[Editor's Note: I received what now appears as the Pro section of this piece as a guest post from George Diaz, who blogs at SobreDinero.com, a Spanish language personal finance blog. George is obviously bilingual and sent a nice post reflecting on some of the lessons learned as he and his girlfriend moved in together. However, I felt like there was something missing from the post, and since Pro/Con posts are very popular around here (and usually controversial) I thought it would be a good time to jot down a few of my thoughts on the subject. So I did the Con section. We have no financial relationship.]
PRO
Cohabiting Has Numerous Financial Benefits – George Diaz
If you're in a formal relationship and you've been thinking about living with your partner, it's important to take into account some important points before you make the plunge. To give you some context, I had been with my girlfriend for nearly eight months when she proposed the idea of living together. Now, you may be thinking that eight months isn't a long time, but we live five minutes away from each other currently, and spend time with each other at least five days a week. From an informal poll of about 5 couples I know, this is higher than average, so I figured eight months is almost the equivalent of a two year relationship in terms of time spent.
Anyway, I was pretty sure she was “the one” and we even discussed the idea of marriage at that time, but both agreed that it's probably was too soon. (Though we were well into our 30s). So although she asked me to consider moving in with her, I told her I needed more time before making a decision of this magnitude and I took the following issues into consideration:
More Time Spent Together
Now, again, we had spent an inordinate amount of time together already, but being around someone first thing in the morning, and last thing at night 24/7 is something we rarely did. On one hand, we enjoy each other's company so I don’t anticipate the increased time spent together being an issue.
Trial Run For Marriage
On the other hand, there may be a couple of minor things that irritate me now, and vice versa, and I wondered if these minor issues would now become major ones. For example, I snore. She hates it. She's an early riser and doesn't require a lot of sleep but will it make her resent me if she doesn't get enough sleep? Conversely, she is in the bathroom seemingly forever. I like to get plenty of sleep and can usually be ready for work in 30 minutes or less. I figured that my routine was sure to get disturbed if I'm waiting an hour for the bathroom to be free every morning.
Now this may ultimately be a good thing as this can serve as sort of a trial run for marriage, as we experience each others' quirks and good/bad habits over an extended period of time. Neither one of us have offended each other egregiously and would probably never do so, but who knows? Time would tell if the little things become big or if our respective love for each other can look past seemingly minor inconveniences. Either way, it's better to know now before you exchange wedding vows.
Financial Responsibility
Now, this will obviously vary from couple to couple, as both partners may not be working full time. In all likelihood, one person is going to make a bit more than the other, or in some cases drastically more than their partner. I make a bit more than my girlfriend, but she is more frugal and so it balances out. I also have considerable debt from grad school so technically; she is worth far more than I am.
We have an agreement that we should contribute towards expenses in proportion to the amount of income we generate. In other words, if I make 30% more than she does, then I should pay 30% more of the expenses. We like this rule because it deals with proportions rather than absolutes. Rather than being tied to a number, we are holding each other to percentages, proportions, ratios etc. Therefore, if either one of our incomes dramatically decreases due to job loss, or conversely, increases, we will always be carrying our fair share of the weight.
Half The Cost, Twice The Fun!
With that being said, since our respective incomes are relatively equal, I am looking forward to the potential savings! If you've ever traveled with friends, you know the feeling of being able to split up costs of hotels, dinner, and even activities among several participants rather than having to foot the bill yourself. This is exactly what should occur in a fairly equitable partnership.
Both of our rent contributions will dramatically be reduced as we can consolidate our living accommodations under one roof. Now, we still had to figure out whose place we're staying in because we both loved our respective apartments but I'm sure we'll come to a compromise. This could be a huge point of contention if either one of us owned our respective apartments. Worst-case scenario, both partners are under a mortgage they can't easily get out of. This is just one of the reasons why I don’t believe in home ownership unless certain conditions are met but that's for another article like this one.
Now, with that important caveat aside you should expect savings on rent, groceries, commuting, appliances, electricity, phone, cable etc…Depending on your current expenses, the savings could potentially be enormous.
Do Great Minds Think Alike?
While the savings benefits are certainly excellent, you have to now be mindful of the fact that you are making decisions for two. Legally, you are not sharing half your assets and liabilities just yet (unless you plan to sign a prenup), but you should certainly be in the mindset of thinking for two. After all, poor financial planning can end up being an enormous burden on your marriage as issues like poor credit, overspending, or personal debt can come back to haunt a marriage for many years to come and breed resentment.
I won't get in to details but just keep in mind that now is a good time to get in the habit of learning to compromise as there will inevitably be disagreements on your respective needs vs. wants. For example, she loves antique furniture and expensive artwork. I would much rather spend the money on a leather couch and a giant TV. Let's just say we had to compromise. I got my leather couch, but she got artwork. Again, won’t go in to detail but check out some unique perspectives from WCI forum participants on engagement finances.
Disadvantages
Now I have so far painted a pretty rosy picture of what to expect. It's not all fun and games to be sure. The change I noticed after several months together was that our sex life had become somewhat stale. We would find that we were either too tired from work, not in the mood, or too busy to have sex whenever we saw each other. This is obviously understandable as the frequency with which we interacted certainly increased, but the drop off in how frequently we had sex was considerable.
It took both of us realizing that we still needed to find ways to keep a spark in our relationship in order to keep things fun. For example, we have date night at least 2x/month where we will get dressed up and have a night out on the town. We also do staycations in the city if we can’t afford to travel, but want to get out of the house. Inevitably, there will be certain aspects of your lives that will now become routine, but the point is that it's important not to get lazy and to mix things up so as to ensure that your relationship remains strong.
These are just a few of the considerations to keep in mind as you transition from lovers to “livers,” and perhaps even decide to one day marry each other. It has certainly been worth it and I have no regrets about living together as it is excellent preparation for marriage. After all, if you're planning on spending a life together, what better way to really get to know someone? Let us know your thoughts and personal journeys in the comment section!
CON
Stop Playing House – WCI
There is no doubt that I am a traditionalist, a conservative, even a curmudgeon on this subject. I'm certainly an advocate of marriage, and not just for personal, religious, and cultural reasons. Studies show married people have a higher net worth (at least if you stay married, and of course correlation is not causation.) However, as I read the above article I had several very non-P.C. thoughts run through my head-
“Why buy the cow when you get the milk for free?”
“Stop playing house!”
“Yea, having a roommate helps you save money.”
As you can tell, I'm not a fan of cohabitation, but that rests primarily on the moral implications of it. This is not really a religious or a political site though, so I'm going to do my best to point out only the financial implications of both short term and long term cohabitation. We probably also ought to limit the discussion in the comments section to financial topics only.
Cohabiting Only Saves Money Because You Didn't Have a Roommate Before
Let's start with the obvious. The only reason there is a big cost savings with cohabiting is that neither George nor his partner were “doing it right” previously. If they each had a roommate they were already splitting costs with, there would be no additional savings by swapping roommates. Many of the economies of scale available to cohabiting partners and even married couples are no different from that experienced by roommates. Yup, now you have two incomes to pay the rent, utilities, maintenance, and furnishings. Plus, you can ride together when you go places. I guess partners get to sell one of their beds and they don't have to pay the transportation costs to go see one another, but that's about it.
You Don't Have To Live Together To Plan A Financial Life Together
George makes a big deal out of planning their financial life together. I think it is great that he is having these discussions with his partner. I think they are very important discussions. We had them also before marriage. But we didn't have to be under the same roof or even in the same bed to have them. “Practicing” this stuff before marriage is overkill. It isn't that big of a deal to meld your finances once you are married. Like a prenuptial agreement, the main purpose of any financial agreement prior to marriage is to protect the interests of each partner from the other partner!
Pregnancies Have Profound Financial Implications
Probably the biggest financial issue with cohabitation doesn't even require cohabitation-having children. Now, kids are great; we have four little rug rats ourselves. But I've got news for George- your lifestyle barely changes when you get married. You want a big change? Have a kid. Now you have a “roommate” that is not contributing to “the pot,” who carries all kinds of additional expenses, and not only reduces the amount of time and energy you have for “productive economic activity,” but also profoundly affects the relationship between partners. In addition, you have legal, financial responsibilities after having a child that last for the next 18 years. No matter what happens with the relationship, you're going to be paying for that kiddo for the next couple of decades. Now, I know that people get pregnant without living together, that same sex couples generally don't get pregnant unintentionally, and that birth control exists and is reasonably reliable. But I think it is a very small step to go from being a “roommate with benefits” to being a “parent without benefits” (i.e. the legal protections of marriage.) This is obviously less of a big deal in a short-term cohabitation situation where you get married eventually than it is in a long-term cohabitation situation or one in which the relationship breaks up after pregnancy occurs.
[A brief side note: The whole “milk/cow” thing, while meant to be a clever and lighthearted way to deal with an awkward subject is probably offensive to many. It really refers to the fact that a relationship break-up after pregnancy has more of a financial impact on the person who is actually pregnant- she has insurance co-payments, she is the one on maternity leave, she is the one more likely to miss a promotion/hit a glass ceiling, she is the one who has to either breastfeed, pump, or (potentially) feel guilty about not doing so etc.]
Finances in Limbo
Another major financial issue with an extended cohabitation period is that the period of time in which your finances are in limbo between totally separate and fully joined is prolonged. I think in marriage it is a mistake to have “his money” and “her money” (or these days, “his money and his money” etc.) Once you're married and committed, it should be “our money.” Now, it's fine (and recommended) to have some sort of allowance where you can spend a certain amount of money without having to justify it to your partner, but all the income goes into one pot and all the expenses come out of that same pot as the two of you agree. But when you're cohabiting, you're in this limbo land. You're kind of committed to each other, but not really. And your finances tend to reflect that. You come up with some kind of agreement like George's, or one person pays the rent and the other buys the food or whatever. It ends up being kind of weird and often leads to resentment that the other person either isn't earning enough or isn't contributing enough to the household, especially when other problems in the relationship crop up. Long term relationships are hard enough without financial issues. It is best to get rid of as many financial issues as possible and that means getting out of limbo land ASAP. If you REALLY want to “play house,” have completely joint finances.
Just kidding, don't do that- the risks are simply too high. I mean, if you have joint financial accounts, that partner can clean you out and disappear, taking all the assets and leaving the debt and there is little you can do about it. It's a bit like buying a house with someone you're not married to. The transaction costs on that are way too high for such an unstable social situation. Wait until you're married before buying a house together. If one of you owns a house, just have the other partner pay them rent and keep all finances separate. Of course, have a written, signed, enforceable, “renter's contract” (sounds romantic huh) as to who pays what and how that might change if incomes change. You don't have to enforce it, of course, but if you need to, you can. If you want a joint checking account for convenience, fine, but maintain your own separate ones and have your paychecks deposited there.
Long Term Issues
There are a few more issues that come up when it comes to long-term cohabitation. First, beware if you are in a state with common law marriage. (AL, CO, DC, IA, KS, MT, NH, RI, SC, TX, UT and if it has been a very long time, GA, ID, OK, PA.) Contrary to popular belief, living together for seven years doesn't necessarily make you “married.” You actually have to hold yourself out as married by telling people you are, sharing a name, filing joint tax returns etc. But you can think of a scenario where a previous partner decided to take you to court over this. One way to protect yourself is to both sign an agreement that states something like “Jane Smith and John Doe agree as follows: That they’ve been and plan to continue living together as two free, independent beings and that neither has ever intended to enter into any form of marriage, common law or otherwise.”
Next, realize that you lose the legal protections of marriage. That includes in most states the right to make decisions for your incapacitated partner as the next of kin, but you can get around that with a health care power of attorney and a “regular” power of attorney. You also don't qualify for alimony when/if you split up, no matter what career sacrifices you made for the relationship. Divorce is financially devastating, but splitting up a long-term cohabiting relationship, especially with children, isn't usually significantly better.
There are estate planning implications also. You don't get to use your spouse's estate tax exemption for instance. You'll also need to have a will/trust specifying that your partner gets your stuff (and kids if they're from a previous relationship) if you die, otherwise your next of kin may be in charge.
There are asset protection issues as well. In my state, your homestead exemption doubles if you're married. In other states, married couples qualify for “Tenants by the Entirety” titling of their property.
Social Security also treats cohabitating couples differently. You can forget about survivor's benefits and spousal benefits.
In summary, cohabitation is a risky financial endeavor, not some financial windfall. Protect yourself accordingly.
What do you think? What financial tips do you have for cohabiters? What is the best way to arrange financial affairs for short-term and long-term cohabitation situations? Comment below!
I’m surprised by the Cons list here. Most of them seem more like “Cons of cohabitation as an alternative to marriage” than “Cons of cohabitation.” But in my experience, relatively few couples move in together and stay unmarried for more than a few years – Most couples who are cohabitating are doing so with the intention of incrementally moving their relationship forward, with eventual engagement and marriage on the horizon, when the time is right.
You know the old adage about “one house, one spouse” being the key to financial stability? With that in mind, aren’t there many arguments to be made in favor of couples living together for a period of time to better confirm relationship compatibility prior to marriage?
Agree – most couples I know lived together before getting engaged and hitched. But none of my friends are religious either….
I’m not religious so I argue against cohabitation from a completely behavioral perspective. If you are not ready to commit to someone enough to get married but you will commit to living together, you are passively moving forward into a much different relationship. Once you live together, it is much more difficult to separate and people passive enough to get into this situation are probably not going to make the effort to get out even if not happy, barring an egregious event. What then ensues is a passive move to marriage – “Might as well get married…” Marriage then ensues for 10-20 years and things are not as exciting as they were before. Both people passively decide that the relationship just isn’t doing it for them – “Might as well get divorced…” IMO, this is not the way to move through life. People that behave this way, speaking in generalities, probably won’t have assets to protect – “Might as well buy this or that thing…” On the other hand, if the couple is communicating and understand honestly that this arrangement is a “trial run” and one person is not trying to move the agenda against resistance, maybe occasionally it can work out. Even in that scenario, it makes sense for there to be some form of commitment, engagement for example. All of this is relevant to WCI because obviously divorce is the most catastrophic life event that cannot be insured against.
I’m 72 and never got married. This is the way I looked at it. The divorce rate is 40%-50%, so those marriages weren’t happy by definition. And of the rest who stay married, as I look around, about 50% of those aren’t really happy, but stay together for a variety of reasons. So that leaves the chance of being happily married at about 25%. (not including the financial losses) I didn’t like those odds, and stayed single. I’ve had several close happy relationships throughout the years, many of whom are still good friends. I maintain that the reasons to get married are: Want a family and religion. And I came from a very happy traditional mid-west family.
To be fair, the divorce rate among high-income professionals is significantly lower than 50%.
I also would dispute that 50% of the remainder would have been happier to have remained single. I have no idea what the percentage might be, but that seems awfully high to me.
Put those two together and your conclusion (1 in 4 who got married did the right thing) is way too low.
In some ways, that’s an urban legend. http://divorce.lovetoknow.com/Divorce_Statistics_and_Living_Together
It appears that if your goal is to avoid getting divorced, living together before marriage is not helping and is probably hurting. I think there’s still some debate out there about this, but as far as I know, there is nothing that says it is less likely to lead to divorce, which is what the natural thing is to assume- “try before you buy.”
The problem with this is the whole correlation/causation issue. Couples who are likely to cohabitate may also be more open to divorce.
Long discussion here
https://fivethirtyeight.com/datalab/does-living-together-before-marriage-increase-the-risk-of-divorce/
with the conclusion “Using the same NSFG data, she noticed that people who live together do so at a younger age than couples who get married first. Once we control for age between the two groups, cohabiting has barely any effect on the chances of a marriage ending in divorce.”
“Barely any effect.” So the strongest argument against it is “the effect is small.” That certainly seems to debunk the notion that if you live together you are less likely to divorce, no? At best, it’s equivalent. So “making sure we’re compatible” is not a valid reason to live together.
I think it is a valid reason to live together. I think any of these data reams with really long time frames is hard to make any kind of comparison with, until we wait another 20 years, and there are just simply way way too many reasons why ppl get divorced to be distilled down to a single factor.
I believe I read some newer numbers and divorces seem to be going down in the younger age groups (but marrying later), and was up in older groups. This more likely reflects attitudes on divorce more than anything. Its just not seen the same way as it used to be.
As far as those other studies, its likely those people wouldve ended up divorced anyway even without living together. I think it can help you really learn what a real relationship is like and more about yourself as a partner and what you’re actually looking for.
I wouldnt buy a car or anything else without a test drive, and wouldnt do it with one of the most important decisions in my life either, regardless of whether data bears it out. I do think the financial limbo land is a detriment, but dont think getting married quickly necessarily is without any issues either. Everything is a tradeoff.
Obviously if you’re religious and have a moral standpoint, you’re never going to be able to give it much credence at all. Otoh, “we spend a lot of time together in 8 months so I make it the equivalent of 2 years”, lol, that was hilarious and some serious rationalization. Only 2 years together is anything like 2 years.
this supposed data about does cohabiting make divorce more or less likely almost certainly have to be confounded. admittedly i haven’t deep dove into the data but a few thoughts.
1. The pool of married people is obviously going to include a ton of religious people who view staying married as a moral good aside from having a good relationship. There are likely hundreds of thousands of couples together right now with very little love in their relationships who don’t want to face the “sin” of divorce.
2. The pool of cohabiting people has to be more heterogeneous than the probably already heterogeneous married pool. In this pool is everything from people in committed relationships with reservations about marriage who have healthier relationships than their married friends, young professionals planning weddings, all the way down to people who serially move in with a rotating and rapidly switching cast of unstable partners.
I just don’t see much value in saying “you shouldn’t live together because it makes your marriage less likely to succeed.”
[Non-financial aspects moderated-ed]
George wins by TKO in the second round! George won the first round too, but at least Jim was still in the fight at that point. 😉
I didn’t realize there was more than one round in this one. But at any rate, the point isn’t to win, but to show both sides of a controversial topic. Then everyone wins. If it wasn’t controversial, it wouldn’t be a Pro/Con post.
I agree with WCI here. Sorry George.
Can I also amplify a theme I see in WCI’s remarks?
If any of us enters into a consequential partnership—it doesn’t have to be a romantic relationship, it might be a business or an investment venture—we surely benefit from having a well-defined partnership agreement with clear terms and conditions.
Whatever else you want to say about marriage, you do have centuries and even millennia of cultural norms, religious traditions and law. That stuff creates a probably helpful framework for the partnership.
In comparison, a cohabitating couple probably doesn’t have a partnership agreement that’s as well-thought-out, time-tested or robust. That seems problematic.
We lived together for over four years prior to getting married twenty-five years ago. What worked for us financially back then was to split everything 50-50. We had a dry erase board in the kitchen. We kept a running total of what we spent and made sure it evened out every month or two. We were responsible for adding expenses to our own column and letting the other know what it was for. The board morphed after we got married into our getting out of credit card debt together board. Then it became the getting out of student loans together board. Now it is the early mortgage payoff board. After the credit card debt was gone it came off the refrigerator though.
I lived together with my current spouse 2 years prior to getting married, and in hindsight it was a great choice. You never really know how well you can tolerate another human being until you live with them. We sorted out all our minor problems before taking the big step. If the problems would have been too significant, the big step would have never happened, and that would have been okay. What would not have been okay is ending up with someone who, on a day to day basis, irritates the crap out of you and ends up leaving a year later with half the stuff.
I’ve noticed that the people I know who are adamantly opposed to this idea are super religious, regardless of the actual reason they give for not wanting to cohabitate.
While multiple good points were made on either side of the argument, no mention was made of the relationship between cohabitation and divorce and the possible devastating financial consequences that divorce often brings. While recognizing that correlation does not necessarily imply causality and that some of the data is conflicting, there is a large body of literature demonstrating increased divorce rates among those who cohabitate prior to marriage compared to those who do not. But choosing cohabitation now, a couple may be inadvertently increasing the risk of their marriage ending in divorce. As has been mentioned on this site multiple times, few things can devastate an individual’s financial well being like a divorce.
The strongest argument I’ve heard against cohabitation for unmarried couples is that, for couples who move in together to cut costs without each having their own financial bearings first, it can then become even harder for them to personally and financially if the relationship doesn’t work out. Let’s say Pete and Polly, who’ve been dating a while, decide to move in together. Both have $20K in personal debt (of which they pay the minimums every month, but rarely more) and are living paycheck-to-paycheck without savings, retirement accounts, etc. Pete’s apartment is $800/month while Polly’s is a bit larger at $1000/month, but she’s currently living with a roommate friend and only paying $500/month plus utilities. Once Polly’s roommate moves out, Pete doesn’t renew his lease and moves in with Polly. Both sell off or give away their excess furniture and possessions to consolidate their belongings. Instead of accelerating their debt repayment or opening investment accounts given their reduced living expenses, they indulge in the stuff couples often do – regular dinners out on the town, upgrading Polly’s old living room set – which was a hand-me-down from a relative – into a brand new set to make the place look nicer for company, etc. As a result, their consumer debt is growing rather than shrinking and they’re still living managing paycheck-to-paycheck. Then the relationship doesn’t work out for some reason – maybe it’s an unhealthy relationship involving physical or emotional abuse, or they just realize they’re incompatible in some deal-breaking way, maybe one of them loses their job and can’t find comparable work and now isn’t contributing to the household finances in a way the other partner is OK with, etc., and now Pete and/or Polly want to break up and no longer cohabitate. But now there’s a significant barrier in place – both are still in debt with no savings, and moving is expensive and a major hassle. One or both of them have to find a new place, put down a deposit, maybe take time off work to pack up and move or hire movers, acquire new furniture since they sold off their excess stuff, maybe find new roommates if they can’t afford the rent and utilities by themselves, etc. They both take a financial hit and end up probably worse off than when they started.
Agree with the divorce fact being far more important than the cohabitation aspect. Pregnancy, as mentioned also has a HUGE financial impact.
From a strictly moral/beleif perspective if I had a daughter, I would be pissed about cohabitation. Thankfully I have 2 sons and I am neither for, nor against cohabitation as long as they don’t get a girl pregnant until they are ready to be a married father. I guess that makes me completely sexist when it comes to cohabitation. But, such is life on some topics.
At least @NapoleanDynamite calls out his own blatant double standard/hypocrisy. In this day and age, we should encourage our sons AND daughters to both work hard, achieve academically and intellectually as much as possible, treat their partners with love and respect, and ultimately follow the golden rule with their partners whether in a long term committed relationship or marriage. @NapoleanDynamite remember that in your scenario your son would be cohabitating with someonelse’s daughter. And ultimately you would want that same respect for your own daughter if she were to cohabitate.
That was such a nice comment that I’m going to leave it (and I left NapoleonDyanmite’s), but it’s not financial, so if we keep going down this pathway I’m going to start moderating them.
Totally with WCI on this one.
My now-husband and I placed very little value in marriage, which is why we lived together for almost two years before we got married. It was a huge limbo period though and I’m glad it didn’t go on longer than it did. It started to get annoying keeping track of everything and I’m glad we are done with that and all joint expenses are being funneled through joint accounts now. It is so much easier to track and budget! Furthermore, the condo we lived in was just owned by me (and we had a legal document confirming that) which meant that the longer we weren’t married, the more its appreciation was my separate property.
WCI is right here – there are minimal financial benefits of cohabitation beyond having a roommate. I would further argue that you should not cohabitate with someone for perceived financial benefits. You should cohabitate with them because you share values, envision a future together, and have fun together.
My wife of 21 years and I “cohabited” about six months before we were married. We were engaged for a few months, and my then fiancée decided that it was time to buy a house, move in together, etc. I was mostly led into it. I do not have much to add re pros/cons above, but just one mildly humerous anecdote to share.
We moved in together in late December, during the season of a playoff run for my favorite football team, the Steelers. On one of our first Sundays together as a cohabiting couple, my (now) wife suggested that we go the art museum, have brunch there, etc. I looked at her as if she had three eyes and told her that she had to be joking. There was a “Big Game” today, a Steelers playoff game, and there was no way that I was going to the art museum, brunch, etc. and told her so.
She looked at me rather forlornly and said that she did not realize that this “football thing” is so important to me. Well, we obviously got over it, and there have been many playoff runs since (and a few Super Bowls, too). The point is that there are some things that you might learn about your partner only by living with him/her, some more serious or deal-breaking than a lifelong commitment to the Steelers.
Ha. How on earth did you make it so far as to move in together without her knowing you liked football? My (now) wife learned early on where my allegiances lay. She didn’t even consider a fall wedding because she already knew fall saturdays were off limits if college football was on.
All that said we subscribed with WCI on this issue. But we’re more traditional than most these days. No issue with either side.
We got married while I was in Med School and he was in undergrad – didn’t live together until we had been married for 6 months! We sort of shared finances before this but were both living almost exclusively on student loans. His parents weren’t too keen on us getting married (young, fast, still in school, etc, etc) so we wrote out this document talking about our plans for the next 5-10 years and how we would be grown ups and everything. His mom still has it and it’s just about spot time – timing of kids included.
Ironically – our Nine Year Anniversary is coming up this summer – and it’s the nine year anniversary of his parents’ divorce about 6 weeks after that!
We are just the opposite. We were married for some time before living together. We both had multi-year work commitments that were geographically distant, but we had made up our minds about each other.
Now that’s an interesting perspective on this topic.
This is pretty common among physicians as far as it can be, I’ve known quite a lot of couples like this. Its far more interesting than the topic at hand, and so common among our profession.
On the topic, I just have a hard time using the data when its so complex, and things have changed so much. 20+ years ago when the data we have today (at the most recent) it was not normal or common for folks to cohabitate. Now, nearly 50% of the US does it, so we’d have to wait another 20-30 years before realistically assessing its effect. Obviously, since it also runs near the long term divorce rate Im gonna assume it will be hard to tell much at all.
blog police here… 😉
consider that on the bogleheads forum this post would be stopped within a second for the focus on so much subjective non-financial moral issues.
Just saying…but still a huge fan of this site
Sometimes it is nice to be able to talk about something that LadyGeek doesn’t want you to talk about, isn’t it.
As long as people remain civil to each other, I’m perfectly fine discussing stuff like this. If it gets bad, we’ll move the discussion to the forum lounge (where people aren’t supposed to enter without a thick skin.)
+1 🙂
Sticking to strictly financial issues. Mathematically living together is far better for 2 high income earners as compared to getting married.
I can’t believe people have not discussed the marriage penalty. Two highly paid professionals pay much more in taxes when married as opposed to co-habitating. I calculated this for two friends of mine both making $400k/yr when married their taxes increased by over $20k/year. That equals $1.4 million after a 30 year career if invested at 5% growth. http://www.taxpolicycenter.org/interactive-tools/marriage-bonus-and-penalty-tax-calculator
Also, divorce is very expensive therefor a couple is far better off never getting married. Nothing to fight over, no lawyers, just part ways and move on. A prenup can prevent that though but is not completely full proof depending on what state you live in.
One excellent and one so-so point. I actually get a lot of emails from people asking about the first one who are seriously considering not marrying just because of that.
I’m not sure the fact that some people divorce (and I think the rate is around 25% for a couple with a doc in it) is a good reason to never get married given that marriage is highly correlated with building more wealth. If you get a 75% chance of being better off financially or you can avoid a 25% chance of being worse off, which would you choose?
It’s highly likely that the self-selecting group of people who marry is also a group that will build greater wealth, with or without marriage.
I’m married, but never considered marriage a wealth-building move. Quite the contrary, before I met my wife I was always worried about the potential wealth-destroying properties of marriage, i.e., divorce.
Correlation is not causation for sure. Pretty tough study to do to prove the cause though. Maybe you could control for socioeconomic status, race, religion, age etc and see what shakes out.
correlation vs causation WCI.
Marriage destroys wealth during divorce. I think a 25% odds of divorce for physicians is a very good reason to not get married at all. If you were given the choice of buying a fund that grows just like all your other funds but has a 25% chance of losing significant value would you buy it, or choose a fund without that risk? Remember we are talking finance and not religion, moral values or anything of that sort. Also, if a couple is choosing to not get married for strictly financial reasons that couple will likely build wealth if they are married or not since they are thinking in the wealth building mindset.
WCI, I hope you are not putting your own feelings on marriage when giving financial advice to those people asking about the marriage tax penalty. For those people this is a math problem and not a morality or religious problem. For my friends above $1.4 million is a crap load of money.
If people ask my opinion about marriage I give it to them. If they just wish to discuss our tax code and what it incentivizes, that is what I do.
Moral and religious reasons aside. One reason for getting married is that you can get your spouse’s Social Security after they die. This is particularly relevant for couples in which one partner runs a lot more than the other. I believe this was a reason, if not the primary reason why gay people want to be able to get married.
Also, many people forget that Social Security is a “life insurance” policy for your minor children should you died prematurely
You can always get married later in life to get spousal SS.
That works for retirement and probably disability, but not survivor benefits!
[Not a financial comment-ed]
@MTBDOC, thank goodness Jim owns this site and not Bogle. :O)
Jim, did try and most people are keeping it about finances which is good. I wouldn’t mind the debate the other way, but that isn’t what his site is dedicated too.
I think it gets down to commitment. Living together/Marriage isn’t something that should be started with an attitude of let’s see how this works. You can’t do that with far less important decisions such as buying a car or buying a house. You sign the bottom line and you own it.
I suppose the potential laissez-faire attitude will show up and manifest itself in other areas, too. If you aren’t 100% committed, don’t do it. If you are 100% committed then you might as well get married.
[Not financial, so deleted. I’m serious guys. No politics or religion on this one or take it to the lounge.-ed]
Although I agree that my comments started hedging towards religion and politics, the comment right above mine does the same though lean towards your beliefs and is still standing. As I mentioned lower down it is tough to talk about marriage without bringing in religion and politics. I tried my best to keep it cleaner in that comment. I hope it stays.
Moderation is a tough line to walk. I’ve moderated comments on both sides in this thread.
I cohabitated with my wife for about 8 months before marriage (married 7 years now). Honestly we did so to save money as opposed to getting a roommate. Honestly I don’t view it as that big a deal if you go in with eyes wide open. We wrote up an agreement before hand about what happened to the home should the relationship fail. I bought the home under my name but she tipped in a bit of the down payment. As part of the written agreement she would get back her investment plus 3 percent interest had we not made it. Obviously it’s long since a moot point.
For the military subset – there are another whole set of pros and cons regarding allowances and benefits available to married servicemembers vs single ones, including housing allowance, post9/11 GI Bill benefits, death gratuities, VA benefits, Survivor’s Benefit Plan etc. And that doesn’t even start to cover dual-military couple pros and cons for marriage.
I find it pretty common in the military for people to have a civil wedding to start the benefits and dependent eligibility prior to the religious ceremony that their family will attend later.
Talk to someone knowledgeable regarding the finances of your situation before letting them influence this important decision.
Excellent points about the military.
We had to get married! He was pregnant! JK, The Army would separate us unless we married so we expedited that. He was then pretty shocked when, within a year of marriage, I wanted pregnancy. He really thought I’d postpone reproduction until I was out of the Army, and 34 years old. Admittedly I don’t know if I’d plan the children on the same schedule had we not HAD to get married sooner than if no pressure.
One pro that wasn’t discussed is it allows you to be with someone you love even if you have vastly different financial philosophies. I’ve known my fiance for 20 years. Met in college, then she got married and divorced and we reconnected 9 years ago and have been cohabiting since. I read sites like this and bogleheads and she frequents amazon and ebay. Our financial arrangement is that I pay the mortgage, all household bills, all insurance (besides medical), and buy the vehicles. She makes my life wonderful. I think its a fair trade 😉
My income is much higher then hers, though she does make about $80k or so and manages to spend it all and never save. In fact she has a lot of credit card debt. Meanwhile, I’ve never paid interest on a credit card. If we were married I imagine I’d have minimal savings or end up divorced due to financial issues. From my perspective I have all the perks and none of the downsides of marriage.
While I like the saying that “You don’t have to be on the same page, but you have to be reading the same book,” that massive difference in financial habits seems likely to doom any long-term relationship eventually, married or not. The likelihood of you being able to outearn her ability to spend seems low.
she doesn’t have access to my accounts so she only spends the money she earns, which is why i’m hopeful that the relationship will survive the longterm. I think there is a real chance that bankruptcy will be in her future and maybe only then when she can’t borrow money for 7 years might she learn to budget.
I sincerely hope it works out well for you, but finances are one of the “big five” of marriage- finances, religion, sex, kids, and in-laws. It’s tough to have a great long-term relationship when you have significant, unresolvable differences on one of these topics.
You are underestimating the impact of this difference in spending philosophy, your finances are irretrievably entwined when you are married. And realistically, having you be willing to have her file for bankruptcy when you could bail her out is likely to be a real challenge to your relationship, I’d suggest she understands that this is going to be your approach before you marry!
I actually like this approach. I think it shows that you love her enough to let her live her own life and suffer her own consequences. I think it’s beautiful that you are letting her be who she is even though it is so not what you are, and you love her in spite of that. I hope that she loves you enough and is mature enough to understand where you’re coming from when she gets into financial trouble and you don’t bail her out.
Gay guy here with non married, elective co-parent partner with 2 kids and more on the way. And huge WCI fan. Cohabiting is a no brainier but can’t bring myself to do the marriage thing. I think I always thought it was weird since youth. But clearly I’m the weird one, right?
Like joining the military to pay for medical school, I view marriage as mostly a non-financial decision with some financial consequences.
But this post is focusing on the financial aspects, so that makes the discussion a little odd to start with! And as I tell my kids, we’re all a little weird, no?
Peculiar, yes.
This is the most uncomfortable topic I have ever seen you post.
You want financial aspects of a “non-financial decision” without any discussion of the morality.
I agree, it’s peculiar and was generated by the guest post submitted. But it didn’t seem right to run it without a “Con” perspective. If you wish to discuss the moral aspects, you know where to do it!
In contrast to marriage tax penalty, taxes are vastly improved if one spouse is doctor and one is a stay at home spouse.
In long ago days, marriage was more akin to permanent cohabitation, rather than legal benefits granted by the government. Some rights were granted, but it was not initiated by a government ceremony, but rather by the individuals and families. But we deal with the legalities of today, where marriage is highly controlled by the government.
There are very few big things that cannot be found out during courtship. But it involves communication on potentially difficult topics, which are often easier to ignore.
Definitely one of the most interesting posts, but it has invited people to share their experiences and perspectives that are so unique and different from my own, it’s been very enlightening. Thanks to those willing to share.
I fall into the camp similar to that of WCI.
Sorry for the double post. Thought the first one didn’t post and had to re-type.
I fall into the camp similar to that of WCI and tend to agree with him here.
In any case, this post has been interesting in that it has invited people to share their experiences and perspectives that are so drastically different from my own. It’s been enlightening. Thanks to everyone for sharing.
One thing that hasn’t been mentioned yet is the negative financial effect of marriage on income-based student loan repayment plans. Some plans allow you to file as married filing separately, but others simply won’t consider your spouse’s income as separate; therefore, you could see your student loan payments double or triple based on your spouse’s income, which is not insignificant when you’re still making a resident’s salary. It could be even more of a blow financially to get married if you’re on an income-based plan while training in a high cost of living area such as California, Seattle, NYC, or Washington DC, where even an extra $200-$300 per month in student loan payments could literally mean the difference between living in a safe vs an unsafe area of the city.
I personally believe that cohabitation is a great way to test out a relationship and to see if you can actually stand to live with that particular partner. But I also believe that this same “test-drive” mental phenomenon makes it easier to walk away from a cohabitation scenario than it would be to walk away from a bona fide marriage. However, given skyrocketing divorce rates, the already high divorce rate in the medical profession, and the financial ramifications of divorce (your spouse can take your for half your net worth, but of course he/she won’t take half of your student loans with you when you divorce!!), at least for myself, I would cohabitate for at least 1 year prior to marrying someone. And of course I’d get a prenup too.
Gee, the more I think about it, the more cohabitation sounds like the better scenario financially!!!
Good point about the loans.