Debt Proof Your Marriage
By Mary Hunt © 2003
ISBN 0-8007-1847X
Chapter 1: Get Your
Relationship Ready for Financial Recovery
I knew that equity was an asset, and it was our asset. It was a lifeboat tied to the side of our ship, always at the ready if we needed it. Each time we took a ride in the life boat, we weren’t improving anything at all. We would only move our rapidly accumulating debt from credit cards to mortgage companies and banks. We had another clean slate. Ceremoniously I cut up all my plastic and pledged to never charge again.
Chapter 2: A Stiff
Dose of Reality -- Money, Marriage and Reality
Why Couples Divorce:
unresolved conflicts. What do couples
argue about most? Money. Divorce is a lousy solution. Dividing families through divorce is the
leading cause of poverty in
Improving an Unhappy Marriage – Time. In one study, 86% of unhappily married people who stuck it out found that five years later their marriages were happier. Three fifths were “very happy” or “quite happy.”
Chapter 3: Marriage is
Like a Dirt Road (Money and the Stages of Marriage)
Stage One: Magnetic Attraction
Stage Two: Reality’s Rude Awakening
Stage Three: I Love You; Now Change!
Stage Four: Surrender and Acceptance
Unfortunately, by this stage, many couples are reaping the consequences of decades of mismanaging their finances – years of living paycheck to paycheck, using credit to get by, cashing out home equity, secret spending, and poor financial choices. Stage Four couples often find themselves deeply in debt despite decades of dual incomes. It is not unusual for spouses to have “split” the finances out of pure desperation, resulting in secret debt on one or both sides. Couples at this stage are often behind on preparing for retirement, clueless about where to start and what to do to catch up.
Step Five: Peace, Harmony, and Romantic Love
Now which would you like first, the good news or the bad? Let’s get the bad out of the way: It’s not unusual for couple to be married
thirty years or longer before they finally make it to Stage Five. The good news: No couple has to sit back and just let
marriage happen, no matter \where they are on the Marriage Map. You can opt for all of the deep satisfaction
and emotional connection of Stage Five starting right now.
Chapter 4: The Currency of Life (Why Money is Hard for
Couples)
Personalities and Temperaments: 450 BC – Hippocrates observed four dispositions he called “temperaments.”
I find the predictable differences in our money personalities to be far simpler. I boil it down to this two-part theory:
(1) There are two money personalities: Spenders and Savers.
(2) The typical marriage has one of each.
Spenders don’t look at account balances. It is easier to assume that everything is okay.
Spenders and Savers come in varying degrees of intensity.
In a healthy marriage, the saver – spender combination creates balance. Put a saver and a spender together in an unhealthy marriage and watch the fire works.
Money is Personal:
I asked her (someone asking advice) to tell me more about her fiancée’s financial situation. She shared what she knew, and believe me, it wasn’t much. I went on, “But can’t you ask to see his credit report, how much money he makes, and how much debt he has?” “I could never do that,” she replied. “That would be too personal!”
But unlike their other differences, their other differences, the way they think about money has presented a barrier in their communications.
As children, didn’t we learn to never talk about money?
Financial Ignorance:
Amazingly most adults are fairly ignorant of the basics of money management and personal finance.
Family History:
The way your parents handled money during your childhood may have a lot to do with the way you think about money today.
The Six Money Myths from Ray Linder’s book, What Will I Do with My Money:
(1) Achievement: Money says that I do thing well.
(2) Freedom: Money says that I can have what I want when I want.
(3) Respect: Money says that people like me.
(4) Power: Money says that I am in charge with my life.
(5) Security: Money says that I will always be safe.
(6) Happiness: Money says that I enjoy myself.
Invisible Barriers:
Unresolved conflicts are like the layers of a glue-laminated beam. Just one of the conflicts may be fairly weak. However, when allowed to accumulate, each layer, building on the other and held together by blame, resentment and anger becomes a barrier of considerable proportion.
Infidelity:
Because financial infidelity is such a pervasive problem these days, I’m going to interject right here the steps I offer to anyone in this situation. Acknowledge the offence for what it is – betrayal and deceit. Show remorse with no attempts to justify. Understand your spouse may need time to process. Promise change. Share Details. Your spouse has every right to know the full extent of your financial indiscretions as well as your specific plans for recovery. Offer reassurance. You owe it to your partner and your self to bend over backwards to prove your trustworthiness. Commit yourself fully. Consider counseling. For many couples, the disclosure of money secrets serves as a wake up call that moves them to begin to address the underlying issues in their marriage.
Unresolved Anger:
Clearly, it’s not the anger that’s the problem, but rather what we do with it.
(Mary was doing an object lesson about why we shouldn’t keep anger bottled up using baking soda and vinegar. What to do with the left-over stuff? Mary put it down the drain at the hotel and caused a minor disaster.)
Ventilate the anger by talking it out, praying, and confronting the issues behind the anger are ways to dissolve it.
Unrealistic Expectations:
Broken Trust:
Whenever this trust account is violated (one or the other spouse makes a withdrawal) the choice is to either resolve the issue or let it begin to grow into a major barrier.
Chapter 5: News
Flash: You are Different
Authors Bill and Pam Ferrel summarize the gender differences this way: men are like waffles; women are like spaghetti.
A waffle is a collection of boxes separated by walls. Social scientists call this “compartmentalization.” Men are problem solvers by nature. They enter the box, size up the situation, and come up with a solution. Men feel best about themselves when they are solving problems. This is why men spend most of their time doing what they are best at while they attempt to ignore the things which make them feel deficient.
Spaghetti, on the other hand, is a lot of individual noodles that all touch each other. Piled on a plate, there is not a single strand that stands alone. Each noodle intersects a lot of other noodles. If you were to follow one, you could easily switch to another noodle quite seamlessly (multitasking).
Three Distinct Parts:
Every man and woman has by design of our Creator three distinct parts, each of which has its own distinct need for fulfillment: emotional, spiritual, and physical.
Chapter 7: For Wives
Only – Real Men Don’t Ask for Directions
Your husband like mine has a requirement for your respect and admiration. It is one of his most essential emotional needs. How do I know this about your husband? I know because he’s a man. If a man doesn’t feel respected, often, he will get angry.
Chapter 8: For
Husbands Only
I want to talk to you about just one of your wife’s deep emotional needs. Affection, your wife needs expressions of your affection every day because her need starts over every day.
How to Debt Proof Your Marriage
1) God is the source.
2) Money is not for spending. Money is for managing first, and then for spending.
3) Never keep it all.
4) Never spend it all; pay yourself first.
5) No more new debt.
6) More money is not the solution.
Chapter 10: Till Debt
Do Us Part
Chapter 11: You Are
Here Discovering Your Worth
It doesn’t matter how much you earn. What counts is how much of it you keep and what you do with it. Your net worth is not determined by your income, but rather how much of your income you keep.
Some of us have the personalities that find more comfort in knowing the state of our finances because as long as we don’t know, there’s always a chance things aren’t so bad (Can you say denial?). I can identify with that kind of thinking. I really understand. Still, it is not a good excuse.
Don’t dawdle or hesitate. That will not make it any easier. Instead, write down your fears. Put it into words what you are feeling and why it makes you uneasy. Ask your spouse to read it and you read your spouse’s.
Preparing your balance sheet (Net Worth Statement) may be the first time you are brutally honest with each other about any money secrets you’ve been hiding.
Assets: Wealth building. Depreciating such as a car or household goods.
Liabilities: Everything you owe.
Chapter 12: Getting to
Where You Want to Be – The Basic Elements of Your Financial Plan.
We all want to progress, but if you’re on the wrong road, progress means doing an about turn and walking back to the right road. In that case, the man who turns back soonest is the most progressive. (C S Lewis)
Formula: 10% give, and 10% save, 80% spend.
Contingency Fund: It is an emergency nest egg.
Spending Plan: There are no budgets in this book. A Spending Plan is different.
Chapter 13: A Life –
Changing Formula: The 80 Percent Solution
If you are carrying a load of debt, you are probably living on something closer to 125% of your income. Worse, you probably don’t know for sure where all your money goes or how much your current lifestyle is actually costing.
Take a look at the formula again and notice the order. It’s not 80-10-10 or 10-80-10. The correct sequence is
It’s going to be challenging to adjust your living expenses so that your debt repayment and current bills do not exceed 80 percent of your take home pay.
Chapter 14: Knowledge
Is a Powerful Thing – Where Does Your Money Go?
There are two critical pieces of information you need to create a spending plan:
1) Your average monthly income.
2) A detailed record of where your money goes.
The Spending Record is going to take some time and commitment from both of you too.
Submitting to reasonable boundaries and limitations is the key to freedom – freedom from both want and worry.
You need to take five seconds to write it down the moment money leaves your possession.
Money Laundering or Skimming – she writes a check for more than the grocery bill and receives cash back. That’s cash her husband cannot trace. So you ask, is skimming wrong if the real reason is to eliminate arguments and keep the peace? Lying will sabotage emotional intimacy. So there goes the trust, and if you don’t have that, what’s left?
Chapter 15: You Want
Security? You and Your Contingency Fund
Your Contingency Fund is your #1 savings priority. Your Contingency Fund is not investment money.
Interest income is not important.
Safety against loss of principal and liquidity is important. You may need
access in 24 to 72 hours.
Chapter 16: You Want
Freedom? Expect the Unexpected
Failure to anticipate lets us forget that every day we are wearing out our cars, that our kid’s clothes are getting too small, that accidents happen, that our appliances are getting older, that we are using up our prepaid insurance, and that we are inching closer to Christmas or vacation.
Before the introduction of easy credit, people had no choice but to anticipate the unexpected or go without. Failure to anticipate meant certain doom. Our grandparents called it a “rainy day,” and they were forever putting something way for it.
Imagine this: You get a letter from your mortgage holder or landlord that you have been such an excellent customer, effective immediately, your $1000 monthly payments will no longer be due monthly. Instead, you will make one annual payment of $12,000. Your first annual payment will be due one year from today.
How do you respond?
1) You are overjoyed with relief. No more monthly pressure. It’s always hard to get that check in on time. Now you have a whole year’s worth of breathing room. You will deal with that bill when the time comes.
2) You are scared to death. $1000 a month is doable, but $12,000 a year is impossible. How will you ever get $12,000 a year from today?
3) You
are grinning ear to ear. You open a
special house payment account. Instead
of paying your mortgage company every month, you write the $1000 check to your
special account. One year from now you
look in the account to see $12,263.20.
You write out the check for $12,000 to the landlord or mortgage company
and pocket the difference which is the 4% interest that your money earned.
(While reading chapters 15 and 16, I became confused about how the contingency fund and the freedom account were different. For me, in my personal plan, there is no difference. Saving up to purchase a new car didn’t really seem like a contingency fund item to me. Knowing that car repairs averaged $700 a year even though I didn’t know ahead of time what repairs I would be doing did seem like a contingency fund item to me. Although appliances might have a lifespan of seven years, I might need to replace a major appliance every year. Hopefully, I would not need to replace them all in the same year. Saving up for major home repairs like a reroof might be better placed in an area I would have less liquidity and a higher interest. I determined that what Mary calls the Freedom Account is used for things that occur on a regular basis such as quarterly or yearly for which we have a very good idea of the amount such as the property taxes or a license renewal. My “Freedom Account” is a checking account which I do not use for monthly expenses. This account is also my “Contingency Fund.” Richard)
At times you will be tempted to think of your Freedom Account as a savings account or an investment. You may think it takes the place of funding your contingency fund. This is not a savings account, and it is not an investment either. Your Freedom Account is money that has been committed for a specific purpose.
You may be tempted to go high tech with your Freedom Account. I’ve heard of readers who have created an Excel spreadsheet or set up their Freedom Account in
Quicken. My only concern is that this needs to be user friendly for both of you, not just the spouse who is more computer savvy.
(Mary’s method is binder with an individual page for each regular expense.) One of you needs to take responsibility for the actual management of the pages, recording deposits and keeping current balances on each page. One needs to become the keeper of the checkbook and also reconcile the monthly bank statements.
(I know that some people subscribe to the envelope system. This is scary to me because some of these envelopes could have hundreds of dollars in them. Perhaps a better idea comes from John Fuhrman when he suggests using several bank savings accounts. It would be a simple matter to show “transfers” into a “property tax account” and a payment out of that account for the property taxes using Quicken or MS Money.)
Chapter 17: You Can
Get Out of Debt; Yes, You Can!
Rapid Debt Repayment Plan: Credit card companies, unlike mortgage lenders, are required by law to accept any amount you want to send them even if it is less than the required payment, and they must accept it at any time. So, if the minimum payment is $47 and you send $48 or $4.80, they must accept it and credit it as received.
1) No more new debt.
2) Pay the same amount every month until all of your unsecured debts are paid. As you know, the minimum monthly payment required by each of your creditors fluctuates each month in direct proportion to the current outstanding balance. Ignore declining monthly minimums from now on.
3) Arrange your debts so that the shortest payoff time is at the top and the longest payoff time is at the bottom. (Some methods advocate putting the highest interest rate at the top and paying that off first. Mary is correct in using the method that gives the greatest emotional payoff. The actual dollar amount and the amount of time difference between the various methods are small.)
4) As one debt is paid off, roll that amount over to the next debt in line.
Chapter 18: It’s Not a
Budget, Honestly! Plan How to Spend Your
Money.
The transition period may be challenging, particularly if you are behind in your bills or are facing initial expenses that are greater than the amount of money you have to work with. It is difficult to build the Freedom Account while taking care of current large irregular amounts now due for which you have not planned for up until this point. You can start with small steps, but please push yourselves to the maximum effort possible. For example, if you simply cannot give 10% and save 10% in the first month, give and save something.
You may be thinking that this sounds like way too much work and a lot of trouble. But once you have your system up and running, the amount of time and effort debt proof living requires is quite minimal. And if you keep your accounting simple and both of you have complete access and input on at least a weekly basis, this is going to run so smoothly you’ll wonder how you ever got along before.
Question: It doesn’t make sense to me to put any of my money into a contingency fund while I am in debt and paying double digit interest to credit card companies. Shouldn’t I use all of my available money to pay my debts first, and then start saving?
(Mary’s answer was good. My personal answer says similar things: Using a credit card for my contingency fund is what got me into trouble in the first place. I need to learn a new habit.)
(Subsequent chapters deal with such things as working with Third Party Administrators, Debt Negotiation, Keeping Your Business Separate, and being a Commissioned Salesperson.)
Chapter 24: A Call to Faithfulness – An Eternal
Perspective on Wealth
One of the universal laws on money is that everything you own is on loan from God.
What you receive has a correlation to how much God know he
can trust you with. “A person who is
trusted with something must show that he is worthy of that trust.”