The Nuts And Bolts Of Managing Money • Money: Part 2 (Episode 42)

Brent and Janis look at practical ways to manage money that can help a couple meet their joint financial goals and aspirations.

The Life & Love Nuggets podcast will help you learn valuable insights into relationships, life, and love. Brent and Janis have been empowering couples through pre-marriage and marriage therapy in their private practice, Life Connection Counseling, since 1982. They recently retired after forty years of pastoral ministry and are continuing to help individuals, marriages, and families in their private practice.

The podcast is produced by ⁠Clayton Creative⁠ in Tulsa, Oklahoma. The content should not be considered or used for counseling but for educational purposes only.

This podcast should not be considered or used for counseling but for educational purposes only.

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Transcript:

Welcome back, friends, to Life & Love Nuggets. We're glad that you're with us today. We've been talking about, gosh, this really very important topic that oftentimes in marriages that couples really struggle with. We've titled this How to Not Fight About Money in Marriage. It's kind of the number one thing that couples say that they struggle with. You know, 90% of couples struggle with this. It's also considered the second highest reason for divorce, next to infidelity. So this is really huge. So last time we talked about the kind of mindsets and kind of foundational principles that we've found that can help couples start off on the right foot. The first one was to let your differences fascinate you instead of frustrate you. Easier said than done. But what is it about the way that they see things, whether they're a little more tight and a saver than I am or a little bit more of a spender than I am? What is it about that that's good? What is it that, wow, that's interesting? I want to learn more about that instead of just getting frustrated. And instead of getting into right and wrong conversations, I'm right about this, you're wrong. So we need to do it my way. We need to focus on really blending with each other, finding common ground, finding things that we can agree on so that our decisions are us decisions instead of yours or my decisions. Yeah.

Then the third one is have the mindset that money is our money, not yours and mine. So whoever makes the money, whoever, even whatever debt we bring into the relationship, all of this is ours. Instead of separating us as roommates, it's a marriage. It's ours.

So that's the third one. And the fourth one is don't spend in secret. I mean, we can't emphasize that enough. There shouldn't be anything you're doing that your spouse shouldn't know about. But spending in secret is what harms so many relationships. And then the last one was set expectations together. So once we get these mindsets on the same place, this is our money. We're working together, finding common ground. Then let's set our expectations. And it's going to be a blend between our two viewpoints. But if we can get our expectations set together, then we're going to find a better pathway to peace. Now, the fifth one, setting expectations together, certainly on the spending side. But it's not just managing your current expenses. It's also there should be a discussion about debt. Are we okay with debt? Once again, think common ground because almost every couple is going to have different opinions about that. One's going to want to be a little more comfortable with carrying a little bit of debt. And one wants to like, no, we should never have any debt whatsoever. And certainly a wide range of options on this from, again, having no debt at all to that it's okay on a house or an education or bigger things like that or cars.

It's okay.

Some people are okay even carrying a little credit card debt and others aren't. So all of that needs to be blended as well. So we really have to look at what are our financial goals together. I mean, I look at us and we've come to agreement over the years in the different ways that we spend and save and what our priorities are. Our priorities for house, what kind of house do we want? And one of the things that we chose that is different from a lot of people, and I'm not saying it's right or wrong, but we felt like we wanted to pay for our kids' basic education. And for us, that included their undergrad bachelor's degree. When they went to grad school, they were on their own. We only do so much.

But we just really felt like that was a priority for us. We wanted to help with their weddings, pay for their weddings. And those things were priorities for us that helped us feel like we were putting our kids on pretty solid footing in their financial world after they graduated from college. But to do that, as you know, we had to do some things. We both worked for many, many years. I worked part-time. I didn't work as much as you did, but we worked for many years.

We bought – I'm sorry. I'm just gone.

Can they edit this? Okay.

Are you sure?

Okay. Okay. One of the things we did is we came to an agreement on our financial goals, that the house we lived in, how we were going to spend our money, in particular, the expenses with our kids. And we felt like we wanted to make it a priority to pay for our kids' basic education, which in our case happened to be undergrad. And as soon as they went on to grad school, they were on their own. But we did feel like we wanted to pay for their undergrad education and for their weddings, because that really helped put them on a solid financial standing going forward into their life. But we had to do some things to do that. We both worked all the way through. I didn't work as much as you did, but we both worked all the way through. We invested in houses, in rental property. We made spending money for our kids' education a priority. Now, there were a couple years where we had two kids in college at the same time, and we did get a little bit of educational debt at that time. And we both felt good about it, because it was appreciable, or at least that's what we felt like a college degree was. So, we were able to pay that off quickly, but we were in agreement. Those were our goals. That's what we wanted for our kids and for our family. And it's worked for us. And not everybody's going to think this way, you know. And I would say, over the years, we would occasionally get some debt on cars. We would choose to buy cars and go ahead and pay payments on it, because at that point, it felt like the wiser thing to do.

Yeah.

So, the idea is we've got to wrestle this out together until we can get on the same page. We're just giving you an example that we felt like on things that went up in value. Now, cars don't go up in value, but everything else felt like an education went up in value, a house went up in value, those things we were comfortable with. Now, some people, again, are different in that way, but getting a plan on what you're comfortable with that. Now, for us to put a TV or clothing or those kinds of things on a credit card, we felt like was putting us at risk. And we didn't feel like that that was what we wanted to try to do. And so, we realized if we bought a television, and all of a sudden, one of our jobs drops off, or we go through a hardship, and we can't pay the payment on that if we put it on a credit card, I'm not going to walk through the mall with a television in my hand going, will you give me what I paid for this?

Not going to happen.

You can't even put it on Facebook Marketplace and get what you paid for.

Exactly. Yeah. And so, we're not saying you should never use a credit card. They can be a management tool as long as we paid it off each month. And so, again, recognize that was a goal that we had. That's kind of where we settled and things that we're not going to appreciate in value, then we just have to hold off and wait on those things. Again, getting your mind together on those things. And that's where with the credit card stuff that we've seen with other couples that we've worked with, where couples tend to get into trouble.

Yes. You know, one of the things that makes it so difficult now is, well, one is internet shopping, because there is no pain involved in internet.

Just a button.

Yes. You push it and they have everything saved. You don't have to swipe it. It's just a button. I know. It's awesome.

And then you come home and you have presents on your porch. And so, it can be really, really addictive. And you can spend so much. Anybody that's listening or watching knows they've fallen into that at least some point. It's just so easy to do that. We don't really realize how much we're spending. And even at restaurants, you know, when you just hand over your card or you tap it, you often don't think how much money you're really spending. There was an old study many, many years ago about they gave people with the same income, one cash and the other credit card. And what they found is the people that had a credit card spent 26% more than the people that paid cash. And even now, you know, I don't ever carry any cash. But when I do, it kind of hurts to feel. It's like, wow, that's a lot of money that I just spent for that. So, oftentimes, we just aren't aware of how we're spending and how easy it is to spend. But when couples start getting into financial debt or financial stress, it chokes the life out of the relationship. It makes it so hard in so many areas. And it really steals some of the intimacy. Because if we're in conflict over what you just spent, Brent, right, you can't feel that closeness. You can't feel that same sense of intimacy. Brent Scharf This is just such a high temptation right now, though. If I can get that new stuff furniture for the front room, it would just be so great. And we can really enjoy that. And we've got people, we've invited people over next week. And we just, you know, and we can have it tomorrow afternoon, delivered with no payments for 10 months or whatever it is, you know, it's just so, so tempting. And...

Linda Karrad Well, and I do think the difference between online shopping and going to the mall, because all our malls are dying. But we've gotten so spoiled to, I don't want to get in the car and drive over there. And there's a salesman that's going to give me trouble about furniture. And it's just too easy to buy things online.

Brent Scharf Yeah. So hard to resist. The debt slowly builds.

So we always say it's like a frog in hot water. You don't realize how it all accumulates. Linda Karrad Boiling water. Brent Scharf When you're just tapping or swiping. So, you know, the old story about a frog in a pot of water, and they turn it on and it heats up and it but the slow incremental increase isn't being noticed until it's boiling and the frog dies.

It's too late. And so, that's what can happen with the ease of short-term credit in our lives. Now, to not do that, people don't just decide one day, well, let's just go spend as much money as we can, you know, get ourselves into great debt. They just don't really have a plan. And they're just spending as time goes on. And so, the sixth one that we want to talk about today, this kind of strategies is to develop a plan so that your expectations and dreams can become a reality. A lot of couples want to buy a house by this time or want to buy a new car, but they don't have a plan to get there. And so, the time, you know, they get there, the time, you know, that they wanted to, and they're not ready to do it. And so, well, let's just do it anyway. And they get themselves, you know, overextended. So, once you've found common ground in your expectations and dreams, we've got to find this practical plan. Now, as we've said earlier, everything that we talk about in these podcasts is stuff we had to learn the hard way. So, this isn't like we started out perfectly here. I remember the, you know, as we mentioned before, we both came from pretty conservative backgrounds. Neither one of us were extreme spenders. But the first two years of marriage, we were both working and no children.

And we did okay.

But after a couple of years, we pretty much spent everything that came in. Now, we weren't in debt, we weren't overspending, but we weren't holding on to anything either. And so, I remember we had just closed on our first house. And we actually was back in the time where you could assume a loan, where if the people that you're buying it from, if their loan interest rate was lower, you could actually pay off the equity and assume their loan from their bank. And we did that. And I think we got 4%, didn't we?

It was great. Which was unheard of in that time. It was unheard of being extremely low.

Yes.

And so, we were able to do that. But I was sitting down at the closing table thinking, how did we do this? How did we come up with that chunk of money to put down? Well, it wasn't because we saved any money. And it wasn't because somebody gave us money. And so, maybe you can tell a story a little bit of what we did. It's because we were pretty much insane for that period of time in our lives, which some people would argue we have been in other periods in our lives. But this period of our life, we were both working full-time. And we were going to graduate school. And we had a couple that we're really close friends with. We are still close friends with to this day. But I'm just going to say probably the guys came up with this. I'll put lame somewhere.

Had the idea of buying a house down in downtown Tulsa. It was one of the first houses ever built. We were both living in college housing. And so, we didn't have any of those expenses. So, we were all four of us, both couples. We were all in grad school. We were all working full-time. And we decided to buy this old, old house. And we were going to flip it.

Quickly. 90 days.

That was our plan. We got a construction loan from a bank for 90 days. And we're going to go in and fix it up and flip it. And this is going to be amazing.

Yes.

And I won't go into how disgusting it was. The fact that we had to tear out the entire bathroom to get rid of the smell. But we learned how to sheetrock. We learned how to tile. We did all kinds of things.

And because both of the guys were perfectionist, that house was done really, really well. We kind of rebuilt the house.

Let's say that. We did rebuild the house. I mean, I learned to hang sheetrock.

And I'm...

I don't think I've done it since. Because I think I walked away going, I'm not doing that ever, ever again.

We were exhausted. We were overwhelmed.

It took 18 months. It took us 18 months.

We turned that loan over at the bank many, many times.

Many, many times.

But because we basically tore it down and rebuilt it, we did get a lot of equity out of it when we finally sold it. But that's what it took for us to buy our first house for us to live in. And I think we decided we're never doing anything that crazy again.

That was our motivation.

It's like...

Yes.

Is this how we're gonna save money? Is we're gonna keep doing this and killing ourselves?

This is no lie.

Every spare minute we had, we were... All of us were down at this house working on it.

Every weekend, every...

Oh, my gosh. It was...

We were definitely insane. And so, that was our motivation. We gotta figure this out and start holding on to something here. Or we're gonna be our age now and have nothing to show for it. And so, we got motivated. I started scratching stuff out on paper, trying to recognize where we were at, what we had, what we were spending. And now, there's a lot of ways to do this today. But every financial system, every monitoring system... Because we have to monitor what we're doing. Now, a lot of couples sit down and write out what they should spend. This is what we should spend on all these categories. But they never look at it then. They never keep track of it.

And so, it's too late at the end of the month to go, oh, my gosh, we overspent $1,000 last month. Because where's that $1,000 gonna go? It's gonna go in a credit card. And we're just gonna... And those credit card bills are just gonna slowly increase and increase and increase. And then we get a bunch of those. And then let's get us a loan consolidation. Let's take a second mortgage out on our house and consolidate all... Anyway, it's just a frog in the hot water. And so...

But every system goes back to the old envelope system. So, this might be our grandparents' generation, maybe, where... I mean, there was no such thing as Visa or MasterCard. It was unheard of.

Matter of fact, the first credit card was Diner's Club in 1950.

This was 73 years ago.

So, not that long.

I mean, it was like six years before we were born as the first credit card. And so, again, that was just unheard of in our grandparents' generation. So, they would cash their paycheck, they would come home, and they had a bunch of envelopes. They would put their house payment in one envelope, their gasoline in another envelope, clothing, food, whatever. Yeah, it depends on what they could afford determine how many envelopes and how much was in each envelope.

But there was... There's a limit.

So if I go to the grocery store, I take my grocery envelope to the grocery store, pay the person, put the change back in, come and stick it under my mattress or under the floorboard of some room in our house, which we don't recommend today doing this. Until the next time I need to go to the grocery store, I take that same envelope to the grocery store. Eventually, there's no more money in that envelope. Well, I can't put it on visa. There was no such thing. And so unless there was money in another envelope, which may be clothing, and we decide, we're actually more hungry than we are need tennis shoes. And so I take money out of the clothing envelope, put it in the food envelope and go buy some more groceries. But I can't go buy tennis shoes because there's no money in that envelope. So they immediately recognize the ramifications of their decisions. And today, it's so easy just to automatically have our checks deposit in our account. And we just spend money. And we're not, we aren't sure what we're spending it on. We don't know if we're spending food money or tennis shoe money or whatever money. And then if we're at least watching, we stop spending before the end of the month maybe. But we have not, but we pretty much spent everything or what we actually should be accumulating for my electric bill, which is gonna be super high in August, I should be accumulating some money for that.

I don't.

And so then August comes and my electric bill is skyrocketing but I don't have any extra money set aside for that. And so. And I think a lot of times people just don't know how much life costs. And so they spend and spend. And how many times have we both had couples in our office that have said, how can we be in financial problems? We make so much money.

And then they'll tell me what they make and internally I'm going, boy, you do.

How could you be in financial problems? Exactly, but they haven't kept track of it. They don't know where it's going. They just assume that there's plenty there. So when there's a great trip to Mexico that's really cheap and it's all inclusive and five nights and everything, we can afford that.

Look how much money we make.

But you can't. Because of other things that you need to pay for. So we're taking a trip to Mexico and we're actually spending money that we should be kind of holding onto for Christmas or for a car repair or a refrigerator breaks down or those kinds of things. And we're not saying we shouldn't go to Mexico. Again, it's finding common ground. It's, are we living at our means? And short-term credit allows people to live at a higher level than what they can actually afford. We've just seen the pressure of that just can strangle couples. So the idea is coming up, thinking about envelopes. Now again, we don't recommend 25 envelopes and cash under your mattress. Though I've had a few people who have had to start that way.

No, that's right, yeah. There are a lot of modern ways to do this. Again, I kept this by hand for years and years and years. And, but I had this kind of spreadsheet that had all these columns on it. And at the bottom of each column was a total. So it's like that much money was in each one of the envelopes. And now every couple has to figure out a way to keep track of this, which is so much easier now that we have our checking account is automatically linked to something like Quicken or Microsoft money or whatever the system is. And it automatically uploads this stuff. And so it's modern technologies made this a lot easier. I remember getting your check stubs and taking those amounts and entering them in by hand initially. Cause the idea is if I've got $400 in a grocery column, yeah, like, right, we can, $400 for food. Whatever the amount is for food, if I have a column and there's X amount of dollars at the bottom of that, then every time I spend groceries, I've got to write that down. I got to keep track of that. I used to do that stuff by hand. Then I started doing something like Quicken before, this is not a Quicken ad by the way, it's just something we use. But before they start automatically linked, the checking account, your bank account, Quicken. So I had to input all that stuff by hand, but it helped us know where we were at. So we could quickly look at a kind of a report or whether it's a handwritten report or whether it's a electronic report and look at our envelopes. Because at some point, you got to realize your envelopes are empty. And so it might be the 20th of the month and we spend all our grocery money. Well, either we're going to eat macaroni and cheese or beans and cornbread or whatever. Whatever the family staple is until next month. And that envelope gets funded again. Or it's Thanksgiving next week and we've got all the kind of people coming over. We got to buy some more groceries. So I've got to go to another category. Whether again, I can't go to my house payment. I can't go to gasoline to get me to work. I've got to go to some kind of a, where there's discretionary money and pull some out of that. But again, I recognize the ramification of my decision. I'm taking it out of that account and putting it into this account. And so some system that shows us how to do that so that we can tell ourselves no. I'm having a memory of when our kids were little, when we had two in diapers at the same time. And I remember I used to go to Target and buy all the diapers we would need for the entire month at the beginning of the month, as soon as we got paid. Because I didn't want to have at the very end of the month where we were going to go on a date night and not have any money because we had to go buy diapers. I'm like, I'm getting that out of the way. And that way we already know we're covered. So again, the idea is some kind of a system that helps us see our envelopes and see what's actually happening in those. Now, fortunately, in today's time, again, a lot of this can be done electronically.

I know we have as well.