This is the final installment featuring my friend H who is having such terrible money troubles.... I am so sad for him, and I can't really help that much.
He came over to my office on Wednesday. I am super busy and I didn't have a lot of time, but we figured out a couple of things.
1. He and his wife keep their finances pretty separate. (I am curious if any of you do this, too?). They even pay car insurance separately (which means, of course, no discount for two cars).
2. They are in the habit of wasting money because it's just easier (he has never gotten different quotes for insurance, for example, so even though he has access to USAA, they have never gotten a quote from them). He "thinks the comcast internet just went up" but he's not sure, and he hasn't called them to ask about promotions. Etc.
3. He pays for major things out of his paycheck (mortgage, etc) and her money (about a third of what they make) is mostly for "stuff." So about a third of their money is her discretionary money for clothes, toys for the kids, etc. He doesn't know at all how this money is spent, and last month she said she ran out of money and he gave her $430 from his account. They do not have a joint account at all. I said they need to have one account where they dump in their money and pay for joint things, and he said they tried that but his wife put the account in her own name, and he doesn't have access, so it was just her money and it didn't work as planned.
4. He had $500 for food last month and said that's about 1/3 of their food spending. So his wife spent about another $1000. That is $1500/month on food for a family of four. It's way more than double what we spend. He said there's a lot of eating out for convenience. Convenience seems to be a theme.
5. He had a new Honda Fit that his parents got him since his other car was so old, and when it was about 2 years old, the Honda dealer called him with a deal on a new Fit, and of course he went for it, so now he has a $300/month car payment for another two years.
6. Their biggest expense seems to be his wife's medical expenses. She doesn't have a major medical issue, but she does do massage and it means that her body is often sore. She has spent (he thinks) about $15,000 to $24,000 on medical expenses last year. I said I didn't think that the max. OOP was that high, and he said she likes alternative treatments and they aren't covered.
We came up with a little to-do list for him, but it will be a drop in the bucket compared to medical expenses and food.
I think he's really frustrated because his wife has most of the control over the money (since what he pays for is pretty much fixed). And he has no idea what she spends, and a lot of it is in cash.
Any ideas about what I can tell him that I haven't already?
People Who Aren't Frugal, Part IV (Final Installment)
April 30th, 2016 at 04:37 pm
April 30th, 2016 at 05:16 pm 1462036604
April 30th, 2016 at 06:22 pm 1462040550
Like Joan said - they need to work together. Get someone to watch the kids so they don't have any distractions, and maybe go away somewhere for a few days. Spend time going over the finances, discussing goals, and figuring out how to make things work to both of their satisfaction.
April 30th, 2016 at 06:46 pm 1462041960
I hope you told him not to take any future offers for a new vehicle! Honda is definitely known for those, but as soon as you take it you have car payments. Get it paid off and drive it for a long while.
April 30th, 2016 at 07:08 pm 1462043323
If money can be saved by having a single auto insurance policy, then they should do that. They can still split the cost, each paying a portion.
April 30th, 2016 at 09:13 pm 1462050780
April 30th, 2016 at 09:21 pm 1462051298
I definitely a big proponent of combining asset and monthly budget. But I know it will take time.
April 30th, 2016 at 09:44 pm 1462052662
And one more thing that I'm not sure I mentioned.... I dated H for about 6 years (20 years ago) and at the time I thought "He's not the kind of person you could ever SHARE a life with." So there you go... the sharing finances is hard for both of them because a shared life is hard for both of them. Aren't we all very glad that I didn't stay with him? (I know I am glad and so is D!!!!!)
April 30th, 2016 at 09:52 pm 1462053120
April 30th, 2016 at 10:32 pm 1462055565
May 1st, 2016 at 12:06 am 1462061214
My finances were pretty awful for many years, and they still aren't perfect, but being secretive about how much money I had with my partner was never part of it. So I wouldn't be sure how to advise someone who has kept them completely separate like that for so long.
But it was nice of you to try and help!
May 1st, 2016 at 03:39 am 1462073965