Tag Archives: debt-free

Battling Debt for Better Marriage

Finances are one of the biggest marital stressors. The Washington Post recently reported that the recent recession added financial stress to 29% of marriages. A silver lining is that one-third of couples worked harder to save their marriages, partly because they couldn’t afford to dissolve them. Of those who “redoubled their marital commitment,” more than half reported a very happy marriage.

Since so many are struggling with financial worry or stress, I asked Brad Chaffee of Enemy of Debt to tell us how he and his wife dramatically improved their financial life–and ended up improving their marriage. Brad also asked me to share how 9 Tips for Financial Bliss in Marriage on his blog today, so give that a read. Thanks to Brad for his inspiration and insights!

Brad Chaffee founded Enemy of Debt in 2008 after starting his very own debt-free journey. He wanted to motivate and inspire financial discipline by focusing on key behaviors and truths that would help others with the same process. In 2008, Brad and his wife grew tired of living paycheck to paycheck and living under the stress of being more than $26,000 in debt.

Through dramatic action, they eliminated debt from their lives in a mere 18 months and plan to never borrow money again, for any reason. Brad has agreed to answer some questions for married couples who may have financial stress in their lives.

Q: Brad, when you say you eliminated all debt from your lives, do you include even mortgage debt? How do you feel about families having mortgage debt? There are some financial advisors who say paying off the home early takes away a useful deduction. How do you respond to that?

A: We are currently in the process of selling our house so we’re not “completely” debt-free yet. As Dave Ramsey would say, we’re “debt-free, except for the house.” People always tell me it doesn’t make sense, because we will just have to go out and get a mortgage down the road if we want to own a home. Not true.

We are going to save and pay for our next house using the 100% down plan. We are perfectly okay with the fact that it means we will be renting for about 5 years until that day comes. Too many people make the mistake of declaring something impossible because it might be harder to accomplish. I would even argue that taking the easiest route to acquire something is the reason people find themselves struggling with debt in the first place. For us, being debt-free is worth the sacrifice and the extra effort.

As far as not paying down the mortgage to keep the tax deduction. I think Dave Ramsey debunks that myth with this table found in Financial Peace University. A tax deduction is never a good reason to NOT pay off your mortgage. What about all of the extra interest you end up paying as a result? Does the deduction justify paying more interest than you would if you paid the house off early? I think not. Pay down the mortgage!

 

 

 

 

 

Q: What are the four most important steps you took to get out of debt?

A: Deciding not to borrow anymore was the key step in getting things started, but I think the real journey started after that. I would say team work and communication, selling everything we thought defined us, saving an emergency fund, and maintaining a high level of intensity through it all, were the four most important steps.

The most important thing was to begin the communication process and realize, together, our mutual goals and desires were ours together. That led us to a place where we could agree on what we were willing to do to get out of debt, which for us, included selling our “stuff”.  That provided some momentum and allowed us to save $2,000 in the first two months. Finally, maintaining a level of intensity was important because it helped us reach our goal much faster.

One of the most overwhelming things about paying off debt to most people is the time it takes them to do it. Why not benefit from doing it faster?

Q: What was your biggest obstacle to gaining control of your finances before making this decision?

A: The biggest obstacle for us was realizing that our spending habits were the very reason why we ended up where we were. It was hard because that meant we had to face our decisions and habits head on, and the truth really does hurt sometimes. That’s where my tagline for Enemy of Debt came from; “where behavior meets reality”. The budget helped us overcome that reality by enabling us to see the truth of our situation on paper. A budget does not lie.

Q: Did you increase your income as part of your solution, or did you change your lifestyle. Many people who live paycheck to paycheck feel they cannot change their situation until their income increases dramatically.

A: I would say we did both. During the process my wife graduated from nursing school, which naturally increased our income, but we also bought and sold stuff using eBay to increase it as much as we could. The mistake most people make is accepting or believing that they cannot increase their income. There is always something you can do; it’s often just a matter of what you are willing to do to make it happen. Personally, I feel the word “cannot” is a person’s biggest problem. If you believe you cannot, then you’ll never try because you’ve already determined it to be impossible.

Q: What is the most important thing you gained from changing your life situation?

A: I would say that the most important thing we gained was a better sense of unity. Better communication started the process, but it wasn’t until Financial Peace University that we took it to the next level. Dave Ramsey taught us that our marriage was the definition of team. A team doesn’t win because one person did all the work; it wins because of the collective effort of everyone involved.

Most marriages usually have a “designated hitter” — the one who handles the finances and consequently, also catches all of the grief when a mistake is made. It’s an unfair position to put your spouse in, and one that can dissolve your marriage fast. Resentment is a powerful and very destructive force.

My wife and I played that game for the first four years of our marriage. She handled the money, then I handled it; each time resulting in the blame game, and many, MANY, money fights because one of us messed up.

Financial Peace taught us that if we were both involved in the process at every level – which meant we agreed on our goals and dreams TOGETHER – there was a lot less to argue about. You can’t argue about what you agreed on unless one of you broke the agreement, or in this case the budget in which case the problem is bigger than money.

I am very happy to say that my wife and I hardly ever argue about money. We still argue, after all we’re normal. It’s just not usually about money. Money is one of the most common reasons people give for getting a divorce. Fix that, and your marriage has a much better chance of surviving.

Photo Credit: © Sophia Winters/PhotoXpress.com

Money Help: Become a Financially Free Couple

As a follow up to the last post on Money Help, which included reasons to make your financial health a priority in your marriage, I’d like to share a few practical resources. One of the most well-known and successful financial gurus is Dave Ramsey, a debt-free fanatic. I say that in a good way–I’ve heard many success stories of couples who have followed his plan to financial freedom. I like how Ramsey calls borrowing “debt” and not “credit” or “borrowing,” which are terms banks use to make it seem more pleasant. Even if you are not in debt, read the entire post, as I have a positive challenge for everyone!

Ramsey’s web site is replete with useful tools and info. Even if your spouse isn’t yet on board, start reading there to build your excitement for financial freedom. Take some baby steps, such as the three steps for building wealth for young adults. Reading about how others have dug themselves out of tens of thousands of debt (or more), or attained financial dreams, is liberating. It may require a shift in your thinking and possibly in your behavior.

Dustin at EngagedMarriage completed Ramsey’s plan to become debt-free last year. He finds his biggest money wasters are on eating out and entertainment and has resolved to trim his spending as well as his waistline for higher goals.

Kathleen at ProjectM explains how she and her husband live very happily and frugally by following a unique set of cultural values in their community. Chief among these is to buy only what you need (i.e. gadgets are not a need), to do the work rather than hiring others, and to produce what you can rather than purchase it. These are serious DIYers.

One of the couples I interviewed who have been happily married for more than 30 years refused to take out school loans to complete medical school. (School loans are also frowned upon by Ramsey.) They scrimped and saved–and even sold blood products–to get through each semester without borrowing. They continued to live a simple lifestyle even after earning much more, and use their savings for charitable endeavors.

Ramsey hits the nail on the head when he explains that most of us just want what we want now. We don’t want to wait. We don’t want to sacrifice. We’d like the lifestyle of those who have worked for 30 years, but we want it within 3 years.  Some find credit as the way to achieve that lifestyle.  The real joy in Ramsey’s financial plan is that it frees you from the bondage of debt. Our country is all about freedom. We want freedom to do what we want when we want it. But without financial freedom, you are indebted to someone and not really free at all.  What would you be doing differently if you had financial freedom? Whom would you help?

Financial sacrifice may be good practice for our marriages. After all, we shouldn’t always get our way in our relationships. We need to learn to put another’s needs ahead of our own. As many begin the Lenten season today, consider whether some type of sacrifice may benefit your family or marriage, maybe even something as small as spending the evening doing something your husband chooses, or giving your wife the day off from mothering responsibilities.

Whether you sacrifice in dollars or in loving acts, the treasure will be returned to you with interest.

Money Help: Just in time for Valentine’s Day

Couples today are often more comfortable talking about sex than money—and they may be more compatible sexually than financially. Creating budgets and living within your means may not seem romantic, but new research (yes, I’m all about research) may convince you that the state of your financial affairs directly and profoundly impacts your love life.

If this subject has been on your marriage’s back burner, think about scheduling time with your sweetie in the next month to discuss your financial goals and outstanding debt, and to agree on upcoming expenses. My blogging pal, Brad Chaffee at EnemyofDebt.com, is offering some useful tools to help you get your financial house in order at Manage Your Money.

Why should you care about money in your marriage? First, you can reduce the number of disagreements you have by setting and using a budget. Second, you can improve the happiness in your marriage by reducing debt and living simply. If you don’t believe me, listen to the experts:

A study just released by Matt Bell and Synavate concludes that couples who use a budget are less likely to have financial fights. Nearly 40% of married couples say they argue about money, but when they have a budget, those disagreements go down by 11%. The financial topics most married couples argue about are spending (49%), debt (33%) savings (26%), investing (15%) and donating (10%). Stop fighting and start making joint decisions about these matters.

The New York Times reports couples burdened with credit card debt are more likely to experience marital difficulty. The newspaper reported on the research of Jeffrey Dew of the National Marriage Project. Dew’s report Bank On It: Thrifty Couples are the Happiest says “consumer debt plays a powerful role in eroding the quality of married life.” While assets solidify ties between spouses and protect against divorce, debt puts a strain on all marriages, whether they have high or low incomes. If one perceives his or her spouse of not handling money well, lower happiness is rated in the marriage. And viewing one’s spouse as a foolish spender increases odds of divorce by 45%.

Dew says money fights last longer and escalate higher than other topics, and men tend to take financial conflict particularly hard. That may be why he says financial conflict predicts divorce better than other types of disagreement. The good news is that the American recession has made debt-reduction and savings-accumulation chic again, and resources abound. It’s up to you to use the tools available. “Clearly, money matters play a crucial role in shaping the quality and stability of married life in the U.S.,” says Dew. “In particularly, couples who are wise enough to steer clear of materialism and consumer debt are much more likely to enjoy connubial bliss.”

Read the next post once you have decided to pursue financial freedom.

 How about it, ready to talk green to preserve your marital harmony? Or it just too hard to face those mounting credit card bills?