But what happens if you discover that’s the case? Can couples recover after one has lied to the other about debt?

The short version is yes, but it can be a rocky road. Here’s a message I got from one of my Facebook fans, who didn’t want to be identified:

My husband has always handled money poorly. When we began dating, he had several delinquent accounts and a repo. As we got engaged I took over managing our money and cleaned it all up. We got to a good place, but apparently the underlying issues were not addressed.

I routinely monitor our credit reports and I noticed an account I didn’t recognize on his. I asked him about it and he told me it was a business credit card from his job. It stayed on his reports after he left the job and he told me there must have been some mix-up where it didn’t get closed when he left. I asked after it periodically and he always said he’d get it taken care of. I assumed he was just procrastinating, as he was busy with his new job.

A little over a year later, I got a call at 8 a.m. from a collection agency about the account. He was away on business at the time and I was irritated with him for not dealing with it, so I decided to call and wake him and tell him about the collection call. At that point he confessed he’d kept the card as personal after he left his job and has been using it for “play money”–lunches out, gadgets, etc. He thought he could handle it himself and find some way to cover the bill on his own.

I was devastated. The money wasn’t a big deal, but it was such a betrayal–all the lies, feeling like a fool, and feeling like we weren’t on the same team at all about our goals and financial plan like I thought we were.

It was a hellish couple of weeks. I had to decide how I wanted to respond and he was terrified and ashamed. We had a lot of emotional conversations in the aftermath, and the only positive I can see out of it is that we knew each other a lot better after that. I ultimately decided to stay, but I was also very clear that it was a one-time thing. If it happens again we will be divorcing.

One of the outcomes of our discussion is that we started allocating much more money for personal use, something he felt he’d been lacking. I was ambivalent about it–it almost felt like rewarding him for what he had done–but in the spirit of trying to have an equal marriage where we both had a voice, I agreed. That was nearly two years ago and while we’ve mostly recovered, I’ve also realized I don’t think we’re ever going to be completely recovered. I’ve gotten to the point where I trust him about 90%, but I’m kind of stalled there. He’s a wonderful man in many other respects and I don’t regret staying, but I do grieve for having lost the ability to trust my husband unconditionally. I would caution anyone contemplating hiding money or an account from their spouse that it’s just not worth it. Just like physical infidelity. What indulgence they’ll be getting just isn’t worth the ultimate cost.

I think this account is instructive for a number of reasons. It shows how devastating a hidden debt can be on a deceived partner.

But it also highlights how both spouses can play a role in creating this situation. People, even married people, need some independence and freedom to spend money with no questions asked. Even when you’re working together toward important goals, such as saving for retirement and paying down debt, you need to carve out some cash for each person to spend without having to be accountable to the other.

I mention this because, as the money expert in our household, I have a tendency to think we should do things MY way. And that’s no way to run a marriage. My husband has his own needs, perspective and goals that are equally important. I’ve learned that compromise is essential to a happy marriage. Maybe we don’t save quite as much of our income as I’d like (although we do save a ton) and perhaps we don’t spend quite as much as he’d like, but we’re on track to meet our goals and (this is important) still enjoying our lives today.

Answer: Congratulations. Marrying your financial opposite can be challenging, but it also can help you create a more balanced financial life. Savers can learn how to enjoy life today as well as save for tomorrow, while spenders can learn how budgeting and saving actually free them for a richer life overall.

You’re off to a good start by recognizing that your partner’s perspective is different from, but not worse than, your own. Frugal folks sometimes make the mistake of believing their approach to money is the only right way and insisting their spouses have to shape up, rather than recognizing these issues are subject to discussion and compromise.

Start by talking about retirement — when you’d like to quit work, where you’d like to live, what you’d like to do. Playing around with an online retirement calculator can give you both a better idea of the trade-offs you’ll have to make. An early retirement with lots of travel may require a savings rate that’s greater than he (and perhaps even you) would be willing to sustain. Retiring a bit later and spending somewhat less can lower the savings rate to something more comfortable.

Once you find the middle ground, put your plan into practice. Remember that retirement savings needs to come first, even when you have debts and are saving for other goals. Retirement will be expensive, and a delayed start on saving can cost you dearly.

The exercise of creating a retirement savings plan is good practice for every other discussion you’ll have about money. There are always trade-offs involved, and both halves of a couple need to sign off on a money plan for it to work.

It also can help for each of you to have some “no questions asked” spending money, so you don’t have to discuss and compromise over every dollar you spend. Another helpful idea is the “talk to me” limit in which any purchase over a certain dollar amount requires the consent of the other partner. The amount depends on the details of your finances; try $50 to start.

I’ve shown up in a few other articles lately as well, including a CreditCards.com piece about tipping waiters and a Woman’s Day article about bouncing back from unemployment. Finally, AARP made it easier to find my latest magazine columns on its site–thank you, AARP!

Okay, that’s enough from me. Enjoy your weekend!

Here are just a few of the issues we tackled, with some follow-up information since you can only go into so much depth on radio:

Eden has a one-year-old baby and wants to save for college. She’s doing so using U.S. savings bonds and asked me if that was a good strategy. I had to tell her it really wasn’t. Interest rates are so low these days on savings bonds that you’re really losing ground when you invest in them. A better bet would be a 529 college savings plan, which receives favorable treatment from financial aid formulas and allows your money to grow tax-free for college. Eden wanted to retain control of the money, which a 529 allows you to do. You can switch beneficiaries to another relative if your child doesn’t go to college, or use the money yourself, or simply withdraw it and pay a 10% federal penalty on any earnings (not the whole withdrawal). For more, read “How to save for your kid’s college.”

David lost two properties in 2008, one to a short sale and one to a foreclosure, and received 1099s tax forms for the difference between what the properties sold for and what his mortgage balances were. He asked if he could escape this tax bill. When a lender forgives debt, the amount of forgiven debt is typically treated as taxable income to you. One exception is if the foreclosure or short sale involves your primary residence. Then, thanks to the Mortgage Forgiveness Debt Relief Act of 2007, the canceled or forgiven debt is not taxable. Unfortunately for David, neither property involved was his home. The other way around having to pay tax on forgiven debt is if you were insolvent at the time. David should speak to a tax pro about what to do next.

Kathy called in because she’s in the middle of a divorce, their house is underwater and her husband doesn’t want to try a short sale–he just wants it to go into foreclosure. Kathy’s worried she’ll be sued for the difference between what they owe and what the home is worth, and wonders if she’ll have to file bankruptcy. California homeowners are protected from lawsuits by lenders if the loan in question was used to buy the house–if it was purchase money, in other words. If the loan was refinanced, though, the protection is more questionable. And as I noted in “Lose your house, then get sued,” some people who arrange short sales inadvertently agree to remain on the hook for the unpaid debt. Long story short, Kathy needs to talk to an experienced bankruptcy attorney about her exposure; she can get referrals from the National Association of Consumer Bankruptcy Attorneys.

Another caller was facing a $30,000 IRS bill and $30,000 in credit card debt. He had the cash to cover one debt but not both, and asked which one he should pay off. I suggested he pay off the credit cards, because the IRS offers low-rate installment plans. If you owe $25,000 or less, you can apply online for an installment plan. If you owe $25,000 or more, you may still qualify, but you have to jump through a few more hoops. For more, visit the IRS’ page on payment plans and installment agreements.

Yet another caller had a pile of debt and a 401(k), and wanted to raid his retirement to pay off the bills. No, no, no, I told him. A 401(k) withdrawal triggers a tax bill that will eat up one quarter to one half of your withdrawal, plus you lose all the tax-deferred gains that money could have earned. A $1,000 withdrawal will typically cost you $10,000 or more in lost future retirement income. If you’re considering tapping retirement accounts to pay your debts, you need to talk to an experienced bankruptcy attorney first because you’re likely in over your head and you need to understand the ramifications of what you’re considering.

In honor of Valentine’s Day, we had a few questions about spousal liability for debt. One wife asked if she could be taken off a joint credit card where her husband was carrying a big debt. The answer is no; if you’re a joint account holder, rather than an authorized user, you are equally responsible for the debt and it will show up on both your credit reports. One solution is to have the husband get a three-year, fixed-rate personal loan from a credit union, pay off the debt with that and then close the card. Next, a husband told us his wife had stopped paying her credit cards, and his credit card issuer had recently frozen his account. If the wife’s cards were in her name alone, her problems should not affect his credit; his issuer may have acted for other reasons. If, however, these are jointly held cards, her problems will indeed hurt his score.

These are just some of the questions we tackled. I’ll be back on the show next month and we’ll be tackling more of the issues that affect you, so call in if you can.

Setting up finances as a couple

Many couples have only joint bank accounts, some have only separate accounts and some have a combination. Also, more on paying down a mortgage versus saving for retirement.

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Dear Liz: My husband and I have been happily married for a year but have reached a disagreement on how to handle our finances. I think that we should have a joint bank account only to pay bills, with each of us putting in a percentage of our income into it while retaining separate accounts for everything else. He thinks that we should have just a joint account. I’m the main breadwinner, so it’s primarily my money that would be going into the account, and I’m just not comfortable having only a joint account. While I have no problem spotting my husband for things, I don’t like the idea of his being able to spend my money without my say-so. I’m also concerned that if we share an account we won’t be able to surprise each other as we will both be able to see what purchases have been made. Finally, I’m worried that we will both make plans for the same money and that will cause checks to bounce. What is your advice on how to handle this?

Answer: There’s no one right way to set up your finances as a couple, and it may take some trial and error to figure out what works for you.

Half of married couples have only joint bank accounts, according to a Harris Interactive poll, while 18% have only separate accounts. Twenty-nine percent take a combined approach, with both joint and separate accounts, and 3% have no bank accounts.

Those who decide to hold all their accounts jointly often say it helps them to be on the same page financially and supports the idea that they’re working as a team. Those who opt to keep their finances separate may have suffered through bad financial experiences with partners, including divorce, that makes them wary of mingling money.

The joint-plus-separate approach allows for a bit of both worlds: joint handling of bills and other expenses while keeping some money separate for each person to spend as he or she chooses. If you opt for this approach, though, you’ll need to make sure that all the accounts are adequately funded. For example, the joint account will need to have enough money to cover all the bills you’re likely to face, and the separate accounts should have enough for reasonable personal expenses. Being stingy with the grocery money or a lesser-earning partner’s “allowance” shouldn’t be an option.

What may matter more than the configuration of accounts is how you handle spending decisions. Many couples have a “talk to me” amount, which means any purchase above a certain dollar amount must be discussed with and agreed upon by the partner. The limit could be $50, $100, $500 — it depends on the details of your finances.

You’ll also need to discuss how much to allocate for retirement, debt repayment, vacations and other big expenses, since those budget items affect how much is left over for other spending. And if you have a joint account, both of you should have online access so you can check the balance frequently to avoid overdrafts.

With a little experimentation and a lot of communication, you can find a way to handle your finances that works for both of you.

Intellectually it feels like the fair way to go, since we both work and are equally responsible for our family’s finances. The money we’ve been putting in his retirement accounts will ultimately belong to both of us. But emotionally, I feel anxious about not having my own accounts. Should I just work this out in therapy (joking) or am I right to be concerned? What would you advise for a couple like us with an age difference?

Answer: You are likely to outlive your husband by at least two decades. Rather than focusing on early access to retirement funds, you should be making sure that money lasts for a lifetime: your lifetime, not just his. By the way, considering your own needs is not unfair — it’s sensible. A loving husband wouldn’t want to leave you old, alone and impoverished.

You may not need a session with a therapist, but you should definitely have a meeting with a fee-only financial planner who can review your situation and make sure the needs of both of you are considered.

Answer: If you were turned down for credit, you should have been given free access to the credit report the lender used to make its decision. In any case, everyone in the United States can get a free look at their credit reports from the three bureaus once a year at www.annualcreditreport.com. You should peruse the reports to see whether there are any obvious errors, such as accounts that aren’t yours or late payments when you paid on time.

The problem could be that all the credit you have is in your husband’s name. If that’s the case, you should begin building your own credit. If you’re already an authorized user on his cards, see if the credit card issuers will report the accounts to your credit reports as well as his. Opening a credit card account in both your names, as joint account holders, also can help build your history.

Answer: If you live in a community property state and don’t have a prenuptial agreement, debts incurred during marriage are typically considered owed by both parties (even if there’s only one name on the credit card). Community property states include California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In other states, debts incurred by one spouse are usually that spouse’s responsibility alone, unless the money was used to buy family necessities such as food or shelter. If you divorce, she probably would be responsible for these separate debts. If she dies, creditors could go after her separate property and may be able to go after her half of any jointly held property.

The rules vary enough by state that you’d be smart to consult an attorney about your potential liability.

Wherever you live, though, this debt is affecting your union and your future together. The money she’s paying in interest isn’t available for other purposes, such as saving for retirement or your children’s educations, plus it’s clearly causing tension between you. If you want your marriage to succeed, you should invest in sessions with a marriage counselor and a fee-only financial planner.

Answer: You each will retain your individual credit reports when you marry. They won’t be combined.

If you plan to use her income to help qualify for a home purchase, though, her credit scores will be used to determine the rate and terms you get. If the bankruptcy is recent or if she hasn’t taken steps to rehabilitate her credit, that means you could pay more interest or have more trouble finding a loan.

If you don’t need her income to qualify, on the other hand, her credit troubles don’t need to affect your loan.

Written by husband and wife team Gary and Melisa Neuman, the book has some wise words and gentle wisdom about how to help your relationship survive life’s setbacks. Among them:

Fight the problem, not each other. Tensions over money can cause people to lash out and blame each other. It’s understandable, but horribly counter-productive. To weather bad times, you need to come together as a team and work out solutions.

Let go of the past. Any therapist will tell you a relationship can’t improve if you keep throwing past mistakes in each other’s faces. But in this case, the past refers to your past financial life, whatever that looked like. Maybe you’ll never again make the kind of money you used to make, or live in as fancy a house as the one you lost to foreclosure. Life may have better things in store for you, such as a less-stressful job that allows you to spend more time with your family, or a smaller home that’s simpler to take care of. In any case, you can’t go back, and hanging on to the past will just make you miserable.

Commit to communicating. If talking about money leads to fighting, you’re likely to start avoiding the topic just to keep the peace. But silence leads to misunderstandings and isolation from each other. To keep the intimacy in your relationship, you need to talk about money, and continue talking. Some ground rules:

• Set aside 30 minutes to talk each week. Schedule a time when you’re not tired or distracted.
• Share your earliest memories about money and how money was handled in your household growing up. These revelations can help couples better understand how their partners view money.
• Acknowledge you’re not always right. Couples need to compromise and acknowledge each other’s needs and wants.
• Work together to define your top financial goals and draw up a budget to help you get there.
• Track and review your spending weekly to make sure you’re on track.