For the longest time, my biggest obstacle to financial success was simply discussing matters with my wife. Money was the most uncomfortable subject between the two of us - every time we discussed it, even with the best intentions, one of us wound up very upset. So, for years it was a complete taboo topic outside of the functional “Did you pay the electric bill?” type question. When we finally sat down and had a real financial heart-to-heart, it was relevatory. We realized that we were on the same page on a lot of things, and that in our own separate ways we were making many of the same mistakes.

Here are ten tips for getting the discussion started - and making sure that it doesn’t devolve into an emotional battle.

1. Start off talking about goals. Ask your spouse when he/she wants to retire and what he/she wants to do after retirement. Ask what his/her dreams are - where would they like to be in five years, or ten years. The point is to think positively about money by asking where it can get you.

2. Admit your own mistakes. If you’re having this discussion, it’s likely you’re not blameless. Start off by admitting your own mistakes. Before the discussion, evaluate your own spending and figure out where you spend too much. For me, I admitted to spending too much on books and on eating out, both of which were seriously draining our finances.

3. Look your spouse right in the eye, and hold their hand. No matter how big your spouse’s mistakes are, never, ever give any sign that you are anything other than compassionate and loving. For me, this meant that as my wife was summoning the courage to express her fears, her spending problems, and her doubts, I sat next to her, looked right at her, listened attentively, and placed my hand on top of hers. It was a simple gesture, but it reminded her of the love that we share.

4. Be goal-oriented. You’re having this talk to achieve some sort of goal. Maybe you’re realizing that credit card bills are getting too high, or maybe you’re starting to think about having children - or about life after the kids leave the nest. Let your partner know what the goal of the conversation is, but don’t frame it around “you need to change your behavior.” Be very specific about what you want to accomplish: “I would like to get these credit cards paid off” or “We’re about to finish paying off the house and I’d like to think about an upgrade.”

5. Look at numbers - but don’t judge. When I did this, I let my wife see all of my statements first and gave her a pen to mark off anything she found questionable. She was so blown away by the openness that she almost automatically did the same thing once we evaluated my spending, and without a peep. If I had started off by demanding her statements, it would have turned into a giant war.

6. Be fair. If/when your spouse admits to overspending, don’t blow up at them. We live in a consumerist society that is designed to push our buttons and trick us into spending. Even worse, it’s a pattern that’s very difficult to break - it’s a very socially acceptable addiction. Instead of exploding, ask them what they think of the spending: is it reasonable? Is it more important to them than paying off a credit card? Do not blow up if your spouse gives an answer that you don’t like.

7. Create goals that you both agree on. Each of you should make a list of the goals you’d like to reach, both in the short term and in the long term. Then, find the ones that mesh together and agree to work towards them. For example, my wife and I are both interested in being debt free as soon as possible, buying a home in the near future, and retiring early, so we’ve made that one of our primary goals, and we now think of our spending in terms of these goals.

8. Create plans to reach those goals. For each of your common goals, spend some time figuring out how you can get there. Do you need to cut down on the Starbucks visits? Does your spouse need to spend less cash on authentic baseball jerseys (hey, I’ve seen a couple where the husband was budgeting almost $10K on baseball-related apparel a year)? Each of you needs to be willing to make some sort of sacrifice to reach the goal, and if you’re initiating this, you should be the first one to offer up something.

9. Agree to talk about it regularly. I am a big fan of a monthly family meeting about money issues. This should include the children as early as possible. This way, all parties can stay on the ball and everyone can have a say in any planning decisions.

10. Do something romantic afterwards. After our first talk, I made dinner for the three of us while my wife picked up our son from daycare. After supper and some playtime, our child went to bed, and we spent a romantic evening together, secure in the new bonds we had just built.

Recently, the subject of cash gifts came up between my wife and I. Her grandparents both give us moderately sized cash gifts each year (between $50 and $1000, to give a range) as a Christmas gift. In years past, we have almost immediately spent these gifts on some sort of material item, often contributing some of our own money to buy something expensive.

This year, I wanted to do something different with it. I suggested to my wife that we save or invest that money instead of just buying something silly with it. Her argument in response was that it is given as a gift for enjoyment, so we should enjoy it.

Her argument does have a degree of validity with it. When we receive the gift, it is usually with the stipulation that we “do something fun” with it because we “work so hard.” My argument is that we should indeed do something fun with it - but we should save their gifts for something really special, like a trip to DisneyWorld when our son is nine or ten years old. My thought is that if we tell them that we have a long term goal like this and we’re investing the money until then so that we maximize what we have when we go on the trip, they’ll be thrilled. Of course, investing the money now means that her grandparents might not survive to see us really appreciate their gift.

I guess the question is what is the most appropriate way to handle small cash gifts? My feeling is that once the gift is given, it’s up to you to determine what to do with it, and investing it doesn’t necessarily mean that you won’t end up doing something enjoyable with it.

On the other hand, I visualize the reaction of my wife’s grandparents when they receive our thank you note and we tell them that we took their money and bought a five year treasury note.

I suspect that we’ll go back and forth on this until Christmas.

Yesterday, I talked about the period in my life where my wife and I spent money like it was going out of style in order to obtain a “yuppie” lifestyle. Then, that magic moment happened: we took a home pregnancy test and discovered that a little one was on the way. I can remember that night like it was yesterday: we sat there excitedly holding each other’s hands and talking a hundred miles an hour about this child, our child, and what it all meant. I didn’t know it then, but this was to be the event that was the straw that broke the proverbial camel’s back.

The first mistake we made was insisting on only the “best” (read, most expensive) things for our child. We bought a ridiculously expensive crib, multiple layettes, multiple carseats, and so on and so forth. Perhaps the pinnacle of the overspending is when I had a slightly smaller duplicate of my own dresser made for him. We had this vision of a perfect little nursery in our heads and we were going to have it at any cost.

The little things added up as well. We bought him lots of toys, only to find out that free toys are often much more entertaining. We bought piles of wipes and diapers and such without understanding that we were spending our baby budget in nonsensical ways.

Now that we had all this stuff, we found out we were sorely unprepared for the day-in day-out costs of having a baby. Diapers, formula, wipes, clothes that he seems to outgrow every day; it’s a continuous cost that you’ve basically committed yourself to for, oh, the next eighteen years or so. We were completely unprepared for this new financial reality and we soon found that we didn’t have nearly as much money as before.

The lifestyle changes that the baby brought also brought a second wave of changes on us, and accounted for a second mistake: we spent money instead of coping with our lifestyle changes. For instance, we started eating take-out most every night simply because we were spending so much time with the baby and his night-time feedings were making us both worn out. We also travelled quite a lot when he was about three months old simply to show him off to others instead of inviting his many well-wishers to come and visit us, which would have been cheaper and more convenient but was alien to our lifestyle of showing off.

The real problem was that we were unable to separate what our child actually needed from what we wanted. We deluded ourselves into believing that buying all of this stuff for him was actually going to benefit him. The reality of the matter is that it doesn’t matter if it is a $50 crib or a $1000 crib, he’s still going to stand up in it and chew on the railing and he’s still not going to remember it when he’s four years old. The only difference that it makes is to us, so that we could feel some sort of parental glow when we saw it, but the child in the crib ended up counting for more than the crib ever did.

If you haven’t put the pieces together yet, things were just about to collapse. Bills were piling up left and right and it would only take a few things for the whole house of cards to collapse. Let’s just say you should tune in tomorrow for part eight in this series. It’s titled “Meltdown.”

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned

Yesterday, we learned about my immature behavior in handling a large steady income. I was starting to sink further into debt without really acquiring any assets, and I was building up a lifestyle based around extremely poor spending decisions. Yet, I was about to embark on a path that would make matters much worse.

I was about to fall in love.

I wound up falling in love with an acquaintance from my high school days. We were in different social circles then, but we kept bumping into each other and finding that we had a significant overlap in terms of interests, personality, and mutual friends. Soon, we were dating and before long, wedding bells were about to ring. And I was about to jump off of a financial cliff.

I erred right off the bat by presenting a grossly inaccurate picture of my personal finances. I gave off the impression that I was making significantly more a year than I was. Although my wife was not a gold-digger in any fashion, my treatment of her in the early days of our courtship set the bar pretty high, and through my own egotism, I refused to lower that bar even though it was killing me to maintain it.

The second mistake I made was that I set the engagement and wedding expectations way too high. Rather than sitting down with my bride-to-be and talking about some realistic expectations, I not only allowed but encouraged those dreams to take root and grow. The end result is that there was too much spending on the engagement, the wedding preparation, and the wedding itself.

Before you start thinking to yourself, “Wow… what a sucker!”, I want to point out that these mistakes were entirely my own doing. My bride-to-be often encouraged me to spend less than I was spending on many things, but I was too caught up in my own spending glut to realize it.

The big, big mistake came after the wedding, however: I vastly overspent, beyond any reason, on our honeymoon. We flew to London first class, stayed in a suite overlooking Hyde Park for a week, ate like kings and queens, attended lots of shows, and basically drowned ourselves in excess. Then we repeated that week in Edinburgh. I had a credit card with a huge limit on it and just put everything, no matter what, on that. I didn’t even try to keep a running total or even look at prices at all beyond a perfunctory glance.

Needless to say, when we returned home and I saw the bill, I nearly choked. I resolved to get this paid off as soon as possible, but now we were a young married professional couple. Did I turn our finances around, or did I continue down the path of destruction? Tune in Monday to find out.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned