The Best Way to Avoid Money Fights

Arguments over money are the single biggest friction in all relationships. Sometimes I think money harmony is a bigger imperative than any other. How we spend money may be the greatest physical manifestation of our value system than anything else in our lives. it’s the ultimate visceral expression of our beliefs.
{Joel Salatin 
Your Successful Farm Business}

Have you ever had something you needed to tell someone, but then you wait too long and the moment has passed and then it gets weird to bring it up?

Money discussions in a relationship are kind of like that.

That’s why the best way to avoid money arguments is to start a relationship with the understanding that money discussions are a necessity.

I’ve talked before about how my husband and I discussed money very early in our relationship. But here’s the thing, it doesn’t have to be an awkward sit down where you stare into each other’s eyes and say lovingly, “how do you want to handle our money.”

That’s weird. And it would probably freak the other person out.

Rather than having having a serious sit down, look for opportunities to bring up a money conversation naturally. It may be sharing stories of how money was handled in your house growing up or when you did or didn’t get a toy you wanted. These count as money talks!

There’s a lot to learn about people from hearing them talk about their early financial experiences and their reactions to them. Did they feel like they never got what they wanted as a kid? Did this make them desperate to give their kids everything they want no matter the cost or manage their money so they are able to truly afford what they want?

However you decide to start, talking about money early and often is the best way to avoid money fights as the relationship progresses.

If you’ve been in a relationship for awhile and haven’t really discussed money and finances, stay tuned! I’ll be digging into that soon, and I’m working on a resource to help couples discuss money together no matter the stage of the relationship.

What are your tips for bringing up money discussions???

Budgeting for Beginners

I have no idea how we did our finances before starting a budget. We started budgeting our money after taking Dave Ramsey’s Financial Peace class in 2014, and as a result were able to pay off my student loan debt fairly quickly after kind of treading water for a few years. You can read part of our debt free journey here–>How We Became Debt-Free {real numbers + our top 6 tips}

Starting to do a written budget every month is really how we got control over our money, but it’s a difficult process to get started and it takes some trial and error to get it right an feel comfortable, so these are a few things that we learned along the way.

  1. Find a form or template that you like.
    I use Dave Ramsey’s forms that can be found on his website. I also found this and this one from consumercredit.com that look pretty good. This one from pennypinchinmom.com. I prefer forms that have all of the categories listed. You obviously don’t have to have something for every line, but sometimes seeing a category will help you to remember things you might otherwise forget.
  2. Start slow and make adjustments as you go.
    The first few months are tricky since people, many times, don’t actually know how much they spend on things. We knew exactly how much we spent on groceries, but that was about it. Our first real struggle was our personal money. We each get a set amount, and the first month I wanted to go out to eat towards the end of the month, so I was watching my spending really closely so I could take us both out. My husband spent his on things he wanted, and I realized that if I saved my money to take us both out, I wouldn’t be able to buy anything else and got irritated with him that he was spending his money on him. Crazy, I know. We realized that we needed a separate category for things that we do together. It seems like a no-brainer now, but that was something that we had to discuss and figure out for ourselves.We’ve been budgeting every month for four years, and we still run into months where we over budget or under budget on a category and have to adjust mid-month, or grab money from somewhere we know we won’t need it all. Knowing that there needs to be a little bit of flexibility really helps when something unexpected comes up.
  3. Zero based doesn’t mean you spend all of the money.
    I kept hearing that budgets should be zero-based, meaning that at the end of the month all the money was gone. I was confused because I didn’t know how we were supposed to save if every dollar had to be assigned to be spent somewhere. It didn’t seem to make sense. Since it took me awhile to wrap my head around the idea, I figure it might happen to others, so I’ll try and explain it the way it finally made sense to me.Zero-based doesn’t mean you’re spending every dollar, it means you’re assigning every dollar. As long as all of the money coming in is going somewhere-payments, bills, clothes, savings, etc-you’re good. Once all of the money is assigned and there’s zero money left over, you’re done!
  4. Communication is key.
    If I need a little extra money for something one month, I tell my husband and vice versa, and then we work out if we can swing it or not. I usually do the budget based on what I know are monthly expenses and then add in anything that I know is coming up, this month it’s truck tags, and then he looks it over to see if there’s anything I forgot or that he thinks needs to be added. If he has a question, he asks it. If I need to talk through where money needs to go, he listens and offers suggestions. It might take awhile, but learning how to talk about money with your spouse will take you so far in managing your money well.If you’re not married yet, check out Simple Tips for Discussing Finances while Dating and Engaged. If you are married or headed that way check out Combining Finances for some tips on how to join your bank accounts after you get married.

Communication about money and sticking to a budget have been the two biggest factors in taking control of our money. They’re not always easy, but they are super worth it!

We’ll Never Borrow Money Again {except for a house…maybe}

If you missed the first post in this series, you can check out How We Became Debt-Free {real numbers + our top 6 tips}!

When we started paying off debt, our WHY was two-fold. We didn’t want to be dependent on lenders for the things we wanted, and we wanted to be able to go to one income, so one of us could stay home to raise our kids. We knew being debt-free would feel good, but we had no idea how good it would really feel.

Here’s why we’ll never borrow money again {except for a house…maybe}:

We like owning what we have: If you owe money on something, is it really yours? The thought of someone coming and taking our things in the event that we fall on hard times and can’t make payments is scary to me. We paid cash for our car, so it there’s an emergency, we don’t have hundreds of dollars tied up in payments every month. We own all of our electronics, including our cell phones, our furniture, our 4-wheelers. Everything.

We have an emergency fund: When people find out that we don’t have credit cards, they’ll ask what we would do if there was an emergency. We have an emergency fund. For us, we’re comfortable with around $12,000-about 6 months worth of expenses-tucked in a money market account. That’s money that we’ll never touch unless there is an emergency and a big one. We also have a smaller savings about-about $8,000 right now-that’s for smaller “emergencies” that come up, like seal coating our driveway or fixing the muffler on the car (both happening this month).

We’re comfortable on a smaller income: When we decided to have kids, we knew that one of us was going to stay home to raise them. As a teacher, my job is stable, and I get a lot of time off in the summer and for holidays, so I work and my husband stays home during the day and works part-time nights and weekends. We both get to be home a lot during the summer, and being debt-free allows us to live on a smaller income. Sure, we don’t have everything that we want, but going without some things that fall under the “it would be nice to have ____” category, gives us more time with our kids and with each other.

We might borrow money to buy a house: The thought of saving up $100,000+ is daunting, especially on a relatively small income, so we’re not totally opposed to taking out a mortgage. In contrast to things like cars and boats, houses go up in value, so we wouldn’t lose any money on the purchase of a home. The thought still makes me a little uncomfortable, and I wouldn’t really feel like I owned it until it was paid off. But, right now, we’re just going to save as much as we can, so we can be prepared to put down a down payment if an opportunity opens up. Otherwise, we’ll just keep saving and maybe have enough to pay cash when the time comes.

Taking care of a family is scary, and it’s even scarier to think that if something happened where would couldn’t work, creditors would come looking for their money. There is a peace of mind that comes from knowing that we don’t owe anyone any money, and once we had that peace, we never want to be without it.

If you want to read more about handling money as a couple, check out How to Handle Different Financial Styles in a MarriageSimple Tips for Discussing Finances while Dating and Engaged, and Combining Finances.

 

How We Became Debt-Free {real numbers + our top 6 tips}

My husband and I paid off $60,000 of student loan debt in 3.5 years.

How did we do it?

We worked.

We worked hard. I’ve seen people talk about paying off debt, and it seems like they want to find a magic bullet or get creative. The reality is, if you want financial freedom, you have to work for it.

After I finished graduate school to become a teacher, we had $60,000 of debt. My husband was debt-free when we got married, and told me that we would be free of my student loans in 5 years. I thought he was crazy. I mean, I was paying a little more than my minimum payment each month and the needle was moving, but I just didn’t see how it would be possible to get it all paid off that quickly, especially when we weren’t making boatloads of money.

When we started, I had just begun my teaching career, and he was working for the Idaho Fish & Game department as well as helping out on a ranch.

We weren’t really budgeting, but we were putting a fair amount towards the debt each month, but the needle didn’t move much.

It wasn’t until we found Dave Ramsey and took Financial Peace University that things really took off (this is not a sponsored post-but I wish it was). This program was a game-changer for us.

We brought in between $45,000 and $70,000 over the course of paying off our debt. In the first 2 years, we paid off $9681.22, and after taking the Financial Peace class, we paid off the remaining $48,810.90 in 1.5 years. We paid $27,479.39 in the last six months. The progress was insane. I haven’t looked at those numbers in a long time, and they just blew me away again. I attribute our success to a few things.

    1. Combine finances with your spouse: I strongly believe that married couples should combine their finances after getting married, and for us, doing that made our financial situation so much stronger because we were working as a team and really communicating about our finances.
    2. Take Financial Peace University: Something about that class really got us fired up, and we’ve been followers of Dave Ramsey ever since. I still use the budgeting forms on his website every month to make our budget (There’s also an online budget you can do, but I prefer paper and pencil).
    3. Create a budget every month: Before taking the class, I kept track of what we spent each month, and at the end of the month I added up our receipts and put our spending into different categories and felt sick over how much money we had spent as I paid our credit card bill. Once we started writing down our budget and telling each dollar where it should go, we ended up with more money that could go towards the debt.
    4. Work. Work. Work: I was working full-time as a teacher plus working the after school program and milking cows. My husband was going to school full-time and got a housing stipend through the G.I. Bill. He also worked milking cows and breeding cows through a paid internship. We didn’t see each other much, unless we were both able to get to the farm for milkings, and we spent a lot of time on the phone during our respective commutes. It really sucked, but we knew it was only for a season, and that we could slow down once this goal was met.
    5. Keep expenses down: We are incredibly fortunate that we live in a house owned by my in-laws. It’s not my dream home, or anywhere close to it, but it’s a roof over our head and it serves its purpose. I don’t love having people come over or the fact that it doesn’t truly belong to us, but it’s a means to an end that allowed us to reach our goals and for that we are thankful. The majority of people have to pay rent or have a mortgage, so we know we’re rare in this case, but choosing a place with a low rent or mortgage can help to move you towards your goals much more quickly. Outside of housing expenses, we kept our entertainment budget tight, giving ourselves $50 each and $100 together each month for eating out, fun stuff, etc. We raise or hunt our own meat, so we budget $200 each month for groceries, and we use any income from selling our pastured pork and poultry to pay for our share of the meat.
    6. Lastly, and possible most importantly, have a WHYNeither one of us likes to depend on others and, really, that’s what debt is. Depending on the grace of others-the bank, the school, the credit cards-to buy the things you want. That was our first reason, we don’t want to depend on anyone else. Our other goal was to give ourselves peace of mind and allow one of us to stay home to raise our kids. Two months after we became debt free, we got pregnant with our first child, and the peace we felt knowing that my income would be enough to sustain us was incredible. My husband stayed home with our son and is now working part-time to get our income up a little more. Being debt-free has afforded us the opportunity to raise our kids in the best way we can.

This post has gotten long, so stay tuned for why we’ll never go back into debt (except possible a house)!

I’m curious, what are your thoughts on debt???

How to Handle Different Financial Styles in a Marriage

My husband and I talked a lot about finances while we were dating (you can read about that here), and after we were married we combined our finances and started budgeting and handling our money together (you can read about that here).

One of the best things we did was to take Dave Ramsey’s Financial Peace University, a nine week class that walks you through the basics of budgeting, communicating about finances, choosing insurance, saving for retirement, etc. Doing this class together gave us even more to discuss and really kept us on the same page about our goals.

An entire class was dedicated handling money with your spouse, and it breaks people into two categories-Nerd and Free Spirit (this article on Daveramsey.com explains this a little further).

The Nerd is the one that delights in spreadsheets and budgeting and calculating.

The Free Spirit doesn’t really care about those things and wants to spend money as the need arises without quite as much planning.

According to the old saying “opposites attract,” and generally a marriage has one of each. The weird thing about my husband and I is that I wouldn’t fit us into the category of “opposites attract.” We’re very similar in a lot of aspects, and I don’t necessarily think that marrying your complete opposite is a great idea. So when we took the quiz in class, we were scarily similar and both Nerd (he tended a little more Free Spirit than I did).

BUT, there is a but, there are two more categories that you can fit into-the Spender or the Saver. THIS is where we differ. Big time.

Spending money makes me very uncomfortable, which is one of the reasons I LOVE budgeting. It gives me permission to spend money on things and know that we can afford it. I’m a saver and want money tucked away so I can see it and know we have it.

My husband is much more comfortable spending money. It’s generally on things that we need, and it’s always on quality products, but he’s very willing to spend. He’s a spender and wants money to work for him and buy things that are going to make things more efficient (I’m willing to struggle through things if it’s cheaper that way).

So here’s how we handle these differences: We talk, talk, talk.

I make sure to communicate my discomfort, and then I ask a lot of questions which he answers, and this leads to an honest discussion. Some questions I’ll ask include:

  • How much do you think we’ll use this?
  • Will we use it enough to justify the purchase?
  • Is there a cheaper way to accomplish the same goal?
  • Where will we store it? *We have a small house*

Sometimes, even if I’m not entirely comfortable, I’ll agree to a purchase because I trust him and his decisions.

Sometimes, even if he thinks we really need something, he’ll hold off because I’m not comfortable.

The important thing is that we communicate about what we need and how we can both be comfortable with the money we’re spending. If we do buy something, and it doesn’t pan out or we don’t use it, I don’t gloat or say “I told you so.”

If we don’t buy something and it turns out we do need it, he doesn’t throw it in my face. We just put it in the budget and buy it.

Communication is key and being “right” doesn’t matter because you’re not competing over how to spend money. Working as a team and talking through purchases makes you stronger as a couple and staying on the same page about finances keeps your money working for you.

Combining Finances

This post is about how to handle combining finances after marriage, if you’re dating or engaged, check out my last post Simple Tips for Discussing Finances while Dating and Engaged.

My husband and I kept our finances separate until after we were married. It really wasn’t something that we thought about, but we talked a lot about our finances. We knew we wanted to pay off my student loan debt in 5 years, so our plan was for me to use the majority of my checks towards the loan and then he would pay for most everything else-rent, utilities, groceries, etc. Actually, looking back, I’m not sure who paid for groceries or eating out, but it definitely worked for us at the time.

After we got married, we decided to combine our finances and are firm believers of combining finances after marriage. Besides the legal protections that marriage affords, there’s something about officially becoming a team and saying your vows that solidifies the financial commitment as well. Part of being in a relationship is being a good teammate and having to discuss finances adds another layer of teamwork that serves to strengthen the relationship.

Once we combined our bank accounts, we began budgeting together. There were a few tricky months as budgeting for the first time with a joint bank account means a little trial and error, but that’s where communication comes in. We talk about every penny that comes through our account. For some, that may seem exhausting, but making a plan for our money keeps us on the same page about a lot of other things that could easily get out of whack.

For instance, we have to decide what to spend on groceries, which means we have to essentially agree on what to buy and what we’ll be eating. We decide how much to spend on clothes, gas, and anything else that comes up. I think this enhances our communication because we have to talk about those things. He knows if I need extra work clothes, and I know what he’s going to spend on hunting supplies. It takes a lot of talking to keep everything straight which is great for our relationship because we have to work as a team to keep things going.

Here are some things we did after we got married to transition to combined finances:

  • Use budgeting forms or software to direct your budget-We were working to pay off my student loan debt and ended up following the Dave Ramsey plan, including their budgeting forms to get us started. We still use their budgeting forms every month. Starting a budget is a lot like jumping into a pool without knowing how to swim, so using ready-made budgeting forms provides a kind of life jacket until you get the hang of it.
  • Have monthly budgeting meetings to discuss the month’s needs and expenses-Since starting a budget is tricky, communication is essential. Talking to each other about what expenses are coming up in the month makes it so we don’t forget anything. Some budget meetings take longer than others depending on what the upcoming month is going to bring. We also have to have conversations about what is necessary and what isn’t.
  • Figure out who is the saver and who is the spender and negotiate-I am definitely the saver and my husband is definitely the spender. He is much more willing to purchase things than I am and, many times, he wants to buy things that I don’t necessarily think we need. This includes toys as well as household items. Discussions over these things have the potential to be difficult, so I make sure that I ask a lot of questions and say what’s on my mind and voice my concerns. Here are some questions I make sure to ask if he starts talking about a purchase that I’m uncomfortable with (which are most of them):
    • How much do you think we’ll use this?
    • Will we use it enough to justify the purchase?
    • Is there a cheaper way to accomplish the same goal?
    • Where will we store it? *We have a small house*

As he answers these questions, I start to understand his thought process a lot more            and through my questions, he understands my hesitations. Sometimes we decide to            go ahead with the purchase, sometimes we decide to wait until I’m more                                comfortable with it, and sometimes we scrap it altogether. The important thing is                that we come to the decision together, and we’re both aware of the other’s thought            process. You can read more about this here.

  • Budget money for entertainment and decide together what you’ll spend it on-Our transition to combined finances and budgeting actually went very smoothly because of how much we talked about it, but there was one fairly significant hiccup. In our initial budget, we had only budgeted personal money for each of us and no money to spend together. I knew I wanted to go out to dinner later in the month and was saving my money to take us out. I watched in annoyance as he spent his money, and I felt like I couldn’t spend mine. I let him know how I was feeling, and we decided that the thing that our budget was missing was a category for both of us together. Once we got that in there, we were able to do things together and still have personal money.
  • Have personal money to spend on whatever you want-We pretty much discuss everything and make most decisions together, so it’s nice to have money that just belongs to each of us. I can spend mine on burritos, and he can spend his on energy drinks, and there’s no judgement and no discussion over what we spend it on.

Combining our finances was an adjustment, but a good one. We talked a lot about money before we lived together and were married, but actually working our budget and making our financial plans together definitely makes our relationship stronger.

I’d love to hear your thoughts about when to combine finances!

Simple Tips for Discussing Finances while Dating and Engaged

Discussing money and finances can be very scary, and I don’t think there’s necessarily a best time to begin the discussion. For us, conversations came naturally, and we did a lot of discussing in the abstract before we got to specifics. Talking about things like how our parents handled money made for good driving around conversation and those conversations deepened as our relationship progressed. Being able to discuss and handle finances together is essential for a simple, happy relationship.

Here are some simple tips for discussing finances with your partner.

  • Talk about how each of your parents handled money-Whether we like it or not, we pick up on a lot of our parents habits, good or bad. When you’re talking to your partner, think about the following things:
    • Did your parents make financial decisions together?
    • Did they fight about how to spend money?
    • How did they handle things when money was tight?
    • Did they have combined or separate finances?
  • Pay attention to how he or she handles money-Paying attention to how your partner handles money will go a long way into figuring out their philosophy on finances.
    • Do you agree with financial decisions he or she makes?
    • Does he or she spend money on things that you think are frivolous?
    • How do your spending styles compare (impulsive, strategic, planned)?
    • Is he or she a spender or a saver?
  • Discuss financial goals-Even though you might not be making financial decisions together, it’s important to discuss what you want your money to do for you.
    • Are your goals similar?
    • How does your partner feel about debt? Retirement? Vacations? Home purchase?
  • Dream together-This kind of relates to discussing financial goals, but it’s a little more fun. When the relationship turns serious, talk about big things you’d like to do with your money.
    • Do you want to buy a house? Pay off debt? Buy your dream car? Go on shopping sprees? Take vacations?
    • What do you want retirement to look like? Travel? A second career? What kind of lifestyle do you want?
  • Discuss big purchases-Even before our finances were combined, it was important to me to run a big purchase by my husband. I have a hard time spending money, so for me, having someone that would help me walk through whether or not the purchase was worthwhile was really helpful. If you’re someone that spends more freely, you may not need the feedback, but involving your partner in the decision is still important.
  • Communicate about salaries-Talking about money in the abstract sense can be uncomfortable enough, but getting into actual numbers can be downright scary. But knowing what your partner makes can help with discussion about what combined finances will look like. Even before we were married, we made sure that we knew what the other made which helped as we began to make financial decisions together since we knew what we were working with.

What tips do you have for talking about money with your partner?