My wife came to me today and told me she owes almost $18,000 in credit card debt. She has asked me to take over her accounts. Since I have an excellent credit rating, I transferred the debt using a 0% balance transfer credit card offer.
I hope to pay off this new debt in 15 months. How should I handle this? Any advice would be greatly appreciated.
Let's start with you. You have every right to expect your wife to live within a reasonable budget. But the key word is "reasonable.
" Did you talk to your wife about how much she might want for "food, clothing and incidentals for the kids"? Did you work out a budget together and adjust it from time to time as circumstances warranted? Or as seems more likely did you just unilaterally decide $600 was enough, end of discussion?
If you'd talked to your wife, chances are the signs of strain would have been evident before now. After all, $600 would barely cover the food bill for many American families of four, let alone clothing and incidentals. Families of four spent an average of $6,351 on food, $871 on housekeeping supplies, $735 on personal care including haircuts and $2,953 on clothing in 2005, according to the U.
S. Bureau of Labor Statistics. Not every family spends so much, particularly those with below-average incomes, but these figures should give you some idea of what's typical.
It also doesn't appear as if this sum has been adjusted for inflation over the years. Even if $600 was enough in 2000, your wife would need about $716 to buy the same goods and services today. Clearly, your wife was wrong for accumulating debt in secret.
She also may have a spending problem. But you two need to figure out a way to talk honestly about money and reach some compromises. Dear Liz: I recently left my old job and my new one doesn't start for a couple of months.
I'm very responsible with money but feel I need to take advantage of this rare time off by doing some traveling. I want about $10,000 to cover my expenses. I know I shouldn't touch my 401(k), but I have about $10,000 each in a high-interest money market account, in a stock that I probably should have sold long ago and in an index mutual fund.
Which should I tap? Answer: Tap the money market account. Selling either the stock or the index fund could incur a tax bill you've got too much trip planning to do to fuss with that.
When you get home, rested and ready after your adventures, you can decide whether to sell the stock and use the proceeds to refill your emergency fund. Have a great time! Dear Liz: I am fortunate enough to have a net worth of more than $4 million, not counting my home.
I invest solely in short-term U.S. Treasuries because I have more than I ever will need and could not bear to lose any of it.
My friends tell me I should take more risk, which I am completely adverse to. Am I nuts? Answer: You are taking the risk that inflation and taxes will erode the value of your investments over time.
If you were less rich, that might be a real problem. Most of us need the inflation-beating returns of the stock market to build up a nest egg sufficient to support us in our old age. But if you really do have all you ever will need, then maybe your approach is just fine.
Before you decide, though, you probably should get the opinion of a fee-only financial planner to make sure your assessment of your situation is correct.
Liz Pulliam Weston is the author of the books "Your Credit Score" and "Deal With Your Debt," both published by Prentice Hall. Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd.
, No. 238, Studio City, CA 91604, or via the "Contact Liz" form at . Distributed by No More Red Inc.
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