Tuesday, May 11, 2010

Combining finances

As usual, Red beat me to a wedding-related post and I'm dropping in my two cents later. This time, it's about combining finances. Red and D are keeping their finances fairly separate for their own good reasons. At the other extreme, Peanut and I are throwing everything into one pot and stirring it up good as soon as the paperwork's signed. Here are our reasons:

1. Simplicity. We've been doing the joint-and-separate account thing for nearly a year, ever since we moved in together. It's been fine, but it's a giant pain to balance everything and make sure we're using the right debit card for whatever purchase, and it's one more financial institution sending us junk mail. I can't wait to have ONE bank with ONE checking and ONE savings account and not have to figure out were we even on groceries for this month or does the joint account owe someone money for something.

2. Value. Peanut is paying off his student loans aggressively and as soon as I'm out of the grace period, I will too. By pooling our money and aggressively paying all of our loans in order of highest interest rate, we will ultimately pay less interest. We may only save a few hundred bucks, but hey, that's something. Also, I'm benefiting from the education those loans got him. And he's benefiting from the education my loans got me.

3. Equal partners. As I write this post, Peanut is creating a massive master spreadsheet that will serve both as a spending tracker and a net worth tracker. The way it's set up will require both of us to participate at least nominally in keeping it up to date, meaning that we will both be aware of our financial situation on a regular basis. I realize that we're a little unusual in both being so involved with our finances, but this is a set up that allows us both to feel like we're in control and also communicating about what we're doing. Since money is one of the major sources of contention in marriage, this will help to keep us on the same page. Sort of insurance, if you like.

This is a good time to address one of the issues that most people have for keeping at least some finances separate, which is that you should always have access to "cut and run" money in case of an emergency--like the husband beats on his wife and she has to escape. Frankly, I find this so ridiculously offensive it's hard to put into words. In a joint set up, I would be just as capable of freezing Peanut out of all of our funds as he would, and I know for a fact that I would not do it. I wouldn't do something like that even at my angriest, most fearful, and most vengeful point against my stalker ex, so I can't imagine a scenario in which this would possibly apply to my relationship with Peanut. I realize that the women in those situations didn't really expect that it would happen to them either, but I still find it offensive that I need protection money and he doesn't.

As to stuff like buying gifts for the other without letting them know, well. We've always discussed how much we spent or set a limit, so oh, well. We just won't be as romantic as other people (but we'll be rich! *cackle cackle*)

4. Preparation for going to one income. It'll be much easier for us to adjust to a single income later on if we already have everything combined and think of it as "ours" instead of "mine" or "yours". In fact, starting now it'll be as if it's all one income, and our goal will be to live on half of that income, using the rest to pay off student loans and then save. 

So that's covers the how of accounting--we'll be mixing everything up (one checking account, one savings account, one ING account) and adding one another to our credit cards. We'll be keeping track of expenses and paying bills together. But what about budgeting?

This is something we've touched on but haven't finally sorted out yet. We know that I spend more money on clothes and Peanut spends more on electronics, and that I go out to eat a little more frequently. We'll want to make sure we both feel like we can spend the money we've individually earned from our work without being resentful that the other person spends money on stuff that we don't think is as important. I also save for specific purposes and keep track of those sub-accounts (see my sidebars!) whereas Peanut saves whatever he doesn't spend and then when he needs to make a big purchase he does so. So I've got a "gift" fund and "travel to parents" fund and he doesn't--how will we reconcile that? He's not accustomed to marking funds for those purposes and I'm not giving it up.

So more to come on that in a future post!


  1. The Modern Love Machine and I started talking about this stuff the other night. We've already talked plenty about finances (I'm the financially savvy one, he isn't). I'm ready to get everything in one, joint account myself for the simplicity.

  2. Like Modern Gal, we're in the position where one is PF savvy (me) and one is not. We combine everything for simplicity, but we do maintain separate savings accounts (I came into the relationship with a few thousand banked and am continuing to save, where he's between jobs and can't really afford to at the moment). Plus, it's nice to have a bit of your own money - he'll probably want to buy something I consider ridiculous (motorbike) one day. Or he might want to buy me a ring...you know?

  3. T is like peanut - he doesn't get my little funds, but doesn't spend frivolously either.

    Honestly, the only reason I'm holding off mixing anything together physically is because T is paid on a weird schedule that changes from quarter to quarter (phd student/researcher), and I don't want to wrap my head around it just yet. So we're keeping our accounts separate for the time being and will slowly merge them more.

  4. If you're planning on paying off your graduate loans together, please get a prenup. Technical those loans are individual debt since they were incurred before the marriage, and any assets you put towards his loans would be lost without an agreement.

  5. I totally agree with you. Unless you have a blended family or monster gambling problems or something, I think you should combine.

    If you can't trust your partner with your money, why on earth get married?

  6. I heard a rumor that you aren't supposed to combine college loans, when you get married. Does anyone know why this is? I thought it had something to do with a higher rate, but I'm not sure.

  7. Jenna, we can't actually combine our loans--we won't be consolidating them or anything like that. Instead, we'll order all of our loans by interest rate, pay minimums on all but the highest, and jointly throw money at that loan until it's gone.

    It doesn't make sense for me to consolidate my loans, since I'd wind up with a higher interest rate, but I don't think it's even possible to consolidate loans from different people into one. We're just treating it as a joint bill.

  8. @Little Miss Moneybags - Gotcha, I think we are on the same page on this one. Thanks for clearing up that rumor for me. Good luck attacking your student loans.


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