Sharing Your Life & Your Finances

After my last post, which was also my first, you probably think I’m a little crazy. That’s okay, you’re in good company. Of course they say it’s a fine line between crazy and genius—I like to think I am on the later side. With that I figured I would tell you a personal story to get the ball rolling.

This story will be kind of hard to tell as it will no doubt cause me a lot of anguish. It’s not about me mind you, it’s about my girlfriend, and I’m sure she will be none too thrilled.

I’m a cautious person in general. When I was younger I had a nice little condo I bought when the market was in the toilet. It was a smart investment and it was safe. My mortgage was cheaper than rent. But the housing market didn’t stay in the toilet, the value of my little condo started to rise. Throughout this time my girlfriend lived in one state and I lived in another. Then one day it hit me—let’s buy a house together!

This wasn’t the type of thing I do. It was risky. I would get myself into a hefty mortgage, not to mention a committed relationship! But when this idea hit me, I knew it was a good idea—it was so clear to me.

Fast forward 4 months, me and my girlfriend have new house (new to us anyway) and we are sharing our lives and our finances. Together we went from spending around $500 on a mortgage to almost $2000! With both incomes we would be tapped every month between a car payment, insurance, gas, utilities and food. When we first got the house I didn’t have any debt, in fact I had cash in the bank. Remember, my mother taught me well. My girlfriend came from a slightly different socioeconomic background—she had around $10,000 in debt, and nothing to show for it. Really this wasn’t that big of deal. I am sure most of you are thinking, “So what?” “I whish I only had that much debt.”

As we knew all of our monthly money would go to expenses, I paid off her debt. We started at zero.

A couple months into our new arrangement we were discussing finances and I came to find out even though our lives had changed, my girlfriend’s spending habits had not. She began to rack up more debt. I honestly don’t remember how much, but I was furious. I pay off all the previous debt she incurred, and she was just going to make more? I don’t think so.

Now I am pretty easy going guy, but this is where I drew the line. I didn’t spend my whole life building good credit and saving money just so someone else could put me in the poor house.

With that I setup some rules and but the stop to all spending—myself included. My girlfriend was not thrilled, to say the least. In fact she was miserable. Before me she lived at home, rent free, and was used to spending money on whatever she wanted, whenever she wanted. But life had changed and we couldn’t afford to live like that any longer.

So a couple more months went by and my girlfriend came to me very sheepishly one day. She spoke with a whisper, her head hung low, “Well, uh, my work shoes are worn out and, and I need to buy a new pair.” I asked her, “Have all the bills had been paid? “Yes, of course” she replied. I then wanted to know if there was money in the bank. She nodded, “Uh huh.” My reply was, “THEN GO BUY THE SHOES!” “Go to the store and pay cash for them, why are you even asking?” I swear to you, I could see the light bulb over her head. She actually blurted out, “So this is how it works.”

Yes, this is how it works. We saved at least 30% on those shoes because we didn’t have to pay interest! Yes, I know it was just a pair of shoes, but if you live your life like this, you can always save that much. There we go, there’s that light bulb again.

By the way, my girlfriend is a very smart person. Guess what she does for a living… Would you believe she works in the financial industry? It’s true. It doesn’t matter how smart you are, or how much money you have--anyone can have bad spending habits.

Our society is part of the problem. We are bombarded with the hot and new thing we must have every day. Our lives are all about buying. We have too much crap, and not enough time to deal with it. All that crap cost money.

Of course we have to each accept responsibility for our actions too. If you have kids, are you teaching them good spending habits? And are you leading by example? If not, and you don’t know why, it’s because no one ever taught you. Of all my formal education the only thing I remember being taught in school about finances, was how to write a check. Great, I learned how to spend money.

Today my girlfriend and I are in our second house, and the mortgage is back down around $500 again—I’ll share more on that in future postings. More importantly we have never had a disagreement with our finances since—not one. She lives like I do and we have everything we need, and a fair amount of the things we want. In fact there are times when I say, “Honey, I am going to buy…” She will then ask, “Do you really need it?” Sometimes I whine, “Well, yeah.” But mostly my reply is, “You know, you’re right, I don’t need that.”

There are really two lessons here. First is the obvious fact that you need to make sure you aren’t spending more than you make. You can NOT live on credit; none of us can afford that. The other lesson is that people who live together, and share finances must be on the same page. Sadly very few people discuss these things before they take the plunge, and this can make for a very volatile living environment.

Okay, that’s enough for now. Until next time, pay cash!

Bubba