Here’s my problem!
My husband, Thomas and I are in our early thirties, have been married for three years and have a really good relationship, except in one key area – money!
When we met we both had debts, which we amalgamated. Then we got married – paying for our wedding with credit cards. Next we bought a home that we could barely afford that is now worth less than what we paid for it. And further down the line we want to have kids.
Long story short we now owe about $60,000 on top of our mortgage (and we still have student loans). I’m completely freaked by the situation and am always worrying about our debt burden – but Thomas argues that everyone is in the same position these days and we should just learn to live with it.
We both work full time jobs in relatively secure industries – but I’m terrified of what might happen if one of us is made redundant.
So tell me Rene, how do we turn our finances around? And how can I get my husband to start taking our money situation more seriously.
Paula, St Louis
Well let me first commend you for realizing this is not the way you want to live and that there are storm clouds on the horizon. But as someone who just last month had 70 dollars in overdraft charges, I’m probably not the best person to advise anyone on finances. Luckily my buddy Jean Chatzky, best selling author and financial editor for the Today show, has some answers.
You are SO not alone. Research studies have shown that we worry more when we have a lot of debt on our plates and that debt specifically, is one of those things that leads to major fights and unhappiness in marriages. Here’s what I want you to do for me. I want you on the DEBT DIET (I’ve put many couples on it and saved marriages!)
FIRST: DO A REAL ASSESSMENT: You and your husband need to know where your money is going. You both have to start tracking it. Write down every time you spend anything. You’ll create a roadmap of where your money is going and you’ll start to see where you can make changes and free up money to throw against your debts.
SECOND: LOWER THOSE MONTHLY BILLS: Go to billshrink.com and tackle the cable, Internet, cell phone. That should free up more. A reverse mortgage is another idea. When you opt to take out a reverse-mortgage on your home you can request either a lump sum or monthly installments from your lender. When you discuss loan terms with your reverse mortgage lenders, you will quickly discover that you do not have to pay such loans back at regular intervals. You can choose your own repayment pace. However, any remaining balance owed to the lender when you move or pass away will become due immediately. If you are no longer living, your family will be given the option to pay the loan balance or allow your home to be sold in order for the lender to recover
THIRD: SEE IF YOU CAN LOWER ANY INTEREST RATES: Call your credit card companies and ask them to lower the rates. You may have to stop using your cards. That’s okay, debit works fine.
FINALLY AND MOST IMPORTANTLY GET ON THE SAME PAGE ABOUT THE FUTURE: Do you want kids? Vacations? Security? Well that means reducing debt and saving more. Sit down and have a serious conversation. Tell him I said that it’s not true that you should “just learn to live with it.” that in fact, trying to do that is making you a nervous wreck. You need his help to get on the road to financial comfort. If he still isn’t listening send him my way!
Thanks Jean! Paula, I know it may sound like a lot but this actually is a pretty simple roadmap. One of the things I did to help with my overdraft situation was go to the bank and ask for a check register. I enter every expense when I use my debit card, which has helped. The other thing I find that has helped me is using cold, hard C-A-S-H. There’s something about going into the store with a set amount of money and knowing that you cannot spend anymore that is a wonderful regulator.
In the meantime, if you have more questions, check out Jean’s website, where you’ll find the debt diet and so much more.
Got a question for Rene? She probably has an answer. Click here and ask away!