Sort out finances or look at separating, couple warned

A COUPLE needs to have a “date night” to sort out their finances and decide whether they want to share their money or separate, writes Barefoot Investor.

A couple need to start talking to each other about their finances.

A COUPLE needs to have a “date night” to sort out their finances and decide whether they want to share their money or separate.

DENISE ASKS: I love my husband but he is terrible with money and he will not discuss our finances. He earns twice as much as me, but we split the bills, and I often pay extra. I don’t have any debt, though I don’t know if he does. I have cleared his debts a few times but stopped doing that recently. So, I have bought your book, have no debt and have started saving. One thing that is stopping me is, when I get myself together financially and if we break up, won’t he just take half of everything I worked so hard for? I feel like a cow asking.

BAREFOOT REPLIES: It sounds like you’re already separated — financially, at least. I really don’t know how you can have a close, loving marriage if you’re not willing to share your money. I mean, how do you two set goals for the future? You can’t. You’re basically roommates with benefits. The very reason I structured my book around monthly “Barefoot Date Nights” is so that couples can work on their financial future together (with wine and garlic bread to boot). Now, maybe he’s lost his confidence. Maybe he’s embarrassed about his situation. That’s okay — flick him my book and invite him to a date night. It’ll take you through how to set up your buckets, sort out your debts, and have you on the road to financial safety ... together, as a partnership. However, if he’s adamant that he wants to keep everything separate … maybe what he’s really trying to tell you is he wants to live separately, too.

KEEP WORKING

CRAIG ASKS: I am 58 and am preparing to retire in the next couple of years. I earn $75,000 (wifey has already retired!). We have $140,000 combined super and have $45,000 left to pay on our home (worth $750,000). Other than paying the mortgage off, what would you suggest?

BAREFOOT REPLIES: I’d suggest you keep working for another 10 years, cobber. You shouldn’t retire based on how many candles are on your cake, but how many dollars you have in super. Fact is, you don’t have enough to retire “in the next few years” and be able to live comfortably. Remember, there’s a very good chance you’ll spend more time in retirement than you did in the workforce, so you need to prepare. Let me give you three goals to reach before you officially retire: First, own your home completely debt free. Second, in 10 years’ time you’ll want to have saved up at least $300,000 (combined) in an ultra-low-cost balanced super fund, as an absolute minimum. Third, commit to continuing to work while you’re in retirement — you should aim to earn at least $10,000 p.a. each by working a day or two a week. Best of all, your wife can get started on this now!

HARD TO SWALLOW

TIM ASKS: Just over a year ago my wife and I (40s, married, two kids) moved our super fund into a North Personal Superannuation Protected Growth fund on the advice of our adviser. The selling point was that our locked-in growth amount cannot reduce if the market crashes. We knew we would be up for some fees but on receiving my first annual statement I found that total fees (including admin, adviser, guarantee and insurance) were $7552.70 (on $160,000 super). And that’s just me, not even my wife. What would you suggest we do?

BAREFOOT REPLIES: If you were sitting across from me, here’s what would happen: I’d casually grab the North Personal Superannuation Protected Growth Fund brochure, and start flicking through it. You and your wife would look at each other, and then back at me, smiling. And then I’d slam the brochure down on the desk, and begin theatrically tearing out the pages. I’d then scrunch up the pages and start eating them in front of you. And through mouthfuls of paper I’d yell at you both, “you guys are in your 40s — you have 30 years until you retire — the share market will make you fabulously wealthy if you can ride out the temporary dips!” And your wife would recoil in horror ... but she’d also get my point that paying close to 5 per cent a year in fees to “protect” something you won’t cash in for three decades, will end up robbing you of hundreds of thousands of extra dollars in retirement. Any time you hear the words “protected growth”, it means you’re paying for costly hedging portfolio insurance that will eat away at your returns. My advice is as follows: arrange one final meet up with your adviser. Take along your printed annual statement. Then start chewing.

MAN WITH A PLAN

BEN WRITES: Tonight on the train home from work I finished your book and I had tears in my eyes. You have given me what I have never had. I feel so empowered. I know beyond a shadow of a doubt that “I’ve got this”. Three years ago we had no savings, $10K in credit card debt, a single average income for our household and a belief that there was no way in hell we could ever buy anything any time soon. But, for the first time in my life I feel like I can do it. I know what I need to do, and what order to do it in. The $20 I spent on the book will go down as the wisest and most profitable investment I have ever made. My two little girls and my beautiful wife will have a faithful husband, a present father, a hard worker and a good steward (read “investor”) until the day I die. You are the real deal.

BAREFOOT REPLIES: You’ve got what I call the “Alpaca Attitude” (named after my two headstrong alpacas — Pedro and Alberto — who will spit, kick, and stomp on anyone who tries to mess with their flock). Getting on top of your money isn’t that dissimilar to losing weight: we all know what to do, it’s coming up with the why that stops most people. When you have certainty about an outcome, it’s only a matter of time before you achieve it. Go you good thing!

 

barefootinvestor.com

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice

Originally published as Sort out finances or look at separating, couple warned