Till debt do us part

The author of ‘Practical Steps to Financial Freedom and Independence’, Mr. Usiere Uko, writes about how families can manage their debts.

Taking a loan simply means accessing money you are yet to earn, and spending tomorrow’s money today. What makes the difference is what you use the money for. Spending more than you earn has put many families in financial difficulty. Among the poor and middle class, money is the biggest cause of marital discord and eventual break up. Since most couples hardly discuss money, most money battles are fought in other arenas – in-laws, marital bed, friends, child discipline etc.  Financial frustrations are vented in the wrong places.

Love does not solve money problems

Most couples dive headlong into marriage without discussing and agreeing on how they intend to manage money as a couple. Most believe that love conquers all; once there is love, the money will take care of itself. Most have found out rather late in the game that love does not solve money problems.  As a matter of fact, the goose pimples that come with the feeling of love can stand in the way of sound decision making. Many wives know how to get things out of their husbands, things they may not get under normal circumstances.  They extract a promise from the husband at a moment of weakness, and hold on to it when common sense returns. I know someone who wakes the husband at 2am to make a request. Of course the poor guy will say yes in order to get back to sleep, only to wake up in the morning to be reminded of a commitment made in the wee hours.

Many husbands have borrowed money to please their wives, buying gifts they cannot afford or going on holiday funded by credit card.  Everything goes smoothly until the bills start to arrive. As the husband struggles to keep up with payments, resentment sets in, and this sets the stage for quarrels at the least provocation.

The love of money may be the root of all evil, but the lack of money is the root of bitterness. Money may not buy love but without money, love can suffocate. Like it or dislike it, you cannot ignore money. Financial independence is the springboard to other freedoms. If you do not handle your finances properly, your love nest can turn to a matrimonial shouting festival and in some instances, boxing ring and domestic violence.

Lack of communication

Very often the husband or wife wracks up debt for the family. The husband rather than put his foot down when the wife or children demand for what he cannot afford takes the line of least resistance and borrows to please his loved ones, without letting his wife know where the money is coming from. Sometimes the wife buys on credit without informing the husband. Some husbands do not get to know until the creditor come calling. It can be very frustrating when one partner is trying hard to build while the other is busy pulling it all down.

Many wives do not know how much their husbands earn. Some husbands keep the information away from their wives in a bid to reduce demands from their wives.  They believe if their wives don’t know, then they will make less demands. However this lack of knowledge will keep the wife guessing. Some wives think the husband earns more than he really does, and may keep spending, piling up debt for the husband to settle.

You have a situation whereby both partners do not know the true financial state of things.  Every partner is doing his or her thing while the pile of debt keeps going up, creating more tension in the home.

Economic separation

Most families do not have a plan to achieve financial independence. The running of the family depends on one or both incomes (husband and wife working).  There is no additional source of income. If the husband loses his job, the wife becomes the bread winner while the husband looks for another job.

This has led to many families separating for economic reasons.  The husband or wife leaves the rest of the family behind to travel abroad to work and support the family. This has resulted in many unintended consequences. The spouse left behind becomes a single parent and in some instances, the children become uncontrollable. In some cases, infidelity creeps in, things fall apart and the centre no longer holds.

Sometimes the separation is local – the spouse works in another town and visits only on weekends.  The partners may end up leading separate lives.  Financial pressure has led many to do things they would not do under normal circumstances, just to make ends meet are maintain their current lifestyle.

Finances have enormous impact on our lives and the consequences of financial mismanagement can shake the foundations of our lives, including divorce. If we do not exercise proper control over our finances, it can cost us our homes, businesses, values, friendships, marriage, sanity and even our lives (due to inability to access the right medical care on time). It is a very heavy price to pay because of financial indiscretion. That is why it makes no sense to mortgage our future in order to please people in the present.

Good debt and bad debt

Though debt may be a scary word, not all debts are bad. There are two kinds of debt – good debt and bad debt. Good debt makes you richer while bad debt makes you poorer. The kind of debt most folks are used to is the bad debt variety – consumer debt – borrowing to consume rather than borrowing to invest for income.

Bad debt is debt you incur and pay for by yourself. The item you spent the money on does not repay the loan. You have to take more money out of your pocket to repay the loan.  Very often, there will be nothing to show years down the line.

Good debt is debt you incur but is repaid by others. That means the item pays for itself. For example, if you borrow money to buy a car for car hire, haulage etc and the car pays for itself and returns a profit, then you have good debt.

More good debts mean more income while more bad debts mean more money from your pocket.  Borrowing money to acquire liabilities is misappropriation of funds. It reduces the family’s cash flow, wipes out savings, puts you under pressure, prevents the family from achieving financial independence, leads to quarrels in the home and may ultimately put asunder what God has joined together.

Author: Usiere Uko

Culled from Punch