Marriage finances can either be a source of unity between a couple or cause discord. It all depends on how they are handled. Financial differences are the No 1 stress factor in marriages leading to divorce. Credit problems can even lead to divorce! Read out this complete guide to combining finances after marriage.
The good news is that you can salvage everything by tweaking your approach to marital finances with honest communication and mutual planning. If you’re looking for how to combine finances after marriage, there is no one-size-fits-all.
The key questions to ask each other are:
- What do we mutually value?
- What are our shared financial objectives?
These joint priorities are borne from the intersection of your individual values and goals. Discuss what an ideal financial situation looks like to each partner as well as each one’s idea of financial freedom.
The financial end both of you are seeking, determines the means.
A New Combined Budget
You can’t plan your financial future without a clear picture of how much money is coming in for both of you and where it’s going.
Some couples choose to pool finances in one joint account and pay out the expenses, savings, investments, and personal allowances from that single pot.
This approach doesn’t work for everyone. Others prefer to divvy up responsibilities and pay individually.
Whichever approach you take, you need a clear outline of income and expenses. Here’s an example budget to get rid of debt.
A Family Spending Plan
While a budget sets out the current state and use of finances, a spending plan is a blueprint of where you want to go.
This plan provides the details of how you will fill in any gaps in your budget. It set out how you will meet your expenses and how you will achieve the financial success you both want.
The money conversation is difficult to have especially if you have different financial beliefs.
Think of the partner who wants to take calculated risks on the stock market versus the one who wants to put everything in a secure savings account.
Set a Dedicated Time
Don’t ambush your partner with the big money talk as they’re rushing to work or when you are both tired from a full day.
Agree on a suitable time for the chat together. This will also allow each of you to prepare anything they would like to bring up during the chat such as objectives and gripes.
Research has shown that 30% of partners have secret savings.
Brutal honesty is advisable when discussing finances. It’s a useful exercise to do a marital balance sheet. Though typically created during a divorce, a marital balance sheet can still be a very positive and useful tool if undertaken together.
You will be answering these questions.
- What are the assets and who do they belong to?
- How much debt is there and who does it belong to?
You should have a clear picture of what assets and debts are joint and individually acquired.
During this honest conversation, address any surprises that might have popped up while doing the balance sheet. Was there a debt you did not expect? Is your spouse’s income lower or higher than you expected? What expectations did you each have?
Make sure you check your credit score and have your spouse check theirs. This way you get full understanding of everyone’s credit situation.
Create a No-Judgement Zone
If the revelations in the previous step are such that you can’t remain cordial, take a step back. Request time to process the information and set another date to revisit the financial conversation.
Another solution to employ when the conversation heats up is to take turns speaking, 2 minutes each. Everyone gets a chance to be heard.
The money talk is not an opportunity to verbally lash out at your partner about real or perceived failures, or about credit problems.
Mutually create a space of no judgement which will foster more honesty.
Get On the Same Financial Wavelength
Between the two of you, who is the spender, and who is the hoarder? Understanding how your partner’s financial outlook differs from yours will save you a world of recriminations.
The goal of this step is to find a middle ground from which to navigate your financial future together.
Figure out what a rich life or financial freedom looks like to each of you.
To make your financial conversations fruitful you need to set SMART goals and create systems to implement them. Some systems you can create are:
- Create money rules around spending and what amount requires a consultation before spending
- Joint accounts for shared expenses
- Money tracking and budgeting apps such as Mint by Intuit
We all have different strengths, some are good at enforcing frugality while others are excellent at spotting investment opportunities.
Having determined the needs and set the financial systems, you need to decide who does what.
For instance, if you choose to split expenses, you can assign them pro-rata based on how much each spouse is earning.
The thing to remember is that neither spouse should feel diminished. After all, money has a strong power component.
Financial decision checklist
This set of questions can help make sure both of you feel seen and catered to in your financial plans.
- Is it fair to both?
- Do you both feel heard in the decision-making process?
- Does it match your individual and joint values?
- Does it support your mutual goals?
Make It a Regular Thing
You can agree on a regular chat to discuss the health of the marriage finances. Whether it is monthly or quarterly, take the time to review how effective your budget is and how well you are sticking to the plans you made.
Discuss potential investments. Keep in mind the foundations of this conversation which are honesty, respect, and no judgement.
The thrust of this article was how to untangle your marital finances once you have already tied the knot. That said, these are conversations you can have even before marriage. One useful premarital tool is the prenuptial agreement.
Is it Advisable to Pay Off Collection Items?
The majority of consumers appear to believe that if they pay off collections, their credit scores will improve and become better. A shocking truth has emerged: this is not actually the case. Just so you’re aware, negative items can remain on your credit reports for a maximum of seven years, and your credit score will only begin to improve once the negative item has been removed.
What are Collection Accounts and How Do They Work?
Collection accounts are entries on a credit report that indicate that a debtor has fallen behind on previous obligations. Original creditors may have sold the defaulted debts to a debt buyer or may have assigned the debts to collection agencies after the default occurred. It should come as no surprise that the collector’s ultimate goal is to work on the client’s behalf in order to have the defaulted debt collected from the debtor or as much of it as possible.
The majority of the time, these collection accounts are reported to credit reporting agencies. According to the FCRA, or Fair Credit Reporting Act, these are permitted to remain on credit reports for up to seven years from the date of the initial debt’s first delinquency.
The Consequences of Paying Off Collections on Your Credit Score
The ramifications of completely paying off collection accounts will not disappear in an instant, however. You will still need to wait until the statute of limitations has expired before this information can be removed from your credit report. As previously stated, this will typically take approximately seven years. Fortunately, information from the past will have a smaller impact on your credit score.
Despite the fact that paying off collections will not improve your credit score, there are several ways in which you can take advantage of this situation:
Credit card or medical bills can result in debt collection lawsuits, which you can avoid if you take the proper steps.
As a result, you will be able to avoid paying interest fees to debt collectors. A debt collector is constantly selling and buying accounts, and he or she may continue to charge you fees and interest on the accounts that have been purchased.
In the event of a settlement or payment in full, the credit report will reflect this. When it comes to lenders, it can have a positive impact because they are likely looking beyond your credit score and instead of looking at your credit history and other factors. Comparing those who successfully repay an extremely past due account to those who never managed to do so, the former will demonstrate greater financial responsibility.
You will eventually be able to benefit from the most recent FICO Score model. Despite the fact that the FICO 9 is still in the early stages of implementation, the vast majority of lenders will eventually adopt it. Medical bills will be given less weight in this model, and paid accounts will be completely ignored when it comes to collections.
According to the law, the majority of negative credit information, such as collections, should be removed from credit reports over time. The fact remains that attempting to settle or pay off your debt as quickly as possible will be in your best interests. Not to mention the fact that, in contrast to older models, the newer models for credit scoring do not take into consideration collections with zero balances. If you don’t think you’ll be able to handle it on your own, you can always enlist the assistance of professionals who can simplify the entire process for you.
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How Bad is an Eviction and How Long Does it Stay on Your Credit?
Every time someone mentions a record during an eviction, what they are really referring to is a background check as well as your credit report and history. In general, an eviction will appear on your credit report for up to seven years.
That is correct; you read that correctly. It will be there not for 7 months, but for as long as 7 years, according to some estimates. Eviction is, therefore, a major issue in this community, and it is treated as such. Landlords, in particular, are wary of renting to tenants who have a history of evictions on their records. If you are ever evicted, this fact will follow you wherever you go for the next seven years, no matter how hard you try to forget it.
For landlords to know that you have been evicted in the past, there are two ways to find out.
If the reason for your eviction was non-payment of rent, your landlord may have forwarded this account to a collection agency, which will then appear on your credit report as a result of your actions.
When the courts were involved in your eviction, the case judgment is considered public record, and landlords who use tenant-screening services will be able to see this information if they conduct a background check on the tenant in question.
Is it possible to have an eviction removed from your credit report?
Anything that is accurate on your credit report will remain on your report for seven years. If there is ever a mistake, you will have the opportunity to contest the decision.
This error will be removed from your credit report if you can provide proof to the credit reporting agency that a mistake was made. If you were successful after being served with an eviction notice, you should provide proof of your victory to the reporting agency. There are landlords who will attempt to evict people even if they do not have a legitimate or acceptable reason to do so.
How Can You Find a Place to Rent if You Have an Eviction on Your Credit Report?
It is important to understand that just because you have an eviction on your credit report does not necessarily mean that you will be unable to rent for the next seven years. However, even though your report contains an eviction, there are still several options available to you for finding a place to live in the meantime.
Take the initiative.
Inform the property manager or landlord of your intention to evict them prior to submitting your application and explain your circumstances to them. Even if the eviction took place years ago and you have maintained a good tenant record since then, there is a chance that the landlord will rent to you again.
Look for someone who will sign on as a cosigner for you.
It is possible for you to obtain a rental unit if you have a co-signer who has good credit and can vouch for you. Your parent or another person with good credit can serve as your co-signer. If, on the other hand, a payment is not made on time, your landlord has the right to and will almost certainly ask for the money from your cosigner.
Pay in advance if possible.
A high probability of obtaining a rental unit exists if the landlord recognizes your willingness to pay the rental value in full upfront for a period of 3 to 6 months.
What’s the bottom line?
It is preferable to avoid being evicted in the first place if you want to avoid having any eviction information on your credit report.
Why did House Prices Go Up in 2020 During the Pandemic
The pandemic brought with it a lot of surprises, one of them being the rise in house prices. The US economy plummeted with millions of Americans finding themselves out of work and without food. No one would have predicted that at the time when times were hard for everyone, home prices would become overheated, mortgage rates would skyrocket, and the supply for houses would not meet the demands and consumer confidence in the housing market was reducing. The housing market was booming.
Right at the beginning of the pandemic, no one was willing to buy a house or even sell one. This was because of the uncertainties of the time brought about by Covid-19. In a span of a few months, most day-to-day activities were confined to the available properties. Houses became a key asset and prices began to rise.
The US real estate market in context
The American real estate market suffered a huge blow as a result of the 2008 financial crisis. The recession saw the prices of houses fall by a big margin and the world’s largest real estate market was affected in ways no one would have imagined. This was as a result of subprime mortgages that were given in large numbers to help as many Americans as possible to become homeowners. Homeowners found themselves mortgages that were higher than the value of their houses. By 2013, the market was showing signs of recovery. From 2018 to 2019, the market began to fall slightly.
For many Americans, owning a home is very important to them as it allows them to build up their wealth, make it easy for them to access credit, and be able to save more as they no longer have to pay rent. A large percentage of homeowners rely on mortgages to acquire homes after raising the down payment from their savings or with money from their families. It was expected that the pandemic would lead to foreclosures especially since the economy took a downward spiral at the start of the pandemic. Many people also lost their source of income and were unable to keep up with their mortgage payments.
The most expensive real estate in the USA is found in San Francisco, California. San Francisco has a booming economy fueled by the presence of tech companies like Apple, Facebook, Intel, and Tesla that have their headquarters in the nearby Silicon Valley. The city also has been at the forefront in matters progressive culture which attracts more people to relocate to it. As a result of the thriving tech economy that brings billions of dollars into the city, and rising housing demand, the city is the most expensive place to buy a house in the US. On average, the price per square foot is $1,100.
Why do house prices go up in general?
The value of a house is usually expected to depend on the demand for living in a particular area, but things like recessions and pandemics are known to have an impact that can either be positive or negative. House prices go up when the supply does not meet the demand. One of the key factors that affect the supply has to do with the regulations that restrict the number of housing units that can be built. For example in a single-family zone, it’s illegal to build townhouses or apartments, or condos on any spaces designated for single units and parking minimums must be met. This forces contractors to make provisions for parking spaces even in places where it’s unwarranted.
Some local governments allow groups of people to block developments they feel will have a negative impact on the overall value of the entire estate. These local zoning regulations are making it impossible for most Americans to move to better estates due to the shortage of housing.
Why did house prices go up during the pandemic?
The price for houses is determined by the existing demand and supply dynamics. The fewer the number of houses available, the higher the prices for the available units would be. If the number of buyers is fewer, then the house prices would be lower. The prices went up because the pandemic affected both supply and demand. A lot of people were in a rush to take advantage of the falling mortgage rates which made it easier to acquire homes at a cheaper price.
As a result of the falling mortgage rates, houses were not staying on the market for long. Among those who bought the homes were first-time homebuyers or those who were buying a second home. These put a lot of pressure on the market as were not putting another home on the market as they took one out of it. In some instances, others chose to refinance their mortgages based on the lower rates instead of acquiring a new home.
Because of the pandemic, people who had plans of listing their homes did not do so and those who had listed their homes took them off the market. As a result of the social distancing rules at the height of the pandemic, not many people were willing to show their houses.
Home developers did not anticipate a surge in the demand for housing during the pandemic. A number of them had let go of their employees and had shut down. At the same time, prices for materials like lumber also added to the construction costs alongside the scarcity of skilled workers.
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