5 Ways to Start Married Life with Extra Cash
Weddings often leave couples with more than just the memory of college roommates dancing with grandma or cousins fighting over the bouquet. Most couples spend more than planned on their big day, and many use credit cards and other forms of borrowing to cover the full bill.
Once you've said “I do,” though, you have access to insurance discounts, tax benefits and other ways to cut costs. Use these tips to give your marriage a strong financial start — and maybe to pay down some wedding-day debt.
1. Refinance your student loans
Whether you're a newlywed or not, you can save money on student loan bills if you're a good candidate for student loan refinancing. Generally, you'll need a credit score of at least 690, and your annual income should exceed your total loan balance, especially if that balance is high. If you're married, you can refinance through Purefy, a lender that rolls spouses' student loan debt into one monthly payment. The company considers your combined debt and income, and will base your interest rate on the higher of your two credit scores. That could get you a better deal than if you refinanced on your own.
You'll lose access to federal income-driven repayment plans and forgiveness programs for public service workers if you refinance federal student loans. So familiarize yourself with the pros and cons of refinancing before moving forward.
2. Grab insurance discounts
Share your wedding news with your auto insurance company, and not just because you want to shout it from the rooftops. You might get a discount on your insurance premiums merely because you're married, which some companies believe means you're less risky to insure.
Liberty Mutual offers a “newly married discount” on car insurance, and State Farm says married men under age 25 may see a drop in their premiums. Combining your policies also could save you money, but it may not be the best move if one partner has a bad driving record or poor credit.
Other types of insurance may offer discounts for married couples, too. And you and your spouse can sign up for the cheaper of your two employer-based health insurance options.
3. Consider staying on the family cell phone plan
If you think adulthood means finally ditching the cell phone plan you've shared with your parents and siblings for years, think again. Each member of a four-person family plan saves $180 to $300 a year compared with what they'd pay for an individual plan, a NerdWallet analysis found. Even starting a new account with a spouse could cost more if you have fewer people contributing to the bill.
If you're thinking about switching, compare cell phone plans first to see how much a new individual or family plan will cost based on your average data usage.
4. File taxes jointly to lower your tax bill—most of the time
Marriage also provides tax benefits not available to singletons. For instance, you can leave an unlimited amount of money to your spouse when you die if you're legally married; it won't be subject to federal estate taxes.
In most cases, you'll save money if you choose the tax filing status “married filing jointly” instead of “married filing separately,” says Dave Burton, a certified public accountant based in New York City. Joint filers have access to more tax deductions and credits, including a credit for child and dependent care costs, and a deduction for interest paid on your student loans.
If both you and your spouse are high earners, though, a larger share of your incomes could fall into higher tax brackets, Burton says, leading to a higher tax bill.
You may also want to file separately if you're on an income-driven student loan repayment plan, says Hui-chin Chen, a financial planner and co-owner of Pavlov Financial Planning in Arlington, Virginia. Filing jointly means the government will take your combined income into account when it calculates your monthly loan payment. If your spouse is a high earner, your payment could jump. Filing separately will keep your bill at a level you're used to.
5. Maximize credit card rewards
Combining your finances means more opportunities to save money with credit card rewards, as long as you're committed to paying your bill on time and in full every month. Carrying a credit card balance accrues interest charges and diminishes the value of your rewards. Plus, your credit score could take a hit if you're using 30% or more of your available credit each month.
You can add your spouse as an authorized user to your account, which will allow him or her to use the card to earn rewards or make cash-back-eligible purchases. If there's a sign-up bonus when you spend $1,000 in the first three months, for instance, you'll get there faster with two cardholders. Choose credit cards strategically for their rewards value based on the purchases you make most often — groceries, for instance, or travel.
If your spouse has no or very little credit history, he or she can build credit if your card reports authorized users' activity to the credit bureaus. But the cardholder, not the authorized user, is ultimately responsible for the bill. Talk about your purchases and financial goals regularly so your credit card bill — and money in general — isn't a stressor from the start.
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