Women’s Issues

Fiscal Infidelity

BY SHARON LEVINSOHN

There is a dirty little secret lurking in many marriages today, and it is called fiscal infidelity. While you may have heard of the term sexual infidelity, you may not be as familiar with the financial version. Fiscal infidelity involves deceit, planning and deception. This syndrome necessitates spouses going to great lengths to hide major purchases, lie about personal spending proclivities and/or maintain secret bank accounts. The financially unfaithful plan out elaborate schemes and construct numerous lies in order to carry out this financial form of cheating.

The numbers of fiscally unfaithful couples are staggering. According to a joint survey sponsored by Redbook magazine and lawyers.com, almost one-third of American adults, aged 25 to 55, in committed relationships admit that they have been dishonest with their partners about their spending habits. The survey also revealed that women are more fiscally unfaithful than their male partners (33 percent of women, versus 26 percent of men).Is it easier for women to hide their bills or the purchases that they represent because more of them are in charge of the household budget? It’s certainly a reasonable theory. In addition, the survey noted that 41 percent of women are in charge of their own budgets, versus men, who weighed in at 21 percent.

Others are just a bit more devious. Consider Lauren*, 48, a full-time wife and mother, who resides in one of Miami’s poshest enclaves. She has been hiding her purchases which consist of designer and couture clothing, shoes and handbags from her husband for the past five years. While her husband makes a healthy living, he does not understand her desire for deluxe duds, so she has devised an elaborate plan. She explains, “First of all, we have the money. I would not be buying these things if we could not afford them. My husband just doesn’t get it and he hates shopping. I really love nice things I have had them throughout my life. Rather than fight with him about what I buy, I have devised a plan which seems to work. I simply spread out the purchases, on different credit cards, or even use some cash for some things, and he never realizes what I am doing. I have told him that buying these things makes me happy, and that should be enough, but he refuses to accept my explanation.”

Sandy*, 43, a West Palm Beach financial executive, also admits that she has been hiding purchases for years. Even though she and her husband earn similar salaries, he became enraged when he saw what she was buying. “I don’t feel that I have to apologize for buying certain things. I adore items from Gucci, Jimmy Choo, Chloé, Prada and other designers. When I used to walk in with the bags after a shopping trip, he would chastise me about my purchases. I just got sick of fighting with him and trying to justify what I had bought, so I just decided to hide them in my car and bring them in (little by little) when he wasn’t home,” she explains.”I feel like I am entitled to buy what I want. I work hard and we have the money. It’s sad that it has to be this way, but in speaking with many friends, this situation seems to be quite common.”

Many of the women who were interviewed for this article admitted that they hide purchases mostly clothing, jewelry, handbags and shoes from their husbands on a regular basis. The constant refrain that was echoed, centered on their husbands not understanding their wives’ desire for upscale merchandise or the satisfaction that these items engender.

Sandy adds, “Life is stressful and retail therapy really works. I buy things that are well made and that last for a long time. Meanwhile, he spends on cigars, playing golf and on car accessories. I don’t begrudge him anything and it is sad that he will never understand my purchases.”

But what about the husbands? How do they feel about this buy-and-hide-then-lie syndrome? Mark*, 53, is a recently divorced attorney and the father of three children, who was furious at his wife’s continual financial deception. This Fort Lauderdale resident admits that he was livid about his now exwife’s secret spending. Not only did his stay-athome wife spend over $10,000 per month buying things for herself, she also hid money in secret accounts that were only discovered by his forensic accountant when the divorce proceedings began.

“I always considered myself a good husband and a good father, but my ex-wife’s spending was way out of control. We used to fight about these purchases, which I never knew about when the bills came in. When my accountant eventually found these secret bank accounts that she had set-up years ago, that was the last straw. We were already in the midst of a difficult divorce, but this revelation really made me mad. It also showed me that the problems in our marriage were way worse than I had imagined.”

Men are not immune to financial infidelity, as the survey clearly illuminated. While the percentage of men secretly splurging is lower, the deception is just as painful. Consider Leslie, 38*, a Weston resident, who was shocked by her husband’s reckless and often secret spending. “First, he bought a convertible BMW without even consulting me he just drove it home one day. I was shocked because this was a major purchase. hen, he joined a golf club I don’t play with a high initiation fee and expensive yearly dues.” Leslie’s most hurtful and shocking financial betrayal was revealed when she received a phone call from a billing office at a strip club. She continues, “It seems that my husband had taken some clients to one of these places, and had spent over $5,000 in one night! The only way that I found out about this secret splurge was because of that phone call. The club needed the three-digit code from the back of the credit card. Not only was I mad that he had gone to one of these clubs, I was livid that he had spent the  money there instead of on a family vacation. He had told me that we could not afford to go to the islands because he didn’t have the money.”

Other husbands and wives who were interviewed for this article also spoke about financial infidelity involving spa and golf vacations, expensive automobiles, high-end jewelry, clothing and secret  bank accounts. Some even mentioned impulsive real estate investments that did not include the other spouse’s input. It is not the specifics of the purchases that mattered as much as the lies and deception that fueled the behavior.

John Reynolds Allison, a psychotherapist in private practice in Jupiter, Florida, specializes in cognitive behavioral therapy. He acknowledges that financial infidelity is rampant in today’s society. Allison explains, “Major spending should never be a one-person decision unless it is for a gift for a birthday, an anniversary or for the holidays.” He continues, “Communication is key and couples should always discuss how money is allocated from household expenses to vacations, to material items. Impulse buying and spending vast amounts of money without telling your spouse is considered manic behavior. These people are just going for the temporary euphoria that comes from spending money on certain items. For many people, these secret purchases can be attributed to a substitution. They simply substitute material items for love. This is a form of self-medication and they really should seek professional help to discover and work through their underlying issues.”

Whether it is gambling in casinos, going on high-end vacations and/or buying designer items or expensive automobiles, Allison says that these individuals are simply looking for a quick fix and a way to make themselves feel better temporarily. He continues, “Many of these people don’t think of the outcome, or that they cannot really afford the watch or the car or the trip. They also don’t think that they will eventually have to speak to their spouse about this purchase, which can lead to major conflict and even, in some cases, to a separation or a divorce. They don’t think logically this is an example of ’stinking thinking.’”

Allison believes that many people can benefit from couples counseling as well as financial counseling. The first step on the path leading to a healthy marriage involves a decision to be honest and open about finances. Spouses should sit down and write up a budget, including all facets of their spending, including the mortgage, insurance (home, car and health), debt, credit card bills, education and entertainment. Surprises should not be part of their financial picture.

While most couples have a joint account for household expenses, many of them also have individual accounts for personal spending. The key is disclosure. Chris*, 54, a real estate investor from Orlando, believes in the “yours, mine and ours” theory of bank accounts. “My wife and I both work and we believe in open, honest communication about everything including our finances. We pool our money for the major joint expenses and we have individual bank accounts for discretionary spending. If you have the trust, and are open with each other, financial infidelity does not come into play.”

Veronica*, 40, an accountant from Tampa, states, “My live-in boyfriend and I have a rule. We discuss major purchases of $1000 or more before we buy anything. We also have three accounts. We both work in finance and neither of us could live with deception or discord.”

Allison urges full financial disclosure for all couples, and adds that instead of rewarding themselves with material possessions which often serve as temporary band aids for greater emotional issues couples begin their journey to healthy relationships relationships by creating meaningful rituals. “In lieu of secret spending and splurging, couples can spend time holding hands, going for walks, practicing yoga, sitting on the beach, listening to music, spending time in the pool or the ocean… Date night is also important, as is making time for intimacy. Creating trust on every level is a process. Rewarding relationships require emotional, physical
and fiscal intimacy and honesty.”

* All of the names and residences of the people who were interviewed for this article have been changed to protect their privacy

Tips for Fiscal Fidelity

• Discuss finances, including income, debt, bills, retirement contributions and discretionary income.
• Divide financial responsibilities, including paying the bills, overseeing savings, paying taxes and tracking spending.
• Determine a financial amount, that is comfortable for you both, and do not make purchases (for this amount or above) without discussing them.
• Determine if you want to pool all of your money or if you want to have three accounts (one for joint and household expenses, and one for each of you).
• Discuss discretionary spending. What items are important to each of you? Determine what amount is mutually acceptable for these items.
• Consult with a Certified Financial Planner to educate yourselves on a wide variety of financial issues.
• Meet with a psychotherapist who specializes in couples counseling to learn new ways to communicate and improve your relationship.
• Say “no” to financial infidelity. Say “yes” to compromise. Value honesty and open communication in every area of your relationship.

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Expert Advice on Divorce

The advice you need when divorcing in these troubled financial times
BY ODETTE M. BENDECK

DEPENDING ON YOUR PERSPECTIVE, now is either the best time to divorce or the absolute worst. In complex cases—it could be both. Understanding your finances and evaluating those options carefully with ounsel can make the difference between a good decision and a devastating one.

Understandably, even in good economic times, contemplating divorce is one of life’s biggest decisions fraught with emotional and financial pitfalls. By the time a party seeks legal counsel, the matter tends to fall into one of two categories: when to divorce, or whether to divorce at all.

Spouses that fall into the “when to divorce” category have already concluded that a divorce is inevitable—it is only a question of when they will proceed. In those situations, often the timing is driven by life events associated with children or financial events. Those that find themselves in the “whether to divorce” category, may have hope that the marriage can be saved, but still need to understand the process and realities of divorce should it happen.

In a severe economic climate such as we are now experiencing, it is more important than ever to understand how the financial issues of a divorce may play out. Whether you can use the economic times to your advantage depends on which end of the spectrum you find yourself in. Will you be the “paying spouse” or the “receiving spouse”?

The Paying Spouse
For this analysis, the paying spouse is the party in control of the assets and the party at risk of paying alimony to the other. Assuming, as is true in most cases, that the family net worth is going to be divided in half, there is no better time for the paying spouse to divorce than at the bottom of an economic downturn. After all, sharing half of a $10 million estate is less painful than sharing half of a $20 million estate.

A divorce is essentially “on sale” for the paying spouse when the assets are valued at their lowest. A divorce might even be a clearance sale when the assets include a business to be retained by the paying spouse. For purposes of the divorce, that business will be divided based on its current depressed value. If the paying spouse is convinced that over time he or she will be able to bring that business back to previously high values, that increase will not be shared with the receiving spouse who was “cashed out” when the value was low.

Another advantage for the paying spouse in a depressed economic environment is that support obligations are based on current income levels. The paying spouse may for the first time in many years be earning a fraction of the income enjoyed during the good times. Accordingly, when that lower income is the only source from which to pay support, it stands to reason that the support obligation will be considerably lower than it would have been had it been set at higher earning levels. While support obligations are typically modifiable, meaning that they could be increased in the future when economic times improve, generally speaking, it is beneficial for the paying spouse to have support initially set at a legitimately established lower level.

Of course there is another side to this coin even for the paying spouse. Depending on debt obligations to lending institutions and other fixed obligations, cutting up a drastically reduced income among the creditors can be extraordinarily painful in an intact marriage much less in a divorce. Given that the ability to sell real property in order to generate capital or reduce debt is greatly diminished at present, the domino effect of being unable to keep everyone paid can lead to dire financial consequences. As a result, even a paying spouse who has long waited for the perfect moment to divorce may find that there is a lack of liquidity or cash flow to make it work.

The receiving spouse Is there any upside to divorcing for a receiving spouse in this climate? Oddly enough, there can be. In a divorce, not only do the assets get divided, but so do the debts. It is not uncommon now for even the most well-intentioned spouse in control of the finances to be increasing the debt load in an effort to keep things afloat. If that continues, and if the house of cards falls, it may be that all there is left to divide is debt. Sadly, divorce litigation is now more often leading to foreclosure and bankruptcy litigation as well. So, just as it is preferable for the paying spouse to divide $20 million than $10 million, it is also better for the receiving spouse to receive $5 million in debt rather than $10 million. Another silver lining for a receiving spouse divorcing in this market is the availability of housing bargains. Even couples with a high net worth often have a large percentage of their net worth tied up in their primary home. In better economic times, finding alternative housing for the receiving spouse can be costly, resulting in a drastic reduction in the size or quality of the replacement home. Presently, there are more homes either on the market or quietly for sale under distressed circumstances than we have seen in decades. This presents options for a receiving spouse that do not exist in better housing markets. The Bottom Line While it is not polite to acknowledge that spouses may need to re-evaluate dissatisfaction with a marriage given economic times, it is a reality that sensible couples must face. Although this article explores the issues on a big picture basis, the factors to consider and the other factors involved are far more complex. Under any circumstances, divorce should not be taken lightly. In today’s uncertain financial times, it should not even be contemplated without the advice of competent legal counsel.

The Receiving Spouse
Is there any upside to divorcing for a receiving spouse in this climate? Oddly enough, there can be. In a divorce, not only do the assets get divided, but so do the debts. It is not uncommon now for even the most well-intentioned spouse in control of the finances to be increasing the debt load in an effort to keep things afloat. If that continues, and if the house of cards falls, it may be that all there is left to divide is debt. Sadly, divorce litigation is now more often leading to foreclosure and bankruptcy litigation as well. So, just as it is preferable for the paying spouse to divide $20 million than $10 million, it is also better for the receiving spouse to receive $5 million in debt rather than $10 million.

Another silver lining for a receiving spouse divorcing in this market is the availability of housing bargains. Even couples with a high net worth often have a large percentage of their net worth tied up in their primary home. In better economic times, finding alternative housing for the receiving spouse can be costly, resulting in a drastic reduction in the size or quality of the replacement home. Presently, there are more homes either on the market or quietly for sale under distressed circumstances than we have seen in decades. This presents options for a receiving spouse that do not exist in better housing markets.

The Bottom Line
While it is not polite to acknowledge that spouses may need to re-evaluate dissatisfaction with a marriage given economic times, it is a reality that sensible couples must face. Although this article explores the issues on a big picture basis, the factors to consider and the other factors involved are far more complex. Under any circumstances, divorce should not be taken lightly. In today’s uncertain financial times, it should not even be contemplated without the advice of competent legal counsel.

Odette M. Bendeck is a managing partner of Fisher & Bendeck, P.A. Both Odette M. Bendeck and Jeffrey D. Fisher are Florida Bar Board Certified Marital and Family Law Attorneys. Fisher & Bendeck, P.A. is located in West Palm Beach.