Marital Wellness: A View from the Ledger

By A. B. Jacobs

A magazine article I read a few days ago provided extensive advice to the bride. I recognized the author as a well-known psychologist and specialist in the field. The article that went on for five pages touched on numerous topics including the importance of compatibility, factors in child raising, relations with in-laws, and general tips on keeping the marital magic alive. Although the subjects covered seemed reasonable enough, one most important topic was ignored: the matter of money.

In general, marriage counseling is a profession reserved for those with special credentials that can include college degrees in family relations, certification by psychological or psychiatric boards, and accreditation through religious orders. Although I possess none of these qualifications, I’m not oblivious to what it takes to make a marriage tick, having witnessed many a successful one—and too many unsuccessful ones. To name a single element by which to separate the good from the bad, it is the eternal triumvirate: the husband, the wife, and the family finances. And in this category I possess the credentials, namely more than forty years of a most satisfactory married relationship together with a life-long specialty in money. It’s for this reason I feel qualified to offer guidance on sustaining a successful union. Please stick with me as I spell it out.

As with so many subjects, we’d better begin before the beginning—which means before the nuptials. The brutal fact is that there are a lot of prospective husbands out there who are simply unacceptable risks as marriage partners. In addition to the obvious ones—compulsive gamblers, chronic alcohol or drug users, psychotics, and other assorted weirdos—you must add those who exhibit unreliability. It’s my belief that a person’s lifetime characteristics are largely developed by the end of puberty. The man who cannot resist spending beyond his means upon graduation from college will be equally foolhardy a half century later. Similarly, if his checkbook is hopelessly out of balance on his 25th birthday, expect it to be similarly chaotic on the day that he receives his first social security payment. In such ways, people don’t really change much as they grow older. And these character traits can impose an intolerable strain on a marriage.

With this said, let me make my first recommendation. Recognizing that desirability as a marriage partner goes hand in hand with reliability in honoring financial obligations, you should not consider marrying without first obtaining a satisfactory credit check on your intended. Despite your infatuation, the warm glow will wear off quickly as reality sets in. Once you acquire a financially unreliable spouse, your predicament can be best be described by the following tale. It involved a series of very early morning telephone calls by the same caller to a hotel lobby switchboard. The voice, sounding progressively more intoxicated with each call, asked repeatedly what time the bar opens, being advised each time that the bar opens at 9:00 AM. In response to the same question at the 5:00 AM call, the desk employee answered sarcastically: "As I've told you before, the bar opens at nine, but what makes you think we'll let you in?" The voice responded in an almost unintelligible slur: "I don't want to get in. I want to get out."

In the marriage lottery, selecting the right partner is two-thirds the battle. After that, it’s mostly a matter of maintaining a steady course and avoiding the shoals. This requires that as a family, finances be managed effectively. Reducing this to a single principle, it’s far less important that family earnings be large than both spouses habitually spend less than they earn. This can be a challenge, of course, as the market forces aren’t designed to assist. So let me pass on three tips to help you prosper.

■ The misuse of credit cards is a national preoccupation, thanks in part to your friendly banker, with payment of interest by the American citizen a national outrage. If you want to understand what it’s all about, consider how one typical institution, Bank of America, operates. For sums of money that you place into their passbook savings account, you receive interest of ¼ percent annually. For sums of money they advance to you in cash on your credit card, you pay interest of 19.99 percent annually. Does that give you a hint as to how the playing field is tilted? Which gets us to the bare bones of the matter. My belief is that a credit card has a single purpose, convenience when neither check nor cash is handy. Most importantly, when the monthly statement arrives, pay the full cash balance before the date that interest is charged. Follow this rule and the interest rate means nothing. If for any reason you cannot regulate your credit card use in this manner, destroy your cards, swear off cold turkey, and fashion your life accordingly.

■ There is no single product more forcefully promoted or representing such a substantial portion of disposable income than one's vehicle, and the potential for financial dilemma is all too real. From a logical viewpoint, it’s easy to dispense the following advice on the purchase of a motor vehicle.

1) Don’t buy anything you cannot pay for in hard cash without borrowings of any sort.

2) If a new car is not within your budget, search for a serviceable used one.

3) If continuing to use your present vehicle costs less than buying a replacement, don’t make the change.

Unfortunately such advice is just that - easily dispensable. Social and psychological considerations make pressing demands. The need to sport a fashionable vehicle can be an obsession for many young, and not so young, persons. I recall my first financed new convertible with pride; by the time I made my last payment, it needed a transmission and the top leaked. So, at this point you’re entitled to a dispensation. Although my three rules may be logical and defensible, many of you simply will not conduct your lives in this Spartan fashion. Here’s a next-best alternative: If you badly want a new car you cannot afford, consider a late model used car. These past several years they all look alike anyway. And whatever you select, minimize your financing, and shop for the lowest interest rate. Except in the case of a new car subsidized by the manufacturer, it will generally not be the loan arranged by the auto dealer nor an unsecured bank loan. Borrowings secured by assets such as securities or an insurance policy are often available at lower rates. You may do even better from a credit union. Best yet, get a loan from a family member at little or no interest.

■ The first exposure to real estate for most of us is the home in which we live. Perhaps not surprisingly, if a youngster is raised in a rental unit, this becomes a factor in setting a way of life as an adult. In short, buying, versus renting, can be attitudinal. Let me express my bias from the onset: the goal is home ownership, and the sooner, the better. This is important, for the purchase of a first residence is frequently the initial step in wealth building. At the very least, the longtime ownership of a home is often a key element in later life independence. Many a retiree who bought an inexpensive tract house with a minuscule down payment thirty or more years ago, and systematically paid off the mortgage, one installment at a time, is today able to get by with little else than social security. But for a residence free of debt, this might not be possible.

Although there are other things I might add, you at least have a feel for the basic elements. Let me conclude my diatribe with the following admonition: Remember that marriage is a partnership of the most intimate sort, and as with all partnerships, mutual reliance and predictability is the cement that binds it firmly.

AL JACOBS has been a professional investor for nearly four decades. His business experience ranges from real estate, mortgage, and securities investment to appraisal, civil engineering, and the operation of a private trust company. In addition to managing his investments on a day-to-day basis, he is a featured financial columnist for both online and print publications. He is the author of Nobody’s Fool: A Skeptic’s Guide to Prosperity. You may subscribe to his financial Newsletter, "On the Money Trail," at no cost or obligation, by visiting www.onthemoneytrail.com.