Engaged Couple trying to set up budget

[Gruntina]

I am getting married next year. Currently my fiancé and I are not living together and soon will be. Rather than rushing into things, we are taking the time to prepare our relationship for Marriage rather that jump dive into it. I am trying to discuss with him how to plan a budget but I have no idea how to go about it as we are at different financial levels at this time. I am just about debt free from slaving away at two full time jobs to pay off an incredible amount. I am happy that I reach this point but at the same time I don't have anything saved up except for an EF and a $401k with matching program at work. I am still staying at my job. I make less than my fiancé but have the whole benefits package and incredible health insurance coverage as the company is above market level.

He is a home owner with a crazy mortgage and the house in need of TLC. At this time has no retirement vehicle set up. He does have a good job with dependable income. I want to set up a finance budget that will put each other in the best interest and yet at the same time none of us get the short end of the stick.. We live in California where real estate is beyond belief with high prices so we are not looking into finding a new home together as the one he has is cheaper than anything on the market. We both have cars expiring. His is way over 25 years old (Paid off long ago) and mine is 8years old(will be paid off soon as I bought this used last year) but its a tiny car where you can’t use the back trunk for groceries nor passenger can fit in very well. Because the tire mound take over the leg room.

Any advice?

[PRICEPLUS]

A word of advice from someone who has been married a goodly amount of time. Have some serious drawn out discussions about money. It is not romantic and sometimes it can be painful but learn and adapt to each other before you tie the knot.

What are the attitudes towrds money? Are you more a spender or a saver? Do you buy yhings on the spur of the moment or do you save up for things. Will you be combining finances or keeping them seperate and why?

Set goals! Set up a budget! Be totally honest and open about how you feel about money and ask him to be as honest! It is so important to come to a mutual understanding on this oft times touchy subject! Good luck to you both and I hope everything turnsout okay!

[lrjohnson]

I'd post the raw numbers down for you two to look at, and separate "must" areas from "good idea" or "treat" or "goal" areas. See how much you have that is avalaible for beyond the absolute basics: mortgage, health insurance, heat, basic food, etc.

So, say you have $500 available for non-absolute-musts each month. Decide together where that goes: car replacement fund, entertainment, TLC for house, etc. I think the most important part is that you agree. Maybe you throw all your extra money at the house and car replacements; maybe you put some in a travel fund; maybe some money goes into a replacing furniture fund. But agree, and compromise where you can't. And while you decide where the available money goes, it will help you understand each other's priorities. And once you compromise, be willing to stay with that commitment, but also willing to re-visit it every six months. If something isn't working, you should have some flexibility to amend your original plan.

[genmed]

One good idea someone gave us when we first bought our house (four years ago) is to have a separate account where you save just for "maintenance" type of things -- for when the appliances need repair, the windows need replacing, or even just painting. We live in an old house and this has been great for the small things (an electrical outlet needed to be replaced) up to the larger things like when the dryer went up (and DH couldn't fix it anymore). We use it also for tires on the cars and other routine expenses you can't always "budget" for.

[scfr]

If you'd like some structure for discussing things with your fiance, you may want to get David Bach's book "Smart Couples Finish Rich" and the accompanying "Finish Rich Workbook." The workbook is especially good for sharing information with each other.

Good luck! Kudos to you for thinking about these things before tying the knot!

[Broken Arrow]

First of all, congratulations and happy days for you both!

Also, I am imminently pleased that the two of you have decided not to rush things. Not only that, but that you guys also recognize the importance of scaling up towards a two-income household.

For what it's worth, here is my opinion. First, I recommend to show each other where the two of you stand. Then, see what needs to be done (such as have a car fund ASAP). Then find out who can contribute what. Then, figure out how the two of you want to contribute to it.

Now, I know this part is controversial, but I highly recommend that the two of you keep things separate. I know. I'm a divorcee. What do I know? Truth is, when things were going well, it was a godsend, and when things started to fall apart, it become an even bigger godsend.

We've tried the joint account thing, and truth be told, I couldn't keep track of it for the life of me. That's because it was simply too cumbersome to keep up with every transaction that my ex made. In short, I recommend keeping two separate checking, and then having a linked, joint savings for things that the two of you are saving together for. In fact, the joint savings is the only thing that linked my ex and I financially. Everything else was separate, and actually, it worked great for us... you know, except towards the end, but that's when it also protected us from each other....

I'm babbling now. As Miracle Max would say, "Have fun stormin' the castle!"

[PRICEPLUS]

In the end whatever works for the two of you is what you should do!

[tinapbeana]

Originally Posted by Broken Arrow

I'm babbling now. As Miracle Max would say, "Have fun stormin' the castle!"

when asked if they would succeed, he also said "it'll take a miracle!"

Gru, i don't think that will apply to you

[Broken Arrow]

Originally Posted by tinapbeana

when asked if they would succeed, he also said "it'll take a miracle!"

Gru, i don't think that will apply to you

No, of course not. I am just in a wacky mood.

(To clarify, everytime I feel like I have to explain frugality and personal finances to anyone I know in real life, I am constantly reminded of that scene in The Princess Bride, where they have to storm the castle:

"My brains, his steel, and your strength, against 60 men. And, you think a little head jiggle is supposed to make me happy?"

You know, cuz frugality is a tough sell. )

[PRICEPLUS]

There is no try there is only do! -YODA

Failure is not an option!- unknown

Your marriage, your life, and your finances will be fantastic! -Priceplus

Gruntina, everything will work out in the end! -What my mother would tell you!

[HalMd]

There is a good article on this topic on GettingFinancesDone.

Good luck.

[PRICEPLUS]

Great site! Thanks for the heads up!

[Broken Arrow]

Originally Posted by PRICEPLUS

Failure is not an option!- unknown

I don't know if it originated from this, but I know it was mentioned in the movie, Apollo 13, with Tom Hanks. One of my all-time favorite movies.

[PRICEPLUS]

You are correct! It is spoken in the movie Apollo 13 but I believe it was spoken many times before that!

[creditcardfree]

Originally Posted by Broken Arrow

I don't know if it originated from this, but I know it was mentioned in the movie, Apollo 13, with Tom Hanks. One of my all-time favorite movies.

Off topic, I love that movie too! I've seen it so many times, but yet it is still exciting!

On topic, communication is key to the marriage...financial or otherwise. It is great that you will be discussing this ahead of time. My husband and I have always had our finances together and it has not been a problem. Obviously you will both need to communicate on what works for the two of you.

In your post you made reference to not getting the short end of the deal. I'm sure it's hard to have all your debts paid off and then look at the other with the "crazy" mortgage. In my opinion, if you are committed to the other person, you are committed to their financial situation. That is why it is good to know this ahead of time. It helps you commit with your eyes wide open.

I married my husband as a business he started on credit cards failed. Over 15K in credit card debt. It really seemed like a lot at the time. I was determined that we get it paid off ASAP. We did pay it off in about 2 1/2 years. It defined our financial relationship and in a good way. So what appears as a negative, can be turned to a positive.

Best of luck and congratulations!!

[Ima saver]

Sit down and decided who is going to handle the finances, In our case, it was me. I way already on the envelope budget system, so i just continue that, with modifications. I owned a home which I kept in my name only for 7 years. When we moved and built a new home, everything was in both names. I opened IRA's for both of us.
Our savings and checking were joint.
We both got an allowance but were careful with our money. We always discuss any large purchase before we make it.

[HalMd]

Another piece of advice, from my own experience...

Initially my wife and I each had separate checking and savings accounts, in addition to a joint checking account for bills. That's a total of five accounts.

After about three years of managing these accounts (and a others for investments, IRA, and so on), we finally consolidated checking.

I cannot tell you how much simpler things are after you consolidate checking. At the first of each month we 1) deposit our checks there, 2) get equal amounts of cash out, and 3) make a transfer to savings (pay ourselves first). For the rest of the month, the bills are paid from this account. Very simple.

I will be the first to tell you that this is NOT for everyone. Drawbacks include: How will you handle it if you break up? How do you handle "personal" money and spending? But there are answers to these concerns. (E.g., we both can write checks from joint, we both use credit cards and pay them off from joint, and so on.)

Again, good luck.

[vishenda]

Dave Ramsey has a couple of great books on the subject.. I recommend "Financial Peace" as one of the best. Or go to www.daveramsey.com there is allot of great info there. And stay debt free!!!!

[Gruntina]

Wow! Thanks for all your kind responses, advices, and ideas. Since I am behind at keeping up with the emails, my message is long with the response to you all.

[quote=PRICEPLUS]What are the attitudes towards money? Are you more a spender or a saver? Do you buy yhings on the spur of the moment or do you save up for things. Will you be combining finances or keeping them seperate and why?[UOTE]

Priceplus - thanks for the starter up on questions. We are open with our communications; I just didn't know how to get started on what questions or outlook to get started on. Thanks!

Irjohnson (I'd post the raw numbers down for you two to look at, and separate "must" areas from "good idea" or "treat" or "goal" areas. See how much you have that is avalaible for beyond the absolute basics: mortgage, health insurance, heat, basic food, etc. )

Good tips on what to jot down on paper as we communicate. I like that Idea and will try that on our combined financial commitments. It’s a good icebreaker as to getting started on sharing exactly where we are at

jenmed (One good idea someone gave us when we first bought our house (four years ago) is to have a separate account where you save just for "maintenance" type of things -- for when the appliances need repair, the windows need replacing, or even just painting.)

I am actually scared to death on this one!!!! 60 year old house need TLC on EVERYTHING!!! but there are other things needs replacement that are costly over time... hearing aid devices about every 5 years cost at this time $6000.00. Computer is a must as that is how I communicate since I can not hear the phone. We are practically rebuilding the home... that is how bad shape it is in. we both need new vehicles... I actually scared on this one as it will consume all our money!!! Sigh.. Breathe now and try to device a plan that is possible.
scfr (If you'd like some structure for discussing things with your fiance, you may want to get David Bach's book "Smart Couples Finish Rich" and the accompanying "Finish Rich Workbook.")

will check into those books... better than trying to list topic from the top of my mind.

Broken Arrow (Now, I know this part is controversial, but I highly recommend that the two of you keep things separate. I know. I'm a divorcee. What do I know? Truth is, when things were going well, it was a godsend, and when things started to fall apart, it becomes an even bigger godsend.)

This is why I am scared to death on setting up financial obligation as a team. I spent the last 3-4 years slaving away at two full time jobs just to pay off an incredibly high debt from my last marriage. I had to pay off more than 60k. I don’t want to go through that again and miss out on the day to day living by working all the time. I also have a fear of getting set behind again and fear that I am never going to accomplish success with the goal of financial freedom. I may never have an outstanding portfolio but I do not want to be behind. I used to have many dreams such as owning my own home, travel, large family and etc. I now changed to appreciate what I got today and just to keep it is enough for me now.


creditcardfree (In my opinion, if you are committed to the other person, you are committed to their financial situation. That is why it is good to know this ahead of time. It helps you commit with your eyes wide open.)

I agree! Despite his "crazy" mortgage, I do not want to imagine a life without him. It’s such a good feeling to totally feel that way and full peace and positive gut feeling that I want to be with this person whole heartily. It’s the first time I ever felt 100% about a person. We are both lovers of God in the same faith so that helps knowing we have similar guidelines in some area of our relationship. I would like to see this as a potentional to put our finance in the best interest for each other and trying to prepare that prior to marriage but I do understand it’s a trial and error type of things and anything can happen in life to throw everything off. I just rather be educated on some things rather than have to learn everything the hard way.

Ima Saver (Sit down and decided who is going to handle the finances, in our case, it was me. I way already on the envelope budget system, so I just continue that, with modifications.)

We already discussed I would be the one handling the finance. I am still a baby when it comes to achieving a budget plan. The past few years my budget was a drastic plan just to pay off my debts. Now that I am finally almost debt free in a couple of months, I have to device a normal life to life budget plan. My current plan is not for the faint of heart and it’s not at all realistic for a healthy lifestyle. But if I had not done that, I do not think I could move on with my life until I paid off past mistakes, it had some tie over me. I am glad to be the one to handle the finance as I know he can do so much more with the money he takes home. But nervous as that responsibility falls on me and I am not at all near an expert on budget.

Initially my wife and I each had separate checking and savings accounts, in addition to a joint checking account for bills. That's a total of five accounts.

HalMD (After about three years of managing these accounts (and a others for investments, IRA, and so on), we finally consolidated checking.)

It makes sense to consolidate accounts in the confinement of marriage. It would have to take time for me and possibly him too to reach the point of comfort of being able to do so. We have our selfish side of wanting to be able to have our own account to access to when we want. I am hoping to find a middle ground here. I believe each should be strong with finance so that in the case one of us has to die or something, the other will be okay. I do not think it’s in the best interest of each other if one is vulnerable. so maybe a joint account but have each own checking account to put our allowance in might work to start out with?

Vishenda, will check out those books and sites. Thanks

[Broken Arrow]

Grutina, based on what you have shared with us here, I do believe that you're going to be just fine. Although you have "issues", they are mostly in the past now, you have a bright new future ahead of you, and best of all, you have full control of it (the money that is). Perhaps it may seem intimidating at first glance, but I can't imagine a better scenario than this based on your concerns.

Also, feel free to set it up such that you are protected from each other. I think this would be best, if nothing else so that it can give you a peace of mind. Nor do you have to make the merger happen overnight. Just take your time and do what you think works best for you.