My fiance and I combined our finances shortly after we got engaged last August, and I am in charge of managing our money. We're getting married in November. Right now, we pay everything we can with a credit card. This includes any bills we can charge (phone, cable, rent) and all our daily expenses. The plan was that every month we would pay off the card. I figured this would make sure that we never overdrew our checking account.
The problem is that every month it seems like we spend a little more than we can send to the card, and over time that amount is really adding up. My credit is very good, and the card we use was originally in my name only, so we have a very low interest rate. However, it was never my intention for us to be carrying a balance on this card.
I'm afraid if we switch to using a check card and paying all bills directly from checking, we'll risk overdrawing the account. But I know the current credit card plan isn't working, because we are just going into debt. I need help!
See my advice when you read more.
You might be managing the money, but there are two of you spending it. No doubt you both have a lot on your plates with your wedding around the corner, so here is a simple plan for you to regain control of your finances.
- Open another account just for your fixed, non-negotiable expenses, and immediately transfer the money when you're paid. Set it up so the transfer happens automatically and neither of you will be tempted to spend that money on other things.
- Make a spending plan, together. Combining money means you need to communicate about how it's put to use. Because it sounds like you're not exactly sure where your money is going, I would recommend using a money management site like mint.com which will categorize your expenses and give you both a realistic picture of which areas could be targeted to trim costs.
- Get cracking on that credit card balance. Once you've gotten a good idea of your coupled spending habits and have come to an agreement on where to cut back, use that money towards your balance. Like you said, it really adds up over time, so be aggressive with it now.
- When you've gotten a handle on affording your everyday, expected expenses, begin to build up your savings in a high-interest savings account. Start putting some money toward an emergency fund and fit your monthly savings goals into your overall budget plan to avoid the excuse of not being able to afford to save.