‘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

Debt can spell doom in some relationships. In fact, 54% of Americans believe a partner with debt is grounds for divorce. But what about outright financial infidelity?

During a recent episode of Caleb Hammer’s YouTube series, Financial Audit, 23-year-old Christian from Willis, Texas, revealed he manages his family’s finances — although he hasn’t exactly kept his 22-year-old wife, Natalie, in the loop.

Don’t miss

• These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how

• Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger

• Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)

Natalie, a stay-at-home mom of two toddlers, was shocked when Christian revealed some of his hidden borrowing and spending habits. Hammer, meanwhile, was equally surprised at the couple’s untamed monthly budget — “You did not have to go crazy,” he told them.

Money secrets and mismanaged finances can quickly erode the strength of an otherwise healthy relationship. Here’s what Hammer suggested.

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.

Read more: Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says

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.”

What to read next

• 'It's not taxed at all': Warren Buffett shares the 'best investment' you can make when battling rising costs — take advantage today

• Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how

• Millions of Americans are in massive debt in the face of rising costs. Here's how to get your head above water ASAP

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.