Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
When my sister had her son—the only one in my extended family to have a child so far—our grandmother told her she wanted her family to have her home when she died. It’s a modest house in a very nice neighborhood with excellent schools, a walkable downtown, and so on. (My sister and her husband currently rent a house.) We all hoped this would be a faraway offer, but unfortunately, my grandmother fell ill and died this year. She was a wonderful if complicated woman, and we’re mostly focused on our grief. But we barely had her in the ground when estate issues flared up. My mom has several brothers, and years ago my grandmother said she wanted her assets split between my mom and them upon her death.
But this was, apparently, never written down anywhere. My mom controls the whole estate—everything was already in her name. My mom is well aware of my grandmother’s intention to leave my sister’s family her home—she talked very openly about it—but this, too, was not written down. The brothers are torn, and one is very opposed to the idea; he wants his cut from a sale in a hot market. My mom doesn’t know what to do. My sister can’t afford to buy the house right now. She wants this for her family but feels sick at the thought of fighting for it. What is the right way to figure this out, and what are the potential legal considerations for my mom?
—Big Ol’ Mess
Dear Big Ol’ Mess,
I am so sorry for the loss of your grandmother and the issues your family is now facing. I called in Jen Gumbel, a licensed estate attorney, for some extra help figuring out what your options might be.
The first thing Gumbel advises you to do is take a breath. While you may have heard your grandmother’s intent while she was alive and speaking, it wasn’t put on paper, which makes this extremely difficult to prove. When legal documents don’t match the intent a person expressed, you have a legal mess with high emotions. “Assets travel because of writing. If it’s not in a will, it doesn’t happen,” Gumbel said. In order to inherit a specific asset as her granddaughter, it needs to be on paper.
“States have rules on how you give you divide assets in an estate, and it usually has to be written to state standards,” Gumbel added. As every state is different regarding probate, it’s extremely important that your mom speaks to an estate attorney before moving forward. She could have options that are specific to your state and inheritance laws.
Gumbel advises that you all try to have a civil conversation with your family and try not to be accusatory. “People don’t like giving to people who expect. You can’t expect people to give even if it would be helpful and important to your situation,” Gumbel said. Your family may come to compromises or agreements this way that works for everyone.
Dear Pay Dirt,
Say I am 35, had a slow start to my career during the financial crisis, and am finally ascending and making six figures. Say I also never started a 401(k) because I barely had enough money to live on and pay my student loans until recently. Say I will finally be out of serious credit card debt next year, and that the student loan debt cancellation will wipe out my remaining balance, so I will be debt-free for the first time in my adult life. How would you even start to be responsible with money and planning for the future at this point? Someone in this situation would probably feel embarrassed, like all their peers made better decisions than they did when they were 25, and that it feels like they might already be too far behind to catch up.
I hope this hypothetical person isn’t embarrassed, but I get why they might be. I was a late bloomer when it came to my career and finances. At 37, many of my peers own homes and have kids in junior high. But you know what? I’ve come a long way, and you have too. You’re not too late at any age, especially at 35, when you potentially have 30 years until retirement. So, that’s what you need to focus on going forward, But first, pat yourself on the back for getting here. There are three things you can do now to help prep for your future: build an emergency fund, start investing in your retirement, and set up a brokerage account.
When you’re unprepared for a financial emergency, you’ll most likely finance it with a credit card or loan, accumulating debt. The purpose of an emergency fund is to keep you from doing that by providing a safety net. First, you need to save a baby emergency fund of $1,000. Once this is taken care of, you can work toward an emergency stash of $10,000 or three to six months of your living expenses. If you have a stable job, a $10,000 one should be sufficient. You’ll want to keep the cash in a high-yield savings account (HYSA) away from your checking. This way, you can make money on it while it sits there. Look for a HYSA with at least a 2 percent APR.
Investing in your retirement can be done in a few different ways. I’d take advantage of any 401(k) program your current employer offers. Your employer may offer to match your contributions up to a certain percentage which can help you catch up. Even if they don’t, invest what you can with your pre-taxed dollars. Another option for playing catch-up on retirement is to open a Roth IRA. These accounts are funded by dollars you’ve paid tax on, allowing you to earn interest tax-free. Both of these accounts have yearly contribution limits that change annually or every few years, so check to see what the max amount is before you get started.
If you have any money left over, open a brokerage account—it’ll allow you to start investing in stocks, index funds, ETFs, and more. You can open an account with an online financial investment brokerage like Fidelity. It has lower fees compared to going to a traditional Certified Financial Planner (CFP) that would walk you through different types of accounts and then help you open one with their firm. Fidelity also provides one-on-one assistance to help get you started with a portfolio. I’m excited for you to kick ass and take names. You’ve got this.
Dear Pay Dirt,
My husband and I own a home that needs significant renovations. Our income currently covers our needs, we are saving for retirement, have excellent credit, have no debt other than our mortgage, and have a small savings account that we can dip into for unexpected expenses. However, we can’t afford to make the needed renovations without borrowing. Our home is in a desirable area, so even though the market seems to be cooling, I’m confident we’ll get out what we put into it when we sell. It seems to me that the best option is a HELOC, however, I’m not sure how to go about finding one. The regional bank where we refinanced our mortgage doesn’t offer HELOCs, and I’m leery about doing an online comparison shop. (I did one for our initial mortgage and was relentlessly bombarded by calls from lenders.)
What are the red/green flags I should look for in choosing a lender? Would a credit union be a good option? I’m kicking myself for putting this off since interest rates are now so high, but we really need to make some of these upgrades. Once I open a HELOC, what’s the best way to go about making renovations? I feel like we should do one or two projects at a time and pay them off before undertaking others, but maybe it makes more sense to do all of them at once. Any advice you have would be so helpful. Thank you!
Dear HELOC Help,
How exciting that you get to remodel your home. HGTV makes it look easy, but we both know that’s not the case. However, you’re absolutely right about wanting to make sure you’re getting the best loan for your situation.
I would look at your local credit union to see what your options are. Credit unions are great places to get loans because they tend to offer lower fees and interest rates than traditional banks. Online banks may also offer you a competitive rate, but since you’re leery (rightfully so!), the credit union seems like a great first step.
When considering HELOC loans, make sure you understand the introductory rates of the loan. Some lenders offer a great interest rate only to raise the price after a certain timeframe. Since your rates may change, it’s important to understand them during the initial withdrawal and repayment. Make sure the company clearly states their rate cap policy. By law all HELOC loans must have a rate cap so that you’re loan payment does not become unaffordable. If you can, find a HELOC that offers a rate cap. Without a rate cap, your HELOC interest can balloon your payment into something you might not be able to afford.
As for making the renovations, I’d think about how much of your house you want under construction simultaneously. We are still experiencing supply chain issues, so while you may pick to do the kitchen all at the same time, you may have a back order on appliances or flooring. Make a list of everything you would like to do, then hire a reputable contractor to come out and go over the list with you. They can help you determine what is feasible right now to get started and point out any other issues you may not have thought of.
Dear Pay Dirt,
I’m 23 and currently work as a supervisor in food service making a decent wage but living in a very expensive city. Over the past couple of years, I’ve realized my dream is to have my own homestead. I cannot fathom a way to financially get started on saving or how I’d ever qualify for a mortgage. I split rent with my dad who’s retired and living off Social Security. I’ve turned our backyard into a large garden with a small greenhouse where I’ve managed to preserve and can most of our food. None of my extended family or mom is able to help me financially but most have backgrounds in the trades and could help me with setting up a farm. I currently make about $2,500 a month and have around $2,300 in monthly expenses with the rest going into a generic savings account that I currently have around $1,500 in. I want to figure out how to increase my savings and if I should be storing them differently.
—Old McDonald Wanted a Farm
Dear Old McDonald,
Your dream sounds unique and fun. Money can help you get you there, and it sounds like you’re already on your way. We just need to find you some additional resources.
First, we need to up your savings rate. You need to cut your expenses or figure out ways to earn more. You could also do both, depending on your situation. If you’re not already living as frugally as possible, find ways to save costs. Rent, transportation, and food are three main areas people can focus on cutting back on in their budget. It’s hard to suggest where you can cut back since I don’t know all of your expenses. But because you already prep your own food as cheaply as possible, I’d say find ways to lower your bills. Call your providers and ask for loyalty rates and discounts, and look around for cheaper plans.
If you have time to side hustle outside of your job, consider picking up a part-time shift at a local store or starting your own business. With your green thumb, consider selling plants in your community. I recently joined a local plant lovers group, and the plants I see people selling are not only beautiful but also expensive. And people buy them like hotcakes, especially the Monsteras.
Make sure you’re saving your money in a high-yield savings account (HYSA) if you aren’t already. HYSAs offer higher APRs than a traditional savings account, so you can grow your money while you save it. Look for an account with at least a 2 percent APR or higher. If you haven’t already, start working on your credit to make sure your score is the highest you can be. You’ll eventually need a loan for land, and you’ll want to secure the best interest rate possible which means you need good credit. Have fun!
My husband has three brothers, and his parents passed away a number of years ago. We rarely see his brothers because they all live far away. This Christmas, one of the brothers is flying in from out of the country, and my husband now wants to invite the other two as well. The problem is that over the years, the oldest brother has had a number of incidents involving verbal abuse with family members, including one with me in which he threatened me with physical violence.