Tag Archives: getting out of debt

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

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Beware of Financial Infidelity

This morning on the Today Show, financial experts reviewed research on how money is the number-one cause of marital fights, and said the more couples fight about money, the more likely they are to become divorced.

We talked about this research here in February. The gist of it is that the more debt you have, the higher your marital stress level, while increased assets seem to bring security. Couples who used a budget had fewer arguments and higher marital satisfaction.

An interesting concept the Today contributors brought up that I had been thinking about is financial infidelity. That means one or both people are sneaking around about how they spend or save money. Secrets lead to fights, and fights lead to big marriage problems. It’s critical for couples to put all their financial debts, challenges and struggles out in the open so they can be negotiated and managed. Plans for improving finances will be more effective when honesty is displayed.

In the financial stability area, I feel extremely blessed. I can’t recall a single fight about money in our almost-15-year marriage. However, we have unusually similar financial priorities, goals and tendencies. For instance, we both tend to be savers, not spenders. And we like to spend money on the same sorts of things. My hubby tends to be a bit of a spendthrift about some things, which we may occasionally tease him about. But the bottom line is that I know his cautiousness about spending is a way to protect the family for the future.

So, we drive our cars longer than most people I know, and we delay on some unnecessary expenses, but we sleep better at night. We are probably also unusual in that we keep separate checking accounts (although both our names are listed on the accounts, and we both have full access if we needed it). This wouldn’t work for some couples, but it works well for us. Our savings accounts are combined.

Our philosophy has always been to spend less than we earn, substantially less when possible. That may seem obvious to most of you. (I sure hope so.) However, many couples are still thinking they can spend more this year and make it up next year. This generally leads to taking out loans or credit card debt, leading to increased fees and higher debt, more stress, and more arguments.

The experts suggest:

  1. Weekly meetings about your finances where you each provide updates, concerns and progress on your financial plans. You’ll need to discuss and negotiate your financial goals and plans. If you can’t have these meetings without fighting, you may need professional help (financial counselor, accountant, etc.)
  2. If you have credit card debt, focus on paying off the card with the highest interest rate first. Put all your extra money toward paying that one off, while you pay only the minimums on other cards. Then move to the card with the next highest interest rate.
  3. Use automatic payment plans to set up the payments you agree upon.
  4. If you argue about money more than 1-2 times a month, and you feel those arguments are harming your marriage, consider seeing a marriage counselor. Your upbringing and tendencies from your family of origin affect the way you view and use money. Money is viewed as power in a marriage. If you allow these issues to fester, and particularly if financial infidelity creeps in, your marriage is at risk. Divorce is more expensive than a marriage counselor, so get help before it becomes too difficult to repair.
  5. Consider selling assets or downsizing if your lifestyle has become too stressful to maintain. Even if you can afford a higher lifestyle, no one says you must upgrade. One couple I know chooses to use their excess for charitable giving. This decision has given them much greater peace and satisfaction in their marriage than they receive from spending.
  6. When possible, each spouse should have some flexibility in spending so they don’t begin to view their spouse as a “parent” who must approve every expenditure.

Also, read Money Help: Becoming a Financial Free Couple.

Has money been the cause of arguments in your relationship? Have you learned how to better manage these issues without fights?