Freaky Finances

"Oprah" airs in the evening here.  We rarely watch it, but the boyfriend had seen a promo for last night's show and wanted us to watch it.  It was about couples and finances.  We're pretty much on the same page in that area--I think he just wanted to hear the tips David Bach was going to offer on how couples can make themselves richer.  (His website is www.finishrich.com.)

They featured three couples on the show.  The first couple had only been married for nine months and were already $50,000 in debt, because they'd had a lavish wedding in Mexico, another reception in Texas...and had charged it all.  Bach called it their 'rock star wedding.'  They had not only paid to fly guests to the wedding and paid for their hotel rooms, they'd even paid for their spa treatments.  They had spent $22,000 in Mexico and another ten grand in Texas.  And at the nine-month mark, they were already sleeping apart because they were so pissed at each other over the state of their finances.

I thought they were insane.  (And I hope I'm not offending anyone who had, or is planning, that kind of charge-'em-up wedding.)  I just don't understand that mentality:  we'll just charge it and worry later about how we're going to pay for it.  And this particular young woman only makes $12,000 year.

Another couple (she was a stay-at-home mom) got into trouble because he bought a fancy truck (which they couldn't afford) so she started spending money (which they didn't have) to counter the truck purchase.  And because they didn't have the money to purchase the items (PC, video camera, digital camera, etc.) outright, she bought them on payment plans at exhorbitant interest rates.  And because they were making all those payments they couldn't afford, they started getting those nefarious 'payday loans' to tide them over from paycheck to paycheck.  Bach went back through all of the contracts for their payday loans (and they'd been caught in that vicious cycle for awhile) and discovered that they were $92,000 in debt...with no credit card debt.  They were getting killed on interest.  The interest on their various payday loans ranged from 35% to 575%!!!  And here's the thing:  they hadn't really noticed the interest rates. 

He offered some practical tips:

• Figure out what your personal 'latte factor' is.  Where are you spending a few bucks and not realizing how much it's adding up to?  (I'm guilty.  The deli near my office...muffin, lemongrass tea, a dollar in the tip jar for my pal:  $4/day.)
• Go over your finances with a fine-tooth comb and figure out where you can cut back.
• Pay yourselves first.  If possible, take your first hour's income every day and set it aside before you pay anything else.

But here's what I really liked that he did with each of the couples.  Before he discussed their finances with them, he asked them to first (separately) write down their values and prioritize them.  He pointed out that most couples don't take the time to do that.  It was interesting to see how their values differed from their mate's...and how they differed from their financial reality.  That seemed to me like a good first step.

Here's the link to "Create Your Own Value Circle" on Oprah's site.