Financial Miscues in the Name of Love (PART 2)

Adam Levin, former director of New Jersey's Division of Consumer Affairs and co-founder of Credit.com, a consumer advocacy website, weighed in on the matter in an interview with our sister site, MainStreet.com and Colombian-match.com

"I don't know if it's ever really good to combine credit," he said. "I think it's a natural tendency that couples want to do it as part of the process of bringing themselves closer together. But I think that couples must always maintain separate credit files because death, illness or divorce requires that each member of the couple be able to stand on his or her own feet."

"So often the boyfriend or the girlfriend with the bad credit will say, 'Please, let's get a credit card together, it will help me build my credit and you would be so wonderful if you would do this with me,'" Cunningham says. "Don't do it. There is joint control of that credit card which means you may very desperately want him or her off the card, but your hands are tied if they won't budge. If somebody turns into a jerk, they can run up your credit, refuse to pay and nobody can force them to pay. They are off scot-free."

As an alternative, she suggests making that partner an authorized user of an existing credit card.

"Then you can kick that person off whenever you want to and you've remained in control of the card," she says.

Dragging in family members 
If it isn't advisable for one half of a couple to get tied into the other's loans and bills, it is even more dangerous to bring family members into the picture. No matter how well a partner gets along with the potential in-laws, introducing money to the equation is an invitation for trouble.

Even if they offer to help out with that needed loan, either by directly lending the money or co-signing, the help may not be worth the hard feelings that will haunt you if anything goes wrong with a repayment plan.

Leases -- for an apartment, car or business space -- are also fraught with hazard if a partner or their family is overly trusting in providing their John Hancock.

Moving too fast 
The American Dream has many couples dreaming of buying a first home and perhaps even starting a family. But realizing such plans can be too much too soon.

Make sure you understand that an asset such as a house complicates your relationship. Are you prepared to meet the cost of a mortgage payment, insurance and regular maintenance? Is your relationship on solid enough ground that you don't have to fear a messy divvying-up of assets?

"I guess the worse thing would be buying a house, because that's the largest amount of money most of us put our money on the dotted line for, and so many people outside of a marriage situation will buy a house together," Cunningham says. "Then you have the lack of a marriage, which sometimes makes it easy to bail on the emotional commitment, but it is still very difficult to then untangle the financial commitment."

Not having an exit strategy 
Love can fade as fast as it blooms. From teenagers to senior citizens, every new relationship feels like a sure thing -- until it isn't.

It may be a difficult conversation to have amid fast-beating hearts and fluttering eyelashes, but couples need to discuss what will happen if their financial arrangements outlast their relationship. That conversation may not be put to paper as a prenuptial agreement, but certain, very specific items need to be agreed to verbally and, if possible, in writing.

How will joint credit cards be treated? What is the plan for discharging jointly acquired debt? Who gets what physical assets? How will insurance policies be updated or investment portfolios unmingled?

Hashing out such details may not make for a fun date, but in the long run having those conversations may spare grief and uncertainty and, at the very least, make a split far less acrimonious or litigious.

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