Personal Finance and Marriage

What is one of the top issues that married couples fight about? Money. When a saver marries a spender, tensions will definitely rise. It is never too soon to sit down and have that discussion. The longer it is put off, the harder it will be.

The first thing you want to do is establish the family chief financial officer. This would be the money person; the person who actually pays the bills. It is important to keep the lines of communication open. Just because they are the one who pays the bills doesn't mean they should or want to make all the financial decisions.

Before you can reach your destination you need to know where you are going. Establishing clear short and long term goals is important in any family. It's important to discuss this because your goals may not match. The saver may have retirement in mind while the spender is eyeing the plasma TV. When you sit down, write out some of your short and long term goals.

Next, you need to pull your credit reports. Find out how each of you rate. Also take this as an opportunity to fix any credit report errors. Most of the credit bureaus allow you to submit online disputes.

Write out each and every bill that you have. You need to have a good view of what you owe and what you have. You will probably be very surprised to learn you owe more than you thought you did. Put the bills in a specific order you want to pay them off in. From here, you will want to institute a debt snowball plan.

A debt snowball plan is where you make extra payments to one debt to pay it down as quickly as possible. You then take that payment and apply it to the next debt. Then you take both those payments and apply it to the next one. There are typically two ways to set this up. The smartest way is to do it according to interest rates. Pay off your debt with the highest interest rate first and you save money. The other way is to pay off the lowest balance first. This option is chosen by a lot of people because it gets results quicker. You get excited as each debt is paid down.

Review the way you have your banking system set up and determine if it is working for your situation. If you both have a debit card, it can be hard to keep an accurate check register. If the spender likes to get a daily drink at the local convenience store, those $2-3 charges can get frustrating. Determine if using a credit card or cash would suit your circumstances better.

Most important is that you both have a clear understanding of your goals and how you plan to get there. If both of you aren't on board, the ship will definitely sink.