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Dear Quentin,
What steps can I take to protect myself from my husband’s financial decisions? We are both 47 and have a good income (together almost $400,000 a year). I make more, but my husband has $75,000 in credit-card debt and he keeps charging for more things.
I have no credit-card debt. I have about $280,000 in a 401(k) and I’ve recently started saving more for retirement. I also have a really good pension that I’m vested in. My husband has about $20,000 in his 401(k) at my urging.
He likes to spend. He travels a lot — outside of family travel — and he just spends. He recently told me he’s planning on buying sports tickets that cost $8,000. He changes cars regularly (he leases them). I have a car and no car payment.
My credit is excellent, so we bought our home on my credit. His credit is poor — he has high utilization and late payments. He sees nothing wrong with this financial picture. I am concerned, and want to focus on preparing for retirement.
I love my husband. But I’m concerned that his spending could impact me and our child. For example, if he were to die with this debt, would it impact me even if it’s not in my name?
Worried Wife
Dear Wife,
This is insanity. Maintain separate bank accounts. Do not co-sign on any credit cards or loans. Refuse to pay for his vacations or other luxuries. Start a household budget so he can see exactly where the money comes from and where it goes.
There is a fine line between a bystander and a facilitator. You are not responsible for your husband’s behavior, of course, but you also don’t want to help finance the illusion of this lifestyle he has created for himself.
Not paying off your credit card every month in full is simply throwing away money. Maintaining a $75,000 balance and spending more money on luxuries is reckless. He is putting your future at risk. His credit rating is a direct result of his behavior.
How can you budget and enjoy planning a vacation or look forward to a peaceful retirement when he is making these unilateral decisions, without any regard for how they impact you? He needs to see this picture in black and white — and red.
“
Start a household budget so he can see exactly where the money comes from and where it goes.
”
Take out a piece of paper to show him your joint income and expenditure. If he made an average monthly minimum payment of $1,500 on a credit card with 18.2% interest, it would take him 8 years to pay off the capital — plus $66,521 interest.
Place his $75,000 credit-card bill in the center in red. Add the $8,000 sports tickets, with an arrow and a question mark as to where that money is coming from to pay those tickets. Ditto where the money is coming from to pay the credit-card balance.
He must see how he lives his life vs. how you live your life. Your husband requires an intervention. Bring a third party, preferably a financial adviser or financial therapist, to provide an objective view of your finances. Plus a pair of scissors for the card.
“
He requires an intervention. Bring a third party, preferably a financial adviser or financial therapist, and a pair of scissors for the card.
”
The Federal Trade Commission and the Consumer Financial Protection Bureau both say that a spouse is not liable for their partner’s credit-card debt if they predecease them. The contract is between your husband and the credit-card company.
However, you may be liable in a community-property state, according to Bankrate.com. There are nine community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Ask him why he thinks his credit score is so low. Remind him that you would not have this home on his credit rating. He can’t continue to rely on you to achieve these major milestones in adulthood, while pretending like his actions only impact him.
He is living in a fantasy land — and needs a wake-up call today.
Also read: Jamie Dimon insists his workers return to the office — here’s why that’s a bit rich
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
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