How do I set up a new apple ID without losing data off one phone?

I have two iPhones (5) with one Apple ID.  My husband updated his phone to iOS8 last week and I did mine today but it looks like we have to set up separate Apple ID's in order for the phones to work properly.
General > Privacy > Location Services (off for now) > Share My Location <-- it's in here that it keeps showing his phone and not mine. I keep setting to my phone but it keeps reverting.
I also have an issue compounded to this - My Apple ID for some odd reason is set up to use HIS phone number and not mine. I can't seem to change that anywhere in the settings on the Apple site. Help here would be greatly appreciated.
The My Support Profile page will not let me update any of my device info. Hitting the save button just shows the 'working' circle graphic and it never actually stops and saves.
So, it seems that I need to create a new Apple ID for the other phone line and I am unsure how to do it.
Where on the phone I need to change do I log out of the one ID in use?
Should we start on Apple.com and create it all there first?  Then log into the phone? I am going to assume yes.
Same for iTunes - get Apple ID and then log into iTunes. That one is a 'no brainer'.
So, once the new ID is taken care of and set up, how does he not lose any of his current apps and music? Will it all be there or will he have to set up his phone all over again as if from new? What about all the purchased apps in iTunes he's bought with my ID?
Right now we feel kind of 'stuck' and afraid to use the phones until I know what to do to solve these conflicts.

Thank you Lawrence, I know how it all works.
I'm pretty sure if I need to use Find My Phone I can log in from any device into that stupid cloud as long as I have activated it on the phone first. Sometimes I do use that method when traveling but not for daily use.
We can share our iTunes products easily between the phones on both the computers.
I don't trust the cloud. You may feel free to do so but I won't and I won't buy a basic phone because of my mistrust. Although the stupid cloud claims your data is secure or encrypted etc, it's a database. Period. One giant database and SOMEONE has to have access to the information UNENCRYPTED to manage, restore etc. There ARE master users or whatever you want to call them and I'm sorry, I just don't trust. I also have a stalker and because of that I am extra cautious. Don't worry, he's already facing two felony charges and trying to worm out of a jail sentence.
My cell phone and internet provider promised me security and my email addresses have been sold to the highest paying spammer and I get HUNDREDS of spam emails daily. For the first two years I was spam free. Didn't even see that crap in my junk folder but the last 5 years it's increasing daily. Now how does that happen? Unscrupulous employees is my guess. Especially since I do not use my regular email address for things I know will generate spam. I'm very cautious of my privacy online. Very.
Thank you for believing iCloud is safe but you did hear about all those celebrities whose photos were hacked and stolen from iCloud, didn't you? THIS is (one of many reasons) why the cloud can't be trusted.

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