The impossible happened – the logical, cool nerd fell in love and got married!
The wedding and honeymoon were magical. Everything I had envisioned since I was a little boy (<- joke).
We returned from our honeymoon a few days back and I’m currently getting back in the swing of things. So if you left a comment, used the contact box, or replied to an email (if you sign up for email updates, you’ll receive 1-2 emails a week with juicy details), I’ll get back to you soon.
Marriage and Finances
This is a financial blog about rental properties, so let’s examine marriage through that lens.
Finances can be a huge strain on a relationship – it might even be the #1 cause for divorce. Each individual has their own ideas on money that might not be discussed. I suppose it all comes back to communication.
I am naturally a big saver. I don’t buy many things, even clothes – “I want for nothing” is a Brian-ism. But I do spend big on travel.
Without defining my approach and my wife defining her approach, we would likely just keep our previous behavior, and at the same time expect the other person to behave the same way. That is a recipe for disaster.
Rather than me just saving everything because I don’t spend it, I am going to have to communicate. We are going to have to set goals together and modify our behaviors to reach those goals.
Now that I’m married, I feel greater responsibility in this area. I have heard it is a much bigger kick in the pants when you have your first child, but suddenly my decisions don’t just affect me.
Combining Finances – What’s the Right Way?
There are several options for how to combine finances once you are married. Or even not combine them at all.
You can have a joint checking account but keep open personal accounts with an allowance deposit each month. You can have joint bank accounts but personal credit cards. You can share absolutely everything. You can file taxes jointly or separately.
We haven’t decided exactly what we want to do here yet. We already have systems in place for rent and sharing household expenses (I handle most bills, she handles most grocery and household shopping). We already have a joint credit card we have been using for wedding and honeymoon expenses (which is a whole nother discussion).
It will probably stay this way until all the name change paperwork is complete. Then whatever we decide, it will be close to combining everything since we are on the same team.
How Does this Affect Rental Property Investing?
There are a lot of questions I don’t know the answer to yet.
How will combining finances affect our ability to get investment mortgages? Will our credit score be affected? Will debts held in our individual name matter for debt-to-income ratio calculations?
How will filing taxes jointly change our taxes? I am self-employed so set aside money each month to pay quarterly estimated taxes, then usually owe a lot more in April.
How will marriage affect our mortgage sequencing? Right now a conventional loan on the first 4 investment properties are 20% down and 25% down for loans 5 through 10. Should we try to put some properties in my wife’s name? I know some investors do this.
I tend to delay learning details like this, waiting until it is actually time to act to decide. But some of these might change the strategy or how we set things up, so I will start learning now. If you have any insight, please leave a comment!
Give me some tips – how do you make sure this communication happens? Is there a regular time you sit down and review finances and decisions together?