Newbie needing advice

[FinanceDude]

There's a huge discrepancy between what he says and the actual account value. I see margin activity when I get in to few statements. Plus, I have a huge margin buying power, which explained to me is basically an extended line of credit if we want to use it. I have no idea where monthly contributions have gone--can only assume the've been gobbled up on expired margins.

The service rep I talked to said he didn't see any big red flags and only show an unrealized loss of $4k. But still, my statements shrink.

I have a bad feeling about it, thinking he's leveraged what we did have to "make it big" and now it's all falling apart. He's done margins before but told me 10 years ago that we were done because of the risks/stress. So, I'm assuming he's trying to hide his mistake if he started back up.

I will talk to him tonight.

Get RID of the margin on the account. It is a very expensive line of credit and it seems he already struggles with financial literacy. Margin to people not paying attention is like throwing a 55 gallon drum of oil on a roaring fire, it rarely ends well.

Maybe you need to take control of the finances, he obviously is in avoidance mode because he either does not know what to do, or does not want to admit he made mistakes, etc. Take him off the hook gently..............best of luck........

 

[Texas Proud]

He could be hiding something or maybe your investment knowledge is lacking somewhat and either you don't understand him or he doesn't tell you much because he doesn't think you understand?

I only say this because twice now you've described your IRA situation and neither time has it made sense. You said your IRA "only increased by $14000". To me that means you've contributed $19000 and it has increased by $14000 and now totals $33000. But then you say you've lost $5000. So is the IRA now worth $33,000 or $14,000?

I got what she said....

She said during a 6 year period she put in $19K...

During that same 6 year period the account only grew by $14K...

That means there was a LOSS of $5K that is unexplained...

She never gave the beginning balance, so we do not know the total...


You assumed that her stmt of growing $14K was earnings... I did not..

 

[Sassy]

Pb4,

Thanks again for the steady advice. Your post are keeping me calm in all this. You may be right on how he is valuing things. He says we have other holdings, so I need to find those and see what's up. Part of this all stems from trying to get everything organized in Quicken, so once I have all the accounts in there I'll have a better idea where we stand. Then I can be more proactive in it, too.

I hate that I'm coming off as the stupid little woman who wasn't involved. I feel I was involved and interested in our finances. I asked questions and got answers and had no reason to distrust him. I know he wants to do what's right for our family and take care of us, i just don't know if he went to far with it and got into deeper water than anticipated. So all of this has me really confused and him frustrated because he says he keeps explaining the same thing over and over to me. plus I'm confused by the margin stuff--and maybe I'm not reading it correctly--and how this fits in with our passive investment approach we agreed to.

I really just want to get to the bottom of this, get our ducks in a row, and move on.

 

[gauss]

Pb4,

So all of this has me really confused and him frustrated because he says he keeps explaining the same thing over and over to me. plus I'm confused by the margin stuff--and maybe I'm not reading it correctly--and how this fits in with our passive investment approach we agreed to.

Hi Sassy,

Brokerage statements and margin accounts in particular can be very confusing to read -- and this is being written by someone who actually managed the account. Don't be too hard on yourself in terms of trying to come up to speed in the middle of it. If you see any activity with Options/Futures/ForeX (ie foreign currencies) then it could be really a challenge to represent this in Quicken, but I haven't seen any mention of this in your posts so this is good.

If you just want to approximate Annual Rates of Return, then there are approximation formulas out there based just on cash flows (ie deposits to and withdrawals from the account) and beginning and ending of year balances. There would be no need to represent the actual trades. One example of these formulas can be found in "Bud" Hebeler's first book (ref: J.K. Lasser's Your Winning Retirement Plan - Henry K. Hebeler pg 117-120).

This book can be previewed at Google Books (or pm me if you would like me to send you copies of the relevant pages).

-gauss

 

[jclarksnakes]

Sounds like he has made some investment mistakes. As someone who has made at least a couple of investment mistakes over my lifetime I would ask that you not be too hard on him for his mistakes. It would probably be a good idea for you to take over managing the investment accounts BUT, do keep him involved in the decisions so that it will at least seem like you are doing it as a team.

 

[Milton]

I suggest that you focus on trying to understand the facts and the situation and the cause of the apparent discrepancies and, at least for now, avoid any judgement on the wisdom of his actions or lack thereof so he doesn't clam up.... It sounds like it will be a difficult conversation for the both of you so be careful. Good luck.

+1. Also, keep in mind that if you push really hard he may bring up the fact that he is the sole breadwinner and as such who are you to question the way he invests the money. That would derail the whole discussion and turn it into an unproductive debate.

He says we have other holdings, so I need to find those and see what's up. Part of this all stems from trying to get everything organized in Quicken, so once I have all the accounts in there I'll have a better idea where we stand.

Is there a good reason why you need so many accounts? If you can consolidate these into two ETFs - one registered, one not - things would be a lot easier to manage.

 

[Sassy]

Well, he finally fessed up tonight. Turns out he lost everything in the 2008 crash because he was highly leveraged. He had dabbled with that a bit in his 20s then we agreed jointly that it wasn't good to do anymore, but he started back up. So, I guess you can see he's a bit like a gambler with an addiction. Anyway, he's been hiding it for 5 years, making up numbers, telling me lies, hoping to make it back. So, yes, I'm out probably about $600K and 15 years of squirreling away and living below my means, not to mention all the emotional crap that now comes with this. Fortunately, we had been putting things in cash for the last 5 years, so that is saved along with the retirement accounts. Things are not absolutely dire, but the ball game has definitely changed.

Here is my immediate plan:
1. He is to get a list of accounts/passwords everything with a $$amount on it to me and sit down with me and go through it so we know exactly where we stand.
2. Passwords will be changed and he is removed from any decision that involves a $.
3. I'm heading to my parents for advice on future investments and where I should be.

If you have anything to add for advice I should be doing for right now or down the road, throw it my way.

I will be going back to work but I need to figure out what to do. Being out of the workforce for 10 years and an English degree really aren't strengths. Really kicking myself on that liberal arts degree right now. Probably time for a new career, so I should add career counseling discussions to the list.

Thanks for all the input. You will probably be hearing more from me as I navigate this path with plenty of questions.

 

[UserRequested]

Well, he finally fessed up tonight. Turns out he lost everything in the 2008 crash because he was highly leveraged. .

Oh Wow. Sorry to hear that.
Good to see you have a plan and determined to see through all of this.
Best of luck. I'm sure you'll succeed.

 

[Sassy]

I don't have much choice other than to make a plan and move on.

Pretty much having my "As god is my witness" Scarlett O'Hara moment.

 

[Meadbh]

OMG Sassy. Thank goodness you found out now. This is a crushing blow in more ways than one: (a) because you have learnt that your money has been lost and (b) because you have learnt that you cannot trust DH.

I think that you need some support. First, moral and emotional support from your friends here on the forum. Feel free to PM any one of us you feel comfortable communicating with. Second, I think you need some support from a financial expert in your community. Someone who can help you build a strong framework for the future....including ensuring that you are the one in charge of the family finances from now on. No compromises! Third, you and DH need some relationship counselling. Fourth, you need some career counselling. All this is too much to take on at once, but it must all be done.

The positive thing is that you are a strong person, and with the right support you can pick yourself up, overcome this cruel challenge, and face the road ahead. I hope you can bring DH with you. But my advice (which, coming from a single, you may have difficulty with) is never to trust him again.

 

[Sassy]

Thanks Mead,

I agree on all your suggestions as they have all crossed my mind in this short, chaotic amount of time. Right now, I really want to focus on the immediate of getting him off all the accounts (he agreed immediately to that) and making sure that nothing else is hidden. He's assured me there isn't. I really think this is just a case of him wanting to take care of his family and be the "hero" and it just got away from him. The other immediate financial concern I have is where do I go from here, ie, financial counseling. I called my parents and told them I'd be visiting this weekend. They are self-made, LBYM people and they will be completely blindsided by this. How I'm going to have that humiliating conversation, I don't know, but I need some advice and I need to ask about their advisor. Plus, they just need to know because I'm not sure how this will all end once it's played out. I feel so incredibly stupid and duped.

And, yes, I have thought that I'm awfully lucky to know this now instead of my 60s. I have time to recoup and hunker down, but, as I told him, all our dreams are wiped out. He's also essentially taken away the kids' childhood as they know it with me at home for them before and after school and during summer. The kids are 11 and 8 and my biggest priority is not to rattle their world right now. I need to get myself in order first and then we'll see where to go. Clearly, trust is out the door, so I'm not sure what'll happen to the marriage. (Is there an ER forum pool taking bets on whether I'll be married in a year??) I had mentioned marriage counseling and he is willing to do whatever it takes and says that he will do whatever I want, including grant me a divorce with alimony if that's what I wish. I'm really not ready mentally to go down that road either way as there's enough of a fire I have to tend to right now. Of course, that decision might have been a little easier if I wasn't a SAHM for 11 years with a stupid liberal arts degree. Obviously, I'm open to a career change, I'm just not sure what. Maybe something in the medical field? I want to earn a decent salary and recognize that I'll need some training. But I also want to get up and going fairly quick. I was thinking maybe in LN nurse or something along that line with a 2-year degree where I can then work and progress and get more schooling to go for an RN or something more specially trained. Not sure, just thinking out loud here.

And, yeah, it's safe to say that I'll never trust him with $$$ again.

 

[Texas Proud]

Sassy..

I am curious as to how he hid such big losses from you.... did you not look at your tax returns

You should have seen big losses a few years back and asked about them...

You should have seen almost no income etc. since... again a red flag...

I think another big question that you might not want to answer is will you stay together? I would think that keeping that kind of info from a spouse is a big time no-no and would lead to other problems.... We are not talking chump change here, but $600K.... that might have now put your retirement in jeopardy....


As someone else suggested, I would recommend talking to someone you trust so you can get a handle on your emotions... I really do not know what I would do in the same situation, but I know I would be very very mad for a LONG time...

Good luck...

 

[pb4uski]

Sassy, I am hugely sorry to hear of this but I am glad that he finally had the courage to fess up (even though you sort of had him painted into a corner). I'm sure fessing up was a very hard thing for him to do. I don't sense a lot of resentment in your post and I hope that is the case but I suppose you are still in a bit of shock.

Putting myself in his shoes, I would be despondent and feeling like a failure and like I was walking on eggshells. As you have said in earlier posts he is a good man and a good provider and father. Remember that and give him a big hug and thank him for his courage to finally come clean. For you to forgive him will be hard, but I encourage you to do your best.

That is an astounding amount of money to have lost but it is what it is and it is better to know and address the situation than to have found out 5 or 10 years from now. One thing you should do is make sure that you guys have garnered as much tax benefit from these losses as possible, both in the past and in the future. You may need to consult with your accountant if you have one and you may need to file amended returns for prior years.

With respect to future investments, I suggest no-load, low cost mutual funds from Vanguard or Fidelity or Charles Schwab. I am a Vanguard guy, but there are some other good quality outfits out there - and unfortunately a lot of poor ones. When you get to that point, we're here for you.

I differ from Meadbh's view that you never trust him again. If you remain married you must trust......but verify.

 

[Texas Proud]

Sassy, I am hugely sorry to hear of this but I am glad that he finally had the courage to fess up (even though you sort of had him painted into a corner). I'm sure fessing up was a very hard thing for him to do. I don't sense a lot of resentment in your post and I hope that is the case but I suppose you are still in a bit of shock.

Putting myself in his shoes, I would be despondent and feeling like a failure and like I was walking on eggshells. As you have said in earlier posts he is a good man and a good provider and father. Remember that and give him a big hug and thank him for his courage to finally come clean. For you to forgive him will be hard, but I encourage you to do your best.

That is an astounding amount of money to have lost but it is what it is and it is better to know and address the situation than to have found out 5 or 10 years from now. One thing you should do is make sure that you guys have garnered as much tax benefit from these losses as possible, both in the past and in the future. You may need to consult with your accountant if you have one and you may need to file amended returns for prior years.

With respect to future investments, I suggest no-load, low cost mutual funds from Vanguard or Fidelity or Charles Schwab. I am a Vanguard guy, but there are some other good quality outfits out there - and unfortunately a lot of poor ones. When you get to that point, we're here for you.

I differ from Meadbh's view that you never trust him again. If you remain married you must trust......but verify.

It is probably too late to get the benefits of the tax losses if he did not take them... you only get 3 years to amend a return...

 

[Meadbh]

I differ from Meadbh's view that you never trust him again. If you remain married you must trust......but verify.

Perhaps men and women may see this differently. Women, historically, have been conditioned to trust men to look after their welfare. When men fail to live up to that ideal, well, all bets are off.

I once had a secretary who was in this position. She and her husband were in their early 30s. She divorced him and is now in a much better position and far happier in another relationship. She manages the money.

 

[REWahoo]

Perhaps mean and women may see this differently.

 

[pb4uski]

It is probably too late to get the benefits of the tax losses if he did not take them... you only get 3 years to amend a return...

If the bulk of the losses were in 2008 you're probably right, but my point was to get as much out of the losses as possible. If it ends up that is zero, then it is what it is.

 

[pb4uski]

Perhaps mean and women may see this differently. ....

Freudian slip?

 

[Meadbh]

No, spellcheck! Fixed now.

 

[Sassy]

I saw tax returns and they had minimum losses (around $3,000). He says there's a certain amount you can deduct each year that we have a huge tax loss to carry forward. I had the tax accountant do taxes for 4 of those years because we were overseas, but he did them this year. And now that brings up another realization--that's another thing I need to take control over and remove from him. F&&ck anyway. Sorry.

And, yes, I am in shock, which explains why I'm so calm. I'll probably blow up in a couple of days when the magnitude of this hits home. I assume this is a bit like grieving a death and there are 5 or so stages to go through.

I don't have an answer for the marriage because mentally I'm just not ready to think about it. My first priority is my kids and getting on my feet so I'm independent. Can we stay married? Perhaps, I'm sure others have gone through worse and survived. Will we? I really don't know. I can't imagine breaking up the family, but I can't live like this either. I realize the ball is entirely in my court. He's said he'll do whatever I want, including granting a divorce and alimony or stay together for the sake of the kids w/o the "marriage" bit or marriage counseling. I don't know. I'm just not at any stage to discuss it yet and would rather plug the holes in the ship before I look at +/- of selling it off or keeping it.

All I know is that a lot of tears have been shed tonight from both of us and we will probably have more days like this. He has been willing to answer my questions--it's a matter of whether or not I believe him and is this over yet?? Or will I be blindsided with something else I have that feeling where I don't know if I'm going to get hit with a bat again or if it's over.

And we are far from the hugging stage, pb4uski, and I'm not thanking him for his courage. I feel that I've been pretty fair and civilized so far--though that may change as this sinks in more--I haven't verbally beaten him up but I have made my feelings/fears/concerns clear. And there has been a lot of why? how could you let it go this far? etc? etc? He is doing a good job beating himself up. He told me one of the things he considered to get out of it was buying a big insurance policy and killing himself. I don't know how much thought he gave to that or if it was a go-easy-on-me ploy. I told him 1. that wouldn't work because insurance companies have timeframes from issuance to death and it would invalidate it and 2. Don't even think about leaving me with more emotional $hit and baggage for two young kids to carry their entire lives. Maybe my response comes off harsh, but that's where I was at the moment. I think he is over that hurdle and has realized he wants to be here to see the kids grow up.

My god, how a day changes a life. Wish these were somebody else's shoes I was wearing.

 

[jollystomper]

Sassy, I'm so sorry... I had feared this would be the case.

All I can suggest is to not make any hasty moves at the moment in terms of the marriage relationship. Yes, you are in shock - which is the very reason you should not be thinking about major changes now.

This is one of those "give me the courage to change things I can" moments. I think the first thing, as you are doing and has been suggested, is to get a complete and true picture of your finances. Then once that is in place, determine, based on where you hope to end up financially, what needs to be done to try to get back on track. Perhaps it means something like your husband working a 2nd job to try to make up as much as possible.

One thing you should not waiver on - you need to be in control of the money. He seems very willing to do that now. But - as a warning - 3, six, nine months, a year down the road, when hopefully things are more stable, he might start making sounds again about managing some of the money... that is the time when you really need to stay strong and keep saying no.

 

[Katsmeow]

Sassy

I'm very sorry to hear about your situation. I do think that taking the steps to take control of the finances is the right thing to do.

I realize it is early days, but I would think that marriage counseling and/or individual counseling might be in order.

With regard to finding work I wouldn't necessarily assume that your English degree is worthless. My son is an English major and his plan is to go into technical writing. There are job opportunities available in business/technical writing that can pay decently. Also, remember that for some jobs they just want someone with a degree and it really doesn't matter that much what the degree is in.

 

[UserRequested]

Sassy and Members
I would seriously refrain from providing any personal relationship advice to someone who is going through such a painful experience. Firstly, I doubt if anyone on this site is qualified. Secondly, any advice provided is superficial as no one here understands the depth and complexity of the issues Sassy is dealing with. Thirdly, there are a lot of people on any Internet site who are not well intentioned. Everyone here is a stranger to you. Do not take any advice provided here without a pinch of salt.Lastly Sassy, take time to figure out what you want and need and seek counsel from professionals and people you know and trust.
All the best.

 

[Gasdoc]

Sassy and Members
I would seriously refrain from providing any personal relationship advice to someone who is going through such a painful experience. Firstly, I doubt if anyone on this site is qualified. Secondly, any advice provided is superficial as no one here understands the depth and complexity of the issues Sassy is dealing with. Thirdly, there are a lot of people on any Internet site who are not well intentioned. Everyone here is a stranger to you. Do not take any advice provided here without a pinch of salt.Lastly Sassy, take time to figure out what you want and need and seek counsel from professionals and people you know and trust.
All the best.

THIS is great advice. Everyone on this board wants to help out and provide support, but relationship advice from us probably isn't warranted. I will say, all of the financial stuff you have been offered is excellent. We truly do hope everything works out for you. Good luck.

 

[pb4uski]

Sassy and Members
I would seriously refrain from providing any personal relationship advice to someone who is going through such a painful experience. Firstly, I doubt if anyone on this site is qualified. Secondly, any advice provided is superficial as no one here understands the depth and complexity of the issues Sassy is dealing with. Thirdly, there are a lot of people on any Internet site who are not well intentioned. Everyone here is a stranger to you. Do not take any advice provided here without a pinch of salt.Lastly Sassy, take time to figure out what you want and need and seek counsel from professionals and people you know and trust.
All the best.

WADR jags, your post is a perceptive glimpse of the obvious. Sassy seems to be a pretty sharp cookie and would intuitively know all of that. Besides, all of what you say could be applied to equally to financial and investment advice unless all of us are qualified finance and investment pros. What we are doing is no different from what a friend might do for a friend going through a personal crisis.

From my experience on this site I haven't seen any inkling of the "not well intentioned" thing and if it did occur, I think other participants would jump on a poorly intentioned post real quick. Not many wallflowers around here.