A 5-Step Plan to Come Clean About Your 'Inner' Bernie Madoff

NEW YORK ( AdviceIQ) -- If you've ever told lies about money to someone, you're not alone. According to a survey by the American Institute of Certified Public Accountants, one in three Americans has lied about money to their spouse or live-in partner. (That probably explains why half of all marriages end up in divorce.)

Besides the financial problem that deceitful spending creates, the abuse of trust can be extremely difficult to recover from -- unless you use the following five steps:

1. Don't Spill The Beans - Yet

Unless your spouse has already discovered your secrets, don't come clean just yet. It might feel great to unload right now. But unless you can present a clean-up plan along with your "mea culpa," the likelihood is that you are just going to make things worse. Don't worry -- you're going to make a confession -- but you need to prepare first.

2. Investigate

Your spouse is going to want to know the exact nature of the problem.You need to be prepared with all the credit card statements, ATM withdrawal slips and bank statements. Highlight all the charges that were made behind his or her back.

Often, out-of-control spending dings your credit rating. You need to be able to show your spouse what, if anything, has changed in that regard. Fortunately, you can get your credit score easily. Get your report and understand what it means. Then be prepared to share what you've learned with your spouse.

3. Plan
I know that you're dying to get rid of that 10,000-pound rock that's on your shoulders by talking with your spouse. But we're just not there yet. Now that you realize the extent of the damage, you need to devise a plan to fix it. If you are still spending more than you should, which expenses are you going to cut now?

If you want to get out of this hole, the first order of business is to stop digging deeper. If you are in debt as a result of your indiscretions, how are you going to pay that expensive credit card off, or at least refinance the debt to a lower rate? Are you going to get a second job? Will you liquidate savings? What exactly is your plan?

You may not like hearing this, but even if you aren't in debt, if you 've spent money that belonged (at least partially) to your spouse, you must repay that money. That being the case, you still need to create a plan on how you're going to do so.

4. Action

Put your plan into action, unless by doing so right now would be a further deception or hurtful. Let me give you an example.

Let's say you decide to get a second job to put the money you spent back in the communal kitty. If you plan on doing so without telling your family and sneaking around, that's just another lie. And you don't want to do that.

In this case, you don't want to start the job yet, but you can still take action. There is nothing stopping you from inquiring about part-time work and lining things up. Do that now as one of your action steps. You'll start working once you've come clean. And that's only a few days away.

Again, take as much action as possible, as long as it doesn't hurt anyone else.

5. The Talk

Once you have done the groundwork of learning the exact nature of the problem and worked out a solution, you are ready to be honest with your spouse. Tell him or her exactly what you did and the extent of the problem. Don't try to minimize the damage or the pain he or she might be feeling. In fact, it's very important to empathize. Imagine how your spouse is feeling during your conversation, and tell him or her what you think he or she is going through.

But don't stop there. Tell her your plan to correct the problem and what you've done already. On top of that, make sure she gets duplicate statements for your credit cards and bank accounts from here on. Whatever you do, put safeguards in place so she knows this kind of problem could never come up again without her knowing about it.

Being less than honest with your spouse isn't great for your relationship, but it doesn't have to be the kiss of death. Work these steps and be completely honest while doing so. Try very hard to put yourself in your spouse's shoes and talk about the feelings. Above all, make sure you install mechanisms that will prevent something like this from ever happening again.

If you take these steps, I can't guarantee what the outcome will be. It may take a long time for your spouse to forgive you, if ever. But doing these things is important even if he or she never forgives you. Why? Because it is the only way you can begin to forgive yourself.

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--By Neal Frankle, CFP, founder of Wealth Resources Group in Agoura Hill, Calif., for AdviceIQ

Follow Frankle's blog at Wealth Pilgrim

AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.

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