First comes love, then comes marriage. And after that, you might have to work through some money disagreements as you make your way down the road to "happily ever after."
In this episode of Motley Fool Answers, we talk about ways to minimize big-picture and day-to-day financial disagreements, discuss whether "wife bonuses" are as ridiculous as they sound, tell you where to get your free credit score (actually free, not jump-through-hoops "free"), and reveal what Zsa Zsa Gabor got when she checked out of her Hilton marriage.
Read on or listen to our awful Zsa Zsa accents on iTunes or Stitcher.
ALISON SOUTHWICK:
This is Motley Fool Answers. I'm Alison Southwick, and I'm joined by Robert Brokamp and Dayana Yochim. Today we're going to talk about the sorry plight of extremely rich women living on the Upper East Side, Dayana has good news about your credit score, and then we'll offer up three tips for divorce-proofing your marriage when it comes to money -- all this and more on this week's episode of Motley Fool Answers.
ALISON SOUTHWICK:
Let's start off by talking about the craziest thing we read this week, and that's pitying the poor, wealthy women living on the Upper East Side of New York.
DAYANA YOCHIM:
The Glam SAHMs. Glamorous stay-at-home moms.
ALISON SOUTHWICK:
These women devote their days to raising their children -- hyper-raising their children -- and taking care of themselves in spinning classes and the like. And they toil for their wifely financial bonuses.
DAYANA YOCHIM:
Actual bonuses.
ROBERT BROKAMP:
Actual. Bonuses.
ALISON SOUTHWICK:
Actual financial bonuses.
ALISON SOUTHWICK:
So, this was an article that appeared in The New York Times, and it was written by a woman who actually went and hung out with a bunch of these women on the Upper East Side...
DAYANA YOCHIM:
Yeah. She lived there.
ROBERT BROKAMP:
Well, lived among them for years.
ALISON SOUTHWICK:
Which makes it sound like she's living among gorillas and studying them...
ROBERT BROKAMP:
Well, she's an anthropologist, so...
ALISON SOUTHWICK:
Really! She's an anthropologist?
DAYANA YOCHIM:
Yes, and that's exactly how she approached it. She sort of gathered the data and then found out about how this tribe actually acts and interacts with each other.
ALISON SOUTHWICK:
Tribe. I think that's an accurate way of putting it. A lot of these women -- their husbands are hedge fund managers, and they get paid big bonuses for performing. And so this woman, in her New York Times article, said that a lot of these women who live on the Upper East Side actually get financial bonuses when they outperform when it comes to managing their house and raising their kids.
DAYANA YOCHIM:
They're called the "wife bonuses." Wife bonuses!
ALISON SOUTHWICK:
So, on the one hand, when you first hear that, you think, "Oh, my gosh, this is horrible, right?"
ROBERT BROKAMP:
Right.
ALISON SOUTHWICK:
But then on the other hand, you think, "Well, they are actually doing something that costs money that they are not getting paid for." I don't know. I'm kind of playing devil's advocate, right?
DAYANA YOCHIM:
Yeah, not very convincingly, though.
ROBERT BROKAMP:
My first thought when I read it was that it was a joke. I mean, they call it that, but it's kind of a joke. It's just like every other household. At the end of the year, we have this much in our bonus. Here, you can spend this much on whatever furniture or whatever stuff you want.
ALISON SOUTHWICK:
I guess I'm making it sound like it's actually written up in a pre-nup or a post-nup.
DAYANA YOCHIM:
It was. In a pre-nup or a post-nup and distributed on the basis of all of those things. How did you manage the household finances? Did your kid get into the preferred elite school? It's not a joke, Robert!
ROBERT BROKAMP:
At first I thought it was a joke, but then when I read about it in the legal documents and everything, then it was a little disturbing.
ALISON SOUTHWICK:
There was pushback, however. As soon as the article came out, there were other articles that basically called BS on this and said, "I don't think these wife bonuses actually do exist."
DAYANA YOCHIM:
It's very hush-hush. And remember, she was an insider. She lived among the tribe and became one of them.
ALISON SOUTHWICK:
She picked the leaves off of the hide.
DAYANA YOCHIM:
She is not talking down about these women, either. She talks about how well-educated they are. Using skills from graduate school and the days when they were working and then organizing galas, editing newsletters, running library bake sales.
ALISON SOUTHWICK:
So, you're cool with the bonus. With the wifely bonus.
DAYANA YOCHIM:
I'm not so cool with the bonus. I think that's a little crass to award a bonus at the end of the year depending on how someone did in a personal relationship!
ALISON SOUTHWICK:
Robert, what do you think?
ROBERT BROKAMP:
I don't think it's a bad idea that, as we will talk about later, depending on how well the family does financially over the course of a year, each person gets a certain amount that they can spend whatever they want on. If it's based on a certain performance of running the household, I don't know. That's a little different.
There was something about running the household budget, so if you think about saying that we, as a couple, decide that we are going to spend this much on food, this year, for example, and somehow we spend less than that, there might be an incentive there, right? If we spend less, then you can have part of it, and I can have part of it. Or we can go on a family vacation, or something like that.
I would just like to see more of the details in how that is arranged before I provide a final verdict on how this works. I'll just say that.
DAYANA YOCHIM:
So, we want you, if you have a Wife Bonus set up in your class, to send us a copy of your pre-nup or post-nup...
ALISON SOUTHWICK:
Highlight the part that talks about your bonus...
DAYANA YOCHIM:
So we can break it down here...
ALISON SOUTHWICK:
And judge you.
DAYANA YOCHIM:
...and then, yes, judge you.
How to get your free credit score
ALISON SOUTHWICK:
Dayana, you're here with this week's super-practical, everybody-try-this-money tip.
DAYANA YOCHIM:
All that's hyphenated, right?
ALISON SOUTHWICK:
Yes.
DAYANA YOCHIM:
Yes, I am. So this is all about your credit score. Now, thanks to the Fair and Accurate Credit Transaction Act (which we all know as FACT Act) that was passed in 2003, once every 12 months, consumers are entitled to free access to their credit reports from the three major reporting bureaus (that's Equifax, TransUnion, and Experian). And to get your free report, just go to annualcreditreport.com.
But it's a totally different story when it comes to your credit score. And just a reminder -- your credit score is the three-digit number based on all of the information in your credit report. Think of your credit score as your money GPA. Unfortunately, Uncle Sam does not pick up the tab for your credit score (at least not yet). There is legislation pending that would give consumers access to free credit scores, but it's just not there yet.
So, until recently, you had to pay one of the credit reporting bureaus to actually buy your score, and that usually costs around $7 or $8. Or you could get it for free, but you had to jump through some hoops by signing up for a credit monitoring service, and then remembering to cancel that service before the automatic billing kicked in.
But lately, corporate America is really stepping forward and giving consumers free credit scores. Some credit card issuers offer a free score with your statement, but other companies are also offering free scores. One of them is CreditKarma.com, and it gives away two free credit scores, which is why I like it. Those scores are derived from your Equifax and TransUnion credit files. You don't have to enter a credit card number -- so that's great -- but they're going to encourage you to take free trials of their credit-monitoring and credit-helping services.
These sites make their money with third-party advertisers, so you'll see a lot of recommendations for good credit cards for you based on your score.
You don't have to take any of that. Just go there, get your free credit scores. Those are updated once a month, and it's a great piece of information for you to have.
ALISON SOUTHWICK:
Yeah!
__
Divorce-proof your finances
ALISON SOUTHWICK:
Even though the divorce rate is falling in America, every year, about 2 million people call it quits.
According to a Kansas State University study, arguments about money by far is a top predictor of divorce, so we are here to help with a few tips to divorce-proof your finances.
DAYANA YOCHIM:
Or as my friend Brad likes to say, just don't get married.
ROBERT BROKAMP:
[Laughs] The No. 1 way to prevent divorce is to not get married.
ALISON SOUTHWICK:
All right. This has been Motley Fool Answers... I'm Alison Southwick. As always, I'm joined by...
DAYANA YOCHIM:
[Laughs]
ROBERT BROKAMP:
[Laughs]
ALISON SOUTHWICK:
Yeah, divorce. It could happen to you, and it could be not only emotionally traumatizing (like being hit by a train), but it's also like your wallet gets run over, as well.
ROBERT BROKAMP:
Right. The average divorce costs something like $15,000 these days. Plus, there's some underappreciated costs of a divorce. If you're in one house right now, you have a certain number of expenses. Then if you have two people going to two separate houses, it actually costs more. You're probably used to your spouse doing things -- either managing the money or running the household -- something that now you're going to have to do on your own, or pay somebody to do. So there's actually quite a significant financial cost.
DAYANA YOCHIM:
That laundry isn't going to do itself.
ROBERT BROKAMP:
That's right. That doesn't mean you should stay married just for the money, but if you're kind of on the fence there...
ALISON SOUTHWICK:
[Laughs]
ROBERT BROKAMP:
...you might want to just think about the financial consequences. Give it a little more time. See what happens.
ALISON SOUTHWICK:
Just suck it up. Basically. You'll save $15,000. I mean, you can weigh it right there. Is it worth $15,000?
ALISON SOUTHWICK:
So, if you're the kind of person who doesn't want to get divorced, here are three easy steps -- eh, easy, I don't know, as marriage is never easy -- but here are three steps that we recommend you take to help divorce-proof your finances. Robert, what is the first step?
ROBERT BROKAMP:
Well, the first step is to decide what you agree on and where the issues are, and then for the financial goals that you agree on, fund those.
So, most people agree on retirement. Most people agree on maybe college for the kids and things like that. You say, "Okay. This is where we can meet together, and agree on these goals, and fund them and fund them automatically."
So make sure the money goes directly to those places. It might be even a vacation home. It might be what other financial goals you have. Maybe someone wants to take a year off as a sabbatical.
Once you agree on those, you get those off the table, fund them automatically, then you see how much money you have left, and then you can decide, "All right. What are we going to do with this money? How much money are you going to have? How much money am I going to have?" And then you can sort of ferret out a little bit more where the disagreements are.
DAYANA YOCHIM:
Hopefully you're on the same page about the major goals. But maybe there is something that you're really excited about that your spouse isn't exactly excited about. Put those on the list, too. Just having these long-term, larger goals there that make you excited are going to make you less resentful of where else your money is going. Plus you're got another person on your team, here, to kind of cheer you along as you're getting closer to that financial goal, and maybe even kicking in some to help out.
ROBERT BROKAMP:
You can even bring this down to a smaller level. Even something like groceries. I mean, I know it sounds ridiculous, but groceries actually cause a lot of issues within families because it's not only about, how much are we going to spend on certain food items, but what's healthy for our family and what's not healthy usually means more expensive. Is that worth it, or not?
You get into that point, and you get to a point where, "this is what we agree on in terms of food, the base amount that we should be spending." And then you say, "Okay, this is what we disagree on. Maybe we should just say that we agree on whether we should spend money on this, but let's say at least once a month or once a week." Something like that, so that one person who wants it, gets it ... but the person who doesn't want it feels like it's not out of control if there's a limit to it.
ALISON SOUTHWICK:
So, once we have decided what our agreed-upon goals are, funded them, and automated them, we've got the pile of money that's left behind. What do we do now?
DAYANA YOCHIM:
Here's again where talking again about values -- having to get on the same page -- that could be a hard thing. So you want to set rules for daily play money or for your own money that you can spend on whatever it is you want. You could call it an allowance.
ALISON SOUTHWICK:
A wife bonus.
DAYANA YOCHIM:
[Laughs]
ROBERT BROKAMP:
[Laughs]
ALISON SOUTHWICK:
It is not too far away from a wife bonus.
ROBERT BROKAMP:
It's a spouse bonus.
DAYANA YOCHIM:
It's not a bonus. It's part of your everyday spending. It's part of your everyday budget. But here the idea is to make sure you each have some financial autonomy. You don't want to be second-guessed with every purchase that you make, or every dollar that you're spending. Nor do you want to have to worry about the other person spending dollars that should be allocated elsewhere on something that you don't value, or that you think is a waste of money.
So get the big goals funded automatically, and then come up with an amount each of you gets to spend -- no questions asked. "Hey. A hundred dollars a week for each of us... you can do anything you want with it. You could save it up if you want a new gaming system or whatever it is."
ALISON SOUTHWICK:
A husband thing.
DAYANA YOCHIM:
I know. I was trying to think of a "man thing."
ROBERT BROKAMP:
A new man thing.
ALISON SOUTHWICK:
I found a little article. I think CNN Money polled both baby boomers and millennials, and they asked them how much their significant other should be allowed to spend. Like what dollar amount should they be allowed to spend before they have to run it by you and make sure you're cool with it.
Do you want to guess what dollar amount this was? Because they both actually averaged out to the same amount.
DAYANA YOCHIM:
$100.
ROBERT BROKAMP:
I'll say $199.
ALISON SOUTHWICK:
$154.
DAYANA YOCHIM:
All right.
ROBERT BROKAMP:
Wow.
ALISON SOUTHWICK:
Yeah. So, $154. It turns out also another funny thing is that one in five Americans have spent $500 or more on something without giving their partners knowledge, even. Without even telling them.
DAYANA YOCHIM:
How'd that work out?
ALISON SOUTHWICK:
Right. Yeah. More men have done that than women, too. Women get the bad rap for like leaving shopping bags in the trunk and waiting for their husband to look the other way, but 26% of men have spent more than $500 without notifying their wife versus 14% of women.
DAYANA YOCHIM:
I'm looking over Robert's shoulder now at Rick, our producer in the control room, and he's rolling his eyes like, Oh, yeah. That might have happened in our household.
ALISON SOUTHWICK:
You bought an amp or something, didn't you?
DAYANA YOCHIM:
A camera, I bet.
ALISON SOUTHWICK:
So, what are some other kinds of rules for daily spending? Are there any other daily spending rules that couples should talk about?
ROBERT BROKAMP:
Well, I'll tell you what my wife and I do. We have an app, and we each have a certain amount of money that we can spend each month. For me it's $300. She has more because she's in charge of more of the household expenses. Go pull up that app. You write down every expenditure, and once it's done for that month, you can't spend any more. And any that you don't spend in that month rolls forward to the following month, so you can do that whole "savings" thing, like if you want to save up for a bigger purchase.
The funny part comes to when you're buying something, is this totally discretionary and up to me, or is this really a family expense? So, when I took my daughter to the daddy/daughter dance at school, we had to pay to get in the dance and had to pay for parking. So that's sort of entertainment. Sort of discretionary. We didn't have to go. But it's also kind of an important family thing.
DAYANA YOCHIM:
Do you know what? That came out of the love in your heart! That's where that expense came from. I can't believe you're putting a dollar figure on that. That's just crass.
ROBERT BROKAMP:
That's right. But you do have those decisions. I think it's important to track the expenses...
DAYANA YOCHIM:
[Laughs]
ROBERT BROKAMP:
...that's all I'm saying. And fairness is important, too. So those are one of those things where, "Okay, do I put this down or not?" I don't want to be caught cheating by my wife (if you know what I mean). But the thing I like about this is fairness is an important part of a relationship, and if someone is spending loads of money on iTunes and Spotify and Pandora...
ALISON SOUTHWICK:
Is this a friend of yours? That you're talking about?
ROBERT BROKAMP:
That was one of my weaknesses in the early days of Internet music. The other person either is going to get resentful, or has to feel like, "Okay. That's fine as long as I can do my thing."
DAYANA YOCHIM:
Yeah. And then you get into this competitive spending thing, which is not healthy for anyone.
So, you could go so far as to set up some rules for the spending. Like, here are the types of things that we must consult one another about before we purchase. It could be things for the house. Electronics. You could just say a dollar figure here -- anything above $150...
ALISON SOUTHWICK:
$154.
DAYANA YOCHIM:
$154.53. So that you know you don't have to think about it. You know that you need to talk to your partner about this before you spend this money. And then other things, like the stuff that costs below a certain amount or that you know, "This is something I'm going to enjoy alone." Or, "I'm going to spend this to take my daughter to the father/daughter dance."
ROBERT BROKAMP:
The father/daughter dance. It was fun.
ALISON SOUTHWICK:
So assuming that an app isn't helping -- and even setting limits on how much you can spend and all these rules aren't helping, and you guys are still having trouble coming together and managing your money -- our last piece of advice is...
ROBERT BROKAMP:
To get a professional, objective third party. That could include a range of possibilities. Of course, there are marriage counselors, and any experienced marriage counselor has the experience of handling money issues. Not that they're financial experts, but they know what works, what doesn't, and what has led to healthy resolutions.
There's also a financial planner. In a lot of these situations in which people are arguing about financial priorities, there is a right answer, like it or not, and it's good to have an expert say, "You know, this is actually the right thing to do." Then the couple has to find some way to handle that. If they already have $40,000 in credit card debt and one of them wants to go to Europe for a vacation, it's a pretty clear, objective answer that you should probably not take that trip.
There actually are, now, more financial planners who are experienced in what they call financial therapy, or they're certified divorce counselors, so they help people at the divorce, but they also help people who have already gone down that road, and then maybe they can do a few things, if money is the main issue, to get the couple to a point where, "We're at a better place. We feel better about the money, and the rest of the relationship is good enough to keep the marriage going."
DAYANA YOCHIM:
So, find a neutral third party. Call a complete stranger and spill your money and emotional guts right there.
ROBERT BROKAMP:
Here's Dayana's phone number.
DAYANA YOCHIM:
Please, no.
_______
ALISON SOUTHWICK:
Let's close by talking about some famous and bizarre divorce settlements. Doesn't that sound like fun? We put the fun in divorce.
So, the largest divorce settlement, to date, was in 2014. Elena -- oh, I'm going to butcher this last name.
ROBERT BROKAMP:
It's Russian.
ALISON SOUTHWICK:
I'm sorry. It is Russian.
ROBERT BROKAMP:
There you go. I knew it.
ALISON SOUTHWICK:
Elena Rybolovleva. Oh, sorry. [Laughs] Was awarded $4.8 billion from her husband, aka, "the fertilizer king," Dimitri Rubba-bov-a. No!
DAYANA YOCHIM:
Bless you.
ALISON SOUTHWICK:
Thank you. It was a six-year battle after 24 years of marriage. And here's a fun little fact: He refused to settle for $1 billion, and so the court ordered him to pay $4.8 billion. I believe this is where I am legally obligated to insert, Wah-wah-wah.
All right. In one of the more bizarre divorce settlements (and we got this off of Mental Floss), a guy in Long Island requested that his cheating wife return the kidney he gave her. Technically, a kidney is a gift and not a loan, and the woman would have died without it, so, yeah.
ROBERT BROKAMP:
So the court said no, I assume.
ALISON SOUTHWICK:
I think they did. He went and settled for like $1.5 million.
DAYANA YOCHIM:
He said, "Your kidney or compensation of $1.5 million." So before you give your kidney away as a gift -- you cannot sell it -- just remember [whispers] there might be someone out there who is illegally willing to pay $1.5 million for a kidney.
ROBERT BROKAMP:
[Laughs]
ALISON SOUTHWICK:
That's what the going rate for kidneys is, I guess. And finally, let's end with Zsa Zsa Gabor, who is famous for her beauty and... guess how many marriages?
DAYANA YOCHIM:
Ugh. Eight?
ALISON SOUTHWICK:
Yes! You got it!
ROBERT BROKAMP:
Oh, my gosh. Eight marriages?
DAYANA YOCHIM:
Dahhhh-ling.
ALISON SOUTHWICK:
Dahhhh-ling. That's right. Dahling. So her second marriage -- she was in her 20s -- and she married Conrad Hilton of The Hiltons. Of the hotel chain. And when they got divorced, she received a property settlement worth $3.6 million in today's dollars. And so this is a very cute thing she said following the divorce. She said (I can't say it in a Zsa Zsa Gabor accent), "Conrad Hilton was very generous to me in the divorce settlement. He gave me 5,000 Gideon Bibles."
DAYANA YOCHIM:
[Laughs] And Hilton coasters for a lifetime.
ROBERT BROKAMP:
[Laughs]
ALISON SOUTHWICK:
She has a ton of great quotes about divorce and marriage.
DAYANA YOCHIM:
She was a card.
ALISON SOUTHWICK:
And she landed a lot of rich husbands. Like everyone -- one after the next -- was just rich, rich, rich!
ROBERT BROKAMP:
That's our financial tip for today, folks.
ALISON SOUTHWICK:
If you're going to marry...
DAYANA YOCHIM:
Marry like Zsa Zsa.
ALISON SOUTHWICK:
Often and...
ROBERT BROKAMP:
...wealthy.
ALISON SOUTHWICK:
That's going to do it for today, folks. If you want to reach us, we are at [email protected]. You can also follow us on Twitter. Coincidentally for all of us it's "@" and then our first name and our last name. So @AlisonSouthwick, @RobertBrokamp, and @DayanaYochim.
And don't forget to go to iTunes and give us a review and rate us. It helps us climb in the rankings and get more listeners, and we also love getting your feedback. For Robert Brokamp and Dayana Yochim, I'm Alison Southwick. Fool on!
