Sunday, March 12, 2017

Husband or Wife has Secret Credit Cards

Many marriages devolve into a race-to-the-bottom, but usually due to lack of communication.

A reader asks me a number of questions, but one of them involves a wife spending money secretly or having "secret" credit cards in her name or taking out credit in her husband's name.   It sounds far-fetched, but it happens more often than you think:

And so on.  It is a popular topic on the Internet!

How can you avoid this sort of problem, and what can you do if it happens?

It is sad to me, but I see a lot of married people who are basically roommates - strangers to each other, sharing a space to live in, their lives intersecting once a day for sleeping and perhaps eating.   And sometimes not even then.   I know couples here on the island that sleep in separate beds, eat at separate times, have different hobbies, friends, and activities.  Their marriage has devolved into sharing a house.

And don't even ask about sex.

It is sad, but a lot of people live this way.   They get married because they think they have to.  And being married is, ironically, a status symbol, and it certainly helps in your career to have a wife, whether you love her or not.

Like I said, it is sad.

Marriage can be a team, where you work together for common goals.   Or it can be a race to the bottom, with each partner trying to get the "most" out of a bad relationship.

Talking openly and frankly about money is the key to money management.   And such discussions are hard to have, as they can quickly devolve into "You buy too many shoes" and "Oh yea, well what about all those tools you bought?  And that stupid Jet Ski?"  For such couples, it may already be too late.

Starting out a marriage on the right financial footing is the key.  The longer you delay financial discussions, the worst it will get over time. 

In my personal life, I can say we started out with separate checking accounts and split the rent and other bills for a very short period of time.   When we moved into our first apartment, we got a joint checking account, although I kept my Patent Office Credit Union account, which later became my business account for a period of time.   We still had separate credit cards.

When we bought our first house, I recall that most of our bills were paid from a joint account and all our credit cards were joint.   But neither of us were very good at managing the bills.   We were late on credit card payments more than once and had our rates jacked, and like most young people were like "Duh, is that important or something?"

Ahhh... youth.  Wasted on the young.

Pretty soon, I realized we were headed for a credit crises - well, actually in one, and we sat down to discuss money.   Mark wanted nothing to do with balancing the books, so he just thrust the job off onto me.   And once I started keeping track of things, well, it was an eye-opener.   And it took more than a decade to start to get our financial house in order.

We had early on put everything in joint tenancy with right of survivorship (JTWROS) so our assets and debts were all jointly owned.   It is funny, but I know married and unmarried couples who have separate checking accounts, investment accounts, and even their cars titled separately ("His" car and "Her" car, as if they were clothes!).  Very few people are willing to make the commitment - to jump off the cliff, so to speak - and completely trust their spouse with everything they own.  Although in a legal marriage, you basically already are.

And in some instances, maybe that is a good idea not to trust your spouse, if they are compulsive gamblers, or liars or cheats or you are just strangers to each other or you can't discuss money with each other.  But then again, why would you marry someone who is going to financially abuse you in the first place?

Of course, co-mingling funds has its own problems.   If your spouse does have a gambling habit or a shopping habit, a joint credit card or checking account can be a nightmare - they can drain the account or rack up debt in a short period of time before you notice it.   On the other hand, it is a way to manage spending and monitor it, at the very least.

There are other ways to monitor your spouse's habits as well.   For example, every year, I go to to get my free credit report.  It would show any credit cards or other debts opened up in my name - or my spouse's (if you run reports for both people).   In addition, most banks and credit card companies offer free credit monitoring and credit scores, which keep you alerted to changes in your credit status or new debts being opened up in your name.  TurboTax even offers a free credit monitoring service as well (which they use to try to upsell you to a paid service).

Putting a "freeze" on your credit would prevent a spouse from easily getting credit cards in your name - but such freezes can be voided by sending in a signed application.  If your spouse is willing to forge your signature, all bets are off.

Financial Abuse is a relatively new topic these days, along with identity abuse.   We are aware what constitutes physical, sexual, and psychological abuse between spouses, parents and children, or even children and their parents (elder abuse).    Identity abuse is very new - often the result of born-again parents who birth and school their children at home and refuse to provide them with a birth certificate or social security number as a means of preventing them from leaving an abusive home.   What people do in the name of Jesus never ceases to amaze me.  Or Islam, or Buddah, or Moses or Elron Hubbard.

Financial Abuse can take on a number of forms, however.  It can be the spendthrift spouse, or even parent or child.   People are known to run up debts and then go to gullible family members, asking them to "bail them out of trouble" again and again.   But the old saying is true, it takes two to tango, and people who fall for this "your family is everything!" and "you have to help me out, I'm family!" have only themselves to blame for being abused.

So what do you do if your spouse has "secret" debts that you are not aware of, or worse yet, takes out credit in your name?  That is a tough call.   In some instances I have read online, former spouses have taken out credit in their ex's name.   In that situation, you need to call the Police and file a complaint - and yes, throw in them jail.

If you are still married, though, it gets trickier.   If your spouse really forged documents and obtained credit in your name, you could go to the Police and have them arrested (if you can prove your case, however).  You have to decide whether to keep going with this sham of a marriage or just call it quits.

The key is, of course, to ask yourself why your spouse took out this credit in the first place?  Do they have a shopping habit?   A drug habit?   A gambling habit? A secret lover?  Squirreling away cash for the day they leave you?  None of these are good scenarios.

In the first article linked above, the advisor suggests divorce as a last option.   However, financial abuse is really no better than a punch in the gut, which in reality it really is.   And once you figure out where the money went, you may not be inclined to remain married to this person for long.   Even if the money just went to new shoes and clothes, you have to ask yourself, does this person value shoes more than our marriage?

Tough call.   Counseling would help, but your spouse would have to commit to this - and commit to changing the relationship to be more open about money and spending.

It is funny, but we have a cash drawer (left over from my business days when we had petty cash) that I usually keep $100 to $200 in cash in (along with coins).   If Mark needs money, he just takes it from the drawer, as I do as well.   Of course, we rarely use cash anymore, since credit cards are actually easier to use and having change jangling in your pockets is a pain.  We've never had a serious issue about one of us spending money on big ticket items without telling the other.  But then again, maybe it is because we communicate about money more.

Again, it takes two to tango, and if you can't talk to your spouse about money, odds are, bad things will happen down the road.  It is not necessarily a matter of "secret debts" or something like that, but just the usual shit in America - failing to save for retirement, re-financing the house again and again to pay off debts, having perpetual credit card debt, and so forth.

Been down that road.  Never want to go back there again!

UPDATE:  A reader notes that one of the links above offers some sketchy advice.  I cited these links only to illustrate how common the question appears online and thus appears to be a common occurrence in America.   One of the other links does mention that no matter what option you choose, paying off the debt is pretty much a forgone conclusion.

I am not offering financial advice here or anywhere else in my blog.  I am not the shouting guy, Dear Abby, or Sooze Orman.   I am just commenting on things I see and experience.

The main issue with a spouse running up "secret" debt is not a financial one or a legal one - but an emotional and relationship one.   The issue isn't how to pay off the debt (you have to pay it off, one way or another) but how you got into this situation in the first place - being married to a stranger, and what causes the spouse to run up these debts in the first place.

All I can say is, it is very sad that spouses have such serious secrets from one another!