Yesterday I was reminded of something I heard in my past. Peter from Bible Money Matters mentioned that someone had reached his site by someone searching for "should i use 401k to pay off hidden credit card debt?" This single question really gets your head spinning. We have all heard of hiding money from your spouse, while I don’t advocate hiding anything, this seems to make sense. You want to stash a little cash aside so you can by your wife something nice, so you hide it in a jar or elsewhere until you have enough to by that gift.
Why on earth would you want to hide debt from your spouse/partner? A relationship is inherently built on honesty and trust both of which go out the window the second you start doing things to undermine the financial well being of your household. When someone takes on debt but does not involve their significant other in the decision they are putting their relationship in jeopardy.
You may think that your financial shortcomings only affect you but when it comes down to it both people in a relationship affect the financial future of the couple as a whole. I have a friend who is a mortgage broker and this is probably something he has seen pretty regularly. Imagine that you and your spouse go in to qualify for a mortgage and the broker comes back to you and says: “I could get you a 4.5% rate, however, there is this $10,000 credit card balance so the best I can do is 5.8%” to which your spouse responds with “what credit card.” All I can say is I hope you have a comfy couch when that scenario goes down.
What Can You Do About It?
Lets say you have made this mistake and you have hidden debt your spouse doesn’t know about, what steps should you take to make this situation better.
- Admit you have a problem, if to no one else but yourself. Most instances where you are trying to hide your spending, or debt, you are doing it to fulfill some obsession whether it be gambling or shopping. Admit your problem and if needed seek help from an AA or related group.
- Stop taking on any additional debt, hidden or otherwise.
- TELL YOUR SPOUSE! This is a must, you CANNOT maintain a healthy relationship when their are secrets and deceit involved.
- Sit down with them and admit your problems, or reasoning for the debt.
- TOGETHER come up with a plan to eliminate the debt
- Eliminate the debt
The key here, as always in a relationship, is going to be communication. You aren’t going to want to be brutally honest, but you need to be. As I said earlier, your relationship is built on honesty and trust. You are going to lose points in the trust department so you might as well be completely honest and keep, or even gain, some of those.
Once you have the air cleared on the subject it is going to be just like tackling any other debt you have. To Peter’s Googler, under no circumstances should you take out of your 401k to payoff your “hidden” debt. Plan your attack method and then, in the words of Dave Ramsey, work the plan with gazelle like intensity. You are going to feel better because you don’t have the weight of lies, deceit, and debt on your shoulders and eventually your wife will forgive you.