Personal finance columnist Michelle Singletary was online to continue her discussion of "love and money" -- or how couples can talk openly and productively about financial issues.
A transcript follows.
Background: In her Feb. 27 column, Michelle announced the winners of her annual "Honey, I Need Some Money." And earlier in February, her pick for the Color of Money Book Club selection was "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."
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.
Michelle Singletary: Good afternoon. So glad that so many of you have joined me today (I know this because of the long, long, long queue of questions.) I'll try to get to as many as I can. So let's get started.
There's a principal used in marriage counseling that seems to apply to money-management as well. It's known as the "Policy of Joint Agreement." Basically, it means that neither person in a relationship does anything that the other person would not enthusiastically agree too.
So...a husband who wants to use a $2,000 bonus to buy a big-screen television should ask himself if his wife would "enthusiastically" support that decision. Likewise, a wife in a similar situation should ask herself the same question.
The POJA is a great way to head-off potential conflicts. It keeps both parties in a relationship working as a team. It leads to the development of a common vision and reduces the possibility of hurt feelings or resentment. And it fosters discussion and joint decision-making.
What do you think?
Michelle Singletary: I thought this was a good comment/question to start off the discussion of love and money. I LOVE this principal. It's exactly what my husband and I have practice during the 13 years we have been married (coming up on our 14th anniversary.) But in our household we call it the "It Takes Two Yeses and One No" Rule. Meaning it takes the both of us to say "yes" before any major (and in many cases minor) money is spent. One No and the deal is dead. It does make things complicated at times. It took us six years to agree on a dining room set. But you bet to believe we BOTH love the set. So I wholeheartedly endorse a policy of joint agreement. Cuz the person you could potentially tick off with a big purchase he or she didn't agree to sleeps right next to you :)
Michelle, were all the folks who wrote in for your "Honey/Money" contest women? I noticed that all the people listed in your column on Sunday were women. Did any men write in with problems?
washingtonpost.com: Honey, I Stretched The Fiscal Truth (Feb. 27, 2005)
Michelle Singletary: I addressed this issue in my newsletter this week. You can find it on the Post site. In fact, the majority of entries to the contest were submitted by women. I really should have noticed that and mentioned it. Just didn't ring any bells with me since in many, many columns I've addressed the fact that men and women have money issues. Sorry for that fellas.
Today's E-letter: Sorting Out Social Security
I know that you advocate combining accounts and that there should only be "our" money and not "his and hers". However, when I married, my husband wanted to keep an account for just him. His parents were very controlling and secretive with money and he was always forced to "beg" for money (even to buy lunch at school). He uses "his" account to buy "his" toys (video games, presents for me, etc). "My" account became the "our" account, from which all bills are paid. Our paychecks go into our account, but a tiny bit is diverted to "his" (the account holds only a few thousand). The key is, we are joint holders on each account. I'm not supposed to peek at "his" account around Christmas, birthdays, and anniversaries (and vice versa), but am free to any other time. There are no secrets, no lies, and my husband still feels like he has something to call "his" and not feel like he must ask permission to buy a video game (we each get "play money" each month). It works quite well for us!
Michelle Singletary: I think what you did was a great compromise. Essentially you are still following what I advise: that all money be treated as "our" money. And I do think people in a marriage should have some money they can spend without any questions or preying eyes. As long as everything is open and honest. So good for you for making it work and being sensitive to your husband's past issues.
Regarding joint accounts and how this affects your credit score after divorce: What if both parties do not want the divorce and during the separation period one party decides that he or she does not want to close the joint accounts? Can't this affect the other's credit? Don't you need both parties consent to close out accounts in two people's name?
Michelle Singletary: I'll have to double check on this but it's my understanding that any one joint account holder can close the account. So if you are separated and headed for divorce you should close that joint account right away because if your husband or wife starts to abuse the credit line or not pay it off as per some agreement you had, then yes it can affect your individual credit.
My boyfriend and I have different spending habits. He likes to go out to eat a lot more than I do and buy me expensive gifts. He told me how much money he put aside for my engagement ring and I was horrified--I don't want him to spend that much money! I make less money than he does and tend to be more frugal. We are planning on getting married in the fall--how can we get our spending habits a bit more in sync before we get married?
Michelle Singletary: Got two words for you -- Marital Counseling. Don't walk down the aisle without it. Seriously. What you describe is very normal. It's not a cliche that opposites attract. But the trick is to learn to live with your opposite without killing him or her (and I mean that in a lighthearted way). It's good that you are talking tho. That's a start. Now take that a step further and really get at your money differences. I'm more like you. I hate it when my husband spends any "real" money on me. I look at the present and think "That could have gone in the kid's college fund." But you both need to find some middle ground. You may need to learn to let him spent a little and he needs to learn to budget better. But if you want to have a successful marriage conquer these demons now because things won't change just because you say "I do."
"it's my understanding that any one joint account holder can close the account."
This is quite true. Indeed any one joint account holder can -clean out- the account completely, so people headed for a nasty divorce ought to be thinking protectively.
Michelle Singletary: Thanks.
My boyfriend and I have a dilemma that has caused many heated discussions over the past couple of months. We are planning to get engaged within the next few months and married at some point in the not too distant future. The problem comes from where we will live.
We are both successful professionals, he is 33 and I am 27, and both own our homes. I have a 90 year old row home that I have invested a lot of sweat equity making it perfect over the past 15 months that I have owned it. It is the house that I always dreamed about and just adore it. I have about $130K mortgage remaining on it and its current market value is ~$200K. It is in a great neighbourhood, but we both agree that it would be a bit small for both of us. He owns a house in 18 year old classic suburban neighbourhood where there are only two or three models of homes for the ~100 homes in the neighbourhood. I have always RUN away from this type of a home because of its lack of individuality. The first owners really decorated the place in the late 1980s and it shows. It's in great shape but wallpaper covers nearly ever surface. We are planning to begin working on one room this weekend but I am having a very tough time seeing myself be "at home" there. He has about $240K mortgage, the house is worth about $250K and he purchased it in September 2004. His house is a better size for us but its location is not as good as my home.
This has caused innumerable frustrating conversations between us and we cannot seem to come to a resolution. I do realize that many couples wish that this type of thing was their biggest problem. We make a combined salary of about $190K and have no children. Ideally I'd like to buy a new home for us and sell or rent these two but it doesn't seem realistic financially. Can you shed any light on this situation or provide any advice? We would really appreciate it.
Michelle Singletary: Girl, welcome to the world of when you get married it's not about "YOUR WANTS" anymore. The two of you HAVE to find a compromise and it may mean selling both houses and finding one that suits both of you. I know you probably don't want to hear that but ask yourself, is the house you are living in now more important than finding a HOME you and your new husband BOTH can enjoy? Would you really want him to move into your house and be so unhappy that it causes arguments all the time. It's just property. You can learn to love another house. But can you or do you want to love another man?
Owings Mills, Md.:
My wife is a big believer in compromise in marriage. I've heard it said once that there is no such thing as compromise and that successful marriages are those where both parties are willing (sometimes) to "lose" for the their spouse. A compromise is sometimes seen as a no win situation since both parties didn't get what they wanted. From practical (and biblical perspective) sacrifice is a cornerstone of a successful marriage. I'm not sure if I agree or disagree with the "Compromise means two losers" statement.
What are your thoughts?
Michelle Singletary: I don't think compromise means there are two losers. In fact, I think of compromise as a middle ground that both parties can be HAPPY with. Who would ever want to compromise if they think they're a loser every time there has to be a compromise?
Iowa City, Iowa:
We're having a baby this summer. This is very exciting to both me and my husband (even though the baby was a "surprise"). Here's our problem: I am the primary breadwinner in my family. I earn about 5 times his salary. He is not in a job that allows him to take off much time to spend with the kid. We are debating whether I should take my FMLA time or just go back when my 6 week short term leave ends. I get paid partial salary for 6 weeks, and then no salary for any additional time I want to take off. My husband's salary will cover the mortgage and diapers but won't stretch to cover our massive student loan bills. We have some money in savings that we can tap to pay bills if we need to. My question is: should I just go back after 6 weeks and not worry financially about the baby, or should I take the additional bonding time and worry about the long-term financial implications later? Thoughts?
Michelle Singletary: Could you "compromise." Could you take the six weeks off and go back to work and your husband be a stay-at-home dad for awhile? Can he take time off? A lot of men are doing this. With my first baby I took off six months and it was so good for me, the baby and our family.
I have a relationship with a genuinely great guy. We have been dating for almost two years. His credit is not up to speed. He has not managed his financial affairs very well in the past. But, I like him very much. The relationship is getting serious. In my career, I can not have credit problems. What can I do in a situation like this? I really want to be able to trust him, but, I don't know whether I can financially or not.
Michelle Singletary: You know talk is not cheap. It's priceless. Talk to your man. In fact, send him a transcript of this chat. Just be honest and open and share your concerns. You may be surprised to find out he's worried he will bring you down financially. Getting over debt isn't a show stopper for me. People can learn to handle their money better -- if they are shown a better a way and practice at it. So talk. And then watch. See if by talking he starts to handle his money better. Let him know that you need to see proof that he wants to change in this department.
Pentagon City, Va.:
My boyfriend and I are looking to purchase a home together, and I make significantly more than he does therefore I can afford a higher priced home. What's the best way to go about saving for this home. Should we match dollar for dollar or should we save a certain percent of our salaries?
Michelle Singletary: Okay, I hesitate to say what I'm about to say because I really don't want to sound like your mama, or my Big Mama. But really get married first. Then buy the home. I can not tell you how many unmarried folk I hear from who buy property together and then break up. And somebody ALWAYS get's left holding some debt they can't handle. If you're married then the question of what's fair it moot. You put all your money in one pot and it doesn't matter who's contributing more because it's "your" money.
Now if you're hardheaded and still want to live together than honey I would make sure I drew up a contract, have it reviewed by an attorney, and spell out all your expectations. If you put in more money toward the closing costs, downpayment etc. then you may want to get that money back if you ever have to sell the house. You should also spell out how the debts will be handled, etc. Get in writing what will happen if your boyfriend walks away from the house leaving you with the mortgage. Will you both be on the title? And if so, what happens if you want to leave and buy another house? Will he agree to take your name off the title? All I'm saying is before you buy property with someone you are not married to you had better think thru ALL these issues and more.
My sister is separating from her 'common law husband' (they've been together 9 years). They own a house jointly, and the separation is thus far amicable and scheduled to take effect in one year or so. Any advice I should give her as to what to watch out for 'before its too late?'
Michelle Singletary: They need to talk about how the house will be handled. Who is going to get the house? Will either of them one the other to be removed from the title? How about the mortgage? How will that be handled? Honestly, I think your sister needs to consult a real estate attorney because if she is separating from her live-in boyfriend then she will want to make sure she is free and clear of him all things financial, including the house.
We were married in June and my wife has over 30,000 dollars in debt. How do we handle eliminating that debt? Am I obligated to help her payoff debt she accumulated before we were married?
Michelle Singletary: Legally obligated? Probably not if you did not co-sign for any of the debt. Morally? Yup. You married her and that debt is now the "household" debt. Why? Because any money she needs to divert from her paycheck to pay off that debt affects what your household can save, spend or invest. So it's both your problem now whether you handle your money from a joint account or not.
Owings Mills, Md.:
What would you say about a husband who is unhappy with wife's frequent small purchases but every two months or so he makes a big purchase that surpasses her frequent small purchases. Small purchases being $20 here $35 there, every two weeks. Big purchase being $500 here $450 there, every two months.
Michelle Singletary: I would ask the husband if he's making the purchases out of spite? And if so you both have some major issues you need to address -- namely trust, overspending. Please, talk to your wife and tell her you're upset about all these little purchases. Get everything out in the open.
For Pentagon City
In a similar situation, we drew up a contract and I insisted on a clause that if one of us died, the heirs were responsible for that part of the mortgage payment until the house could be sold. I had the lesser income and feared being saddled with a $2000 month mortgage I couldn't cover. We did split up and he bought out my part with interest and appreciated value. We're still good friends and that may be one of the reasons why.
Michelle Singletary: And it could have been worse.
Do people really not talk about money issues (a $30,000 debt??) before they tie the knot? Goodness, if you don't know how your honey handles money, don't walk down the aisle until you do!
Michelle Singletary: Are you kidding? You must be. People don't talk when they sleep right next to each other. I've heard of people going to apply for a mortgage and only then finding out their honey has massive debt that gets the couple rejected for a loan. Can't say it enough, talk is not cheap.
Iowa City...follow up:
My husband gets three days off, including the day of the birth. He's tried to get around this policy and the coordinator of his facility has explained that she will put him on light shifts from July-September so he won't have to do overnights, but he'll still be working his 80-hour-weeks. Basically, if I don't take the time off, no one does. I know we're relatively fortunate in that we earn a fair bit of money, we have good careers, and we have options like taking off FMLA time. I just can't figure out how responsible or irresponsible I'm being by taking off more than my 6 weeks. I talked to my parents about this from when me and my brothers were kids and my parents told us they lived off credit cards so that my mom could take 10 weeks with each kid, and it took them a year to pay off what they had accumulated. I am not interested in that! I am just concerned that I will look back and regret not having more time at home...
Michelle Singletary: If you can financially swing it, then take the time off. You won't EVER regret having spent the most important months with your child. However, you WILL regret it if you could have afforded and didn't. I might mean cutting back now and after you have the baby. Try not to live off credit. That's not good but with your income and savings sounds like you can swing it. Trust me you will need all the time you can get to adjust to having a new baby. With each of my three kids I took off about six months. We lived off our savings. It was definitely worth it.
Wow...I can't believe someone would ask if he is "obligated" to help his wife pay off "pre-marriage" debt. What was his plan? Let his wife try and if she failed, "Oh well, it wasn't my obligation. Enjoy bankruptcy honey."
Michelle Singletary: Now don't be too harsh. Leave that to me:)
Seriously, this money stuff is tough. People just can't face some things. Besides the way so many people go into a marriage fuels this "it's her (or his) problem."
What do you think of prenups? How do you suggest bringing this up to future spouse?
Michelle Singletary: A prenup says to me, "Honey I love you but I don't trust you one little bit."
Prenups are a plan to fail.
I do have one little caveat. If you are entering a second marriage and have property or assets intended for children than make provisions for that in a will or other document. But for goodness sake if you don't trust someone enough with your money and stuff, why on earth are you getting married?
I had always been told that each person in a marriage
(yes, both husband and wife) should have an individual
account with enough money in it to pay basic bills for
about a month. The reasoning I was given was that if one
person on a joint account dies, the account is frozen until
the estate starts to get settled. With the individual
accounts, at least there would be money for the mortgage
and utilities without having to start probate.
Michelle Singletary: That's wrong. If you are a joint account holder with rights of suvivorship, you will continue to have access to the money or use of the credit card if the joint holder passes away.
In my view, joint accounts are critical for married couples. Marriage is about creating a sense of "us." My wife and I pool all of the money that comes into our home - regardless of whether I earn it or she earns it. It's ours. We approach my 401-K the same way. It's OUR retirement money, and we manage the fund together.
Also, let me add this: joint accounts reduce the possibility for secrecy. And secrecy, more than anything else in my view, is what dooms marriages.
Yes, it takes a lot of faith and trust to have joint accounts. And that doesn't mean that people shouldn't protect themselves against the possibility of a breakup. But...it seems to me that a marriage has a much better chance of working if both people have "skin in the game," so to speak.
Mingling assets makes breakups much messier. And, for reasonable people, that should be an incentive to work out problems.
Michelle Singletary: Amen!
Park City, Utah:
The bottom line for all of those love-birds out there is this: it is a very, very, very, very bad idea to buy a home or a car with a person you are not married to. You are setting yourself up for huge headaches down the road. Don't you people ever watch Judge Judy?
Michelle Singletary: Can I get another Amen! In fact, Judge Judy should be required viewing for all who want to co-sign or buy property together. Look if 50 percent of marriages end in divorce and there are laws to help sort tho that mess, what do you think is the outlook for people shacking up?
re: Policy of Joint Accounting:
Before my husband and I got married, we went through counseling through our church. They had us each write (without the other looking), how much we would spend without first telling the other person - then we'd share our answers. I wrote down $75. He had written $500!!!! Wow - what an eye opener THAT was - and a great start on discussing finances within our marriage.
Michelle Singletary: Good point.
Thank you for your great advice. And no, people do not talk about money prior to marriage and sometimes after. I married someone who had debt that he conveniently forgot to tell me about, and then compounded that by having to owe several thousand dollars in federal taxes. I was furious because by that time it was "our money, our debt." I had to work 2 jobs, he had to work overtime and borrow money from his family to pay off the debt. Now that we are about to purchase a new home, I am applying for the mortgage alone because I know that I can rely on me. Parents talk to your children early about budgets, and spouses pray that your spouse had parents that did.
Michelle Singletary: I appreciate your comments...but you're still in trouble. You don't trust your husband so the answer is to buy your new house in your name only? Girl, please sort this out.
Prenups - another perspective:
I think it can depend on your cultural background. I'm Jewish and the ketubah, an essential part of the wedding ceremony, is essentially a prenup that covers support obligations if the relationship ends. While it's an ancient document, a lot of my friends (I'm not married yet) have found it helpful to start a discussion of how their obligations to each other continue forever, even in the unfortunate event of a divorce. Plus, it can cover some very important religious issues surrounding women and divorce. I know Muslim women who have felt the same way about their religious marriage documents. Just another perspective.
Michelle Singletary: Always happy to hear another perspective. But again, if you're getting a prenup because there are trust issues, that document won't address that.
There's a good bit of judgmental moralizing going on these days about how married couples should have joint accounts. But in the case of second or third marriages where there are children on both sides involved, it just doesn't make sense, given each spouse's existing commitments. But that does NOT mean that money can't be managed jointly. The emphasis should be on full disclosure of all assets, income, and investments and a joint commitment to managing that money.
Michelle Singletary: Moralizing? Maybe. But second marriage or not if why would you expose your children to someone you don't trust with your money? Which is more important? If you want to merge your LIFE and your children's LIVES with someone then by God you should want to merge everything.
I do not have a question but if possible I would like to give my husband the credit he deserves.(if you can't fit this, I will just show him I wrote it)
I do not mean a credit card . I MEAN APPRECIATION.
He tells me I don't appreciate his fiscal habits(I could do without the crinkled up ATM slips he hands me though...)
Before we were married we saved for our wedding in Ireland and he paid for my beautiful engagement ring all in cash.(He worked many hours in a deep building foundation PIT and saved all the overtime !)
In 2 out of the 3 years we have been married, my husband has not worked. No he's not a slacker, he fell off a hig- rise building during work. However, we have always lived on one salary, I direct deposit my check into a brokerage account. This is accomplished by keeping the monthly bills to only 3 (gas/electric, telephone, and co-op maintenance), it's my rule and all my friends know it. Our ages are 42 & 38 with a current combined income(wage/workman's comp.) of $55,000. We have been saving at least $2000/per month, not including my 401K. This has allowed us to save approx $190,000 in cash, euros and mutual funds over the last 6 years, not including $290,00 in 401k/IRAs. We live in a small shoebox mortgage free Co-op, thereby avoiding the current big mortgage no equity craze (as in big hat, no cattle). Did we sacrifice ? only a little. We both cook great ethnic meals, better than most restaurants. The coffee and Eggs Benedict brunch on Sundays (with bloody Mary's) taste better at home, especially when it doesn't cost $40.00. Sometimes the lack of closet space makes tempers flare, however "small rooms discipline the mind" .
BUT WE NEVER FIGHT ABOUT MONEY. Living well below our means has given us a cushion so that when my husband had the accident our standard of living has not been affected at all. It is a incredible feeling to never worry about money. We take a paid for vacation to London, England or County Kerry, Ireland every year, and have parties with all our friends every few months.
None of this would be possible were it not for my husband, Sean. He has always agreed with saving as much as possible(joint accounts), and never goes out on a buying spree(except if he finds San Marzano tomatoes from Italy on sale). When people ask "why don't you have cable, a computer etc." ? He proudly exclaims : If I had met my wife 10 years ago I would be a millionaire now.
Next year we are planning to move to Ireland, build a house for cash, buy a car for cash (and God willing, have a baby or if not, get a Irish Wolfhound and Kerry Cow).
What a nice way to make a new start, completely DEBT FREE.
"Baby you're the greatest". (Bob the builder, consider yourself duly appreciated)
You have wonderful column. Also I am giving copies of your book to two girls who work in the mailroom at my job. They are both single mothers, graduating from Community College and I want them to get a good start when they start making "normal" money.
I plan on counseling people about financial basics in the future.(I do it informally now, but no one listens)
All the best, Deirdre
Michelle Singletary: You made me cry!
I recently moved in with my boyfriend -- we are pretty serious. Do you have any pre-marriage financial advice for us? So far, we have been splitting all living costs -- do you think it would be worth it to open a joint account? Is there any way to "practice" financially for our future?
Michelle Singletary: I think it would be worth it for you get married and then open joint accounts. There is no way to practice being married financially or otherwise. Sorry, couldn't help myself.
But until you are married keep your money separate.
Michelle, this isn't a problem so much as it is just a depressing situation. My husband and I are expecting our first child in early August, and we are saving like crazy so that we can be comfortable for the time I'll be taking off without pay.
We bought a house last year and figured we'd get a bunch of money back in taxes because that's "one of those great benefits of owning a home." We were going to use the money to have our last hurrah vacation before the baby makes its appearance. Well we did our taxes this week and just found out that we owe Uncle Sam $3000. I mean, come on! We were supposed to be getting money back, not giving money to the tax man!
Sometimes it seems that no matter how well you plan for things, things like these just jump out at you. Nothing we can do, of course, and we'll have to reconsider our vacation plans. Just depressing, for sure...
Michelle Singletary: Don't be depressed. You are blessed. Girl, you have a home, a man and a new baby coming. And it sounds like you have the money to pay that big tax bill. I don't want to minimize your disappointment. I know how a vacation can really jolt you. But don't focus on what can't be. Before the baby comes, just find a way to do things with your hubby that are low cost. Heck you can have a vacation right in your new home. Turn the phones off. Close the blinds. Cuddle. Have a picnic lunch in your living room. Get tons of sleep (cuz you ain't going to get sleep for a LONG time). Be disappointed. And then count your blessing.
A 70/30 Split:
How do you fairly split all bills, including mortgage, when one person (woman) is making 70% of the household money, the guy, the other 30%?
And what about big purchases? Shouldn't said guy not go buying expensive stuff on his wife's dime?
Michelle Singletary: See and this is why joint accounts work. This 70/30, 50/50 or 80/20 or whatever is nonsense. If you're married stop acting like you're roommates. Merge and be happy you both got good income to spend. And that last line "on the wife's dime." What if the wife was a stay-at-home mom? Would everything she buy be on the husband's dime? Please. Look at your financial life as one and stop keeping score.
Michelle Singletary: Okay folks I have got to go. Thanks for hanging around. Thanks for all your questions. Thanks for letting me fuss. I mean it all in love (really). I just see the outcome when people don't really think thru their decisions to live together, keep financial secrets, keep financial score etc., hide debt or fail to talk about their money issues. It's heartbreaking. So that's why I'm so dogmatic on this issue of love and money.
Until next time. Peace out (I've always wanted to say that)