We Should Have Joint Debts, Not Joint Assets!

by Kristina on August 29, 2011 · 6 comments

doll houseGood Morning DINKS. Today we are discussing the ever important question of merging our single money into our joint bank accounts.

I overheard a co-worker talking about her upcoming nuptials in the lunch room this week and I feel the need to share her story.  I couldn’t believe what my ears were hearing and I want to know what you think about her money management skills. As DINKS we are all in couples and we all have to manage our budgets with dual incomes, but would you use your individual income to pay off someone elses debt?

My co-worker Julie is about to get married in a few weeks. She is currently house hunting with her fiancé.  They both came into our branch for their mortgage pre approval, but now I overheard Julie saying that their future family home will only be in her future husbands name.  Does this sound crazy to anyone else?

My co-worker will be contributing money towards the down payment for the home and she will be paying half of all the monthly house related expenses, including the mortgage payments.  However, the house will only be under her fiancés name. Julie will be paying off debts that are attached to her fiancés asset.  Julie says that she fully trusts her finance and when he becomes her husband he will take care of her.

The one thing that Julie is forgetting is that when people get divorced they (usually) hate each other.  If Julie and her fiance do get divorced in the future I am not convinced that Julies (then) husband will still want to take care of his soon to be ex wife.  I have to ask myself (and all of you) does Julies future husband really love her and want to take care of her, or is he just really a huge con-artist?

As you may remember I am all in favour of joint debts but not joint assets.  My boyfriend Nick and I have joint credit cards but our bank accounts, savings accounts, and retirement accounts are all held separately.  He actually has his own Personal Financial Advisor, I don’t even give Nick financial advice or review his investment strategies and goals. This may not work for everyone, but it works for us as a couple. The only time that Nick and I share joint assets is if there is a joint debt attached to them, such as our (former) car and our (former) car loan.

Does marriage automatically imply that we should share everything with our spouse?  Money is money and love is love, but does love automatically mean that we have to share our money?  I understand that marriage should imply that we fully trust our spouse, but do you trust your spouse 100% with your own money?

Money may not be the most important thing to everyone, and therefore not everyone actively manages their own money and their own assets. However, money is a necessity for everyone to live.  Without money we couldn’t eat and we couldn’t sleep in our comfy beds every night. Without money we couldn’t stay warm in the winter and we couldn’t stay cool in the summer (if you are lucky enough to have air conditioning).  Without money we couldn’t look forward to coming home every night and spending quality time with our spouse.

Would you prioritize the love in your relationship before the management of your own money?

Photo by Downing Amanda

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{ 5 comments… read them below or add one }

1 settleme August 29, 2011 at 4:21 pm

Okay there is a lot to be said here. My personal feeling on the subject is that at the very least they should rewrite the house contract to include her name on everything. Then she should pay half on everything if her name is on the contract. If not, then she should not pay for something that he will later benefit from as far as his credit rating. She needs to do this so that her credit is built up.

2 Marianne August 29, 2011 at 6:26 pm

No, no and HELL no. I was married twice and both husbands ruined my credit. Contribute equal shares to a joint account to pay joint debts, keep the rest separate. Despite the initial stars in your eyes, things can change, and it’s too easy for one or the other to clean out a joint account unbeknownst to the other, if things go south.

3 Alita August 31, 2011 at 12:48 pm

I wonder if there was a specific reason for just having it under her husband’s name. My husband and I are looking to buy a house in the next 6 months, but when we go to apply for the mortgage, it will only be my name. Our credit scores are at opposite ends of the spectrum, his being in the low 500s and mine in the upper 700s.

We are both saving for the down payment in a joint account. If we were to apply for a mortgage jointly, we may be approved for more because of our dual income, but will likely be at a significantly higher interest rate. If we apply using my credit and income alone, our borrowing amount may be reduced, but at a much, much more favorable interest rate.

So limiting the application to consider only one income has a few benefits. We can pay extra to the mortgage and cut down the life of the loan. If either of us lose our job, then we can still manage the payments. We fully plan for the house to have both of our names on the title, but not on the actual loan. Perhaps down the line after my husband’s credit has bounced back, our next house we can have both our names on the loan. Maybe she is doing something similar?

4 Brooke August 31, 2011 at 3:35 pm

Depending state to state, it might not matter. due to crazy bank rules the 2 of us couldn’t get the loan, but i could get it on my own. its in my name, but the title is in both. speaking with an attorney, in our state at least, its all the same. in divorce court a judge divides up the debt and the assets and if one person purchases something during the marriage its still considered joint property.

maybe one has better credit than the other and can get a better interest rate? i’m sure there are plenty of logical reasons you haven’t thought of to explain what they are doing. the scary part (to me) is if they are going through with these things before there is an actual marriage. then courts don’t get involved and you’re dependant on the good (or not so good) nature of the other party.

5 MrsKruse August 31, 2011 at 10:38 pm

We have plenty of joint assets (checking account, savings account, investment accounts), but our only joint debt is our home. Our other debt is separate – student loans because it didn’t make sense to consolidate, and cars because my credit was better (no reason to pay more for the loans just to put both of us on the titles). I’m not that concerned. We live in an “equitable distribution” state, so a divorce would mean that the courts would divide things up if we couldn’t come up with a plan ourselves. Now, if unmarried, I wouldn’t have anything joint. Engagements fall through and you have little to no legal protection – at least marriage provides you some protections in many states.

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