Help!!! Overspending Wife!!!

[handsomeone]

First, the background:

Three years ago I quit my high-paying job to start a business, which I financed with a home equity line of credit. The business is finally doing reasonably well (knock on wood). It's been about 6 months since I've had to borrow any money and in fact I've started paying down the $85,000 I borrowed against the house.

My wife earns a lot less than me and in fact is now unemployed. She also takes care of our two children. The way we handle the finances is that I pay all of the monthly household bills (cars, utilities, mortgage, taxes, insurance etc.). I also give her $430/wk to spend on groceries, clothes for the children etc. I have no idea how she spends this money, which is by design. Since I am a cheap person, she doesn't like me questioning her expenditures. So the deal was that I would give her a fixed amount of money every week and that would be that.

A little over a year ago, she told me that she had run up about 6 thousand dollars in credit card debt and she didn't know how to pay it. After a lot of fighting and arguing, I agreed to raise her weekly allowance retroactively. (At the time, it had been $370/wk). This gave her a few thousand dollars to pay down her credit cards. We also agreed that if she got into trouble with her credit cards again, I would not bail her out.

------------------------

Well, guess what. A few weeks ago she tells me that she now has $8000 in credit card debt and she needs my help. Of course I am furious. And I just don't know what to do.

The truth is that my business has been doing pretty well lately and I could afford to bail her out, but I don't trust her not to do the same thing again and again. Also, even if business continues to be good (which is by no means guaranteed), it will take a few years to pay off our home equity line of credit. And then I want to start saving for our kids' college.

She feels that it's unfair that I borrow money to spend on my own things and object to her doing the same. However, it seems to me that borrowing money to start a business is very different from using credit cards to buy clothes, haircuts, and takeout food.

Also, she refuses to let me look at her credit card statements. (I told her she was free to inspect my books, bank statements, credit card statements, etc.)

So the question is, what the hell do I do? Obviously any solution that requires me to trust her to act responsibly is unlikely to work.

[Lok]

$430 a week? And all the monthly bills are paid? And she still can't keep up with her credit cards? Sounds like she has a problem.

Knowing nothing about your situation but what you have posted, the only option I can think of she won't like. Tell her you will pay off the cards. Then they get cut up, the accounts closed and she can't have any more. If she wants to use a card, get a VISA or MasterCard check card from your bank. Told you she wouldn't like it.

$430 a week!? That's more than I take home, and I have to pay the bills! I need to get a different job.

[irishgirl]

The problem is with the credit cards, which allow her to spend money she doesn't actually have. Either make sure the bill is paid IN FULL every month, or cut them up. That includes store cards too.

Explain that any debts on a card you have not approved (should she get one without your consent) are her responsibility alone. You will not contribute to paying them off in any way.

You have arranged a budget which you both agreed was reasonable, and she blew it. It doesn't matter WHAT the money was spent on, just that it was spent.

If you've been putting the money into her account, start givng it to her in cash. It's harder to spend money when you actually have to hand it over in cash...signing receipts is MUCH easier.

Alternatively, if you have a joint account, put her allowance and the money for bills into it, and put your earnings into YOUR account. That way, if she takes out more money than her allowance, the bills won't get paid.

Explain that if there is an emergency you will be happy to give her more, but that you want to see receipts of whatever this extra money was spent on. This is NOT unreasonable.

Explain (if you haven't already) that every dollar she spends is one less dollar paying off your debts, one less dollar paying for your kids' education, one less dollar for your retirement.

[An Arky]

I hate to tell you this, but it seems to me that $14000 in about a year is buying more than clothes and takeout food. That's why she won't let you see the statements.

[Alessan]

My advice - instead of seperating it into "your money" and "her money", divide it into "business money" and "family money." The former is all the money that goes in and out of the business, including your business loans. Your wife should not have acess to it. From it, you should take out a specific amount of funds every month - think of it as a salary - and transfer it to the latter. The "family" money should be in a joint account, with all credit cards belonging to both of you and all credut statements available to either of you. From this account you pay the bills, buy groceries etc. It's not your money, it's not her money, it's the family money, and you both are accountable to where it goes.

If you want financial independence - if you want money of your own - then don't get married.

[Q.N. Jones]

In my experience, when one spouse takes control of the money and treats the other spouse as subordinate in that regard, it leads to trouble. It's a common situation, even among couples who consider themselves equals. I've had several friends who've done this and ended up with big marital troubles because of it.

You guys need to sit down and discuss the whole financial picture together. Keeping things separate and private from each other isn't working out for you. Find out what your overall financial picture is like--including business finances and those secret credit card bills. Then come to an agreement about how you're going to fix the problems that have come up. Then figure out how you're going to plan things so that this doesn't happen in the future. This isn't her problem or your problem to fix. You have a collective problem.

It sounds like you're frugal and controlling about money, whereas she tends toward being careless and extravagant. You're going to have to work hard to reconcile those attitudes, and you'll both have to give some in order to keep your finances in order and to prevent further arguments about money.

For example: maybe you both need to be on an allowance for personal expenses. Maybe you need to come to an agreement about allowance amounts together, instead of having you dictate them. Maybe some expenses that are currently a part of her allowance shouldn't be. Maybe child and home related expenses need a separate allowance. Maybe credit cards should be kept in a drawer at home and used only in emergencies. (I do that one.) Maybe you should let her pay the bills sometimes.

You should probably also consider finding a counselor who deals with couples who have financial issues like this. The book Smart Couples Finish Rich has a lot of good ideas about how to sit down and have financial conversations with your spouse.

[flodnak]

Yikes! Did I do the math right? $430/week for a year + $8000 in credit card debts = over $30K she's spent in a single year? And that doesn't include mortgage, car payments, or utilities?

Originally Posted by handsomeone

Obviously any solution that requires me to trust her to act responsibly is unlikely to work.

The fact that you said that makes me think your family needs more help than a message board can give. If you can't trust her, you need an outsider - a financial counselor, at a minimum - to work this one out. Clearly, she shouldn't be carrying credit cards around until she gets her spending habits under control.

My gut instinct is to say that the interest on a credit card debt like that will kill you, so pay that off first - but a home equity loan can be scary, too, I mean, that's your house you're talking about. I really think you need a professional to look at your situation and work out what's best for you.

Good luck to you and your family...

[Dangerosa]

And you are both treating each other in a way where you have control and the other is subordinate. You dish out the cash (you-control, she-subordinate), she doesn't let you see the bills (her-control, you-subordinate).

And An Arky, you can spend $14k on food and clothes and "stuff" - especially with kids. And you don't even need to be "extravagant" to do it. Two McDs meals a week will set you back $30 with kids, a $100 grocery bill is easy, register the kids for swim lessons for $60 each, drop another $100 at Target on household stuff and kid stuff, have a decent dinner out with the family once a week ($100), fill the gas tank ($20) and now you are down to $20. My hair costs about $110 for a cut and color with the tip. Now, granted, when I'm feeling broke we don't eat at McDonalds, cut the nice dinner out, the Target trip is $60 and the groceries are $80, my mother cuts my hair and the color comes out of a box (the kids still get swim lessons), but there is no need to imply she is doing something nefarious with the money.

If you are going to continue to bail her out (and you don't have a choice - in most states (I am not a lawyer this is not legal advice) you are responsible for your spouses bills), you and she need to figure out where the money goes. Your other option is to not bail her out and wait for the bill collectors to come after you or divorce her and pay maintenance (which is going to put you back further).

I agree that having her work on a strictly cash basis for a while might be a good idea. So might a phone call to a marriage counselor.

Best wishes. Brainiac4 and I just watched his brother go through something very similar. His end result was bankruptcy followed by divorce (but no children, and your wife is an amateur spender compared to my ex sister in law) - may you not go down that path.

[Dangerosa]

Oh, and (IANAL) I hope your business is incorporated. And I'd make sure that you had a good accountant and a good attorney around. Because you don't want her overspending to impact the business. And if this cannot be resolved happily (and I hope it is, but hope for the best, plan for the worse) her divorce attorney will be all over your business books.

[MrFantsyPants]

Obviously, you will have to be paying those bills. You don't have much choice. Staying away from the implications all this has on your marriage (other people have talked about that, and frankly it is hard to say anything meaningful about other people's relationships with so little information), you need to see the VISA statements, and you need to come up with a plan for limiting future spending on the credit cards. You could remove them completely, or you could switch to a card with a $500 spending limit.

Good luck

[lieu]

Originally Posted by handsomeone

Also, she refuses to let me look at her credit card statements.

While that amount of money can legitimately be spent on what she's responsible for, her refusal to open to inspection what she actually is spending it on suggests that it is not.

[Man With a Cat]

Originally Posted by An Arky

I hate to tell you this, but it seems to me that $14000 in about a year is buying more than clothes and takeout food. That's why she won't let you see the statements.

That's what I was thinking. Who's name are the cards in? If they're in yours, get the statements because you need to see where she's spending $8000 in charges she's hiding from you. IMHO there's bigger issues here than money. You control her financially, I wouldn't be surprised if you found out there was some sort of rebellion going on in her mind that's costing YOU a lot of money.

I'm dancing around some things here, aren't I?

[Long Time First Time]

I can think of a less sinister reason why the OP isn't allowed to look at the credit card receipts - the wife knows that he'll blow a gasket when he sees them.

He'll spend some time screaming at her in general, and then pick each and every item apart ("$40 at Target!!!! WTF did you buy that cost that??").

Then, for the next 2 years, the snide "not as much as your last Target bill" jabs will be in play.

Who needs that crap? Better not to show him.

This is not about the money, IMHO, and not just her problem. It's all about control and all those other things that bedevil marriages, and the problem is shared equally between the both of you. A marriage or at least financial conseler would seem to be in order.

Till then - DON'T GET ANGRY. DON'T ASSIGN BLAME, MAKE SURE YOUR WIFE KNOWS THAT THIS IS THE COUPLE'S PROBLEM THAT YOU WILL WORK TOGETHER TO FIX.


Good luck

[cantara]

I like the idea of your money and accounts and her money and accounts. It's good that you can treat each other like adults and trust one another to be responsible with your own money. Unfortunately that is not the situation you are currently in.

These are the factors preventing you from having completely separate finances:
1) She does not currently have an independent income.
2) You are married
3) You are the owner of your own business
4) You own your property (together I am assuming)
5) Your business has a stake in your personal property.

Item 1 is the only one that can easily be remedied to allow your finances to be independent from one another. All of the points taken together would suggest to me that the finances are communal, and to that end you cannot have secrets from each other relating to finances. The budgeting for the household will have to be done with open books and you will have to see the bills that she is trying to pay (or not pay). The fact that you are giving her an allowance right now is not (in my eyes) a point of control, but a necessity to allow her to keep the household running as she sees fit. The fact that she is not staying within the budget means that she is not being fiscally responsible with the monies available.

She needs to understand that 'your money' is not play money for your enjoyment but investment in the business to generate a decent return to fund the household expenses. You've made the books of your business avialable to her scrutiny and she should provide the same. Please ensure that it does not become an adversarial position where all purchases must be justified, but a money management discussion. If you have having to come in to pay off her debts after you trusted her to manage the money that has been allocated, then she has lost the 'right' to keep her records confidential.

She may be buying $600 hats on a regular basis, but I suspect that there is something else hidden in the bills that she doesn't want you to see. Get your business in order and protect your business and yourself! ie. ensure that the business is incorporated, that you are the sole owner, and that you separate the assets and debts of the business from your personal assets and debts.

That last paragraph sounded nasty, but from the little you've written it sounds like you are being taken advantage of, and that's when things are going well. If things get bad when you ask to see the bills, I can't see her being nice about it...

[Trunk]

As others are hinting at here, it's not like you have "happy marriage and this one problem with spending."

You have an odd hierarchical structure set up. You don't communicate. You don't trust. You don't keep promises.

The credit card debt is the symptom, not the disease.

And so, "Cut her off" isn't a solution. "Cut up her credit cards" isn't a solution. "Work out a budget" isn't a solution.

The only solution is to sit down and figure out a way to trust each other.

Because all the rules in the world aren't going to solve this if. . .

Originally Posted by handsomeone

any solution that requires me to trust her to act responsibly is unlikely to work.

[ioioio]

Y'all need to see a counselor and work out the real issues before your marriage falls apart irreparably. I'm not taking sides -- this seems to be a basic issue of differing attitudes about money -- but your wife gave up her financial independence to be a stay-at-home wife and mother and you seem to be treating your role as money-maker as being the superior role. I imagine she feels very demeaned, and she's getting back at you. All this criticizing and antagonism and secrecy does not make a healthy marriage.

Financial security is important, but it won't make you as happy as having a loving, peaceful, respectful family environment.

[yellowval]

Originally Posted by laina_f

<snip> your wife gave up her financial independence to be a stay-at-home wife and mother and you seem to be treating your role as money-maker as being the superior role. I imagine she feels very demeaned, and she's getting back at you. All this criticizing and antagonism and secrecy does not make a healthy marriage.

A stay-at-home wife and mother who gets a generous allowance of $430 a week for whatever she sees fit. That's more than I make in a week, working 40-45 hours! I'd gladly be demeaned for that price and stay home with the kids!

YMMV, of course ... so, I'd like to know from our SAH moms on the board: would you feel demeaned in this woman's situation?

It just doesn't make sense to me that if she needed more money for something for the house, kids, herself, that she wouldn't just ask her husband for a few extra bucks. Sure, he's a spendthrift. But I don't think "The kids need new shoes" would get a negative response.

[Trunk]

Don't focus on "$430" a week.

That's a lot more than some people make who stay within their means.

That's a lot less than some people make who spend beyond their means.

This woman spends outside her means, and when her means increased, she went into even MORE debt.

She's either incapable of handling finances or she's capable and doesn't want to. Either way, there's a massive breach of communication in this marriage.

The "demeaning" has nothing to do with whether she's getting $100 or $10,000 per week. It's the fact that the man controls the means.

[Canadiangirl]

Bailing someone out on credit card debt is ok once, but twice?

Doesn't matter who it is.......teach them how to manage credit.......find out where the money is being spent.........are there financial NEEDS that are not being met? Or is it just reckless spending?

If she will not show you the statements, there are other problems. Find out what they are......

IMHO.

If my husband ever refused to show me anything to do with finances, or the other way around, I'm sure it wouldn't be an ongoing concern....as it probably wouldn't be an ongoing relationship.

Finances are important - in fact, what most couples struggle with. Planning for the future, spending habits and common goals are important.

[AmericanMaid]

Growing up, my father handled finances the way you and your wife handled finances. He gave my mom an allowance. The job market stunk so she couldn't find work for a while. Desperate for financial independence, my mom started gambling. She borrowed against credits cards and ultimately wound up being $36,000 in debt. An equity loan paid that off.
My suggestion is to only have only credit cards in both of your names. Also, realize that your wife's debt problem probably is linked to some underlying problem. Not necessarily that she's irresponsible/ extravagant. Get couples therapy ASAP. My parent's marriage didn't survive, yours could.

[Flander]

If you wanted to see the statements, why don't you just check online? I'm sure since you have the card info you could just log on and see. You pay the bills.

The trust issue is probably a factor. Sit down. Talk.

Please keep us informed on how things go (if you feel appropriate).

[Anaamika]

I also kind of had a kneee-jerk response where I thought, "What century is this?" I mean, really, what you talk of is our parents' time and even before that.

She needs to have more of a say in where the majority of the money is going, that is, have some input.

You need to know what the hell is going on that she can get into that much debt.

Honestly, it sounds like she's taking revenge on you for the perceived notion that you control the money.

You say you don't know what she does with the money, does she know? And honestly, if she wants extra money she should get a part-time job to finance whatever she needs.

There are issues here, but everyone else has already told you that.

[Cat Whisperer]

As her husband, you might want to look into whether or not you are responsible for her debts anyway. My understanding is that both spouses are responsible for debts incurred while married, whether your name's on the card or not. Her refusal to let you see the credit card statements is a big, fat, red flag. It might be a heck of a lot higher than the $8000 she's admitting.

It doesn't sound to me like you're being controlling with the money; it sounds like if she had valid reasons (i.e. not gambling debts) for needing more money, you would have given it to her. Something is going on with her that she feels she needs to spend way more money than her weekly budget that she agreed on with you. I agree with all others that couple's and financial counselling is in order here.

And I just have to say, $430 a week? I read that as $430 a *month* at first, and it didn't sound unreasonable to me, if all the fixed expenses are already taken care of. Wow. There's a whole 'nother way of living out there that I obviously know very little about.

[yellowval]

Originally Posted by Trunk

The "demeaning" has nothing to do with whether she's getting $100 or $10,000 per week. It's the fact that the man controls the means.

That may well be so, but I question it because it seems to me that it was her choice to receive this sort of allowance, or that it was decided to be the best arrangement by the two of them as a couple. The OP says that his wife doesn't like him looking over her expenditures so he agreed to give her a set amount. Sounds like she had a choice in the matter, it wasn't just him saying, "This is all you get."

I agree with those who have said there's likely something else going on deeper down with her. It could be anything from a gambling problem to depression. A few years ago, a friend of mine had some major spending issues. She had a hard time finding a job after finishing college, so she was staying home with her two young children. She was depressed, her self-esteem was low, and she made herself feel better by going shopping. I watched her spend $700 on a day's shopping trip on more than one occasion, when I might fork out $25 to $100. Now she's doing much better. She's employed full-time, and her uncontrollable spending habits have ceased.

[wnorthr]

I just want to add, and I know it sounds bad, your wife can get a credit card that you are responsible for without you knowing about it. You can do a credit check on yourselves to find out what outstanding credit is in your names. Forgive me for what I'm implying here but a warning's better than oops.

[DiosaBellissima]

I don't know much about how this works, but here are my two cents:

When I got a little behind on my Macy's bill, they started calling for me at all kinds of wonderful hours. "Diosa?" they would ask. "No." I would reply. "Is she there?" "No." "Does she have a husband I can speak to?"...

That's my point. Can't you call the companies and get copies of the bills, as you are liable for them also?

[PunditLisa]

She's either spending money on legitimate things or she's not. You need to determine if she's an emotional spender or if you are unrealistic about the budget.

My husband hinted a few years back that I wasn't managing our money properly (He manages our long-term money; I manage our day to day money). We fought and the end result was that I created a budget that line items every thing we spend money on, from fundraisers, to hair cuts, to cable, to tennis club memberships, to groceries, all the way to the mortgage. I showed him how there were months when our expenses exceeded our income. Yes, there were occasional frivolities that I spent money on (e.g. a new comforter set), but all in all I was not guilty of mishandling our money. He simply did not understand how our money was being spent. It was my job not to just ask for more money, but to educate him on the realities of life in suburbia.

We know treat our own budget similar to a business. We conduct a formal annual State of the Budget review where we discuss everything related to finances, including retirement, net worth, and capital projects. We each have "wish list" items that may or may not happen. Each month I'll give him a casual review on how we are doing and to let him know about any speedbumps ahead (e.g. vacation, property taxes, Xmas bills) so he doesn't blow a head gasket when I ask for $7,000 out of savings. It's worked well for us.

The OPer and his wife need to start acting as a team. What is good for you is good for the family and vice versa. I know a lot of people are saying $430 a week? My God! But if she is like me and every 6 months she'll open a $2000 property tax bill, you would understand that it may not be a wife overspending as much as a husband who doesn't see the trees for the forest. No matter what, it's up to her to communicate to him and defend herself, if needed. And if she can't defend herself, she needs to be brought back into the business model, if you will, and understand the impact on her family if she continues to overspend.

[Cat Whisperer]

Excellent points, Pundit. My husband and I have a budget that accounts for nearly every dollar we spend - we both bring all receipts back in for recording. We both know at all times where the money is and where it's going. The fact that way too much of it is going for dinners out is well known by both of us.

[Giraffe]

Everyone has made really good points so far. I would add that one of the problems of the OP's current arrangement is that it disconnects the wife from the money that she doesn't see. In other words, from her perspective the OP controls some large amount of money, from which he gives her as little as he can get away with. If his business does great or poorly, she is no richer or poorer. So if she can get more money out of him, either directly or indirectly, she has made money. There's no downside to running up a big credit card bill -- the OP will have to pay it off, and she wasn't going to see that money in any other form anyway.

With fully shared finances, there's far less incentive to hoard, because it's already your money anyway. Any money you blow on stupid crap now is less money you have down the road for a house, or a new car, or a cool vacation, or whatever.

[Icarus]

I'm a recently married husband in a similar situation. My bride brought in debt, I knew about it and I'm OK with it (well, not pleased, but, y'know, oooohhh-kaayyy). You can't change the past, only the future.

I'm gonna go out on a limb and say that your wife is not showing you the credit card bill because it is not $8000, it's much more. Whatever you do, it's important to get her to understand that debt cost money. It's not only the $8000+ that is owed, it's the interest owed on carrying the debt. If it's 10% then you're looking at an extra $800 a year/$66.67 a month that is flying out of your pockets to the credit card company. I'm sure she'd rather have that money to spend on something she wants.

The first thing to get agreement on is making sure you're paying the lowest interest possible. Shop for a new credit card with a lower rate and transfer the balance. Stop using the old one, cut it up, but don't close the account (for some insane reason that lowers your credit score).

As for all of the comment regarding counselling and unequal power, etc., I think it is important to stress in your conversations that you value your relationship and don't want to see it harmed by this, that you recognize the pitfalls of the unequality. Don't play the hard-guy authority father role here. Let her know you respect her and her challenges. Help her open up on the subject. And take a page from PunditLisa about bringing her into the detailed information side of personal finance. She might suprise you.

Good luck to you both!