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I Have a Secret Credit Card. How Do I Tell My Wife About It?

In this edition of "Bank of Dad", our columnist answers questions about financial infidelity and how to make a surprise $2,000 stretch the furthest.

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Okay, so, my wife and I are pretty open about our finances. We have shared accounts and meet every other week to talk about how things look. But I do have a credit card that I keep for myself. I don’t use it much. It’s for emergencies. But I accidentally threw it down on a recent work trip after I drunkenly agreed to and lost a round of credit card roulette to see who paid for an expensive dinner. Thing is, I’ve told my wife that I don’t have any other accounts or cards. I know. Now I know I screwed up and have to come clean. But how do I handle this? — Charles, Lake George, New York

It’s amazing what a few cocktails will do to our better judgment, isn’t it? Obviously, this is quite a hole to find yourself in. Hiding debts or accounts from a partner is a very serious breach of trust; but addressing the matter in a frank, contrite way should make it easier for her to forgive, eventually.

Good timing will certainly improve your odds of success. Lindsey Hoskins, a couples and family therapist in Sterling, Virginia, suggests talking to your partner when she’s in a nice, relaxed mood. “Discussing difficult topics while other stressors are present can amplify the negative reaction,” she says.

The hard part, of course, is figuring out what to actually say that won’t get a wine glass thrown your way. For Hoskins, it’s about showing that you grasp the gravity of your actions. Tell your partner that you know you’ve made a mistake and that your actions violate the shared expectations of honesty and transparency in your relationship.

“Bank of Dad” is a weekly column which seeks to answer questions about how to manage money when you have a family. Want to ask about college savings accounts, reverse mortgages, or student loan debt? Submit a question to Bankofdad@fatherly.com. Want advice on what stocks are safe bets? We recommend subscribing to The Motley Fool or talking to a broker. If you get any great ideas, speak up. We’d love to know.

Also let her know how you’re going to act differently in the future to avoid causing the same pain a second time, when it would be even harder to regain her trust. Yep, the days of having a secret credit card in your nightstand are over.

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Give her some time with this one. Things may – and, honestly, probably will – get pretty chilly in your house for a while as she sorts through her emotions. “Let her know that you’re ready and willing to discuss it further if and when she’d like to do so,” adds Hoskins.

You’re rightly focused on getting your relationship back on track, but take care of yourself, too. You’re probably going through some strong feelings of guilt over this one. The best thing you can do is remember that everybody makes mistakes in their marriage. What matters in the long run is that you learn from them. 

I just came into a couple thousand bucks. Yeah, I’d love to throw it all on a new smoker — who wouldn’t? But what’s the smartest way to use that money? Paying down credit card debt? Making an extra mortgage payment? Putting it in an emergency fund/savings? Any sort of hierarchy there? — Jason S., Duram, North Carolina

Let’s start with the easy part. Sending in an extra mortgage payment is a luxury compared to the other two. If you’re carrying a credit card balance and don’t have a “just in case” fund, those are much bigger priorities. The question becomes which of the latter you attack first.

While hacking away at your card balance is a great goal, having an emergency fund that’ll cover three-to-six months’ worth of expenses is even more basic. If you suddenly lose your job or get hit with an outrageous medical bill, what you don’t want to worry about is losing the roof over your head.

It might seem like it makes more sense to pay down your high-interest rate card balance and use your plastic as an alternative “emergency fund” instead. But there are a couple problems with that approach. For one, you may not be able to make mortgage payments that way – it only works if your credit card network (Visa and Mastercard), card issuer and mortgage lender allow it.

Plus, your card issuer can lower your available balance at any time, and in fact might be likely to do so if the economy spins into a recession or your payment history is spotty. Believe it or not, they can even slash your limit if you haven’t used the card enough. Unfortunately, there’s not much you can do about it.

When you build up an emergency fund, you’re in full control. I recommend setting up a separate account, so you’re not tempted to dip into it for that killer grill you have your eye on. With online banks like Ally offering annual interest rates of more than 2 percent a year, you’re getting returns that are almost on par with a CD while retaining the ability to pull out your money at any time without penalty.

So, by all means, use that money as a safety net for a worst-case scenario. You’ll sleep a lot better at night, though I can’t promise your brisket will taste any better.