1. Suze Orman: How to Split the Bills

    “How should we split the bills?”

    Suze says (on the Suze Orman Show which aired 2007/01/13) this is the most common question she gets from couples. (I’d have thought she’d hear “Should we have separate accounts, or joint?” more, but what do I know.)

    For most folks, the default answer to the bill-splitting quandary is 50/50. But Suze suggests that it’s almost never this easy (no kidding!). And that for couples where the two spouses earn significantly different amounts (which would be most couples, probably), splitting the bills 50/50 will almost always lead to resentment and frustration.

    Here’s the fictional household setup that Suze presented as an example:

    Partner #1 makes $7k/month.
    Partner #2 makes $3k/month.
    Household expenses total $3k/month.

    In the case above, Suze would suggest that the bills be split 70/30, rather than 50/50. This way, each partner/spouse is responsible for an equal percentage of the bills rather than an equal dollar amount. They don’t earn equal dollar amounts, so they shouldn’t pay equal dollar amounts.

    After all, paying $1,500 worth of bills (a 50/50 split) drains the $3k earner a lot more, percentage-wise, than it does the $7k earner.

    My first thought, of course, is that there are roughly four couples out there making $10k per month and spending only $3k/month, so the example is kind of flimsy in that regard. Numbers like that just ain’t happening for Joe and Jane Sixpack. Still, I recognize that it’s the math that matters.

    I’m all for fairness in relationships and finances, and Suze’s idea makes sense to me: Pay the bills in the same percentage that the household income is split. Still, I can already hear the uproar from the “But we’re married, and we’re ONE now!” crowd. “What’s hers is mine, and what’s mine is hers! The only percentage that matters is the one we’re paying on our Discover card!”

    And they have a valid case. Really, I think Suze’s point was meant more for non-married couples, but she wasn’t really clear on this. My advice, in any case, would be this:

    Just do what works.

    And if what you’re doing isn’t working, change it.



  2. Dave Ramsey Live Event

    Well, today was the day. I attended a Dave Ramsey Total Money Makeover Live! event this afternoon.

    Actually, I attended only half of it.

    Thanks to a searing headache that became unbearable around the halfway-point of the show, I most certainly did NOT get my money’s worth ($20 per seat) out of the deal. But that wasn’t Dave’s fault. Stupid me forgot to have painkillers handy for just such an emergency. That’s what I get for not planning ahead, right?

    I will say this: Dave Ramsey (talk-radio host, creator of “The Baby Steps”, and author of Total Money Makeover, among others) is an energetic guy, a great communicator, and a salesman of notable ability.

    “The world we live in today is pretty strange,” he told the audience early on. “It is one where common sense has become a marketable commodity. I’ve simply packaged it better than anyone else in my generation.”

    He may be right. The auditorium was wall-to-wall full, with extra fold-out seats crowding all aisles. Lines at his book- and media-product-sales tables outside the auditorium were heavily populated, too. Most of the people around me seemed excited to be in attendance. I got the distinct feeling that most folks were there due to ties with churches and other religious groups. No big surprise, as Dave leans heavily upon these groups for readership and networking of sales. And readers of Ramsey’s books know he does not shy away from outright religious overtones and missives in his financial advice. (“God’s and Grandma’s system of managing money,” as he describes it.)

    If you’re willing to look a bit beyond all that, you get to hear a pretty good and entertaining fiscal sermon delivered by a guy who’s obviously had lots of practice. Much of his live message duplicated the content of Total Money Makeover, but there was enough fresh material thrown in to make the hours of sitting in not-so-comfortable pews a little more bearable. Would it have been worth the $20 if I’d have been able to stay for the duration? Yes, probably so.

    One anecdote of Dave’s that I found rather interesting:

    Ramsey offered the following what-if to the audience: Suppose your young child at home has been diagnosed with a terminally ill condition. She will die in exactly one year unless a $5,000 vaccine can be purchased and administered. Your insurance does not cover this vaccine in any portion. You must pay for it yourself, but you cannot under any circumstances use any funds which you already have. You may not borrow the money for it; you may not pay for it with credit in any way. You may use only what cash you can raise over the next year.

    “How many of you,” Dave then asked the audience, “would find a way — somehow, some way — to raise that five thousand dollars?”

    As you might imagine, the number of arms raised was … extremely high.

    The point behind this macabre scenario? According to Ramsey, one reason for why debt has become such an out-of-control problem in this country is that people have become almost entirely ambivalent to the ramifications of it. Debt, he said, obviously causes consumers varying degrees of financial discomfort for years and years. Yet until things get so painful that drastic change is the only way out, people simply do not care about paying off their debts, because it doesn’t matter enough to them on a personal level.

    “If the end result matters enough to you,” Ramsey said, “then you will do whatever it takes to get it accomplished. Failure will not be an option. You would take any action necessary to save your daughter’s life. Yet people will not do the same to save their financial lives.”

    There is significant truth in that, I think. If it matters enough to you, you will do it.

    Unless, of course, your headache is just too bad. 🙂



  3. OKC Total Money Makeover

    I feel a bit guilty.

    This afternoon I put in my order for two tickets to see Dave Ramsey at his OKC “Total Money Makeover” live event in February 2005.

    Dollar cost for The Wife and I to attend: $38.

    Cost per event hour per person: $3.80.

    Driving time to get there: 30 minutes, tops.

    Amount of credit-card debt I’ll have by then: $0.

    Amount of student-loan debt I’ll have by then: $2,100.

    So why guilty? Dunno. But that’s how I feel. Folks who’ve been reading my stuff for awhile know that of all the broad-base financial gurus out there, I respect Ramsey and his plan far more than anything anybody else has put forth. (I’m talking media-centric types here, like Suze Orman, Jean Chatzky, and David Bach. Those people, IMO, have a penchant for serving up mediocre advice, sound-byte aphorisms, and a hearty helping of fluff.)

    Now, I can get hardnosed with Dave, too, as I did in my review of his latest book. But he tends to dispense sharp, to-the-point advice, with little room for whiners or “woe is me” types. That’s what I like about him, mostly, and that’s why bits of Dave are all over this site. And I guess that’s why I’m looking forward to hearing him in person. Hearing him, that is, probably regurgitate everything I’ve ever heard from his radio show and everything I’ve heard from my 25+ readings of his Total Money Makeover audiobook. (Look, the guy is a great motivator. He keeps me on point. And local radio sucks.)