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Let’s Talk About Finances, Baby

Season 1, Episode 3 Listen to a discussion about radical honesty, financial baggage, and how to set your relationship up...

Published March 04, 2020

Season 1, Episode 3

Listen to a discussion about radical honesty, financial baggage, and how to set your relationship up for success through openness and vulnerability around one of life’s touchiest subjects: your money.

Hosts: Laurel Road’s Alex Lawrence and Briarley Laban
Guests: Laurel Road General Manager and Chief Experience Officer, Alyssa Schaefer

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Alex [00:00:07] Hey, this is Alex.

Briarley [00:00:09] And I’m Briarley. And you’re listening to Financing Ambition, a Laurel Road podcast.

Alex [00:00:14] Where we’ll talk about the financial decisions that you’ll face along the road of life with an eye to increasing your financial health and understand. So today we’re talking about a study we did recently around millennials and Gen Z couples finance issues. Our study found that debt and finances who are no longer taboo in relationships.

Briarley [00:00:37] What I found really interesting from the survey, Alex, is that 84 percent of all respondents are actually open to discussing debt. Amazing. Really good stuff. But 65 percent are currently hiding that debt from their partners.

Alex [00:00:54] And we also saw that 85 percent of millennial and Gen Zers have at one point considered delaying or holding off on taking their romantic relationships to that next level because they want to pay off debt first. And that’s a responsible sounding thing.

Briarley [00:01:09] That sounds really practical, but I’m also quite sad to be honest. Alex, I know you were a performing artist in a previous life. Did the unpredictable nature of your work put any strain on relationships?

Alex [00:01:23] Well, just to be clear, it was the same life, same body, same voice that I have. But it was a very different career. Couldn’t be more different than the one that I have now. Yes, I lived paycheck to paycheck. It really was very unpredictable. You never knew if you were going to be employed from one month or several months ahead of time. So living with the stress of uncertainty around your financial situation was a huge contributor to my relationships struggling during my 20s and early 30s. It’s wonderful that couples talk about this. They’re honest about it with each other, whether they have a stable career or not. Talk about debt and bring these things up. Now, Briarley, you got married pretty young. So that’s really bucking the trend for us millennials and Gen Z’s, because generation after generation, the average age people are getting married, has been going up and up and up. So can you talk about what it was like being married so early?

Briarley [00:02:17] Yes. So I am going to be honest here. I don’t actually think we considered our finances one bit. We met in college. I was in my last year of college when I met Jared. And so things were a lot simpler as fresh grads. We really didn’t have much to begin with. So we were really on even playing fields, I would imagine it definitely gets a lot more complex in nuance when you’re getting into a relationship, when you’ve got an established career and you have debt. So the big thing for us was knowing that we were on an even playing field and we both had potential to earn. So we were going into it with our futures looking pretty bright. You know, it’s been a bit of an adventure, but no, it definitely wasn’t a big aspect in our relationship. We kind of learned as we went along.

Alex [00:03:03] Yeah. It makes sense. I mean, there’s some blissful ignorance there. Sure. Yeah. Nearly three and five respondents, that’s 58 percent actually revealed that they found out about their partners debt within a year of being together.

Briarley [00:03:16] Alex, you’ve been in your relationship for about a year now, right?

Alex [00:03:20] Yeah, just about 11 months.

Briarley [00:03:21] All right. So have you had the big talk?

Alex [00:03:23] Well, I wouldn’t call it one big talk, but we sort of developed a transparency pretty early on in our relationship where we started talking about, you know, our money situation. Topics came up around our salaries. And if we had debt. Fortunately, neither of us had debt. So it didn’t have such a huge influence on how we progressed. But talking about it and knowing that early on was a huge relief to the both of us.

Briarley [00:03:48] And when you had that conversation, were you talking about your debts or was it more around kind of your spending habits?

Alex [00:03:54] Oh, it was both. First, we just wanted to know, I mean, she’s more recently out of college than I am. And I was curious if she has student loan debt as the majority at her age probably do. It was a combination of that. But also we became aware of each other’s spending habits just by going out together, observing how we use our money and, you know, choosing which restaurant we’re going to go to, all those difficult decisions that do say a little bit about what your priorities are. So it’s good to take note of those things early on, in our relationships. Briarley we want to discuss a show. It’s called Love is Blind. It’s on Netflix. If you’re going to watch the show and you haven’t quite gotten to episode six. Go ahead and skip ahead about a minute because we’re going to give away a few things here. Now, Briarley, you’re the one who got me into the show. Can you introduce Love is Blind?

Briarley [00:04:37] Yeah, sure. So Love Is Blind is a new reality dating show, contestants decide in just a few days, if they’re ready to marry a person that they’ve only ever spoken to through a wall.

Alex [00:04:48] Oh how romantic.

Briarley [00:04:49] I know it’s one way to put it. So they’ve never actually seen each other in real life. What this results in is a very, very intense 30 days in the lead up to what is their wedding. So in this episode, episode six, we’ve seen Amber and Barnett who are one of the couples in the series leave the bubble of their honeymoon and into the real world by actually moving in together.

Alex [00:05:14] Yeah, it’s a dramatic and quick shift. All of a sudden they’re moving in together. And then the conversation that ensues after moving in together.

Briarley [00:05:21] Yeah. So they have a pretty robust and honest conversation about their finances, starting with Amber sharing that she has some unpaid student loan debt and that she hadn’t actually finished college. She also went on to explain that she did have some credit card debt,.

Alex [00:05:38] Right — a makeup credit card.

Alex [00:05:40] Clearly an impulse purchase makeup card, although she seemed to value this part of her life and she was still very upfront with him, like makeup is important to me.

Briarley [00:05:49] I will stand by her and say that makeup is expensive.

Alex [00:05:52] You know, I’ve heard it before.

Briarley [00:05:54] That said, it was interesting to hear how she deals with that debt. She said that she still has a balance on that credit card, and it was sitting there that her credit score wasn’t that good. This can be a sobering conversation to have so early in the relationship. But I really do value that transparency. It showed a lot of strength on her part to expose that side of her life.

Alex [00:06:17] Yes, absolutely. So to go a bit deeper on that, we’d like to bring in Alyssa Schaefer, our chief marketing officer here at Laurel Road, responsible for all aspects of marketing, product and strategy. Alyssa, thanks for being with us today. So you’ve been married for how many years now? Tell us about how you and Michael, your husband, met.

Alyssa [00:06:35] So I’ve been married now for almost 13 years. We met very young. We were actually in undergrad at the University of Michigan, and we met, as RAs, in the same dorm. So a little bit of a funny, dorky story. And we’ve been together really ever since, but we got married about 13 years ago.

Briarley [00:06:53] Amazing. And so, Alyssa, what was it like starting out in your marriage, knowing that Michael was entering medical school? Was it a big concern for you?

Alyssa [00:07:02] Well, I wouldn’t say that it was a big concern because doctors put in this massive investment of time and money and effort into their educations. And eventually there’s a balancing out, let’s say, at the end. I will have to say, just like any young person in love, love leads first. I think when we started talking about a wedding and an engagement ring and some of those costly items, it became a concern because the debt was really weighing on being able to do some of those things. So it was an evolution, I would say, for us in terms of recognizing how we are going to tackle that debt and how we are going to tackle our finances as a couple. And, you know, setting some of those ground rules to be able to make sure that we were on the same page.

Alex [00:07:46] Sure. And I think for some of our younger listeners who aren’t even close to the marriage phase yet, they want to know what was it like talking about debt when you were just starting dating?

Alyssa [00:07:56] Well, I think it really starts with your family and your background. My dad was a small business owner, so sometimes we just seemed to have a lot and go on vacations and sometimes we didn’t. And so we were very flexible and used to that sort of arrangement where Michael grew up in a house where both of his parents worked and had professional jobs and it was definitely more stable. So I think understanding how that translates into how you think about debt was really important for us.

Briarley [00:08:20] So one of the big areas of conversation before you joined us is that people are hiding debt from the partners. Alyssa, can you share more about our survey findings and also your experience and your work with newlyweds?

Alyssa [00:08:33] We are very passionate at Laurel Road and I personally am very passionate myself about how people handle this issue of debt. It really is the downfall of a lot of relationships, not just romantic relationships, but parents and children, siblings. And so one of the reasons why we wanted to do this survey was really to understand what was going on when it comes to relationships. What the survey showed was some very clear trends. One of which Brierly you mentioned in terms of a vast majority of people hiding debt. But we also found that 84 percent, I believe it was of people said they were open to talking about debt within the first year of the relationship. So even though some people are hiding debt, people are very open to talking about it. They’re just not having those conversations. And I think it is extremely, extremely healthy to have those conversations.

Alex [00:09:24] 100 percent. And fortunately, the survey showed that 74 percent, the vast majority of couples believe that talking about their finances made their relationship stronger. So knowing that you and Michael do counseling for other couples. Is this a topic you run into? And do you find that in your work with younger couples in your community that the stronger relationships have a theme of openness around financial discussions and transparency?

Alyssa [00:09:48] So, yes, a hundred percent, the couples that are talking about this issue openly, it seems to not necessarily make them stronger, but make sure they’re on the same page, which of course, makes the relationship stronger. People are coming to relationships with debt most of the time, sometimes it’s student loan debt, sometimes it’s credit card debt. But people are coming to relationships more and more with some form of debt. And how they approach that becomes very different. Or I should say, it can become very different. Sometimes couples choose to treat those things individually. Sometimes couples choose to sort of combine things and kind of tackle those things together. Actually, our survey said that most people do tackle those together, which is great to hear, but it’s very different. And it’s all about what works for you. So the more that people talk about it, the more that they’re open to talking about it, just the more they can get on the same page. It sounds very basic, but we find oftentimes people have not talked about this issue even when they’re thinking about marriage. So getting into it is really helpful to kind of set them on the right path going forward.

Briarley [00:10:51] Definitely. And you know that transparency is a key factor in the financial health of relationships. So what are some of the key ways that young people can build trust around money right from the very start?

Briarley [00:11:04] We recommend sitting down and setting ground rules for yourselves and really talking about how your financial lives are going to be combined. So when we got married, we did have a couple of ground rules, some of which we still follow today. A budget has never really worked for us. So a very strict budget is not something that we ever put on each other or on ourselves. So we believe in acting responsibly. We believed in sort of guardrails, if you will, but not a strict budget. We also have a bit of an unspoken limit to if I’m going to buy something or if Michael’s going to buy something, the limit is changed over the years, I will say. But we have this unspoken limit that if we’re going to buy something big for ourselves, we’ll kind of let the other person know or just, you know, have a quick check in about that. And the other ground rule that we set out early on and agreed upon was that we wouldn’t carry credit card debt. So I was carrying a little bit of credit card debt when I first moved to New York City and I was still paying off my student loans. And I thought that was perfectly fine. We decided as a couple that we weren’t going to be fine with that. So really sitting down and talking through some of those things also talking through how you’re going to divide and conquer the bills and all those payments. We in our relationship, we have everything completely combined, probably because when we first got married, we were very young and we sort of needed that to kind of cover everything. Michael was in residency. So here we combined everything and we’ve actually never really changed that.

Alex [00:12:32] I really like what you said about budgeting. I think that for a lot of people, they can feel like they are a bit rigid, like a like a strict diet. And not everybody needs that kind of solution. I think there has to be a fluidity to finances in the way that there’s a fluidity to what we choose to eat day in and day out. You know, sometimes we’re going to need something that we didn’t intend to or have that kind of meal that we’re just craving. So with finances, it’s the same. I think you need a lack of rigidity, but also an understanding that there are limits to things.

Briarley [00:13:00] It’s funny you use that analogy because what I’m trying to be good and not spend money or not shop. Those of you who know me sitting in this room know that I like to shop. But what I’m trying to really be good and not spend money. I cannot do that and diet at the same time. It’s one or the other.

Alex [00:13:17] It’s one or the other. Pick your poison.

Alyssa [00:13:20] Exactly. But it feels similar. It’s very restricting.

Briarley [00:13:22] Yes. One thing that we discussed earlier in our conversation, sometimes it’s not necessarily about debt, but problems can arise with spending habits. And when your spending habits differ. Do you have any advice on how to approach the conversation around spending habits?

Alyssa [00:13:39] Yes and no. I don’t know if I’m the perfect person to answer this question only because we definitely have different spending habits in our relationship. I am a spender and Michael’s very much a saver and I find that that often tends to be the case. And I actually think that’s healthy because you balance each other out. I would say since I’m the spender, you know, you just kind of have to have a mental pulse of what might be a little bit too much, not only for you as a couple, but maybe for that other person. You know, like I said, we have this unspoken limit. If I’m going to buy something big, I let him know it’s it’s not necessary that I’m asking for permission. It’s just more of a courtesy. So I think that’s really what helps eliminate some of the potential friction in our relationship, because it’s not a big surprise. So I would say just like anything else. Try not to let these things be a big surprise.

Alex [00:14:31] Yeah, totally. Transparency is such a critical factor. And I think the more you are open about your spending habits and the more they become apparent early on, you can see. Are you aligned with your person? Are you guys really going to be able to make something committed and long term work? Because this is a major, major part of the stability of your future together. So in the first period of your relationship with Michael when he was going through medical school, I assume that there was sort of an imbalance in your income. We know medical residents don’t make a lot of money. Were you taking care of the finances primarily during that period?

Alyssa [00:15:05] Well, for us. You’re exactly right. I mean, we had been together since undergrad. Then through medical school and through residency, then fellowship because Michael specialized. So there was an imbalance for the first few years of our marriage when he was in residency. It wasn’t something that was unexpected. Because we knew this was the case and it didn’t weigh on me, it was something that was a little uncomfortable to have that burden, but I knew that it was short term number one. And what we found was there’s lots of ways you can share that burden. So I’m not one who actually likes to physically pay the bills and align all the accounts and do all the budgeting on a monthly basis. But Michael’s very good at that. So I was happy to relinquish that responsibility to him. And he was happy to take it over. And that was just another way that as a couple we could share in the responsibility of debt and finances and budgeting. So while I was making more money at the time, he very much had more of the responsibility to make sure that everything was taken care of.

Alex [00:16:08] So Brirley, some really awesome insights today. My takeaway that I loved, the advice on not being too strict with a budget made her budget. I have had no success with budgets in my life. The strict ones, at least.

Briarley [00:16:20] I’m the type of person that loves setting up a budget. I’m terrible at following through. And one of the things that is helpful or a helpful tool is some of the apps that are out there that track your expenditure. It’s really good just to get a kind of a pulse,.

Alex [00:16:35] A snapshot of where you are.

Briarley [00:16:37] Yes. And if you can set that up and it’s running in the background and you can check that once a month or once every few months, it’s a really good way to gauge, even at a high level, your incoming vs. your outgoings, and if that’s improving.

Alex [00:16:50] Yeah. And I’ve used a variety of those apps. I think that they give you a great snapshot of where you are financially. But again, I think budgets are annoying. Let’s admit it. But we need to use those insights periodically to set yourself back on track.

Briarley [00:17:04] Yeah, I’d have to say one of the most upsetting things about those apps is seeing my rent go out every month and I am reminded of the extraordinary rent that I pay living in this beautiful city.

Alex [00:17:17] It hurts, doesn’t it? It hurts. But I will say that even though you see that painfully little drop in your mountainous climb, that that really does help you, I think, be a little bit more frugal. And in the end, you know, you’ll thank yourself or pat yourself on the back for that.

Alex [00:17:39] Stay tuned for further episodes as we continue to explore topics such as gender issues in the workplace, financing your wedding, building equity, where to put your money and much more.

Briarley [00:17:49] Thank you so much for joining us. We hope you enjoyed it. And if you did, please hit subscribe. To learn more about what was spoken about today. Visit lower Laurel Road dot com slash podcast. We’d also love to hear your thoughts and feedback for future episodes. Please email us at podcast at Long Road dot com.

Alex [00:18:09] Let’s get the legal out of the way. Laurel Road is a brand of KeyBank and a member FDIC and equal housing lender in MLS number 3 9 9 7 9 7. Any opinions, findings and conclusions expressed in this podcast are those of the participants and do not necessarily reflect the views of KeyBank. In providing this information, KeyBank is not acting as your agent or is offering any tax, financial accounting or legal advice.

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