Saturday, October 14, 2006

Laying It on the Line

I had some indigestion last night, so I got up from bed and worked on preparing my remarks that I planned to give to my wife on Sunday. She asked me this morning why I was up so late on the computer, and not feeling like covering up any longer, I presented her with the full text of the five-page letter. Here is what it said, with a few redactions for discretion's sake.

Begin Text of Letter

I am facing a choice between two anxiety laden courses of action:

  1. Have a frank discussion with you about our financial situation.

  2. Go bankrupt.

In the book Passionate Marriage, David Schnarch devotes the better part of a whole chapter on these kinds of problems. He calls them two-choice dilemmas and says that avoiding the choice is one of the things that undermines marriages. Biting the bullet, confronting the anxiety, and making a choice is what contributes to personal growth and improves the marriage, he says.

After having looked at our present financial situation and past spending behavior, I have decided to choose the first option. This letter attempts to give you clear statistics, my interpretation of those statistics, and my emotional reaction to them.

Our financial situation has been on my mind for the past month or so, ever since you revealed to me that we had only about $400/month to live on once our bills were paid and that you thought we had been in this situation since February of this year.

I Statement: When I heard you say this, I felt shocked because I wasn't aware that our financial situation was so tight.

I spent several weeks wallowing in this and the uncertainty of whether to stay in my job. I admit this was the reason that I have been more withdrawn recently, and it wasn't a healthy thing to do.

Last week, I finally started to snap out of the gridlock and went to work trying to get an accurate picture of where we are financially and where we have been the past year and a half. I started with our checking account, since both work income and expenditures touch that account. I looked at the total deposits from our paychecks and the total debits for the month, plotting them to make a chart.

The chart covers activity from early March 2005 through early October 2006. The debits are squares connected via blue lines, and the deposits are diamonds connected by red lines. Ideally, you want the diamonds above the squares, but there are times when that's not possible. However, when you go for a year and a half with more debits and credits, you've got an unsustainable situation.

During that time, we deposited $67,941.15 in pay and spent $110,923.87, an excess of $42,982.72. To put that in perspective, my current annual net pay at my employer, after taxes and insurance, is $40,800.

I realize that during the spring and summer of 2005, we spent large amounts money. Some of that was due to remodeling work, and we agreed to set aside some money for you to help your family out after your dad had his stroke.

If we change our focus from early November 2005 to early October 2006, so that these expensive months don't figure into the calculation, I find that we spent on the average of $5,453.21/month against $3,681.23/month of income, a shortfall of $1,771.98/month. That's a ratio of 1.48:1, or $3 spent for every $2 earned.

This tells me several things:

  1. The spending patterns that gave rise to our tight financial situation have been in play for a lot longer than since February 2006.

  2. The spending pattern persisted far beyond the spring and summer of 2005. In fact, they continued up to this very day.

  3. While it's likely that me eating out for lunch contributes to our costs, this is probably no more than $175/month (21 - 22 workdays a month at a little over $8 per lunch). That's less than 10 % of our average shortfall. Brown bagging my lunches may be a good start, but it is nowhere near the amount we need to achieve a balanced budget.

I Statement: When I first looked at the checking account graph, I felt inadequate because I felt like I was not providing for my family.

I have examined myself, and I don't believe that I am the primary cause of the shortfalls in the checking account. I can count on one hand the number of large purchases I have made for myself during this time, and the only other things I spend money on regularly are lunch food, fuel, and runs to the grocery.

Shortfalls in checking were covered mostly by transfers from our savings account, so I took a look at our deposits, withdrawals, and closing balance over a similar time interval, obtaining another chart.

In this chart, total deposits are shown as squares, connected by blue lines. Total withdrawals are shown as diamonds, connected by red lines. The closing balances are shown as downward-pointing triangles connected by yellow lines.

In addition to your $150/pay period deposits, we had two large deposits:

  1. A deposit just under $20,000 from my late grandmother's estate.

  2. Our state and federal income tax refunds for the 2005 calendar year, totalling around $2,000.

The account's balance closely tracks the progress of our checking. More than half of the $20,000 deposit was spent by the end of October 2005, most likely on remodeling, furniture purchases, assistance to your parents, and roof repair.

That doesn't bother me so much as the trend for the rest of the time period. When we zoom in on the period from early July 2005 through early October 2006, and plot just deposits and withdrawals, there continues to be a pattern of large withdrawal totals. In fact, whatever respite we may have gotten from the tax refund in March 2006 was offset by a spike in withdrawals that same month.

I Statement: When I first looked at these charts, I felt perplexed and distressed, because I could see just how badly our savings cushion had deteriorated.

Out of concern for our financial well being, I took a look at my credit report to see whether our bills were being paid in a timely fashion. To my relief, things seemed to be in good order, but then I saw an item that caught my eye, an entry for the Discover Card that is your name. I knew that the card existed, but I was not aware that the balance was so high ($5,460). I then took a look at the closing balances on this card's statements for the past 12 months and obtained this chart.

It shows a steady growth in balance from November 2005 through July 2006.

I Statement: When I saw this chart I felt betrayed because you were choosing to spend money we didn't have without my knowledge.

I Statement: After reflecting further on these numbers, I have been experiencing some very difficult emotions. I have been feeling anger toward you and ambivalence toward this marriage.

I have struggled to figure out how to bring this up with you in a healthy manner. I know that you have been on the other side of this situation before, so you know how it can hurt. I don't know what your motivations were, and the temptation of focusing on them rather than my own issues has been very strong. I'm going to do my best to let go of that concern and let you choose how to deal with it. In the future, this degree of overspending will be unacceptable to me and a dealbreaker for this marriage.

I'm going to focus on my side of this. I need to own up to how I contributed to this situation. Back in early 2005, when you expressed a desire to spend money on remodeling, I recall saying that I wanted you to take over payment of the bills so that you could experience the frustrations of trying to watch where the money was going.

In No More Mr. Nice Guy, Robert Glover talks about how men with Nice Guy Syndrome try to manage their anxiety rather than confronting it. They do this lots of times by making what he calls covert contracts. This is where the Nice Guy does something or makes a concession with the expectation that the beneficiary will do something nice in return. The fact that the first option of my two-choice dilemma above causes me so much anxiety is indicative of how badly I've suffered from Nice Guy Syndrome.

In retrospect, my surrender and avoidance of the checkbook was a covert contract designed to help unload the anxiety of financial responsibilities. I realize that this was the act of a martyr, not a man. It certainly isn't the kind of behavior that inspires respect or fosters confidence in a spouse. I am sorry for having behaved so immaturely. I want to help us figure out a sustainable solution to our budget crisis by asserting leadership of our family expenses.

If we look only at my monthly net income (pay after taxes and health insurance), and then we subtract off obligations for insurance, utilities, and non credit card debt, we can create the following table.

Net Pay 3400.97


Minvan Payment 210
Auto Insurance 89.53
Life Insurance 106.16
Electricity 94.49
Natural Gas 133
Water 35
Land Line Phone 63.23
Wireless Phone 67.88
Cable 117.25
Replacement Window Loan 130
Flooring Loan 200
Installment Loan 400

Total Left


Some explanatory notes on the figures in the table are necessary:

  1. The loans are estimates since I didn't have access to the actual payment values, but they should be good upper bounds.

  2. The electricity bill is based on a 12 month average of previous statements.

  3. The gas bill is based on the current levelized billing plan. This should go down somewhat this winter since we already have an account surplus and market prices are expected to be much lower.

The bottom line amount is much more than the $400/month you initially estimated. It also doesn't figure in the $350 that you bring in every month from your current job. I believe that if we watch our expenses closely, we should be able to live on this in the short term and have some left over to save.

In both the short term and long term, we need to bring sanity back into our financial activity. This means we need clear goals, boundaries, and accountability. I am willing to work with you on drawing up a plan on how we can accomplish this, but I need your full commitment and cooperation if we are to make this work.

This process will not be easy, and it will probably require some changes on your part that may be unpleasant to you. You, too, will face one or more two-choice dilemmas. It will be your job to identify them.

The question to which I need an immediate answer from you is: Are you with me on this?

Since my job leads appear to be dead ends, and since my employer has enough funds to operate for rest of the year, I am going to recommit to working for them until the end of the 2006. I will set up an appointment with a counselor this coming week (10/15 – 10/21) and get moving on my own therapy. I will be using the ideas of Schnarch's and Glover's book as a basis for the therapy because they focus on self confrontation and personal change. At the end of the year, I will reevaluate whether I should move on to another job.

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