Managing Household Finances
I've been married for over 20 years. For many years, things were good. During that time we bought a house, and had a baby. Our baby is now in high school. However, about 10 years ago, we hit a rough patch. Partly due to the resulting stress, my husband (who is an alcoholic), spiraled into out-of-control drinking. He got sober 4 years ago, but I started noticing suspicious signs that things were not going well with us financially. Approaching my husband about this, he would always say something like, ''Oh, I don't know what happened. I thought I paid that,'' or something else equally as odd.
The problem is that I keep discovering additional debts and problems. Every week I learn of an old credit card that I didn't know existed that has been sent to a collection agency, or that we never paid some taxes, or that he'd modified our home loan at some point, and the interest is about to go way up, or that he has unpaid traffic tickets. I've become terrified of the mail.
I'm trying to keep us above water, juggling all these debts and obligations as best I can, but now our monthly expenses are getting dangerously close to exceeding our monthly income. We make a combined $182,000/year (mostly his salary), and almost all of that is tied up now. We can barely afford to take our kid to a movie, or get a pizza - no exaggeration. It's absolutely suffocating.
As our house is under water now, and we owe back property tax, and our credit is ruined, I am in constant fear of losing our house to foreclosure or tax auction and not being able to rent - thus ending up homeless with a child. I have developed chronic insomnia. I lay awake each night having terrible anxiety attacks that make my stomach hurt. Adding to this, I don't know what to do with my anger. I am so angry at my husband for doing this to us, while he shows very little remorse of concern, that the anger is overwhelming. I feel stuck, and am starting to lose hope that we'll get through this OK. I'm frightened. We need help, but I have absolutely NO IDEA what or who can help us. A financial adviser? A lawyer? A support group? Divorce?
I'm sorry to hear of your trials and acknowledge you for asking for help. I grew up in an extended family where some relatives were active alcoholics, but no one recognized the behavior as such. I only realized it after I discovered I was married to someone with an addictive personality and serious money issues. Addictive behavior has serious consequences on the people who love the addict. I chose to break the pattern and got counseling and participated in Al-anon. My suggestions: Number 1--Take care of yourself physically, mentally and spiritually. See your doctor to make sure your health is ok. I found swimming to be a great overall exercise for keeping fit and sleeping better. Meditation, walking and drinking Sleepytime tea are great too. Join an Al-anon group, which exists to support relatives and friends of alcoholics (even recovering alcoholics) Consult a financial advisor. A very good friend highly recommends Jan Lambert at 925-820-2975. Check out Consumer Credit Counseling in Berkeley http://www.moneymanagement.org Consult a lawyer specializing in family law to find out how to protect your personal assets from your spouse's money behavior. Support your daughter to keep up her friendships and activities and not be drawn into the issues between you and your partner. Suggest she join Alateen. Wishing you all the best. Sympathetic
Your husband sounds like my wife, except she has had no issues with alcohol. Divorce can be tremendously expensive... if you think you have bills now. I suspect you may be able to manage this so long as you take control over all the finances, as you have been doing. I have been where you are, where the surprise un-paid debts should up in the mail, or on the telephone answering machine. It's a tough slog, but if you can rein in both his and your spending, and steadily pay down the bills, you will dig yourself out. (Ask for payment plans where possible. Often times medical bills can be paid on interest free/low-interest installment.)
The next question you need to answer regarding a possible divorce is whether or not you are prepared to manage the finances in this relationship for the rest of your life. There will be no going back once you take it all on and bring order to the disorder. You won't be able to let yourself give up the control. Note also that divorce is not only about dividing up the assets, but the the debts too.
married to financial incompetence
I'm afraid I don't have a specific person to recommend to you, but it does sound like the best thing for you, financially, may be to file for bankruptcy. So I'd suggest consulting some BK attorneys for their recommendations. It's possible that you could dig your family out of this hole without resorting to that, but it would obviously require significant cutting of expenses and a lot of time and effort on your part to negotiate payment plans with creditors.
Also, it's likely that your husband's issues around dealing with finances and his alcoholism are both symptoms of the same mental illness. He may appear to be keeping it all together otherwise now, but the inability to cope with bill-paying sounds a lot like my husband (fortunately in my case, it was always obvious that he was horrible at handling money and so I've always done most of it) who struggles with depression. You mentioned meds, so perhaps the people who helped your guy get sober also helped him with general mental health care too -- and you can raise the issue to them even if they can't disclose any information to you -- but if nothing else it may help you with your anger at your husband (and oh man have I been there) if you can keep in mind that his neglectful behavior isn't really willful and isn't intended to hurt you or your daughter. It's a reflection of the same neurological conditions that led him to be a drunk for so many years. The harm it does is more subtle, which can make it more difficult to overcome, but he's shown he can make changes and he's getting treatment, so those are positive things that should give you some hope.
A support group, for you and perhaps one for your daughter as well, isn't a bad idea either. Insufficient, by itself, to solve your problems, but possibly helpful. Al-Anon groups are an obvious place to start, though they're not right for everyone. Your husband's counselor -- or a counselor at your daughter's school -- might know of other free or affordable possibilities. Paying the Bills
This sounds really terrible. I'm so sorry you are having these troubles. I don't think divorce will fix the problem. I think the best thing for you to do is to get your hands dirty and figure out what your financial situation really is. Get the numbers. Don't leave it up to your husband any more to manage the finances. It will be a lot of work and it will be very painful and very stressful. I know how much it hurts to manage finances when your expenses exceed your income. It is no fun. But you really need to step up to the bat now and take on this responsibility yourself and stop leaving it up to your husband to do this. Your husband has demonstrated that he cannot do it, so that leaves you. You made a good first step by writing down all the problems and thinking it through. Noe it's time to take action - you can do it! If you can afford a financial consultant to help you, great. But ultimately one of you needs to be the grown-up and get a grip on the money situation, and it ain't gonna be your husband!
Hello BPN, I have been having a lot of worry and stress about our financial situation. We were a 2 income home (in our early 40s) and now recently went to a 1 income when DH got laid off. Most days the stress is manageable but some days I find myself going out of my mind with worry. We have a mortgage and tax that we can handle on my salary but other things have had to be cut (e.g., eating out, small shopping, retirement savings, college savings for children). I am finding myself fixating on retirement savings and paying for kids schooling (at the expense of enjoying the small things in life) -- will we every retire, how will we live, how will we ever pay for the kids' college etc. I am just starting to feel like a bad an irresponsible parent and person for not being able to do these things, epsecially when I have friends who pay for their kids to go to private school so that they can have a head start in life. I am unable to reason with myself and find myself awake at night a lot. Help! Slap some sense into me, please
These are harder times financially, and many of us are worried. However, worry only steals away your joy, so good for you for recognizing that poison. There are many options to worry. You look for practical solutions, live mindfully in the moment, meditate, etc. My personal best antidote: GRATITUDE. It's nature's defense against so many mental ills. Give some of your precious little free time every week to those in need (see volunteerinfo.org, Google or BPN archives). If that doesn't cure you, give away some money each month. Don't forget http://eolife.org/articles/Beliefs/It_Could_Be_Worse.aspx It could be worse.
My husband and I both paid for our own college at inexpensive schools and have turned out fine. I only mention this because if you can't afford it, you don't owe your child a college education. They can earn scholarships and take part-time jobs and those things will help them build character. Your primary concern should be your own retirement, so take care of that first. gl
I used to worry about retirement and kids college but with my SO self employment becoming scarce in the past few years. I just worry about keeping our home. I think its great you are stressing about college and retirement and you should continue to make sacrifices to fund that. However you should feel grateful that you can make your motage and other bill payments on a single income. You SO will eventually get another job and help contributing to kids college and retirement fund. anon
Hi Fellow BPNers, The last few months I have been very worried about our finances. We have 2 young children and a $400k+ mortgage and I feel I am obsessing disproportionately abt our financial situation. My husband and I earn decently -- 160k -- between the two of us but still we seem to have no savings. We put away a some money in our 401k every month and only abt $150 a month for our kids' education. A bulk of our money seems to go in mortgage, home maint. taxes and childcare. We don't eat out much (5 x a month) and hardly ever buy new things.
I don't quite understand what we are doing wrong that we can't save more money. Some days I get so stressed after I look at online calculators telling you what you need for retirement and to pay for 2 kids' education. I feel we'll never have enough for either of those 2 priorities and that we will have to work forever. I also have other interests that I feel we won't be able to achieve like traveling the world, etc.
I was never one to worry about money. In grad school I lived on 15k a year and had no debt. I was happy and carefree. I don't know what's come over me but I've become very worried about money after the kids were born. My husband feels I am worrying about nothing. Not having savings, etc. does not bother him. But he comes from a family where his siblings have declared bankruptcy and live off their credit cards, Compared to them, we look super responsible.
Am I worrying unnecessarily? I guess I can't sort out if it's a real problem or one I am creating. Should we try to save more and how? I'd love to get ideas from other folks who've taken a stricter approach to their budget. Is it irresponsible for us to not have proper savings for our kids college? I feel ashamed to worry like this when I know we make good money and have so much. frettingabtfinances
Hi, Ah, yes: how to find that peaceful spot / balance between obsessing about finances and putting one's head in the sand. It can really be challenging with the realities of today. My mantra in the moments of highest anxiety: ''I am grateful for all I have and I have faith in my unfolding future.'' Then with that clear vision, I do the work. But, of course, we often pair up with our opposite when it comes to money matters. The worrier and the happy-go-lucky one. The saver and the spendthrift.
Two years ago, my husband lost his job. I had to drop out of grad school to frantically search for a job. I couldn't find anything. We drained our savings. We eventually moved, because of a job, and are getting everything back on track. Why am I telling you this? Because you never know what is going to happen. You just don't. And worrying doesn't add a penny to your bank account, or a day to your life.
You don't *need* to pay for your kids' college; there are community colleges, loans, scholarships. If you do, that is wonderful--but you don't have to. There are so many people who have nothing right now. I would count my blessings.
If you still find yourself worrying, maybe seek help for anxiety (I'm sure you have health insurance, another thing so many people *do not* have). poor mom
160K is plenty to be able to save. We live on half of that (family of four) but we rent so that makes it easier in some respects. It all depends on where your money is going. Do you have more than one car? Do you have expensive cell phone plans? Do you have cable television? Etc. All of those things are optional. Maybe cut down eating out to 3x per month. Grow your own vegetables. Little changes can go a long way. happy with the basics
Can I just say I share your stress? I'm in a similar financial situation and save less than you do... it just seems like the expenses of life take up all our money. My husband isn't that worried about it but it does worry me. I don't have a solution. I think it is just the squeezing of the middle class in the very expensive Bay Area. I hope someone else offers some helpful ideas! another mom
I wouldn't worry too much about saving for college right now. When you go to apply for financial aid, it's actually a disadvantage to have a chunk of money saved up b/c they'll take that right away before calculating if you need assistance. Better to put it into retirement where it doesn't count against you. By the time your kids get to college age, chances are you'll make more money. I'm sure your childcare sucks a lot of money out of the household income, so once that goes away (think public school) everything lightens up immensely. -anon
I don't have much in the way of advise but I can give you a little perspective. we are in a similar situation with similar spending habits. one thing you should realize is that, as your kids get older, childcare will get less expensive. if you send them to public school, there is a light at the end of that tunnel. Also going out 5 times a month does seem like a lot to me. I love eating out but it really is expensive and not all that healthy. we tend to make a lot of food and eat leftovers so we're not stuck cooking every day. Also find some free way to enjoy life and your family - the library offers a lot of different options, exercising - not a gym membership. whatever you think you'd enjoy, sometimes I think we are all so busy and so stressed that we forget to enjoy life. good luck
I suspect you are worrying a bit too much -- but it's possible that you could save more money than you are if you choose to make that a priority. As far as saving for your children's education, two things to keep in mind: (1) Retirement savings are a much bigger priority. There are a lot more potential sources of funding for education than there are for retirement! Besides, the possibility exists that your kids will not need a lot of money for college, for a variety of reasons. (2) Given that you and your husband both work and you have young kids, I assume you are currently paying (a small fortune) for full time childcare. That budget item will likely go way down during your kids' grade school and high school years, and the money you save, relatively speaking, can go toward saving for higher education (or other ''launch'' money).
No, it's not irresponsible of you to not save enough to pay for your kids' college educations. It's a wonderful gift if you can do it (and $150/mo is a lot more than I'm able to save for my kids right now!), but not at the expense of giving them a secure home, the best care and the widest range of experiences you can give them NOW. When they reach college age they can apply for financial aid, get student loans, work to pay their own way, etc.
But it is irresponsible not to fund your own retirement if you possibly can. Are you maxing out your 401(k) contributions? Do you have other long-term investments? What about making extra payments on that mortgage so that you won't be burdened with high housing payments when you're retired?
If you're not saving anything beyond your current needs, then sure, take a hard look at your expenses, see what you can cut out or cut down on and create a budget. Maybe see a financial planner who can help you figure out realistic savings goals and how to achieve them. But it doesn't sound to me as if you're in dire straits or anything; try to relax. Your kids won't hate you if you decide to travel the world instead of paying for four years at an Ivy League. Middle Income Mom
I do/did stress about money much more once we had kids. Partly it is just so much more expensive to have kids than not and partly I'm worried about the future for them. But remember that now is an expensive time -- daycare and preschool cost A LOT of money. But unless you are sending them to private school for elementary school this cost will end in a few years.
We are almost in the exact same position as you in terms of what we make and our mortgage. We have 3 kids rather than 2, but the oldest is in public first grade this year. Once he got out of preschool, his childcare costs went from $18,000/year to $4,000/year (mostly in the summer) plus another couple of thousand for classes. And this is after- tax money.
We decided to take one year off from contributing to our 403 (b)s. Then I will be back at work full time and the middle child will be in Kindergarten (though we may do private for that one year since our school district has half-day Kindergarten *and* fairly large K classes), so we will get both a boost from my increased salary and from not having to pay for preschool. When our youngest is out of preschool, we are planning on putting into college accounts what we were paying for preschool plus a little more.
Now we have no college savings (other than a $50 savings bond someone gave our oldest as a baby gift , we aren't contributing to our retirement accounts, and we are draining a little of our savings each month to stay afloat. But in 3 more years we plan to be putting $2500/month into college accounts plus maxing out our 403(b) s plus building up our savings again plus having a little extra every month. It sounds unbelievable, but we are just spending A LOT of money for preschool and daycare AND I've gone down to part time to help manage the load at home while our kids are so young. In 3 more years, we'll have about $40K/year more (taxable) from my salary plus $35K/year more (already taxed) from decreased childcare costs.
My guess is if you run the numbers, you will see that your trajectory looks similar. Don't let the ''now'' freak you out.
Also, I heard that you are supposed to contribute to retirement first and then do college funds. Not sure why, but that's what we're doing. Anon
I think you and your husband do need to get on the same page regarding finances and it's probably closer to your perspective than his. Most Americans aren't saving enough for retirement. As hard as it is to say amongst parents, that should be a higher priority than saving for your kids' college. You can get loans and scholarships for college, but nobody provides the same for retirement.
I would encourage you to track your spending and divide it into discretionary and non-discretionary. Save as much as you can, but you also need to set aside money for fun stuff and current life experiences. It may very well help to seek out a financial planner who can act as an objective 3rd party to mediate between the two of you, but your husband has to buy into that otherwise it will be a waste of time and money. Best of luck, John
Your posting was quite frustrating to read, but not because of the income level per se. I sensed maybe erroneously that there was a lack of awareness of where 160K (gross, I assume) goes *exactly*. Making this much money it is essential to appreciate what you have, what you use, how we make the most of it, and how to conserve it. I don't know what your husband means exactly, but it sounds like he doesn't care where it goes, or why there is none left to put away, but that it will somehow always be there. I think you are much wiser to realize that you need to put as much of it away -- although, worrying adds nothing (the responder who stated that had some excellent advice).
The way to deal with the stress is to get informed. You need to sit down and figure out *exactly* how much of your pay you spend on the essentials (mortg., ins, prop taxes, utilities, childcare, etc), and how much is discretionary (dinners out, lunch expenses at work, ipads, kindles, flat screens, CD collections, and other ''hobbies'' -- which regrettably, some people call ''needs''). Work up a spreadsheet and do a monthly breakdown of expenses, and also a yearly one (for things like prop taxes that are payable twice a year, or summer camp).
If it all goes to the essentials, then, you are in good company with many households who are trying to deal with the outrageous cost of everything these days, childcare being one them. It's not clear if you have that level of insight into your expenses. If you were simply estimating, get ready for a big surprise with the ''undocumented'' ones. A common one is the tendency to grossly underestimate how many times people go out to dinner and how much they actually spend. The same holds largely true of many ''lifestyle'' expenses.
Childcare is usually very costly to a working couple, so maybe it costs you as much as the mortgage, or even more. That said, this income level even after taxes still leaves you with a whole lot of net. It's hard to imagine where it all goes. Home remodeling, etc tend to eat up a lot. Even then, it's hard to find how the numbers add up to that much.
How do I know this? We are very much in your situation in terms of exposure, expenses, home mortgage, etc. Except for one thing: we have been unemployed for two years, despite our advanced education, professional experience, etc. We used to make that kind of money, but we never stressed that it is not enough to put some of it away. We were really grateful to the universe and helped friends and relatives as we could. Things are much more uncertain now for us, since we have very little income. But we still manage, somehow. And we are not alone, we have other friends who are also mid- and late-30's with kids who are in similar if not tougher straights. My point is that what you consider a stressful financial situation is the lap of luxury for someone with no job, no health insurance, a sick spouse and two kids.
I think you need to learn to appreciate what you have, and to also find out how much, MUCH tougher other people have it. If you can't save with that kind of income, what will do it? 180K? 200K? 500K?
We would be happy and truly comfortable running a similar household on just 60K. how do others manage to live on much less?
I'm a terrible filer and tracker of my finances. I always pay all my bills in full and never spend more than I have, but my issue is probably rooted in being poor as a kid, and anxious feelings around money that make me want to avoid the topic. What happens is that I let statements and things pile up because all my bills are automated, and then I have a huge and daunting task of dealing with and filing this stuff once it becomes a mountain. So is it wise to have all my bills converted from mailed statements to emails, or will this even further cause me to create a financial mess. Do any money phobes out there use Mint or some other finance tracking service to help them stay organized? What's the minimum I need to do on a regular basis to be responsibly on top of things? Thanks for helping my $ anxieties!
Paytrust is a good way to pay bills for a money phobe like myself fellow sufferer
Try this most amazing on-line service: mint.com It is free; it is fast! You will love it. It allows you to track everything all in one place, plan your budgets, watch spending trends, track expenditures from multiple accounts all in one place. Sarah
I read that people should have some basic financial things squared away to prepare for a baby. Things include buying life insurance (maybe supplemental disability insurance as well), setting up a will and trust, updating the budget, and start saving for college (like opening a 529 account). Did everyone else get all this done before the baby arrived? Is there a one stop shop to cover all my basis easily? I looked into financial advisers but they either cost $4K+, want to manage my portfolios for a 1.5% fee, or are trying to sell me stuff. Thanks for your suggestions! Connie
No, and I still haven't done it (kids are 5 & 7). Probably not the best, but! I was also recently told by a financial advisor that I should focus on building up my retirement (I'm 38) rather than investing in a college fund. EP
The number one thing you should do NOW is buy life insurance. Get a level premium 20-year term plan. The reason to do it now is that you are younger and healthier and you'll qualify for a lower premium plan now than you will a few years from now. And, you never know when you'll develop some health problem which may not be lifethreatening but could prevent you from getting ANY life insurance. Case in point: I bugged my husband incessantly until he got life insurance when our son was born. He wanted to put it off, but I pitched such a fit he finally did it. A few months later, he was diagnosed with cancer. He's fine now, but no one will sell him life insurance, so if he hadn't gotten the coverage then, he never could. And he'd be uncovered if a tree fell on him or a drunk driver ran him over. You can do the other stuff later, but get life insurance NOW.
you must have some significant amount of asset, or you're an incredible planner. we didn't do any of that until the baby was born. we now have two kids, got the life insurance 3 months after the 1st one's birth, and set up 529s for both kids shortly after their births, but primarily because hubby's side insists on giving non-cash gifts. (we have yet to contribute due to a lack of funds.) still didn't do a will/trust, but we're slowly making the decisions - i know my millionaire friend doesn't even have life insurance. in fact, most of my friends just starting out with the family thing don't have any of that. thank goodness that most things go okay. so do what you can, and shop around while you have the time and brainpower. congratulations, and good luck! kim
A lot of these things you can't actually do until you have a baby, because they need the baby's SSN number, or have the baby exist. It's kind of strange because what happens if you die during childbirth?
Anyway, before birth, I went through my finances and updated my budget, and saved up money for a year for pregnancy and first year expenses. I went over my plans w/ my partner because the only thing I was afraid of was dying at childbirth and then needing someone else to do my financial planning for me.
One thing I learned was that I didn't save enough for childcare. I also thought about a will. But didn't do the will till after my daughter was born.
For supplemental disability, usually companies give you one chance a year to enroll. So if you're planning to get pregnant, research beforehand your options and enroll. I think it's too late to enroll and get disability after you give birth.
Usually companies will also give you a chance to enroll in life insurance, health plans, accidental death insurance, flexible spending, etc etc, within 30 days after you give birth. Just make sure you research your options before hand. Because you won't have time after when you have to make your choices!
Similarly, you can't open up a 529 or coverdell account till the baby is born because you're opening a custodial account and I had to give them my daughter's SSN. I'm not a financial advisor so I don't know if there's a way around it.
Lastly, be sure you have your healthcare directive set up before you give birth. That was the one thing I made sure I did before hand as I'm a worrier and one never knows what may happen at birth. Maybe not as important if you're married but I wasn't. anon
Here is what we did/do to get/have our financial house in order before the birth of our first child (we now have 2 girls ages 5 & 7):
-Max out my husband's 401(k) every year with me as primary beneficiary (if I die at the same time, then the money goes to a trust)
-Max out Roth IRA's for both my husband and me (I do not have any retirement plan through my jobs)
-Max out term life insurance for my husband through his employers (we have about $1.5 million in term insurance). I cannot get life insurance. It is not offered through my employers - I work part-time. And, my blood pressure elevated during my pregnancy and has never come back to 'normal' levels since giving birth (without medication), so I am not eligible for most life insurance through alternative means. If we had a 'do-over' I would have gotten a $250,000 to $500,000 policy to cover childcare (I am a mostly SAHM) until the children were in elementary school full-time.
-We buy all sorts of weird types of insurance to cover the 'what-ifs' of my husband's profession - loss of license, short-term disability, long-term disability, supplemental insurance to cover the loss of one type of term-life due to a very narrow part of work in my husband's second job.
-529 plan - we contribute $150/month plus all financial gifts to my children's plans. We use Iowa's 529 for one child and Utah's 529 for the other child. Both are great and the money can be used for either child.
-other financial: We contribute a couple of hundred dollars a month to various mutual funds.
-will's...our assets on my husband's death would fall prey to the 'death tax' (it comes back next year...unless congress changes it), so we are considering doing a trust of some sort...right now we have wills that specify what happens to our assets and who get the kids. We have spoken to who we want to have the kids and who will administer their trusts.
Budgets? We don't really have one. We always planned on living off of one income. My income is gravy. We do stick to paying off our credit cards off every month and 'paying ourselves first.' Periodically, we will shut off 529 contributions if we have a crazy month (September and January, it seems...) -anon