When Bill and I got married, we opted to keep our finances separate for a couple of reasons. The first is that, as a non-custodial father, he has child support obligations every month that must be paid. I didn't want my money mixed in to that. The second is that I brought with me a good amount of credit card debt to the marriage, and I didn't want his money mixed in with that. Therefore, we divided up our co-expenses what we both thought was pretty equally, and that has worked pretty well for us.
Last week, Bill took a look at what we were each paying into things and became concerned that he was getting the short end of the stick. When looking at a ration of what he pays to what I pay, compared to what he makes and what I make, he thought that perhaps he was paying more than would be fair considering our original plan. Therefore, yesterday we had a little economic summit to set things straight.
The first thing that happened is that we discovered that we are, in fact, paying the correct amount toward our household expenses. He makes about 40% more than I do and pays about 40% more than I do. The second thing that happened is that we wrote down all of our credit card debt and set a plan for how to deal with it.
I had not ever put a real number on what I owe to credit card companies, although I had an idea in my mind. I also had never told Bill what the true number was, or even a ballpark figure. Because I was so intent on it being my debt for my to deal with, I didn't even want to get into it with him. However, yesterday, we laid it all out on the table. It was an ugly picture, but at least we are on the same page about it now.
I really would like to cash in one some of our home equity and deal with this Right Now. However, everything I have read suggests that option is merely a band-aid and that it is important first to learn to live without credit cards. After all, if you use home equity to pay off debt, what is to stop you from running the debt right back up? Instead, it is best to learn not to incur more debt so that using home equity to pay it off can be more of a solution, as opposed to a temporary fix. Therefore, this year, we will use a snowball method to pay off our smaller debts, while chipping away at the larger ones. And next year, we will look into a home equity loan to pay off some or all of the rest, after having learned to live without credit cards.
Regardless, it feels good to be on the same page and to have a plan with my husband as my partner. This must be what being a grown up feels like...
4 comments:
I'm proud of you. I know there was really no way you could really get out of this 'debt conference' so to speak, but good for you for really and truly knowing what you owe and how you can pay.
I am still in the clouds about my debt. Well, not really, I know I owe a lot on my CC debt and I have a school loan that is just under $6,000 that I am just barely paying. But I have come to terms with that debt and I think that's a big step. I know I can pay it off and while I'm incurring interest, I have decided I'm not going to lose sleep over something I can't control. I am working on my credit cards and while I make peanuts I am actually making a dent in them and am proud for that.
I want to know -- once again-- what it's like to be debt free. I was there a long, long time ago.
I don't think you should learn to live without credits cards I don't care what anyone says. I think you should learn to live with two. One for emergencies and one that you use as your "everyday' credit card, you know what I mean?
That is what I'm going to do. In today's lifestyle it is almost impossible to live without at least one (flights, online purchases, etc.) but I used to have more than 5 and that was just too many.
Anyway, good luck to you.
I married someone with no debt, and I had a ton. We paid off my credit cards, but ranking them by interest rate. I made minimum payments on all of my cards, and then threw any money we had at the 20% and over interest cards. That actually paid them off fairly quickly. Then we got down to two cards. I got a great deal with transferring one debt to the other card for zero percent interest for the life of the transfer. That helped a ton, but those days might be gone with this economy. Now our biggest debt is student loans (on top of the usual stuff). I owe $91,000 in loans. That's nuts. Right now I am just paying minimum payments because the interest is so low. What we ended up doing with our credit cards once I paid everything off, was using them for everything. I charge everything and then I pay the bill in full every month. That way if I can't afford to buy it, I can't afford to charge it. Good luck. I think that it will help a lot to have Bill on the same page as you.
Glad you finally explained how you guys were handling finances- I wasn't sure why you referred to money troubles as "yours." I get it now and I think it is totally fine to have separate finances if that is what works for you. I have known married couples that kept their finances so divided that they didn't even know how much money the other made- that seems a bit extreme.
My personal feeling is that credit cards are evil. I like the convenience of them, but that is it, and the convenience factor is easily matched by using a debit card instead. It takes a lot of self control to use a credit card for everyday purchases without racking up some debt, even when you intend to pay it all off each month. Switching to a debit card takes all of the temptation away. We keep one credit card for emergencies only, and really keep to that. That is our approach and it works well for us- we haven't had any credit card debt in six or seven years. Of course, another solution might work better for you, but I thought I would share anyway.
Congrats on getting serious about paying down debts. The snowball method based on balance owed smallest to largest seems to be the best method of attack. You really should read "The Total Money Makeover" by Dave Ramsey...and listen to him on the radio if you get a chance. He's even on the new Fox Business Network now at 8:00 eastern.
I must warn you though...he speaks strongly on the seperate accounts for bill paying. He's against it, strongly. You married your husband...all of him...including his support payments. He married you...all of you...including your debts as well.
To have seperate accounts is to not be fulling living as one...as in, One Soul in marriage. You are really just living seperate lives but residing in the same address if you can't work together with money.
I tend to think that if you combine your accounts into a single account, and get on a strict budget, you'd probably be able to knock away at that debt faster because you'd have a full, singular picture when you do your budget every month rather than having to compare back and forth.
I don't mean to sound preachy...I just happen to agree with Dave's perspective on that. Money is the number one cause of divorce...seperate accounts automatically puts you behind in the financial game of life. Give yourselves the best chance possible to survive and be on the same page with everything, including money. You relationship will grow stronger as you work together to pay off debt, rather than being independant in marriage and working towards seperate goals.
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