Happy St. Valentine’s Day everyone! Over the weekend I stumbled upon this article over at Kiplinger that should take a little bit of the romance out of the day for anyone moving in together… It’s a bit old, but I couldn’t resist the irony (or maybe not “irony” exactly… but it made me laugh) of posting it today.
So for all of those love birds popping the question or asking their boy/girlfriend to move in today, check out the post and its five money rules for moving in together (along with my two cents at the end, of course):
- Talk about money;
- Keep your finances separate;
- Put your arrangement in writing;
- Keep major purchases separate and documented; and
- Be smart about housing.
Talk about taking away all the romance of moving in together, huh?!?! But it’s generally some smart advice. I know a lot of people say to never live with someone before marriage, but I broke that rule (I actually lived with my wife in a tiny studio apartment… God bless her for putting up with me!). So let’s get that out of the way – if you choose to move in together I tend to agree with these.
Hiding money and not talking things through is a HUGE problem whether you live together or not. Make sure everyone knows how much money and debt you have and how much you make. My now-wife and I didn’t split things 50/50 but neither of us felt ripped off because we both knew how much each other made and we made a decision that we both felt was fair… If we hadn’t talked about anything and just split it 50/50 one of us (or both) might have felt guilty or stressed out. The best thing we did was talk it through.
I totally agree with keeping finances separate when you’re dating. I’m sort of indifferent when you’re married as long as both of you are open about how much money is around, coming and going. The mechanics of joint or separate accounts don’t keep me up at night although having one, joint account is the simpler way. A tie almost always goes to “simple” when it comes to money, in my opinion. So if you’re indifferent, keep your finances separate until you’re married and then go joint.
I also agree with writing – even a simple e-mail saying “we’re splitting everything 50/50″ is fine. Anything simple that spells out the deal works. (i.e. “I’ll pay 75% of the rent and you pay the rest plus utilities” “we split everything 40% you and 60% me” with a reply that says “ok”). It doesn’t have to be fancy, but having something in writing makes sure that no one forgets the deal and ends up feeling ripped off. Get it? It’s all about creating simple harmony.
Keeping major purchases separate is fine. I would rather buy all the living room furniture and have my girlfriend/roommate buy the bedroom furniture instead of splitting everything, for example. This way if it doesn’t work out, I take my couches, she takes the bed and there’s nothing to cut in half! Sending a quick e-mail or keeping a list of what each person bought is a good idea.
Being smart about housing is key. I don’t think it’s a good idea to buy a house with someone unless you’re married. If you break up it’s a mess. You have no idea how many people tell me they still own a house with their ex-husbands or ex-wives and can’t refinance because they’re under water! And I’m not a personal finance professional – I’m just a regular guy! Imagine when people see ten to twenty people a day – how many messed up ownership deals there are out there… And those people loved each other at one point to make a commitment for life… If you rent a place, put both names on the lease. If you buy a place, good luck. I wouldn’t do it; not until you’re married at least! Some folks say not even for a year or so after that. I think Dave Ramsey says something to the effect of “so you know how close to the in-laws to buy.” Pretty funny – but also true.
So that’s it! Sorry for taking a little romance out of today. Now go give your boyfriend/girlfriend/husband/wife a kiss and tell them I’m sorry! If you’re single, that’s OK too! Maybe today’s the day you meet someone you’ll eventually move in with. Now you have a few rules for when that happens!
Until next time, put your credit card down and slowly step away from the mall!