Combining Finances Now Is Dangerous

Brit wants to know if it would be better to start Dave's program separately and keep it separate or combine finances when he moves in with his girlfriend.

QUESTION: Brit in Illinois wants to know if it would be better for them to start Dave’s program separately and keep it separate or combine it when they move in together? Dave recommends keeping it all separate until they’re married.

ANSWER: It would be better for you to start the program separately and keep it separate until you’re married. If you live together and share all the finances in the house, that’s going to get you into problems in a lot of ways. You’re going to get yourself into a mess, because you don’t have the benefit of the legality of marriage, meaning if you pay a bunch of her debt off because you’re acting like you’re married—which is what you would do if you were married—if you pay off a bunch of your girlfriend’s debt and you break up, you’re screwed, dude. You’ve got no money. She’s not legally obligated to pay you back. In the case of a wife, then that’s a lifelong commitment. It’s not a relationship of convenience. You’d handle your financial goals differently in that setting.

I would keep my money completely separate unless you’re married. You shouldn’t buy a house together. If you both already own homes, then she has the money from the sale of her house, and then if you ever boot her out of your house, she’s got money. Do a refinance whenever it’s best to do the refinance. If you can’t handle the refinance on your income, then you don’t have that option unless you want to put her on the mortgage with you, which is a really bad idea unless you’re married because again, breaking up is very hard to do. You’ve got to keep this thing really clean because it’s not a permanent arrangement. You get yourself into all kinds of twisted deals.

These people buy houses together and then shack up together and then they leave and they want the other one to sell. It’s not as easy as a divorce. It’s a dissolution of a partnership, and that requires a full-on civil court legal action. It’s a pain in the butt. So what sounded romantic and cute and convenient or whatever ends up really backfiring in a lot of ways. If you can refinance in your name, now is a good time to do it. Interest rates are really low. It’s the best time to refinance in years. Interest rates seem to be ticking up a little bit right now. I’d get it done if you can do it, but it’s going to have to be done in your name. You’d be silly to do it otherwise.