Finances

Exercises

Cash or Credit?

Making the decision to use credit is a very personal matter, and one on which both partners should agree. There are a number of reasons why a couple may want to have a major credit card. They include:

• Safety
• Convenience
• Emergencies
• Identification Purposes
• Acquiring a Credit History
• Ability to Buy Goods by Phone or Online

Some cards even offer a merchandise guarantee in case a product you buy turns out later to be shoddy or defective. The reasons for not using credit include high interest costs, additional fees, privacy concerns, the potential for overspending, and credit's ability to affect your financial flexibility.

Problems can arise with using credit when it becomes a tool for overspending, or when one partner values thrift and saving and the other partner wants the latest of everything right NOW. Go back to your discussion about your values concerning money. Look at the goals that you set together.

• How is the use of credit helping you achieve your goals?
• How is the use of credit keeping you from achieving your goals?

Be honest about your answers. If one of you thinks the other is a spendthrift (an absolute tightwad), credit can become the battleground over which you fight out your differences. You would think that savers would always marry other savers and they do sometimes, sharing their days together happily watching the balances in their 401(k) accounts grow. But savers often marry spenders, who feel and act differently toward credit. Two spenders joined in married bliss don't both remain spenders forever. One of them will eventually become a saver, or at least less of a spender. Otherwise their financial boat would sink. A spender-saver marriage needs lots of open communication, a joint agreement on goals, a sharing of ideas, compromise and negotiation.

Creating a Credit Control Sheet

If you and your spouse decide to use credit, financial experts Tom Garman and Ray Forgue suggest using a credit control sheet to help you manage your credit obligations and keep track of what you are spending. This prevents a nasty shock if he decides to buy a new power drill the same month she replaces her old winter coat. You don't need to wait until the end, middle or beginning of next month to get a reading on your entire credit picture. Also, when the bills do come in, you can check your control sheet against your statements for accuracy.