How can relatives confront contentious money concerns without dynamiting family ties? Because personal finance is as much personal as it is finance, we asked experts from a range of disciplines—finance, law, psychology, and even preschool education—to address common family money scenarios. Here are a couple that newlyweds—or those about to marry—may encounter. We’ve also added our own practical advice.
Loving the Debtor, Not the Debt
Your fiancée is your perfect match, but she has $100,000 in student loans. How do you discuss your concern about how it might keep you from achieving major goals, such as buying a home?
A relationship expert’s take. Beginning a life together in debt puts an immediate strain on your relationship and can fuel resentment for years, says April Masini, founder of AskApril.com, a relationship and advice site that includes a dating forum. It would be a mistake, she believes, to not address your concerns head on—before you get married. “Say, ‘Something’s been bothering me about your debt. Can we set up a time to talk about it?’ ” she suggests. “Then start a dialogue about how you’re going to share income as well as debt in marriage, and create a savings plan and financial-goal bucket list for your life together.”
Regardless of whether your state is a common-law or community-property state, debt incurred by one party before the marriage is not owned or owed by the spouse. Still, Masini says it’s key to agree on how to handle it.
A millennial money expert’s take. Beth Kobliner, author of “Get a Financial Life: Personal Finance in Your Twenties and Thirties” (Touchstone, 2017), concurs that the problem can’t be swept under the rug. But she advises to look on the bright side and execute an action plan. “Tell your partner, ‘It could be worse; at least it’s not a hundred grand in high-interest credit-card debt,’ ” she says. “Then get on the phone together and call the student-loan servicers to find out about available discounts. For example, could your fiancée knock a fraction of a percentage point off the interest rate by signing up for automatic payment? Is she eligible for a loan forgiveness program, such as one that’s available to teachers? If she has lower-rate federal loans, can she stretch out the repayment period to lower the payments, leaving extra cash to pay down any private student-loan debt with a higher interest rate?”
You should also consider how to pay off a chunk of the debt sooner, Kobliner says: “Maybe a low-key affair at city hall followed by a backyard barbecue makes more sense than a blockbuster wedding in the Keys.”
CR says. Check out repayment plans for federal loans at studentaid.gov/repayment-estimator. Consider consolidating multiple federal loans into one loan with a longer repayment period and a single, smaller monthly payment. You can learn about loan consolidation here. You might be able to consolidate private loans through a bank, a credit union, or an online lender such as CommonBond or SoFi. You can also get more information on private loans at the Private Student Loans Guru website. Avoid consolidating federal and private loans together; this gambit may turn low-fixed-rate federal loans into variable ones and makes the borrower ineligible for federal repayment plans.
For a fee—usually $50 to $200—a debt counselor located through the National Foundation for Credit Counseling can help devise a budget and identify ways to save, so you can free up funds for loan prepayment. Those struggling to repay their loans can also go to studentloanborrowerassistance.org.
More on Family Money Issues
- Solving Family Money Fights
- What to Say When an Adult Child Needs Money Help
- How to Handle Sticky Money Fights With Siblings
- What to Do When a Spouse Risks Family Finances
- When Your Elderly Parent Needs to Give Up Control of Her Finances, What Do You Say to Her?
For Richer, for Poorer, for Real?
You’ve just married your same-sex partner after years of living together. You’ve always had separate accounts. Now, how do you frame the discussion about how—or whether—to commingle assets?
A marriage and family therapist’s take. “Some newlyweds slide into a comfortable money relationship easily,” says Diane Kubrin, director of mental health services at the Los Angeles LGBT Center. “But for other couples, merging accounts brings up issues of trust. They withhold sharing money as a fear of commitment, even after they’re married.” That fear of vulnerability often arises from personal money history; talking about how your parents handled money and your financial situations growing up can clarify your positions and help you move forward, she explains.
“Then the conversation can be, ‘There are so many different ways for us to merge our money or keep it separate, let’s figure out what all the scenarios look like,’ ” Kubrin says.
An attorney’s take. Bringing up the many financial benefits that married same-sex couples now enjoy could lead to a talk about how to apportion money tasks, says John Skarbnik, a tax professor and attorney with McCusker, Anselmi, Rosen & Carvelli in Florham Park, N.J. For instance, your spouse might know that married couples who file their income taxes jointly usually save money over filing separately. But he may not realize that you can now give twice as much money to relatives—$28,000 per year, or $14,000 maximum per spouse—without triggering the gift tax.
Still, look honestly at each spouse’s strengths and weaknesses, Skarbnik says. “If you’re married to someone who can’t handle a checking account, you’ll want your own account so your checks don’t start bouncing,” he says.
CR says. Even if you decide to keep certain accounts separate, a web-based money-management service—such as Mint.com or YouNeedaBudget.com—will allow you both to view all shared accounts in one place, which can make budgeting, planning, and saving easier.
Editor's Note: This article also appeared in the May 2017 issue of Consumer Reports magazine.
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