Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
My husband and I recently started the housebuying process with a gorgeous home in a perfect area. Despite the hot housing market, the house had been on the market for about a month. We were absolutely over the moon—we qualified for down payment assistance, and the sellers would help with closing costs per our contract. We put down $2,000 in earnest money, which was everything we had saved up. This was the only way we could afford a house, and we felt so lucky.
But quickly after the sellers accepted our offer, they started acting squirrelly. Evidence suggested they were still showing the house after accepting our offer (our contract didn’t have a kick-out); they asked to amend later so they could accept “backup” offers (we didn’t accept); they demanded that they not be required to turn over the keys during closing until they received everything from our loan distributor; and there were other actions insinuating we would somehow breach.
Things got really bad after the inspection. The house needs a new roof, there’s a gas leak, the dryer vent and old wiring is a fire hazard, the foundation is starting to crack. The inspection cost about $2,000, but with the sellers covering closing costs, we thought we would be OK. The sellers asked for an extra two weeks so they could talk to contractors, and we were happy to oblige. But after the full two-week period, they decided to just terminate the contract rather than make any offer of repairs or a discount at all.
I don’t think they ever wanted to sell to us, honestly. And our realtor thinks they did this so that they could put the house back on the market without having to tell other potential buyers of these serious problems. She doesn’t trust the sellers’ agent to be honest in the disclosures, but there’s no proof they weren’t honest with us. Now, we have to pay for the inspection because there is no closing, and our savings that let us potentially buy a house in the first place are wiped out.
I feel like I’ve been scammed and had my dream of homeownership stolen from me. I’m heartbroken, and furious that these sellers would waste our time and our money and treat us so disrespectfully in the process. Is there anything at all that I can do, either to recover what we’ve lost or to make this inspection public so that other buyers aren’t scammed the same way we were?
—How Can People Be So Cruel?
The housing market is very competitive right now, as I know you know, and I could definitely see how you would feel misled. A dream you thought was in reach is now gone. But you might just have to chalk this up as a lesson learned in a shady (and expensive!) matter.
Contrary to what HGTV portrays, deals fall through ALL the time, taking the money spent for inspections with them. “While inspections are pricey, I have only been asked for a refund once, which I declined,” shares Tom, the real estate guru behind the Frugal Gay. Tom, who owns over 18 homes across the states of Texas and Ohio, says: “A $2,000 inspection sounds a bit ridiculous. The most I have spent was $1,600 for a four-unit building. But think, this expensive inspection could have saved you tens of thousands of dollars in fixing up a money pit of a house.”
Tom has a very good point. Houses are expensive—especially houses with problematic foundations. If spending $2,000 wiped you out, then you are probably not ready to own a home, and especially not this one. Assistance programs only cover so much, and rarely do they cover anything maintenance-wise. Anything can go wrong at any time, so besides having a down payment saved up, you’ll still need an emergency fund to help weather the storms called homeownership.
I’m so sorry this happened to you, and I hope that in a few years—with luck and work, from the comfort of the much better home you’ll own in the future!—you’ll be able to see the silver lining to the situation.
Dear Pay Dirt,
I am a 23-year-old woman who just hit 1.5 years at her first job out of college (woo!). I grew up lower-middle-class in a rural part of the country; my family was on free or reduced (usually free) lunch for all but two years of my childhood. Now I earn about $75K per year, which just feels like SO much money to me. And honestly, I don’t know what to do with it.
Since starting my job I’ve saved about $12K for my pile of student loans and another $11K or so in my personal savings. My loans are still in deferment, so I have the money in a regular savings account with my personal savings. I have a retirement account through work, but besides that I haven’t invested any money.
My mom took on quite a bit of debt way back when my parents got divorced and it was a struggle for her to pay it back. So I tend to be pretty risk-averse when it comes to money—I didn’t even get my first credit card until this year because I was so nervous about taking on avoidable debt. I don’t have a car payment or anything, either. Just my student loans and rent.
It feels almost like a waste to have over 10 grand squirreled away in a normal low-interest savings account, but I’m also so, so skeptical of day trading and crypto trading apps, which seem like the go-to option for people my age who want to invest. I just don’t have the mental energy to keep up with stock prices and make smart investments. It’d end up being like glorified astrology. I do want to buy a house someday and I’ll be applying to (fully funded) Ph.D. programs starting next year.
All this to say: Do I just leave my savings in a normal account? Should I even keep saving now that I have $11K tucked away, or should I use the extra grand a month to enjoy life outside of school? I’m proud of myself for saving as much as I have, but I want to use my money wisely too.
—It’s Just Gathering Dust
Dear Gathering Dust,
Before I share anything else, I want to say one thing. Your mom’s money story is not yours. It’s hard to decipher the difference when we unconsciously take on a money script, but just because your mom had issues with debt does not mean you have to.
Salaries for grad students in fully funded doctorate programs average $30,000 per year, so while you wouldn’t be destitute if you get into one and decide to attend, any extra cash you have saved would come in handy when you need more flexibility with your budget. Consider what Brenda Olmos shares in regard to your unique money situation.
Olmos, who is currently a practicing nurse practitioner pursuing a Ph.D. in nursing, as well as co-host of the Minority Millennial Money podcast, wants you to remember that crypto and day trading are not the only options you have when investing before pursuing a doctorate program. At 23, it would be a major advantage to put your $12,000 into market index funds like VOO, VTSAX, or VTI. You have time on your side, so investing in index funds now can be extremely lucrative later.
She also suggests that you be very sure of the exact reason you’re pursuing your Ph.D.: “Look into what kind of jobs people with that Ph.D. have and how much they make. It’s definitely easier when it’s fully funded, because you don’t have to work, but it’s a long haul, and most professor jobs are only going to pay slightly more than $75K she already makes.” And these jobs are highly competitive to land, so make sure you’re pursuing one that will allow for adequate job growth internal to the institution.
Dear Pay Dirt,
When I was a child, my grandmother opened a savings account in my name and hers so I could be a member of her bank (which is not open to the public—it’s only for military members or their beneficiaries). She has been depositing small sums of money into this account for years. About five years ago I got married (no prenup). We are both members of the same bank and have joint finances, but this savings account is still held in mine and my grandmother’s name and he has no access to it.
Fast forward to about a year ago and I got a raise at work (which I told my husband about). I also requested a change to my payroll disbursement so $200 a month is now direct-deposited into my private savings. I did not tell my husband about this. He has some lingering childhood/young adult trauma that has left him with the belief that women are cheaters and they use men and then leave. He knows this account exists but would view me putting money into it as an escape fund, and it would destabilize the marriage.
I am aware that therapy would be beneficial, and it is something I’m trying to convince him to do. My primary goal of putting this money aside was to have a small nest egg in case I wanted to buy him a gift without it appearing in the normal account or if I wanted to do something with the money he wouldn’t agree with (i.e., help out a family member). But I am also a realist and recognize that having a small emergency fund may come in handy in the event things were to ever go south in my marriage.
My question is, this savings account is in my name and my grandmother’s (although I believe within the next five years it will be my name only, since she is very old and is doing poorly) and it is a portion of my paycheck only that is being funneled in. If we were to get divorced, would this be considered joint funds? Is there a way for me to have an emergency fund in the event of a divorce that is mine and mine alone?
—I Just Feel Better With It There
Dear Better With It There,
When married, your assets are commonly referred to as marital or nonmarital. The tricky thing is whether you live in a community property state.
Marital assets are anything you’ve acquired while married. This can include bonuses, salary, and inheritance if it’s received after marriage. The checking account you opened prior to marriage with your grandmother is considered a nonmarital asset for now, but can change depending on how you are funding the account (in your case, salary earned while married) and if you are paying for any joint expenses with the money.
You can open a checking account in your name, and your name only, which can give you quick access to any funds you may need in case of an emergency. But just because the funds are in your name now doesn’t mean he can’t come after you later. Your best recourse is to consult with a licensed financial planner in your state to find out what you can do now to protect yourself later on.
You’ve mentioned going to therapy with your husband, which is totally needed, but I’m going to suggest you go to therapy by yourself as well. This situation with your husband sounds like it’s on its way to becoming financial abuse. You are scared to have your own account and are hiding it from him. This is a huge red flag. I wish you the best of luck finding these answers while keeping yourself safe. If you need more information, the National Domestic Violence Hotline can help direct you to the closest services.
Dear Pay Dirt,
I’m in my late 30s and have a retirement question. I spent 10 years in local government but in two different counties so have two (small) pensions. I recently started working for the federal government—yet another pension. I’m putting the match amount into this account each paycheck. Finally, I have a small Roth IRA that I occasionally put money into.
I feel like I have lots of accounts with small amounts of money. Should I just leave all these accounts alone? Or should I try to roll them over into one account?
—Lots of Little Nest Eggs
Dear Lots of Little Nest Eggs,
Different retirement accounts offer different benefits and options. While you can usually withdraw from your IRA without a major hit, you can’t with a 401(k). You can contribute pretax to one but not the other. In this case, I’d see if you can roll over your state 401(k)s into an investment account, and then keep your federal pension and IRA separate. This way you can actively invest your way to one bigger nest egg, while still keeping two aside. At your age, this seems like the best plan.
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My husband and I are expecting our first child. We’re both in graduate school and have a pretty tight income right now. We qualify for a child care subsidy that would put day care within the realm of possibility. My husband is open to this but has offered up an alternative: We each take three days a week “on” and three “off.” When we’re “on,” we’re responsible for being the primary caregiver for the bulk of the day, and when we’re “off” we can go onto campus, get work done, but would split responsibilities in the morning and evening. (We’d share the seventh day.) I feel heartless, but I’m pretty insistent about day care. I need to write my doctoral dissertation, and I’m worried that won’t happen if I’m caring for an infant.