SECURED AND UNSECURED LOANS

A secured loan is a loan backed by something of value that you pledge to insure payment. You make a promise, usually in the form of a printed security agreement, stating that the creditor can take a specifed item of your property if you fail to pay back the loan.
Often, the item pledged is the one being purchased. The pledged item can also be an item that you already own. If you stop paying for any reason, the pledged item goes to the creditor.

The most common items purchased by a secured loan are :

■ Houses and condos
■ Motor vehicles (cars, trucks, and motorcycles)
■ Major appliances, such as refrigerators and washing
machines
■ Furniture
■ Expensive jewelry

In addition, if the spouse without checkbook control is contributing all income to the household pool, that spouse will be left without funds for ordinary living expenses. This raises the specter of the allowance, that is, a weekly or monthly sum provided to the partner without checkbook control. Many modern couples will recoil at the notion of an allowance, as it means dependence on the bill payer and suggests a subordinate role. It also implies regular negotiations about the size of the allowance. You can well imagine the scene: The spouse with the allowance forced to justify all expenditures under the harsh glare of “The Boss.” For many, this is an unsavory prospect that introduces, even regularizes, conflict in a marriage and can lead to more serious problems in the relationship.

Generally speaking, secured loans are high priorities in your debt-repayment plan, especially if the loan is for a home or transportation. You might be willing to have someone repossess a diamond necklace, but you certainly don't want anyone foreclosing on your mortgage and repossessing your home.

An unsecured loan is a loan not backed by collateral. The majority of debt in the United States is in the form of unse cured loans - primarily credit cards - but this category also includes student loans, personal loans, checking accounts and medical bills.

For the single-account approach to work, couples must communicate frequently about the financial needs of the family, and neither partner must be judgmental about how the other partner’s allowance is spent. If you and your partner share similar views about spending and saving, this method has a better chance to survive. But if one of you is a “saver,” and the other is a “spender,” you need to find common ground quickly.

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