We should have money. Where does it go — and what can we do about it?

By Jim Killam

Hi, I’m Jim, and I’m a financial nincompoop.

I make a decent salary. We live in a nice house, have plenty to eat, dress well, and go on vacation every year. We don’t live extravagantly. So how come we never get ahead financially? And how come new expenses – such as jacked-up car insurance because our oldest son has started driving – have thrown us into a tailspin?

I suspect our financial life isn’t much different from yours. We’re average, and though we don’t look it, we’re basically broke.

My quest to get a handle on our family’s finances led me to two money experts: Neil Atkinson, author of The Shrewd Christian: You Can’t Have It All, but You Can Have More Than Enough, and Dave Ramsey, syndicated radio talk-show host and author of several best-selling books about mastering money. Both agree that financial pain can be a good thing if it forces you and your spouse to look seriously at your finances for the first time in...how long?

Here are two of their “magic money” secrets revealed. While neither step promises to be pain-free, both will energize your marriage.

secret 1: get out of debt

Many couples are financially paralyzed by credit card debt and car loans. They make only minimum payments and have given up the idea that they’ll ever crawl out of the hole. They’re one missed paycheck or unforeseen expense from disaster.

While this seems a no-brainer, if you want more money, you need to wipe out debt – for now, everything except your mortgage. In Total Money Makeover, Dave Ramsey offers this advice:

• Stop borrowing. Destroy your credit cards and don’t get more. Keep a debit card for times when you need a credit card (hotels, car rentals, online purchases).

• Create a $1,000 rainy-day fund. Sell stuff, put off unnecessary purchases, cash in a CD, do whatever it takes. Set aside money as untouchable except in case of a real emergency.

• Find ways to temporarily increase your income. Maybe a weekend or evening job. “Wait a minute,” you say, “Won’t that harm our family life?”

Ramsey can answer that one from experience. About 15 years ago, he and his wife, Sharon, went bankrupt. Today he calls it the worst and best thing that ever happened to them. They transformed their lifestyle to get out of debt as quickly as possible. That meant extra work and, for Dave, limited family time for a while. Their family was under such stress from the debt load they carried that it was worth that sacrifice. Today they’re thankful they did.

• Spend less. Way less. “You can moderate spending, or you can slash it to the bone and pretend your children’s lives depend on your getting this mess cleaned up,” Ramsey says. Watch the grocery bill. Eat out less often. Reduce your driving. Divert every dollar you can toward attacking debt.

• Sell the car you owe the most money on. Buy something used, reliable, and much cheaper, with no more than an 18-month loan. (And don’t even think about leasing.) Put the saved money into a cookie jar for a year, and you’ll have enough to pay cash for a decent car until you can afford an even better one.

• Make minimum payments on all but your smallest debt. Send as much money as you can to the smallest debt each month and pay it off as quickly as possible. Then take what you were paying toward that loan and aim it at the next smallest. And so on. The reason for taking on the small debts first is that you’ll see progress and stay motivated.

“If I see that it’s going to take me 10 years and 7 months to get out of debt, it’s hard to stay energized,” Ramsey explains. “If it’s 24 months, I can grab hold of that. That’s a dream I can live.”

Ramsey even encourages couples, once they’ve conquered credit cards and car loans, to tackle the big one: mortgage. If you have a 30-year loan, either refinance to a 15-year loan or pay extra principal so you treat it like a 15-year loan.

There’s one expenditure, however, that should never be sacrificed in order to pay off debts. You hear a voice in your head: Suspend tithing for a few months. That’s a big chunk of cash. And after all, won’t you be able to honor God more with your money once you’re debt free?

“Twenty-two times in Proverbs alone it says that the tithe is ‘first fruits’ or off the top before you do anything,” Ramsey points out.

Atkinson adds that part of mastering your money is learning to be generous with it. A couple can accumulate an emergency fund, get rid of credit cards, pay off their cars. “But if they aren’t being generous back to God, they’re missing out on the best part – developing their relationship with the Lord,” he says. “When a couple tithes, they develop a better relationship with God, and He’ll bless them. Maybe not financially. But finances are the least of the Lord’s blessings.”

secret 2: have a plan

Outside of some major medical bills, there are few real financial surprises. “Kids grow up, people get sick, and cars break,” says Ramsey. That means having a budget. He calls it the “whip and chair” to make your money do what you want it to.

Atkinson, on the other hand, doesn’t think budgeting is the answer for couples. “Budgets don’t work,” he says. “They’re like diets. Budgets are great for engineers, attorneys, and accountants — people who are disciplined. For the normal Christian middle class, budgets will work for a little while. But it will drive them crazy — they’ll have too much in one thing, not enough in another, so they’ll borrow to make it up, and the cycle begins. Then they just chuck it all and go back to their earlier patterns.”

Atkinson believes budgets aren’t necessary if couples are tracking: setting aside time together each week to follow carefully how they spend their money. They’ll quickly spot and slash the frivolous things for which they received no real value. (“We spent how much on a singing fish that hangs on the wall?”) He and his wife, Margie, also never spend more than $25 without the other person’s permission.

A financially struggling couple told Atkinson they didn’t eat out very much. But when asked to count, they realized they’d eaten out 13 times in the past 15 days. It was just part of their busy pattern and it met an immediate need.

Once they discovered this, the couple ended up spending the same or less money to go out on two date nights a week to restaurants with tablecloths and silverware. The evenings are planned, they’re fun, and they bring value because they help build a relationship. But for them to make that change, it took stepping back and looking at every dollar spent.

Either way, with a budget or without, couples need to be on the same page. “When you can come into agreement on your spending, you reach a level of unity in your marriage that you reach no other way,” Ramsey says. “Now you’ve agreed on your priorities, your dreams, your goals, your fears.”

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