Wife Over, spent need advice

**Helena_Handbasket** · 01-17-2009, 09:14 AM

Before answering your question, could you please provide additional information on the nature of the overspending? On what was the extra money spent? If it was spent on merchandise (clothing/jewelry/etc.) that is not necessary to the running of your household, can any of it be returned or sold to recoup some of the money?

I see some possible red flags here as well. What was the cause of the sudden overspending - a communication mishap (misunderstanding of what the year's budget was), major medical issue that added to household expenses, or something else? What will you do to ensure this does not happen again? Are you and wife on the same page with your household financial plan?

**jIM_Ohio** · 01-17-2009, 09:48 AM

Pay off all the debt and start saving again
You need to change the spending and saving behavior to prevent problem from reocurring

**campbound** · 01-17-2009, 09:52 AM

Yes, good question, it appears that she just lost control of the money management, through out the year we had done some renovations that accounts for some of it, while just extravigant spending ( dinning out with her girl friends, spending on the kids and so forth)
No, there is nothing i can see that can be returned. as far as prevention, she no longer has access to any account exept her chequing (no over draft). I have control of all accounts and charges. This is her request as well. she relizes she did wrong. I her CC. I have put a budget together and our expenses vs income are all in check, I end up with $1300.00/ month over Expenses ( and thats with continuing my RRSP contributions).

Does that help?

**Helena_Handbasket** · 01-17-2009, 10:08 AM

Thanks for the clarification. Looks like you've got a plan to deal with the debt.

Please consider the long-term financial plan with your wife. It sounds like she has turned over all control of finances to you, maybe b/c she is scared to mess up again (kind of like a person who has a car accident and doesn't want to get back behind the wheel) - it's perfectly understandable. But will she eventually begin to resent not having a CC or access to any of the bank accounts? What if you were to become incapacitated - would your wife be able to handle the household finances in the manner you would want? Is there any way to help her develop confidence and competence in money management and to get her more involved in household finances?

**campbound** · 01-17-2009, 10:35 AM

Absolutly, I have that in my plan as well, firstly, I have discussed with her that this plan is to develope a stronger future finacial plan, secondly, she admiotts to being scared of messing up again, and that her self confidence is shot, I am working with her on that.
I have explained to her that this is a lesson for both of us, and that we need to run the household finaces like a buisness, but not one person is in control, it's a shared responsibility. She is working along side me every step, not only to regian confidence, but to learn better finacinal control measures. Again, I am responsible for this too, I left her alone with it, and she needed help.

So, do I pay off the LOC, or with property values so low do I take advantage of that?????

**Like2Plan** · 01-18-2009, 05:17 AM

Originally posted by campbound View Post

So, do I pay off the LOC, or with property values so low do I take advantage of that?????

campbound,
It sounds like you are going to go ahead with the property purchase?

If the above asumption is correct, it sounds like you have 2 choices:
1. Pay cash for the property and continue to pay off the LOC OR
2. Pay off the LOC and finance the property.

What is the interest rate of the LOC and the terms? Could you get better tems if you financed the property instead?

**maat55** · 01-18-2009, 05:46 AM

I agree with Jim, I would payoff the debt and start fresh. With your income and a sound plan, you can save very quickly.

**srblanco7** · 01-18-2009, 06:24 AM

Could you please clarify the price of the retirement property. Based on your first post, I guessed it was most (or all) of the $160k you had saved. But knowing for sure would be helpful.

Interest rate on debts?

**jIM_Ohio** · 01-18-2009, 07:15 AM

Originally posted by maat55 View Post

I agree with Jim, I would payoff the debt and start fresh. With your income and a sound plan, you can save very quickly.

Maat brings up a point I might not have mentioned...

You have a high amount of savings to "reststart" the savings plan- so why pay interest which is financially inefficient? You have little risk (IMO) to paying down the debt.

There is risk in buying a property and keeping the debt.

**campbound** · 01-18-2009, 08:22 AM

All very good point's. Intrest rate for the loc is 3.5% open term, property price is $140,000.00 ( not including closing costs or renos') the property has dropped in listing by $120,000 ( 8 months ago it was up for sale @ 260). Yes I could save again, and that is what I am leaning toward, just feel like I am losing a good deal on a retirement home of my dreams.

**Like2Plan** · 01-18-2009, 01:45 PM

campbound,
I don't think borrowing money to make a major purchase is a bad thing. It might cost you more if it takes you so long to save the money up again that the home value doubles...

Some arguments for it:
1. Your LOC is only 3.5% which is a very good rate (if it is fixed ) if you bought the property with cash and continued to pay the LOC off.
2. You expect to have +$600.00/ month from your retirement property.
3. You love it. There is a lot to be said for this. We have been searching for years and years for the right retirement situation. I am about 2 years from retirement and we still haven't found the right situation. The only thing DH and I have narrowed it down to is we agree on the floor plan for our home (can't settle on where, though

)

Would the money saved be enough to cover property acquisiton, closing costs, renovations and a reserve?
Will the $600.00 be enough to cover operating costs (taxes, repairs and the like).

**TBH** · 01-18-2009, 05:55 PM

It sounds like you should buy the property now because you can get it for a good price. If your LOC has a variable rate, I'd get a fixed-rate mortgage to pay for the retirement property now while rates are low, and pay off the LOC with your cash savings. Then I'd use the rental income from the property, and also the extra income you have each month, to pay down the mortgage very quickly.

It's also a good idea to keep a good emergency fund in cash, especially if you're going to be a landlord now. The norm is 6 months' worth of living expenses.

**EEinNJ** · 01-19-2009, 09:25 AM

If you find yourself in a hole, the first thing to do is stop digging. If you have 110K in debt and 160K in savings, you really only have 50 thousand. From what you say, it sounds like you and your wife have to figure out some new money management skills. If you don't, and go ahead and buy the retirement property, you may find your problems compounded. Another property will mean taxes, maintenance, trips there, perhaps decorating or renovating. You have a nice income, hopefully it is secure. If you buy real estate instead of paying off debt, if you should loose your income you could be left holding the bag.

**Bernz** · 01-24-2009, 09:49 AM

Well, In this economic times I can only suggests that you pay off both your LOC and CC. That should still leave you $50,000 positive and that's a great start especially with the amount of money you are making. That's some serious money. Besides paying off your LOC is really putting that cash back into your house anyway. It remains an asset and you should be able to purchase that retirement in the near future with the way you are handling your finances now. Good luck....

Wife Over, spent need advice