Newlyweds sort out money issues

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MIAMI – Jose Garcia adores everything about his new wife, Michelle Limia, whose beauty and feisty spirit won his heart. But there was another quality that equally attracted him: her fiscal conservatism.

“She’s very responsible about money, and that was important to me because love is awesome, but after awhile love can sort of blind you,” says Garcia, 32, who married Limia, 31, less than a year ago in Coral Gables, Fla. – after they both agreed to pay off their credit card debts, open a joint savings account and maintain their own private checking accounts.

“We agreed to do everything 50-50,” Garcia says. “We’re a company, a corporation. We have to agree on everything, including finances, which can sometimes be the worst part of a business because if the numbers don’t fit, we won’t work out.”

Garcia and Limia, both pharmaceutical representatives living in West Miami, are among a growing number of couples who are convinced that long-term romance is intrinsically linked to finance. This new generation of newlyweds – many already in their 30s, with established careers, investments and lifestyles – are keen on sorting out the money mechanics of a lifelong commitment before they walk down the aisle. Along with agreeing upon the guest list, the reception menu and the honeymoon, an increasing number of newlyweds find prewedding discussions are also a good time to figure out how to merge the checking accounts and who pays the mortgage.

Discuss money, save the marriage

It defies every romantic movie and novel ever written, but going into a marriage with your eyes wide open – and your credit histories revealed – may ultimately save the relationship.

A third of 1,022 people polled earlier this year said that a lack of financial responsibility hurt their relationships even more than their significant other being unfaithful, according to Fair Isaac Corp., the company that pioneered the FICO credit-scoring model. The national telephone poll, conducted in January by Opinion Research Corp. for Fair Isaac’s consumer division, also found that keeping the finances straight even trumped a good sex life. Respondents were twice as likely to select financial responsibility (22 percent) over sexual compatibility (10 percent) as a personal trait that has sustained their relationships over the years.

“You get married and come back from a week in Acapulco (Mexico) and the bills are in the mailbox,” says John C. Kroll, a Miami Lakes, Fla.-based financial consultant who conducts financial planning talks to future couples for the Archdiocese of Miami. “Who’s going to write the checks to pay them and what did you bring to this marriage – your love and also $30,000 in credit card debt? You want to know that before you stand before the altar. That kind of debt probably won’t be a deterrent to marriage, but it should be brought out ahead of time.”

In Florida, the law actually encourages engaged couples to talk about money. Since 1999, couples who apply for a marriage license in the state can waive a three-day waiting period and knock about $32 off of the $93.50 cost of the license by attending an optional four-hour premarital course, which includes finance as one of the topics. Both Miami-Dade and Broward’s marriage license bureaus post lists of approved counselors or course providers on their Web sites and in civil court offices. Most of the counselors who teach the course are based in churches or synagogues.

This pragmatic approach to marriage goes against the romantic, passionate notions that prevailed in previous generations, but it’s an obvious byproduct of today’s consumer-conscious, Internet-matchmaking dating set. More and more, singles have become realistic about finding a partner who is compatible in every sense of the word.

“The way it’s been taught to all of us is that you worry about these things later,” says Paul Moses, who wrote “Opposite Schmopposites: Opposites Attract but Complements Last” (Tate Publishing, $15.95) with his wife, EmilyAnn Moses.

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Define your money style

“The old way of thinking is that you start with the physical attraction, and if that’s there, then you stay in the relationship and let everything bubble to the surface down the road,” says Moses, a Winter Park, Fla., lawyer who conducts couples counseling. “But we encourage people to do your homework about yourself – including your money expectations – before you get into a relationship so you know what you’re looking for, so you find a partner compatible with those values.

“Are you a saver or a spender? If you get a $15,000 bonus tomorrow, are you in Hawaii the next day or in your financial advisor’s office or somewhere in between? In the course of courting one another, find out what the other person’s opinions are on credit versus cash, savings and spending. I don’t know a person who doesn’t carry a credit card debt, but it’s all about testing the waters for your own comfort level. Is it 50 bucks or $5,000?”

Financial planners and relationship counselors suggest several strategies to smooth out or eliminate trouble spots that commonly affect newlyweds. For starters, talk. That means exchanging full and complete financial information, including everything you own and owe. Also share your financial history and phobias. Were your parents tightwads or did they shop, shop, shop? Was your allowance a weekly entitlement or did you have to work for it?

In addition to talking about your childhood and how your parents handled money, which can say a lot about you, create a list of short-term goals (paying off wedding debt or college loans, a new car) and long-term goals (buying a house, having children) to prioritize your spending.

One priority: Who will pay the bills?

In its phone survey, Fair Isaac found that late bill paying was cited as often as problems with in-laws or relatives as a stressful situation that put pressure on a relationship.

For all our supposed financial sophistication and equality, the vast majority of married couples still divide the family’s financial labors along traditional lines, with women handling everyday spending and budgeting decisions while men plan and invest for long-term security, according to a nationwide survey this year of 1,000 spouses conducted for Money magazine by Mathew Greenwald & Associates.

Almost all of the respondents admitted that money was a cause of tension in their marriage; seven in 10 actually owned up to arguing about it. The survey found that couples argue more about money than about sex, but not as much as they fight about the kids or taking out the garbage. Traditionally, some married couples have pooled their income in joint bank accounts, but with the high presence of women in the work force today, a growing share of couples is keeping some money separate.

Garcia and Limia worked out a deal that many experts advocate. They kept their own checking accounts, but created a joint account in which they deposit money given to them as wedding gifts, job bonuses and other unexpected sums. The account is for emergencies and things like renovations on the house that Garcia owned before their marriage and the condo Limia purchased before they tied the knot and moved into Garcia’s home. Garcia pays the mortgage on the house; Limia pays for household bills, such as electricity, cable TV and water.

The two showed each other their credit reports and agreed to get their credit cards down to zero balances before saying “I do.”

Now, they both agree that if they can’t pay for something in cash, they don’t buy it. When the two recently took a weeklong Caribbean cruise, they split the cost of the trip equally.

“We’re the type of couple that goes to Costco, and we’ll each give our check card and split it right in half,” says Limia, who dated Garcia for two years before they married Nov. 5 at Coral Gables Congregational Church. “You need to go in with your eyes open because if you’re blind to financial problems that could cause a divorce. You have to make sure you’re aware of what’s going on.”

Some financial consultants suggest couples open a joint checking account that both contribute to with mutually agreed amounts, not necessarily 50-50. The account could be used to pay monthly bills, such as rent, utilities and car payments. By keeping some money separate, it allows each partner an island of privacy and some discretion over how to spend it, which provides a certain comfort level, especially to people in their 30s who have been functioning independently for years. Some advise that couples should set a budget-buster dollar limit for the household account over which one won’t spend without consulting the other first.

Even if one spouse earns significantly less or isn’t working, it can help to have separate spending accounts with a set amount deposited in it weekly or bi-weekly by the spouse who makes considerably more or is working.

“If you deal with it up front and have a designed amount that the other person can’t question how it’s spent, then that allows some freedom and can be a good strategy to avoid conflicts,” says David Teitelbaum, a licensed mental health counselor and owner of The Relationship Counseling Center, with offices in Hollywood, Fla., and Pembroke Pines, Fla.

There are other legal reasons at least one joint account makes sense: asset protection, creditor protection, death. But no matter how bank accounts are arranged, full disclosure and communication about money is crucial, marriage counselors say.

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For Danny Lopez, 26, and Sofia Souto, 25, pooling all their money into joint accounts seemed like the most open way to handle their finances. The couple – he is managing partner of a political and government consulting firm called Capitol Gains; she’s a speech therapist for the nonprofit Hearing and Speech Center of Florida – aren’t due to get married until Nov. 25 in Miami Beach, Fla., but they’ve already created joint checking, savings and retirement accounts.

“We settled that very early,” Lopez says. “We both feel whatever money comes in is house money. It’s easier to manage and budget that way. Everything is totally joint.”

The two learned each other’s credit scores when they applied for a mortgage loan for an apartment in Coconut Grove, Fla., that they hope to close on later this year. They also attended an “engagement encounter” that included a discussion about finances that was required before they could have a Roman Catholic wedding. “It forced us to spend a day talking about these kind of things,” Lopez says.

And the lines of communication over money need to stay open as a marriage grows because circumstances can change. One spouse may leave a job or stay at home if children come along.

“I’m seeing a patient tonight who has been married a few years and finances are a serious problem,” Teitelbaum, the mental health counselor, says. “She wants to stay home with the kids, and yet they have financial obligations. People need to look at values versus real life. A couple needs to discuss, “What are we going to do when we have kids?’ This is what we try to head off.”

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