MISCEPY

Marriage and money

WASHINGTON - The honeymoon is over for all of those June brides and grooms. Now it's home to happily ever after -- and bills, bills, bills.
How you handle money at the beginning of your marriage can have an enormous impact on the rest of your lives together. Or your lives not together.
"Fifty percent of all marriages end in dissolution, and the Number One reason for that is financial pressures," says debt expert Howard Dvorkin.
Maybe he's a bit pessimistic: There's some evidence that the divorce rate has been diminishing for a couple of decades and may be closer to a third than a half. But his point is well taken. Dvorkin, who runs the Consolidated Credit Counseling Services, in Fort Lauderdale, Florida, has seen many marriages destroyed by money problems. Clear up the cash at the very beginning, and you can stop all of those arguments before they escalate out of control -- and build a prosperous future. Here's how.
-- Pay off the wedding expenses ASAP. The longer debt lingers, the more it prevents you from accomplishing what you really want. Interest rates are on the move up, so any debt you are carrying is likely to start costing more down the road. Look at all the other debt you have as a couple and develop a plan for paying it down. You can use an online debt payoff calculator such as the one here or here .
-- Develop a bill-paying system that works for you. It doesn't really matter whether you both agree to put all of your bills into the same shoebox, or use the latest in Internet banking, as long as you have a system that keeps you paying everything on time. Couples who are commingling their finances for the first time often wind up paying bills late just because they haven't gotten organized, and that will affect their credit reports and scores.
-- Focus on your credit reputation. You'll both need good credit scores to buy that first family car or house. If one of you has a clean credit history and the other doesn't, keep those credit cards separate, says Dvorkin. The person who already has a good credit score can help the spouse build a better credit history by encouraging him or her to start with a secured credit card, and then getting a regular credit card, and making timely payments. Adding the "bad credit" spouse to the "good credit" spouse's cards won't help rebuild the weak credit score, but could hurt the good score.
-- Keep some checking accounts separate too. If you're both used to earning and spending your own money and have decided to kick in together for family finances, keep three checking accounts. One for each spouse and the household account, to which they both send money to cover shared expenses.
-- Talk about it all. Come up with a specific dollar amount for purchases that are so big the couple has to discuss and agree to them together. Below that amount, each can spend the money without asking. New couples should have many discussions about their financial goals, too; it's easier to make the household money work if both partners are committed to the same ideal. Even if one spouse is the money person and the other isn't, set aside some time every month to discuss the family budget so both know where the money's coming from and where it's going. Even the spouse who doesn't manage the family money should know where it is and how to get at it, if necessary.
-- Do the paperwork. Change the beneficiary on your workplace retirement accounts, your IRAs and your life insurance.
-- Eliminate redundancies. The National Foundation for Consumer Credit tells fledgling couples to compare cell phone deals because they can save money on a family plan. Compare health-care plans from both jobs to decide whether you each want to stick with the plan you've got or double up on the better plan. Even duplicate couches, books and kitchen goods can net you some cash in a garage sale.
-- Save big, even when it seems impossible. If two households are combining into one, you should be able to save one entire salary, says Dvorkin. This time he might be being optimistic: Couples don't typically cut their expenses in half when they marry. But there's no time in life when you can be happier on less money than in that first year of marriage. Live lean while you are young, squirrel away as much as you possibly can, and you'll have the downpayment and diaper money when you need it.