Before Casey and I had even walked down the aisle, we made some pretty major financial mistakes to kick off our marriage. From there, the situation only grew worse. It took many years to correct many of our early marriage mistakes only to follow those up with different financial conundrums; student loans — can’t live with ‘em, can’t live without ‘em.
We’ve made a lot of financial mistakes, but I know we aren’t the only family out there who have run into the same issues. In my time as an attorney, I’ve observed many avoidable financial mistakes that I’d have handled differently and would have left the family in a better, happier situation. I’ve watched a lot of court cases get tried at the courthouse too, and it seems that most marriages are destroyed by stresses that come from financial struggles, so maybe some of these marriages would have been survived intact.
As a husband and father who has made several financial mistakes and as an observant attorney, I would offer these 7 tips to avoid financial pitfalls:
Credit Cards Aren’t For Everyone 1 of 7
I have many friends who tell me that they buy everything with credit cards because it helps their credit score. That's true, but for those of us who can't handle staying within an allotted budget, credit cards will eventually do more damage to a credit score than good. Casey and I don't ever use a credit card except in emergencies.
Photo Credit: Flickr
Think and Think Again 2 of 7
Early on in my marriage, I decided I just had to have a laptop for school. Even though I didn't have the money to buy a laptop with cash, the need was so great that I put the whole thing on a credit. It ended up being one of the dumbest financial decisions I've ever made. I didn't need that laptop. In fact, I barely used the laptop until my senior year in college, and by then the laptop barely worked. After that blunder, I instituted a policy that I cannot make major purchases (basically anything over $50) unless I let three or four weeks pass, then I decide if I need the item. Usually after three or four weeks pass, I discover that I didn't really need it in the first place.
Make Your Personal Finance a Marital Responsibility 3 of 7
I hate managing money — hate it with a passion — but it's part of my marital responsibility. When I look at my bank account statement, I can feel the acid in my stomach start to churn, my blood pressure rises, my forehead breaks out in a sweat, and my mood drops. It doesn't matter if the bank account is in good shape or not. Many of our financial problems would have been avoided if I had been able to help Casey manage the money. Both parties should actively participate in managing of their finances. In many marriages, one spouse is surprised to learn that the other spouse has ran up gigantic credit card bills leaving the married couple in financial ruin.
Designate a Shopping Day 4 of 7
A few years ago when Casey and I were struggling with our monthly finances, I asked Casey how it was possible that we were running out of money each month. Actually, my questions was formed in an accusatory form because I didn't think I played any part in running our bank account dry. Casey pulled me aside and showed me the bank account. I didn't go to the store and spend $50 or $100 once per week, instead I went to the store multiple times each day, almost every day, and all of those trips added up to way too much money. I learned that if I designated one day a week to get what I needed that we'd save a lot more money. It eliminated my impulse spending.
Don’t Pay the Minimum Payment Each Month 5 of 7
That minimum payment each month will enslave you to your credit card company for many, many years. Credit card companies are huge fans of that minimum payment because of the amount of money they can suck out of people. Make larger payments, or extra payments, to really eat into the principal of the debt. You'll be surprised at how much progress you can make in getting the debt paid off.
Don’t Ignore the Court Notices 6 of 7
I don't know how many people I've come across in my time as an attorney who have received a court notice and have ignored it. Ignoring court paperwork almost always results in the collection company getting a default judgment, which might as well be labeled as a you now have no leverage judgment. Hire an attorney or respond to the court paperwork yourself. Don't let the collection company get a default judgment. Many collection companies are willing to negotiate the overall debt down to a smaller balance, but that usually only happens before a judgment is rendered.
Photo Credit: Flickr
Don’t Be Shamed Away From Bankruptcy 7 of 7
I've heard all kinds of bad rumors about bankruptcy. Usually they're some kind of accusation about how filing for bankruptcy is immoral. People make mistakes, and Congress put a mechanism in place that will help people get out of whatever financial hell they may have put themselves into. Remember the lesson about minimum payments? Don't feel bad about the credit card companies getting shafted. They made their money, and they entered the transaction knowing there was a good risk of default and discharge. Bankruptcy can help people shed the debt and reestablish their financial security, and many people are able to keep their homes and their cars through this process.
Photo Credit: Flickr
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