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As newlyweds, we have debt. We should use our PFDs on that and not blow it on a honeymoon ... right?

  • Author: Wayne and Wanda
  • Updated: September 28, 2019
  • Published September 28, 2019

Dear Wayne and Wanda,

As you guys know, it’s almost time to get our Permanent Fund dividend payouts and my husband and I are fighting about it like crazy. We just got married earlier this summer so this is the first year that we are dealing with this together. We dated for four years before we got married. When the PFDs paid out, we would usually go out and have a nice dinner date. After that, well, I knew he had debt, because he mentioned it frequently, so I figured he was paying that off.

For me, I put half in savings and half toward bills — things like my last bit of student loans, or a house project. I have been very disciplined with my money and my budget and I don’t have much debt beyond those student loans, mortgage and my car payment.

As we prepared to get married, we sat down to share our financial situations with total transparency, and I was pretty surprised to learn my husband had $15,000 in credit card debt, give or take. We agreed a goal would be paying this off together. His debt is my debt, right?

So here is the disagreement: I think our PFDs should go to the credit card. That would pay off a good chunk of the balance! He wants us to take a honeymoon and said if we pool our PFD, we could have an amazing week in Hawaii. Well of course I want to go to Hawaii. Who doesn’t? But I’m trying to be practical here. He says PFDs are “fun money” and we should enjoy the “windfall” and celebrate and that I’m being “boring.” I think I’m being smart. Help?

Wanda says:

Behavioral economist Dan Ariely wrote a very readable book called “Dollars and Sense: How We Misthink Money and How to Spend Smarter.” One of the book’s central tenets explores how humans tend to engage in mental accounting exercises that separate our dollars into different buckets, depending on how we got the money in the first place. For example, a windfall like a high-paying pull-tab is fun money! Because it’s extra, unexpected, exciting, and should go toward something extra, unexpected and exciting! On the flipside, that dependable paycheck definitely goes toward boring old bills.

But Ariely’s point is money is money is money — in accounting terms, it’s fungible. It doesn’t matter how we get $100. It’s $100. And we can pretend that $100 is assigned to responsible things like mortgage and car payments, or we can frame it as excessive funds with which to indulge, but at day’s end, it’s still $100.

And so it is with our PFDs. We can pretend it’s a special payout for a special thing with no relevancy to daily life, but that’s a fallacy. It’s reportable on our taxes, isn’t it? It’s just as much an earning as a paycheck. Whether it’s a windfall or a drop in the bucket depends on individuals’ financial circumstances, but in no way changes the finance fact that there’s nothing special about it.

So I’m with you. Paying off debt sooner means less interest later, which means more trips to Hawaii down the road! Your husband is dreaming of Maui and mai tais at the risk of ignoring your shared financial reality. Hey, no one said adulting is easy.

Wayne says:

Oh yeah — Hawaii baby! Book that killer trip and go big! All inclusive, oceanfront views, luxury rental car, all the poke you can eat and all the mai tais you can drink! Hey, it’s free money after all! And when that windfall runs dry, throw the rest on the credit cards — that’s what they’re for, right? Cowabunga, dude!

Or how about reminding him that acting and spending like this is exactly why he — and now you — are in debt.

I’m so impressed that you guys talked frankly about finances before marrying, and that he fessed up to his mess. I’m even more impressed that a fine financial planner and devoted saver like you took a big one for the team in committing to fixing the financial funk that he created. And I’m really disappointed that he isn’t living up to his end of the agreement or appreciating the serious sacrifices you made and continue making.

Ask him, “What the heck happened to our shared and agreed to goal of paying off your credit card debt which is keeping both of us from taking amazing trips, not to mention having a solid credit score, and ultimately helping us finally be free of shoveling piles of extra money to credit card companies every month?” Not as much fun as buying new beach gear and planning a week of tropical sun and fun, but being in the hole to credit card companies for the foreseeable future isn’t exactly a romantic walk on the beach.

He clearly needs a reminder. Something along the lines of, “Sorry buddy — you aren’t getting lei’ed until we can see some daylight at the end of this not-so-great depression you put us in.”