‘You did not have to go crazy!’: Young Texas couple with 2 kids are swimming in more than $53K of debt — wife is shocked to discover financial infidelity. Caleb Hammer responds

Financial infidelity

Christian earns $5,350 a month, after taxes, working as a restaurant manager. He has regularly taken out cash advances for his salary at an interest rate of 4%. Although the amounts are small — roughly $100 — his wife wasn’t aware of this until Hammer brought it up during the episode.

“I definitely feel like that's something I should have at least known,” Natalie said to her husband, calling his actions “concerning.” She added that Christian doesn’t involve her in the family finances.

Thirty percent of U.S. couples have dealt with financial infidelity at some point in their relationship, according to a survey by US News & World Report. This could include everything from lying about monthly income, hiding purchases, not revealing instances of debt or draining bank accounts without disclosure to — or consent from — a partner.

The effects can be devastating. Seventy-six percent of married couples who reportedly experienced financial infidelity said the experience had a negative impact on their relationship, according to a study published in the Journal of Financial Therapy. Roughly 10% of couples divorced over it.

However, Natalie and Christian’s financial issues go beyond secret borrowing. The family’s spending and borrowing habits are unsustainable, according to Hammer.

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Untamed spending and borrowing

Although they’re both in their early 20s, Natalie and Christian have made major financial commitments that they may not have been ready for. They own a home and have two children, which means their monthly spending is roughly $6,300 — significantly higher than Christian’s monthly income.

To close the gap, Christian used credit cards, many of which were maxed out, according to him. Struggling with the monthly payments, Christian decided it would be a good idea to pay off his credit card debt with a Home Equity Line of Credit on the family home. “It was either not pay them [the credit card companies] or take out a HELOC,” he said.

That decision has saddled the family with roughly $32,000 in HELOC debt at a 12% interest rate. The home also has a second-lien debt due to a downpayment assistance program the couple used to purchase the property.

Natalie and Christian added another $21,281 to this debt burden in the form of an auto loan for a car that was big enough to fit a third child, which they plan to have within the next couple years. “That doesn’t make sense,” Hammer pointed out. “Why not clean up your finances first? Kids aren’t cheap!”

Indeed, parents can expect to pay between $16,227 and $18,262 a year to raise each child, according to Credit Karma. Hammer believes adding another child to the family is a “scary” commitment for a young couple.

The commitment is scary enough for some couples to limit the size of their families. Nearly 30% of parents say their financial situation is preventing them from expanding their family further, according to the 2023 Policygenius Cost of Parenting Survey.

Natalie and Christian’s finances are already stretched with their existing family size. Hammer estimates it would take roughly six years to pay off all their debt and save up enough for emergencies based on their current income. He describes them as “irresponsible parents” for trapping themselves in this predicament. “Essentially, your kids will have to take care of you for your retirement.”