Living Within Your Means and the Marital Allowance
The mainstream media is now chock-full of stories about married couples having to tighten their belts to “live within their means.” It is interesting that these stories are only recently becoming popular because not living within your means is a problem whether the economy is in good shape or, like now, in terrible shape. But reading a recent story about this spendthrift couple in the New York Times, the picture becomes clearer.
It’s too bad no one had earlier explained to the Jones that “living within your means” is a function of income and outgo, not asset appreciation and outgo. It’s also too bad that financial writers in the Times and other media outlets didn’t jump on this issue two or more years ago, when the real estate bubble was still growing instead of blowing up.
So Plan B for this clueless couple called for a substantial cutback in expenses. Duh. But Mr. ToughMoneyLove is not exactly sure that the Jones are feeling a lot of pain. According to the story, they are “reining in expenses” by sticking to a monthly allowance of $600. Each. My interpretation of this is that husband and wife Jones are each being forced to survive on a monthly marital allowance of $600, to cover their respective personal discretionary expenses. Gosh, that must really hurt.
Mr. and Mrs. ToughMoneyLove have had completely combined finances since very early in our 31 year marriage. At various points over those 31 years, we have used a marital allowance strategy to avoid sniping at each other about one of us spending on stuff that that other thinks is kind of dumb. In other words, we each got to spend some dumb money without being concerned about looking dumb to our spouse. The last time we used that strategy, I think our marital allowance was $100/month. That covered a wide variety of expenditures, including workday lunches. (Talk about creating incentives for packing your lunch.)
When I saw that the Jones couple had voted themselves a $600 marital allowance (for combined discretionary personal expenses of $1200/month), I blinked two or three times and thought what the …….?
Yeah, they make a lot of money. But let’s not forget that they have $100k in credit card debt. With their house having dropped substantially in value, I’m quite certain that they also have a negative net worth. Under those circumstances, how can you say that the Jones are really living within their means, when that “living” includes $600 each in monthly personal expenses?
I suppose I am really making a couple of related points. First, a marital allowance is an appropriate tool for controlling spending in a marriage in a way that reduces conflict. Second, when you have not been living within your means for so long, you need to be a lot more aggressive in your debt repayment schedule and less generous in your marital allowance. In other words, the “living” part of the equation needs to have more emphasis on debt payments and less emphasis on accommodating the well-established spendthrift tendencies of the marital partners. Even in California, I don’t think that a marital allowance of $600/month gets it done. It’s like trying to cure a smoking-related lung disease by cutting back from two packs to one pack per day. The Jones need more standard of living pain to experience net worth gain.
Honestly, even though we have no non-mortgage debt, I don’t think I could bring myself to spend $600 each month in “dumb” money. But then, if I had $100k in credit card debt, I wouldn’t be buying a turkey fryer at Costco, period. (Yeah, Mrs. Jones had to have one of those.)
When I reached the end of the Times article, I was kind of hoping but not expecting that the writer would make some cynical remark about the magnitude of the Jones’ marital allowance. Alas, it was not too be. But I know who that writer is, from reading some of the stuff she has written on MSN Money about her own personal finances. She has her own money issues, so she is probably hesitant to jump on someone like the Jones whereas Mr. ToughMoneyLove has no such qualms. It’s my self-appointed mission to speak the hard truth about personal finance.
What do you think about the size of the Jones’ marital allowance in this situation? Do you have a marital allowance in your budget? How much?