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Thoughts on Saving & Debt

As I was preparing to write this article, I mentioned in the office that I was going to be focusing on saving and debt. I got a puzzled look from a team member. “Um, Dave, it’s the month of Valentine’s Day. Are you sure you want to talk about death?”

We had a good laugh, and while it’s true that you’ll save money and yes, eventually die, there’re are quite a few places in between where you’ll likely take on some debt to help you move through life. 

For most of us, it starts with that first car. Mine cost $800 and I had $150 to put down, leaving me what felt then like a whopping amount of debt at $650. Then I went even deeper into debt for my college education, which I paid off through student repayment programs. During that time, I took on even more debt by purchasing my first home. 

The reality is that, no matter what stage of life you’re in – just starting out, raising a family, building a career or facing retirement – they all typically encompass the acquisition of debt in some form or fashion. While the popular voice of Dave Ramsey has people screaming out the window “I’m Debt Free!!!,” and I do wish that for everyone, where I get off that bandwagon is where “debt” becomes a dirty word we’re not allowed to say unless we scream that we’re done with it. If you’re saving your first emergency fund, or replenishing it after an emergency, those types of things need to take precedence. 

People often ask me what the minimum client size is for working with us at Family Financial Partners. While I’d love for everyone to be super wealthy and never need to access any of their money, that’s only 5 or 10 percent of my clients. The vast majority are everyday people who are oscillating between saving and taking on more debt. So, the answer is, we have no minimum – we work with people who have dreams, and goals, and are thriving. And that’s the fun part – seeing people achieve the things they’ve been working towards. 

We’ve all heard that 50 percent of marriages end in divorce, and that a leading cause is money. So, if you’re in a relationship, it would behoove you and your spouse or significant other to talk about your savings plan, your goals, and yes – your debt. It sounds simple, but trust me, this conversation is hard to have. If you’re used to managing things yourself, it can be hard to tell someone that you have a credit card balance, or that you spend every last dime and therefore don’t have any savings. It’s scary to feel judged, or admit things you may not be proud of. 

However, if you can’t have that conversation with the person who should mean the most to you in life, who can you have it with? In many ways it comes as no surprise that marriages are stressed and often end due to finances and a lack of communication. 

I was recently blessed to meet with a new client couple who, when asked how they talk about money, shared with me that they do have a budget in an Excel spreadsheet. You might be thinking that these folks are overachievers and maybe they are, but they didn’t have everything figured out and still have goals they’re working on. What they had learned was to communicate with each other when they had a little more cash flow and might make some purchases, or when one would call a “spending freeze” and they’d both tighten the budget to save up. I could see the joy in their faces that came from not only living within their means, but when they lift that spending freeze and get whatever it was they had been saving for. 

In addition to talking with your spouse about spending, saving, assets and liabilities, it’s also a good idea to do a self-assessment of where you swipe your card. You don’t have to share the results, but be sure to recognize any purchases that you look at and wonder what you were thinking. Identifying where and how you create consumer debt is a powerful task that can empower you to be more mindful with your money going forward. 

I can also tell you this – very few people come into my office without the income to meet their goals (if time is on their side). It’s much more common to talk to people whose goals aren’t met because their resources are being spent elsewhere. 

My challenge to you this week is to take some time and have a chat with your spouse about where you are with your goals, balances (both savings and debt) and overall financial picture. Then, look at your own statements from the last 30 days and make note of where your money is going. There’s nothing wrong with spending money – just make sure you’re spending it where you really want to.

Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.

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