His Debts, Her Debts, or Our Debts?

You’re in a relationship. That relationship is starting to get serious. You’re contemplating marriage or some other form of long-term commitment.

Now what?

Quite often today, people are bringing significant debt into relationships with them. Credit card debt. Student loan debt. Auto loan debt.

I often get emails from readers asking me how to deal with them. Should they keep these loans separate from each other? How much debt should they really share?

This was also an issue that Sarah and I struggled with when we got married. After some struggles, we eventually came to a conclusion that really makes the reality of these debts quite clear.

First of all, regardless of who actually owns the debts, they are now shared debts. When you’re married, your money effectively becomes a shared pool, whether or not you directly share that money or not. If one of you has a debt, the money to pay for that debt comes out of the shared pool. What’s left in that shared pool is smaller, reducing your opportunities as a couple to build towards other financial goals.

When we were married, for example, I had an auto loan and my wife had an auto loan. I had student loan debt, as did my wife. I had credit card debt, as did my wife.

At first, we each tried to handle our own debts. What we discovered, though, is that after covering these debts, we each had much less left over to contribute to the things we shared – rent, energy bills, food, and so forth.

Even though we were keeping our debts separate, the reality was that the consequences of those debts were shared. If the consequences are shared, then it follows that the responsibility for paying off the debts ought to be shared as well.

Which brings me to my next point: once you acknowledge the debts as essentially shared, the optimal way to get rid of those debts is to consider them all together. It should no longer matter who has the worst debt. What matters is that the worst debt is the one that you both focus on first.

When my wife and I reached this conclusion in 2006, we began to really work together to focus on all of the debts either one of us had. It didn’t matter whose name was on the credit card or on the car title. The consequences of those debts were shared, so we both benefit when any of those debts go away.

Doing all of this successfully requires complete openness. You can’t hide debts from each other. You can’t hide money from each other. You can’t hide spending splurges from each other.

Whenever you do these things, you are taking money out of that shared pool that helps you both get what you want from the future. You’re also being dishonest with your partner and, likely, you’re undermining your debt repayment plan and other financial plans for the future.

This type of dishonesty is acid to any relationship. It opens the door to other forms of dishonesty that can completey destroy a relationship.

Any relationship where things are not completely in the sunshine is a relationship that’s eventually asking for problems.

If you’re not comfortable with that openness, then your relationship needs work. This goes beyond mere finances. It’s an indication that there are trust issues in your relationship and as long as those trust issues exist, you’ve got a gigantic fault line in your relationship that can easily erupt into a earthquake.

Simply put, share your debts. Regardless of who brings them to the table, you share the consequences, so you should also share the effort of eliminating them. This can also help you to pay them off in a more optimal fashion.

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63 thoughts on “His Debts, Her Debts, or Our Debts?

  1. Kevin says:

    Totally agree. One thing I often wonder regarding “separate finances” couples is: What will they do once they reach retirement age?

    If Jane has a bunch of student loan debt, and John doesn’t, and they decide to keep their finances separate, then John will have more saved up for retirement than Jane (assuming identical incomes and spending habits). What will John do then? Will he travel the world alone, telling his wife “Sorry honey, guess you shouldn’t have taken all those student loans. If you need me, I’ll be in Hawaii. See you in a month.”

    I just don’t get it. If you’re a team, then work as a team. Otherwise, you’re just roommates “with benefits.”

  2. getagrip says:

    I think a lot depends on when you get married. I got married out of college, we had nothing and we absorbed each others debts and worked as a partnership in attacking them.

    That said, I’ve seen folks who get married after they are farther along and have a fair amount of assets. I can see those couples splitting up the money and debt more along individual lines because they aren’t starting from near zero. However, both need to be aware of the others debts, agree to how fast they are getting paid off, etc. because they are responsible to each other now. Again, the issue becomes one of openness, trust, communication, and commitment which is what good relationships typically require anyway.

  3. Adam P says:

    I disagree (except on the openness part, that’s correct 100%).

    I would resent having to pay for consumer debt in particular acquired before I met someone I’m with and require they pay that debt off themselves out of their own pocket, if possible before we got married. That’s moot for me because I’m not going to get serious with someone at this stage of my life that carries revolving credit card debt. Such a person would be a poor fit for a Chartered Accountant who trolls personal finance blogs in his spare time.

    Joint expenses that my partner and I agree on jointly I will gladly pay my share or even more than my share if I make more than the person (the whole equal % of income contributed to the pot makes most sense to me).

    As for #1 Kevin – at retirement age life will continue exactly as it was before retirement age, why would it not? Instead of income from a job you take income from your retirement accounts (4 or 5% withdrawal is common) and then you contribute equal percentages to your joint expenses (such as a holiday).

    Jane’s retirement income would be less than John’s, so when the trip comes up she contributes what the contributes the same percentage towards it as he does from her smaller retirement income. Just like if she made $40,000 a year as a secretary and he made $90,000 as a plumber and they were married. It would work just fine, the same way it does for millions of non-retired and retired couples.

    This is a case of to each his own, and what works best for the couple is the best way to go.

  4. TLS says:

    I don’t necessarily agree, but every couple is different. In my first marriage, we shared debts and put all the money into one pot. We divorced after several years, and all the debt was gone by then.

    I have since remarried (last year, after being together four years), and we have our finances separate. We don’t even have a bank account together (yet). We have a system that works for us right now, and I’m sure it will evolve over time. By the time we retire, I suspect most of our finances will be shared and we will pool our retirement. But we also have a 10-year age difference, so we aren’t going to retire at the same time. I don’t actually ever plan to retire, but that’s me.

    By not sharing our finances, but by talking about things and understanding each other, we have built up a good foundation. For example, three years ago, my husband wanted to quit his job and live off savings for a year or more, because he was seriously burned out from work. I wouldn’t have done it that way, but it was his savings and his decision. He was responsible for his part of the expenses. I trusted him and his decision, and although him being off work for a year and a half wasn’t always easy, it worked out fine and he is much happier now. If we had shared finances at that point, I’m not sure if I would have been comfortable with him doing this.

    I always laugh when people say ‘you’re not really married if you don’t share your finances’. They certainly have a right to their opinion, but how do they know what is right for everyone else? Love, trust and understanding are the basis of a good marriage, not just shared finances!

  5. valleycat1 says:

    I would say the first thing is to have the open conversation about your financial status while you are deciding whether to commit to sharing a household. That way there should be no nasty surprise hidden financial obligations and an opportunity to find out that you can (or cannot) reach an agreement on how these should be dealt with equitably, before you reach that tipping point of having the merged financial resources.

  6. Johanna says:

    (Disclaimer: I’ve never been in a relationship that’s gotten even remotely close to the point where we would be thinking about combining finances.)

    I can see separate finances working well, as long as household expenses are also divided appropriately. If I were in a relationship with a man who was paying down a big student loan, I would want us to regard the loan as “his debt,” no question, because if we were to split up before he finished paying it off, I would not want to be stuck with any of it. But I would gladly cover a larger share of our joint expenses (rent, groceries, entertainment activities that we do together) so that he would have enough money to pay down the debt *and* to save adequately for retirement in his own name.

  7. Amanda says:

    When my now-husband and I got together and combined finances we decided on what would be joint expenses. Things like his credit card bill became his and things like my student loan became ours. He didn’t think I should be penalized because his parents had paid for all of his college. In return, when he went back to school for his MBA that was also a joint expense – as the plan was for it to increase his earning potential so when we had kids we could afford for me to stay home the first few years. We both feel this has been fair.

  8. That’s why I’m helping my girlfriend pay off her debts now. If we do ever get married, it would be nice not to have to worry about that stuff!

  9. +1 for #4 TLS.

    My wife and I share our household expenses in accordance with the % of total household income each of us earns. The rest is our own to invest/spend/save as we wish.
    That is not to say that we don’t buy each other things or help each other out with retirement savings goals etc. But, we’ve never fought about money and I hope to keep it that way.
    With respect to debt coming into the marriage, we both paid off our own consumer and student loan debts before we got married.

  10. Russ says:

    You don’t necessarily ‘share the consequences’ if the debt is manageable. Right now my girlfriend and I are paid into separate accounts, and contribute an agreed-upon amount each into a shared account which is then used for bills, groceries, and other shared expenses. Individual debts are paid from our individual accounts, as are savings etc. As long as we can each afford to pay our share into the shared account (which we can, easily), neither of us suffers. I’m not saying we’ll keep this arrangement forever – retirement savings in particular will eventually be merged – I just wanted to illustrate that the ‘shared consequences’ idea is far from universal.

  11. TLS says:

    Thanks, #9 Tyler@Dividendmoney

    My husband and I don’t fight about money either. We have clear agreements and talk about them openly. If one of us isn’t happy about the situation, it’s that person’s job to speak up. This works for us.

  12. Adam P says:

    “Simply put, share your debts. Regardless of who brings them to the table, you share the consequences, so you should also share the effort of eliminating them.”

    I wish you would come out and say “For Sarah and I, sharing our debts was the way to go. For some couples it may not be. The key is to be honest and open about your finances and discuss what will work best for your situation before getting married.” instead of giving out one size fits all for everyone advice.

  13. Liz says:

    @Kevin: This is a very limited answer to your retirement question, and it’s based on health, not debt, but, my husband has only a few thousand saved for his retirement, because the men in his family generally don’t make it to retirement age. His grandfather didn’t live long enough to see his youngest child born (and he wasn’t killed in a war or an accident — he had a massive heart attack). His father and brother both had heart attacks before age 45, and it’s only because of modern technology that they’re both still alive (dad is 63 and not yet retired, brother is still under 45).
    The other male relatives support the theory that any of them that live to retire are the exception, not the rule. So my husband lives for today.
    I, on the other hand, have had relatives live active lives into their 90s and a couple make it past 100, so I am saving hand over fist for retirement.
    And I openly admit that I’m sacrificing today for the future, while my husband is sacrificing his future for today. Together we’re probably a happy medium, but it can stir up some conflict. We’re working on it, but sort of aiming toward letting each of us use our natural tendencies to the benefit of both of us.

  14. Gretchen says:

    You can be open and still have separate accounts.

    Or separate plus a joint which sounds complicated but works well for us.

  15. Matt says:

    My take on the whole “separate accounts” issue is that it seems to make life a whole lot more complicated – and could also potentially cause resentment when partner A has more money to play with than partner B. Obviously some people make it work… J.D. Roth at Get Rich Slowly being the first to come to my mind.

    How do the “separate finances” advocates deal with having one partner as an at-home parent though(as in my case, where my wife stays at home)? Most of the people who I’ve seen advocate this are childless.

    @ #3 Adam P – Would you then not be allowed to share your partner’s big-screen TV bought with that credit card? If you’re not going to contribute to costs, it seems unfair to accept benefits. And what about stuff like student loans?

    @ #6 Joanna – I disagree with your perspective on the student loans… mostly because it’s predicated on the “what if we split up?” question. I think when you approach financial decisionmaking that way it encourages distrust. My wife and I have both had student loans that we’ve taken out (at different times) and regard that burden as shared (though only one person’s name is on each account).

  16. Nate says:

    I find it very interesting how there are such differing feelings on pooled versus seperate finances in couples, particularly once married. I have a hard time comprehending why couples would want to keep everything seperate. To me pooling everything makes complete sence and fits with the partnership aspect and trust involved in marriage. There are others who can’t imagine giving up “their” money.

  17. Nate says:

    I find it very interesting how there are such differing feelings on pooled versus seperate finances in couples, particularly once married. I have a hard time comprehending why couples would want to keep everything seperate. To me pooling everything makes complete sence and fits with the partnership aspect and trust involved in marriage. There are others who can’t imagine giving up “their” money.

    Trent’s point, which may have been missed by a few of you, is that even if you keep your money 100% seperate, your partner’s debt can affect your ability as a couple to meet financial goals. If you don’t have financial goals as a couple, it’s time to make some! If one persons debt is getting in the way of a financial goal, this is a problem for both of you and you should deal with it as a couple, not leaving it to only one person.

  18. Justin says:

    I agree with this, although I think there is definitely a trend going the other direction.

    When you get married, you’re now one body, one unit, one flesh. What’s mine is ours, and what’s yours is ours.

    When my wife and I got married, she was fine taking on my $33K in student loans. Just the same way, I’m fine taking on her $40K in student loans now for grad school.

    Is it fun? No. But by having our finances in one pot, we’re setting ourselves up for a better chance to have a lasting marriage.

    Once you begin separation in something as important as finances, you could be setting yourself up for separation in other ways too.

    Although I WILL say that some couples get by fine with it, everytime I’ve seen shared finances it resulted in some form of “whats mine is mine and what’s yours is ours”.

  19. lurker carl says:

    When two (or more) people cohabitate, incomes and debts ARE shared regardless of how strictly each individual’s monies are separated or pooled. When one can not pay for their share of the joint household expenses, the other must cover it or everyone shares the consequences.

    I believe that is the point those dozen plus paragraphs attempted to make.

  20. Johanna says:

    @Matt: Maybe you’re right – maybe thinking clearly about what to do in the event of a breakup actually makes the breakup more likely to happen. (Is that what you’re saying?) But even if so, I think that that’s a tradeoff that I, personally, would be willing to make. For me, it’s more important to ensure that I’ll be able to land on my own two feet no matter what happens than it is to maximize the chances that my true love and I will stay together forever and ever. Other people may have different priorities, and that’s totally fine – I’m not saying that everyone has to do it the same way that I would.

  21. Patty says:

    We have seperate and joint credit cards and checking accounts. We mostly paid for our own cars and our own expenses but put in 50/50 on the household. My husband has been fine with pooling but I had this desire to pay half the house (community property state says we’re 50/50 anyway). This has worked fine for 3+ years but now I’m quitting my job to start our family. I can’t keep contributing 50% of the expenses forever. We’re sorting out our new plan but no matter we’ve always had each others backs.

  22. 8sml says:

    @ #15 Matt:

    My husband and I had separate finances for several years, up to the day our first child was born. At that point, it made sense for us to merge our finances because I was giving up my salary to care for our daughter.

  23. Kristen says:

    Emotionally, I think Trent is exactly right. Any debt either party has is shared (paid for, commiserated over, planned for) together, 50/50.

    Legally, though, there are a couple of other things to consider. 1) there are very good reasons that any debts brought to the marriage or partnership should be left solely in one person’s name. If ever you get into a situation where the debt cannot be paid, it only damages one of your credit scores.

    2) It is absolutely crucial for both members of the partnership to have a credit history! If something happens to your spouse, and every bit of your credit history was in his or her name, it could take you years to get back on your feet. This applies to a divorce or a death. Don’t fall into the trap of one partner having all of the loans, and viewing them all as “shared” — emotionally they are, but legally, they aren’t!

    3) Having something like a car in both partners’ names creates a huge hassle anytime you have to do anything with the car — sell it, title it, you name it — You BOTH have to go to the DMV. Don’t do that to your spouse. One car in his name, one car in her name. Or some other balanced approach to sharing responsibility/debt.

  24. Monica says:

    Interesting post, as I am a newlywed in this situation. My husband came to the marriage with a little bit of remaining debt. We are completely open and everything is in one “pool” on the budget worksheet. However, we have not combined our finances legally through a joint account for credit score reasons. (We will be doing so in the future.)

    I do think it’s possible to be completely open and have a shared pool of money, even while technically having separate accounts. I don’t look at it is “his debt that he has to pay” — We’re now married, so it’s our debt that we are working together to pay off.

  25. Elizabeth says:

    Tagging on to what Kristen (#23) said, it’s important to know what the actual laws are in your state regarding whose debt it will LEGALLY be. Not emotionally, not for these day-in-day-out practicality reasons, but in hard legal facts.

    In general, if the debt was incurred before you were married, you’re not legally responsible for it. Once you’re married, the details differ by state (especially for the 9 community property states). This might help you know how to pick your battles.

    For me, I’m not worried about what my future partner has done in the past (his problem, his solutions), but I’m focused on what he is doing *now* and what we will do in the future when I’ll actually be liable. Can’t change the past, after all.

  26. BrentABQ says:

    In your decision making process you’ve looked at the future of the relationship and decided the best course of action. But what about the other way? Looking at this shared finances scenario and realizing that would cripple the relationship. If the debt and income ratio is really imbalanced why wouldn’t shared finances be resented?

    Marriage could be the worst financial decision possible. Taking on another’s debt. Say he has a mountain of debt and low income, and she has a mountain of assets and high income. With your system the highest priority for her is no longer retirement, but debt. He couldn’t afford to split their life 50/50, but she doesn’t want to downgrade. If she’s unwilling to downgrade her lifestyle should she also be unwilling to marry?

  27. AnnJo says:

    There are three parties to every marriage – the two spouses and the State. Regardless of what decisions a couple makes during marriage (or cohabitation), they should realize that in the event of a split, the State may see things differently.

    For instance, take @Liz above, who is saving heavily for her retirement while hubby figures he’ll be dead before he reaches that age, so lives for the present. If Liz and hubby split, in many states the court will split Liz’s retirement with her hubby and pay no attention to the spouses’ assessments about likely lifespan. If that were to happen, hubby will have enjoyed his toys and games, but Liz will give up half (or more if hubby has suffered a disabling heart attack by then and can no longer work) of the retirement she has saved for so devotedly.

    Likewise, in most states, if both came into the marriage with equal debt but decide to pay off wife’s debt first because it is higher interest, if they split before husband’s debt gets paid off, chances are good that he will get little to no credit for paying off wife’s debt but will walk away with all of his own.

    There’s a way to avoid these outcomes: A prenuptial or postnuptial contract prepared by a competent lawyer for one party and reviewed independently by a lawyer for the other. Spell out in writing what your ideas of fairness are, and it will be given a great deal of weight.

  28. Riki says:

    This discussion is fantastic — I live with my partner of 8 years, not married, but we just bought a house together. We’ve always shared expenses according to our incomes but everything was in separate accounts: chequing, savings, retirement, everything. With the house that will change but I’m really not sure how.

    I’m not a believer that we should have one account and nothing separate; we’re both much too independent for that. He’s currently on vacation (without me; that’s how independent we are!) but once he returns we have a lot of planning to do. Should be interesting.

  29. Melissa says:

    #15 Matt – your question about separate finances once one partner is at home with the kids is a good one, I hope more people weigh in. My husband is a stay-at-home dad and so we put everything together in order to make the household work. I don’t see how it could work for us any other way, but I’d be curious to hear other experiences.

  30. Des says:

    I think this has a lot to do with where you were at financially when you got married. Trent was young and not well established, and it is easy for folks in that place in life to combine finances. For those of us who married in our 20s, we most likely share our finances. But for folks who married in their 30s or later (or, who had a previous marriage), it often makes more sense to keep separate finances. After you’ve established yourself and your bookkeeping habits, it is harder to incorporate another person. Also, shared finances works best when one person is the finance nerd and the other doesn’t care as much. If I was married to another Me, we would not share finances.

    Also, even though DH and I have combined finances, he does have a side-business which he keeps all his income from (less taxes). That lets him buy his toys that I think are a waste of money without even needing to ask me about it. “$400 iPhone? Whatever, its your money.” No resentment from me for wasting “our” money, and no resentment from him that I’ve said “no”. Win-win.

  31. valleycat1 says:

    My spouse & I had both been married before, both single then for almost a decade, & were 40-ish when we married each other; both work with significantly different income & benefit levels. It took about 5 years for us to sort out by trial and error what actually works in practice for us day-to-day. What initially sounded good in conversation didn’t work out when we tried it. On paper our current system would seem pretty complex, but in reality we don’t give it much thought now that we hit on what works for us.

  32. TLS says:

    @ #28 Riki

    We don’t have children. But if we did and one of us were a stay-at-home parent, I think you’d pretty much have to combine finances to make it work.

    I have a friend who is married and has two children. She and her husband both do freelance work, and do not have joint finances. They have clear agreements on who pays for what, and that works for them.

    My other friends and family members with children all pool their finances.

  33. Allison says:

    my husband and I have been married for 5 years and we don’t have any joint accounts or credit cards (though our names are both on the mortgage and my car loan). When we met, I had zero debt but he had a student loan, car loan, and credit cards. Since he had been paying on these for so long (we were already in our mid-20s when we met), why should I suddenly start paying on them too?

    This is how we do it… he and I each pay for things throughout the month, then at the end of the month, we figure up the total, the percentage each owes based on our percentage of total income, and then the one who didn’t pay enough writes the other a check or rolls over what they owe to the next month. We’ve been doing this for so long, that it’s always understood what’s a shared expense (health care costs, diapers, etc.) and what’s not (hair care products, clothes, etc.). Figuring it up at the end of each month is extra work and sometimes I consider getting a joint checking account for bill, but this way has just always worked.

    As for retirement and other savings, we both agree on what we will contribute to our own individual accounts and all savings is considered shared equally. We’ve never had a situation where one person wanted to use savings for a non-shared expense.

  34. Riki says:

    TLS — Agreed. If one person doesn’t work outside the home or if children are involved, joint is probably the most sensible way to go.

    We’re not having children, we have no non-mortgage debt, and we might get married one day but neither of us are in a rush. In fact, we always joke that in our case getting out of the mortgage will be harder than getting out of a marriage.

    I plan to continue saving for retirement as though I will have to support myself. This isn’t a statement about the quality of our relationship but rather a prudent move that will benefit us both down the road. In terms of daily expenses . . . I don’t know. We get paid on very different schedules and have decided to match our mortgage payments with his regular paycheque. It would be easy for us to simply have the payments come from his account, but really both of us should be able to make inquiries about that sort of thing and in that scenario I wouldn’t be able to.

    Alas, we’ll have to make some changes but I’m not quite sure what we’ll do. I was really happy with our current setup and now I’m loathe to change it. But we’ll figure something out.

  35. Telephus44 says:

    We do his, hers, and ours. My parents have everything separate and have been married 40 years; my inlaws have everything combined and have been married 40 years. People need to do what works for them.

    When we got married, I finished paying off my student loan debt and my car, he paid off his credit card debt and his car. When we purchased our first car after being married, that came out of “our” pot. I think personal finances are something that evolve over a relationship, it’s not a “we got married so *poof* wave the magic wand and everything is combined” moment.

    I will also say – the issues largely come from when there are large disparities in either income or debts. If one spouse has a significantly larger income, or if one spouse has a significantly larger debt, then there are more issues to deal with when you completely combine finances. Maybe in Trent’s case it was easy because they both had a car loan, both had student loans, and my guess is that they made similar incomes. That’s a lot different than if one partner is making $100K and the other person is working a minimum wage job with $20K in student loans.

  36. CNM says:

    Our system is a lot like #10 Russ. We both have significant student loans ($30K each) and we both are paying them off at almost the same rate. We each put in a certain amount into our joint accounts to pay for things like bills, mortgage, home improvement items, etc. and the remainder of our wages go toward loan payments and personal expenses (books, clothes, etc.). This works out very very well for us. So, we use a hybrid joint/personal finance system. The key thing is that my husband and I discuss our finances regularly and we both know very clearly where our money is going and there is no resentment or “secret” debts.

  37. Hunter says:

    I strongly agree with valleycat1, and others. Open conversation is key to any relationship worthy of marriage. There’s no way to escape finances so it’s simply better to be honest with each other (and ourselves) from the moment it begins to get serious.

    All our transactions are recorded on quicken. We can see where the money flows, and how much we have at any time. It’s a little tedious at times, but worth it to be on top of things.

    We use a fun-money system, for, well, fun. My wife and I each take $100 every pay-day. This is ours to spend, save, invest as we see fit. No questions asked. I highly recommend it. Your budget may allow for more or less than our $100.

  38. Kathleen says:

    The idea of separate finances and deciding which spouse “owes” the other for shared expenses sounds absolutely AWFUL. This is marriage, folks, not a roommate relationship. If you can’t deal with combined finances, I’d seriously examine the soundness of the bond.

  39. sm4k says:

    Echoing many other sentiments, open communication is key to making it work, regardless of your decision.

    I’d think “Compound Interest” is the only thing that should be pointed out when it comes to sharing/joining accounts. Something like your retirement is going to be a much better shape simply because you worked together.

  40. Gus says:

    @sm4k #49

    Regarding compound interest: Whether you compound 10,000$ in one acount at a rate of 3% or 5,000$ in account A and 5,000$ in account B, both at a rate of 3%, the end result is the same. one does not compound any faster than the other.

  41. Brittany says:

    Scenario:
    I have scrimped and saved and worked an extra job to pay off my student loans agressively (they’re roughly equal to my annual salary, and I was determined to pay them off in 2 years. I’m going to miss it by a couple of months, but I’m overall happy with the progress). I contribute adequeately to retirement, an “irregular expenses” account, an emergency fund, and other miscellaneous medium-term-goal-savings. I’ve lived lean for the last several years so that from here on out, I can plan a debt-free life. I can continue to fund my savings at roughly the same rate, but add more “frivolity” to my life with the extra money I’m not throwing at student loans.

    So I meet a man who has been paying minimum payments on his student loans, who has wracked up a some consumer debt living beyond his means, and who has a car payment because he bought a nicer than necessary car. He’s since had an epiphany about financial freedom and is getting his financial life on track (a prerequiste for me in someone I’d combine my life with). We decide to get married. For the sake of simplicity, the portion of my money I pool for shared expenses and savings goals is the same as my individual expenses before, as is his. But I’m left with a chuck of “extra” money that I can spend frivilously, because of my previous lean years. He’s already had his frivilous years and has to spend the “extra” money on debt instead of toys.

    To me, if we’ve settled on “fair” portions of combiend finances, why should I be responsible for his previous debt with my “extra” money? I’ve done my lean years to get out of agressive-debt-pay-off mode. Does this mean I just shouldn’t get married?

  42. Kestra says:

    Luckily my husband and I had no debt when we were married. If he did have debt I would have been uncomfortable helping him pay off consumer debt, especially if his income was higher than mine. Though, realistically I don’t think I’d have married someone who didn’t share my financial ideals. Too much trouble there.
    Also, before we were married I was considering going back to school. He felt this was too risky and wanted the risk to be my own, not his. Because of this and other reasons we decided to keep finances separately. My risk of returning to school and my possibility of increased income is mine alone. (He also decided to return to school and is making less money than me now – funny how things change.)
    But we do look at our money are generally joint. We just manage it separately. We do the splitting of finances and the one person “owing” the other person. It makes both of us comfortable and we’re so used to the system that it’s no trouble at all. I’m very picky about how money is spent and invested and what-not. He has the right to not have me knit-pick his personal choices. He’s an adult and can do what he wants with his money. If he wants to spend more and retire later than me, that’s his choice. If one of us wants to take time off work, as long as we cover our share of expenses, then the other could care less. I think we are smart and independent enough to make our own decisions. We’re a partnership, not 1 person.

  43. Kathleen says:

    @41 – does it mean you shouldn’t get married? Bawd on the way you described this hypothetical relationship, I’d say yes- you should NOT get married. There’s an overtone of criticism and resentment in describing this hypo-husband. Those sentiments in real life spell disaster for a marriage. In marriage, you take your spouse for the good and the bad. If you’re not ready to do that, you’re not ready to get married.

  44. Mel says:

    In my 2 long-term relationships, it’s basically been a his/hers/ours split. In the first, we sat down and had “the talk”, came up with a number for the monthly expenses and split it equivalent to our incomes. That worked until I went back to school for a year. At that point, I took out a very small living expenses loan, but he covered most of the expenses. We split (amicably) after that year. When I said I felt bad about “living off him” since he didn’t end up benefitting from my study, he said “I could afford it and would’ve had most of the expenses anyway”.

    The next/current relationship, it’s just happened naturally that everything is considered joint, regardless of the name on the account. Travelling together for almost 3 months in remote places tends to do that! If we had to keep track of who spend how much in what currency we probably would not have survived it. The banks here aren’t so good about ‘joint’ accounts, so ours are connected to his personal. But that student loan I brought into the relationship? He ended up paying it off for me, in order for us to get a mortgage. At the moment, I earn far less than him and it’s not regular income. That will soon change so the balance will change as well.

    In both cases, the only thing that has made it work is openness, honesty and a commitment to the relationship that makes the actual dollars almost irrelevant.

  45. Julie says:

    I think anyone who enters a marriage concerned about “fairness” in any issue (money, household chores etc) is setting themselves up for some serious issues in the long run. Many posters above have mentioned that they have worked out a “fair” agreement with their spouse. I was taught to enter a marriage not expecting to give 50%, but to enter my marriage expecting to give 100%.

    Eventually you will find that life is not fair. If your marriage was based on negotiations up front, what happens down the road when your situation changes and you can’t agree on a new “fair” financial arrangment? It seems as though this is a recipe for resentment should life take an unexpected turn.

  46. Kestra says:

    @45 – I think “fair” in this context means that neither partner feels they are being taken advantage of, and that it is a mutually agreed upon decision. If both partners feel the arrangement is fair, I see nothing wrong with that. Are you suggesting you go into a marriage thinking that you will give 100% and if you are lucky, they will give more than 0%. I hardly think that’s a formula for a good marriage. If both partners plan to give 100%, then what’s unfair about that?

  47. Julie says:

    #46…If you are enterring a marriage and one of your concerns is that your partner is going to take advantage of you….then maybe you should not be enterring the marriage.

  48. Kathleen says:

    Amen, Julie!

  49. Doug says:

    When my wife and I married, we had the discussion. She said “Why can’t we just keep our finances separate and split the bills?” Trust was a big issue, thanks to a previous marriage.

    I replied “Because I’m the better saver, and when I have enough money for a vacation I’m not going to pay for you to come with me.”

    Once she realized that I was serious and had no problem going somewhere without her, that was the end of the discussion. Our finances are now combined.

    Of all my acquaintances, the ones who have marriage trouble and arguments are the ones with separate finances. The ones who don’t have trouble are the ones with combined finances.
    Some people think that’s coincidence.

  50. Kestra says:

    @47 – That’s my point. To me, fair means that you aren’t going to take advantage of each other. You should marry someone when you feel you are both benefiting and are in agreement about whatever arrangements you make.

  51. Julie says:

    #47,

    I can’t even imagine marrying someone if I had the slightest concern that they were going to take advantage of me. Thus I would not worry about having all of the details of “who pays for what” worked out in advance of a marriage. I also did not marry to “benefit.” I married to start a life with someone…till death do us part. That being said, I think much of this discussion really comes down to what you ultimately expect to get from (or hopefully bring to) a marriage…and if you expect marriage to be as long as you both shall “live” or as long as you both shall “love.” (I have heard this vow in more than one marriage in recent years.)

    For me, marriage was about two individuals becoming one for a lifetime. I realize that others don’t share this belief, and thus they may enter a marriage with a different set of criteria than I did… However I can’t help but wonder if allowing yourself the option to split up, and even making it easier for yourself by keeping your finances separate, isn’t possibly dooming yourself to failure before you even begin.

  52. Julie says:

    One more thought….I do think a 2nd marriage where children are involved can call for completely different arrangements/mindset than a first marriage. My husband and I have trusts in place to ensure that half of our assets will be protected from a future spouse should one of us pass and the other re-marry. We have also agreed that the wealth we have buult together should ultimately pass to our children, and not to a future spouse. Thus neither of us would remarry without obtaining a prenuptual agreement to protect our estate for our children. Should some future potential husband not understand my desire to protect my children…he would not be the husband for me.

  53. deRuiter says:

    #8 Kevin “That’s why I’m helping my girlfriend pay off her debts now. If we do ever get married, it would be nice not to have to worry about that stuff!” IF???? And what IF, after her debts are paid off, you don’t look quite so charming to said girlfriend, and she dumps you and marries her soumate? You will have enabled them to start life debt free. You’re a generous person. Also, if you do get married, she may continue to saddle you with debt you haven’t accumulated, because there is a pattern of you settling her debts. Suggest you save your money in your personal account until things develop more seriously, i. e. you get married. If there is a split and no marriage, you will have a nice chunk of change to start a new relationship, and not be sulking because your money went to pay off the previous girlfriend’s debts.

  54. EngineerMom says:

    DH and I got married at age 25 (me) and 26 (him). I had finished school at age 21 and was working full-time. He was in grad school after spending one year after undergrad working full-time and living with his parents. We immediately combined finances upon marriage.

    I had a small student loan ($50/month) and a car payment ($200/month) when we married. My husband had no student loans, and his car was paid off. Neither of us had any consumer debt. We paid for most of our wedding ourselves with money we had saved, with the alcohol and honeymoon budget as gifts from our parents.

    I think combining finances when marrying is an act of faith in the relationship. All this talk of “if we ever split up, I don’t want to be stuck with…” strikes me as setting yourself up for failure. Growing up, my mom talked about how taking divorce off the table completely forced her and my dad to work out their differences, whether financial or otherwise. That is how I approached marriage – if I feel like I have to have a “just in case” scenario, why am I marrying him in the first place?

  55. EngineerMom says:

    @#52: I do agree with keeping some things separate for children from previous marriages (whether from divorce, death, or whatever). Each parent has an individual responsibility to his/her children, and it’s reasonable to keep that financial responsibility separate from the current relationship.

  56. Tally says:

    This has been one of the more interesting discussions we’ve had recently. Lots of food for thought here.

  57. Mary says:

    Is that an orange top on the dinner plate?
    Mary

  58. Julie says:

    #54…

    Same thing with us….divorce wasn’t an option. When you know that going in, it certainly changes the way you view a relationship.

  59. ChrisD says:

    I think the question can be extended to discuss all relationships, not just marriage. And I think it is very important to keep finances separate at the beginning of a relationship. That sounds very obvious but I’m reminded of a story in the memoir ‘he died with a falafel in his hand’ where a young couple decided to live on one income and save the other income for travel. Instead of each contributing half and each saving half, she spent all her money and he ‘saved’ all his money. In reality he injected all his money. At the end of the day her loss was not too terrible, but I never understood why they didn’t keep separate finances.

  60. CJ says:

    I’m afraid I can’t agree with you on this one Trent.

    Perhaps this worked in a more traditional, single income, patriarchal society.

    My spouse and I have separate careers, separate investments and separate debts, though only very small balance student loans.

    What do we share? Rent. Groceries. Utilities. Things we both actually use.

    We also share a financial philosophy; no frivolous expenses, no debt, no extravagances.

    We live frugally. Furthermore: no kids, plans to never have any.

    If we can’t make it on our own, burdening each other with one or the other’s vices or problems would only breed resentment and eventual splitsville.

    No, we maintain our respect for each other knowing we don’t *need* each other. I suppose we do share debt in that neither of us have any.

  61. cc says:

    wow, we’re in the minority over here. 14 year age difference and large income difference, we both have big ol’ tax bills from messing up as freelancers. they’re different sums, but proportional to our income. we’ve both agreed to pay our own debts off and then get started with this saving business.
    we do have a joint banking account we had to register for me getting on his insurance- so far we’re saving for a couch.
    i appreciate that our savings are relatively separate- we can both buy stupid stuff that makes us happy without worry of criticism from the other :)
    well, except when he bought that motorcycle, i had some criticism for him then. besides that everything works fine ;)

  62. Vivianne says:

    His, hers, ours.

    Family pool for family expenses.

    “Allowance” for frivolity (graphic novels, takeout food, makeup and pedicures, musical instruments, gifts to each other).

    Saves a lot of arguments in our house.

  63. Danielle says:

    My husband and I combined everything when we got married. Since then, we’ve had two children and I’m now a stay-at-home mom. Our baby has complex medical issues requiring me to stay in the home, so we put extra effort into ensuring we both feel we have equal access to and responsibility for our finances, debts and all.

    My in-laws, however, keep almost everything separate. My father-in-law is very frugal and finds it very important to save for retirement and their yearly vacations. My mother-in-law loves to share her love for people via presents, and not because she’s obligated to but because she loves it. In short, he’s a saver and she’s a spender. They keep everything, including debt, separate, and as long as the joint bills are being paid, they are happy with the arrangement.

    The only circumstances I don’t think every work involve lying. Shared finances may be the most common “best” solution, but different strokes for different folks.

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