This & That: Rough Relationships Edition
L wrote: How do I get through to my husband the reason we never have money for vacation every year is that he drinks and smokes our vacation away? Last night I sat after watching your show and figured out how much he spends a week/month/yearly on Beer and Cigs its at least $3,000.00 a year. I never thought about adding this up, omg it’s our vacation being drank and smoked. I thought it was the way I was paying our bills just couldn’t figure out where that extra was going. Please help me.
Gail says: Sometimes it takes smack with a two-by-four to get the message across to some people. If your buddy is as thick as a brick and won’t listen to reason, you’ll have to resort to a more concrete approach. Give him the $60 each week and say, “This is your bad-habits money or your share of the vacation money. You decide.” Take the same amount as your own allowance and say, “This is my vacation money. If you don’t have yours saved, I’m going without you.” See how it goes from there. But get ready to pack a bag and take even a short trip on your own. If it’s an empty threat, he’ll just call your bluff.
S wrote: I am single but have been in a relationship and have a mortgage with my boyfriend of 11 years. I think I earn more money than he does and he pays child support. I have zero consumer debt other than the mortgage. He’s never discussed his finances with me. We keep our finances separate at all times, even groceries. I know he’s in debt but do not know how much or even if it’s my business. If I ask him he refuses to tell me anything. I have thought of what would happen if we decided to get married and frankly it scares the heck out of me. If he won’t discuss finances now, I truly believe he never will. I think that unless he is open I would just say no to marriage which really is Ok with me. We do not have a common law where I live but we have been together and basically are happy. Do you feel it is none of my business to know his finances or do I have a legitimate reason to demand to see them. I would gladly let him see all of mine. Sincerely, feeling left out.
Gail says: You describe yourself as “single” but you sure are acting “joined-up”. I do believe that partners should share their financial information. That being said, if you’re not in any danger and you’re comfortable with the way things are then, hey, if it works, right. But just for a moment take a look down the road with me:
What if he is a financial moron and gets himself into serious trouble and asks for help? Would you be able to turn him away and say, “Sorry buddy, you made your bed now lay in it” or would you bale him out?
What if he must declare personal bankruptcy and the asset you own together (your home) becomes a part of the issue?
And what if he does want to get married down the road, would you make it conditional on him telling all? At that point, if the mess is huge, would you dump him?
And what if you get pregnant and need to rely on him and his income? Will you be willing to still be in the dark while he does whatever he does with his money?
Think carefully about how this will affect you. It’s lovely that you’ve managed this far, and you manage forever with no problems. But what if?
Kerri in Regina wrote:
I have seen your show and watched you change people’s lives. My husband and I have over $30k in credit card debt, $195k on a home mortgage (for a house which is now only worth $150k), and two car loans (one will be paid off in June 2011, one will be paid off in Dec. 2012). I am perfectly willing to live on the budget and pay down our debt, but my husband is very resistant. He says that we should just accept that we are in debt now and always will be. This is how his family has always lived. To that end, they expect us to go to parties (at $60 per family for a reunion), a weekend vacation with the family (which will cost us at least $600), and other such activities. My husband won’t say no to them, but it doesn’t seem fair to me! We have a 14-month old daughter and another baby on the way. . . We need to get a handle! Any advice on how to make my husband see the light?
Gail says: I get a lot — A LOT — of letters like yours, asking me for help in getting partners on board. Sweetie, I’m afraid the best I can tell you is that you need to sit down and have a solid heart-to-heart. Perhaps if you did up a debt repayment plan that showed him you could, in fact, be out of debt in x number of months, that would help him imagine something he never thought possible. Go and borrow a copy of my book, Debt-Free Forever, from the library and follow the plan. For sure, if you have another baby on the way, you do need to get a handle on your spending. If you do not believe you can afford these family outings and he insists on going, then let him go on his own. You can cuddle up with the wee one at home, and have a quiet evening or weekend reading or partaking of some other pastime you enjoy. He’ll get to be with his family and you can minimize the impact on the family budget by reducing the costs. If he insists that you also come, tell him you’re willing to do so for this event if he’ll take a pass on the next one.
T wrote: I was jilted and my common law partner moved to another country. I lost a lot of money on the wedding. Since we were planning to move to another country together, I was left with an overnight bag and two cats. I was unemployed, homeless and he took all of our funds leaving me with a large debt, which he helped to accrue. I declared bankruptcy. Now, I am out of the bankruptcy, working a temporary position while looking for full time but I can’t seem to stop dwelling on the fact that I’m forty and have nothing. Can you advise me on what I can do to rebuild my credit as quickly as possible?
Gail says: One reason why I strongly suggest that each partner in a relationship maintain their own financial identity — have separate bank accounts, have separate credit — is because you just never know the workings of another person’s mind. I’m sorry you’ve been through hell.
Since “assets” are good indicators of your credit personality – if you have some you’re a better risk – set up a savings account and start stashing some money away. Both a retirement account and an emergency fund are a good idea. Remember, you can start small. Just START.
Setting up services in your name will also help re-establish your credit ID. Get telephone, cable and utility services in your name. Because you have a crappy credit history, you may need to provide a security deposit. Once you’ve proven your payment track record, you can ask for the deposit back and throw it in your emergency fund.
Apply for a secured credit card. Ask your bank how it works. Usually you need to leave on deposit two times the credit limit. So to get a credit card with a $500 limit, you will need to put $1,000 on deposit with the credit card company or bank. Make sure you know how long it’ll be before you can get the money on deposit back so you can plan how you’ll reallocate that money (to retirement savings or your emergency fund).
Gas or department store credit cards are often easier to get and can be good ways to re-establish credit. You MUST pay your bills in full and on time because the interest rates on these cards are often astronomical. As long as you don’t carry a balance it makes no difference what the interest rate is. Use these cards wisely and they can be a great toe-hold back into credit.
Once you’re on you way, apply for an installment loan. An RRSP loan is the perfect way to do this since this loan, while not officially collateralized, might as well be. What it does mean is the interest rate won’t be horrendous. Only borrow as much as you can afford to repay in six months. Don’t let them talk you into more. Once the six months are up, use the amount you were using to repay the loan as your monthly retirement savings contribution. Now you’ve gone from catching up to being proactive about saving and helped your credit history too.