Hello and seeking some advice.

TheMrsW · May 2014

Hello! Newbie here.

So I'm seeking some advice (or possibly some encouragement?) DH and I just got married on the 4th. We've talked about money before, but now that we're married I feel the need for us to talk about it again - which we are doing tonight. He has very little debt, one credit card which he pays off almost that carries a low balance and his car loan. I, on the other hand, have school debt and several credit cards (I only have myself to blame for my credit card debt).

I understand the concept of paying down CC's with the highest APR, then taking that payment and applying it to the next CC, etc. but I feel like I am stuck in a rut and can't get out of debt. The only debt I've been able to pay off is my first school loan and I only have two more, and was very excited about this. I am also about $120 dollars from paying off one CC as well. So I must be doing something right?

We have zero savings and zero emergency fund, which gives me a lot of anxiety. DH works full time and I part time, so money is tight. I am currently working on getting a full time position. We are hoping to buy a house in the next few years but I have this fear (probably irrational, but still!) that we will be stuck in our apartment forever.

Now that I've gone on with possibly unnecessary information...
What keeps you motivated to save money and/or pay off debt?
What works for you to stay on budget and pay off debt?
Save an emergency fund first or pay off debt or do both at once?
Pay off CC's with highest APR or highest balance first?

hoffse · May 2014

We stay encouraged by seeking out inexpensive or free activities together. Tonight we're going to a minor league baseball game with tickets I got through my firm. We've also found that exercising together accomplishes two things: it helps us get back into shape, and it relaxes us mentally when the amount of debt we have starts to feel like it's going to take forever.

I also find it helpful to focus on one bit at a time. If I think "we have tons of student loan debt" that feels impossible. If I think "We have 2 months and just a bit more to go on this one loan" then that feels a lot better.

Others can give you additional tips.

I would definitely pay off the card that only has $120 left. That's low-hanging fruit. Then I personally prefer going by interest rate (because mathematically it saves you money), but the DR fans prefer going smallest balance to largest so that you don't lose motivation. Big picture - it doesn't really matter which method you choose, as long as you get it taken care of.

I do think you need at least a small emergency fund. Stuff happens in life, and you don't want to be reliant on your credit card when it does.

In reading your post it sounds like you and your husband are keeping finances separate? Have you talked about your budget together? You guys need to be on the same page, and I will say that even if the majority of the debt is yours, he needs to help. 75% of our debt is under my H's name. I knew that when I married him, and I've been paying down undergrad loans for him while he was finishing law school. It's NBD. Once you're married, you rise or sink together, even if you don't commingle your money.

Another thought - have you considered taking money you received as wedding gifts and applying it toward this debt? It's not the sexiest thing you could do with it, but ultimately it's probably the best use of it. Money is a long game, not a short one.

Finally - why does your H carry a balance on his credit card at all? It doesn't do him any good, and he's probably paying 20-25% interest on it. That myth that carrying a balance helps your credit score is exactly that: a myth.

KatieCutie05 · May 2014

Well now that your married you have a few very important steps to take first before you can worry about any of this. Your still working separately without each other....so first you need to discuss how you and your husband are going to do this together. You need to do all of this together, it will be the greatest thing you can do for your marriage. That means you now have a car loan and he now has a student loan. So you need to get one joint checking and savings and close ur individual ones. Then make a joint budget together. Then u need at least 1k for a small emergency fund. Pay off the credit cards first because they have the highest interest then the car and student loans starting with the lowest balance one first.
I highly recommend reading Dave Ramsey Total Money Makeover. Ultimately what ever you do the most important thing is to have a plan for your money and a joint goal and if you really work together toward a common goal then you will get there.

kmcd0413 · May 2014

I second the recommendation for Dave Ramsey's Total Money Makeover. He's got a class too - Financial Peace University. My husband and I have been working the plan for 6 months and we've paid off $12,000 in debt during that time. We have $30,000 left (my student loans) and plan to be completely debt-free by February.

For the time being, list your debts smallest to largest (not by interest rate - by amount owed). Throw as much money as possible toward the smallest debt while paying the minimum on all the rest. When you've knocked that debt out, apply what you've been paying toward the smallest debt to the next debt. Wash, rinse, repeat. This is called the debt-snowball.

Get on a written budget, too. Minimize or completely eliminate "extras" like dining out and extended cable packages.

And, most importantly, WORK TOGETHER. When you get married, your finances get married, too. He doesn't have a car loan - you both have a car loan. You don't have student debt - you both have student debt. The left hand needs to always know what the right is doing and vise versa. Working together is the only way to win.

hoffse · May 2014

Also check out Smart Couples Finish Rich by David Bach. It's a good one and focuses more on the long-term perspective that you need to keep in mind when handling money as a couple. While you definitely have some important short-term goals, neglecting the long-term ones entirely can screw you over later on. He goes through a questionnaire to help you talk about money together in a constructive way.

EDIT: One more thought - Do take a hard look at things you can cut or places where you are bleeding money (every single one of us bleeds money somewhere - it's inevitable). Cut down where you can. That said, you do need to make sure you spare yourself a bit of room in your budget to live life. It's not realistic to think you will never go out to eat or never go to a movie or whatever during the time you are paying off your debt, especially if you are in it for the long haul (H and I are on the 7 year plan... eliminating eating out entirely is not going to happen). If you are too strict, you will lose motivation. Getting finances in shape is a lot like losing weight. Crazy diets don't work - you have to change your basic habits in such a way that it fits into your lifestyle. It might not always be happy, but don't make it so tight that you are perpetually miserable.

TheMrsW · May 2014

Thanks all for the replies!

We did sit down and talk about money issues and where we can cut back and save. We're working on coming up with budgets as well - especially grocery. We seem to spend a fortune on unnecessary food items. We're agreeing on asking ourselves "Can I live without it?" If the answer is yes, don't buy it (this is an especially needed rule right now until I find full time work). He is going to call the cable company this week and get our cable bill down as low as he can, and we're trying to be more conscious about electricity, not turning the AC on so high when it's hot, etc.

We already plan on opening a joint account (failed to mention that before!), but he wants to keep our own separate accounts. Joint account will be for bills/groceries/savings, then our own separate accounts for little things we may need to get for ourselves. The majority of both our paychecks will be allocated to the joint account.

"What's mine is yours now" is a totally new thing for both of us. We've both been very independent before our marriage, so I think it will take some getting used to.

@hoffse - I will definitely check out that book!

blondie42107 · May 2014

H and I initially kept our pre-marriage checking/savings accounts but added each other as soon as we were married. What a pain in the arse! The best thing we did (I understand that this might not be the right choice for everyone) was to keep all accounts open but pick one checking and savings to use as a primary. All payroll direct deposits, etc go into the same account. We always know our balances, etc. H and I don't feel the need to keep separate money in other accounts to cover personal expenses. Our money is our money. We don't hide where or what we spend money on.

short+sassy · May 2014

TheMrsW said:

Thanks all for the replies!

We did sit down and talk about money issues and where we can cut back and save. We're working on coming up with budgets as well - especially grocery. We seem to spend a fortune on unnecessary food items. We're agreeing on asking ourselves "Can I live without it?" If the answer is yes, don't buy it (this is an especially needed rule right now until I find full time work). He is going to call the cable company this week and get our cable bill down as low as he can, and we're trying to be more conscious about electricity, not turning the AC on so high when it's hot, etc.

We already plan on opening a joint account (failed to mention that before!), but he wants to keep our own separate accounts. Joint account will be for bills/groceries/savings, then our own separate accounts for little things we may need to get for ourselves. The majority of both our paychecks will be allocated to the joint account.

"What's mine is yours now" is a totally new thing for both of us. We've both been very independent before our marriage, so I think it will take some getting used to.

@hoffse - I will definitely check out that book!

My DH and I have been married almost one year and we still keep most of our finances separate. It's not that either of us are opposed to pooling our money jointly...its just that we lived together for over 10 years before we got married and had always kept our finances separate. So we kind of just kept with the status quo. In fact, I purchased the house we live in two years before we got married and charged him rent (though not anymore, lol).

One thing that complicated things on the financial front is he lost his job about one month after we got married and hasn't been able to get another one since . Before we got married, I told him what half the bills were plus his rent and that was the money he gave me. After he lost his job, he has no money to give me, so I just pay the bills. We did add each other to our accounts, but we still see them as "my account" and "his account".

I think, once he is working again, that we will probably do more joining. We have already talked about future plans of saving together to purchase a rental home.

But, really, as long as spouses are on about the same page when it comes to finances there is no "right" answer. What you and your husband are planning to do...one main account, then smaller separate accounts for "fun" money...is a pretty typical configuration that I think makes a lot of sense.

To answer some of your questions, I would focus first on building at least a small e-fund. Maybe $1,000 or whatever would make you comfortable. My e-fund has saved my butt a few times and, whenever I have had to dip into it, my first priority with any extra money is to pay it back.

What motivates me is to see balances paid off. With that said, it is also relative to what I owe and their APRs. For example, if I owed only $500 on one credit card with a 10% APR, but $2,000 on a credit card with a 20%APR...I'll work on the one with the higher APR first even though it will take me longer to pay off. But that may not be the right answer for you all. Making progress of some kind toward your financial goals is really the main thing.

The good news is, if you all get on a budget and have some money left over for your goals...while you are working part-time. Think of how much money you can start socking away on the down payment for your first home once you are working full-time!

cbee817 · May 2014

DH (31) and I (32) have been together for 11 years, married almost 8 years, and have 2 girls. We keep some things separate (checking accounts, credit cards) and some things are joint (savings, investments, mortgage). We split up the bills- I cover the mortgage and utilities and he pays for day care (which, on average, ends up being the same as our mortgage and utilities). We pay off our credit cards in full each month (unless it's on a 0% card, then we make monthly payments on it so that the balance is $0 when the 0% offer is up) and discuss large purchases (usually anything over $250) prior to making them. Currently, we only have mortgage debt ($105,000 remaining)- DH paid off his SL in 2013 ($37,000) and we each paid off our cars in 2008 and 2011 (2 $15,000 loans). The SL and car loans were all paid off early- we kept an amortization schedule of each loan and stayed motivated by seeing how quickly they could be paid off and how much interest we could save. Our emergency fund has been established for quite some time- currently we have 14 months of expenses saved. The higher number is mostly due to the fact that we have 2 kids and if DH and/or I were to lose our job(s), we wouldn't want their lives to be too disrupted. We're finally starting to feel more comfortable with taking some of that money and investing it for a larger return. I contribute 10% to my 401K, DH does 4% with a 403B, we have Roth IRA accounts, and DH will get a state pension. The next biggest thing to tackle is 529 plans for the girls once they are out of day care, 2 newer cars eventually (mine is 11 years old, DH's 8 years old), and adding money to the principal of our mortgage so it's paid off in 2020.

The main point is that we're always on the same page financially for our family- the system we have set up works for us, but more importantly, we are open to adjustments as our finances change.

formerlyGDaisy09 · May 2014

We also seek out those free/cheep activities to do together. we enjoy going out to restaurants to socialze with friends, but find that that gets too expensive, so as a compromise, our friend group goes to play pub trivia a few times a month, since it's an activity there's less pressure for everyone to buy a meal. we'll often eat at home before hand and just have a couple beers or share an appitizer.

One thing we "splurge" on is gym membership, i put splurge in quotes because we joined the community gym and once we get out fitness reimbursement it's $800 for both of us for the whole year. we go an relax there (not as often as I like), i did calculate that we go enough to make the year long membership worth it (rather than paying the $12/day pass fee)

overall doing the math and proecting out when we'll meet our goals helps (or in somecases how much we need to pay each month to pay off a debt by a certain point). It begins to feel like you're making progress, and that helps motivate us. we've hit a couple milestones this spring and that motivates us further. We are now CC debt free (!!!) and have shifted our focus to our student loans and further increasing our e-fund and various savings accounts we have for vacations, and home improvements.

Talking about the things we want to do also helps motivate us. TTC is part of our 2-year plan, and we have a few things we'd like to accomplish before then.

1. Plan a vacation to Italy

2. finish part of the basement into a guest room/suite, so our current guest room can become a nursury and my parents would still have a place to stay.

I've set a $5000 goal on our vacation fund for Italy, and I have a contractor coming to give us an estimate on the basement project so we have a goal for that. both thing are things that H and I are excited about and that motivates us.

We balance our "extra" money between:

1. paying down debt

2. e-fund and other goal oriented savings

3. treating ourselves to little things throughout the month

I calculate our our budget for essentials every month. Whatever is left at the end of the month, 50% goes to paying down debts, 40% gets split into e-fund(20%), vacation(8%), home improvement(8%), and a car fund(4%), and the last 10% we might spend on a nice dinner out, this month we bought some patio furniture so we can enjoy that space more, some months it gets divided up on smaller things (H has a love-affair with the local diner, I can't stand it, but occasionaly I treat him to a breakfast out).

The balance of knowing we're enjoying some of what we work for, but also really working towards our goals keeps us motivated.

Hello and seeking some advice.

Re: Hello and seeking some advice.

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