Author Topic: Getting married, give us your best advice!  (Read 3990 times)

domo

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Getting married, give us your best advice!
« on: August 21, 2015, 02:12:19 PM »
We are in pretty good shape financially:
Her:
No Debt
Middle 5-figure Salary
No assets outside of 401K (with about 1 year salary in it) and a 2K emergency fund

Him:
Mortgage and Car Debt
Low 6-figure Salary
Owns a house, a SUV and a tiny red convertible, a 401K (with about 1.5 years salary in it) and a substantial savings nest egg.

We've both paid off our student loans/CC debt and are looking to retire early. We want to get a pre-nup to safeguard our retirements and protect any business ventures. We are unsure about how we will handle accounts. Right now we both use Mint individually and each has 1 checking account shared with the other. We'd like to merge our finances, but between us we have three checking accounts, five credit cards, and money 'stached in a bunch of different investment/savings accounts. Should we just add the other person to our existing accounts? How should we handle household expenses? With our uneven incomes and asset imbalance, how should we set up our pre-nup? Give your advice to two fledgling mustachians.

KMMK

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Re: Getting married, give us your best advice!
« Reply #1 on: August 21, 2015, 02:26:54 PM »
Our prenup was simple - it just said that everything was separate unless we intentionally made it joint.

I'd probably keep a certain level of separation and not worry about merging everything, though you may want to simplify a bit.
So maybe 1 joint chequing, each have a separation savings account (so you can move money into them to re-distribute to retirement accounts), reduce the credit cards a bit.
For household expenses I'd do the same percentage of income into your joint account. That seems fairest with uneven salaries. You'll have to discuss how to deal with the mortgage and car debt. How much equity is already in the house? How does ownership of house and mortgage go going forward? Does he take care of the car debts on his own?

My situation was a bit simpler as neither of us had debt or real estate when we married.

Just finding out your state laws re: division of assets is a useful part of the pre-nup process.

domo

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Re: Getting married, give us your best advice!
« Reply #2 on: August 21, 2015, 02:38:54 PM »
How much equity is already in the house? How does ownership of house and mortgage go going forward? Does he take care of the car debts on his own?
He pays the mortgage and the car note. She pays for the other bills: electric, water/gas, internet, phone. We have 100K left on the mortgage, the house is now worth about 200K (we paid 115K). It would make sense to have the house stay under his ownership in the event of a divorce.

TN_Steve

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Re: Getting married, give us your best advice!
« Reply #3 on: August 21, 2015, 03:05:03 PM »
Domo,

There is no "right" answer to this issue.  You guys probably would be best served by sitting down, discuss and figure it out together.  My S.W.A.G. is that 1/3 the folks on this site (and other financial sites) are proponents of strong pre-nups; 1/3 are against, and 1/3 say "it depends." 

I'm in the last category.  We didn't do one (got married 1/2 way through our respective grad schools), and have joint pooled everything from the beginning.  If we had done one, we would have projected wrong on many different levels as to everything from what our spending would be to who would make more--and neither of us thought that we'd have a stay-at-home parent in our relationship.  You, OTOH, are older than we were and more established, so you might benefit from it....

Agree with KMMK that you should get an understanding of the default positions under your state's law at the outset.

AZDude

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Re: Getting married, give us your best advice!
« Reply #4 on: August 21, 2015, 04:43:10 PM »
If you do not have any kids then separate finances are just fine. If you have kids, you are joined forever, so might as well combine everything.

11ducks

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Re: Getting married, give us your best advice!
« Reply #5 on: August 21, 2015, 05:47:35 PM »
My advice is to put at least as much effort into maintaining your marriage as you do to maintaining your finances. A strong healthy marriage will get you to FIRE quicker, as well as improving your health and happiness. For every hour you spend on budgeting and stock markets, endure you are spending an hour strengthening your marriage, with communication, support, kindness etc. cause FIRE ain't worth much without health and happiness

GizmoTX

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Re: Getting married, give us your best advice!
« Reply #6 on: August 21, 2015, 06:25:09 PM »
If you are in a community property state, everything you earn since the marriage is considered joint property, regardless of how you style it. To keep property acquired before the marriage separate, make sure you never deposit anything into it using community property money, which would co-mingle & immediately make it community property. Property kept individual & not co-mingled stays individual; you would not need a pre-nup for it. Businesses started after marriage are community property unless you have a specific agreement by both spouses.

bsmith

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Re: Getting married, give us your best advice!
« Reply #7 on: August 21, 2015, 06:33:15 PM »
Go through a premarital checklist. Religious or not. Some divorce lawyers have some pretty good ones.

firewalker

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Re: Getting married, give us your best advice!
« Reply #8 on: August 21, 2015, 07:51:35 PM »
Pre nup? Don't sell your current homes. Keep them as rental property. You'll be moving back soon 'nuff.

little_brown_dog

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Re: Getting married, give us your best advice!
« Reply #9 on: August 22, 2015, 09:40:42 AM »
I can’t really comment on the prenup since we did not get one and probably wouldn’t have even if we were more established when we got married.
We maintain separate checking accounts, a joint savings account, and separate credit cards. This makes sense since we both have our own incomes at this point in time, and we just kept the credit cards separate because there was never a need to add each other to the accounts. Once I transition to a stay at home mom, we may revisit this arrangement and do a joint checking, but will probably keep the cards the same. We are the sole beneficiaries on each others’ retirement accounts.
For expenses, our uneven incomes mean that he covers the majority of our expenses including mortgage and utilities. I cover my own credit card, and my student loan payments. Day to day expenses like groceries, home supplies, and routine medical bills usually end up being split roughly equally based on whoever is available to pay (if we are running errands together, it goes on his card, if not, it goes on mine). This isn't a problem for us because we are both frugal and rarely spend money on anything but necessities.
For me, the concept of combining finances isn’t so much about exactly whose names are on the accounts, but rather how the couple THINKS about their money. Even though we have separate checking and credit cards, we view all income as ours. If I ever needed help paying off a high cc balance, he would happily transfer the money and vice versa. He routinely kicks in extra funds to pay down my student debt faster (he views it as his debt as well). We always discuss purchases together, and ALWAYS ask/confirm with the other if we need to withdraw money from the joint savings. This method has worked really well for us so far, I'd recommend a similar approach.
« Last Edit: August 22, 2015, 09:43:16 AM by little_brown_dog »

patrickza

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Re: Getting married, give us your best advice!
« Reply #10 on: August 22, 2015, 09:59:56 AM »
Don't spend a fortune on the wedding. We just got back from our elopement in Paris. Couldn't be happier and saved a fortune!

Bracken_Joy

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Re: Getting married, give us your best advice!
« Reply #11 on: August 22, 2015, 10:15:08 AM »
No advice per se, I can only share what we did and our thoughts as to why. We didn't bother with a pre nup. IME, they're not upheld in court usually anyway, so why bother? And neither of us had major assets coming in (I had about $20k in investments and a car, he didn't have much although now he's the earner in the family). I think your age can be a factor here. We're young and starting out, and I lean on him and he leans on me to build our lives, financial and otherwise. Neither of us has sole rights to what we are building- we couldn't do it alone.

We know we want to have children, so we set up a joint account. I can see the desire to keep separate accounts, but I feel like that fails in the face of progeny, especially if someone stays at home- seems like too much risk if you're not "all in". This is in addition to our personal accounts, but right now they're acting as "dead ends", places we can pool downpayment fund for example. Added bonus that we didn't have to change direct deposit account. We also put eachother as authorized access on these accounts and all our CCs and investments.

If I didn't trust him completely and wish to combine my life entirely, for the length of my life, I wouldn't have gotten married. If we divorce, it's going to be so miserable that I hardly think protecting a small degree of our assets will make any difference.

domo

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Re: Getting married, give us your best advice!
« Reply #12 on: August 28, 2015, 03:50:37 PM »
The pre-nup is more to protect any companies/patents we create. We're both tinkerers and would like to start businesses of our own. We've been together for 10 years, we don't expect we'll divorce. It just seems like divorce would wreck both our FIRE and business plans. Divorce is bad enough on its own, why would you need to make it more horrible?
We already have two joint checking accounts (our main accounts where our paychecks are currently deposited). They have been joint for three years now. We just created two more accounts. A high interest savings account and a checking account for the wedding and household budgets, respectively. We are considering moving our direct deposits into the HI checking account and then transferring an equal "allowance" into each of "our" checking accounts for personal spending. Being mustachians, this will not be much. If one of us wants to spend money on something and the other doesn't, it can be saved up for with this personal money. Household bills would be paid from the HI account. Any money over a one-month "buffer" gets moved to high interest savings.

This is the plan we came up with after our discussion, and it may be too complicated. We shall see.

We're being very frugal with the wedding planning as well. We plan on getting married in the park ($75) by our friend (bottle of nice whiskey) in a short ceremony with minimal decorations ($500 for chairs, decorations). The reception is something we are still mulling over. We want it indoors, so we'll probably end up paying an exorbitant cost for food and drink. Most venues require that you purchase their packages. Some even require that you buy your cake from them!
« Last Edit: August 28, 2015, 03:54:30 PM by domo »