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Ask Dave

Too Much Money To Be This Broke

Tammy and her husband make $250,000. Her husband likes using a credit card for cash back at the end of the year. Tammy wants to cut the card up. How can she get him to cut this card up?

QUESTION: Tammy in Los Angeles and her husband make $250,000 and are in their 30s. They have five kids and are able to pay their bills, but they have a lot of debt. Her husband likes using a credit card for cash back at the end of the year. Tammy wants to cut the card up. How can she get him to cut this card up?

ANSWER: You make $250,000 a year, you have $150,000 in debt on student loans and credit cards, and no money. Y’all are pitiful. You’re pitiful. That’s just ridiculous. I’m so ashamed for you. (I was doing that for a reason—not just to beat you up.) The point is your plan sucks. Why would anyone working on your plan have any credibility—have any discussion about continuing to do your plan? In other words, your husband. It’s kind of a Dr. Phil moment, you know? How’s it working for you? It’s not.

I have met with thousands of millionaires. I have never met a millionaire who says, “Dave, I made all my money with my cash back when I overspent on my credit card.” I’ve never met a millionaire caused to be a millionaire that way. As a matter of fact, the vast majority of millionaires don’t use credit cards anymore. They use debit cards.

The credit card is not the issue. The budget is the issue. If you’re paying it off every month anyway, get a debit card. It’s the same thing. It comes right out of your checking account. If you overspend on it, you go into overdraft. You’ve got to live on a written plan.

Your husband has kind of looked at this and has not decided that he is uncomfortable enough with how bad your situation sucks, because he’s not ready to change yet. I’m not saying who’s at fault for how you got here. I’m saying who’s at fault for you staying there. We laid it out on a napkin, and we make $250,000 a year. It’s time to do a real written budget, isn’t it? I’m talking to him too, not just you. That’s pitiful! If you worked for you and this was your response on a job you were being paid to do, you’d fire you.

You guys aren’t stupid people. Stupid people don’t make $250,000 a year. You’re just engaged in stupid behaviors around your money. My prescription would be that the two of you get very, very intense because you become so disgusted with what you see in the mirror. You become very intense about changing your habits, and that’s a written, detailed budget. Every dollar has a name on paper, on purpose, before the month begins. Pretend you hired you as a consultant for $100,000 a year to manage your money. What kind of excellence would you expect of that consultant? What kind of detailed reports and having everything laid out and having a plan for every dollar would you expect? You would ride herd on somebody you were paying that kind of money to, wouldn’t you? Just pretend like you were doing that for you—you and your husband.

You guys have got to turn off the television and slow down your life about three notches—dial back a little—and let’s get a written, detailed game plan down. Cut up your credit cards. Here’s the thing you tell him. Cut up the credit cards and get a debit card. Two reasons: One is the plan you’ve got sucks. It’s not working, so you have no credibility to even argue about this. If there was any semblance of this working… You make so much money and have nothing to show for it but a pile of debt. You don’t even have a leg to stand on to argue about this. Cut ‘em up and get a debit card.

If I’m wrong and living on a budget and getting out of debt and having no credit cards doesn’t work, then you can always get credit cards and get back in debt, can’t you? Like by Friday. It wouldn’t be hard at all. People will line up around the block to give you a credit card. You make $250,000 a year. You’ve got to want to be thin enough to back away from the cookies. The cookies are good. Using that credit card is painless, isn’t it? You don’t even feel it. It doesn’t even feel like real money. Let me tell you what. You guys start carrying around some cash and actually spending cash at the grocery store, it’ll curl your hair.

You’ve got to change your legacy. You’ve got to change your family tree.

That’s my prescription for this, and the thing is this though. I can’t make you guys want to change. You can’t make your husband want to change. Merely discussing it is different than getting so angry about it—not at each other but at the situation.

See if your church has Financial Peace University, and you could go through the class. The thing about the class that it does for someone like you guys… The problem is your husband’s just too smart. If he was a little dumber, it’d be easier to argue with him. He’s got to engage himself into a process. I’m that way about working out. I’m that way about taking care of my body—the same thing—because I love food. I can figure out a way that it’s all okay, and I can rationalize my butt off, in other words. But if I’ve got a trainer, even if he’s a young kid and I’ve got socks older than him, at least he looks thin and is in good shape, and that’s the goal and he’s putting that right in front of me, and that accountability will help an intelligent person who borderlines like me or your husband on being a little bit prideful or maybe even a little arrogant at times. We need accountability. We need something that puts it in our faces and reminds us we’ve got to change. In other words, he’s a tough cookie to sell. If I can ever get him sold on himself, there’ll be no stopping him. This thing will turn around, and you guys will be wealthy because you’ve got a huge shovel. You can go anywhere with this income.

I’d get in that class is what I would do. It’ll help this tough cookie come around. In the meantime, I’ll send you a copy of the book The Total Money Makeover. That’ll at least get something going maybe. But you guys have to get fired up. You’ve got to get passionate about this. This is not an intellectual exercise. This is a spiritual exercise. It’s an emotional change in your life. You can do it.

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