How do you reconcile one spender and one saver in the family?

[Liz CA]

Dh is not a great spender but certainly views things like mortgages and loans with less head scratching than I do.

I would prefer not to have a mortgage or do everything to pay it off fast, he is always thinking of the tax deductions.

How do you compromise?
How do you budget together?

[profmom]

Liz, I would recommend Dave Ramsey books, such as Total Money Makeover, or his Financial Peace University, which may be held at a church near you -- www.daveramsey.com. He talks about how to budget together when one spouse is more of a spender than another, or when one is more "geeky" about budgeting than the other. :) Attending one of his classes or his live events could be very helpful for getting you guys on the same page.

We use Mvelopes www.mvelopes.com for budgeting here, but there are lots of other effective ways to budget -- cash envelopes, Excel spreadsheets, paper spreadsheets, software, etc.

As far as tax deductions go, you don't come out ahead by keeping debt just for the deduction. Say you pay $1000 in mortgage interest and use it as a deduction; your tax savings is only your tax rate times the deduction. (So, if your tax rate is 15%, you're paying $1000 in interest and only saving $150 in taxes.) I'm with you...pay it off as soon as possible, but I do like the order of Dave Ramsey's plan. (You wouldn't pay extra on the house until you had accomplished a few other financial steps first.)

HTH!

[5wolfcubs]

I'd rather pay things off, dh would rather have money in the bank. Since he is the one making the money and paying the bills each month, I try to stay out of it. :) If he asks my opinion or mentions a debt (mortgage and motorcycle loan) I'll put my 2 cents in. But in the end, he is the provider and if it makes him secure knowing that we have X months of salary in the bank...then I'm okay with that and feel secure too.

Any money management courses in your area that your dh would be interested in? Sometimes it helps to hear things from others...besides the wife and her larvae friends!!:D

[Cadam]

A written budget, a bunch of grace and Dave Ramsey. We are pretty much on the same page as far as our goals right now so that makes it easier to work out the little stuff. We stick to a tight budget though.... and it's about to get tighter.

[Danestress]

As far as tax deductions go, you don't come out ahead by keeping debt just for the deduction. Say you pay $1000 in mortgage interest and use it as a deduction; your tax savings is only your tax rate times the deduction. (So, if your tax rate is 15%, you're paying $1000 in interest and only saving $150 in taxes.) I'm with you...pay it off as soon as possible, but I do like the order of Dave Ramsey's plan. (You wouldn't pay extra on the house until you had accomplished a few other financial steps first.)

HTH!


There is so much more that goes into it than that, though.

For one thing, you have to look at what you can earn on that money vs. your interest rate on the loan. If the interest rate on the loan is 5% and you can earn 9% with tax benefits on a college fund for your child, that's relevant. Or for us, we can put $5000 in a 501K with matching contributions from DH's employer and earn (historically) 8% with tax benefits, or we can put it toward our mortgage which is only 5.75%. For us, this is really relevant and it's forced retirement savings, which I really like. It still might, in pure number crunching terms, come out better to pay down the mortgage, but there are things to consider as well. I like the security of knowing that we have retirement savings, and I doubt we will stay in this house until retirement. I like knowing the employer makes those contributions for us too.

I don't know. I think if one spouse is a "spender" in terms of buying clothes and electronics that's really different than if one wants to pay off the mortgage and the other wants to see that money used for college or retirement savings or for something like that.

[CookieMonster]

For one thing, you have to look at what you can earn on that money vs. your interest rate on the loan. If the interest rate on the loan is 5% and you can earn 9% with tax benefits on a college fund for your child, that's relevant.


Honestly, though, I don't think her husband is looking at re-investing the money. What you say has merit, for someone who is looking to invest their tax return. But, my guess is that her husband, like many others, is looking to spend their tax return.

And how many people actually have a 5% mortgage? If she's got something higher, and isn't getting enough back to invest a good chunk, the rules of the game change.

I totally agree with what you say, but want to caution others that it may not apply to them.

[CookieMonster]

Liz, to address you specifically, I would say that the one thing that has helped my husband and I the most is listening to the same financial teaching together and discussing it. We always learn something. We always reconsider something that we had previously thought wrongly about. And we become closer oriented in our goals.

We also form our budget together. It seems to change slightly every couple of months, but we "approve" it together. The budget is kind of the easy way to enforce all our values on our money. It's a spending plan that conforms to what we find important. If we didn't have it, one of us would be spending all available money every month without trying. But, because we have put in spending and giving categories in our budget, those things get done before anyone touches the money to spend it. That makes me, the one who likes to save and give to charity, peace of mind that we are doing the right thing with our money. And, it doesn't make him feel restricted by whims of mine to suddenly save or give money.

And, we both know how much we really have available to spend, so we can communicate about it together. If I say, "Oh, I'd like to get that!" he can say to me, "Um...we really don't have the money for that this month." and neither of us gets defensive because we both know how much money we really do have to spend. We've already agreed on it.

[CookieMonster]

Oh, and one more thing.

The financial ministry we've found the most help from is Crown Financial Ministries. It's a Christian organization that teaches on the over 2,000 passages in the Bible concerning money. Their radio broadcasts really helped cement our attitudes about money. We don't get to listen to them anymore since we moved.

They also have budget counselors available. They have books. They do workshops around the country. And they have a website: http://www.crown.org/

If you don't want a Christian ministry, I'm afraid I don't know where to direct you.

All the best in this journey...

[Just Me]

I second the recommendation for Dave Ramsey. His advice is sound, and he explains these concepts in ways that I understand! I am pretty sure that his advice would be to pay off the mortgage in this instance, if other areas of your financial situation were in place. For example, no other debt, and an emergency fund established. If you visit his website, I believe his book is on sale this month. Good Luck!

[profmom]

There is so much more that goes into it than that, though.


I agree. There are also risk levels to consider, in addition to things you mentioned. This is why I like Dave Ramsey's "baby steps" -- he doesn't recommend paying extra on the mortgage until all other debts are paid, 3-6 months of expenses are set aside in savings, retirement savings is at 15% of income, and college funds are going. It's nice to have expert advice on the order of the financial goals that we know are so important.

[Liz CA]

Thank you everyone for your advice.
We'll have to check into Dave Ramsey's resources or Crown Financial - I believe I am familiar with Crown if it's the one founded by the late Larry Burkett.

Thankfully, we have no other debt than a mortgage but we also have not been contributing to IRA regularly. A college fund for ds was established by a deceased uncle who left his estate for nieces and nephews to benefit for College or other educational expenses. We also still have some EE bonds somewhere.
Getting organized is half the battle. Since we moved, papers and fileboxes are everywhere.