A reader of AskTheMoneyCoach.com wanted to know what to do about tens of thousands of dollars worth of credit card debt, as well as thousands of dollars in student loans debt that she’s facing.
She was wondering whether she should pay off that debt by selling a vacation home she owns – especially because she’s fed up with her husband’s financial wrongdoing.
Since her situation is complicated, I will re-state her question, with a few details changed in order to guarantee her privacy.
The woman said: “I have $57,000 in credit card debt, student loan debt of $22,000, and a credit card that I found out my husband gave to his sister who lives two miles from us. We have no emergency fund, but we have a second home in Florida. We live in Maryland. Should I sell the house in Florida and pay off the credit card and student loans and save up my emergency fund? I’m in limbo. I’m 41 years old with no children. My husband insists on taking care of his family at our expense. I have recently opened a separate account with my name only, and I have about $5,000 saved. Any advice would be greatly appreciated.”
This is a loaded situation, but here’s my answer to this woman:
Based on all the details in your question, I see the core issue as being a communications problem between you and your husband.
It sounds, frankly, like there’s been a lot of financial infidelity going on between you and your spouse. In other words, your husband hasn’t been open and honest with you about supporting family members, giving credit and/or loans to relatives like that credit card he gave to his sister.
Then again, you seem to be returning the favor — so to speak — by opening a separate account in your name only, presumably without his knowledge or consent. And you’ve already saved up about $5,000 in that account, which is no small chunk of change.
Normally, I don’t have a problem with couples having separate accounts. I encourage that because I think it’s healthy for many relationships. Separate accounts can promote financial independence, and also help each of you learn how to budget and manage money independently.
However, I do have a problem with “secret” accounts, and when someone that you’re married to – and presumably see every day and lay in the bed with every night – doesn’t know about savings, checking, investment accounts, or other assets.
To me, that is financial infidelity, and it’s unhealthy for the relationship in the long run. It doesn’t help you to row together as a team and to meet your collective financial goals.
Needless to say, I’m not putting all the blame on you here. Your husband was totally wrong to give his sister nearby a credit card that you didn’t even know about.
Likewise, if you feel like he’s jeopardizing your family’s financial health just to be able to take care of his extended family, that’s clearly a problem.
These are the main issues you need to address with your husband. You need to sit down with him and talk to him about your feelings of financial insecurity and personal insecurity.
You should not have so many secrets from one another. You shouldn’t be 41 years old with no emergency fund and massive amounts of credit card debt. You should be actively planning for retirement, the two of you.
The fact that you have no children means that you should be more prepared to save, invest, and plan for the future as opposed to less able to do so.
Tackling Big Debts
About that $57,000 in credit card debt and your $22,000 in student loans, I honestly don’t have enough information about your entire financial picture to be able to tell you whether or not it’s a wise choice to sell your house in Florida.
What I can say is that, as a practical matter, it probably isn’t that feasible and perhaps not that desirable.
You’re looking at selling your second home, a vacation home I presume, in Florida.
But I don’t know if that’s also an investment property for you, if you rent it out and you get money from that on a monthly basis in terms of tenant income.
I don’t know if it’s a home that’s essentially sitting up vacant or empty and that you only use it when you go from Maryland to Florida on vacation.
I also don’t know the amount of debt that you owe on that house; whether or not there’s a large or small mortgage, or any mortgage whatsoever on that house.
Do you have enough equity in the house such that if you did sell the house you’d be able to raise that $57,000 necessary to pay off your credit card debt? These are all factors that would have to be taken into account before I — or anybody else — could offer you good advice about selling that house.
A Dose of Reality
Lastly though, because I mentioned that from a practical standpoint it might not be feasible or desirable to sell the home, you also have to consider whether or not you’re prepared to do things the right way or the wrong way.
The right way, of course, is to be up front with your husband about it and to talk to him about the viability and the necessity of selling the home if that’s the conclusion that you reach.
You said, “We have a second home in Florida.” Certainly, I would hope that you wouldn’t try to sell that house on the sly — without his knowledge or consent. That could lead to more issues of distrust and more financial problems down the road.
Finally though, many parts of Florida happen to be foreclosure central. It’s very difficult to sell a home in that market right now.
So even if that was your plan, and even if your husband got on board with it, you might not be able to very easily just sell the house, and get top dollar or the money that you need to pay off your large credit card debt.
Rather than focusing on selling what may be an asset to pay off debt, try to pay off your debt organically.
Look for ways that you can cut back on your budget in terms of excess spending.
Certainly talk to your husband about restricting the amount of money that’s going out the door to relatives.
But first and foremost, you really do need to sit down with your spouse and get committed to being on the same page financially. That’s the only way you’re going to move together in financial harmony and personal harmony in your relationship.
I hope this information helps you. Good luck!