handling financial issues

[diverp]

I am engaged to a fantastic woman. We are getting married in May. We very much get together and love each other. There is one thing that is bothering me though and I am going to bring it up to her, but wanted some opinions first.

 

Before we lived together and got engaged, we had a discussion about a number of things. One of them was her debt. She has run up a fair amount of debt over the last 5-10 years. She makes about 30k each year before tax and I make about 70k or more. I have a fairly inexpensive mortgage, but I have about 10k of debt I am trying to pay off.

 

She has a horse that she boards that costs a lot of money each month and is a major reason for her being in debt. Now, we sort of agreed that I would take care of most things except for perhaps food and stuff like that. Well, I don't know what her debt is, but her monthly payments are in the arena of $400-$450. For the time we have lived together, she never seems to have money left over at the end of the month, even though she has no expenses now like rent or anything like that. I get nervous that she is still blowing her paycheck.

 

I have a stock purchase program at my company that allows me to put in a certain amount of money each paycheck in order to purchase stock in one year at a 15% discount. It is a good forced savings plan that I convinced her to help contribute to and put towards paying off her debt. I have tried finding other things like that to help her control her debt.

 

Anyways, what bothers me is stuff like today. She calls me up and says she has to come up with $98 to pay for her horse's vaccines on Wednesday. She doesn't have it and asked if I could lend her this. Well, I have lent her money on a number of occasions ($50 here, $100 there, etc.) and I never get paid back.

 

I have written a budget for myself and what I can and can't afford. I can't really afford for her to ask for cash like that when I can't budget for it. Now, after we get married, we will want children (we have discussed this). If we are married and she is going to want to stay at home with kids, there is no way we will be able to make it by with only my paycheck and her spending habits.

 

How should I bring this up to her? How should I let her know my concerns? I am trying to find a way of bringing this up without me totally sounding like a cheap money pinching jerk, but that I have concerns. I know I shouldn't have issues with just bringing it up, but its hard at some level to not be able to provide for what my "family" will want, even though I make a good salaray. Any input is greatly apprecitated.

 

Thanks

[melrich]

Well try sitting down with her and mapping out your long term goals. Don't focus on the financials. Map out your goals, then map out what you need to do to achieve them. At this point you can start to talk about budgeting and money issues. Some people do not understand that achieving financial goals usually require some sort of sacrifice.

 

Get agreement on what you guys want to achieve, then talk about the reality of financing that (including can she indulge her passion for horses whilst working towards being a stay at home mom?)

[Cecelius]

I agree with the above advice

[Luciana]

Exactly. Sit down with her and make a financial plan. She needs to see that the piggy bank does have a bottom. Tell her that your 70 plus her 30 makes 100, and how much you will both need for living expenses, how much for entertainment, how much for clothes and cosmetics, and how much extra you can really spend a month. If she is given a nummber (say, she only has 300 dollars a month to spend on extras), she will have to stick to it.

Also remember that you and her must put away money every month, for vacations, old age and college fund.

 

While you discuss this, be patient and loving, so she doesn;t feel you are a cheap controlling guy.

My fiance also has problems discussing money, he gets evry defensive.

[marijo2480]

I agree with all of the above. Put together a budget, say a spreadsheet on Excel, and show her how much income you create with the two of you, how much expenses you have, and how much needs to be set aside for savings. The money left over could be used for your own personal desires/entertainment but it needs to be well managed/financed.

 

I use to track every little thing that I bought, from a pack of gum from the old Seven 11 to a big purchase (clothes, cosmetics, facials, etc). It helped me manage my money well. Now I have to admit that I stick solely to online banking, but for these purposes, it's best to break it down for her. I agree too that you should try to be as positive and friendly about it as possible. Some people get defensive and will immediately feel attacked when something of this nature is brought up to them. Especially if they're not very thrifty with their income. Best of luck to you! I'm sure it'll all work out just fine!

[Day_Walker]

Talk with her about her spending habit and realize that some sacrifices are going to have to be made. Do it now before you get married otherwise then it also becomes your problem. The issue seems to be the horse, she cant afford the up keep but still wants it. If she honestly wants the horse then she is going to have to do some extra work to keep it. As of now your finances are separate unless she decides to take responsibility for her debt she is just passing it onto you and letting you take care of it. Resolve this issue before the marriage otherwise you are going into a marriage with financial trouble, which can lead to divorce rather quickly.

[annie24]

I agree with all of the above. It is important to sit down and talk about your goals. Also, if you two plan to have children, she will have to take time off of work. Then, you two will be living on only 70K a year. I was watching Suze Orman on TV, and she was suggesting that couples who want to have kids, they try for a few months to live off of one salary alone, and see how that goes.

 

You two also have to think about retirement. You're not a bottomless piggy bank, so you two have to come to an agreement, and a budget and stick to it. If she says, "stop being cheap!" just remind her that you are tying to plan for your futures together - kids, retirement, kids' college, etc. Those take $$$$$ and need careful planning and sacrifice.

 

Best of luck to you both -

[DN]

There is nothing wrong with bringing this up. many divorces are caused because of money issues, especially when one partner is thrifty and the other is not. Do not think just because you are a man that she has no responsibility to contribute towards the family finances. The habits you are forming now are the ones you will have to live with after marriage. Should you ever divorce, remember that in some states assets acquired before marriage can be assessed for issues like alimony and child support.

 

This could be a major issue for you, sooner or later. You have a right to be assured that your money is not squandered just as she has a right to expect to be an equal partner in financial decisons. A talk to get these issues resolved before commitments of any sort are made is essential.

[al7]

How about if you starting talking to her from a topic of having kids.. and how much you want to have kids.. and how much you want to provide them a good life with with education... and how much it costs.

Start with that: it will make het think at least a little bit about the spending habits.

 

I would advice you to talk about money in several talks: do not say all at one "session". First bring kids needs & education, next time: that she may not work as much as she does now and how it will affects money that you can save for kids..next time you needs to assess how much she spends on average and point out it is not possible to spend that money while she won't be working AND providing a good money for kids...etc

 

I was watching Suze Orman on TV, and she was suggesting that couples who want to have kids, they try for a few months to live off of one salary alone, and see how that goes.

 

Annie, I agree about the advice. It is good. And I like Suze Orman as a woman and a person: she speaks good and dress nice.

But do you know she does not have college education?

Anyway, I find that she says things that are just common sense: do not spend more then you can afford: estimate you expenses and figure out if you can afford it. I really wonder why so many people listen\read\watch her seminar as if they have less common sense than she does.

Just curious.

[annie24]

I do know that Suze Orman is not a college graduate. However, when she was a Certified Financial Planner and she was a broker for Merryl Lynch, she made a ton of money (It's not like her only qualification is being a waitress). I think as evidenced by diverp's fiancee, not everyone has the money thing come naturally to them. It comes to Suze Orman quite well apparently.

 

It's not just like "don't spend more than you earn." People retire now in their 50s an 60s, but there are so many people living into their 80s and 90s now! You have to save up enough money to survive on for decades!

 

Her book that I am reading, "The 9 Steps to Financial Freedom," is really good. It stresses Responsibility - being responsible to those you love. If you are the primary breadwinner of your family, and something happens to you, you have to make sure that your family is taken care of.

 

Do you invest in a 401K, or a 401b, or a Roth IRA? This isn't something that comes naturally to some people. Not me - that's why I'm reading the book.

 

Diverp - I hope that you've started talking to your finacee about this. You don't really have to "ease" into things - just sit down, and talk about your goals, and figure out can you two afford to live that lifestyle. You two may also consider going to a Financial Planner that may be able to help you achieve these goals.

 

Good luck!

[DN]

Annie, I agree about the advice. It is good. And I like Suze Orman as a woman and a person: she speaks good and dress nice.

But do you know she does not have college education? .

 

Neither did Winston Churchill, F. Scott Fitzgerald, Bill Gates (dropped out of Harvard, first year). first Duke of Wellington, and many more successful people.

[al7]

Annie,

 

I am just amazed by her. No big educaton, lots of money, lost of fame.

and she is not saying anything we do not know...

Whta I am still wondering don't people already know that simple truth that she is saying? Resposibility, spend not more that you eran etc?

It is all so inteeresting...

 

What new info you found the book you were reading? I bet you already know all that stuff even without Suze.

 

I am not planning to live up to 90. Besides when you are 90, you don't really care about money that much. No I am not planning to save for 401

in next 5-10 years.I have a lot to spend money on right now, not after some 30-40 years when I would not care about it.

[annie24]

The name of her book is "The 9 steps to financial freedom." Diverp, I highly recommend you two sit down and fill out the accompanying workbook.

 

Al - you feel this way now - you are a single man. But, once you have a wife, kids, dog, mortgage, braces for the kids, leaky kitchen sink... blah blah blah... managing your money will become more important.

 

No - money is something that I am bad with - that why I have to read it.

 

For example, she cites, say you want to save for your newborn's college. If you were to start putting $366 every month in a 9% interest account, in 21 years, that will be $200,000. However, if you were to wait until the child is 8 years old, you would have to start putting away $633 a month!

 

When money is in an account early, it really grows a lot over time!

 

Another thing the book talks about is to really examine your financial habits. For example, why does your fiancee keep her horses when they are soo expensive? Is it that they provide "unconditional love?" I know she loves the horses, but it sounds like they take several hundreds of dollars per month. As you can see from my above calculation, that can be $200,000 you can have 21 years from now! She can find another way to be around horses - for example, to get a job there.

[al7]

But do you know she does not have college education? .

 

Neither did Winston Churchill, F. Scott Fitzgerald, Bill Gates (dropped out of Harvard, first year). first Duke of Wellington, and many more successful people.

 

Hehe, you thought I am trying to belittle her? It all depends how we look at it...I was VERY surprised that Suze a) is extremely popular b) says VERY simple things, super simple c) and yes, she reache dthat with no college education. She gave us a lot to think about, she shows a way we should think about..not some useless degrees (I have more college degress that you can imagine and working on another one) But I do feel

degrees do not help you in real life.

[al7]

1. Al - you feel this way now - you are a single man. But, once you have a wife, kids, dog, mortgage, braces for the kids

 

2. No - money is something that I am bad with - that why I have to read it.

 

3. For example, she cites, say you want to save for your newborn's college. If you were to start putting $366 every month in a 9% interest account, in 21 years, that will be $200,000. However, if you were to wait until the child is 8 years old, you would have to start putting away $633 a month!

 

4. Another thing the book talks about is to really examine your financial habits. For example, why does your fiancee keep her horses when they are soo expensive?

 

1. Sure I agree, once you have a family you will get more expenses.

But the question is would it lessen my ability to manage my finances? To manage, not to increases or make more savings?

My ability in terms of financial responsibility is something of how I think.

A family could make me spend a lot more, but it would not change how I make savings. Right?

 

2. Hmm.. I can help. That's easy.

 

3. Ohh....is not it a common sense? The sooner you start savings the more you will get! The more you save each month the more you get!

Those figures do not change how much money you have. Think about it: if you come up with a number it doesnt mean you have this number available each month.

My concept is simplistic: you save as much as you can, do not throw

your money - is not it simple?

I respect Suze's achievement as a pubic speaker! But I feel like I already

know all what she says. I was just wondering isn't obvious to all people?

 

4. Annie, we are all adults here... kind of. We all know it is irresposible to

keep horses if you cannot afford them. My point is: if she is not responsible financially and lack some simple common sense in finance,

I really doubt that any kind of financial self help book would give her this resposnsibility. It is not about book, it is about the way you live, when you have some common sense and based on it you can decide what you can afford and what you cannot.

 

I do not have american background. Maybe if I had grown up in US \

I would have been thinking differently...But for me money management is the simplest thing you can do: just use you common sense, do not buy things just cuz "they are cool". Save as much as you can.

Is not it simple?

 

... today I talk to my friend's wife about her brother whos got a great job and in credit card debts. I just could not get how in teh world he can have debts earning 3 times more than I do and not having a family?

He is not a gambler or anything, he is a just an average american guy...

[annie24]

4. Annie, we are all adults here... kind of. We all know it is irresposible to

keep horses if you cannot afford them. My point is: if she is not responsible financially and lack some simple common sense in finance,

I really doubt that any kind of financial self help book would give her this resposnsibility. It is not about book, it is about the way you live, when you have some common sense and based on it you can decide what you can afford and what you cannot.

 

I actually think Diverp's fiancee needs to read this book! The book is really examining about your attitudes towards money and why you handle your money the way you do. It sounds like you have it figured out. However, your friend's wife's brother.... the one with all the debt, obviously has some issues to work out. Does he keep buying every new gadget on the market to "keep up appearances?" She says in her book that a lot of our money problems stem from our insecurities.

 

It's like with staying fit and slim. For some people, it is very easy. Eat healthy, exercise, get sleep. For others, it's books, and programs, and fad diets, and all that... They know that it's about eating less and exercising more, but it's hard for them to do. That's why you need a plan.

 

It sounds to me like she can't afford these horses, if she's always asking her fiance for $90 here, and $120 there... that adds up quickly!!! Horses are good when you are rich, but when you are making $30,000 a year, not the greatest choice... So, no... I don't think it is obvious to some people.

[al7]

1. It sounds like you have it figured out.

 

2. Does he keep buying every new gadget on the market to "keep up appearances?"

 

3. She says in her book that a lot of our money problems stem from our insecurities.

 

4. It's like with staying fit and slim. For some people, it is very easy. Eat healthy, exercise, get sleep. For others, it's books, and programs, and fad diets, and all that...

 

5. It sounds to me like she can't afford these horses.

I don't think it is obvious to some people.

 

1. more than that: I have never had other attitude, I had always had that figured out. When I was a kid with less common sense I simply didn't have money to fool around at all.

 

2. Probably. Have no idea what he does and his sister was probably embaraased to tell me how he handles money.

 

3. Could be true, but it is not the main reason some people are broke.

The reason people are broke is that they can buy everything on credit, when they spend money they do not have yet.

For example I believe you gotta sve money before you buy a house and not fro downpayment only. You gotta pay more than 250% of the house cost if you get a loan. It means instead of just buying a house for its nominal coats, i.e. 100%, you'll end up paying 2.5 times more!!!

and it is not like a meal in an expensive place whi would not make you broke anyone. ok $15 - is a ok good meal, $45 is kind a expensive.. but who cares if it is just a meal? right.

If it is a house that costs say just $150,000 than after payig all interest to a bank you will have to pay $375,000! So you pay $225,000 to a bank just cuz it allowed you to loan the money! Dont you think it is a little bit TOO MUCH??

Even Suze Orman doesn't teach you that you gotta save money BEFORE you buy a house, because a bank that give a loan just gets all your money doing basically nothing. No she does teach that I guess, she just choose not to emphasize that point, and go with the mainstream of bank\loan\mortage approach.

 

4. You are right.. I dont get it: if I want to lose weight I just eat less...

hmmm... intresting world. People spend money they do not own, eat more than they need....

 

5. Maybe. I think she is more like a spoiled brat. I would be very careful

giving her "$100 here, $50 there"... It is a huge red stop sign.. the sign of Stop. Turn around and Run away...

A book won't help her unless she's got into financial trouble and then figure out herself that she should not spent more than she earn. It is very simple.

[annie24]

well - unfortunately, most of us don't have $375,000 in cash to drop on a new house. But, in her book, she does have a section on paying off your 30 year mortgage in 15 years instead. Pay a little more each month than what the bank asks for... makes a huge difference in the long run.

 

Hmm.. that is interesting. You see her as a spoiled brat, but I just saw her as fiscally irresponsible. She could be both! Or neither. I guess only diverp knows for sure.

 

Diverp, are you still there? How are things going? Did you have a talk with her?

[al7]

well - unfortunately, most of us don't have $375,000 in cash to drop on a new house. But, in her book, she does have a section on paying off your 30 year mortgage in 15 years instead. Pay a little more each month than what the bank asks for... makes a huge difference in the long run.

 

Hmm.. that is interesting. You see her as a spoiled brat, but I just saw her as fiscally irresponsible. She could be both! Or neither. I guess only diverp knows for sure.

 

Diverp, are you still there? How are things going? Did you have a talk with her?

 

Annie, you scared me with your statement. $375,000 is what most people do not have in cash all right, but what they are going to have to pay in cash!!! Instead of jst paying $150,000 right away.

My idea is to for example save as much as you can say $100,000, then get a loan for that $50,000 and pay it off in the very first year.

 

I'll explain it: look so many people tell you do not rent you throw away money you can put into you house.

Lets see: you gotta pay 375k in 30 years for the house, ok.

225k to pay only in interest.

So roughly you have to pay about makes 225/12=7.5k per year plus land and house taxes and insurance that amounts to about another 3-4k.

Each year to gotta throw away 7.5+3.5=11k.

I guess it is much better to reant an apartment for $500 for one year (12*500=6k) or two years (12k) and save about 100k in the meantime.

You spend 6k in rent, but i fyou get a loan a buy a house you'd have to throw away each year not 6k but 11k, almost double of that!

So it is much cheaper to rent first, and save all your money and then buy a house.

Plus, there is an interesting complication is involved. You start working and what? you immmediated buy a house? I don't think so, you first reant an apartement, right? most aprt lease are for 1 year terms...

doesn't it suggest you gotta rent at least first year and save all you money for a house? or even rent for two years, since each year you spend 5k less by renting then owning a house.

Hope it is gettin clear....?

[al7]

Hmm.. that is interesting. You see her as a spoiled brat, but I just saw her as fiscally irresponsible. She could be both! Or neither. I guess only diverp knows for sure.

 

Being a spoiled brat leads to financial irresponsibility I guess.

He loves her, nothing wrong with being in love with a spoiled brat kinda girl... I mean it is his problem. Our problem is to point it out that she is spoiled, but it appear he knows it too already.

[annie24]

Yeah - I understand what you are saying. Obviously, any rent you are paying, that could also go towards mortgage.

 

I think it all depends on the type of lifestyle you want. If you'd like to have tons of kids, and have a nice backyard for them to play in, then a house would be the better option.

 

My aunt and uncle did what you said - lived very cheaply in an apartment when they first moved from Europe to canada, and then bought a small house for them to retire in. Since they saved up, they purchased it outright. No banks to deal with.

 

Then, there's always the middle ground. I am considering buying a condo. Not the types of upkeeps needed as on a house.

 

I guess - to relate it back to Diverp, there must be some sort of compromise that can be reached. I don't think he is being "cheap" as he was afraid of being thought in the original post. I think he is being smart.

[al7]

1. Annie, it is not like all money from rent you can put into your house. it is not even close! You have to throw away 225k in my example, or 7.5k per year. plus you have to throw away house insurance, mortgage insurance, land taxes and house taxes. (about 3.5k per year)

You simply choose what to throw away each year: 11k or 6k.

Something tells me 6k is less to throw away.

 

2. You start thinking from some other "end": from kids and lifestyle.

C'mon, after you graduate you are not going to have 3 kids and a house, right? You are going to look for a job. That means you probably have to move. Where? to a an apartemnt first. That means 1 year lease.

What are you going to do there? not saving?

You better save you 50k in the first year, and 50k in the second one, then buy a house get a loan for another 50k and living in the house pay off the moratge in the third year. Don't thin in terms of 30 year loans. It lead to financial burden for the whole life. I dont like that.

 

3. Well, you have to save a lot and fast, I dont want to you buy a house when you are about to retire.

 

4. Then you know that still you'll have to pay 1) community fee ($200 typically per month), 2) loan insurance (maybe $50). 3) interest to the bank (again about 6%)

And again you are going to rent first something most likely for a year. Save some money in the first year and buy a condo in the next one, and pay it off on the second year.

If you like plans (appears you do) plan it for youself.

 

It all sounds so simple... I wonder if Suze says anything about that.

 

5. He is smart, but he coul be percieved as "cheap". We'll see, hopefully he'll update us soon.