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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: What is the best way? Date: 7/21/2014 4:11 PM
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Hi,
I have been gone awhile and have racked up a ton of debt. Hard to sleep. So I am going to go forward with the plan to withdraw from retirement. I am making absolutely no dent in the debt any other way.

Credit Cards:
BOA (business and not on credit report) $21,500
Discover: $13,500
NFMaster: $16,000
NFVisa: $3,700
USMaster: $21,500
USVisa: $11,000
USAMEX: $1,950

Taking out $50K to get things started. I know I should probably pay the highest rate off first but would like some satisfaction of starting a snowball.

So my question is:
Do I pay off cards in their entirety or pay them down to half and start working from there?

Help?
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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308382 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 4:39 PM
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In 2006, you said you were "very consistent" about paying down debt and very organized.

http://boards.fool.com/jim2b-thank-you-for-your-response-to-...

It seems that may not really be the case?

I really, really wouldn't even think about touching retirement.

Ishtar

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308383 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 4:45 PM
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Hi, and welcome back.

Are you borrowing from retirement funds, or withdrawing completely? And are they official retirement funds (401(k), IRA) or money you have set aside for withdrawal?

How much money do you normally have to pay toward the cards? Is there anyway you can budget more toward the payoff?

I always feel anxious when people say they're taking retirement funds to pay for something. If there's any way you can avoid doing that, or at least cut way down on the amount you remove, it would be better.

Nancy

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308384 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 4:50 PM
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I was very consistent.
Then things changed dramatically.
Got married, had 3 kids. One child cost a royal fortune due to severe prematurity and all the bills associated even after insurance paid.
That post brought back memories...
I used to keep a ledger, something I just bought a pretty purple one yesterday to start it all over again. I need to get back to where I was before but it has been hard as there is nothing ever left over each month. Seems like I borrow from the next month each month so I have to get started somehow.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308385 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 4:53 PM
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As a withdrawl, you need to start with federal and state taxes, and if you are under 59 1/2 federal and state penalties.

It routinely costs at least 40% in taxes and penalties. You really only have $30K. Since you didn't list rates, the 30K would cover two small ones USAMEX, USMaster and the largest BOA. Any remaining amount could be sent to any of the other 4.

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308386 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 4:55 PM
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So you think I should pay them off in their entirety rather than halve each one then start the snowball?

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308387 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 5:11 PM
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I can understand a change in circumstances (goodness knows!), but it's all the more reason NOT to touch retirement funds.

Is your spouse on board with what you're doing?

Will a ledger make sense to your spouse or would something like YNAB work for you? (Discloser: I'm a YNAB junkie! It's helped a LOT even when my income was very low - and it's still not all that high).

Is there anywhere you can cut expenses? Anywhere you can bring in a little more by freelancing/tutoring/babysitting/selling crap you don't need anymore?

I would do all of those consistently for a year before thinking about pulling money out of retirement.

Ishtar

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308388 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 5:15 PM
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I have to do this alone. Everytime he gets anything above and beyond he has spent it before it hits his account. Thankfully we have separate accounts so this is my debt and I will own all of it.

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308389 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 5:18 PM
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Ok, I am an advocate of separate accounts for a lot of reasons, but there are times when you've got to sit down and make decisions together, even when separate accounts are involved.

Do the two of you share the same financial goals?

That's important.

If you're both pulling in opposite directions, it's going to be frustration for you both and with 3 kids. . . . that's not easy.

Have you discussed this?

Ishtar

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Author: FiddleDeeDee Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308390 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 5:51 PM
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I have to do this alone.

Unfortunately you can't. You are a partnership and you will not get anywhere without the other.

He must be on board or you won't make any progress.

Fifi

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308391 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 6:05 PM
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GX470:


"Credit Cards:
BOA (business and not on credit report) $21,500"


I would not ever pull retirement funds to pay business credit. Are you self-employed or are these business expesnes that will be reimbursed by your employer? If the former, are you expecting payments to pay them down? If the business is continually losing money, how long can you keep it running?

"Discover: $13,500
NFMaster: $16,000
NFVisa: $3,700
USMaster: $21,500
USVisa: $11,000
USAMEX: $1,950"


Total 67k + - have you examined the causes of this debt to confirm that you have control of your expenses and are not increasing the debt monthly? If yoy do not have the current expenses under control, then even if you were to pay the debt, it would eventually return.

"Taking out $50K to get things started. I know I should probably pay the highest rate off first but would like some satisfaction of starting a snowball."

I do not like this idea.

Nonetheless, as someone noted, account for your taxes and penalty first. Another poster thougth 40% loss, but I would assume 50% until you actually calculate it.

Without listing interest rates, for the debts, I will not even venture a suggestion as to order of payment.

In another post you indicated that this was your debt, and you would own it, but without review, is that accurate? For example, your preemie child is both your and your spouse's child, so I hope that you did not pay 100% of unisured costs from your budget. Or perahps you are paying 100% of kids' expenses and your spouse is not contributing reasonably.

It is good that you want to own your debt and pay it off, but without a better understanding of how the debt arose, I am nout sure that I agree with your assessment.

I do not envy you your task, but you probably need a seriousl review of your expenses in order to increase cash flow to pay down the debt.

Regards, JAFO

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308392 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 6:07 PM
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At the very least, your spouse should be aware of the debt and how much having it is stressing you out.

Ishtar

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308393 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 7:00 PM
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You are how old?

What are the total amounts of your retirement accounts, and what other assets do you own?



Seattle Pioneer

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308394 of 308782
Subject: Re: What is the best way? Date: 7/21/2014 8:24 PM
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I have been gone awhile and have racked up a ton of debt.
.
.
.
Got married, had 3 kids. One child cost a royal fortune due to severe prematurity and all the bills associated even after insurance paid.
That post brought back memories...
I used to keep a ledger, something I just bought a pretty purple one yesterday to start it all over again. I need to get back to where I was before but it has been hard as there is nothing ever left over each month. Seems like I borrow from the next month each month so I have to get started somehow.
.
.
.
I have to do this alone. Everytime he gets anything above and beyond he has spent it before it hits his account. Thankfully we have separate accounts so this is my debt and I will own all of it.


Okay, I'm not understanding why 'racking up debt' because of getting married (which takes 2 people) and having 3 kids (together, presumably) makes it all your debt. There has to be more to the story, that you may (or may not) be willing to share.

That said, you can't out-earn a spender. You have nearly $90k in debt. How much does he have? How much of 'your' debt was really for stuff that you paid for because he had already spent 'his' money and wanted you to pay, 'just until he got his next check'?

It appears to me from what you have shared that you have a relationship problem as much as a spending problem, and until you fix your relationship problem, it's probably not much use trying to fix the spending problem.

Before taking any money out of your retirement I would strongly suggest that you need counseling on both your debt and your relationship.

Find a debt counselor using www.nfcc.org - they have accredited debt counselors who will help you figure out how to pay off the debt without withdrawing from your retirement, or if it's not possible to do so, they can guide you on how to declare bankruptcy.

If he's not willing to go to relationship counseling with you, you still need counseling on your own so that you can figure out how you got into this behavior, and more importantly, how to prevent yourself from falling back into the same behavior when/if you do get your debt paid off.

Only after you get both types of counseling should you even think of the possibility of taking money out of your retirement account - and I would strongly discourage it even then. If you take money out of your retirement account without changing your behaviors, you are just setting yourself to end up getting in debt again, only this time, you will have $50k less in retirement funds to use.

AJ

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Author: skorthos Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308395 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 8:41 AM
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ishtarastarte: Discloser: I'm a YNAB junkie! It's helped a LOT even when my income was very low - and it's still not all that high

This resonates with my experience, though it was not YNAB when I first realized I needed a handle on my spending, it was "Managing Your Money."

The author, Andrew Tobias, had a sense of humor and a "you can do it" attitude that inspired my trust and loyalty for years. The world moved on to Quicken and eventually I had to move, too. But the lesson I learned from Tobias was to start small...just begin entering stuff and let the program help with organization. After a while, a picture begins to take shape.

In my case, the picture was of a sinking boat. It was sinking not because of a huge hole in the hull but because of dozens of small leaks. After I had used the program for about a year I could see the leaks and I could see the effects on the bottom line as I plugged each leak.

If my budget had a "fuel" category but one month I was able to save by taking metro to a job location, I could see when that small change also made a small change in the bottom line. Same thing when I found extra money in my paycheck. Especially gratifying (and a big surprise to me because I had not thought about it in my callow youth) were the months when I got three paychecks instead of two. Once I had drawn up my monthly budget for bills, a three paycheck month left me reeling with riches and an insight into how to pay down long time debt faster and save money faster and blah blah.

Perhaps the best result was that MYM helped me convince my first wife that we could get control of our finances even though we did not make a lot of money. She was adamant that she would not keep track of her personal expenses, but she allowed me to pool our money and put us each on small monthly allowances for personal expenses. She was more frugal than I was in that respect so she was able to accumulate cash for periodic splurges. Even though she never used MYM herself, she became comfortable enough with my use of the program that she would ask me to check the "oracle" to see if we had enough money to buy a couch or take a trip or...

The above goes to ishtarastarte's excellent suggestion (intimation) that to bring a spouse on board, maybe one needs something more interactive or illustrative than a ledger. The project can be started by one person, but for it to really work, both must be on board.

Otherwise, as aj points out down thread, the one drilling holes in the hull can work a lot faster than the one plugging them.

skorthos (gets seasick standing on a dock)

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308396 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 9:59 AM
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The above goes to ishtarastarte's excellent suggestion (intimation) that to bring a spouse on board, maybe one needs something more interactive or illustrative than a ledger. The project can be started by one person, but for it to really work, both must be on board.

There are several couples on the YNAB forums that have one spendy spouse that wants nothing to do with YNAB. Over time, many of them do start to come on board.

Having a mobile app helps, I think.

Read some of the Journals to get a feel for how people are dealing with it. http://forum.youneedabudget.com/categories/journals


Ishtar

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308397 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 10:33 AM
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Thank you to all for your suggestions. The 'sinking ship' is exactly how I feel. Spouse gets an 'attaboy' at work and he goes immediately to buy a new suit or watch. How many watches does a person need?? I have 1 gold and 1 silver. That's enough.

Very frustrating but I don't see light at the end of the tunnel with regard to that relationship so I am doing what I need to in order to be in a better position for when the inevitable comes. There are more issues than money of course...but in the interest of ensuring I can make it on my own without that second paycheck is my goal. I admit to buying whatever he wanted but they have come to expect without being appreciative. Just wants to keep up with the Jones'. Gets irritated when neighbor gets a new car. They don't have kids. I haven't bought a car since 2007. I use my 2001 as my commuter car. But he wants a mercedes. WHY? Our kids are in carseats. Not conducive to the family life. Some friend has one and he 'needs' one now. But his credit score keeps him from getting it. Along with the fact he won't pay his current note on time. So frustrating.

So when I say I am doing this alone...I really mean it as one day, I will be. I just need a little guidance in getting on the road to good fiscal health.

Thank you all for lending your much appreciated opinions.

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Author: impolite Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308398 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 1:34 PM
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That said, you can't out-earn a spender.

This. This this this this THIS.

impolite

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308399 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 1:42 PM
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But he wants a mercedes. ...Some friend has one and he 'needs' one now.

Maybe he needs to start by reading "The Millionaire Next Door."

PS--If you get divorced, make sure the debts are divided between you fairly (perhaps half to each or in the same ratio as your incomes). This might be hard to accomplish if all the debts are on your credit cards.

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308400 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 1:46 PM
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So when I say I am doing this alone...I really mean it as one day, I will be. I just need a little guidance in getting on the road to good fiscal health.

All the more reason not to use 401K money (and I'm assuming it's your 401K, not your spouses) to pay off debt incurred jointly.

It's hard to have good fiscal health if the spending problem isn't resolved first. And in your case it sounds like that will either require a marriage counselor who specializes in fiscal disagreements between couples, or if your spouse refuses to do that, a formal separation and proceeding with a divorce. But spending down your 401K will not put you in a good position if your spouse continues to shop.

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308401 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 1:50 PM
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But he wants a mercedes. ...Some friend has one and he 'needs' one now.

Maybe he needs to start by reading "The Millionaire Next Door."


I think they need to watch Brene Brown's "The Power of Vulnerability" TED talk. Over-spending is a form of "numbing" one's emotional unhappiness.

https://www.youtube.com/watch?v=iCvmsMzlF7o

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308402 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:05 PM
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PS--If you get divorced, make sure the debts are divided between you fairly (perhaps half to each or in the same ratio as your incomes). This might be hard to accomplish if all the debts are on your credit cards.

There is a lot more to divorce that a decree to divide debt. The credit card companies are not bound by a divorce decree. An ex-spouse can still be held liable for accounts when an ex declares bankruptcy or doesn't pay the account.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308403 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:13 PM
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But he wants a mercedes. WHY? Our kids are in carseats. Not conducive to the family life. Some friend has one and he 'needs' one now. But his credit score keeps him from getting it. Along with the fact he won't pay his current note on time. So frustrating.

401K balance have some protection in bankruptcy. You need to face the reality that divorce and bankruptcy maybe the only way out of this mess, and start proper preparation now. Before taking any funds from your 401K, you need to talk to a lawyer that can advise you both on divorce and bankruptcy. You won't walk away without paying any of the debt, but doing both will provide you a clean start.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308404 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:13 PM
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An ex-spouse can still be held liable for accounts when an ex declares bankruptcy or doesn't pay the account.

Even if they were never an authorized user on the account?

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308405 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:21 PM
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An ex-spouse can still be held liable for accounts when an ex declares bankruptcy or doesn't pay the account.

Even if they were never an authorized user on the account?


Professional advice is needed. The answer depends on state law.

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308406 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:24 PM
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I was afraid of that.

Are you in a community property state?

It might seriously be good to have a consultation with a lawyer before you make any action on your debt.

If you're in a community property state, it likely won't be as simple as "my debt" and "his debt".

Ishtar

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308407 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 2:30 PM
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There is a lot more to divorce that a decree to divide debt. The credit card companies are not bound by a divorce decree. An ex-spouse can still be held liable for accounts when an ex declares bankruptcy or doesn't pay the account.

And unfortunately divorce lawyers sometimes overlook this and don't push for their clients to ask as part of the divorce decree for debt to be paid off with non-retirement assets and/or that any debt that cannot be paid off be refinanced into the individual spouse's name within a set timeframe.

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308408 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 3:08 PM
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I just listened to the audio for this book. Very eye opening!
:-)

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308409 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 4:45 PM
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But he wants a mercedes. WHY? Our kids are in carseats. Not conducive to the family life. Some friend has one and he 'needs' one now. But his credit score keeps him from getting it. Along with the fact he won't pay his current note on time. So frustrating.

Do you how much debt there is in "his" accounts? You need to know exactly. Since he can't get any more debt, the assumption is that he has maxed out any credit he could obtain. If you haven't, you need his credit report. Attempting to pay off these accounts while he is taking you deeper in debt isn't productive.

I strongly suggest marriage counseling and a lawyer. Unless he changes and starts acting like an adult and responsible parent, your options are limited.

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Author: MissEdithKeeler Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308410 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 10:28 PM
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so I am doing what I need to in order to be in a better position for when the inevitable comes. There are more issues than money of course...but in the interest of ensuring I can make it on my own without that second paycheck is my goal. I admit to buying whatever he wanted but they have come to expect without being appreciative. Just wants to keep up with the Jones'.

Keep track of every. single. penny. from here on out. What goes for bills, what goes for debt, what he contributes to the household, what you contribute.

You're going to want it when you negotiate your divorce settlement.

Frankly, if you think it's inevitable that this relationship is going to end, I'd probably yank the band aid off now and contact a very good divorce lawyer for some advice, especially before you pull money out of your retirement account and start paying off debt that belongs to both of you, out of only your money.

Do you live in a community property state?

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308411 of 308782
Subject: Re: What is the best way? Date: 7/22/2014 10:45 PM
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Under no circumstances touch your IRAs and 401Ks. They are not (usually) able to be touched in bankruptcy. And it sounds like there is no point in trying to pay this down married to a compulsive spender who doesn't understand that you have a household budget that needs to be addressed jointly.

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Author: JonathanRoth Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308417 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 1:55 PM
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you need to talk to a lawyer that can advise you both on divorce and bankruptcy. You won't walk away without paying any of the debt, but doing both will provide you a clean start.

About divorce, if your name is on a debt and you divorce and the court assigns the debt to your spouse, unless the lender agrees otherwise you still owe the money. If your spouse doesn't pay the bill, your credit still gets dinged, and you're still on the hook for the loan.

Generally, the best way to deal with community debt in a divorce is to pay it off, close the account and move forward. In my case I had to refinance the house to get my ex off of the mortgage. All credit cards were paid off and closed when we started our divorce and new credit cards were obtained as individuals.

If you go the divorce route, verify your state specifics with your attorney.

Good luck and I hope you work everything out.

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Author: GX470 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308418 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 2:09 PM
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Hi everyone,

I want to thank you all for your wisdom. We had a heart to heart last night. More tears...
Says he is willing to hand over his whole paycheck if that will help. So at least he can see on paper where the money is going or needs to go.
I will keep hope alive that he finally realizes I am a mother cub who has to protect my children and his spending and carelessness (late fees/NSF/repos, etc.) are killing me and the choice is to either be on board or go elsewhere. We don't have a rocksolid communicative marriage at any stretch of the imagination...and I have doubts of his ability to stick with this for very long but at the minimum, I can start paying stuff down sooner so there isn't so much when the courts get involved with splitting the debt.

Thanks! Will keep you posted!

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Author: ishtarastarte Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308419 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 2:19 PM
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Ok, I'm going to put in one more pitch for YNAB.

http://www.youneedabudget.com/

(This is not my affiliate link, but if you think the software might work for you after the 34 day trial, send me a private message and I can get you 10% off - or any other current user of YNAB).

It's envelope budgeting in the modern age.

Gail Vaz-Oxlade (Canadian TV show host for shows about getting out of debt and taking control) and other personal finance people sometimes recommend using envelopes and/or jars to separate out your money to the tasks it needs to do so you can clearly see where your money is.

On the YNAB forums there are many people who come in with a spouse with ostrich syndrome who gradually come to use YNAB with their partners.

Do a search on the YNAB forums for "value summit" and find Longstockinggirl's excellent post about working on how she and her husband communicate about financial issues (has to do with making sure your money is in line with your values, and figuring out how important things are to you and your partner).

Ishtar

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Author: Patzer Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308421 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 3:26 PM
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We don't have a rocksolid communicative marriage at any stretch of the imagination...and I have doubts of his ability to stick with this for very long but at the minimum, I can start paying stuff down sooner so there isn't so much when the courts get involved with splitting the debt.

I've thought about responding on this thread several times, and each time failed to come up with a post I was happy with.

I went through a divorce from 2002 to 2004. Yes, it took 15 to 24 months, depending on where I count the start and end of the divorce proceeding. Finances were a measurable, undeniable symptom of underlying marriage problems. Finances weren't the problem; but they were a symptom that I could not deny.

My issue with responding to you is, I could very easily project my own bad experience onto your example. In reality, what you face may or may not be similar to what I faced.

FWIW, I thought for a long time we had communications problems. It turned out that we had agreement problems. To oversimplify the financial part of it, I could not accept unrestrained spending with no thought to the future, and she could not accept any constraints on spending when she felt like spending. Other stuff in play made it take me far too long to recognize this.

I originally started frequenting this board in 2002, hoping to find a way to educate then-wife on why running up credit cards hurt us. I found an answer, but it wasn't helpful in getting her to change. That answer is most elegantly expressed by a classic light bulb joke:

Q: How many psychologists does it take to change a light bulb?
A: Only one, but the bulb has to really *WANT* to change.

Perhaps you don't face as hopeless a situation as I did. If you do, divorce is the only way to stop the financial bleeding. That's messy, emotional, and not anyone's first choice; but sometimes it has to be done.

If you do get to the point of divorce, here's a teaser: Prudent financial management in the context of a divorce, particularly when divorcing a spendthrift, is different from prudent financial management under the assumption that the marriage is viable. Been there, done that, and things look a whole lot better a decade after it's over.

I hope I don't need to see you on the divorce board; but if I do, it is what it is.

Patzer

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308423 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 3:49 PM
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Generally, the best way to deal with community debt in a divorce is to pay it off, close the account and move forward. In my case I had to refinance the house to get my ex off of the mortgage. All credit cards were paid off and closed when we started our divorce and new credit cards were obtained as individuals.

It is the best way, but I don't see that as an option in this case.

With 67K in "her" name and he has an unknown but maxed credit in "his" name, paying off the debt is secondary to providing for the children. He is already having problems servicing his existing debt. There is no reason to believe he will be any more responsible after a divorce.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308424 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 4:48 PM
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I want to thank you all for your wisdom. We had a heart to heart last night. More tears...
Says he is willing to hand over his whole paycheck if that will help. So at least he can see on paper where the money is going or needs to go.
I will keep hope alive that he finally realizes I am a mother cub who has to protect my children and his spending and carelessness (late fees/NSF/repos, etc.) are killing me and the choice is to either be on board or go elsewhere. We don't have a rocksolid communicative marriage at any stretch of the imagination...and I have doubts of his ability to stick with this for very long but at the minimum, I can start paying stuff down sooner so there isn't so much when the courts get involved with splitting the debt.


Immediately get a full list of all of debts. You need to know how deep of a hole you are in.

It would still be wise to have a consultation with a lawyer to discuss both bankruptcy and divorce. You need to plan for the possibility of both.

Don't make any withdrawls from your retirement plans until you fully understand your combined financial situation. If things go badly, you will need money for a lawyer and probably enough to rent an apartment.

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Author: JonathanRoth Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308425 of 308782
Subject: Re: What is the best way? Date: 7/23/2014 7:40 PM
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Good work GX470,

It takes time to learn new skills and a new attitude and even the best of us will slip-up sometimes.

Jack
She claims she's perfect, but she's too humble.

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308446 of 308782
Subject: Re: What is the best way? Date: 7/25/2014 9:58 AM
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Says he is willing to hand over his whole paycheck if that will help. So at least he can see on paper where the money is going or needs to go.
I will keep hope alive that he finally realizes I am a mother cub who has to protect my children and his spending and carelessness (late fees/NSF/repos, etc.) are killing me and the choice is to either be on board or go elsewhere. We don't have a rocksolid communicative marriage at any stretch of the imagination...and I have doubts of his ability to stick with this for very long...


If you are feeling any hope, and there is any attraction left at all... reward him when he does good. For example, if he were to say something like, "You know, that Mercedes is nice, but all it really signifies is another boat anchor around the neck of our future," jump him right then and there. Seriously. Tell him how financial responsibility and wisdom really does it for you. Take him in the back and do things he never thought you would do.

Okay, okay... that's shallow. It's manipulative. But I defy anybody to claim it has no chance of working.

xtn

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Author: legalwordwarrior Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308486 of 308782
Subject: Re: What is the best way? Date: 8/2/2014 8:34 AM
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A little late to this thread, but here's what I see about the situation:

I want to thank you all for your wisdom. We had a heart to heart last night. More tears...
Says he is willing to hand over his whole paycheck if that will help. So at least he can see on paper where the money is going or needs to go.


Try it for 3 months. You have already established that you knew how to keep the finances in check before you got married and had kids. Set up an agreement with him that he turns over everything to you: paycheck, any bonuses, etc. for 3 months. Give him a set amount of money per week for his expenses and lock up his credit cards.

Now, take your new purple tracking notebook and get to work. At the end of the 3 months, sit down with him and review everything. It will give you two things:

1) a chance to make a dent in the debt; and

2) a paper trail to show him how you are doing financially.

Then, talk about extending the project if it's working and you're seeing real change. If you aren't it's time to talk to a credit professional about your situation, which may for may not end up with BK.

Good luck!

LWW

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