There is a big difference between looking after your own finances while living alone, or with parents, and living with a partner. The transition can be very difficult, especially if both partners are strongly independent, or one partner is financially weak and the other strong. In fact, it is an area of a new relationship that has many pitfalls if you do not set the ground rules from the start.

It is best to sit down together and quietly plan your finances, even before you get married or move in together. Then, when you do so, it is important to be open with each other, and discuss what may go wrong with the domestic finances if you do not plan correctly. That way, you can work on a plan together, and a budget, and set ground rules for a smooth financial future together. It is sensible to bring the use of credit into that discussion, as there will come a time, maybe from day one, when credit cards and other forms of credit become an issue. Agreement on all relevant credit and finance issues will reduce the risk of problems, arguments and misunderstandings later on.

An early decision to make is whether to keep finances separate or not; deciding, for example, whether to have joint bank accounts or joint credit cards.

The Benefits of Joint Accounts

The advantages of consolidating funds into one current account include:

1. Easier record keeping.

2. Should you apply for a loan at any time, there will be less paperwork.

3. Working closely together on the running of the account may help to solidify the relationship and build trust. It gives an opportunity for both of you to bring out your best co-operative nature.

There is one drawback, though. With two people actively using the account, it is not so easy for you to keep track of the account transactions and balances, especially if you are both using the account a lot. This can be overcome by discussing openly all expenditure the day it happens.

The Benefits of Separate Accounts

Keeping separate accounts will allow each person in the relationship more freedom: each will not need to check with their partner over every purchase. In addition, having separate accounts may create fewer complications in the relationship. It will allow them to maintain a sense of independence, and this can be very important to some relationships.

One negative to a joint finance arrangement is that it can seem unfair. If one partner earns

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Debt consolidation is often marketed as the easy way out of debt. I’m sure we’ve all seen television advertising consisting of interviews with relieved looking couples who have consolidated their debt into “one easy monthly payment”, Sometimes they even have enough left over to take that trip of a lifetime, or treat themselves to something special.

The truth is, that debt consolidation can often be dangerous, and far from being the way out of debt, it’s often one of the first steps to getting deeper and deeper into debt.

As an example, let’s say you owe the following on credit cards:

Your total debt is $5,000, so you decide to consolidate it into your mortgage. After all, your mortgage is at a much lower APR, only 5.5%, and although you’ve got 25 years remaining on it, your mortgage company has told you it’ll only cost an additional $30 a month, where as previously you were paying over $110 a month just meeting the monthly minimum payments.

But it’s not as simple as it seams. Although your mortgage is on a much lower interest rate, it’s also over a much longer period of time. In fact, over the 25 years of your mortgage, you’ll actually pay over $4,000 in interest on the extra $5,000. That nearly doubles the cost of your original credit card debt.

Snowballing may be the answer.

By snowballing your debt, you pay off your debts in order of interest rate, from highest to lowest. You pay as much as you can afford on the debt with the highest interest rate, while paying the minimum on your other debts. As one debt is cleared, you move on to the next and so on, until you’ve reached your debt free day (Hurrah!).

In the above example, you’re already paying $110 a month just to meet the minimum repayments. If you could stretch to paying $200 a month then you could be debt free in just over 2 years, and only pay around $750 of interest. That’s got to be better than paying over $4,000 right?

Even if you could only afford $175 a month, it’ll still take you less than 3 years to become debt free.

In my opinion however, there is a much bigger advantage to snowballing than just paying off your debt quicker and saving money in interest. The biggest problem with consolidation is that it can often give you the false feeling that your debts have been paid off (they haven’t, they’ve just been moved), which can lead to building up extra debt on your now “clear” credit cards.

Snowballing takes a small amount of money management - Each month you need to figure out how much to pay each of your debtors, and you need to write the cheques or transfer the money. That means that you’ll naturally start to look at your finances and once you start doing that, you’re well on the way to managing your money better.

Money management - It really is addictive!

http://www.whatsthecost.com contains a number of useful financial calculators including a snowball calculator which allows you to see quickly and easily how much interest you can save by snowballing you debts correctly.

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Most of us don’t talk about money, finances, credit, debt….Young people especially go into the real world blind about these issues. They have had it easy or difficult growing up financially. Some kids use their parents credit cards or are even issued one. Some don’t have anything above the necessities. Then some “EARN” an allowance and are taught to spend conservatively. I think all of us have a responsibility to steer them in the right direction.

It is necessary to establish credit. Choose, for example a reputable credit card company. Often this can be obtained through the credit union or bank where an account has been active. Carefully read all of the disclosure. Pay close attention to the interest, grace periods and penalties. Most importantly, spend the way you always have and absolutely no more. Charge one or two of the usual expenses and be sure to pay the bill on time. This creates the needed credit and good score to buy bigger things.

Credit is a good thing in some ways. But as we all know it is more often a problem. One problem is people lose control of spending. I think there’s something psychological that makes it easier to sign a piece of paper than to write a check or whip out the cash. One is your money, the other doesn’t seem to be. The worst part of being up to your eyeballs in debt is that it snowballs quickly and usually hopelessly. There are debt reduction programs and free consultation services and unfortunately bancruptcy. But it’s easier not to get there. Another problem is bad credit on the report that’s incorrect. Amazingly this happens very often and consumers aren’t usually aware of it until they apply for something. It pays to check about once a year. If something is in error it’s usually not difficult to get it corrected.

I had a young man (19) come to see me yesterday. He said he wanted to buy a house and no one would pay attention to him. What a sad statement. He has belonged to his credit union for years. He has rented a house for a year and paid the utilities. He’s a certified mechanic who took first place in the state. He has worked in the same field for several years. That’s more stability than I’ve seen in some forty year old people. John went to the credit union and spoke to someone in the mortgage department. I’m fairly confident it went well and I will find him a good property and a good deal because I know him and I’m proud of him. I think he was hesitant to talk to me because his mom and I are best friends. I wish the other people had treated him with the respect this young man deserves.

Suzie is a certified residential appraiser, licensed real estate broker and an expert author with twenty years experience in the business. Other professionals in the field have contributed as well. http://www.freewebs.com/realestatenews

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