Author Topic: How to help spouse with money  (Read 4995 times)

T-Rex

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How to help spouse with money
« on: March 17, 2014, 04:45:48 AM »
My spouse has a couple debts that I don't think she is motivated to pay off quickly on her own (she recently said "that's not fun" in reference to saving money.) All our finances are kept separate. She doesn't like to get help with money, but I feel like a debt like that could affect getting / being able to pay for a house. I am thinking of offering to match every dollar she pays over the minimum payment. What do you think of that idea? What have you done to help your spouse and them on the right path?

skunkfunk

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Re: How to help spouse with money
« Reply #1 on: March 17, 2014, 06:26:09 AM »
I feel like if she's not on board with getting it paid down, you'll just be enabling her to pick up more debt even sooner.

Truckman

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Re: How to help spouse with money
« Reply #2 on: March 17, 2014, 06:37:54 AM »
Have you showed her compound interest charts? Does she understand how much extra she's going to be paying in interest, vs what she can earn in interest by paying it off quickly?  Does she understand exactly what her debts are doing for your future?

It sounds to me like she may be how we were years ago - could barely plan for today or see past tomorrow. I'd recommend having a real heart to heart and educational talk with her, you two need to get on the same page as far as which direction you are headed, goals, plans, etc.... 

Personally, I'd recommend against the dollar for dollar match. That sounds to me like something you'd do with a child to encourage saving. She's an adult, treat her like one.

This reply is based off a vague OP and a lot of assumptions were made - no offense intended.

garrettld

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Re: How to help spouse with money
« Reply #3 on: March 17, 2014, 07:15:41 AM »
If she thinks that debt is about "fun" then she needs a serious shift in attitude, but thinking of money in terms of how much fun or freedom it can buy can be helpful sometimes.

If spending money = fun, then having debt means you get to have less fun in the long run. It's as simple as that. I would start by telling her that and see what she says. I wouldn't try to incentivize her paying off debt. Paying off debt is incentive enough in itself, and if she doesn't understand that then she won't sustain it in the long run.

Seriously, though, you guys are married. Financial problems and/or disagreements are a major cause of marital stress and divorce, and dismissing your concerns with "that's not fun" is not okay (you didn't give us much detail about this, so I may be stretching a little bit here. If so, I apologize). She needs to know that this is important to you, and if it's important to you it should be important to her. Not to mention that debt makes it harder to buy a house, have children, and basically everything else.

Be real with her and express your feelings about her debt without insulting her, without defending your position, and without arguing about who is right or who is wrong. Living in debt forever is a perfectly acceptable lifestyle choice, but it seems like she's just doing this by default, not because she chose it from all available options. Good luck!

nereo

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Re: How to help spouse with money
« Reply #4 on: March 17, 2014, 07:17:44 AM »
The two things that helped me realize the value of savings were
1) compound interest charts - helped me realize just how much $100/week savings invested with 7% returns could become in 10, 20, and 30 year periods (answer:EDIT! $72k, $227k, and $532k).
2) the idea (also championed by MMM) that every $100 saved could give you $5 (or even $7) a year, every year, forever.
It was my dad who taught my these things, and I thank him for it every year when I look at my retirement accounts grow.

As for spouses, my fiancée is a frugal person by nature but she's always been told that retirement is something you do in your late 60s.  It's been hard for me to convince her that we could retire in 20 years, particularly since we've both decided to go back to school and so we're currently living on meager student stipends and are only able to save a few hundred$ each month.
But my approach has been "slow and steady and respectful".  There is validity in thinking "I work so that I can buy things", even if we mustachians know saving will ultimately provide us with so much more.
« Last Edit: March 17, 2014, 07:31:07 AM by nereo »

T-Rex

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Re: How to help spouse with money
« Reply #5 on: March 17, 2014, 07:47:23 AM »
Have you showed her compound interest charts? Does she understand how much extra she's going to be paying in interest, vs what she can earn in interest by paying it off quickly?  Does she understand exactly what her debts are doing for your future?

It sounds to me like she may be how we were years ago - could barely plan for today or see past tomorrow. I'd recommend having a real heart to heart and educational talk with her, you two need to get on the same page as far as which direction you are headed, goals, plans, etc.... 

Personally, I'd recommend against the dollar for dollar match. That sounds to me like something you'd do with a child to encourage saving. She's an adult, treat her like one.

This reply is based off a vague OP and a lot of assumptions were made - no offense intended.

Well, we have an almost 10 year age difference. She is only 21 year old. So, I don't think it is fair for me to expect her to have the same maturity when it comes to money. At 21, I spent all my money on partying, but I wasn't married and had no debt and extremely low income.

She has learned a lot since we have been together,  but the only personal finance she seems to know about is budgeting. Seems happy with the idea that her debt will eventually go away. I am not sure if she understands the price you really have to pay to have "low payments."

schimt

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Re: How to help spouse with money
« Reply #6 on: March 17, 2014, 07:52:20 AM »
For us, my SO is a visual person, so when i laid out what her list of debts look like in terms of cost of interest by paying minimums compared to using a strategy like the snowball effect, it really hit it home for her, also she saw how much faster things would be paid off. I am talking about a large amount of student loans we are tackling, so a smaller amount of debt could receive less of a reaction for you two, but it's something you need to show her over the long term if she intends to get into a cycle of living in perpetual debt!

Check out the file I attached, which we used to analyze and motivate paying off current debts.

If she is just running a credit card up, you should look at the average balance she is carrying and calculate the annual cost for carrying that balance on a credit card, show her what that savings in interest paid could become in $'s invested in 10 years vs $'s paid for nothing in return (CC interest) in 10 or 20 years.

T-Rex

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Re: How to help spouse with money
« Reply #7 on: March 17, 2014, 07:57:35 AM »
If she thinks that debt is about "fun" then she needs a serious shift in attitude, but thinking of money in terms of how much fun or freedom it can buy can be helpful sometimes.

If spending money = fun, then having debt means you get to have less fun in the long run. It's as simple as that. I would start by telling her that and see what she says. I wouldn't try to incentivize her paying off debt. Paying off debt is incentive enough in itself, and if she doesn't understand that then she won't sustain it in the long run.

Seriously, though, you guys are married. Financial problems and/or disagreements are a major cause of marital stress and divorce, and dismissing your concerns with "that's not fun" is not okay (you didn't give us much detail about this, so I may be stretching a little bit here. If so, I apologize). She needs to know that this is important to you, and if it's important to you it should be important to her. Not to mention that debt makes it harder to buy a house, have children, and basically everything else.

Be real with her and express your feelings about her debt without insulting her, without defending your position, and without arguing about who is right or who is wrong. Living in debt forever is a perfectly acceptable lifestyle choice, but it seems like she's just doing this by default, not because she chose it from all available options. Good luck!

Thanks for your advice as well... I am trying to find a palatable medium for her to learn about this stuff. I tried to direct her to MMM, but I think MMM is too many steps ahead of her current goals (very basic "chip away at debt and don't any get new debt") Yeah, I worry that it could become stressful if I come home and she hasn't taken care of her side of things. So that's why I want to find the right things to inspire her! It's hard to explain to someone that lots of intangible future money will be taken away from you.

Truckman

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Re: How to help spouse with money
« Reply #8 on: March 17, 2014, 08:11:24 AM »
Have you showed her compound interest charts? Does she understand how much extra she's going to be paying in interest, vs what she can earn in interest by paying it off quickly?  Does she understand exactly what her debts are doing for your future?

It sounds to me like she may be how we were years ago - could barely plan for today or see past tomorrow. I'd recommend having a real heart to heart and educational talk with her, you two need to get on the same page as far as which direction you are headed, goals, plans, etc.... 

Personally, I'd recommend against the dollar for dollar match. That sounds to me like something you'd do with a child to encourage saving. She's an adult, treat her like one.

This reply is based off a vague OP and a lot of assumptions were made - no offense intended.

Well, we have an almost 10 year age difference. She is only 21 year old. So, I don't think it is fair for me to expect her to have the same maturity when it comes to money. At 21, I spent all my money on partying, but I wasn't married and had no debt and extremely low income.

She has learned a lot since we have been together,  but the only personal finance she seems to know about is budgeting. Seems happy with the idea that her debt will eventually go away. I am not sure if she understands the price you really have to pay to have "low payments."
Gotcha. Well, to her credit she is further along at that age than I was. At least she understands (and does?) a budget.

Like some of the other replies suggest, I think the best is to visually show her with charts, etc... just how much this debt is truly costing her.  How much she's paying out in interest now until it's paid off, and how much that expense is costing her and preventing her from making by investing that same amount of money.

T-Rex

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Re: How to help spouse with money
« Reply #9 on: March 17, 2014, 08:27:32 AM »
For us, my SO is a visual person, so when i laid out what her list of debts look like in terms of cost of interest by paying minimums compared to using a strategy like the snowball effect, it really hit it home for her, also she saw how much faster things would be paid off. I am talking about a large amount of student loans we are tackling, so a smaller amount of debt could receive less of a reaction for you two, but it's something you need to show her over the long term if she intends to get into a cycle of living in perpetual debt!

Check out the file I attached, which we used to analyze and motivate paying off current debts.

If she is just running a credit card up, you should look at the average balance she is carrying and calculate the annual cost for carrying that balance on a credit card, show her what that savings in interest paid could become in $'s invested in 10 years vs $'s paid for nothing in return (CC interest) in 10 or 20 years.

Thanks for the file, it is like what nereo and Truckman are talking about. I will see if I can get her to check it out!

T-Rex

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Re: How to help spouse with money
« Reply #10 on: March 17, 2014, 08:30:18 AM »
Truckman: yes, I am relieved that she likes to budget, but it seems silly to nickel and dime everything yet pay full interest on big debts. It seems like most personal finance advice goes that route.... coupons, sales, stretching the dollar... I like the MMM concept of debt as a "hair on fire" emergency.

nereo

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Re: How to help spouse with money
« Reply #11 on: March 17, 2014, 08:38:17 AM »

Thanks for your advice as well... I am trying to find a palatable medium for her to learn about this stuff. I tried to direct her to MMM, but I think MMM is too many steps ahead of her current goals (very basic "chip away at debt and don't any get new debt") Yeah, I worry that it could become stressful if I come home and she hasn't taken care of her side of things. So that's why I want to find the right things to inspire her! It's hard to explain to someone that lots of intangible future money will be taken away from you.

Re: "I am trying to find a palatable medium".  Personally, I started out a "Fool" (aka Motley Fool school of investing).  They have some good, entry level articles about investing that helped me a lot in my late teens and early 20s.  In fact, article #1 deals with the magic of compound interest!.  The later steps are all about how to invest in individual companies (perhaps not as relevant to her right now) but I think it's worth a look.  I really like their emphasis on investing for the long term, the power of automatic investments, and how low-cost index funds may be the best and most simple investments for most people.
Check out the 13 steps to investing Foolishly here: http://www.fool.com/how-to-invest/thirteen-steps/index.aspx?source=ifltnvsnv0000001

MsSindy

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Re: How to help spouse with money
« Reply #12 on: March 17, 2014, 10:36:54 AM »
What does she want out of life?  What dreams does she have?  Does she even want to own a house?  Does she want kids?  Does she want to travel?  Does she want to work?  Try talking to her about her dreams and goals for life...might be hard with someone who's 21, but give it a shot.  Then see if your dreams are matched up and going in the right direction.  If not, then that's a discussion in and of itself.  If your dreams are matched up, then talk about how you guys will get their TOGETHER.  Ask her, "so, what do you think we should do?"   Maybe you challenge a bit with, "yeah, we could wait until 8 years for XXX, but you know, if we did this (XXXX), it'd only take us 3 years."    .....something like that.  Also, noticed I said 'we' not "if you did this" - even if your finances are separate, you need to start thinking about this as a partnership.....otherwise you're just "friends with benefits"  ;)

swick

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Re: How to help spouse with money
« Reply #13 on: March 17, 2014, 01:01:33 PM »
"It's not fun!"

Well then...make it fun for her! Turn it into a game for the both of you to do together. First figure out her learning style, is she visual? Would creating thermometers help that she can fill out and mark her progress? Could you create a vision board of your shared goals that you can hang somewhere you'll see all the time? Is she auditory? Would listening to pod casts in the car together help? How about one of those learning to invest stock market games? Or learning through having her research her favorite companies that she shops at and learning how you can actually 'own" part of that company? But before you can invest...you need to pay off the debt.

Paying off debt isn't "fun" because there is no immediate effect or gratification - all she sees is the deprivation, not spending money, not being able to shop or go out just so one day you can start again at zero. Especially at her age - the longer view seems very far away.

I would suggest reading "The Five Love Languages" and finding out what combination your partner is. It will help you communicate better but it will also give you in site into what motivates her - and you can use this to your advantage. Reward her and motivate her all the time, create the immediate rewards she craves. Celebrate each extra payment with  a little gift (free or very cheap), a massage, a compliment, a note of encouragement, doing something nice for her (whatever will give her the biggest boost, depending on her love type)

It could turn into something fun for both of you, and you'll end up closer and debt free :)