by Bill Hardekopf
In the past few weeks, consumers have received their credit card bills, revealing the financial damage from the Christmas season. Financial relief may be hard to find since Valentine's Day is just around the corner.
The National Retail Foundation predicts that U.S. shoppers will spend an average of $126 on gifts and treats for loved ones on Valentine's Day, an 8.5 percent increase from the $17.6 billion spent in 2011. While this spending may be good for retailers and romance, it can add add more debt to a budget that is already under stress.
Money management and spending are landmines that can destroy a relationship. Making financial decisions together can be extremely difficult since many couples can't even agree on what movie they want to see. However, couples that create a workable and efficient financial plan significantly lower their anxiety levels and have more time and money for long-term romance.
Talking about money may be initially awkward, but don't avoid it. Building a solid financial foundation is much easier than bitterly trying to re-build after a financial collapse.
Here are 10 tips for couples to help reduce financial stress:
1. Full Disclosure of All Debt and Financial Obligations
Get everything out in the open. Make a list of all student loans, car loans, credit card debt, even loans to friends and parents. Get copies of individual credit reports to share the financial past and any accounts that you may have forgotten.
2. Raise Your Credit Score
Make it a goal for both partners to have a credit score over 720. This will this help you qualify for the best terms and interest rates on loans and save thousands of dollars over your lifetime. In addition, insurers, landlords and employers use credit reports to make decisions about your application. Raise your credit score by paying your bills on time, paying down your debt and limiting your credit applications.
3. Plan for Spending
Both spouses spend money on things they think are necessary, but this is often subjective. Conflict occurs when spending leads to judgment or anger from the other spouse. Together, work out a plan for daily spending and how to save for some of the bigger purchases and even an occasional splurge. This can help remove the temptation to hide purchases and keep secrets from your spouse about spending.
4. Keep a Credit Card in Your Own Name
Keeping a credit card in your name helps build your individual credit history. If you are worried about your partner's spending habits, then he or she should not carry a credit card. Add your partner as an authorized user to your account and monitor the monthly statements for any unrecognizable charges.
5. Pay Off Debt
Decreasing debt reduces financial stress. The faster you pay off your loan balance, the sooner you can start saving and building a strong financial foundation. When you receive gift money, a bonus, a second job or a tax refund, use this to pay off debt. Making micropayments can help pay down your debt faster. Eat a meal at home or use coupons, and immediately apply the money you saved to your credit card balance. If you have multiple credit cards with a balance, pay off the balance with the highest interest rate and then move to the next-highest rate.
6. Emergency Fund
All couples should have an emergency fund of six to eight months' worth of living expenses held in a safe place, such as a money-market fund. Simply knowing it's there can reduce stress, since you know you're not walking a fine line between comfort and catastrophe. Make savings consistent and untouchable by setting up an automated deposit from your paycheck into your savings account.
7. Monitor Your Accounts
Even if you divide up bill paying and investing duties, both parties should be able to easily access accounts to know what is going on with your money. Websites like Mint.com can keep track of all accounts, including investment, checking, college funds and loans. This keeps information clear and in the open for both spouses.
8. Get Help
If arguments prevent you from getting started or making a financial plan, it may be good to seek professional counseling from a financial counselor or credit counselor. The National Foundation for Credit Counseling can help you find a certified credit counselor in your area. They can help you create a debt management plan. The set up fee is typically $50 and the monthly fee is about $25.
9. Talk It Out
Regularly make time to talk about your finances. It is important that both partners actively participate in these discussions. Keep it comfortable and conversational; do not make this a business meeting. It is not a time for blame and accusations. Let it be an open forum where either spouse can bring up problems and issues and even ask for suggestions and help. Let your actions show that you are in this together.
10. Add Extra Income
Selling unwanted items at a garage sale or on eBay is a start, but you may have skills that can make extra income. You can make picnic tables and chairs and sell them on Craigslist, or make bows and girls' accessories to sell at children's clothing consignment sales. You can board animals while their owners are on vacation. If you are a former athlete, you can give private lessons to kids learning how to play your sport.
Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates.