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MONEY MAKEOVER

Before the wedding, couple need to cut debts and stop overspending

A financial advisor tells the Pico Rivera residents to postpone their wedding until they can pay for it without going deeper into debt.

September 27, 2009|Ann Marsh

To hear Summer Brown and Briana Biddle talk about it, their upcoming wedding and civil commitment will be a fairy tale, complete with happily ever after.

But fairy tales can turn dark pretty quickly, and a look at the couple's finances shows that the poisoned apple in this story could be money.

Let's start with the wedding: Brown has a $986 wedding dress and a $2,600 engagement ring, both bought on credit. Then there are older debts: a $20,000 time share on which Biddle is not making payments and $17,000 in student loans for Brown, among others.

To the rescue rides financial planner Alfred McIntosh, who has agreed to look at the couple's finances as part of The Times' Money Makeover series.

Except here's where the fairy tale skids into reality: If the couple, who together earn about $79,000, don't clean up their finances, happily ever after is going to be awfully hard to reach.

"This situation requires change from both of you, quite honestly," McIntosh, founder of McIntosh Capital Advisors in Los Angeles, told the women when he met with them this month.

Biddle, 28, and Brown, 27, met four years ago as students at Cal State Northridge and fell in love last year. They share a Pico Rivera apartment with an affectionate, high-energy pack of three small dogs and a cat.

Like many young people, they're learning the hard way about managing their money -- by overspending, underestimating how much income they need and generally getting in over their heads. Now, they say, it's time to get out of debt and set realistic goals for saving and spending money.

Although a domestic partnership between two people of the same sex is not legally considered to be a marriage in California, Brown and Biddle would assume many of the same risks that married couples run, such as the higher earner potentially becoming responsible for spousal support of the other, according to family law attorney Melissa Mayer of Mayer & Glassman in Los Angeles.

Because they plan to register as domestic partners with the state, any dissolution of the partnership would have to be legally formalized, often involving many of the same costs and complications as in a divorce, she said.

Brown earns an annual salary of $45,000 from a nonprofit social services agency where she counsels troubled children to help them stay with their families. She is working toward her license as a therapist. Biddle makes $34,000 a year from the Greater Los Angeles Agency on Deafness, where she advocates for deaf people who are looking for jobs. It's exhausting work for both of them.

"I don't know how she does what she does every day," Biddle said of her partner's job. "I get just one case of discrimination against a deaf person, and I'm destroyed."

Brown has saved $2,200 in a retirement account, and they have $57 in their joint savings account. But their balance sheet is dominated by debt.

Biddle carries about $11,250 in debt on two credit cards, at interest rates of 25% and 30%, and $553 in a line of credit associated with her checking account. Brown carries about $1,450 on one card at a 7.23% interest rate.

They're racking up 45.2% interest on the credit line they took out to buy the engagement ring because they stopped making payments and the rate jumped. And they owe $3,000 on two more credit cards that they hold together.

Brown also has $17,000 in student loans at 2.48% and a $21,000 car loan at 4.99%.

It was during the discussion of debt that the meeting with the financial planner became tense. With a hollow look on her face, Biddle confessed that she hadn't been completely straightforward about her debts and spending.

Brown became upset.

"I'm bitter now," Brown said, "because I've done everything I was supposed to do financially and she didn't."

McIntosh slipped into his therapist role.

"Since you don't like letting her down," he told Biddle, "and you want to do better at this, you have one choice: to get better at this."

All that debt -- and its continued accumulation -- is the most pressing problem and the first thing the pair need to address, McIntosh said. "Stop using those cards," he told them.

Brown and Biddle can start taking responsibility for their finances by holding weekly meetings. To start each one, each should share the progress she has made that week on financial issues. Then they should discuss ongoing challenges. The meetings could end, he added, with a discussion of their goals for the coming week.

He praised them for coming in to see him now, more than a year before their planned wedding. "They need to be on the same page if this marriage is going to work," he said.

Right now, their financial goals are somewhat different: Biddle wants to get a master's degree in education. Brown wants to buy a house.

They need to talk about priorities, McIntosh said. But neither of those goals will be attainable if they don't get their finances under control. Both have spending issues that are sending them into debt at more than $800 a month.

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