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Money and Marriage: Jean Chatzky on Mixing Love and Finances When Couples Say "I Do"

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Jean Chatzky
Author and Money Coach
Thursday, February 19, 2009; 2:00 PM

Mixing love and money can result in a mess. Author and money coach n Chatzk was online to help couples sort through a tangle of financial questions, from combining bank accounts to setting a wedding budget.

Chatzky is the financial editor for NBC's Today, a contributing editor for More Magazine, a columnist for The New York Daily News, and a contributor to The Oprah Winfrey Show. She also hosts a daily show on the Oprah & Friends channel, exclusively on XM Radio.Her upcoming book "The Difference: How Anyone Can Prosper In Even The Toughest Times" (Crown Business) will be available on March 10. The discussion transcript is below.

Wedding Week 2009

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Jean Chatzky: Thanks so much for joining me today on this washingtonpost.com chat. I'll get through as many of your questions as I can in the next hour. And if you have any remaining unanswered, please drop me a line at jeanchatzky.com.

Thanks!

Jean

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Palm Beach, Fla.: I got into a bad situation when I was very ill with no medical coverage, because of that, I have a lot of credit card and medical bill debt. If I get married to my boyfriend, will he inherit the debt, or will it lower his credit score? And if we decide to get married, and to buy a house, will they take both of our credit scores into account, or can we only use his?

Jean Chatzky: Good news, Palm Beach. Your boyfriend won't inherit the debt and it won't lower his credit score. If you get married and buy that house, they will take both scores into account -- unless you use only his income on the application. But, it likely takes less time to improve your credit than you think. Pay your bills on time. Pay down any credit cards that are maxxed out. Don't close old cards. And you'll be just fine.

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Chantilly, Va.: Hi Jean, how do you get your spouse involved with the finances when one person usually handles everything?

Jean Chatzky: That depends on how reluctant that person is. It can be as simple as just asking your spouse to first do it with you for a month or two, then take it over for a month or two after which you do it on an alternating basis. But some spouses -- men and women -- are truly heel draggers. In that case, you're going to need to argue that this is something they need to do for their own financial security...just in case something happens to you. Last resort: Ask for this (and nothing else) for your next birthday.

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Midwest: Hi, Jean. Thanks for chatting today. Not a question, so much as a comment that I'm hoping you'll endorse from your perspective.

Dear lovebirds, discuss your finances extensively before you tie the knot. I'm talking to the point of swapping credit reports, if the case may be. It's a painful, uncomfortable conversation a lot of the time -- money often is -- but it will pay off in the long run.

While I had the financial conversation with my husband-to-be, it was more avoidant than real, and because I didn't ask to take a hard look at his obligations before we were married it was only after that I found out that the man I loved was $35,000 in debt, most of it from evil plastic. I had no indication of it prior to the wedding, when we were forced to combine budgets, and wow, was it a really hard and painful thing to work through, both from a financial and a trust perspective. Debt doesn't mean you don't get married, it just means you maybe wait a little longer to actually take that walk, or, at the very least, you walk with eyes wide open.

Thanks much.

Jean Chatzky: Eyes wide open is absolutely the best way to go. You need to know what you're getting into because in the future it may get in the way of buying a house, starting a family, retiring... Once you tie the knot, set a time once a week to sit down and discuss money matters!

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Comingling assets: I've been married for more than a year now (less than two) and we have yet to really commingle assets. Some of it is laziness and some it is not knowing quite where to begin. I should note that we did not live together before marrying and we both owned homes. There's not necessarily anything wrong with how we're doing things but I suspect it could become troublesome down the road and I also think we could maximize savings.

Jean Chatzky: I'd try the yours, mine and ours system. I think every person needs a little financial autonomy -- and with more couples marrying at older ages, many are defaulting to a system much like yours. But I find it helps to have a household account that you both deposit an equal percentage of your pay into. It should cover both the household expenses, joint vacations and other joint expenses and JOINT SAVINGS for those big goals.

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Arlington, Va.: Dear Jean, my "boyfriend" and I are both in our early 50's -- no kids on either side. I have a lot of equity and some investments, 401K, a mid level job. He got wiped out in a divorce (his wife went back to school and became a divorce lawyer!), but has health care for life (spouse included) and a great career. Any advice on how to mingle our assets if we decide to marry?

Jean Chatzky: With a pre-nup. I always -- like you do -- think "boyfriend" is a silly term for a man in his 50s, but it's all we have. And if you really care for each other, you're going to want to protect what you came into the marriage with and share what you grow together. Although you're coming in with more, it actually sounds like he has great earning potential, so he may be okay with that. See a lawyer. And tell him to see one of his own.

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Falls Church, Va.: My boyfriend and I are talking about getting married. We have seriously different attitudes about money: I have more than half a dozen ING savings accounts for expenditures, am saving for retirement, etc., his cell phone has been off for three months because he cannot pay the bill (he has no home phone). We have talked about it, but he doesn't see this as a problem. I would like to discuss the issue with an impartial third party before committing to life with him (I worry about this becoming an issue that we fight over all the time), but worry that his laissez faire attitude is not changeable and/or he will refuse to go to a counselor. Any suggestions?

Jean Chatzky: I think discussing this with an impartial third party is a really good idea. You're in Virginia right outside Washington, D.C., I believe. Olivia Mellan is a D.C. therapist specializing in these issues. Call her.

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Brandywine, Md.: An overwhelming amount of people feel only a fifty/fifty split in household expenses is fair. Would the actual more fair measure be, proportionate to income? The person that makes 70% of the household income contributes 70% towards the household expenses. Should this person feel "cheated", and even expect the other to go make more money? (Like get second job?) Thanks.

Jean Chatzky: I disagree with the 50-50 folks. I think what's fair is for each person to contribute an equal percentage of their pay to the household expenses until you can cover them. That leaves the person with more income with more money in his/her pot at the end of the money. Each person can do whatever he/she pleases with the leftovers. That said, I also think it is important to look at what each person is contributing to the running of the household and that in a relationship that's working we appreciate our spouses for more than their earning potential.

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Tampa, Fla.: What is the deal with prenuptial agreements? Is it rude to ask the person you are about to commit the rest of your life to for one, you know, just in case? I have a much larger nest egg than my fiance, and I have worked hard to build it. After watching my parents' nasty divorce I want to protect myself, but I don't want to start my new family off with what I consider an extreme insult. We are getting married 'till death do us part... right?

Jean Chatzky: It's not rude, it's smart. And if you explain it to your fiance the same way you just explained it to me -- that you feel the need to protect yourself after watching your parents divorce -- I am sure he will see it that way. If you still can't stomach the thought of it, consider that some pre-nups these days are written to expire somewhere down the line. That may make you feel better about it.

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Herndon, Va.: My girlfriend wants to loan me money to pay off credit card debt I incurred from my divorce, saving about 11% in interest. We both believe we're progressing towards marriage, but on the off chance that we don't work out, I don't want to have this loan hanging over my head. What should I do?

Jean Chatzky: 11 percent is big money these days. I'd take her up on it, but approach it as a business transaction -- draw up some papers that say how much you will pay her back on a monthly basis. Then, set up an automatic payment from your bank account to hers to be sure it happens. If you don't want to do the paperwork yourself a website called Virgin Money (formerly Circle Lending) can help.

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Remarrying, burned financially the first time: Hi, Jean. I am engaged to a terrific man who is also financially very responsible. My struggle: I was burned in my first marriage by a very irresponsible person. I should have read or seen the signs (he had terrible credit, so all our accounts were in my name, e.g.), but now I am very leery. My fiance and I own homes on our own, and looking to move into one (probably his). I want everything in writing -- I will pay xx on his mortgage to "gain" equity, what is in my name, his, etc. Any suggestions for how to a) get over the struggles of trusting "my" money into "ours" as well as b) ensuring I am not burned a second time in case (knock wood) anything happens (death, divorce, disability...)?

Thanks!

Jean Chatzky: I think you're doing just fine in that you're walking before you're running. You're getting things in writing. You're talking about the details. But again, someone like you who has significant assets (that home) and your spouse who has likewise, needs a prenup. It's your insurance against the second fire.

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Bank accounts: My boyfriend and I are talking about marriage and all that comes with it. We have very very different attitudes about money and work. I've always wanted a his, hers, and ours bank account (Suze Orman got to me...), and he agrees about that. But, we disagree greatly on how much should go into the ours account. He makes 3 times as much as I do (and probably always will), but thinks that we should put the same amount into the ours account and the rest of our paychecks into our separate accounts. I don't really think this is fair, but don't know how to approach it or what to suggest instead. How do couples with this set up usually make it work?

Jean Chatzky: Suze and I agree on this. You need the ability to buy a cup of coffee without asking him and he needs the ability to do likewise. As I noted above, I think that the contributions should be an equal percentage of what you each earn. Figure out what the household nut is -- including joint savings -- then what percentage of your earnings will combine to cover it.

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budgets: I have to laugh at these suggestions for "yours, mine, ours" accounts and "who makes the most, contributes the most." Who has extra money these days? My entire paycheck, and my husband's, go into our joint account to pay for mortgage, utilities, day care, food, gas, car payments. If I have $5 in my purse I'm feeling good! I'd love to have extra cash for my own personal account, but really, in this economy, is that realistic for people?

Jean Chatzky: I know what you mean -- many people are struggling these days and I don't mean to suggest that I don't know that, or respect what you are doing to get through each and every day. I think what's realistic is trying to live on less than you make so that -- together -- you can scrape together an emergency cushion in case one of you loses a job.

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woaaa!: I know these are sensitive issues, but a marriage is hardly a business contract. If you're both looking at it as to what's 'fair,' then, well, you will both be disappointed. If money's the most important factor, then, well, maybe you shouldn't be getting married. What if one spouse can afford a lavish vacation? Would he/she tell the other spouse: "Sorry, you don't make enough, you have to go to a cheap place. I'll be thinking of you though!"?

I always think of that example when people bring up how much of what they should pay for or whatever.

Jean Chatzky: When I said put what you need to into the household account to cover joint expenses that includes things like vacations. I don't believe the lesser earning spouse shouldn't contribute at all -- but should contribute a smaller amount that is just as meaningful to them. And if you have one spouse at home while the other is working, the at-home spouse should have some money that can be used at his/her discretion without asking permission. Otherwise, the relationship becomes parental and far from romantic. As for fair? Life isn't fair. Ask my kids to whom I say that on a frequent basis.

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Washington, D.C.: Is it wise to set up a joint account (like ING or the like) to save up for a wedding? My parents will help, but we're slowly realizing that it is going to be more than we had in our minds. Yes, we could scale down the guest list, but I'm an only child, 35, and I have a lot of relatives that I just can't not invite. We're talking fall 2010.

Jean Chatzky: Yes -- it's a great move for any goal. Then set up automatic transfers on a regular basis from your account and his into that account. And once you have the amount fixed, then think about the sort of wedding that will fit into that budget. So many things are negotiable these days particularly if you're willing to be flexible. Could you do brunch instead of lunch or dinner? Could you do a Thursday night instead of a Saturday night? Could you do loads of candles and a few flowers instead of loads of flowers? You see where I am going with this.

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D.C.: What do you recommend for an emergency fund? Three months of living expenses? Six months?

Jean Chatzky: Six for a single person or a single income family. Three for a couple with two incomes. In this economy if you can exceed that, that's terrific.

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Washington, D.C.: Is there a good resource to find a financial planner who can help us get through co-mingling of assets and creating a budget? He has debt, she knew about it but has never not paid bills off every month, and neither is sure how to go about paying it down.

Jean Chatzky: Yes -- a financial planner, or a financial counselor. Planners deal with your investments. Counselors with this more basic stuff. AFCPE.org is the website to find a counselor. NAPFA.org or FPANET.org for planners.

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Washington, D.C.: My niece is getting married this summer. She and her fiance are quite young and still learning about how to manage their finances. So far they seem to be doing a good job, but any books to recommend for them on personal finance?

Jean Chatzky: I'd recommend Make Money, Not Excuses (that's mine) for her, Smart Couples Finish Rich by David Bach for them, and a session with a fee-only financial advisor as a wedding gift.

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Atlanta, Ga.: My husband and I were married a little over two years ago. We are in our late 20's, and both entered the marriage with large student loan debts and some credit card debt. Initially, we both thought it would be best to focus on paying off our consumer debt before we focused on buying a house or saving for retirement. It's taken us a long time to pay off that debt, though, and it's still not finished. I'm getting impatient, and want to start saving for large things (retirement and a house, especially since it's a buyer's market right now), whereas he still thinks we should finish paying down the consumer debt (all of which is at interest rates between 3 and 5%). It would be difficult, but not impossible, for us to continue paying down this debt if we diverted a meaningful amount to savings. Any thoughts?

Jean Chatzky: There is nothing wrong with splitting the difference -- especially at those interest rates. The debt isn't costing you all that much to carry it; you may be able to earn an equivalent return on your savings. And you'll both feel you are making progress. Also, if you are thinking of buying a house I'd argue the time couldn't be better to get started. Prices are low. Interest rates are low. There's a first time buyer's credit on the table in the stimulus package. It may be a much better investment than paying off this debt so quickly.

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Washington, D.C.: What sort of savings do you recommend before having a baby?

Jean Chatzky: My mother always said if she and my father had waited until they could "afford" to have children, we would never have been born. But I do think you should at least have a six month emergency cushion in place so that if the pregnancy takes you out of the workforce for a while, you have money to fall back on. And, if you're planning to stop working, try to live on the single income during the pregnancy and bank the rest. It'll not only show you if it's possible but allow you to put substantial savings away.

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Washington, D.C.: My style during any financially stressful times is to cut spending and save more aggressively, even if our jobs, etc. seem secure. My husband sees that as a "downer" and wants to deal with cutting back if if/when we lose our jobs. He says we have cushion in our assets, cars, two modest homes, 401Ks but I don't believe it would be prudent to sell any of those assets particularly in this down market. I've started saving on my own and now have $22,000 saved. But it's from my raises and bonuses and I don't feel like it's a joint effort. Am I being unreasonable?

Jean Chatzky: I'm with you. I believe you should save aggressively in the good times so that you don't have to struggle in the bad ones. But I also don't believe you should stop living. Perhaps you could strike a deal with him to save a bit more while you continue banking your bonuses, etc. which might make you feel you've got a little help. Also, make sure he is paying attention to what's going on in his industry, yours, the housing markets, etc. rather than putting his head in the sand.

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D.C.: I guess I'm awfully old-fashioned, but my husband and I (married 40 years) treat all of our finances as joint except for a small "mad money" checking account each, and our retirement accounts. (Separate accounts were my late mother's idea -- she'd seen people whose joint accounts were frozen when one died, or in a legal proceeding, and there was no way to pay the bills.). We've never "kept score" on who should put what into the joint pot; there were years when I worked very little and took care of the kids, and years when I earned more than my husband did. It's all about trust, and seeing ourselves as a single "corporation."

Jean Chatzky: It sounds like you have an enviably good relationship.

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San Diego, Calif.: While some can laugh at the "yours, mine, or ours" problems of some marriages, it can be hindrance in a marriage.

Granted most will see this as a good problem to have.

Here's my issue: My wife and I met in our middle 50s, anonymously at first, on a web bulletin board, but later as private "cyber pals" for a year. We chatted openly never expecting to meet, but long story short, we wound up getting married. We were more than smitten with each other by the time I learned how well my very down-to-earth SO was doing in her profession. But, other than money, we were an excellent match and we enjoyed one another -- and still do after 7 years.

My job is pretty decent, but it brings in less than a fourth of what she does. A lot of this is cultural; old timers like me just expect to be the breadwinner. How do I shake this bias and guiltlessly embrace her "share and share alike" philosophy?

Jean Chatzky: You're not alone. In the 30-40% of marriages where women out earn their spouses, divorce is more common than in marriages where men earn more. But I respect you for putting it out there and acknowledging that you should probably deal with it. My feeling (and I say this as a woman who has at times out earned the man in her life) is that you close ranks. What happens between you and your wife and your bankbooks is nobody's business but your own. You need to talk to HER about it and come up with a way to contribute that makes YOU comfortable. But once you've reached that happy medium, you don't need to say anything about it to anybody else. I'd also suggest a joint bank account -- see my earlier post about contributing an equal percentage of salary to it -- with a joint credit card. That way you can go out to dinner, on vacations, without either of you worrying who is picking up what check.

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Arlington, Va.: My in-laws are TERRIBLE with money. They have no savings and exist on a very meager pension. My husband wants to start helping them out. I am okay with helping them out but only if they agree to take a personal finance class or work with us to learn to budget. I also am terrified that at some point they're going to run out of money and need a place to go (and I don't want them to live with us). My husband prefers to ignore possibilities like this.

How do you suggest we work through this?

Jean Chatzky: I agree they should learn to do this, but don't agree that you and your husband have to be the teachers. You suggested a personal finance class -- that might be too public for them to agree. How about a session or three with a financial advisor who could get them going? And, if you and your husband truly believe they are going to run out of money, you should try to sit down with them and find out what's there, how long it will last, and if they too see themselves living with you at some time in the future. The right planner (go to NAPFA.org) can sit down with all of you and mediate.

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Richmond, Va.: My fiance and I trying to buy a house in the next few months and are meeting with a Realtor tomorrow. If we do do get a mortgage and buy a house before we get married in September (likely), how will the mortgage change once we are married? Will it?

Jean Chatzky: It won't. You don't have to be married to co-own a home.

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Ellicott City, Md.: My spouse and I have been married a little over two years. We now have a combined credit card debt load of $19,000. We want to tap our 401(k) to get rid of it. This would be one less stress in our new marriage. Any other options you can suggest?

Jean Chatzky: I suggest NOT tapping the 401(k). Here's why: When you pull assets out of a 401(k) you pay taxes and penalties that cost you 30 to 40 cents on the dollar. Also, you rob your money of future growth and by selling now you're likely locking in big losses. What I want you to do instead is take a long hard look at your budget: What is coming in? What is going out? Where is it going? Then ask yourself: Where could we cut back in order to find some additional money to pay these credit card bills. Also, call your credit card company. They are working with people who are having trouble making payments, reducing interest rates, extending terms. CALL even if you have called before.

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New York, N.Y.: Hi Jean,

I need some serious advice! My fiance and I originally decided that we wanted to elope or have a low cost destination wedding. I then got wrapped up in the idea of a big wedding and had a change of heart. Many fights later, my fiance agreed to have the big wedding I decded that I wanted. The budget has grown to about $50K and we have put down a little less than $5K in deposits.

My fiance works in banking and things have obviously taken a turn for the worse. With the way things are now, my desire for a big wedding is FAR outweighed for my desire for this money. I feel sick about it and my fiance is unhappy that I basically forced him into spending this money (most of it is his) on a wedding in this economy. If we had stuck to our original plan, we would be able to put our wedding money towards the approx $120K down we need toward a house in the suburbs. The thought of how long it will take us to make up for this $50K being spent is just tearing me apart.

However, I've already sent out the save the dates and am getting married over a holiday weekend in the summer. I feel like even though the invitations themselves are not out, it would be both humiliating and wrong, etiquette wise, to cancel the wedding, even though that is what I really want to do.

What are your thoughts? We have already cut down all excess from the budget (favors, that kind of thing). It's just REALLY expensive to have a decent wedding in a high cost of living area.

I would really appreciate some advice. Thank you!

Jean Chatzky: Stop. Stop. Stop.

You "owe" (I put it in quotes because that is how I think you are feeling) no one this big wedding. You owe yourself and your fiance the sanity of starting this marriage on the right financial footing.

I suggest either canceling altogether -- you can send a heart-felt letter explaining that in this economy this blowout isn't in the cards -- or inviting your friends/family to a beautiful cocktail reception on some beach that won't cost an arm and a leg.

And do not worry about the $5K. If there is any way for you to get some of the money back, you will get it. Or perhaps you can put it towards the smaller less extravagant celebration you finalize.

A wedding is just one day. A marriage is -- hopefully -- forever.

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West Hartford, Conn.: Hi, With the depressed economy, can we and how do we bargain with wedding vendors such as florists, cake bakers, photographers, etc to lower costs? Thanks!

Jean Chatzky: Great question to finish up on -- you can and should be bargaining. The words I like to use are: That's a little out of our budget. Can you do any better? It's not a hardcore negotiating tactic, but it works really, really well.

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Jean Chatzky: Thanks so much for coming to this chat today.

To the woman who planned the big wedding (New York, N.Y.) and now needs to downsize: Please get in touch with me via my website. And...

If any of you have questions that didn't get answered, please find me at jeanchatzky.com -- and look for my new book The Difference: How Anyone Can Prosper In Even The Toughest Times!

Jean

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washingtonpost.com: Thanks for joining us today! Please come back again tomorrow at 11 a.m. when an editor from Budget Travel takes questions on how to plan a fab but affordable honeymoon. And, in case you missed them, don't forget to check out transcripts of our earlier Wedding Week chats. On Tuesday, Real Simple editor Rachel Hardage took questions on how to plan a cheap but chic wedding and yesterday, Anna Post took questions on wedding etiquette.

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Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.


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