Save or Spend? Who Decides?

Well you’ve done it! You’re now at a place where your debt is under control. Yes, you are still paying off your mortgage but your revolving debt – credit cards and car loans – has been payed off.

Financially stress free marriage, right? Well, maybe not. Many couples have been blessed with enough income so that they have little to no debt. And the debt they do have is easily handled with current income. But unfortunately, many of these couples still fight about money. How can that be? What’s to fight about? They don’t have problems paying their bills and there are no bill collectors hounding them to make payments on past due obligations. So what is there to fight about?

Michal Zacharzewski

Michal Zacharzewski

I have found that the couples who have little or no debt worries, still can have enormous tension over how to spend what they do have. Who determines what amount is spent on what? Who decides when and if and how much to save? Do we spend part of our income on a special vacation? Do we remodel the kitchen? Do we build a new deck and get a hot tub? What about that new entertainment system with the 60 inch TV and surround sound? And of course, the new car. He has always wanted a new Mercedes and after all, it is a very reliable car. And the family has grown, so they need a new SUV to handle the back and forth to school, trips to the coast, and camping each summer.

And we really should get that new ….

You get the point… The wish list is endless. And again, experience informs me that usually one spouse is leaning on saving while the other feels that saving and never spending leaves Jack (or Jill) very sad. One spouse is saying WHOA WHOA WHOA! and the other is saying GO GO GO! Life is frustrating if we can’t spend some money on what we need and want. Certainly we can spend some of the surplus? We don’t need to live as if we have nothing extra each month because everything has to go into savings. How do we decide? Who gets to decide?

Spend some time in the next few weeks thinking and talking about how spending decisions get made in your family. What roles do each of you play in these decisions? Are there particular purchases you have fought about in the last few years? Do either of you ever have negative feelings when a purchase is made by your spouse? Talk honestly and with a willingness to work on making your relationship better.

Next time we’ll look at several tactics to help with planning when you have enough and you are challenged as a couple on how to spend or save.

Get Out of Debt

What’s the best method for paying down your debt? My leaning is to pay off the highest interest rate debt first.



You will need your list of all outstanding debt, monthly payments, and interest rates. Rank this list by interest rate with the highest rate loan first, then in descending order. You will probably find that you have several credit cards with interest rates of 18% to 21% or more. To me it makes the most sense to pay off the debt with the highest interest rate first because it is costing you the most every month.

For example – You may have cards with 18% monthly interest and a car loan that you negotiated a low rate of 4% or even 0% interest. One credit card with a balance of $5000 and 18% interest will cost you about $900 the next year in interest alone. By paying off the car loan, you save nothing in interest expense next year. But by paying down the credit card, you will save 18% on the extra amount used to pay down that debt.

So, step number one, is to rank your debt. Then find money in your budget by earning more or decreasing expenses such as dining out or lattes or whatever you are willing to forego. Use these funds to pay down the highest interest rate debt first. Continue to pay on all your other debts as usual.

Let’s say that you have come up with $200 per month that you can use to pay down your debt. The first loan that you will  pay down is a credit card with a $1400 balance. If you have been paying $35 per month towards this bill, add $200 per month (total of $235) and you will have the bill paid in full in about 6 months!

After the first card is paid off, add $235 to the payment for the card with the next highest interest rate. If you were paying $75 per month to this next debt, add $235 to $75 and begin making payments of $310.

Continue this process. Over time you will increase the amount used to pay off debt by adding the amount from each paid off loan to come up with a new amount to be used to pay off the next.

But remember: NO NEW DEBT! The objective is to PAY OFF all debt. Yes, you CAN keep up this process until you  pay off even your home mortgage, if you have one.

Objective: Get out of DEBT! Why? Out of control debt can strain your relationship by adding unnecessary stress to your marriage. You won’t be fighting over the bills because you don’t have any bills for debt.

No debt. Try it. You’ll like it. And so will your spouse!