You can STOP fighting about money. (cover story)

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Author: Lankford, Kimberly

Spouse vs. spouse. Sibling vs. sibling. Parent vs. child. The Hatfields and the McCoys had nothing on families who feud over finances. We defuse six sources of tension.

You and your SPOUSE don't see eye to eye

FASH POINT: You're a saver. She's a spender. Or, even worse, you're both spending too much money.

SOON AFTER BECOMING engaged in 2002, James Scott found himself bracing for an awkward conversation with his fiancée, Anh. James had so far withheld an embarrassing secret: On a salary of about $35,000 a year, he had amassed $30,000 in credit-card and other high-interest debt. "It was tough for a man who's full of pride to bare his soul about his finances," says James, But Anh surprised him with a revelation of her own: She was $25,000 in debt.

It might have meant disaster for the Denver couple's fledgling union. But having gotten up the courage to talk about their situation, James and Anh decided to do something about it. "We had a little sit-down and said enough is enough," says James. "We didn't want to live under a cloud."

By getting their finances out in the open, James, 28, and Anh, 34, had observed the first golden rule for fending off fights about money. Then they moved on to the second: They agreed on their top priority, which would be paying off all the debt--in their case, before the wedding. To do it, they'd have to work as a team and pool their resources because Anh's income as a mortgage broker was twice James's salary in the Army National Guard Special Forces. Just three months after they were engaged, they opened a joint checking account to keep track of each other's expenses.

James and Anh started by cutting back on movies--and Anh's manicures--and adding the extra money to their credit-card payments. To get a sense of accomplishment, they tackled the smaller balances first.

Then James made the big move: When he finished his military commitment in February 2004, he took a job as a security contractor in Iraq and mote than quadrupled his income, to $ 150,000 a year. "It was awesome," he says. "I'd get a paycheck and another credit-card bill would disappear."

By the time the Scotts were married last summer, a year and a half after their first discussion, they had wiped out all their debts--and didn't owe a penny on their 200-guest wedding. "We wanted it paid off when we walked down the aisle," says James.

Philadelphians Nica and Rob Fleming, both 41, had a tougher time arriving at a meeting of the minds. After their two children, now ages 5 and 3, were born, the couple's finances started to deteriorate. Maxed out on three credit cards, the Flemings were $16,000 in debt and making only the minimum monthly payments. "Whichever one of us was paying the bills would feel the pressure," says Nica. "The stress was affecting our relationship and the kids."

The Flemings' first response to the problem was to duck it. "Rob would get overwhelmed and pay nothing for a while," says Nica. They ended up with late fees on their credit cards and warnings that their utilities would be cut off. Sometimes they'd stop speaking to each other altogether.

Like the Scotts, the Flemings finally decided they were sick of living paycheck to paycheck. Nica found a Web site called the Money Club (www.moneyclubs.com) that offered a free, step-by-step, 21-day debt makeover. When the Flemings started to follow the program's advice and record their expenses in a notebook, they were "pretty shocked," says Nica. They discovered, for example, that they were spending as much as $1,000 a month to eat meals out.

The Flemings trimmed their expenses, and used the extra money to pay down credit-card bills. They also put themselves on a weekly allowance, after which the ATM is off limits--but they can share money if one of them runs low.

Both couples now work as a team toward their goals. The Scotts aim to sock away as much of James's income as possible so that he can retire early or find a less-risky job. The Flemings are enjoying a less-tense relationship. Now that they've erased their credit-card balances, their priority is not to overspend at holiday time. "It makes my month to get the bills paid," says Nica. "It's nice to be able to breathe again."

For more advice on easing family tensions, visit kiplinger.com/magazine/links.