets, my parents--do you really think I am so stupid as to permit him to financially enslave me further than he already has?

Jeff D. Opdyke: this is an extreme issue, honestly, and I would approach it the same way. you have to protect yourself financially from a spouse who might decide to raid the account for some bizarre reason.

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Washington DC: Hi. THanks for this great chat. My husband was raised in a third-world country and never had a bank account, real job, etc. He's been in the U.S. for two years and we constantly struggle with how much of his paycheck goes to household stuff. I make nearly four times as much as him but feel like I never have money because I have to pay the house, bills, car, etc. Is there a fair way for him to contribute to the household expenses and still feel like he has something for himself when he gets his paycheck?

Jeff D. Opdyke: Yes, there is a fair way. combine accounts into a joint account, and assign each partner a share of the money each month that he/she can spend on individual needs/wants. this way, all the money goes in one pot and all the expenses come out of that commingled pot. plus you each get a bit of cash each month to enjoy life.

Michelle Singletary: Ditto. People read this question. See what it really says. People are getting married and acting like roommates not soul mates. Merging is one way of getting rid of mine, mine,mine attitude. A marriage is supposed to be about coming together. So if you do that it doesn't matter who earns more. I make more than my hubby and he's jumping for joy all the way to deposit the checks in our JOINT checking account. And you know what he doesn't feel less of a man and I don't feel more of a woman (bread winner, bacon bringer and cooker.) I know some of you are doing the separate account thing and it's working. But for many people it doesn't because deep down there is still this mine, mine attitude.

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Alexandria, Va.: Hi There,

My fiance is currently in Iraq and I am handling all of his finances, have his cats, all his furniture, clothing etc. He pays 1/2 the rent and originally agreed to also pay some of the other bills because we moved into a bigger place to accommodate his possessions. He is now constantly questioning the payment of for example some of the electric bill (we have electric heat) and other items that were previously agreed upon. I just want him to understand that although he is making a huge sacrifice, so am I. It is really tough to manage someone else's finances and have to see their stuff 24/7 etc. I am constantly on an emotional roller coaster as well as a financial one. The new place is much more expensive then my old one. Do you have any suggestions?

Jeff D. Opdyke: Maybe provide him a copy of every single bill you have to pay and ask him how we would cover this. throw the ball into his court. it's easy to play monday morning quarterback after the fact. it's much more eye-opening to be on the field as the plays are happening and you're having to make decisions on what gets paid when and how. make him make those decisions in some fashion, though i know that will be a bit of challenge in Irag. but maybe email can solve that to a degree given it's instantaneous nature.

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Washington, DC: My fiancee and I are just beginning to discuss finances and budgeting. Overall, we communicate fairly well on the matter, but occasionally we get caught up criticizing the other's budgeting (or lack there of) habits. What suggestions can you offer for couples when one partner feels like the saver and the other feels like they can't spend any money without risking conflict?

Jeff D. Opdyke: Don't criticize. I know that's sounds simplistic, but it's true. you each spend based upon internal dynamics that the other doesn't know/understand. so sit down each month with a spending plan and lay out your spending/saving goals for the month, and talk about them--the operative word being "talk." try to understand why your partner needs to spend on something, and do not belittle it. ask, calmly, whether it's a necessary expense this month or maybe something that might be pushed back a month. find ways to try and understand how and why each other spends/saves the way they do. our financial habits are all wrapped up in what we learned along the road to this point, and they are ingrained, though not always rationale. by talking about them you bring them to the light of day for examination and you might begin to see that they're no longer necessary to your life. But TALK, don't argue/fight/belittle.

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Another joint account question: I was just wondering how easy it is for couples to have only one account - that joint account when they have been living independently and are both good savers? Say the couple is in their late 20s, early 30s and therefore have always managed their own money. If a joint purchase occurs, they can just split the cost, and write separate checks - why do you see this as an issue? And therefore, if I want to buy those Jimmy Chu shoes, he doesn't feel like he has to contribute his earnings towards those shoes and vice versa. Please explain how the joint account is still better even in this situation!; Thanks!;

Jeff D. Opdyke: It's an issue because couples don't see a full picture of the family's finances. You have a joint account with $x, and his account with $y and your account with $z. when it comes to big, important family needs like saving or buying some big ticket item, most couples just look to the joint account and say, well we can't afford it, when in reality there is a bunch of other money sitting in the separate accounts, but no one want to acknowledge that because the each see that as "my money."
In reality it's OUR money. and until you start seeing it that way, you always life separate lives financially. never healthy, in my opinion.
And if you want those jimmy chus, you can get them with your portion of the spending that month. it just means you might not be able to buy the dress, too, or go get your hair highlighted or spend the afternoon at the spa with girlfriends, etc. marriage is a joint venture, period. so is family finance. you have to both work together to make both love and money succeed. That's just the nature of the beast.

Michelle Singletary: Preach brother!

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Michelle Singletary: Well, folks Jeff has to run. I have to run. So sorry if we didn't get to your questions. Seriously, thanks to all who submitted questions. Even if we disagree on some points these issues are so important to talk about. So many couples (as you saw today) are struggling with financial issues. So as usual I will try to answer some of the leftover questions in my print column and perhaps in my online weekly newsletter, which you can subscribe to on the web site. If you like feel free to send more more questions to colorofmoney@washpost.com. Just put "Online Love and Money Chat" in the subject line. Thanks again to Jeff. See you all back here in two weeks.


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