Debbie in San Francisco, California:
"My fiancé and I recently have ordered our credit reports in preparation for our wedding expenses and buying a home. My credit is fine, but his has some problems. He has always been flamboyant, which I love about him, but his spending sometimes is overly generous. There are two collections on his report, one for a cell phone bill and another for a doctor bill. Both he says aren’t his. His credit card balances are extremely high, and the car I thought he was buying is actually a lease with a high payment. Will these things hurt us when we go to buy a house?"

Debbie, you deserve a pat on the back for doing your homework and taking preparatory steps before spending for your wedding and finding a house...

Spending profiles are one of the most important aspects of any financial relationship and yet the least understood.

If your spouse tends to be flamboyant, yet is having financial difficulties, you need to talk about budgeting. If your profile is much more conservative, a good understanding of each other is critical in the beginning so you can head off problems later.

The word budgeting will sound like nails on a chalkboard to the flamboyant spender. But chalkboard it must be if the relationship is going to survive. If you love this man, and his benevolent nature is part of his appeal, certainly don’t clip his feathers completely. He won’t survive.

For example, explain to him that an extra $400.00 a month spent on restaurants and dining out with friends could be spent on a mortgage payment for a home where he could really entertain his friends.

Yes, if the collections are not paid, it will hamper your ability to purchase a home. If he disputes them, pay them anyway before they grow larger with penalties and interest. Settle later. In my experience, 98% of the time the collections are accurate, and the client simply doesn’t recognize or remember them. If he insists they are not his, then contact the credit bureau with a dispute form. They are required to have documentation proving the validity of the claim, or they should remove it from his report.

As far as his credit balances being too high, all I can say is that it’s all-relative. I don’t have enough information to tell you if his high balances would interfere with your ability to qualify for a mortgage or not, or if his income is adequate.

To find an answer, you should make an appointment with a loan officer and go through the pre-approval process for a mortgage, whether you buy now or two years from now. This would be a good learning experience for both of you and let you know where you stand.

Every situation is different because we are all individuals. But one rule of thumb that will always help regardless of your situation is: Start tracking where every dime is spent. Keep a running worksheet of your expenses and expenditures. I have attached an example worksheet. Actually seeing in writing where your money is spent is the best behavior modifier I know.

Remember, you cannot overcome an obstacle you cannot see.

Additional information on this topic:

• Combating debt
   

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