I need help, and I don’t know where to turn. Stay at home mom with three children, ages 7, 2 1/2 and 15 months. My husband is a financial advisor and our finances are in absolute crisis!
My husband opened a branch of a very well known financial institution almost three years ago. Since that time his income has been unpredictable to say the least. I have been at the mercy of his hours and having to babies at home, have been unable to work myself.
I’ve always known it was incredibly tight, but recently have come to realize that we have maxed out every credit card, our line of credit at the bank, and are at the end of our overdraft in the bank account. There’s still a debt owed to his parents from before we got together as well. All of this together puts us over $50,000 in debt! Even worse, if we default on any credit payments, he loses his license to do the job that is our family’s only income!
I don’t know where to go from here. I’ve asked him (pleaded is more like it) to put a deadline to making the business work, and in his defense, it IS making more money than it used to, but I can’t see how we’re going to survive. Even one bad month will KILL us, as we have absolutely no room to even think about saving any sort of “rainy day” fund!
Half the time the credit card payments leave us with no money for FOOD! I just can’t figure out what to do next. Do I insist on him pulling the plug on his business, when it is finally showing signs of “making it” and the job market is not very promising, or stick it out and pray? We need to plug the holes in the dam…It is absolutely drowning us, and my husband’s response is that everything is going to be fine and I’m not thinking clearly. I want an action plan, and he wants to hope. Do you have any suggestions?
First off, here’s a big hug for you. What a mess, huh?
In relationships there is usually a saver and a spender. In fact savers tend to attract spenders or spenders attract savers. It’s kind of an opposites attract thing. This is an important factor to understand at times like these. While you might be absolutely stressed, afraid and scared, he just might not be. That’s not a function of reality, just more the way you each approach money.
Ultimately the best solution to this situation is going to come from a negotiated settlement between the two of you as partners in your relationship. His position of “let’s not worry” is not a balanced approach when you factor in your worries or concerns.
I don’t want to sugar coat this for you, this has the potential to turn out to be a real mess. Just one unexpected event can land you in deep financial trouble. The position you are in now with to savings or emergency fund is simply not safe.
In fact, as long as he let’s this situation roll over him, if it ends in failure it will potentially lead to depression for him which will make it harder to get up, dust himself off, and move forward.
But from his point of view I see a guy who is proudly trying to be a provider for his family, he’s struggling to make his business work, and I’m sure on one level it is very difficult for him to deal with being a failure right now with his personal finances but yet putting on a good show of being a professional financial advisor for others.
At some point the truth that the path you are on now may not be working must be dealt with. My personal fear is that with all the cards maxed out and the overdraft gasping for breath that an expectation you’ll recover from this mess may have passed.
To recover you not only need to be able to live and save within your income but also be able to may enough more to dig yourself out of this hole.
With kids at home and unexpected events always on the horizon it is really not responsible or safe for you not to have at least $2,000 is a savings account to cover emergencies. Otherwise expenses land on credit cards. And I’d be confident in betting that a part of that credit card debt is from making ends meet each month.
My opinion is the best approach is going to come from a negotiated settlement. Your opinion matters here and it is perfectly reasonable to draw a line in the sand and say that unless X can be achieved, we need to stop this train wreck and take a different path.
For you X can be as simple as needing to save $100 a month and live within your income without using credit or overdraft to get by.
Over the years I’ve had many clients that were CFPs (Certified Financial Planners), accountants, financial advisors, etc. They all tend to feel the same thing when faced with this situation; denial and guilt.
By the way, the typical emotional stages of debt: denial, anger, bargaining, depression, and acceptance.
As far as the “everything is going to be fine” approach, it just sounds like denial to me. The reality is that the business has been unprofitable for some time and that it will take years and years to dig out from the debt and high interest rates you are probably being charged now.
I think this is the moment that the ship is sinking and bailing is keeping it afloat, just barely. Do you gamble on more bailing or abandon ship to save the passengers?
Please let me know what happens. I really want to be here for you on this journey.