Money Troubles…Troubled Marriages
Use it up, wear it out, make it do or do without?
Well now, let’s get down to the business of dealing with financial management differences that crop up in marriages all the time. I grew up in a home where the mantra was Use it up, Wear it out, Make it do, or Do without. My Dad never made more than $35,000 a year and yet put three kids through college (w/some scholarships) and managed to leave an estate in 2014 of more than $600,000. We learned early…Financial Maturity
People hardly ever get together with either the same expectations or the same practices regarding money. In addition, unless you are really lucky, nobody bothered to teach you how to manage money, credit, investments, record keeping, insurance, and a bunch of other stuff.
If that wasn’t enough, consider the pressures that are placed on young adults to over extend with inappropriate credit practices. Credit card offers with great sounding rates, pressures by peers and society to get it all NOW. It’s “I want what I want when I want it.”
As of the fourth quarter of 2024, U.S. consumers owe a record $1,211,000,000,000…that’s trillions on their credit cards. The average credit card debt per consumer is $6,380 in the third quarter of 2024, rising to $6,580 in the fourth quarter of 2024.
Look around you at the pressure to buy more home than you can afford with interest only or negative amortizations and all the other stuff that has created the housing crisis and has brought about the knee jerk reaction of our government to solve our problems individually and as a nation by printing and distributing money…
Try this idea on for size. There are only three ways governments can get money to put into circulation:
· Borrow it. The government borrows money by selling government securities to foreign governments and corporations. The more the government borrows, the more it has to pay in interest to attract borrowers. The higher the interest rates the government has to pay, the more inflationary pressure it puts on the economy. The impact at home is that increased debt (just like at your house) raises the amount of income (GDP for the government) that has to be allocated to debt service. Ultimately this erodes the revenues that can be applied to social programs, defense, and all the other legitimate concerns of government. As of this writing, our Federal government is so out of control on spending that it has to borrow 42% of every dollar it spends. How long could you do that at your house?
Here are 7 scary trends taking place in the USA today. While my generations and our predecessors created this mess…all of you born after 2000 are going to have to do the tough job or suffer the ultimate consequences of not cleaning this up. It is scary:
https://michaeltsnyder.substack.com/p/here-are-7-astonishing-economic-charts?publication_id=1520363&utm_campaign=email-post-title&r=4zt2g&utm_medium=email
https://michaeltsnyder.substack.com/p/here-are-7-astonishing-economic-charts?utm_source=post-email-title&publication_id=1520363&post_id=159292446&utm_campaign=email-post-title&isFreemail=true&r=4zt2g&triedRedirect=true&utm_medium=email
· Tax it. The government taxes its citizens and corporations to create revenue to conduct its legitimate business and some other business it probably should not conduct as DOGE is pointing out. The higher the tax rates, the less money there is in circulation and the less incentive there is on private investors to put money into business expansion. When private money leaves the marketplace, jobs are not created, people are not hired, the economy stalls and unemployment soars. The government cannot and does not and never has created jobs and unless it does something to stimulate the investment of private capital in a free marketplace, the economy stalls and the ability to create wealth and succeed financially is thwarted. Winston Churchill’s famous quote comes to mind, I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
· Print it. The government (without any substance behind currency other than the “good faith and credit of the USA”) can simply print more money than the economy can support and spread it around to troubled sectors or special interest groups. As this occurs, the real value of the money in circulation is diminished since the printing does not add value, just spreads real value over more money. Look at what happened to Weimar Germany between the World Wars for a chilling example of what unfettered printing of money produces. See http://en.wikipedia.org/wiki/Hyperinflation
So what does that have to do with you and your home? The prospects of being able to accumulate wealth and succeed in the USA today are lower than they have ever been in our history.
Individual initiative and financial success are being truncated by the pressures toward redistribution of wealth and social equality. No society has ever encouraged ambition and accomplishment when there was no incentive to succeed. These are indeed troubling times even with current efforts to remediate.
So, how do you address the world as it is? Here are some suggestions for you to consider as you do your financial planning.
Go back to the NUGGET on Expectations and review the questions about money management…I’ll wait right here until you get back. Discuss those questions and then come back with some sort of agreement. Got a News Flash for you. It really doesn’t matter what system of managing your money you choose…or who does what. It just matters that you get some SYSTEM that you both agree upon. Do this early before you get too far into your marriage…or if it’s too late for that, then draw a line in the sand and start NOW.
Here are some suggestions:
Income: Decide whose money it is. Yours? Mine? Ours? If you have two incomes or one get on the same page in the book. We find that “Ours” is generally healthier. Make a decision to live below your income…always, no matter what! I mean ALWAYS!
80-10-10 Rule: The sooner you adopt the 80-10-10 percentage rule for managing your money, the better off you will be. Live on 80% of what you earn, save 10% of what you earn and give generously to causes important to you…10% of what you earn.
If you believe that God was serious when He said, “Bring ye all the tithes into the storehouse and prove me now herewith if I will not open the windows of heaven and pour you out a blessing that there will not be room enough to receive it…” then DO it.
I know a church that offers its members a money back guarantee. Try the 10% giving for 90 days and if you don’t believe God was telling the truth by the end of 90 days, they will give you your money back…all of it no questions asked.
Then save early and often. 10% is not too much for anyone to save.
If you have 401K matching fund opportunities at your work, max our your contributions. Every year’s contribution will make you more money than most anything else you try.
The Riches Man in Babylon by George Samuel Clason’s 1926 classic suggests several principles like…a part of what you own is yours to keep and send some money on ahead for the old man/woman you will someday be. Good advice.
More on investing later…just do it. Send something ahead for the old people you will be someday.
Discretionary spending: All too often, impulse spending is the biggest enemy of successful money management. Some rules of engagement must be adopted and kept by both of you if you are going to get the most out of your relationship. Here are a couple of suggestions:
· Budget (I have an interactive .xls worksheet for budgeting that I’ll send you on request).
· Decide how much either of you can spend without permission or discussion
· Allocate some MAD money that you have available to spend during the week without having to account for it, (sometimes referred to as WAM – walking around money).
· If you’d like to see how much impulse spending you do, just track every penny you spend in a pocket note pad for a month. The results will be revealing and probably a surprise.
· There are a variety of good resources to help you manage your finances…either from the git-go or to repair whatever your existing practices have created
o Dave Ramsey and Mary Hunt and Crown Ministries all have good systems to help you retire your indebtedness rapidly
Dave Ramsey http://www.daveramsey.com/
Mary Hunt http://www.debtproofliving.com/
Crown Ministries http://www.crown.org/
o Mary Hunt also has a free website www.everydaycheapskate.com that is chock full of great suggestions for frugal living.
· We will pick up there next week. Y’all come on back.
