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Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the ongoing quest of the Women in Red every other Wednesday in Dunleavey's column on MSN Money.
You might think that graduating with $71,000 in student loans would be a good reason to join the Women in Red. And it is.
But Heather, 24, a law school student in New Mexico, has an even more pressing reason to join the WIR, besides the freight load of debt that awaits her when she completes her degree in 2009:
Her marriage.
No, her husband, who is 25 and works in an equipment-supply business, isn't a gambler or crazy overspender. It's just the debacle that occurs when money opposites attract, and they get married anyway -- financial chaos ensues.
Heather, 24, a law school student in New Mexico, is trying to pare down her $71,000 in student loans.
Arm-wrestling over money
It's the textbook saver-spender struggle:- She wants to keep their belts fairly tight for the next few years and pay off that $71,000 as swiftly as possible -- while also knocking down their $3,300 in credit card debt and saving for a house.
- He is tired of the student lifestyle and wants to know that once they both are working, they can relax and enjoy life a little.
- She worries they aren't saving enough, and she'd like to get health insurance.
- He thinks that they don't go out with their friends enough and would like to buy the occasional video game.
It's not that she's always the angel or that he's always frivolous. They're just not in synch financially. And that push-pull dynamic is putting a strain on their finances even now.
"We're really good for a while -- we buckle down and we stick to our budget -- and then we blow it," Heather says. "We're pretty good at talking each other into some bad behavior."
Nothing adds up
The other red flag that the two are living at cross purposes financially is their helter-skelter money-management strategy.Although Heather's husband earns enough to cover their expenses and then some, somehow the numbers -- and their priorities -- don't add up.
The two live modestly enough in a trailer they rent for just $350 a month from her husband's parents on an American Indian reservation. But after subtracting their known expenses from their net monthly income, it seemed that more than $600 was mysteriously "missing."
| Expense | Total |
|---|---|
Rent | $350 |
Electricity | $35 |
Heat | $50 |
Cable/satellite | $62 |
Phone/Internet | $62 |
Cell | $85 |
Gasoline | $160 |
Car insurance* | -- |
Credit card | $300 |
Groceries | $235 |
Video games | $25 |
Life insurance | $56 |
Clothes/grooming | $25 |
Total expenses | $1,445 |
Net income | $2,070 |
"Missing" | $625 |
*paid by parents
When we started hunting for the money, it became clear that eating out was one big culprit. "When we get home, it's late and neither one of us feels like cooking," Heather admits. And although they eat cheaply -- usually Mexican or Chinese fast food -- spending $15 to $20 a meal, four times a week, accounts for most of the missing money.
It explains where the cash is going, but not why.
More from MSN Money
The bottom line is that because the two don't have a shared vision for their finances, they're behaving in financially kooky ways. For example:
- For various reasons, Heather isn't covered by her husband's health insurance. Nor can she afford the pricey student plan through her school. Net result: Heather needs health insurance, not dinner out four times a week.
- Their credit card debt is manageable -- so why are they paying $300 a month when $400 would help them ditch that debt three months sooner?
- It would seem they have given themselves $625 in "spending money," which they use to go out with friends, eat out and on other miscellaneous expenses.
- Meanwhile, they have no retirement savings and only put $50 a month toward a general/emergency savings fund. Can you say "living for tomorrow today"?
It all adds up to a negative net worth where their debts exceed their assets by more than $73,000.
| Net debt | |
|---|---|
Fall '07 | |
Consumer debt | -$3,268 |
Education debt | -$71,076 |
Retirement savings | $0 |
Other savings | $1,038 |
Home equity | $0 |
Net worth | -$73,306 |
In unity there is solvency
Heather does have to come up with a game plan for her student debt. But if a med student with $300,000 in debt can do it, so can Heather.To truly get her finances shipshape, now and when she graduates, Heather and her husband first need to commit to getting on the same page financially.
To those of you who are single, that may sound like a trivial problem. Those of you who are dealing with the financial side of a long-term relationship know that money is the Mount Everest of couplehood.
Continued: Both spouses must be on board
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