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On money

Split the mortgage, not the marriage

Published October 30, 2005

The question that arrived in my electronic mailbox was provocative: "My husband and I purchased a new home. How do we equally split our mortgage payment based on our yearly salaries?"

If only life and marriage were so simple.

There is no single best answer to that question or to the broader question of how to handle money within a marriage. Couples typically find a solution that suits them initially, then change it as their circumstances change. Their decision might be influenced by the way their parents handled money or even their emotions about money. Some couples find money more difficult to discuss than sex.

There are objective issues to consider, too.

A typical couple comes into marriage with modest incomes and few assets and stretches to buy a house that will cost more to keep up than either of them ever imagined. It makes a lot of sense for both of them to put their entire paychecks into a joint account from which they each get a small weekly allotment for discretionary spending. A couple with more resources might do the same thing, only with more freedom for each to spend money from their joint account. (That's what my husband and I do.)

However, the wealthier couple also might choose to have three checking accounts - yours, mine and ours. That means working out an overall household budget (not just the mortgage payment) and deciding how much is needed to fund it each month.

If both spouses' incomes are fairly equal, it would be fair for them to contribute proportionately based on income as my correspondent suggested. If one makes 60 percent of the family income, and the other 40 percent, their contributions to the household budget could be split 60-40. But if one spouse makes a lot more than the other, it probably would be more fair for that person to fund the entire budget - and maybe supply the lower-earning spouse with extra spending money, too. It is not conducive to marital harmony for one spouse to have the ability to spend freely and the other to be forced to pinch pennies.

Each spouse should have a separate credit card, although I think the total spending on those cards should be disclosed and be factored into the family budget.

It also is important to have a joint plan for saving. It doesn't matter a lot whose name is on the accounts because if you divorce, your marital assets will be divided. However, it does matter that there are savings you both can count on in retirement.

Last January, Social Security benefits increased 2.7 percent based on the 2004 increase in the Consumer Price Index, but property taxes went up 3 percent. The Save Our Homes amendment limits the increase to the CPI or 3 percent, whichever is less. It seems to me the increase should have been 2.7 percent. The property appraiser's office says the CPI increased 3.3 percent. Why the difference?

Two different time periods and two different CPIs are used in the calculations.

The cost of living raise for Social Security beneficiaries is based on the increase between the third quarter of one year and the third quarter of the following year in the CPI for Urban Wage Earners and Clerical Workers. The property tax calculation relies on the change from one December to the next in the CPI for all Urban Consumers, U.S. City Average.

As I'm sure you've heard, the Social Security increase for next year will be 4.1 percent. Although we haven't reached the end of the year yet, it's a safe bet that the CPI used to calculate the property tax increase also will be greater than 4 percent. If tax rates stay the same, you can count on another 3 percent increase under the Save Our Homes cap.

Note to Readers: This note is for any of you who have thoughts of leaving your grandchildren more than $1.5-million. The Dow Jones Newswire reports that Health and Education Exclusion Trusts are growing in popularity as a way to avoid the transfer tax that applies when very large bequests skip a generation. A portion of the trust's income must go to charity, but the rest of the money is available to pay tuition, health insurance and medical costs directly to providers. If this sounds like your cup of tea, talk to a lawyer specializing in trusts and estates.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

[Last modified October 28, 2005, 19:41:47]

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