For married people paying off loans

[Ilovewaiting]

How do you budget for med school loan repayment? Do you use both spouses salaries to pay off one spouse's med school loans?I guess I mean do you pay your monthly loan bill using a joint account, like other bills?
Im not really asking for too personal of financial information, just some advice...

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[yadayadadude]

Well, when I buy a new pair of shoes, it comes out of our joint account. When my husband buys stuff for his garden, it comes out of our joint account. So, yah, when we pay off my student loans, it'll come out of that same joint account. I don't really understand your question.

 

[nontrdgsbuiucmd]

I suspect you're asking if the non physician is cool helping pay for med school loans out of a joint account? I think it depends on the relationship; we've always had joint accounts (well over 10 yrs); even w/separate (business) accounts, both of us have full access to all accounts; the accounts in this case are kept separate for tax purposes. I've worked with people who believe separate accounts (for each spouse) work better for them; my impression is that this is just personal preference. Heck, I've heard of spouses who live in separate houses, or separate cities, because that works better. If a certain setup works best for you & spouse, go for it.

It does make holidays and birthdays a bit less of a surprise though.

 

[Ilovewaiting]

Thanks... that was my question...

 

[schwab]

It's a good question and one that couples should really talk about before they get married or as soon as possible if they already are! It's dangerous to go into a relationship with assumptions about money and large med school loans are a huge thing about which to have misaligned assumptions!

My fiancee and I have decided to keep some expenses separate and join others - she's big on keeping things separate while I was originally more for joining things together. I did a blog post that detailed our joint vs separate expenses in marriage discussion - maybe it will help you out!

We decided to keep her loan payments separate, by the way.

 

[Sol Rosenberg]

I've never understood why most people have joint accounts. They require more work (reconciling both people's expenses to one account,) and open you to more liability (i.e. joint assets can be garnished with a judgment against one of the accountholders, whereas with separate accounts, only the party with the judgment against them can have their account attached. This varies by state, however.) All in all, seems like a bigger pain to us.....we've been happy keeping our finances separate (and I paid back my student loans and my wife paid back hers) and I'll pay back the loans I am taking for medical school.

 

[nontrdgsbuiucmd]

I think this is just personal preference, to provide thoughts as to why we chose a different path..

Seems that with separate finances, it'd be easier in case of a separation. Having kids tends to change this feeling -- once they're there, they're there to stay.

We'd consolidated accounts when married, just like many couples change one person's last name, move into the same house, or agree to decide jointly on new major purchases. Each of these is a fair amount more work, but also for many, kind of a compromise that may be a part of being married. (we did not do one of the 3 things above, so clearly this is not for everyone)

We handle bank reconciliations by the more financially savvy partner checking the account status online a few times per week to make sure purchases all look OK and the account is comfortably positive. (very few checks are written these days - most things post immediately)

The primary checking account is close to zeroed out each month; in any legal proceeding there'd be plenty of advanced notice (like if I rented, and failed to pay rent, I'd be aware that my bank account could be frozen) so this is not really a concern in our case.

 

[montessori2md]

This is a VERY personal decision for the couple, and if you're not yet or newly married, it should be part of a series of meetings the two of you have together. Work it like this: the 2 of you make a date for say, 2 weeks from now, with the understanding that you bring all of your financial records to the table for the meeting (prev yr's taxes, pay stubs, credit cards -ALL of them), other debt, retirement info). You sit down w/ the papers/computer screens, and go through it.

If both of you are fiscally responsible, always pay your bills on time, have some savings, then do whatever you both want to do.

If one of you can't remember to pay bills on time, has a big pile of unpaid credit cards, and one of you doesn't, it's important that the one who is more "with it" not freak out, and the one who is less "with it" completely fess up, and the two of you figure out a plan to handle it that will WORK and not upset either party. This was my situation when I got engaged, and the result was basically that I took over the household finances, and gave my DH training wheels for a long time, with a gradual return to normal. I try to keep him in the loop and give more of a full report on where we are about once a quarter, and he has full access to our accounts, but never bothers to look at any of it. This is hilarious to me, because he knows the numbers at work to .01%.

If one person is basically handling the finances, having joint accounts can be a major pain in the *****. If the med student has the good fortune to have a partner who is fiscally organized, I personally recommend having basically all the bills turned over to that partner, so you don't have to worry about remembering to pay the electric bill while your schedule is upside down. This CAN be easier if you have a joint account, but can also be managed with separate accounts, particularly if you just make a transfer to the major payor whenever you get a loan disbursement.

As far as paying back the loans, this once again goes towards what is more impt to the couple -emotion or finance. As long as the payments are being made, it doesn't really matter how or whose money. But if you're a resident living on chump change, and your spouse wants you to pay exactly 50% of the mortgage and expenses, and won't take you along on a vacation in the Bahamas because you can't afford to pay your way, I'd kick him to the curb. Usually if you lay out the numbers, and say "we'll save $40000 over 10 years if you help and we pay off $x/mo more on this" a sensible person will do it. But $$ can trigger all sorts of emotional responses in people.

 

[Sol Rosenberg]

The primary checking account is close to zeroed out each month; in any legal proceeding there'd be plenty of advanced notice (like if I rented, and failed to pay rent, I'd be aware that my bank account could be frozen) so this is not really a concern in our case.

One day you will have money, and inertia is powerful (you likely won't separate your accounts when your financial situation changes.) If you transfer money to avoid satisfying a judgment, you can be liable for fraud or other criminal charges. However, if you knew you were getting into trouble, and had one person of the marriage be "bad" and one be good, you could always separate the money and keep it in the good account. No transfer, no fraud, your family keeps your $$$.