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Finance

Remarrying? Say 'I won't' to money mistakes

To hear Frank Sinatra sing it, love is lovelier the second time around.

But can you imagine old blue eyes crooning, "Love's more financially complicated, the second time around."

Well, it is. Not that it wasn't tough the first time.

The sad truth is that half of all second marriages in the United States end exactly where the first ones did -- in divorce court. And the major reason is the same: money.

"Money is the leading cause of divorce in the United States," says Steven Pybrum, author of Money and Marriage: Making It Work Together.

Making a second, or third, marriage work requires all the love you can find, but handling your newly blended finances as well as you handle your newly blended families is a key to staying both maritally and financially healthy.

And you can do it!

Money matters matter
Jaine and James Carter, work/family experts and authors of He Works/She Works agree. "The No. 1 problem that all marriages have is money. All couples have the same kind of issues the second time around, but what we have is more obligations without necessarily more income."

Kathleen Miller, author of Fair Share Divorce for Women, admits money problems are both predictable and frustrating. "It's so easy to get married and so costly and involved to get divorced that I don't understand why somebody doesn't spend a little time talking about the financial and business aspects of marriage."

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Although the U.S. Census Bureau stopped compiling national marriage statistics in 1990, it is estimated that Americans have married and divorced in roughly equal numbers throughout the past decade. Among those who divorce, three out of four will remarry, usually within three years. When you do the math, it's little wonder that the average American family today is actually the stepfamily.

For richer, for poorer (again)
It's pretty easy to understand why most couples avoid "the money talk," even the second time around. After all, it's love, man! You window shop for a diamond, not a CD rate.

And that's precisely the problem.

"For 85 percent of married couples in America, it is very difficult to sit down at their own kitchen table eye to eye and talk about money issues," says Pybrum. "Resentments build up until there is an explosion over something else, when the root of it is how money is being spent in the household."

Those resentments can begin with little differences in the money management styles we learned from our parents, relatives and friends. Often, when the first marriage ends, people blame it on their spouse and enter into the second marriage without any better knowledge of their own strengths and weaknesses in handling money. The failure rate of second marriages seems to indicate that they then make the same mistakes again.

"A lot of people don't take that inward look at what went wrong in the first marriage to make themselves more apt to be lifetime partners in the second marriage," says Pybrum.

Especially when it comes to the marriage's finances.

Beating the odds
How does a wiser couple beat the odds the second time around?

Here's what the experts suggest to keep money problems from intruding on your bliss. And, they say, don't think of them negatively -- you only do that because you don't want to talk about them:

  • Separate accounts
    For two-income couples where one or both parties have child support obligations, it is a good idea to establish three checking accounts: yours, mine and ours. Each person then contributes a specified dollar amount or percent of income each month to the joint account, which is used to pay the mortgage or rent, household expenses such as food and utilities, and vacations. Child support would come out of the individual's account; savings would go into their separate accounts.
    "The male may have alimony and child support payments," says James Carter. "If we were to merge our income as well as our savings accounts, there is no doubt that it will lead to resentment. Here's what happens: We put money in a joint account, but every month she has to send $450 to his past wife. She'd have to be an angel not to be resentful."
  • "Don't ask" accounts
    Even couples without outside obligations might consider opening separate "don't ask" accounts -- money that is theirs alone to spend.
    "If you look at our parents' generation, there was only one way that you dealt with money as a married couple and that was the joint account," says Pybrum. "The more comfortable way today is to have the combination of joint and separate accounts. It takes a lot of frustration out of it because we each have access to our little mad money."
  • Separate credit history
    The important thing here is, get one. Should divorce loom on the horizon, a credit card in your own name can help jumpstart a new life.
    "It's important to get that because it can be really hard to get once you're divorced," advises Miller. "Get that history. One of the bad things about getting joint credit cards is, as far as the credit card company is concerned, you both are liable for that debt."
    "One of the biggest tragedies I've seen is when a couple divorces and one of them skips out on the credit card bills and the other one is stuck with them," says Jaine Carter. "One woman told me she paid for the engagement ring of (her ex-husband's) second wife ... he had put (it) on their joint credit card, then subsequently declared bankruptcy. In order to keep her credit good, she paid off the bill."
  • Income tax filing
    Bear in mind that if you file a joint tax return, you are both responsible for payment of all taxes. If you file separate returns, you are each responsible for your own taxes.
  • Marital property
    In general, most items of wealth (money, real estate, investments, personal possessions, etc.) acquired during a marriage are considered marital property. In most states except community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington), earned income is considered individual property. It might be a good idea to know how your property would be divided in your state of residence.
  • Inheritance
    Inheritance and other gifts you receive during your new marriage remain your sole property. That doesn't mean you can't share and enjoy them, however.
    "You can put some of your inheritance into the community between the two of you, but just keep a record of it," advises Miller. "It doesn't mean the family can't enjoy some of it, but don't throw it all in, because once you throw it into the pot and you get a divorce, it's almost impossible to get it out."
  • Prenuptial agreements
    Sure, prenuptial agreements sound scary. But experts agree they're a good idea when they're used to prompt open and honest talk about your new financial reality.
    "We believe in them, even if this isn't your first marriage and even if you're not millionaires," says Jaine Carter. "Some say, 'If you loved me, you wouldn't make money an issue.' That's the most childish argument I've ever heard. It's like a little kid who wants everything on the shelf at Toys 'R' Us. They're not living in the real world."
    Says Pybrum, "It's a modern-day thing to do to write down anything you agree to do."

Realize that talking openly about finances can be like talking about which house or car to buy, or choosing which restaurant or movie to go to -- you don't stop loving each other if you disagree.

Don't be surprised if arguments arise, say the experts. There will be differences of opinion, but they'll be on the surface, manageable and not powerful enough to destroy you.

Talk, talk, talk
If couples would do nothing more than sit down and discuss money with each other, their chances of a long and happy life together would likely increase dramatically. Counseling doesn't always help. Pybrum points out that marriage counselors are no more prepared to discuss your money problems than accountants are to advise you on your love life. Ultimately, the long-term answer to our coin-toss divorce rate is education.

"As educated as the country is, 95 percent of the country is financially incapable of retiring in the style they wish they could. They haven't put forth enough information in the school system to train people in the art and science of building net worth, therefore we are just by default in this mode of earn, spend, earn, spend, earn, spend, and forever keep ourselves on a treadmill."

And so, a toast to the bride and groom: "May you be happy and healthy forever, and may money never come between you."

Jay MacDonald is a contributing editor based in Mississippi.

-- Updated: Feb. 01, 2001

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