On Sunday, I sat next to a guy on the plane who was heading to Las Vegas for his honeymoon. Now why I was sitting next to him and not his wife I’ll explain in a moment, but I love meeting young couples that have decided to tie the knot and embark on what I consider one of the greatest journeys known to man. I learned that he and his spouse had actually been married for a year, but this was the first time the two of them were able to get away. The fact that the trip was planned at the last minute because of their busy schedules explains the separation in seats, so I insisted on trading seats with his wife so that the two of them would be together (which landed me in the exit row – sweet!). As I sat back in 9C, I began thinking about how this would probably be one of a thousand challenges they would face together, both financially and non-financially, as a couple.
This week, Susan and I celebrate our 17th wedding anniversary. Now you don’t stay married for this long without a few bumps along the way, but in order to stay married this long it does require the effort of two people choosing to work together, especially concerning financial decisions. Here are some of the financial milestones Susan and I have achieved along the way, along with the unique circumstances that helped determine their outcomes:
You may not consider this a financial milestone, but I believe it is a milestone nonetheless, and as you can see from my friend on the plane, not all newlyweds enjoy one right away. It takes planning, both on the part of schedules as well as on the part of finances, to enjoy this important “alone” time to strengthen your relationship. The key is to avoid borrowing money to pay for it. Chances are, when you get married, one or both of you will already be carrying debt (e.g. student loans, credit cards), and while it may not legally belong to both of you, it will most certainly affect both of you, so don’t add to it.
Susan and I were able to save enough to pay for our honeymoon without having to borrow, which I believe started us off on the right foot. Even if it means postponing your honeymoon for a short while, I suggest doing the same.
Our first apartment
Susan and I lived separately with our parents until we were married (we were married rather young), so living together would be a new experience for both of us. We knew that we would want to buy a home someday, but until then we figured an apartment would be appropriate. This was a good idea for several reasons. One, it allowed Susan and I to get used to living on our own; two, it helped to build our credit history; and three, expenses were fairly controlled, so we could start creating a budget based on our combined incomes. We chose to live off of one income so that we could use the other to start saving for future financial goals.
Our first house
After a year of renting an apartment, we were ready for our first house. Because we were DINKs (Double Income – No Kids), we were able to save for a down payment, but we could only afford to put down 10%, which meant our mortgage payment would include primary mortgage insurance (PMI). Also, we learned why it is so important to clean up your credit before applying for a mortgage because we almost did not get the loan thanks to a PG&E utility bill that my college roommate never paid (the account was in my name, so guess whose credit report it showed up on?). Needless to say, we qualified for the mortgage and moved into our first house.
Our first child
Rachel was born in August of 1998. Nothing in the world could have prepared us for the great joy we experienced, but there was plenty we were able to do to brace for the financial impact. The cost of raising a child varies based on where you live and other factors, but if you think you will wait to have children until after you can afford them, chances are you’ll be waiting a long time. Having children means making sacrifices, and the more children you have, the more sacrifices you will have to make.
One such sacrifice came at the time we purchased our house. Susan and I had discussed the possibility of having children, and we wanted Susan to have the option of returning to work, or to be a stay-at-home mom. To provide for this option, we decided to only consider how much we could afford based on one income. That way, if and when we had children, we could afford to have Susan stay at home. This also gave us a cushion should one of us lose our job unexpectedly.
Our first minivan
Eventually, we did have children (four actually), and as the family grew, so did our need for more seats and more cargo space. I didn’t mind the idea of buying a minivan, but I did mind the idea of making car payments. For this reason, Susan and I put money aside in order to be able to purchase a vehicle outright. However, doing so would have depleted most of our emergency savings, so we made a compromise. We used some of our cash reserve but opted to finance a portion of the cost to buy the minivan. That way, in the event of an emergency, we would still have some money to get us through. We were also able to pay off the car loan quickly, and then use the money that was going toward our payment as a monthly savings in order to build our cash reserve back up.
What lies ahead
These are just some of the financial milestones Susan and I have had to cross since the time we exchanged vows, and there are many more that lie ahead, including college, paying off the mortgage, and eventually retirement. The true secret to having a long, healthy marriage is to take the time to get on the same financial page. As a couple, Susan and I have regular “dates” to discuss our financial picture, and we also discuss major financial decisions (that’s any purchase over $300) before making them. If you truly love your spouse, you’ll make the time to work on a family financial plan together. Take it from me; we may not be perfect, but after 17 years, we must be doing something right.