By Chris Serres
The News & Observer, Raleigh, N.C.
All marriages are based on friendship. But nothing can kill a friendship faster than squabbles over money.
Just ask Lisa C. Williams, a debt counselor and founder of the Center for H.O.P.E., a nonprofit group that provides free financial counseling services to individuals and families. At least once a month, Williams faces the daunting task of rescuing a marriage that is on the verge of falling apart because of financial disputes.
Williams, 38, discussed with staff writer Chris Serres ways that married couples can resolve financial problems before it's too late, especially during the holidays.
QUESTION: Why do married couples come to you? Why can't these couples resolve these issues on their own?
ANSWER: They're afraid of rejection. People, even married people, keep secrets.
The husband or the wife may be hiding credit-card bills. They're afraid that the marriage may end at that particular moment if someone else is not there to intervene. And sometimes it's just fear of the unknown.
Sometimes, one spouse will know there's a problem -- that one person is spending too much money -- but they don't really want to know what the problem is.
Q: So how do people react when these secrets emerge, here, in this room?
A: I had one case where a woman was hiding a foreclosure notice [from her husband]. I mean, the bank was about to take their home. This was a case where the husband was giving her his paycheck, and he had no clue what was going on.
All too often, one person will handle the finances and the other person says, 'Fine, I'll relinquish that role to you.' But they are married, and they ought to come together once a month. The person handling the bills should say, 'Look, this is what went on this month. This is how much came in, and this is how much went out.' You want to physically see where the money is going.
Q: What about couples who are thinking about marriage? Should they pry into each other's finances?
A: Most money problems occur because people don't talk about money before they get married. I don't see any reason to hold back. Ask for a debt-to-income ratio. Ask to see an investment portfolio. How much credit-card debt do you have? Do you own a house? Do you have a savings account? How do you feel about putting money into a 401(k)? Who should manage the money in a household?
Q: What about a credit report?
A: Absolutely. You want that information. If we look at the statistics, and they tell us that 51 percent of all marriages end in divorce and that most divorces are caused by fights over money, then why wouldn't you deal with that issue up front?
Q: What is the most significant cause of financial-related marital stress?
A: Debt. They're coming here because they have credit-card debt and the creditors are calling every day. And people are knocking on their doors.
Q: How serious are some of these cases?
A: Many of them are very serious. Just last week, a couple came to me that was spending $965 a month in over-the-limit charges and late fees [on their credit-card debt]. They had 17 credit cards. They had a beautiful home and beautiful cars, but they are so deeply in debt that they weren't even talking to each other.
When I sat down with them, I said, 'Look, excuse me for saying this, but I know that you're not having sex.' They found that abrupt. But when I see couples paying a $35 over-the-limit fee on every one of their credit cards, I know they're not talking. And there's no way that a couple can be intimate if they're not talking.
Q: Do you ever have couples that are on the verge of divorce?
A: Yes, all the time. I had one couple from Garner who came to see me last week. When they came, he would look this way and she would look the other way. They didn't even address each other by name. Clearly, they needed some marriage counseling. ... So with this couple I just said, 'Look, you need to talk to someone about your marriage because you clearly don't love each other. I can help get your finances under control, but I can't do anything for your marriage.'
Q: So what steps should couples take if they have severe debt problems?
A: Well, the first priority is to get rid of the source of the problem: the credit cards. Cancel the cards. That doesn't mean canceling your debt. That means canceling the cards so you can't use them anymore. ... And follow up in writing. Send a note to each credit-card company saying, 'As of X date, I am canceling my card. I owe X dollars. I will continue to make my payment. However, I no longer want to be able to charge on these cards.' ... I allow people to keep one credit card, but just one, in case they need to rent a car. But I suggest they not keep [that card] in their wallets. Put it in a safe place far away from you, where you can't have ready access to it. The freezer can be a good place. It takes a few hours for [the card] to thaw, and then the impulse to buy something is usually gone.
Q: What if you're paying high rates on your credit cards? Is there anything that debtors can do to reduce those rates?
A: Absolutely. People assume that these companies won't listen to them. But credit-card companies want your money, so you have to know what to say to them. You call them up and say, 'I've been behind on my payment. I'm an honorable person. I want to pay my debt. I've had some difficulties, but paying a 24 percent interest rate may prevent me from paying these debts back. I need you to help me reduce my rate so I can pay off my debt.'
Take the couple who were paying $965 in monthly fees on their 17 cards. I had them make those calls for every credit card they had. Every one of [the card companies] except one said yes to them. Most reduced their rates down to 7 or 8 percent, down from 22 to 24 percent. And every credit card [company] did away with their over-the-limit and late charges, with the stipulation that they make payments on time for the next 12 months. That's huge.
Q: But what if you're simply not making enough to meet your basic living expenses? Getting rid of credit cards isn't going to solve that problem.
A: True, that's just the first step. Couples also have to get in the habit of saving money. A lot of couples have zero dollars in savings. Part of the reason why couples fall so severely into debt is that they have no emergency funds to fall back on. Of course, it may seem ridiculous to put money in a ... savings account that pays 1 percent [a year], when you're paying 18 percent [a year] in credit-card interest. So I only recommend a small amount. Just $25 a month in a savings or money market account, just to get in the habit of saving.
Q: What about living expenses?
A: You've got to cut things. People say they need cell phones for emergencies. But you look at their bills, and you see them making calls at every hour of the day, and their bills total $100 a month. I ask them, 'Do you mean you have an emergency every hour of the day?' If you're making a lot of long-distance calls, stop. Use the Internet. That should be your long distance.
And how in the world does a couple spend $600 a month on groceries? You can save $200 a month by not buying prepackaged food. And what about hair? Cut your children's hair. You don't own stock in anyone's beauty parlor. And I ask families if they eat out at McDonald's. Some of them eat out 20 days a month. Cut that out and you've just saved $100 a month. If you've got to have coffee, make your coffee at home and take it to work. Right there, you've probably saved $500 a month.
© 2002, The News & Observer, Raleigh, N.C. Distributed by Knight Ridder/Tribune Business News.
