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My Husband is a Financial Advisor and Our Finances Are In Crisis. – Kathryn

“Hi Steve,

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?

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Kathryn”

Dear Kathryn,

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.

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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.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

17 Comments

  • Hi Steve,

    Good news! I’ve been accepted to the program here that will start me on my way to a medical career. Now my biggest concern is making sure I qualify for the student loan I spoke of in my earlier email. I’ve checked my credit score and it is 660. I’ve found some incorrect payment information that has reported me as paying over 90 days late three times in the past two years on a store credit card that was closed four years ago! I’ve already contacted the creditor and they have confirmed that the information is faulty and are sending me documentation to support the correction. Do you have any idea how much this will impact my score when it is rectified?
    My greatest worry, however, is about a collection for $2332 that is set to fall off in June. I’ve read that there is an extra 180 day period that can be added, and that will push it’s “disappearance” back to a time where the loan officers will be reviewing my credit! Is this a real possibility? Also, when I spoke to the financial aid office at the school I was told that they could see “beyond” my credit report, so they may see the collection issue. I’m stumped! I don’t know if I should do everything in my power to somehow pay off the debt in the hopes that it will be more favorable, should it become an issue, or if I should wait and appeal the decision should I be denied based on an improved ability to repay my loans. (This is actually one of the reasons they list as valid for appealing) I would appeal based on my now-treated disability that formerly hindered my organizational and prioritizing abilities and now does not, and the fact that I have not been in charge of my finances as a stay at home mom, which forced me to rely on someone else to support me…the very REASON I am going to school…to make sure it NEVER happens again! What do you think Steve?

    Thanks!
    Kathryn

    • Kathryn,

      Congratulations. My advice would be for you to just have a sit down conversation with the financial aid folks at the school. They are not there to judge you, there job is to close the deal and get you financing.

      Once the credit bureaus are notified of the update it will appear on the files instantly and your credit score will be adjusted. It would be best if the creditors notified the bureaus directly but if they don’t and send the documentation to you to forward you should except it to take 30-45 days once the credit bureaus get it.

      Keep me posted.

      Steve

  • Thanks Steve,

    Don’t worry about me taking a victim role…I know that noone makes my decisions but me, and although I’m certainly angry at my husband, I am more angry at myself for not being more proactive in my own life. I’m choosing to learn from the mistakes I’ve made and use my experience to go forward with more awareness.

    It’s funny that you should mention the idea of becoming a physician assitant..I was researching it this morning! It is a new field in Canada and the projected growth rate is astronomical! The total time spent to reach that goal would be very realistic. I would still be able to work in the field of mental health, in the areas that I am really passionate about (the very human part).

    The one thing I do have to figure out before applying for my loan is my credit report/score. I have already received my report and have started the process of correcting real errors, but overall it actually looks decent! My unresolved issue falls off about a MONTH before I apply for my loan! I think that right there is a good indication that now is the time to make big changes 🙂 One thing I could use some help with, however, is how to get my credit score. I keep running into walls because I am not the primary cardholder on any credit card. This, according to those I am speaking with, makes it impossible to get my score. This doesn’t sound right to me. There HAS to be some way to get it! I really need to make sure things look decent when I’m reviewed for the loan. Do you have any suggestions?

    Thanks!

    Kathryn

    • Kathryn,

      Did you try Equifax of Canada? Click here.

      Having been in the medical field myself I always thought being a physician assistant looked intriguing. It gave you great responsibility and patient care opportunities without all the massive headaches of being a physician. It’s worth a close look at as a goal.

      Steve

  • Hi Steve,

    Thank you for your consistent replies. When so much is up in the air, and I often feel at a complete loss, your sound advice regarding my situation with my husband (the finacial advisor) and possible solutions has been at least one thing I can count on to be consistent 🙂 I’ve taken your advice, as well as that of a friend of mine (whois also an advisor) to my husband. Although the forecast is pretty clear he refuses to see what others have pointed out in black and white. The situation is that even with me working at a bar 3-4 nights a week and him having his best month ever CONSISTENTLY for the next six years without deviation it would take us 6 YEARS of payments at $1,500 a month to get to zero. This is taking into account that we would have no room for activities for the children, any sort of family life or savings to speak of. It would also tank my aspirations of going to school to finally be able to build something for myself (and for our family).

    I have to say that I am devastasted, but not wholly suprised that he would put his “career” in front of our needs. It has always been this way, under the delusion that he is doing all of this for “us”. In the past 3 weeks I have had to go to social services to inquire about support and I can’t even describe the injustice I feel that I am having to grovel while he walks around in his suit and goes to his swanky office. I am beyond trying to work things out at the moment, and simply want an action plan to make sure I (and my children) are never forced into this situation again.

    After many nights of no sleep trying to figure out what I can possibly do, I believe I’ve come up with a great course of action. I have inquired with the college, the University and the medical school in my city, as well as the financial aid office. I am eligible to attend school as early as September to start on the path towards a career in medicine. Although I don’t believe it is realistic for me to plan 10 straight years of schooling and rotations, I have found that I can get a practical nursing degree in three years. After that I can decide whether to work (starting at a salary of $45,000) in a field of high demand, or continue with school.

    Financially, due to my situation as a seperated parent, I am eligible for up to 30,000 a year in student loans with complete forgiveness over $7,000 per year. This will include child care (that is subsidized down to $100 per month), living expenses and a very low tuition rate and materials fee that together come under $6,000. I have worked out many different scenarios, and although the idea of adding debt to an already debt ridden situation may seem ludicrous, it actually works out in the best way possible! I can get my degree, be independant (finally!) and actually REDUCE our living costs in the meantime. (We are spending roughly $25,000 a year on things above and beyond the mortgage..paying back 7,000 per year at the end of my total study period is a drastic reduction!) So, as I figure it, instead of working for 7 years as a bartender with three young children and a terrible marriage (good LORD!), I can get guaranteed income to take care of myself and the children while working towards a better future. Here is the financial breakdown:

    Bartending @ $400 per week x 52 weeks = $20,800 per year x 7 years = $145,600 + additional Canadian child benefit of 3,000 per year (married) = $166,600
    $166,600 – ($25,000 x 7 re: expenses outside of mortgage ) = $ – 8,400

    deficit of $8,400 in living expenses, depending heavily on my husband, and living under the gun

    Nursing degree : debt of $21,000 after three years (no interest accrued during study period, then 3% on a go forward basis

    $37,382 salary ($45,000 after tax) x 4 = 149,528

    + additional Canadian child benefit of 6,600 per year x 7 = 46,200
    149,528 + 46,200 = $195,728

    $195728 – $21,000 (loans) – $25,000 x 3 (living expenses) =

    surplus of $99,728 and a CAREER that is in high demand and half way to my goal of Psychiatry.

    * I realize this is a rather crude breakdown, but it’s pretty evident which one works out better.

    All of this being said, I have checked into our debt load, and EVERYTHING is in my husband’s name, so those debts won’t keep me from getting the loans. Also, with my steady “income” to go to school, he can do what he will with the business and a large amount of financial obligation is lifted from his shoulders for an extended period. (I feel better about my “part” in the debt, knowing that this isn’t leaving him “high and dry”, but actually gives him more room to possibly make it with his business.)

    What do you think, Steve? I think this may be the best thing that ever happened to me, wrapped up in the most painful experience I’ve ever had.

    Thanks Again!

    Kathryn

    P.S. Sorry it’s so long!

    • Kathryn,

      Thank goodness you live in Canada. Those amazing benefits to help you restart your life would not be available here in the U.S. Go Canada!!!

      I’ll stand behind any plan that allows you a path towards happiness, financial security, and to close the door and resolve the current situation you are laboring under. The nurse first step seems totally logical. Many nurses have decided to continue their training and become physician assistants, doctors and I’m sure psychiatrists.

      My desire and wishes for you are to break the cycle, either with or without the cooperation of your husband. But, and this is the big but, I don’t want you to adopt a victim mentality here. Charge forth towards opportunity with the understanding that the past was not what you wanted. Don’t be a victim, take charge and seize a better future. Part of the better future is going to be coming to terms with your relationship. Don’t live in anger.

      Big hug.

      Steve

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