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The Honolulu Advertiser
Posted on: Thursday, February 24, 2005

Mixing love, money can prove tricky

By Michelle Singletary

The couples who are most successful in managing their money are those who communicate early and often about money, agree on goals and roles, and recognize that essentially they are partners in business together, says Joan Gulley, chief executive officer of PNC Advisors, a major wealth manager.

Oh, if only it were that easy. Clearly, love does not conquer all when money is involved, as evidenced by the many questions I received recently during an online discussion for couples.

Here are some of the questions I didn't get to and my answers:

Q: I have very good credit but my fiance has very bad credit (collections, liens, judgments, late payments). Once we are married, he wants to turn over his paycheck to me to manage, so no concern there. My concern is my credit. I have a job that requires I have good credit. What do I do about getting joint credit cards? He is going to want to get joint cards but I can't have him do that until he learns how to control his spending. He always just picks up and moves when things get bad financially.

A: First, plan on a long engagement. Don't merge your money with your honey until he's shown that he can handle his credit in a more responsible way, especially since your job is on the line. And turning over his paycheck to you once you get married won't necessarily end his bad financial behavior. You are headed for trouble if you don't resolve this issue before you walk down the aisle.

Q: My new hubby has about $12,000 in credit card debt. He also has $10,000 in a certificate of deposit that we want to put toward a new house. Should we use that money to pay off the credit card debt or hold onto it and put it toward closing costs for a new home that we hope to buy sometime this year?

A: Use at least half the money to pay down that credit card debt. Why only half? Because you want to be sure you have some emergency money saved. Besides, you might get a better mortgage loan if you're not maxed out on credit. Perhaps you should put off buying the house this year. You have some more saving and debt reduction to do.

Q: My boyfriend and I have been living together for six months. He makes a good living with no real debt. On the other hand, I have awful credit but own a home with a lot of equity (owe $110,000 but house is worth $225,000). I pay the essentials on time but my (unpaid and delinquent) debt — about $6,000 — is sitting out there festering on my credit report. My boyfriend wants to buy a new home. He doesn't know how bad my credit is. Should I tell him or wait until we decide to try to purchase the house? A large portion of the sale of my house would go to the down payment of the new house so I would be contributing something besides a poor credit rating.

A: What you're contributing to this relationship is dishonesty and that's not how you build trust or a sound financial future. Come clean about your credit. Clean up your credit (as in, start taking responsibility for those delinquent bills). And think long and hard about whether you want to buy property with just a boyfriend.

Michelle Singletary writes for the Washington Post