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,
I recently was married and am very happy. However, I’m having a huge problem with my wedding photographer. As standard practice, I paid her the full amount on the day of the wedding. Unfortunately, the issue is that it’s been five months since my wedding, and she has yet to provide the pictures. Overall, she rarely answers my messages. I usually contact her every two weeks or so, and she doesn’t always answer me. When she does get back to me, she is full of excuses about why she hasn’t sent them (computer trouble or having a husband in a wheelchair). I’m sorry to hear about her computer and husband, but I’m very worried that something has happened to my pictures because she’s been so shady. She says that when she gets the computer fixed, she will send me the pictures. It’s been about four weeks since I heard from her last so I sent her a message telling her that she has until the end of the month to give me the pictures, or I will take legal action. My question is, what legal action can I take? Is this something that small claims court can address? Or should I get a lawyer? What if she did lose my pictures, can I ask for damages in addition to my money back? I feel sick to my stomach whenever I think about this, and I’m sad that I may never get to see any of the pictures of my wedding day.
—I Just Want My Pictures!
Congrats on your nuptials, and I’m sorry to hear the photos are taking so long. Before you take this court, send a certified letter to your photographer requesting an update with a delivery date for your photos. If the letter doesn’t get results, escalate the matter to small claims court (ensure it is under your state’s small claim limit). Small claims cases are usually easy to file without a lawyer. It is unlikely you would be able to sue for damages beyond what you paid, as most small claims courts don’t award pain and suffering compensation. The court would likely compel the photographer to refund your fees, offer a reshoot, or turn over the images promptly. I hope you get your wedding photos soon!
Dear Pay Dirt,
My husband (42) and I (female, 49) need some advice about life insurance. We’ve been married for 15 years and don’t have kids. He makes great money, and I’m in a PhD program, so I only make a small stipend, but we have about $50,000 in savings, plus money in retirement accounts, etc. We rent in a luxury building (primarily because we hate the upkeep of a house) but own a small home that my parents live in and we pay the mortgage on. We’re doing great financially.
The issue is that, because my husband is diabetic and takes mood disorder medications, we cannot get more life insurance for him. We each have $100,000 term policies that we started at the beginning of our relationship (before either of his diagnoses), and he has $100,000 through his job. But this isn’t enough if something were to happen to him. I could pay off my parents’ house, but then what? I still have several more years left in my program. I have obviously worked before and made good money, but I don’t want to do that. He is only denied insurance because of these diagnoses—it doesn’t matter that he’s in good health, that both of his conditions are managed with medication, that he’s never been suicidal, etc. I am frustrated that the insurance industry (even companies that say they cover anyone!) denies people based on these arbitrary criteria. I’m not worried about him harming himself or dying from diabetic complications. I’m worried I’ll be left destitute if he’s killed in a car accident on the way to work. We would like to get a policy of at least $500,000, but this seems impossible. I guess my questions are, why is it OK for life insurance companies to deny coverage like this, and is there any way to get coverage? I really don’t want to write my dissertation on the inequities in the insurance system.
—Tired of Mental Health Discrimination
I absolutely want to read your dissertation on the inequities in the insurance system, but in the meantime, let’s find more coverage for your husband.
The best option for finding term life insurance for your husband would be to seek an independent agent who will advocate for you and seek an underwriter willing to build a custom pre-existing conditions exclusion clause into a term policy. In this case, the insurance would not pay out a benefit in the case of death from diabetes-related complications or suicide. Finding an underwriter willing to write the policy will take some leg work and likely cost more in premiums. Most ultra-customized life insurance policies are PPLI policies made for high-net-worth individuals as a tax strategy. Custom policies often come with a single lump sum premium (rather than on a monthly or semi-annual basis), making them unaffordable to ordinary people.
Another possibility is a whole life insurance product called a guaranteed issue policy. These policies do not require health questions or exams but have a much smaller death benefit, usually less than $50,000. They also have a required waiting period of two-three years before they will pay a death benefit. I’m not usually a fan of whole life insurance, especially since these policies are more expensive with lower coverage options. Still, having one in place may offer you more peace of mind.
Because you already have $200,000 of coverage in place and are in solid financial shape, you might be better off investing what you would spend on life insurance premiums. If you focus on investing those monthly premiums, and neither of you meets an early demise, you’ve got a nest egg going into your retirement years. If your husband (or you) were to die unexpectedly, the surviving spouse could use the nest egg to pay expenses while grieving without dealing with life insurance exclusions or conditions. You can also look into mortgage life insurance, which would pay off the mortgage on your parents’ home and does not require medical underwriting.
So, why are they allowed to deny coverage? Life insurance is a business (even if they might market it as otherwise), not a social program. There’s no legal mandate that requires life insurance companies to cover everyone, only that they do not deny coverage based on race and national origin alone. Actuarial metrics definitely need an overhaul: from discriminatory proxy metrics that raise costs for people of color to the flawed science of BMI. Unfortunately, your husband has two risk factors for an earlier death. For his age group, diabetes and suicide are leading causes of death.
Even if you cannot find a policy that will get you an extra $300,000 of coverage, there is a social program that will provide for you if your husband predeceases you. If he dies after you hit retirement age, you will be eligible to receive social security survivor benefits. You are stable financially and have some life insurance coverage. Rather than focusing exclusively on life insurance to prepare your finances for an untimely death, focus on the entire picture of your financial stability. If you have savings, investments, and enough coverage to pay off your one debt, you’re doing better than most.
Dear Pay Dirt,
I’m a singer and amateur pianist who has always wanted to perform gigs for pay. I’ve been exploring different options for searching out customers, but I’m very nervous about my skills—and therefore worth—as a musician. How can I determine what my rate should be, starting out? Is it okay to lowball myself just so that I can get performance experience, or should I hold strong to a certain daily/hourly pay rate even if it means people are going to pass over me? I’m terrified of either charging too much and not getting anything, or constantly negotiating downward and sacrificing my lucrative (bartending) weekends for nothing.
—A Minor Scale
Dear Minor Scale,
You didn’t clarify whether you want to start doing gig work focused on covering other people’s music or showcasing your own, but that’s a factor in how you price your work.
If you’re interested in playing any piano for pay, some of the most steady gigs for pianists are church gigs and community theater/improv accompaniment. Such gigs are typically spread by word-of-mouth when musicians are looking for a substitute, so the best way to find them is by networking amongst working local musicians. Churches and theaters usually pay a set rate per gig based on the budget. Doing some of this work will help you gain performance experience and contacts that might lead to better-paying and steadier gigs.
If you’d like to start building up your musical brand or playing piano at a hotel or cocktail bar, you’ll probably need to begin with lower-paid or free work. It isn’t fair that the arts are this way, but bookers will not pay a high rate to an unknown musician unless they have an existing fanbase. The booker’s goal is to fill the room and make money. You won’t command a high rate if you cannot sell drinks and bring in people.
Open mic nights can also be an excellent way to build relationships with the bookers at smaller venues. They’re also usually scheduled on weeknights rather than weekends, so you won’t have to give up your lucrative bartending nights. Open mics will not usually pay much (or often, any) money but will sometimes cover your drink for the evening. But the critical element here is that it will help you develop a set, get performance experience, and gain relationships with bookers. If you want to start building up a private event business for weddings or fundraisers, this type of event will help you get in front of the eyes and ears of potential customers. Make sure you have a website and cards to hand out after your set.
If you’re performing well and can bring in a few fans and friends to your open mic, you can talk to the booker at smaller venues and see if you can play a gig there. Since you already work in nightlife, ask around about places that would be a good fit for your set once you feel more confident about your skills. While you shouldn’t expect to get paid top dollar for a gig initially, you can always turn down low-paying jobs if they fall on a weekend evening when you’d make more bartending. Be flexible with your pricing in the beginning, especially for weeknight gigs. Once you’re great at filling a venue and feel more confident performing, start raising the floor on the rate you’re willing to accept.
Dear Pay Dirt,
Last summer, my family (married couple, three kids) moved after 11 years in our home and 20-plus years in our former community. The move was precipitated by a job offer and we only had a month to decide on a slew of things, including uprooting our children from the only home they have known. We made the move but decided to rent instead of sell for emotional reasons (it was obviously a hot time to sell and we likely should have, but here we are). We are now trying to decide on the best course of action when the current tenants’ lease is up next summer.
The house is on a 30-year mortgage. We have about $175, 000 in equity in the home at its current market value. The job offer included housing, so we are currently living rent-free and will be for about two more years. We are in our mid-40s and financially stable but have only been that way for about five years—due to childcare costs, student loan debt, high cost of living area, the usual suspects. We have never been landlords and never intended to be, so we did not consider the tax implications of renting amid the general moving chaos.
What should we do with the house next summer? If we continue to rent it out, are we going to take a big hit on taxes when we do sell it (it is unlikely we will ever live in it again)? I am struggling to find information on selling after only one year of renting versus selling after five years of renting, for instance. If we sell but aren’t rolling the money into a new house immediately, how do we protect that money? This is our only major investment and I’m scared of making a decision that could haunt us and impact our financial future because we don’t understand all the factors in play.
—Not a Landlord
Dear Not a Landlord,
Unfortunately, “just rent out the house” is not as simple as some people make it seem. Since you don’t plan to return to the house and don’t want to be landlords, your best tax move is likely to sell the house when your current tenant’s lease is up (or sooner). The IRS has a capital gains tax exclusion for your main home (up to $500,000 for a married couple), which requires you to meet both the ownership and use tests:
—Owned the home for at least two years (the ownership test)
—Lived in the home as your main home for at least two years (the use test)
You’ve owned the home for 11 years, so you already meet the first test. The second test requires living in the house for at least two years of the five years before the date of sale. So your final sale deadline to avoid the capital gains taxes on your profit is three years from the day your family moved out of the home.
Since this will be your first time filing taxes as a landlord, hire a qualified tax preparer to help you prepare your Schedule E. They will pay for themselves in your peace of mind (and literally, since you can tax-deduct their fees). They can also advise you on preparing for the property sale while avoiding capital gains.
It’s usually easier to sell a house without tenants, but it’s worth checking in with your current tenants if they want to (and are in a position to) buy from you. You can also investigate selling the home with the tenant-in-place to an investor looking to capitalize on rising rental rates. If you end your tenant’s lease, ensure you understand and follow the legal requirements for terminating tenancy in your former state.
Regarding what to do with the profit from the sale, you will not need to shield the money from taxes as long as you meet the capital gains exclusion. If you plan to buy a house a few years after your rent-free life is up, you can hold onto the funds for a down payment in low-risk investments that will earn a little interest while you wait, such as CDs, I-Bonds, or T-Bills/T-Notes.
More Advice From Slate
My husband and I have different ideas about how many gifts to buy for our kids for Christmas. I’d prefer to keep things small; he wants to go big. I’d be happy to compromise, except that his entire extended family—his numerous sisters, parents, grandparents, aunts, and uncles—also give our kids a ton of presents, and we just don’t have the room in our small house for so much stuff…