Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
We were fortunate enough to sell our California house for literally $1.5 million more than we paid for it, and buy a place in another state outright, with about $700,000 left after taxes. I realized I was not saving enough for retirement living in an extremely expensive place and am relieved to finally feel I have a solid financial cushion.
The problem is, my partner has very grand visions for our new home—building a pool, a gym, extending the house to make a giant master bathroom, etc.—while I’m more practical and want to update the 1950s bathrooms and kitchen, install central AC, and save the rest. I also don’t want to spend all our money.
I feel, though, that I owe him somewhat because he packed up and moved away from family to live here. That said, he was laid off when he turned 62 and hasn’t worked since. He’s always had NO concept of money and, when we met, was spending about $2K a month more than he made. I’ve handled the money since and we’re doing well and living within a budget. My plan is to retire in four years (I’m 58).
My initial thought was to squirrel the money away into a retirement account he’s only vaguely aware of (I told him about it, but he’s shown no interest in managing it). He keeps saying “We’re millionaires now” but when I try to explain that we currently spend that amount of money every 10 years, and we’re going to live for another 20-30, it seems to go over his head. I want to keep him happy, but at the same time don’t want to have to work until I die to do it.
What’s the best way to approach what will likely be a very uncomfortable conversation? Should I pretend to “cave” and say “you can spend $100K on whatever upgrades you want but that’s all we can afford”?
—We Are Not Elon Musk
Dear Not Elon Musk,
Great job on making over $700,000 by selling your old home and purchasing a new one. I could easily see how your partner would be mentally swimming around in money piles, a la Scrooge McDuck. I certainly would be too!
You technically don’t owe him anything. He chose to move there to live with you. Yes, he probably wouldn’t have left where he was living, but at the end of the day, we always have a choice with our actions. You’ve also been very supportive of what it sounds like is his choice to not go back to work after being laid off at age 62. But one thing keeps replaying in my head: It’s still not great to lie to him about this money.
If a relationship is built on strong trust and understanding, and you’re not suffering abuse or planning to leave, it’s not a good idea to hide money. Especially a significant amount, like this would be. I encourage you to be honest with yourself, and him, and explain why the money is not to be used for his grand plans, but instead for retirement. You could for sure put forth a budget for renovations, like your $100K idea, and emphasize the interesting things you could do with that. Maybe make sure he gets to see at least one of his ideas for the house executed, if not all of them, and not the most expensive ones. If he argues, encourage him to get another job to start helping out with additional upgrades. Good luck.
Dear Pay Dirt,
I am in my early 30s and have a huge amount of credit card debt (think $30,000), accumulated due to bad decisions with my first-ever credit card and a fraught relationship with money learned from my mother’s shopping addiction and my father’s refusal to talk about money. I just managed to pay off one of my cards (yay!) but even with extensive planning it’s clear that I will not be able to pay the total off for at least three years—more likely four.
I make $57,000 a year, but most of my discretionary income goes to paying this down or to veterinary care for my elderly pets. I don’t own my car or my housing and have no real assets; I also am not able to contribute to my retirement.
My father has been running a successful business for over 20 years and has started an investment account on my behalf to the tune of $25,000. He does not know about my credit card debt. I can’t get it out of my mind that even taking $5,000 out of the investment account to reduce some of this debt will go a long way towards getting out of my current hole.
I know it’s basically never a good idea to take money out of investments, and since I currently don’t have the ability to contribute to a retirement account, this investment really fills that void. The other idea I’ve had is to consolidate with a personal loan, but I really feel lost when I think of exploring that option—how to I find a reputable lender, will they give me enough to help my debt, etc. I have good but not great credit, for what it’s worth.
What do you think are my best options?
–He’d Never Have To Know
Dear He’d Never Have To Know,
If you wanted to cash it all in, I’d be like “That’s too shady,” but I think a $5,000 withdrawal is a drop in the bucket in your investment account, compared to the rest of the debt you have going on.
I would take out the $5,000 (no more!) and then use the debt snowball method to start making some headway on these loans. Line up all your credit cards from smallest to largest in size. Then, after making sure your monthly payments are all caught up, put the $5,000 towards the debt with the smallest amount. Now that you have cleared up what might even be one or two credit cards, their former monthly payment will be freed up. Place that amount towards the credit card with the next largest amount owed.
By using the debt snowball method, you’ll pick up some steam that will keep you motivated and help you see the light at the end of the tunnel. I want you to also consider looking into any additional ways you could be making extra money to help speed the process along. You shared you have cats, so maybe you could cat-sit or dog-walk for a while, through a service like Wag or Rover.
Dear Pay Dirt,
I’m a mid-20-something engaged to someone with a severe chronic illness and have acted as his primary caregiver since he was diagnosed two years ago (we’ve been together almost 9 years). He’s the love of my life, doing well on medication the last few years, and we’re committed to making it work, but the financial situation is killing us.
He gets a very small deposit every month via Social Security disability insurance (SSDI), but it’s not even enough to cover close to half of rent. We live in one of the lowest-income areas of the state and it’s still a struggle. I work 60-80 hours a week, and make $25 an hour, but the place I work for has a habit of promising us hours we’ll never see. I dog walk, babysit, do basically whatever I have to on the side to make sure we can cover our bills and still try and put some money away for savings, all on top of trying to complete my residency hours for school and licensure. I owe close to $8,000 on a car and owe my parents close to $70,000 for my master’s degree student loans (they didn’t charge me any interest and took money out of their retirement to try and help us). I want to be able to pay them back, and be able to be around more to get my fiancé to and from doctors’ appointments, and so on.
What are my options here? He’s still far too chronically ill to work, and struggles to get out of bed most days. I’ve tried to get support from his doctors to help me figure out how to work with Medicare as a caregiver, and they’re no help and I can’t seem to figure it out on my own. Social Security had told us if we gave them proof he was using the money to pay bills they’d increase the amount of his SSDI. We did, but they’ve ignored all attempts at contact since we followed up when they didn’t raise the amount as promised. It’s been over a year of trying. We keep delaying getting married because of the lack of financial stability. Any advice would be appreciated at this point.
—We’re Both So Tired
Dear Both So Tired,
Kudos to you for being a caregiver. It’s a hard job and an exhausting one.
You’re not wrong to say that you need help. Your next step should be finding a pro bono attorney or an organization that can help you fight for the benefits he deserves. The Disability Rights Legal Center (DRLC) helps provide free legal assistance to people with disabilities experiencing discrimination in violation of their civil rights. Your fiancée is losing out on aid that has been promised to him, and the DRLC can provide you with the next steps even if they cannot help. You should also be able to type in “pro bono social security + your state” and get more resources and information. I’m cheering for you.
Dear Pay Dirt,
My relatively successful parents are downsizing their beloved house in one of the hottest housing markets in the country. My siblings and I all live within a few miles of our parents and get along well, but not great. We are all just really different.
My folks offered up their house at a discount (probably in the ballpark of $400k) to us in order to keep the house in the family, as none of us could afford it without a discount (I couldn’t with it). My sister took them up on the deal.
Our parents know that this isn’t equal in terms of the bottom line of inheritance, and that there is no easy way to recoup the discount if my sister flips the house in a couple years with a huge profit, but are you aware of any strategies to make this as painless and fair as possible? Or traps to avoid? Keeping in mind that it may be 20 years before my folks both actually pass on and any kind of true-up needs to be made.
Lastly, in the back of mind is the fact that my sister and her husband make two to three times what my brother’s family or my family make.
–Can’t Help Feeling A Way
Dear Can’t Help Feeling A Way,
I think for this situation, your parents are not using the phrase “keeping it in the family” to mean “keeping it in the family” as part of a collective inheritance. If your sister truly purchased the house from them at a discount of $400,000, and they signed the title over, it’s now hers. Any changes she makes that may allow her to flip it for a profit will result in just that: a profit, for her.
The only thing you can do now, besides be mad, is to talk to your parents, as an adult, over lunch or in a neutral place, and ask if they have all their affairs in order, in case they should pass. If they say yes, you can ask questions about how things may be split up, and if they have decided to use a trust or a will. You can also ask them to see who they have chosen to have as their power of attorney.
They may get angry (no one likes talking about death), but unless or until you can get a copy of their will or trust, you can’t fully understand what assets they have, and how to direct the conversation toward the “painless” and “fair” outcome you might be hoping for. If they do get angry, let it go and try to come back to it at another time.
The truth is, they may not think that what they have done with the house is unfair, at all, even if it seems that way to you—and if that’s the case, you may just have to learn to come to terms with it.