Need advice on wife vs cutting expenses and debt

[nitemarecooper]

I am very serious about finally starting to get out of debt. My wife and I have been married for less than a year and her past was having very little income and no credit cards (she fouled up her only cards and had them cancelled on her and thus now has a poor credit report). She constantly says that she is not used to using cards and having much income and therefore won't have any problem cutting back on stuff.

However, that does not match actual actions. I would like some advice how to get her truly onside with the idea of cutting unnecessary expenses and paying down debt.

Together we make about $90k/ year gross so we make very good money however we owe a lot of debt (about $60k total including credit cards and loans) and thus we are now just starting a budget without much extra for debt reduction.

Our only credit card is in my name and I just want to cancel it to prevent any charges in the future. She don't want me to do that on the belief that it is not realistic to believe that we can do without credit cards. She doesn't really accept the whole "live on cash idea" as when the cash budget runs low, her attitude is that it is a basic requirement to just withdraw more from the bank or charge to card. Limited spending in the first place is (to a limited degree) not a realistic way of life in her opinion. Keep in mind what I said earlier about her statements and past life before meeting me. Another example is that she won't cut back even on cell phone bills to cut waste given out limited surplus of cash. She actually even said that if money gets tight, then we will have to make sacrifices I don't want to make like cut debt payments. Still she refuses to stop paying for her adult son's cell phone or cut back expenses related to the dogs and cats we have (all her pets of course). Any ideas on how to get her to accept my way of thinking would be appreciated.

Nitemarecooper

[Ima saver]

First of all, don't cancel your only credit card. That will lower your credit score. Just put it away and do not use it again. (I just pay mine off each month to get a reward check every month.) Then you need to write up and budget and review it with her. Make sure you both get an allowance for spending money.

[ceejay74]

Hi there,
I was in your shoes nearly two years ago...I suddenly noticed I was about to hit my overdraft limit, did some digging into my finances which I'd been avoiding for a couple years, and was shocked to see where I'd let them get.

What I did to get my family on board was a bit of shock-and-awe: I showed them the extent of our debt, and how many years it would take to pay it all off paying just the minimum. They were suitably dismayed and agreed to follow my lead and cut back on spending. They don't spend anything unless they know it's budgeted for or they use their own pocket money, which I dole out every Friday. If anything else comes up we discuss whether we really need/want it and if so, where the money is going to come from. We don't buy anything we don't have the money for (except college tuition).

If she knew it would take 40 years to pay off at the minimum, and how much it was going to cost in interest for the privilege, hopefully she would see reason.

Good luck!
CJ

[GREENBACK]

You've got some work ahead of you brother. Good luck.
You have to change a mindset here and that's difficult. Some folks aren't willing to sacrifice the percieved neccesities. I get some of that but paying for her adult child's cell phone bill would be totally unacceptable to me.

You said you make 90k together. Who makes most of that? If it's you, I would get a little firmer on how the money is going out. It sounds like you want out of debt w/ sacrifices and she wants out w/o sacrafice.

[maat55]

When I was somewhat in your shoes, I made a basic tight budget and said this is the plan, period. We did keep her cell. We reached many of our goals quickly this way, then we relaxed the budget.

When one does not see the urgency and the other does, it makes for an ugly battle.

I would ask her to write down a budget and debt reduction plan while you do the same and review them together. You are in a delicate situation due to a new marriage and step children. You will argue as to how agressive the plan will be, but a working plan has to win.

I speak for myself on this, but not stopping the bleeding would not be an option. The CC's would be eliminated until paid off. You may need to seek financial councel to resolve this. Personal finance philosophy is as important as religion or children when considering a partner.

[jIM_Ohio]

Many of us (myself included) have been there. Here are the steps you want to outline for the group:

1) What is the 60k debt made of. Credit cards? Cars? House? Please list the following for each debt:
a) type
b) interest rate
c) amount owed
d) minimum monthly payment
e) terms (for things like mortgage and car loan- terms include when loan was taken and when it will be paid off in full).

2) Create a budget. Where is the 90k you make now going. Outline budget based on monthly expenses and also have seperate line items for 1 or 2X per year payments (like insurance, property taxes and similar).

3) Make a decision to get out of debt. Have patience and deal with problems as they come up.

Here is my plan. Apply 20% of your gross income to the debt payment. You make 90k, so 18k per year goes to debt. If you are not paying 18k ($1500/mo) towards the 60k debt, then you need to cut the budget so you are.

Depending on the debt type, some of this debt is more important than others. If your mortgage was included in the 60k, then my 20% might not apply (a house appreciates in value so borrowing for the asset is acceptable), if the loan is a car payment with 2 years left, that might not be an issue either (depends on the car and how long it will last). The 20% generally applies to credit cards and unsecured lines of credit. That is the debt to pay off first.

When you make the budget, make sure the $1500/mo number is in the budget as one single line item. If possible, also include the monthly minimum payments on all the debts as a seperate line item.

Budget might look like this:
Pay myself first $1500
Mortgage payment or rent $X
Car payment #1 $y
Car payment #2 $z
gas
electric
water
trash
phone
cell
cable
cc #1
cc #2
-------
The hope is everything adds up to less than $7500/mo (probably $5000/mo after taxes)

Do you usually get a tax refund?

[Goldy1]

Thankfully me and my husband are both fiscally responsible, and frugal and it has so paid off. I have friends who are not responsible who I KNOW I could not be married to. Guys can be just as bad as women in spending too much. I think so much of it is in thier head thinking they must spend to validate themselves.
Me and hubbie got into an arguement lately about a minor investment and I was screaming and there wasn't even a problem at all. I can't imagine if we actual had immenint financial issues. I would leave someone not responsible if they could not change, but then I suppose I shouldn't say that as it is harsh, but no one is going to drag down my finances.

[nitemarecooper]

Many of us (myself included) have been there. Here are the steps you want to outline for the group:


2) Create a budget. Where is the 90k you make now going. Outline budget based on monthly expenses and also have seperate line items for 1 or 2X per year payments (like insurance, property taxes and similar).

3) Make a decision to get out of debt. Have patience and deal with problems as they come up.

Here is my plan. Apply 20% of your gross income to the debt payment. You make 90k, so 18k per year goes to debt. If you are not paying 18k ($1500/mo) towards the 60k debt, then you need to cut the budget so you are.

Depending on the debt type, some of this debt is more important than others. If your mortgage was included in the 60k, then my 20% might not apply (a house appreciates in value so borrowing for the asset is acceptable), if the loan is a car payment with 2 years left, that might not be an issue either (depends on the car and how long it will last). The 20% generally applies to credit cards and unsecured lines of credit. That is the debt to pay off first.

When you make the budget, make sure the $1500/mo number is in the budget as one single line item. If possible, also include the monthly minimum payments on all the debts as a seperate line item.


Do you usually get a tax refund?

We just recently moved into renting an apartment so fortunately we don't yet have the added expenses of owning a house. As for the tax refund, I do usually get about $2000 or so refund. As a long distance truck driver, I have a number of tax writeoffs like supplies, equipment, and meals purchased on the road that I can claim. So that helps. My wife is currently waiting to have me file her 2007 taxes where she will get back about $3500. There is just a problem to take care of first before we can file it. In total, if ever we get to file full taxes this year from 2007 and 2008 we should get about $7000 or more in refunds. That will definitely help the debt situation.

Without big cutbacks, I definitely won't be able to divert about 18k/year (about 350/week) to debt payoff, but that is definitely where I want to be however. Right now the existing budget now just starting allows for about half that suggested amount. So that is a big challenge and payoff of getting my wife to agree to more cutbacks however.

I find the whole problem with my wife's resistance funny in one way. I have never been without a credit card in my adult life and even though I have said for many years now that I need to get out of debt, I was never serious about it. Now, I don't use my card anymore (normally won't even carry it) and it doesn't bother me. I am now finally obsessed with getting out of debt and being debt free. My parents are about to retire in the next 6 mo, no house of their own in the area and it is mostly due to debt. I refuse to be that way in my older years.

Nitemarecooper

[jIM_Ohio]

Couple of points- instead of getting large refunds, choose (if possible) to get the extra $200 or $300/mo each refund signifies built into paychecks (have $200 or $300 less in taxes taken out). Apply all extra monthy income to the debt.

Without big cutbacks, I definitely won't be able to divert about 18k/year (about 350/week) to debt payoff, but that is definitely where I want to be however. Right now the existing budget now just starting allows for about half that suggested amount. So that is a big challenge and payoff of getting my wife to agree to more cutbacks however.

You missed the whole point of my post. If you cannot afford to pay 20% of gross to the debt, you are living WAY beyond your means and need to make significant cutbacks.

No cable
No eating out
sell a car/ go to one car
reduce the insurance on the car
move to a cheaper apartment
etc...

You need to be at 20% going to debt (this pays off your debt in about 4 years). If you are putting less towards the debt, then you will be working until you die or something catastrophic happens.

You need to post a list of monthly expenses which outlines where your $7500 monthly gross salary goes.

[nitemarecooper]

You missed the whole point of my post. If you cannot afford to pay 20% of gross to the debt, you are living WAY beyond your means and need to make significant cutbacks.

No cable
No eating out
sell a car/ go to one car
reduce the insurance on the car
move to a cheaper apartment
etc...

You need to post a list of monthly expenses which outlines where your $7500 monthly gross salary goes.

I understand what your point was. I do want to have at least 20% as debt payments. My main problem is getting my wife to agree to some of the cutbacks I know we could make to cut waste.

As for the extra high tax refund, the 2007 refund still awaiting my wife was a special case as that year she got into truck driving so the higher income for the last half of the year plus about $5000 in tuition claim gave and extra high refund. My normal high refund is due to the extra deductions but most of that cannot be claimed until tax time. Unfortunately tax laws don't allow for those type of claims and deductions to reduce tax bill at time of paycheck through the year. Wish it did, but sadly not. Already checked into that type of idea a few years back.

Right now I already know some waste that can be cut back. I just cannot make any progress right now with getting my DW onside.

Cell phones - 2 at almost $100 each monthly. Neither of them mine and I have no time or interest in a cell.
Pets - My wife refuses to buy anything less than the top of the line pet food. At about $80/bag plus tax, that is expensive amounting to about $15/week total cost.
Cable/Internet - Current bill about $175/mo could be cut to lower package or even just keep internet (due to extra online courses I take to build a new career and cancel cable totally)
Food - Cut out what little eating out we still do (already cut about 80% of what we used to do so that is one cutback I have thus far succeed with). Still can cut basic groceries a little bit further though if we tried.

If all debt payments were calculated though (including loan payments) then the total would be about 20-22% or so. I just don't normally think about set loan payments as debt payments, so my mistake in improper thinking earlier on that point. Sorry for any confusion. I consider loan payment to be bills as I they are fixed payments and I would prefer to concentrate on my wife's small loan with only about $1500 balance left and then our cc balance of nearly $15,000 on Visa. Right now, my cc payments should total about $150 weekly or so and I would prefer to cut expenses to double that or more to pay it off faster. In the mean time, loan payments will continue and after the cc is paid for and cut up, then whatever is left on the loans can become the priority.

Nitemarecooper

[red92s]

I have no helpful advice to offer, but will lighten the mood by saying when I read the title at first I thought you were asking "need advice: cut the expenses, or the wife?"

[jIM_Ohio]

If all debt payments were calculated though (including loan payments) then the total would be about 20-22% or so. I just don't normally think about set loan payments as debt payments, so my mistake in improper thinking earlier on that point. Sorry for any confusion. I consider loan payment to be bills as I they are fixed payments and I would prefer to concentrate on my wife's small loan with only about $1500 balance left and then our cc balance of nearly $15,000 on Visa. Right now, my cc payments should total about $150 weekly or so and I would prefer to cut expenses to double that or more to pay it off faster. In the mean time, loan payments will continue and after the cc is paid for and cut up, then whatever is left on the loans can become the priority.

You need to post a detailed budget.

Rent
loan payment 1
loan payment 2
cc payment 1
cc payment 2
gas
electric
cable
etc...

go line by line.
Have wife help you.
without a line by line item by item list, it is tough to help you.

$175 for cable is way to high. Get a satellite dish and knock that to $80 for example. We have a dish, plus the nfl package, and our bill is HALF what yours is.

My wife and I had 2 cell phones for $80/mo with sprint which shared the minutes. So $200 for two is way too expensive. We have since moved away from that plan for further savings. She has one phone for $55/mo and I have mine for $25 until my contract is up in the spring.

But $375/mo is a far cry from spending $7500/mo, so seeing the other items in the budget is very important. Don't leave any bill unturned and the people here can help you.

What would happen if you cancelled the cable without asking wife? What makes up that cable bill?
What happens if you open a private checking account and run all your income thru that account and put wife on an allowance?

The 90k income breakdown- how much is yours, how much is wife's? If you make most of the $$, I would open a checking account in your name only. Then take full control.

Create the budget YOU want. make sure that 20% number is included. If you will allow $40/mo for cable, tell wife she needs to come up with other $135/mo. Same with pet food- contribute $5/mo, have her pay the other $10/mo.

If you know wife's income can cover bills x,y,z, make sure she knows she is responsble for those bills in their entirety.

If you look at my posts in October timeframe you will see I had a similar issue with my wife and we got past it. Me suggesting "total control" is what got wife to change her ways.

[nitemarecooper]

You need to post a detailed budget.
.

We just moved into an apartment a month ago and before that we were just renting a bedroom at my sister's apartment. So thus this is a new budget and is subject to some alterations as time goes by. However, here goes.

Rent: 800/mo
Car Ins: 188/mo (covers both vehicles and both of us)
Hydro: expecting 100/mo. Haven't actually got first bill yet, but based on other apartments, this is a wee bit higher than I am expecting.
Cable, etc: 175/mo approx. This includes Cable with HD package, Internet, and landline phone service with some long distance calling minutes per mo included (helpful for my wife to call her relatives).
Cell Phones: 2 at about 90 each. (1 my wife's and 1 for her adult son who lives half a country away from us. Cannot get her to budge on that one)
Student Loan: 100/mo (balance about $3700 left at about 6% now.)
Wife's personal loan: 110/mo (about 1500 balance left at about 7-8% apr)
Car: 131 biweekly (5 yrs left at 8.99% about 17000 or so balance)

Variable costs:
Truck costs: 80 weekly. My budget for buying food, showers, etc as a long distance truck driver.
Groceries: 80 weekly budgeted. As I am normally gone 6 days per week, this is mostly my wife's food budget
Gas and maintenance: 55 weekly budgeted. Normally go through 40-50 a week in gas with the car.
Gifts and clothing: about 10/week in the budget
Pets: 10-15 weekly. My wife won't buy anything less than the top of the line food for the dogs and cat.
CC Pmt: 150-200 per week. about 300/mo minimum pmt and current balance.

Setting aside cash in the short term now for licensing on both vehicles and also pay for driver's medical needed as a truck driver. Both of these costs will be about 1-2 mo from now. About 1/3-1/2 of the cost now sitting in cash already budgeted.

If it were up to me, I would buy out existing cell contracts to save money there (about 30/mo savings by getting rid of all cells), look at cutting cable/phone service, switch to a slightly cheaper pet food to save costs. We don't use the pickup ('04 F150) as we now use the new car bought used last fall ('08 kia rio). extra bill and costs, but the difference in gas costs pay for the car and some of the extra insurance costs too. Bank won't allow us to drop the lien to sell the truck and its resale value is now dropped to near 0 so no benefit to selling it. Already checked into that idea before buying the car.

Nitemarecooper

[jIM_Ohio]

Can you also itemize your income (what is pre-tax, what is post tax take home).

[jIM_Ohio]

Rent: 800/mo
Car Ins: 188/mo (covers both vehicles and both of us)
Hydro: expecting 100/mo. Haven't actually got first bill yet, but based on other apartments, this is a wee bit higher than I am expecting.
Cable, etc: 175/mo approx. This includes Cable with HD package, Internet, and landline phone service with some long distance calling minutes per mo included (helpful for my wife to call her relatives).
Cell Phones: 2 at about 90 each. (1 my wife's and 1 for her adult son who lives half a country away from us. Cannot get her to budge on that one)
Student Loan: 100/mo (balance about $3700 left at about 6% now.)
Wife's personal loan: 110/mo (about 1500 balance left at about 7-8% apr)
Car: 131 biweekly (5 yrs left at 8.99% about 17000 or so balance)

Variable costs:
Truck costs: 80 weekly. My budget for buying food, showers, etc as a long distance truck driver.
Groceries: 80 weekly budgeted. As I am normally gone 6 days per week, this is mostly my wife's food budget
Gas and maintenance: 55 weekly budgeted. Normally go through 40-50 a week in gas with the car.
Gifts and clothing: about 10/week in the budget
Pets: 10-15 weekly. My wife won't buy anything less than the top of the line food for the dogs and cat.
CC Pmt: 150-200 per week. about 300/mo minimum pmt and current balance.

If I add this up (all monthly, some rounding done)

$800 rent
$100 water
$175 cable
$180 cell
$100/mo SL1
$110/mo SL2
$300 cc
$262/mo car
$400 truck maintainance
$400 groceries
$ 50 clothing/gifts
--
total is $2877/mo
If you gross $90k per year, get paid bi weekly and live in Ohio (for state tax reasons) here are the numbers (from
http://www.paycheckcity.com/NetPayCa...CalcResult.asp)

Your Pay Check Results
$3,461.54 Bi-weekly Gross Pay
$497.60 Federal Withholding
$214.62 Social Security
$50.19 Medicare
$132.50 Ohio
$2,566.63 Net Pay

Meaning you still have about $2200 in take home you have not accounted for.

You should be able to swing $1500/mo payments to cc on the numbers you have listed thus far.