My husband is on Social Security Disability and I just recently retired. He went into our savings without my knowledge and lost a portion of it by making bad decisions on investments.
We own our home, which he now wants to take out a $50,000 mortgage to pay back his withdrawal. I think that’s a bad decision, but he says that’s what home equity is for. I just want to know what to do because I’m at my boiling point now with this situation.
No, you don’t build home equity so that you have a piggy bank to raid when you lose money on bad investments you kept secret from your wife. Listen to your gut, not your husband, on money matters. He’s shown that he doesn’t make wise financial decisions.
Your husband has already spent your money without your consent. The fact that you don’t want to take on a mortgage is reason enough for me to say, no, don’t take on a mortgage. You’re the one whose trust was violated, so what you feel comfortable with doing as you try to heal from this mistake matters a lot more than your husband’s opinion.
Even if you’d told me you two were equally responsible for losing this money, I’d still vote no on the mortgage. You’re probably living on a fixed income, so adding a mortgage payment to the mix would force you to tighten your retirement budget. But I’d also imagine that having a new mortgage payment would make it even harder to move forward. Every month, you’d get a bill that reminds you of your husband’s boneheaded ways.
Your problem here is twofold: You’ve got to figure out how to rebuild your savings after your husband left you $50,000 poorer. But your husband also violated your trust. He needs to earn it back.
On the savings side, unless you have a pressing need for the cash, look into a home equity line of credit (HELOC) instead of a mortgage. That way you have access to your home equity should you need it, but you’re only paying interest on money you actually borrow. Should you tap into it, you’d pay a higher interest rate than you would with a mortgage. But at least you wouldn’t be paying interest on a $50,000 lump sum if you don’t need the entire amount.
If you have extra money in your monthly budget, work on rebuilding your savings. But your husband needs to bear as much of the brunt as possible. If he makes discretionary purchases, he should scale back as much as possible to rebuild your coffers. If he has any prized possessions that could generate extra cash, he should look into selling them. This is a problem he created, and he needs to do whatever he can to reduce your burden.
Even if you think your husband had a one-time lapse in judgment, you need to confirm that there aren’t any other unwelcome surprises waiting to be discovered.
The two of you need to review the balances for every investment account, bank account and credit card together so you can confirm exactly what you have and what you owe. Choose a date each month to go over each account together.
If you suspect there may be other financial secrets, like debt that you don’t know about, ask your husband to pull a copy of his credit report at AnnualCreditReport.com. It’s free and will only take a few minutes. He should gladly be willing to do this if it buys you peace of mind.
You and your husband need to be on the same page about how you’ll make significant financial decisions moving forward. Making a budget together that includes a category of replenishing your savings is key.
But I also suggest setting a threshold where you both commit to tell the other if you’re withdrawing or spending more than a certain amount. For example, you could agree not only to stick to your budget but also to tell each other before you withdraw or charge more than $300. When you review each account together each month, you can each hold each other to this agreement. It’s a lot easier to make bad financial decisions when you don’t think your spouse is paying attention.
Hopefully, this is the first time your husband has kept money secrets from you. But make it clear to him that this will be the last time. It’s time for him to do the work to earn back your trust.
Robin Hartill is a certified financial planner and a senior writer at Codetic. Send your tricky money questions to [email protected].