Money isn’t everything, no question about it. Sure, it’s definitely important. Very important. However, there are times when emotions come into play and take over decision making.
A recent example of this is a story that was related to me by one of my friends, who in turn was talking about some people he knows (who I met only once, briefly). Anyway, this friend who told the story is the same guy from Squirreling Gone Wild #19, who encountered a waiter who flattered female customers in order to secure a higher percentage tip. As you might recall, my friend basically pointed out to his wife that the only reason a waiter asked her for her ID when she ordered a drink was simply to make her happy and get money out of her later when the bill came. Comments ranged from a female reader saying ”If your friend was my husband, I would totally smack him”, to a male reader saying “We all know women want to look younger and why shouldn’t we flatter them a bit if it makes life easier. Everybody is happy, it’s a win win situation”
Good times, indeed
Anyway, back to the new story. In this situation, he relayed the story about a couple that he and his wife were friends with. This couple had a baby last year, and were first time parents. My friend’s wife knew the female in the couple for many years, which is how the two couples got to know each other in first place.
The issue at hand is that the woman who just became a mom quit her job, and now the couple has been having financial problems. I mean, problems to the point of not being able to pay their mortgage. Yep, that bad. It’s gotten to the point where they’re facing foreclosure, according to my friend.
So, how did this happen? Well, first of all, both husband and wife were making very good salaries, each over $100,000 per year. The wife made a bit more than her husband, and had gone quite far in her career up until her late 30′s. Sounds promising, right? Well, they had previously bought a very nice home that was based on both people working. Since she stopped working, they were running a deficit.
Then, the guy had to take a pay cut at work. Other expenses mounted, they didn’t make any changes (like selling nicer cars and replacing with cheaper ones) in assets, but they did cut back some expenses. Regardless, these otherwise smart and successful people quickly found themselves in a financial quagmire. What really hurt was that their house plummeted in value even further.
My question was clear: If they had bought the house based on 2 incomes, why in the world would she quit her job knowing this?
My friend agreed and had the same thought, but said that the woman had apparently just ‘found her purpose’ when becoming a new mom, and just simply lost her desire to work at all. I can understand how this might happen with some people. Now, as I mentioned previously, she made over $100,000 annually. Apparently she was a real go-getter and fast riser at her workplace.
Then, I thought about it, and came up with an alternative: Why not sell the house and downsize, cut expenses, and work together to live a more simple, frugal life? After all, the pursuit of money isn’t everything! This way, she can be happy as a stay at home mom and abandon her career entirely as she wants to do, and they can then live within their means and live on less.
Apparently, she didn’t want to leave their home that they brought the baby home to, and desperately wanted to try to maintain the same life. Her idea was that her husband would work harder at his career and focus on being the main breadwinner, while she could take care of things at home. Sounds very traditional. However, I didn’t see how they could keep the same house and lifestyle while losing a little more than half their income.
Remember, they bought the house with a loan based on 2 incomes. If they had some foresight and thought about this ahead of time, this would have never been a problem. They could have potentially done it successfully, going from a 2-income household to a 1-income household. Some people can do it, right? But again, they didn’t plan ahead with a more modest purchase but rather, had already taken on debt based on both people working.
My friend said that the husband in that relationship capitulated to what his wife wanted, to make her happy for the reason that she just had a baby. Clearly, that didn’t turn out so well.
We talked about how on earth this could happen to otherwise bright people. We both thought that there is no way we would ever handle a situation like that. Since the house was purchased based on 2 incomes, we both agreed that we’d absolutely either:
- Insist that the wife works after maternity leave is over for the short-term at least, while trying to find a job that’s part-time – in order to create a win-win where she spends more time at home yet the household finances don’t get destroyed; or,
- Immediately put the house up for sale and move into a much less expensive place, while cutting expenses and living a more modest lifestyle. Pronto. This way, she can be happy by not working anymore, and they can at least stay afloat financially.
The other guy clearly didn’t do that, and now their whole family is suffering. He’s apparently frustrated, and so is she.
My Questions for You:
What do you think about this couple’s decision-making? Do you think the guy did the right thing by letting his wife do exactly what made her happy, even though they bought the house based on 2 incomes originally?
Do you think that the 2 suggestions that my friend and I had are appropriate, or are they insensitive? Consider all factors – financial and emotional. Please feel free to be direct and take a strong stand if you wish!