You love your new man. He’s given you the bling and the second big white dress dream come true. But he’s not the best money manager. If you’re getting into bed with a guy who’s credit sucks here are 5 things you should know to protect yourself and your children.
1. Don’t take on his debt
You are not responsible for your future spouse’s bad credit or debt, unless you choose to take it on by getting a loan together to pay it off. However, your future spouse’s credit problems can prevent you from getting credit as a couple after you’re married. Even if you’ve had spotless credit, you may be turned down for credit cards or loans that you apply for together if your spouse has had serious problems.
2. Discuss financial standing early
You’re smart to face this issue now rather than wait until after you’re married to discuss it. Attitudes toward spending money, along with credit and debt problems, often lead to arguments that can strain a marriage. In fact, the number one reason for divorce is money. Order copies of both of your credit reports from one or more major credit reporting bureaus. Then, sit down and honestly discuss your past and future finances. Find out why your future spouse got into trouble with credit.
3. Get expert help
If there is still outstanding debt, consider going through credit counseling together. Credit counseling may help your future spouse clean up his credit record and get back on track financially. One nonprofit organization, Consumer Credit Counseling Services (CCCS), sponsors money management seminars that can help you plan your financial life together. CCCS can also help you negotiate with creditors. Be aware that CCCS is paid for by lenders. Once it starts negotiating for you, your creditors will withdraw any lines of credit you have, including overdraft protection.
4. Keep separate accounts
Initially consider keeping your credit separate. At least until your spouse’s credit record improves. You don’t have to combine your credit when you marry. For instance, apply for credit by yourself instead of applying for joint credit after you’re married. You can have separate “associate” cards issued for your spouse to use. Even if your spouse has bad credit, your credit rating will remain unaffected. However, keeping separate credit can be complicated. It’s possible that you’ll have a harder time qualifying for loans (e.g., a mortgage) alone than if your spouse’s income could also be counted.
5. Plan for a bright future together
Reach out to a trusted financial advisor for help. They can assist you in setting up a budget you both can follow to pay off your outstanding debt. They’ll also guide you in setting up a way to scrimp out savings from your weekly paychecks for retirement, college educations and summer holidays.
The heart wants what the heart wants… and that’s okay. But it is important to be practical when it comes to finances. You and your children’s well-being must come first. Love and money are separate, protect yourself and your hard earned assets.
This financial advice was provided by Debra Curry,C.F.P. at Yosemite Capital Management.