subject: Remaining financially independent while at home [print this page] Staying at home with the kids means losing financial independence for
many spouses.
This can be a risky endeavour, according to a recent report by CBS
MoneyWatch.com, with one lay-off or injury able to cut off one's
income. The unstable economy has increased the stakes - and likelihood
- that an individual's paychecks will be put to a quick end.
There are several steps stay-at-home parents may make in order to
preserve part of the financial independence, according to the report.
The first of these is to maintain a strong credit score.
Stay-at-home parents should take many of the same measures other
consumers pursue in order to maintain or improve their score. This
means keeping up on credit card payments, taking efforts to keep
balances low and holding onto accounts that have been around a long
time.
This is important because many large loans - on a house or car, for
example - will likely be applied for jointly, according to the report. If one party has a low credit score, it will probably result in higher interest rates or premiums. Consumers who lose their spouse through a
divorce or death will also become solely responsible for loans.
"So if you've been getting by on your husband or wife's good credit,
you could suddenly find lenders aren't so willing to deal with you,"
the report said. "Or, not at the competitive interest rates you're
used to."
Having a joint credit card account can be useful for some couples. But
it is also important for both parties - even the one who is working at
home - to have an individual credit card, according to the report.
People who recently left their employment should apply for an account
quickly in order to pass the means test implemented in the Credit Card
Accountability, Responsibility and Disclosure Act. An individual
account can also be used to build one's credit, even if the card is
used infrequently.
Opening a separate bank account can also protect one's assets from
being frozen following a spouse's death, according to the report. This
may give them access to the funds needed to pay off bills. Those who
want to share an account with their spouse should speak with the
financial institution about its specific policies.
