About Melissa Batai
Years ago, when I worked full-time and my husband was a graduate student, we dined out several times a week in the evenings. In addition, I would go out to lunch with co-workers at least twice a week, and I would buy food at the college cafeteria the other days. (The food wasn’t that good!). I didn’t realize until a few years after I had stopped dining out why I wanted to go out to eat so much during these busy years.
As a DINK couple, you may find yourself and your partner in the enviable position of earning high salaries. While having a high income is a nice reward for hard work, drawbacks exist. One of the biggest is the amount of taxes that you have to pay. However, you can utilize tax strategies of high-income earners to limit the tax burden you face.
The more compatible you and your spouse are, the smoother your relationship. When you live with or are married to someone who shares your values, you can more easily work together to reach your goals rather than fighting because you have different views and values. This is especially true if you’re with a financially compatible spouse. Not fighting about money but instead working together to improve your financial situation strengthens your relationship.
Recently, I drove 2,000 miles from my home to my 72-year-old mother’s home. I hadn’t seen her for two years, so I was excited to visit. However, I also had another motive in mind. While visiting, I wanted to discuss end-of-life planning with her. Imagine my surprise when she was the one who initiated the discussion with me!
One of the most intimidating tasks for many newly married couples is to combine finances. When you do so, you may feel vulnerable. After all, you’ve been handling your money independently for years; now you are going to trust another person to be as responsible as you’ve been all these years. However, if you can overcome your fear and share finances, your relationship can be stronger. First, consider these 6 things to know before couples combine finances.
Have you graduated from college and have student loan debt? Are you trying to become financially secure so you can afford to travel the world? No matter what your goals are, you may benefit from these 4 financial books you should read in your 20s. If you can get out of debt in your 20s and start saving and investing, you’ll be looking at a bright, enjoyable financial future.
You may think you have a healthy outlook on life and don’t have baggage. . .until you get married or move in with someone. When you’re single, you can manage your life in the way that works best for you. When you’re part of an established relationship, you must compromise and negotiate on different issues. This can be challenging, especially if your partner comes from a different background than you do. If you struggle with financial incompatibility, as many couples do, consider counseling.
A few decades ago, I read Your Money or Your Life by Vicki Robin and Joe Dominguez. It changed the way I thought about spending money, especially the formula that looked at hours worked in relation to the price of something that you buy. For instance, if you’re going to buy a meal out, that may equate to one or two hours of work, especially if you’re young and just starting your career. After reading the book, I often asked myself whether a purchase was worth the amount of work it cost. The answer was often no, and this philosophy helped me pay off student loans and a car loan quicker than I would have without reading the book. Now, deep into midlife, I’ve read another little book, Die with Zero, that has changed my perspective on money.
When you and your significant other move in together or get married, you may reevaluate your finances. Should you combine finances or keep them separate? Should you share credit cards and bank accounts? As you talk through these issues and try to make the best decisions for your unique relationship, make sure you consider these 4 things to know before signing up for a joint credit card.
The first thing to know is that many credit card companies do not offer joint credit cards. There are only three banks in the United States that offer this option:
Having a joint credit card account makes sense if you each meet these criteria:
If you can’t say that you both meet all four of these criteria, you likely shouldn’t open a joint credit card account.
Before you sign up for a joint credit card, know what the repercussions are.
Because you’re both applying, you’ll each get a hard inquiry marked on your credit reports. In the short run, this can temporarily lower your credit score. However, if you continue to use credit responsibly and don’t have any further hard inquiries on your credit report, your credit score should rebound quickly.
The credit card company will look at both parties’ incomes and credit scores when deciding if they want to approve your application. If your spouse has a strong credit score but you don’t or vice versa, the application may be denied. The same is true with your income.
Since you each own the credit card, how you use it will affect both of your credit scores. If you use the joint credit card responsibly, but your spouse runs up a high balance, you’ll both be affected. You’ll each get a negative ding on your credit score. If the irresponsible behavior continues, both of your credit scores will fall even if you weren’t the one to spend too much.
This may be the most important point to consider. Since you both own the account, you’re both responsible for paying the debt. Even if you never use the card, if your partner charges $10,000, you’re both responsible for paying the debt. If she doesn’t pay, you will have to unless you want to ruin your credit score.
Even if you and your partner decide not to open a joint credit card account, you may still be responsible for your partner’s credit card debt if you live in a community property state. The nine community property states are
If you live in one of these states, you’re responsible for the debt your spouse accrues during the marriage even if it’s on his personal credit card. If your partner cannot pay his bills, the credit card companies can come after you to pay his debt. The same is true for your partner regarding your debt.
Opening a joint credit card with your spouse requires confidence in your partner’s financial habits and responsibility. Before you apply together, make sure you know the risks.
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When you’re in college, finding friends is easy because you’re in the same place and the same stage of life. However, if you choose to be DINKS, after your later twenties, you may find that your core group of friends is no longer as available to do things with because they now have children. Sure, you can still go out with them sometimes, but they likely don’t have the same open schedule you do because they have to consider hiring babysitters and attending kids’ activities. How can DINKS find friends?
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