Author Topic: Need an honest opinion  (Read 3599 times)

MikeMoeJackB

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Need an honest opinion
« on: November 25, 2016, 12:43:01 PM »
Greetings all,

I'm in need of some objective (read: non-judgemental) opinions on my efforts to finally get my family debt free.

A little background: my wife and I have been married for five years, we both brought some fairly large debt into the union (catastrophic medical debt, student loan, and poor spending habits). We have two kids under three. Over the five years, my wife and I have improved our debt situation exponentially truly out of necessity because we have moved around a lot (4 cross-country moves in 5 years). Now our work/life balance is getting a little better. Our family income is a little over $100k, but, alarmingly,  our debt is around $50k.

My problem is that even though I have come leaps in bounds to increase efficiency, become creative with the debt and balance transfer to 0% for 16 months to stop the bleeding, I feel we are still getting nowhere.  It seems every time I input new figures in our spreadsheets and calculate new numbers for when we could *Possibly* be debt free it is always two years out. For five years now we have been two years from debt free.  This outcome may have come about from my wife's very conservative approach to debt reduction where she believes it's more important to save and invest than pay off or increase debt.

Just recently we came into a large windfall of cash that I covertly used the bulk of to pay off some debt. The trouble is that this windfall, in the mind of my wife, was already earmarked for a debt (or gift) that was given to us from her parents for when we needed to sell or house. I didn't spend the entire sum, but instead saved a portion just in case tempers flared.  Honestly, no one in the family was that upset, my wife was a bit peeved and still expects us to pay her parents back immediately. I'm ashamed to say that I explained to her that we could pay back her parents if we had to by selling off all of our investments and that the money was still there. Only I'm not that sorry. Doesn't it make more sense for us to pay our real debts first, the ones that keep us in this predicament before paying back a gift? Honestly, once we are debt free we could pay them back much quicker with the available cash flow.

Anyway, step two of my plan includes using the rest of the gift money plus the money from our investments to pay off a huge chunk of our debt. I really feel that I need this small victory on top of the strides we've made in frugal living to see us fully over the finish line.

I guess at this point I really just need some constructive advice and encouragement to know if I am doing the right thing.

Thanks!

Mike

Frankies Girl

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Re: Need an honest opinion
« Reply #1 on: November 25, 2016, 01:07:01 PM »
You have hair on fire debt, are not making any progress on it, and have a serious disconnect from your partner.

And you're confusing the terms "gift" and "loan." A gift is something freely given with no strings attached. If you are supposed to pay it back, then it's not a gift or windfall - it is a loan. Doesn't matter if it's from family or what - you just shuffled debt around is all. Not sure what that accomplished unless it was a no interest loan or very open ended? Remember debt is debt and you should be honorable about paying relatives back as soon as you can (and thank them).

Lying or hiding things from your spouse? Not good. Not good at all. Seriously bad actually. Doesn't matter if it was done with good intentions... you should not lie/hide things from your spouse. You are a team and if you don't agree about something, you need to work out compromise, not lie about what you're doing. And no, this isn't being judgmental; it is honest marriage advice, because about the only way you are going to dig out of debt and stay out of debt is if you are both working on it as partners in your marriage.

Otherwise, without you doing a case study, no one can really tell you how to untangle your income/debt/savings mess. It's all pretty cloudy without real details. From the sound of it, you have many issues: wife and you are not on the same page; you're not being realistic about your spending; talking about selling investments to pay debt (what are your interest rates? what penalties would your selloff trigger?), not making sound financial decisions if your debt load remains constant over many years or is growing...

TL/DR: If you want real advice, then post a case study STAT.

MikeMoeJackB

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Re: Need an honest opinion
« Reply #2 on: November 25, 2016, 02:29:53 PM »
Thank you.  That is a very fair assessment.  There are a lot details I am omitting, but your thoughts are pretty much how I feel deep down. I will prepare a case study soon.

Emg03063

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Re: Need an honest opinion
« Reply #3 on: November 25, 2016, 02:40:38 PM »
Some clarification on the terms of the cash infusion from DW's parents would be helpful here.

MikeMoeJackB

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Re: Need an honest opinion
« Reply #4 on: November 25, 2016, 03:31:53 PM »
While I completely understand FG's point about being thankful for help from family, the cash was pretty much no-strings attached. Of course we will pay our family back, but I believe its really just our pride forcing us to do so without taking care of the current bigger fires, so to speak.  In fact, if I went to her mom with the check in hand right now she would flat-out refuse it because she knows about our struggles. So when it comes to terms, there are basically are none as of this minute.

We needed $25k to close on our house before the move, but also we needed our savings to move for work.  I was about to get a loan knowing I would be reimbursed later, but her parents helped us out and gave us no timeline, etc.  Since then my job has reimbursed those closing costs; HOWEVER, taxes reduced the pay out to about $13k.  So, truly, we don't have the $25k to give back in the first place other than by selling our investments anyway.

I hope I don't sound like a slimeball son-in-law here. I am only trying to use the most logical approach to free us from debt. 

Catbert

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Re: Need an honest opinion
« Reply #5 on: November 25, 2016, 03:58:39 PM »
An honest opinion....yes, you are sounding like the slimeball son-in-law.  My advice when someone has a list of debts including debt to family is to pay family first.  It's hard to be more specific here because your story seems to keep evolving  changing.  The money your in-laws gave you was clearly a loan however much you don't want to include it as such.  Taking a large windfall of cash and doing anything with it without discussing and reaching agreement with your wife isn't good.  Hint: divorce isn't cheap either.

You have hair-on-fire debt yet you apparently are making investments, buying houses, moving across country, and getting large windfalls rather than using your $$$ to kill the debt.











SKL-HOU

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Re: Need an honest opinion
« Reply #6 on: November 25, 2016, 04:22:09 PM »
It is not your place to decide not to pay the parents back. It should be up to your wife to push back the payment. She clearly wants to pay them back so you give them the check and let them refuse it. It IS real debt. It sounds like from your explanation that the in-laws gave you the money until you get your reimbursement. So i agree with the previous poster... you do sound like the slimeball son-in-law.

MikeMoeJackB

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Re: Need an honest opinion
« Reply #7 on: November 25, 2016, 04:26:31 PM »
Thank you for the response Mary.  And trust me I do feel like a slimeball son-in-law and it sucks. However, the clear dilemma is that I don't have the money to pay them back. I'm left a portion of that reimbursement and I would have to sell our liquid assets anyway just to pay them what we owe right now.  And I want to. Or I could pay them back as fast as possible using the extra $2k per month that we use to put on bad debt.  But is this the best strategy? Why not pay them back in two years instead of now?

Finally, sure we havent made the best decisions- moving so much, investing instead of debt reduction, buying/selling houses- but that is why I am here.  A lot of these decisions were made as a result of compromises with my wife and family or just plain fiscal ignorance, but at this point I am desperate to fix our finances.

SwordGuy

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Re: Need an honest opinion
« Reply #8 on: November 25, 2016, 05:19:11 PM »
Why not pay them back in two years instead of now?

Because they are family, not some soulless bank.

If something went terribly wrong and you couldn't pay back your debts, would you want to default on family or a bank?

When someone I know - friend or family - coughs up thousands of dollars on demand just because I am in a bind, I prioritize paying them back.   I don't give a damn whether it's convenient for me or not.  I don't care whether I would make more money investing or paying off some other debt first.   

They had other things they could have been doing with that money - THEIR money - that I have kept them from doing.  It's a point of honor to get the money back into their hands pronto.





sparkytheop

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Re: Need an honest opinion
« Reply #9 on: November 25, 2016, 05:31:26 PM »
Also with the loan from family...  You don't have to pay it back in one check.  Make a "good faith" payment of what you can right now, and then budget in payments until you get them paid back. 

Going behind your wife's back with the money was wrong. 

MikeMoeJackB

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Re: Need an honest opinion
« Reply #10 on: November 25, 2016, 06:47:52 PM »
All fair points.  I've wrestled with these emotions for awhile and I understand what I did was morally wrong. Additionally, my wife knows what I've initially done and has had the same emotional response although she accepts what I've done.  Needless to say, there is no trouble in my marriage because of this. 

Sparky, great points, I've looked at it from your perspective of establishing good faith, paying $5k up front and establishing a payment plan.  Honestly, what we are lacking on this matter is communication and no matter what we choose to do that will be the first order of business. 

Either way, I've left out a lot of information that I can put into a case study.

Now where do I post a case study?


MDM

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Re: Need an honest opinion
« Reply #11 on: November 25, 2016, 07:01:04 PM »
Now where do I post a case study?

See How To: Write a "Case Study" Topic.

Don't skip steps.  E.g., don't try to calculate "take home" pay to make it "easier" - just start with gross and list all the line item deductions.

You can use the spreadsheet linked there to keep the math straight.

Good luck!

SeaEhm

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Re: Need an honest opinion
« Reply #12 on: November 26, 2016, 08:52:07 AM »
Just a quick tip: You mentioned that things were omitted.  When you give partial details and omit things, people will use what you do give them and fill in the rest.   Hence, you get those slime ball comments from people who read your posts with a negative tone.

I agree with Frankie about establishing better communication with your wife.  If she's stubborn and you're stubborn then try to find a compromise.  If she (or you) cannot use logic and reasoning to convince the other and have to result to emotion, then just remember that your debt is not worth the hassle to the marriage and give in a little. 

One doesn't cut down a tree in one swing, one chips away at it.  The large majority of people remember negativity far more than positivity. Therefore, the chipping away takes out a lot of the tree far more than the new branches of positivity add to it.

I know there are families who will say that they will give a loan and will actually fight you to keep the money.  From some of your posts, it sounds like this is the case.  Open the line of communication with the family members and see their true feelings.   From what is given, I cannot tell what type of relationship you and your wife have with her parents.

Looking forward to the case study and good luck!