How to Handle Spendthrift Wife

In My Humble Opinion
1

I’ve been married for about 6 years now. Towards the beginning, Mrs. Lucwarm and I would get in terrible fights over her spending of money. Specifically, she would spend money in ways that I believed were excessive and I would object. For example, she would get take-out food delivered a few times a week; she would buy a lot of expensive clothes; etc.

A couple years ago, we agreed that I would give her a certain amount of money every week which she would spend any way she liked and I wouldn’t object.

This arrangement continued for a couple years. She seemed to still be spending a lot, but I didn’t really question it. Her family lives nearby and probably helps her out.

Well, about a week ago she told me that she’s run up about $10k in credit card debt over the last year and needs to be bailed out. She admitted she’s been spending too much and said she would spend more conservatively in the future.

I’m pretty upset by all this. I started my own business about 1 1/2 years ago. Things are slowly improving but I don’t have $10k to give her. The money would have to be borrowed against our house. (I set up a home equity line of credit when I started the business. For obvious reasons, I’ve been trying to use it as little as possible.)

Also, I feel that she’s betrayed her end of the bargain we made.

Finally, based on my knowledge of her and of human nature, I’m skeptical that she’ll reform.

For what it’s worth, she works part time and also spends time taking care of our two children and has an annual income of $20k-$25k. I’m sure she’d be very resistant to the idea of me hovering over her and questioning her every expense.

I pay for household expenses that come in by mail. i.e. I pay the mortgage, insurance, gas, electric, phone etc.

Any thoughts or suggestions?

2

I’m assuming you love this woman…

And what bills does she pay?

Oh, the advice? Uh, sit down with her and make up a household budget. The debt? Her responsibility.

3

I don’t know how much help I can be but here goes:

Firstly the most important thing is to admit that there is a problem, she has probably known about that there is a problem for many months but was too affraid of admitting it to you, making the situation worse.

I believe that the best coarse of action for you to take is to ask your wife to put together her own spending plan and list every expenditure. All income that comes to her should be in cash. (It allways seems more real when you are spending it.)
Secondly, cut up her cards and talk to the relevant companies explain to them that you cannot afford to pay. They will be open to comming to an arrangment where they agree to stop accruing interest and allow you to pay a fixed amount each month. This should allways be your first option instead of obtaining a loan to pay off the card dept. 90% of people firstly borrow more than they need to and secondly it opens up a new line of credit on your paid off cards.

Make a plan to pay off your dept in 18 months. This is a long enough time for you to afford it and not too long for you to never see the end of it.

Non of these action will be of any use to you unless your good lady understands that she is not being persecuted or punished you just want to solve the problem together.

Like I say, I’m no expert but the best advice I give to anyone is that if you haven’t got it don’t spend it, because you have to pay for everything twice.

I wish you all the best

4

She buys food at the grocery store every week; She pays for a cleaning lady who comes to the house every week; she pays for dry-cleaning; she buys clothes and toys and other stuff for our kids; she pays for the baby-sitter.

**

I actually told her to make up a budget, which she did. I pointed out that the money she gets from her job plus the money I give her add up to significantly more than the budgeted expenses she listed. She got pretty annoyed.

5

Have you considered a financial counselor (no, not a credit counselor) for both of you? Sure, she’s the one who ran up the debt, but looking at why could be beneficial to both.

There’s the option of actually paying off the debt from the line of credit, but then requiring her to repay that to you. This is likely a lower interest rate than the credit cards have (especially if she’s been having difficulty making the minimum payments). Cut up the credit cards and close the account(s).

Draw up an agreement between the two of you regarding the repayment of the loan. The amount she pays to you/the line of credit (depending on how you work it out) each month or pay period should be such that the loan is paid off within, say 2 years, but not so long that she feels like she will never get it over with. ($10k paid off in 2 years with no interest payments is $416/month. If that’s not possible on her current budget, adjust it, but keep it enough so that she and you can see the balance decreasing).

Does she have direct deposit of her paycheck? If so, can the amount to be paid each month be put into a seperate account that is used to make the payments on the loan? That way, it’s automatically taken out of her paycheck and put aside for those payments.

Just some ideas. I’m almost out of credit card debt myself - I left my undergrad with a bunch of cc debt and it’s taken a long time to get to a spot that I am financially comfortable. Ok, comfortable is the wrong word, but I know I can pay all of my bills every month, and I see that last balance dropping with every statement I get.

6

Stop paying your utility bills…or just select one like the phone or water. When it gets shut off, tell her that you would have paid it, but you saw this lovely pair of shoes that you just HAD to have.

7

I urge you to go to the library and get a copy of this book:

Title: Two incomes and still broke? : it’s not how much you make, but how much you keep / Linda Kelley.

Author: Kelley, Linda, 1941-

Call Number: 332.024

Publisher: New York : Times Books, c1996.

Subject(s): Dual-career families–Finance, Personal.

Description: xx, 219 p. : ill. ; 22 cm.

Notes: Includes index.

ISBN: 0812925696

I read it and it’s a real eye-opener.

It explains the true cost of a second job. Most folks think of their W2 amount as spendable income and fail to consider the cost side of a job, any job. That’s particularly true of second jobs in the family, regardless of gender. The typical assumption is that Job #1 is covering all the household overhead, so Job #2 is pure gravy. Not true.

What really matters of course is the profit on a job (marginal Job #2 W2 minus marginal Job #2 expenses), not just the marginal revenue. That’s obvious in a business setting but not so much so in a personal setting.

It’s also likely that the true tax bite is badly misunderstood. The second job actually pays full marginal rate for Fed & state income taxes. Add in FICA and easily 38-45% of each W2 dollar goes to one tax or another.

It’s entirely likely that your wife’s LEGITIMATE spending caused by her job (day care, cleaning lady, takeout dinner to save time, etc.) exceeds her true after-tax income.

In other words, the household would be better off financially if she stayed home. And she’d certainly be less frazzled and less likely to spend money on trinkets as a coping mechanism.

Again I can’t say for sure that this is true in your situation, but if you run the simple spreadsheets in the book you’ll get to the true picture easily enough. Armed with the facts you can both make a rational decision. Or at least have a hope of making a rational decision.
Second topic:

As to the surreptitious $10K debt and the apparently FRIVOLOUS spending, I agree with “Different Thinker.” Stop the debt from increasing by cutting the cards and work out a payment arrangement you both can stand.

The surreptitious part scares me for your future. She either has very poor self-control or she actually intended to deceive you for the long term. Neither of those traits bodes good (yep, that’s correct usage) for your long-term relationship.

IF she’s willing to try to change you’ve got some hope. IF she sees the problem as the debt, rather than the process which caused the debt, bailing her out and cutting the cards will merely clear the decks for her to do it again.

As a worst case, some folks simply cannot handle money and cannot practically be trained t handle money. IF she is one of those, you’ll end up needing a long-term arrangement where, financially, you treat her like a child and provide her a fixed weekly allowance in cash or into a debit-card-enabled checking account. Meanwhile, her paycheck goes to your account, NOT to hers. Again, that’s worst-case.

IF that’s her and IF she knows and accepts that she’s an addict, she might go along with this arrangement knowing its for her own good, like alchoholics accept taking the Antabuse drug.

But IF that’s her and IF she doesn’t see the true problem, or personal friction between you two precludes her accepting that “second-class citizen” status on money matters, well then you’re gonna need to decide whether you want to spend the rest of your life married to a bottomless pit of wasteful spending. Rest assured that whatever you make, even up into the millions, she’ll be able to blow it without understanding (or caring) why or how much of a problem it is for you both.

You haven’t given us enough info about your relationship to know which future is likely, but you can certainly tell which of my scenarios matches the reality at your home.

Bottom line:

  1. Maybe she, and to a lesser extent, you, have simply mis-estimated the total after-tax income and she’s merely been spending reasonably given the bogus number she/you both though was available.

  2. Maybe she has a real money management problem now and would still have overspent even had she known the true funds available.

  3. Maybe she can fix problem #2 (if it exists) going forward and maybe she can’t.

  4. If she can’t fix it, you’re facing a hazard to your marriage. Bankruptcy lies down that road not very far around the curve.

Good Luck.

LSLGuy

Coincidentally, check out this recent thread. http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=222996. It’s not exactly on-point, but it does give insight into how a lot of other people manage their joint funds. Perhaps you’ll get an idea or two, or find someone who can commiserate, having been there and done that already.

8

If overspending is a chronic problem, then she probably has some emotional issues with money. There is no shame in that–it’s not uncommon. There are some harsh assessments here, but I’d give her credit for finally owning up to her problem. If you treat her like a child, you may make the problem worse.

I don’t think you should bail her out. Help her come up with a plan for reducing that debt. I don’t know if the credit card companies will give you the sweet deal others have described. When I wanted to cut down a high balance, they were sort of assholes to me about it. My best recourse was a juicy “balance-transfer” offer from a competing card. And, of course, STOPPING using them.

Have her figure out what is really important to her. Does she just get satisfaction from buying things in general? Does it make her feel safe, successful, or rich to be able to leave the store with a big shopping bag? Then I think she needs to really change her thinking. Maybe she can find a way to feel equally satisfied with frugality, to feel a thrill when she resists spending.

Are there specific things that make her happy, like clothes? Then she needs to draw up a budget where she can accommodate a certain amount of clothing purchases that make her feel “taken care of” but don’t break the bank. She might also need to change where she shops (think high-end resale, maybe, instead of high-end retail).

She will probably feel discouraged–when she owes $10,000, what is it really going to help if she resists the $25 takeout (she might well ask)? Well, she got there in smaller amounts than $10,000, so she’ll get herself out of there the same way. And the debt didn’t happen overnight, so it won’t go away overnight. But in the meantime, there is rich satisfaction in turning around bad habits.

9

My husband and I went through something similar, where I was the one with money problems. Naturally I hate to think of myself that way, because I felt like I had nothing to show for all this money that I was throwing around. Most of my problems didn’t spring from needless expenses, but from being stretched too thin to cover my expenses, so I’d rob Peter to feed Paul. I’d skip a payment on a particular bill, so get the late fee, so I’d get further in, over and over again. And I also didn’t talk to my husband about it until it got bad, because I felt ashamed of it, and didn’t want to make my problems his problems.

There are several things that we’ve done to correct the problem where possible, and ease it in other areas. These might help you, too.

  1. Discussed our finances with a third party. This person could be an accountant, a counselor (some churches offer this, as well), an advisor through your employer, your choice. The important thing is that this will be a neutral party who can ask all the tough questions and be there to act as a buffer when emotions run high. That will force both you and your wife to discuss the situation as calmly as you are able, without distractions and without getting sidetracked into other issues.

  2. Discussed what behaviors need to change, on BOTH our parts. I definitely needed to do most of the changing, but my husband needed to, for example, stop pressuring me to do things that I knew I couldn’t afford, and stop laying guilt trips when I wasn’t able to buy him the things he wanted.

  3. Both of us write out a budget per pay period. We each, separately, write down the amount of the paycheck, and subtract each expense that we know we MUST pay. Utilities, credit card bills, what-have-you. The amount leftover is then open to discussion, but is largely regarded as spending money. We each look at the other person’s budget. This helps each of us understand where the money is going and WHY it’s going there. No secrets, no misunderstandings. Before we started doing this, my husband felt I was simply managing my money poorly and never thinking of him. I thought he had a much larger disposable income, and had no real idea of how much was on credit. It’s impossible to get mad about something that has been documented over and over again, and is open for all to see.

  4. This may not apply for you guys, but debt consolidation helped tremendously. I had three student loans held by three different lenders at different amounts. Now I make one lump payment at a reasonable interest rate.

  5. The Low-Hanging Fruit Tree. This was the singlemost important and helpful thing that we did to help us both get out of debt. I literally made a tree out of construction paper and taped it to our bedroom wall. Then I cut out little fruits of various colors and sizes. On each fruit, we put one payment toward every debt we had, and taped them to the tree. That gave us a visual map of how far we had to go to get debt-free. Each fruit represented one MANAGEABLE amount, the highest ones being car payments.

When one of us made a payment, that fruit came off the tree and was stuck down on the wall. Periodically, we’d tally how much money we’d taken off our total amount of debt, and how much we still owed. We took care of all the easy ones first (the really low-hanging fruit), like department store credit cards and some bills left from our wedding. One-time things we could clear up easily, in other words. Then we worked on the longer-term ones, like one massive credit-card debt on his part and my collection of smaller debts and car payments. We started out owing more than $35,000 dollars, and over the course of about 2 years, we cleared the entire tree, with the exception of car payments.

I can’t tell you how much it helped to make the debt SEEM manageable. When we first said to each other, “We’re $38,000 in debt. Holy hell.” it seemed overwhelming. That was more than my annual salary, at the time. But by breaking it down into payments we could SEE being cleared each time we got paid, we could see the progress and understand where our money was going, together. I’m so glad we did that.

  1. Get both of your FICO scores and monitor them. At myfico.com, you can get your full credit report for about $13, and it’s helpful (if scary) to see exactly how lenders view you. It helped me understand the impact of all those skipped and late payments on my part, and how consistently responsible behavior can raise your scores or mitigate the damage of past behavior.
    Good luck working this out with your wife. It’s difficult, but if you’re both willing to be partners in it, you can get past it.
10

For starters, I think you need to lose the “her money/my money” approach so there’s nothing being hidden. You should sit down together when you do the bills (and I suggest doing them every week as they come in, rather than waiting until the end of the month).

One rule that has helped us maintain a healthy household budget is to NEVER CARRY A BALANCE ON A CREDIT CARD. We charge things for convenience only…not as a loan. We pay the bill in its entirety every single month. Last month we both had large purchases on the card, and our bill was over $1000. We paid it in full (dipped into savings for part of it). The thought of paying interest on a non-emergency item just makes me crazy!! Of course, we paid the savings back within two weeks.

Both of you should discuss every purchase with each other until you get back on track. It’s not demeaning when it comes to straightening out your finances. Once she gets in the habit of being responsible, it’ll just come natural to her (I speak from experience).

11

I agree with Kalhoun, I think the “mine/yours” approach is not working for you guys, at least not in its current form. It’s troubling to me that your wife felt she had to hide this from you until she was ten grand in debt, and that her solution was for you to “bail her out”. Some level of separation can be good for some couples, so that you don’t have to ask her other for permission to buy every little thing, but you guys seem to be financial strangers.

You need to sit down together and reach some middle ground on managing and spending money, and you’re going to have to be open to the idea of higher levels of spending on things you don’t value but your wife does. You can’t just tell her what’s OK and what’s not, or you’ll end up in the same situation down the road. At the same time, once you’ve reached a reasonable agreement, you can then get more involved in keeping an eye on things so that you don’t end up $10,000 in debt again. Not by nitpicking every little purchase, but by simply categorizing your monthly spending (i.e. with Quicken) and letting her know when and where she’s consistently exceeding it, and discussing where to limit future spending to get things back on track.

12

OMG for a brief moment I thought my husband had become a member and had started this thread!!

Find out about the credit card account and what you both can do to get it closed, as well as how it will report and if the interest stops accruing after it is closed. One of the things that helped me to stay on budget was to get a budget together with my husband and buy a prefilled debit card. AMEX offers them. Or if she really loves to shop have her get a gift card that she can use at her favorite stores. And when the moneys gone, thats it. It really makes you think before you spend.

Good luck.

13

Thanks for all the advice everyone.

I still haven’t figured out what to do yet, but I asked her to prepare a written plan explaining what went wrong; how she would budget money in the future; and what would be done to make sure this doesn’t happen again.

She floated the idea of putting her credit cards away (but not destroying them or giving them to me), which was unacceptable to me. I suggested that she have a family member of hers agree to make good if this happens again. This offended her – but she might agree to it.

See, I forgot to mention that both of our families are pretty wealthy and would probably bail us out if it came down to it. But I don’t like to ask my parents for money any more than I have to. Also, I don’t like to take part in financing what I perceive to be frivolous excessive conduct on the part of my wife.

14

A compromise could be freezing the credit cards in a bag full of water.

That way, she can’t get to them on impulse…she has to plan to need them.

But they don’t get unfrozen until the debt is paid off and she has a plan not to let this happen again.

You mention both of your parents are wealthy…could it be she never learned how to handle money, since there was never a worry about it running out? How did your folks teach you about money?

Neither your folks nor her folks should bail you out. You guys are married adults, and mature enough to handle this on your own. She got herself into this mess, she can bloody well get herself out of it.

15

Kill her and dump her body.

16

My first thought was similar; along the lines of challenging her to list everything she spent the money on, so she could grasp how much of it was just nickled & dimed on insignificant crap, crap she doesn’t even have anymore but will be paying for for years to come. I know from experience that it’s really easy to get in the habit of buying things because they’re “just” $20 or whatever. But buy 100 things that are “just” $20 and that’s all of a sudden $2,000.

As long as we’re suggesting reading material, I’ll throw in the Tightwad Gazette by Amy Dacyczyn. http://www.amazon.com/exec/obidos/tg/detail/-/0375752250/qid=1068920306/sr=1-1/ref=sr_1_1/002-1432290-7674459?v=glance&s=books

I’m guessing the concept might put her off, but it really helps you think (and re-think) about your attitudes regarding money and using it to accumulate “things” etc. It also offers a lot of help and strategies as to getting out of debt, and addresses the “second income” issue as well. It’s a huge book, and at the very least will take her a long time to read and keep her out of the mall for a couple days. (JOKE!!!)

While looking the book up, I also see there’s a “Frugal Living For Dummies” book. Wow, if she’s ready to cut to the chase, maybe you should start there! (Sounds like she’s not, though, from what you’ve already written. I think it’s going to be hard for her to “reprogram” herself and it doesn’t sound much like she even wants to.)

17

Simple really:

http://www.selfdefenseproducts.com/batons.htm

18

Another book that might be helpful is “The Millionaire Next Door.” They have a good section on the daughters of wealthy parents and how they expect to be provided for.

I share the gut feeling that separate his & her money is not working for you two. Also, it seems like you have some thorny unanswered questions about the role of her parents (and perhaps your parents) in your finances as a couple. This is probably something where a counselor could help, because the questions could get pretty pointed. Is it your expectation that you will live within your income as a couple, but her expectation that she will always enjoy the standard of living her parents do? A lot of a woman’s identity can get tied up in shopping at department stores, not discount stores; getting her hair done at the right place; getting her hair professionally colored, not doing it herself; always having a fresh manicure, etc. And perhaps you subconsciously also have expectations of how nicely she will keep herself, the house and the kids without realizing how much that costs. This stuff adds up to $$$.

I would not have her work from cash. A debit card (or even credit card with the full balance paid monthly) will give a record of where the money is going. The secrecy was very bad.

Best of luck to you both, wishing you success.

19

Marriage Counselling. The inability to discuss these things without protesting and getting upset is a bad sign. You will never get through this financial crisis and still have a healthy marriage if you cannot communicate and agree on an approach that is going to get you BOTH out of this mess. You could keep you marriage and go bankrupt, or get out of debt and be divorced, but not both unless you begin talking effectively.

20

Please be aware that this isn’t about the money so much as it is about your marriage and your family. I think the difficult thing here for you and for her both is that this budgeting casts you in the role of the stern parent, instead of as the equal partner. I know that would gall the heck out of me as your wife. You are probably hating the role, too.

Some suggestions, most based on previous advice: go to a financial planner, e.g., a neutral party, especially if the planner will be the monitor, not you; both of you write out the budget, etc.-it is not homework you have given her, but a shared partnership business deal; realize that you may have a part in the responsibility for this, too, and admit it to her.

Most of all, don’t pay off your debt only to lose a marriage. That is your biggest concern, for yourselves and for your children. By treating her as an equal partner, you are setting that pattern for your children, too.

I know you feel angry and betrayed. Realize that this has been eating her for along time, if that makes you feel any better. She probably came to you to be bailed out because that is the only solution she could think of. Be her friend, and show her there is another way. Sit down together with the credit card statements, and collect the data together. Forget budgets until you do this: concentrate on really figuring out how much really went for what. It could even be that the legitamate costs of things will come as a surprise to you.

There are a lot of budgeting books in the libraries; I am also partial to Michele Weiner-Davis’s books on marriage. Researching can be another activity you can share between you.

This is very tough on you, but keep in mind that you want to win a war here, not just this battle. Winning the war means a good, open marriage, with partners who can spend prudently and count on each other. Winning just this battle may mean punishing and humiliating her so that next time she doesn’t come to you in time–if she is still with you at all.

We are all rooting for both of you! Good luck.