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To Love, Honor and Financially Obliterate
Posted on July 15, 2010 by Stacy
(photo: lionheartphotography)
“A lot of people wonder how you know you’re in love. Just ask yourself this one question: ‘Would I mind being financially destroyed by this person?’”
I first came across that quote hanging on my friend John's fridge, soon after he started dating fellow friend Fahmi. Since Fahmi was on the verge of trading in her lucrative IT consulting job to head back to grad school, it wasn't an idle question.
Happily, Fahmi got her degree, John and Fahmi got married, and they're now cheerfully bonded and financially stable.
But for an illustrative example of just how literally that quote should be taken, there's the tale of Dawn vs. The Leech.
Dawn (not her real name) has been one of my best friends for a decade. About five years ago, comfortably before the housing boom's peak, she and her live-in boyfriend decided to buy a house together. It was a pretty good deal: a recently foreclosed, two-bedroom place in a Western city for a tad over $100,000. Dawn had a stable job and could comfortably manage the monthly mortgage payment; her boyfriend, aka The Leech, was a contractor who could handle the house's badly needed renovations. They bought the house on an ARM, planning to finish the upgrades and refinance the house before it reset.
You see where this is going.
Over the next few years, Dawn and The Leech got married and worked on the house, but the renovations never quite got done. Time management is not one of Leech's strong suits. To finance the renovations, they tapped a home-equity credit line, which added a second mortgage to the house's debt load.
Then the economy tanked. The Leech wasn't getting contract work the way he used to. At the same time, the ARM on the house reset, and the interest rate zoomed past 11%. Once-affordable payments were suddenly a big struggle. Like millions of other Americans, my friends were being bankrupted by their house. Somewhere in here a third home-equity credit line snuck into the mix.
It's easy to point fingers ("An ARM -- what were they thinking!?"; "Never buy a house unless you have enough money saved to make the payments for uppitygazillion years without an income"; etc etc.), but as they say, hindsight is 20/20.
Here's where the situation gets really sticky. Dawn came up with a clever solution to the ugly financial math: move. She'd worked in NYC before moving out West, and had a job offer that would pay about twice what her local job did. With that extra cash, she could afford to keep up the house payments and also get a rental in NYC. So, after extensive discussions with Leech, she moved back East. The plan was that he would stick around for a few months, finish the house and rent it out, then join her in New York.
It was a pretty cool plan. One that got blown to smithereens a month later when Leech moved his new girlfriend into the house. (Here's the part I like best: He didn't want to get divorced. He was pretty happy to stay married to Dawn, keep her on the mortgage ... and live with the new chick. Logical thinking is *also* not one of Leech's strong suits.)
Now, all of this still could have worked out if Leech had the income to support the house he wanted to stay put in. But he doesn't.
Dawn -- who was far nicer to him than I would have been -- took a fair stab at weaning him off her financial support. They drew up an agreement under which she would keep paying into the mortgages for most of a year, while he got his act together. Which she did.
A year later, shock of shocks, Leech was still broke. He promptly fell behind on the mortgages, obliterating his already-shaky credit rating and Dawn's excellent one.
So Dawn is now caught in an epically nasty situation: She's getting divorced but is still on the mortgages for an underwater house she isn't living in and can't sell without the consent of the house's co-owner, Leech. The full face value of the loans on the house sits at around $200,000. The house's market value is maybe 75% of that.
This has to be a pretty common situation these days, but all the researching Dawn and various lawyers have done turns up basically no good way of dealing with it.
No lender will refinance the house notes into Leech's name alone; it's underwater and his credit is shot to %@$!. The best option is to sell the house, but a) that requires Leech's consent, and b) it's probably going to be a short sale, which won't fetch enough to clear all the notes. The second and third lienholders have little incentive to agree to that -- and even if they do, they could then still pursue a deficency judgment for the shortfall.
So for now, Dawn is stuck taking a credit hit every month that Leech fails to make payments, and remains on the hook for a life-destroyinging giant sum of money. She's been waiting for more than a year for one of the three lenders to finally get fed up and foreclose, but every time that seems imminent, Leech chucks the lender a small payment and manages to stave it off a bit longer.
I know the advice, before you co-sign a whopping loan with anyone, is always to be really, really sure you know what you're getting into. But how can you? Very few people get married expecting to get divorced, and yet, almost half of us do. Neuroscientists keep pointing out that we're hardwired to be overly optimistic, make irrational choices, and stay in bad relationships.
So on top of all the many, many ways we now know that buying a house can turn into a debacle, add this one: That mortgage can be more like a marriage. You might end up bound to the ball and chain till death -- or something else equally unpleasant -- do you part.
Money and power
Posted on June 29, 2010 by Stacy
photo: angusf
Personal finance blogger Eilene Zimmerman had a post recently that really intrigued me: How Money Can Hurt Your Marriage.
Eilene hits right on the head a thing that has always played, subconsciously, into my own relationship dynamics: the way finances become a power tool.
Eilene's then-partner significantly out-earned her. "One of the biggest problems in our marriage was his demanding job (that paid well) and that the power in our relationship was – at least from my vantage point – all economic," she writes. "I felt like I had no right to ask for anything I wanted – not material things, but more like time away from the kids, time to work, time to go out with friends, essentially time – because he was working so hard. And although money is empowering in many, many ways, it made me feel powerless, because I didn’t have much of my own. My income was tiny compared to The Husband’s, so how could I declare I would be taking a nap on Saturday afternoon?"
Ding ding. That's a thought process I suspect is common to a lot of women. Maybe it's prevalent with anyone, of either gender, in an income-imbalanced relationship, but my impression is that women are more susceptible to it. Including me -- on both sides of the equation.
Money matters because the most important thing it buys is flexibility. Greater financial resources means greater control over where you live, what you do, how you allocate your time, and a vast swathe of other variables that shape our lives.
But it's easy to let money become something else: a way of keeping score. Beyond the ubiquitous cultural programming that tells us money works meritocratically, with more flowing to those who work harder/better/smarter/longer than others, it's just easy. It's why people are drawn to sports. The results are black-and-white, simple to compare, to rank.
And the kicker is that it's very easy to say "money doesn't work like that; incomes aren't neatly correlated to effort," but like most things in life, this is a gray area. Sometimes they are and sometimes they aren't.
In college I made $7 an hour working the popcorn machine at a local movie theatre; now I make much more money doing a job I think is way easier and more fun. I don't work "harder" now than your typical retail worker. And, of course, I make a tiny sliver of what your average Wall Street financial type pulls down; you can guess how much "harder" I think their job actually is. (I'm not talking about skills and qualifications; I'm simply talking about the strain and labor involved in getting through a typical day of work.)
But then, there's cases where income does reflect effort. One of my friends works about 70 hours a week, on two jobs; her less-employable (and, honestly, lazier) partner works half as many hours.
This is where the gray sneaks in. There's a ton of factors -- some controllable, many not -- that affect income. And when you have two people in a relationship with financially intertwined lives, the only way to avoid tension is for both to be in synch about how money, especially when it's imbalanced, should affect everything else. Time, chores, goals, priorities, everything.
David and I had our own wrangles with this last year. In the middle of an epically bad market, he quit the job he'd held for almost a decade. With nothing new lined up.
While I understood and agreed with his reasons, I was still not what you would call 100% cool and supportive about the move. ("Shrill" and "cranky" would probably be better adjectives to describe some of my comments about it.) Yes, we could scrape by with just my income, but did I really want to? I started expecting David to do a hell of a lot around the house, because part of me wanted him to "prove" he was doing as much work as I was. I was bringing in a paycheck, my little brain-voice said; what tangible thing was he doing? I was definitely using money to keep score, even as the rational part of my mind knew that wasn't really fair.
(Caveat: This equation becomes a very different thing when you add in kids, illness, dependent relatives, or other complications beyond a relationship of two fully functioning, equally competent adults -- which is, of course, the situation most married couples face at some point in their lives. That's a whole other column.)
Then David got a new job, with a salary slightly smaller than his old one. That left our incomes even more out-of-whack than they'd been before.
But that gap doesn't faze me at all. We both work full-time, office-type jobs; mine just happens to be in a field that pays better than his does. He loves his new job and it's a great fit for him. Since my income is higher, I cover more of our expenses, but it seems to me that it would be ridiculous to expect him to do more than I do around the house to "pay off" the salary differential.
So ... sometimes I keep score with money, and sometimes I don't. And though there are times when it's clearly, actively destructive -- most times, I'd guess -- it also feels like a thing humans will inevitably lapse into doing.
How do you sort it out?
The Price of Compromise
Posted on May 12, 2010 by Stacy
photo: somebox
My husband David and I recently tackled the Big Scary Most-Expensive Thing You'll Ever Buy investment: buying an apartment. In New York City. It was one of those "well, they say if it doesn't kill us it'll make us stronger ..." experiences.
The most financially fraught moments came at the end, at the closing table, where we forked over checks for pretty much every dollar we could lay our hands on legally. (We didn't end up knocking over any liquor stores, but we briefly considered it when we saw the five-figure bill for property transfer taxes.)
But emotionally, the big money-related hits came early on, when we had to decide how much we could afford to pay and what trade-offs we'd be willing to make.
A thing we rarely agreed on. Even the best-matched couples aren't going to have identical preferences and priorities.
On the big-picture stuff, David and I were fairly in-sync. We had similar ideas about what kind of total monthly payment we'd be willing to shoulder, and we were both dead-set on only considering a 30-year fixed mortgage -- no ARMs or interest-only exotic stuff for us, thanks.
But within the rough framework of "we can afford X," we had the usual stack of disagreements about what we should use that money to buy. The #1 rule of NYC real estate is "you will never get everything on your wish list unless you double your price range." What stuff couldn't we do without?
I wanted a short commute. David wanted a second bathroom. I wanted two bedrooms. David wanted a nice-looking block.
I didn't care about the block or the bathrooms; he thought a one-bedroom would be fine and wouldn't mind an extra half hour on the subway. Everything on the list came with a price tag. So how could we pick? Whose wishes got to win out?
I'd like to claim we talked it out like sensible adults, calmly bartering swaps from our own personal want lists. "OK, this place is a little further from the subway than I would like, but it has that second bathroom you want, so let's go for it ..."
There was some of that. We picked a building fairly quickly -- which, I'll admit, catered more to my preferences than his. Commute: great! Neighborhood aesthetics, not so great.
But the building is fairly large, with more than 100 apartments and dozens of different floor plans available. Therein commenced the "discussion" about compromises.
Which eventually escalated to yelling.
We only had one really epic fight, but it was a full-decibel affair that led to several hours of us speaking to each other only via the cats: "Kea, go tell the human being on the other side of the room that if he wants dinner, I'm leaving it on the counter."
Finally, a day later, when we decided to again acknowledge each others' existence, we hammered out a framework for decisions. The only way we (ok, I) could see to make either-or choices was to bow to the wishes of the partner who cared more about the issue.
I would have preferred a walk-in closet to a second bathroom. But David felt really strongly about that one, so I said OK to his extra room and goodbye to my shoe-and-handbag haven. On the other hand, I desperately wanted the apartment with a small terrace -- the proximate cause of our Waterloo, since David hates heights. After some extensive pleading on my part, he finally agreed to it.
Buying a house (ok, in our case, "tiny living cube") isn't the only pricey investment that brings clashing wants to the fore. Cars, schools for the kids, even expensive appliances or furniture seem likely catalysts for showdowns. I'm curious how other couples have negotiated the peace treaties.
The Two-Income Pothole
Posted on May 06, 2010 by Stacy
This is the frist post from our new writer, Stacy. We've introduced her yesterday, and you can also find more about her in our about page. We hope you enjoy!
photo: michellemarie
Keeping separate bank accounts with your spouse or similarly intertwined partner has a whole spate of logistical issues attached. How do you split the bills? How do you make sure none slip through the cracks? How closely do you track your partner's finances – and how do you ensure you'll have access in an emergency?
There's also the philosophical issues. Why are the accounts separate, and do you both have the same reasons, or at least understand and respect your partner's rationale if it's different?
My husband David and I have always had completely separate accounts, and in our case, the reason is simple: We both like the independence of managing our own money and trust each other to do so sanely. Plus we'd risk violence if I saw the details of his spending on collectible CDs or he saw the price tags on my handbags.
But for split-account couples, there's another wrinkle that can sneak up on you. What happens when one partner starts vastly out-earning the other?
That can be an issue for couples with joint accounts as well, of course. It's easy to tie a lot of self-esteem up in careers and paychecks, and every couple – even if only one works outside the house – has to make decisions together about the pragmatic and emotional ramifications of their joint earning power.
But it's always seemed to me that couples who pool all their funds have already made one major choice: All our money is our money. If one side suddenly starts generating significantly more of it, yay, but it doesn't fundamentally alter the household financial dynamics. The shared pool simply gets larger.
With split-account couples, the math is trickier. The seesaw tips.
Some couples have to deal with this right off the bat. I know a teacher married to an investment banker, and a computer guru paired with a historian. No matter where you come down on the relative merit-to-society of each position, they're clearly not carrying equal salary potential. Those couples had to sort out early on how they wanted to handle the mismatch.
But for an awful lot of couples, it sneaks up.
It did for us. When David and I moved in together, we were both young and entry-level at our various jobs – journalism for me, statistics for him. We made almost identical salaries. That first year, he made $2,000 more than me. Then I got a promotion and made $5,000 more than him. Then he got one and outpaced me by $2,000 again -- and onward the leapfrogging went for half a dozen years. We roughly split all our household bills and maintained a fairly laissez faire attributed toward each others' finances.
Then came The Big Promotion: A new job with a giant leap up in title and salary. Quite abruptly, one paycheck was 30% larger than the other, a discrepancy big enough to pay our annual rent.
Which made us realize: We'd never talked about this. We never planned for it. It hadn't even occurred to us to discuss or plan for it. Suddenly splitting things straight down the middle, 50/50, didn't seem quite so obvious and fair.
Fortunately, we turned out to be philosophically in synch on the matter: We both have a commie streak. From each according to his ability, etc. We shifted bills around so that each of us was still paying about the same proportional share of income into the household expenses, even though one person ended up shoulder more in absolute dollars. It was a fast, easy decision. Figuring out how to spend a sizeable five-figure windfall involved far less wrangling than my reaction to finding out what David spent on eBay last week for a rare Marillion CD. (I wasn't aware it was possible for small plastic disks to cost so much.)
But we got lucky. I've seen the economic mismatch cause all sorts of angst and arguing, especially when it pops up for long-established couples (a sudden job change – or loss – is the usual catalyst). If you're each used to paying the same into the household in total dollars, it gets fraught when that becomes a much bigger burden for one half of the couple than the other.
To the long list of questions it's essential hash out before you pair up with someone for good – how they feel about career goals, having kids, moving to new places, retirement savings, debt, the Yankees, etc. – it's helpful to add one more: How will we handle our money if one of us is making two or three times as much as the other?
Does Recession Equal Romance?
Posted on January 22, 2009 by Him
Usually when I receive press releases I just ignore them; deleting them would be too much work. But, when I saw the title New Survey Finds Couples Site Recession for Boost in Romance, I had to bite. While I'm not going to regurgitate the whole thing here, I'll grab some highlights and put our commentary in as well.
According to AreYouRomantic.com's Romance in a Recession poll:
- 69 percent of people were satisfied with their relationship over the past year despite economic concerns
- One out of three people feel that financial constraints have brought them and their partner closer together
I'd have to agree with this. Our finances, while far from perfect, are definitely something that we've had to come together to work through. By sticking together, we've put ourselves in much better financial position than we were in 3 years ago, especially during these tough economic times.
- Nearly 20 percent of people feel that their sex lives have improved as a result of the economy
- Over half of all couples are spending more quality time together due to financial constraints
- 43 percent agree that they are spending more intimate time together
Hey, sex is free, right? What better thing can you do to kill 2 minute's an hour's worth of time that's free?
- 60 percent of people agree that financial limitations have not led to increased conflict
- 34 percent of respondents claim that over the past year, they haven’t argued with their partner about finances
We're no strangers to arguing about money. In fact, I think that a little arguing about money is a good thing, as it forces everyone to be brutally honest. Most of the time we keep things pretty civil.
What about you? Has the current economic climate affected your relationships in any way? Let us know!
You can see the full press release here, and the official blog post here. Please be aware that AreYouRomantic is sponsored by a travel company, so feel free to take everything with a grain of salt.
Relationships and Finances: Please Give A Reader Advice!
Posted on October 31, 2008 by Him
If there's something I love about you, our dear readers, it is that you always give solid advice (even if we don't agree with it). I once again ask for your wise words to help out another reader. He writes:
Before we got married, I asked my wife how much debt she had. She was very vague, but after some push and pull I got a rough number of "about $15K," not counting her student loans and car loan. That was quite a bit compared to the nearly zero debt I aim to maintain. But I figured that probably wasn't too extreme since the two of us make over $50K/year in salary each.
Well fast forward to after the wedding and move to a new city for both of us. It took her a while to find a job in the new city, but she did find an entry level position just to have SOMETHING. A few months working there and she finally found a job in her chosen field making about the same as what she made before we moved.
During this time, she kept asking me for money to help pay her bills. I lovingly helped her because I see the marriage as a joint venture. What affects her affects me. She's been working at this higher paying job now for about 5 months and she's still asking me for money.
After the attempted calm and rational conversation escalated to a LOT of pushing and pulling, and then to a full on screaming from her direction, I FINALLY discovered the truth. Counting her student loan and car loan and ALL of her credit cards, she has almost $100K of debt! Her MINIMUM monthly payments on her credit cards alone are more than $1,000/month. All 5 of her credit cards are maxed out. Her paychecks go toward minimum payments and then whatever she has left over go toward frivolous purchases like knick-knacks, new shoes, clothes, and purses.
She doesn't see anything wrong with what she's doing not only to herself but to me and US! I've tried taking her credit cards away from her and sitting down with her to talk budget but she absolutely refuses. Now we are losing money left and right. We can still pay the bills, but BARELY. I've had to dip into my savings and I also had to use all of the inheritance I got from my late mother just to stay afloat. Her only reason for not talking with me is "my parents fought about money and that's why they divorced." I would think NOT talking about money is worse than arguing about it.
I've been making all the payments on the mortgage and utilities. She hasn't contributed toward them at all because she can't afford to. If I had known the extent of her debt, I never would have bought this house. I've been looking at debt consolidation and even bankruptcy and other means of trying to lower her monthly payments but everything I've seen says we have to fall behind in those payments and not be able to even make the minimum payments before any of that will even apply to us.
Do you have any advice for me? I've tried getting her to talk to me or even a financial planner but the financial planner seminar that is coming to town that she did agree to go to isn't for another 6 months. We will be flat broke by then.
Two Styles, One System: Communication and Money
Posted on September 24, 2008 by Him
Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.
Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.
If you share
openly and honestly your thoughts and feelings with your fiancé or spouse, you
are missing out on a great opportunity. Relationships are mutually defined and
both need to share to make it work.
Here are a few
examples of how my husband and I handle money in our
relationship. Is it
perfect? No. Does it work? Yes, because we’re
willingly to talk about our common thoughts and our differences.
Budget
We
keep a Google Spreadsheet to display and organize our monthly
bills.
This allows us to see what our joint bills are and gives a snapshot view of our
individual accounts. I can see how much he puts in his 401(k) and he can see my
Roth IRA deposits.
He’s
great at setting up the spreadsheets and I love playing around with them. I
Goals
Some
of my personal goals are to pay off my car loan and my student loans. We
also set aside money in our budget for saving. We’re working together: our
‘extra’ money goes to joint savings and to paying down the car loan.
Investing
My
husband puts aside money for retirement, but is only semi-interested in
following his accounts. When he changed jobs and was rolling over his old
401(k) to an IRA, he asked me to look at investments to put them into.
I
get a kick out of learning new things about index funds, stocks, ETFs, etc.
While I explained why and how I came up with my suggestions, he just agreed and
made the changes. He’s more conservative with his money and his investments are
a reflection of that. I tend to invest more in international funds than him,
but the volatility is within what I can handle.
Credit Cards
I
have two credit cards (I’m closing one) while my husband has no credit cards.
After learning the hard way about high credit card interest rates, I’ve paid my
debt. I generally pay it off each month.
I
use credit cards mainly for convenience and rewards. I normally keep it at home
with me. If we go on trips, I use my credit card. He is very adverse to debt
and has not found a credit card that ‘he likes yet’. He generally saves until
he can buy it, like his car.
Paperwork
I’m
the paperwork queen. It basically falls to me to organize bill payments and
documentation requests. Due to our basic system, it doesn’t take up to much
time (5-10 minutes). If there are any issues we’ll discuss in the evening.
I
show him where I keep the files, in case something happens and he needs quick
access.
Conclusion
It’s an
imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for
you two.
Talking
it out can help you to understand your partner so much better and help you to
build a stronger foundation on future communication, not just with money.
Remember also that you’ll discuss these issues as your circumstances change.
It’s not set in stone.
Keeping
each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a
stronger system.
Going Out to Eat: How Much Should We Spend?
Posted on September 22, 2008 by Him
Hannah blogs about money and marriage at Monogamoney.com. Topics include saving, budgeting, investing, travel, and The Dark Knight.
Jon and I recently let a relative stay in our apartment for a week, while we were away on vacation. As a thank-you gift, she gave us a $150 gift certificate to a nice restaurant. And this presents us with a problem.
Jon and I have very different styles when we eat out. He'd rather go out less often, and spend more each time. He thinks that when we go to a nice restaurant, we shouldn't scrimp. We should each get an appetizer if we want one, we should get a bottle of wine, we should get dessert, because there's no point doing it if you don't have the full experience. I'd rather spend less, and go more often. I get more enjoyment going twice and getting only an entree each time, as opposed to going once and getting the works.
A few months ago, this perpetual disagreement led to the biggest fight we've had since we got married. We had a $400 gift certificate to a nice restaurant, which we received for our wedding. So we decided to invite two of our friends out for dinner. I wanted to strategize beforehand, so we could make sure we kept our tab under $400, hopefully even having enough to pay for the tip. Jon felt like I was spoiling the fun. He won; the bill came to $700. (In defense of my husband, he eats out like this only once or twice a year. And it was his birthday.)
The next day, after a little yelling and maybe a tiny bit of door slamming, we decided that before we go out for a nice meal, we'll label it a "Hannah" night or a "Jon" night. If it's my night, I get to control our spending, and Jon can't complain. If it's a Jon night, he'll order whatever he wants and I can't complain.
What do you think? Have you had any similar fights with your girlfriend/boyfriend/spouse? How did you resolve them?
How I Got Comfortable Sharing Money With My Husband
Posted on September 19, 2008 by Him
Hannah blogs about money and marriage at Monogamoney.com. Topics include saving, budgeting, investing, travel, and The Dark Knight.
In honor of the nuptials of Him & Her, I thought I would harken back to, lo, those many months ago (October, 2007) when Jon and I tied the knot.
After our wedding and honeymoon, we immediately hunkered down and cut back on spending, so we could pay off our credit card bill. And we started discussing how we would max out our Individual Retirement Accounts for 2007, and contribute the full $4,000 each. That's when Jon said, "If, at the end of the year, I still need an extra $2,000, you can give it to me." Wait a minute, I thought. You want me to GIVE you $2,000? Just GIVE it to you? And you won't even pay me back?
You see, Jon's parents have always completely shared their finances. My parents, by contrast, don't even have a joint checking account. That's partly because Jon's father was always the primary breadwinner, so a joint account was necessary. My parents, by contrast, have always made roughly the same amount of money, so there was no need to combine everything into one account. But the funny thing is, I grew up on a commune. You'd think I'd be the one advocating that we share money.
Of course, I knew I should give him the $2,000. I had made more progress putting money into my own IRA, thanks in part to a generous gift from my grandmother. And in the long run, it's obviously better for me if we've saved as much as possible in BOTH of our retirement accounts. I just had a little trouble, the first month or so after the wedding, adjusting to this new mindset, in which "we" replaced "me" when it came to financial decisions. Unlike Him & Her, who have clearly been a financial team for a while, Jon and I didn't start thinking about these issues until after our wedding. (That's when I started our blog, Monogamoney.)
A few weeks after our initial discussion about the IRAs, the thought finally occurred to me: "You're either in it for the long term, or you're not. And if you're in it for the long term, give him the money." And since I'm in it for the long term, I gave him the money. We use our joint account to pay rent, but everything else is paid for out of our individual accounts. And we no longer keep track of every dollar we spend.
Do you share and your partner share all your finances? Why or why not?
“Mine” vs. “Ours” — A Newleywed's Case Study
Posted on September 17, 2008 by Him
Thewriter lives in Chicago, just got married, and writes about money and writing over at The Writer’s Coin.
For the most part, my new wife and myself have done pretty well when it comes to adjusting to the financial side of married life. We created a joint bank account and the first few months have worked really well — we're living our lives and we're putting away a good amount of money. There have been some hiccups along the way, we aren't the Brady Bunch or anything (nevermind the kids part, that's a whole other ballpark). We've had our fair share of disagreements over things like emergency funds and semantics about targeted savings accounts, but overall we're good.
This past month, something new came up that had us clashing again. It's interesting that such minor things can cause such a lack of understanding between two people that love each other so much. The issue: I get paid twice a month but M gets paid every Friday, which means she'll have four “extra” paychecks over the course of a year. When I got paid every two weeks, I had the same problem and I just treated it like found money — it went straight into my ING savings account.
I wasn't thinking about that and stressed that this was a great way of saving even more money (me being greedy and cheap). Instead of bringing it into the budget (where it would likely get spent, I've learned), I wanted to shoot it straight into our joint ING account.
Then things got defensive. I kind of understood her point, but I still wanted
to “win” the argument, prove I was right and get some extra saving going into
our coffers. It wasn't “my” money being accounted for, so what did I care? She
could tell and wasn't going to give in easily. It was late and her last attempt
to foil me was to say that she would “forget” to transfer new money over on
months where there was an extra paycheck. I countered with this jewel: “I'll
remind you.”
Roundup, Booking Our Honeymoon Edition
Posted on January 24, 2008 by Him
I find it a little odd that there are people who don't believe that credit card rewards can actually be redeemed. The first time I've run into that thinking is through a few comments on this blog. Well, Her and I can tell you that, YES, credit card rewards are redeemable, and we're using them to greatly reduce the cost of our honeymoon. Still haven't paid a cent of interest on credit cards in a while, and don't plan to in the future, either.
Here's what I thought were good readings in the pfblogosphere this week:
Over at Get Rich Slowly, JD gives some good advice on whether you should do your own taxes or hire an accountant. We're probably going to see an accountant this year.
Jim at Blueprint for Financial Prosperity explains the differences between life insurances: term, whole, universal and variable. Since we'll be looking for a good plan this year, this is good information to consider.
While I don't agree with everything in this post in how to become and stay a millionaire by the Wastrel Show, it does give a very interesting aspect of wealth from a perspective that I haven't been exposed to.
Rocket Finances gives us a glimpse of how he does married finances. We do a his-hers-ours plan; we suggest you find the right solution for you.
We've been following 2 Million's review of Smart Couples Finish Rich. He has a great tip, "My wife and I would go to Starbucks and splurge on drinks or have some margaritas while we read it. Find what it takes to make this more enjoyable for your spouse." I'm all for coupling an important, potientially drab activity such as talking about finances with something fun.
Hey, did you know that Single Ma moved? Go check out her awesome new redesigned site, Fabulous Financials, right now!
Ten Financial Considerations For Newlyweds
Posted on January 08, 2008 by Him
Somehow sometime during this long engagement of ours I was signed up to receive the "Groom's News" in my email inbox a few times a week. Along with cheerfully telling my how many days until the upcoming wedding and trying to sell me often unneeded high end trinkets and vacations, it points to articles that may be useful to newlyweds. In today's issue was this gem: Ten Financial Considerations For Newlyweds. Let's discuss, shall we?
1. From the beginning, save 15 - 20% of your income. By combining households, you should reduce your expenses a lot which should allow you to save. You should save to build your cash reserves, in your 401k plans and in a mutual fund.
This is a great tip to start off with. We're currently saving about 10% of our gross income, and after the wedding we're likely to increase that. It will be a balancing act with paying off student loans, though.
2. Rather than simply keeping two checkbooks like before you were married, pool your money into one checkbook and one savings account or money market.
We've spoken about how the joint checking account is working for us. We also have an allowance system to give us a little more freedom in making "guilt-free" purchases.
3. Change all of the beneficiaries on life insurance plans, retirement and other plans at work, and IRAs to your new spouse.
A nice reminder. We don't have life insurance, but we do have retirement accounts and bank accounts we'll have to check.
4. Decide how debts accumulated by each individual prior to the marriage (i.e. student loans) will be handled.
Since we've been living together and have had our finances combined for a while now, we've been living the "everything is ours" way of things - even debt - for a while now.
5. Work together on budgeting and tracking expenditures.
We've made efforts to budget in the past - this year we've implemented a new system that closely resembles the 60% solution. We'll detail that in a later post.
6. Discuss your approaches to handling money -- is one person a spender and one a saver? Create some ground rules on handling any differences.
Haha, it's more like "He's a spender, she's a spender." I mean, uh, we love to save money.
7. If both incomes are needed to pay expenses, be sure to have adequate life insurance.
We're definitely going to have to look at adequate life insurance after we get hitched.
8. Be sure to let each other know where important documents are kept.
More importantly, we need to get a safety deposit box to keep all that stuff. That's been on our to-do list for the past 2 years.
9. Consolidate your credit cards to avoid having double the number of credit cards needed.
Not sure if I agree with this one. We believe that we both should have individual credit. We've even opened some duplicate credit cards in order to take advantage of rewards.
10. Make a list of upcoming purchases together and prioritize them. You should decide jointly how to spend your money now.
Of course, communication is key. Her probably wouldn't like it if I just came home with a 52" plasma screen TV, and I don't quite know how I'd react if she brought home a couple pairs of Manolo Blahniks.
This list actually wasn't that bad. It will serve as a good reminder of things to-do after we're married.
Questions On Talking About Money And Relationships, Answered (Part 2)
Posted on November 21, 2007 by Him
Today we bring you the second half of our reader questions for Sheila Heen, communcations expert responsible for much of the content on Have the Talk America. I wish I could bring her along on negotiations with wedding caterers, but that's another post for another day. Onward to the questions!
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Hello,
Please help with advice.
I have been married since May of 2006.
Late last year, I found out that my husband had purchased a home without consulting me. He was planning on ‘flipping’ the house to make a profit. I found out about it accidentally when I came across some paperwork. I confronted him about it and he has shown little remorse. His explanation was simply that this was a business venture and had nothing to do with our relationship. He knows that I have been extremely upset about this for a year. It has also impacted our lived because he is always late on our rent payments and never has any spending money. He has not been able to sell the house.
This weekend, I found out that in addition to this house; he also took out another mortgage and a home equity loan on an entirely separate house.
All told in the year and a half that we have been married he has taken out a total of $550K in loans. I confronted him again this weekend and again he says that this is not my concern and that this was a business venture. None of this was purchased under a business name; this was all done under his name.
Is there anything I can do to protect myself? I am concerned that he is way over his head and will not be able to pay all of these loans. I am concerned that eventually I will have to start covering these expenses.
Does anyone have any thoughts to advice?
Thank you much,
Indebted and still in love
Dear Indebted & Still in Love,
Oh dear. I can see why you are concerned. Deceit, debt, and dismissive-ness are not a good combination.
Clearly your husband has a set of assumptions in his head. The first of which is that making unilateral decisions about financial matters in your marriage is okay - and, in fact, expected. He seems surprised that you are upset about it. And also that “business” is different from “marriage,” which, if true, would make his behavior make sense.
The problem for both of you is that debt (as well as assets) in a marriage are generally considered marital property. And if he ultimately has to file for bankruptcy, this is going to affect you and the whole family, not just him.
I wonder why he is keeping this information from you? He may feel a great deal of responsibility to provide for you, and feel that he is not supposed to burden you with the worries that he is carrying on his own. Now that things are tight and he can’t sell the property, the last thing he probably wants is to sit through a conversation where you are angry, accusatory and anxious. He’s probably got enough anxiety on his own.
So I’d approach him with compassionate concern. Tell him you want to understand what’s going on so that you can share the burden, and so that the two of you can settle on a plan for how to manage going forward. Get curious about how he thinks about these decisions and whether to involve you, and what concerns he has that lead him to leave you in the dark. Let him know that you two are in it together, for better and for worse, and that if you’re going to brave the worst, you want some involvement in making it better.
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Shri asked:
Hi,
It's nice to see your apt replies. I got married this June and currently not working. My husband had run into a 12K loan before marriage..He never mentioned that before marriage and there were big fights about that. Now he s in the process of repaying them. It did upset me big time, because I was working too and I had saved and invested well.
He is changing but as a next step, once he is done with loans, I want him to invest in real estate in a very lucrative place. He was like ' first I need to have some money in hand'only then will I consider any investment', but the prices are increasing every single day and I don't think it's wise to postpone things. Basically he is very slow in taking steps towards money saving, investing etc..I ll start working in 2 yrs from now after I do my MS. Till then I want him to take the best possible steps which is in the best interest of both of us. How do I go about this ?
Thanks for your patience in reading.
Regds
Shri
Dear Shri,
This is the hardest thing about marriage and money, especially for those of us who like to be in control. How much autonomy and control do I get to have over money decisions that affect me? What do I get to decide myself? What do we have to agree on together? And how do I get my way?
Believe me, I get it. I am the instigator in my marriage, too. It’s me pushing us to save a bit more, buy into the market earlier, and pay down the loans faster. And when I get any resistance from my husband, my instinct is to just push him harder. This, by the way, doesn’t work.
Actually, you should worry if it does work, because if you push him into something he’s not ready for - taking on new debt just as he’s getting out - and then the real estate market slows, you’ll feel responsible. And he may blame you. Not a great combination.
Remember that it’s not just about the dollars and cents. He’s not reacting to the market numbers that you see rising. He’s reacting to the unpleasant emotional experience of being in debt (and having someone you love angry with you about it), and the positive satisfaction of climbing his way out. It’s not surprising that he’s reluctant to take on a new set of anxieties very soon.
So one conversation may be about how you’re each feeling about where you are, and where you want to go. Also, the conversation may be about how close you want to live to the line of “just getting by” and how much risk you want to take.
The other conversation involves a clear-eyed look at the numbers you cite and the trends. The sub-prime mess has impacted a lot of real estate markets across the country - even areas that consider themselves recession-proof. Plan for more than the best case scenario - here’s our payment and income if all goes as planned. Talk too about some “what ifs” - what if one of you loses their job? Or gets a promotion that involves a move and you can’t sell the house? What if you need a new car? Are you planning to have children? Will one of you want to stay home? While there are unpleasant surprises, it’s also true that you can anticipate a lot of probable events in the next five years or so that will impact your finances.
Remember, the most important aspect is starting those two conversations and listening to your husband’s concerns as well as voicing your concerns. Good luck to you two.
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We'd like to thank Sheila once again, for taking the time to answer some our readers' questions! We hope that all of our readers can take something from Shelia's advice or from the advice on Have the Talk America so that you can go ahead and have your own difficult talk.
...but just not at the Thanksgiving dinner table. Save it for after that.
Have a Happy Thanksgiving, everyone!
Questions On Talking About Money And Relationships, Answered (Part 1)
Posted on November 20, 2007 by Him
Last week, we asked if you had questions about how to approach the topic of talking with your loved one about a particularly difficult money situation. Sheila Heen, communications expert responsible for much of content of Have the Talk America, made her advice available and answered your questions. We'll present the first two today, and finish up with the second two tomorrow.
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This is such a great opportunity! I have a 'talk' I need to start, but really am dreading it. I just got engaged to my fiance (we've been together for quite awhile). I know the smart thing to do is to get a pre-nup, but he has said that they are the worst things ever!! He thinks you're preparing to divorce before you even get married! We both plan to spend the rest of our lives together (obviously) but just-in-case (since you never know who you or they will turn into!) I think we should have a pre-nup before we get married. How do I bring this up to him without hurting him and without making it seem like I expect to divorce sometime in the future?
Dear Kim,
First things first: Do you have much to protect? Forgive my forwardness, but I don’t want you to tackle this conversation and endure the pain if you don’t need to.
Pre-nups are designed to protect a spouse who brings significant wealth into the marriage. So if the couple later divorces, the spouse doesn’t have to divide assets that they feel were “theirs” before they even met their soon-to-be-ex. If you have a trust fund, inheritance, stock portfolio, real estate (with equity in it), or a yacht docked in Monte Carlo, then, yes, you should think seriously about a pre-nup.
If you think you might need one, it might make sense to talk with a lawyer, and take your fiancé with you. I know it’s touchy. You are preparing for the worst even while planning for, and expecting, the best. It’s emotionally confusing and may sound to your fiancé like you are sending mixed messages about your commitment or expectations of him. Reassure him that this isn’t the case at all, and try to explain what, specifically, you are worried about. And be sure to ask him what he hears you asking - this will give you a chance to clarify so that you truly end up on the same page.
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My boyfriend, who is in graduate school, is completely financially dependent on his parents. He lives rent-free and earns more than enough to pay his mandatory expenses and save, but instead spends everything he earns and has his parents refill his account when he overdraws. We talk about moving in together when we both finish school, but I'm afraid he'll expect to live off me the way he lives off his parents. It's not that I think he'll take advantage so much as I think he doesn't know how to take care of himself financially. How can I talk to him about "proving himself," without asking him to prove himself?
Dear Strange Bird,
I think you are “right on the money” - as they say - with your concern. A few of us had a class in school about how to manage our emotional relationship with money, which drives the way we spend, save, cash and charge. If your boyfriend hasn’t had a chance to make all the usual mistakes on his own, then you are along for the ride while he figures it out.
You’re right. Asking him to “prove himself” isn’t going to go down very well. This frames you as the grown-up who has the answers, and him as the financial first-grader.
Instead, talk about it in terms of finding out whether the two of you have compatible values, assumptions and habits around money. This will open up the conversation about how you each manage the money coming in and the expenses going out. How do you decide whether you can afford something? How much savings do you each feel you need? How much debt are you comfortable having, and for what? School? A car? Nice dinners out? Or the very latest video-game player? How might you test those ideas - with a household joint account? With a budget for the next couple of months?
If you can have this conversation in the spirit of thinking it through together, and resist the temptation to judge or lecture, then he may hear your concerns, have some ideas, and you can map a path forward together.
Good luck!
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We'd like to thank Sheila for being available to answer some reader questions!
We'd also like to point out that on the Have the Talk America website, if you make a pledge to talk with your loved one about a dificult topic, Nationwide will donate $1 to the Red Cross. I'm sure they could need all the help they could get with the recent tragedy in Bangladesh.
Last Chance - Ask How To Bring Up A Tough Money Situation
Posted on November 14, 2007 by Him
Just a reminder:
Do you have a tough money/relationship question you need to ask someone, but don't know how to bring it up, or what to say? Leave a question for communications expert, Sheila Heen (bio), by MIDNIGHT TONIGHT.
"On Paper" Divorce for Financial Reasons
Posted on November 12, 2007 by Her
photo: How I Met Your Mother website
Last week on How I Met Your Mother, Lily and Marshall considered getting a divorce "on paper" for financial reasons. Lily had bad credit, so she proposed that Marshall divorce her so he could apply for a mortgage without her. The odd thing about this scenario is that I know a couple who actually did this - and it ended in a real, bitter (and permanent) divorce.
This couple, who were close friends of my parents, started several hotel businesses. Over time one business after another collapsed, leaving them personally in financial ruin. They were facing bankruptcy, a difficult time for any married couple with two small children. They were going to lose their home and have to uproot their children. Wanting to protect his wife and children, the husband proposed that they get a divorce before he filed for bankruptcy, allowing his wife and children to retain their home. It was supposed to be "on paper" and he would still live with them. After the dust settled, he planned to remarry his wife. But his wife was so hurt by the idea that they started fighting over it - in addition to their fights about finances. Within a year, they were divorced for real. They ended up losing it all: the businesses, the house, and the marriage.
Aside from the obvious legal and ethical issues (what the husband wanted to do was obviously fraud), this was a terrible idea for their relationship. It may be tempting to try using divorce to cure your financial issues, but chances are you will only add pain to the disaster. It's better to take advantage of credit counseling and other debt services than to try to defraud your creditors and spouse.
How Much Do You Tell Your Parents?
Posted on November 09, 2007 by Him
I love blogging about my mom. Really. She gives me so much to talk about. My dad doesn't speak much, and he's not crazy, so I don't write much about him.
Ever since I've been more or less financially independent from my parents, I feel as if they don't need to know the financial minutiae of my life. When I first obtained my current job, I divulged my salary information to my mom; however, back then I did live at home and was eating their food. Now, I don't tell her much - currently, my mom doesn't know exactly how much I make. That doesn't stop my mom from asking, though.
I wouldn't mind so much if she asked maybe once a year or so. It gets annoying because everything eventually turns to "how much did it cost?" Here's a fun scenario:
Me: Mom, I'm running a half-marathon!
Mom: Oh really? How much does that cost?
Me: ...
You can substitute my first line with anything, from "I like midget bondage" to "Oh my god I sliced off my thumb" to "No, Mario Lopez will always be A.C. Slater to me." She will, in some way, ask about the cost.
Now, here's what happens when she's asks about money coming in:
Mom: So how much was your bonus?
Me: It was a nice amount...
Mom: You should give some to me and your dad.
Again, you can substitute "bonus" with "salary", "amount of Christmas presents", "tax refund" or "illegal mob money" and still get the same result.
Where I start to get angry is when my mom starts asking me about Her's salary, bonuses, cost of whatever. That is certainly not her business. She has even asked Her directly about some money issues. I thought that was way out of line and I told her so.
Why don't I like telling her specifics? My mom has a way of using whatever information I give her against me, and possibly Her, for her own evil purposes. Oh mama, you so craaaaaaazy.
How much financial information do you divulge to your parents? Do they ask you about your finances or do you readily give them information? How has this affected your relationship with them? Do you tell them, or do they ask about your partner's finances?
Want Advice On How To Bring Up A Tough Money Conversation?
Posted on November 07, 2007 by Him
"Listen, we have to talk..." At one point in your life, you have heard these words, and you know that it's never the start of anything pleasant. Maybe they were being said to you, maybe you heard them coming out of your own mouth. Maybe, you are even thinking about saying these words to someone in the near future, but don't know how to go about it. When I had to have a big financial talk with Her, it wasn't that pretty.
Do you have to have a difficult conversation in the near future, but don't know where to start? If you're having trouble finding the right words or right way to frame a difficult money discussion, leave a comment below explaining your situation for Shelia Heen (bio), a communication expert and author of Difficult Conversations, who helped come up with the quiz and tips on Have The Talk America. We'll leave comments open until Monday Wednesday, November 14, 11:59PM. She'll select a few questions to answer, which we will then post on by Have the Talk Day, November 20, a day in which you can prepare for to have your big talk.
Here are some examples of situations you may have trouble with...
- Do you want to bring up money talks with your partner?
- Are your parents getting a little old, and you want to have a big financial talk with them about getting their estate in order?
- Do you have a friend whose spending is out of control and are getting worried about him/her?
Here are some good reasons to have a talk, according to the "Tough Talks" survey...
- More than 40 percent of Gen Yers, Gen Xers and Boomers have admitted screening phone calls or emails, and one in five have actually cut off all contact with a family member for fear of engaging in a difficult conversation.
- "Not having enough money” and “household budgeting” are two topics deemed most likely to cause conflict among all respondents, and for Gen Xers and Yers, “use of credit” ranked third.
- Sixty percent of all Gen Xers and Yers worry they won’t have enough money to retire.
- Fifty percent of all Gen Xers and Yers have lost sleep over the anticipation of a difficult conversation; more seriously, approximately 20 percent of Gen Xers and Yers attribute the end of a romantic relationship or estrangement from a family member to the avoidance of a difficult conversation.
Have the Talk has a lot of tips on how to approach difficult conversations, from talking to your partner about money, talking to your kids about bumpin' uglies (aka SEX, per the urban dictionary), and how to talk to your parents about an estate plan. You should also take their quiz to find out your communication style.
To help soften up the initial invite to talk, you can send a humorous video invite, featuring Frank Caliendo, to that person. Admittedly, I was skeptical of them, but they are really funny.
So go ahead, and leave a comment for Sheila or visit Have the Talk.
(As full disclosure, the Have the Talk website is a campaign by Nationwide insurance, who paid us absolutely nothing to post this. We just thought it would be a great resource for our readers.)
Finances and Relationships: Dropping the Debt Bomb?
Posted on November 01, 2007 by Him
photo: agiel
Her and I met early on during our collegiate careers when we both had little debt, student loan or otherwise. To us, racking up debt was a normal part of college life, so it didn't bother either of us when the other pulled out a credit card to pay for something (in retrospect, that was probably a bad idea). We did everything together as we built our fledgling relationship, from getting wasted at parties studying really hard for classes to building a future of debt. So when we finally divulged our financial malaise to each other, the fact that we each had debt wasn't a surprise.
I wonder how different that conversation would have went had we met in different circumstances. How would this conversion even be brought up? Would I have still stayed with Her knowing how much debt she had? Would Her have been fine with my frivolous spending? Or would have ended with us making out and forgetting about it until another day? We often try and speculate about these things and talk about these "what if" scenarios, but both of us really don't know what would happen.
If you met your partner and either of you had significant debt coming into the relationship, how did you handle it? Have you shied away from serious relationships because of your financial status? Have yours or your partners' debt been the demise of a relationship?
(sorry, no one is going to see our Halloween pics from last night, that would make us not-so-anonymous now, wouldn't it?)
Getting Drunk Or Oil Changes For Cheap (Or Free)
Posted on May 28, 2007 by Him
This past weekend I went to lunch with a friend of mine from way back in the day. Although I haven't seen this guy in quite a while, when we do get together it usually results in a crazy night where I wake up without pants (in my bed, mind you) and half-eaten Doritos all over me. The great thing is that almost all of my cash that I left the apartment with is usually still left in my pants, wherever I left them.
What I neglected to say is that my friend is bartender. Not only does that mean free drinks at the bar that he works at, but he seems to know every bartender at every other Chicago bar. He also worked at a restaurant, and when he did we would get heavily discounted meals at nice places. Alas, the biggest expense whenever we went out were for cab rides and tips.
Normally, I'd really feel guilty taking all of the free drinks, but I NEVER ask to go out to the bars with him. Whenever I invite him out, it is usually for lunch where I can pay for myself. Whenever he invites me out, it is generally to a tavern or six. I consider myself really lucky to have such a generous, well connected friend.
When it comes to getting discounted services, I also able to get inexpensive service performed on our car. A family friend of ours has been the mechanic for all of our cars for the past 10 years. At first we would bring our cars to him because we knew he wouldn't rip us off, and he would charge us only a fraction of the labor charges. Now when we ask him to look at our cars he offers to do it "on the side" at his house, assuming it isn't too complicated. He takes a little longer, but only charges us for any parts. Of course we add in some extra cash to compensate him for his work.
In the first example, I get free stuff because of a mutual friend relationship - we do more than drink. In the second example, it is purely a business relationship - we only really see each other when the car needs work.
Do any of your relationships (business, friendships, etc.) directly affect your personal finances? How did these relationships come about, and how are the discounted services or goods handled?
(Un)Happy Mother's Day
Posted on May 10, 2007 by Him
Two days ago I wrote about the Asian cultural phenomenon of giving back to your parents. As I stated in that post, I don't mind giving back during special occasions in the form of nice meals at restaurants or nice presents. I don't mind because I feel like it should come from me, not because there is a cultural expectation or because my parents expect it.
My mother tends to take this notion the wrong way and as a result often puts us in uncomfortable financial situations. She feels (dare I say) entitled to receive her payback in the way that she chooses - and if she doesn't get it her way, she'll bulldoze us until she does. For example, she has no qualms about asking me how much my bonus was and asking for a portion of it (I declined on both questions). This trait of hers is definitely most apparent when it comes to eating out.
You see, in my family we tend to skimp on presents and place a large emphasis on food. We have a tradition of rallying and celebrating around food. Therefore, whenever there is a birthday or Mother's/Father's Day or whatever, we usually go out to eat.
In fact, the recent $300 meal at Fogo de Chao was my idea to celebrate my dad's birthday. My mom was very pleased at that place because she knew it was expensive, and even suggested we take her there for her birthday which was two weeks later! When her birthday came around, I asked her if we could do something less expensive because we were still reeling from the previous dinner. Needless to say, she was quite offended. We ended up going to a restaurant where the tab came out to $70 for the two of us.
About a year ago we went to P.F Chang's for my dad's birthday. (Yes I know it is barely Asian food but it was close to where we all work and it was easy on the pocketbook.) Of course we offered to pay. While my dad was fine with the choice of restaurant, my mom definitely felt like we were being cheap, and it showed. She made snarky comments about the low price of the menu items and kept talking about other, nice, and more expensive restaurants. We decided to dine family style, so I suggested that we all pick one item from the menu and then we'll all share. That apparently did not fly with my mom who then proceeded to order not one, not two, but THREE entrees. What was formerly a wallet friendly meal now ate up (pun somewhat intended) a large chunk of change.
Now let us fast forward to this upcoming mother's day. This mother's day, we decided to actually follow some advice floating around the personal finance blogosphere and instead of taking my mom out to a restaurant for mother's day brunch, we offered to drive to her house and cook her brunch. So far she is extremely lukewarm to the idea - mainly because we're not going to spend a lot of money on food for her.
We've already spend close to $400 on food for them in the past two months or so, and we definitely don't need to spend more. Don't get me wrong - I don't mind giving back, but not when it is on these terms.
Raise your children to rely on them - Asian Culture And Finances
Posted on May 08, 2007 by Him
I grew up as the child of two Asian immigrants (I'm not giving up my actual ethnicity for the sake of some anonymity). My parents came to America over 30 years ago, and have been naturalized citizens for a long time. I was born and raised here in the United States, exposed mainly to U.S. culture but being very familiar with the nuances of our particular brand of Asian culture.
One of the beliefs that has been ingrained into my head since a very early age is that it is proper and respectful to somehow pay back my parents for all of the years of work and money that they have put into raising me. My mom would always "joke" that when I grew up and made a lot of money I could then buy my parents nice cars, send them on nice vacations, or buy them nice stuff. When my parents told me those things, I knew it was in a half-joking half-serious manner. I knew that my parents worked hard to raise me, so back when I was a kid I dreamed of paying back my parents in lavish ways. This particular sentiment is not just unique to my family or me or just my brand of Asian culture.
This nuance of Asian culture is expanded upon in this article from the OC Register.
As the children grow older, parents around the dinner table might brag about their son or daughter's successful career, followed by frank discussions of how their children help financially. It is not unusual for adult children in Asian families to contribute money to their parents on a monthly basis to help pay for their parents' mortgages and other living expenses.
That's right - giving back by paying mortgages and other living expenses. Here's a little more:
"It's just expected in our culture...our parents raise us and then we help take care of them now that we have good careers. It's the right thing to do." Monthly checks of $150 or $300 from each child are not uncommon amounts given to parents. Often it's not because the parents are in dire financial straits, but because it's a matter of family duty.
But others don't have the luxury of giving much money to their parents:
"I barely make enough money to cover rent and my student loans...I used to give (my parents) $200 to $300 a month, but it was killing me so I had to stop. They haven't said anything to me but I know they must think I'm a slacker."
And others still give even when they don't have the means:
For a while last year, Mai was laid off from his computer engineer job at Hewlett-Packard and couldn't give his parents a portion of his earnings. Still, he plunked down about $6,000 to buy them a vacation package to China.
In our household, we're figuring out how all of this plays into our financial life. The primary reason for this is that Her is NOT Asian - she's as American and white as you can get. In the way that she was raised, the flow of money generally goes from the older generation to the younger generation. For us, not only is this a financial issue, but also a cultural one as well. While going out to nice dinners and giving nice presents during birthdays and Christmas are the norm for both of us, Her is uneasy with these extra financial cultural obligations and has offered to compromise.
Here are some questions for you, dear readers:
Do you give money to your parents other than for special occasions?
Do they expect (whether it is spoken or not) to be repaid financially for their work as a parent?
What does your significant other think about this cultural repayment plan?
I'm really wanting to hear what Mapgirl, Jim, LaMoneyGuy, and any other Asian personal finance bloggers (or just regular Asians) have to say about this.
Reader Question: Merging Finances?
Posted on May 07, 2007 by Him
Reader D writes to us with this question:
Here's my question, and I apologize if it's long. My boyfriend and I have recently made the decision to move in together and this, of course, requires a certain amount of financial meshing. I was wondering if you have any advice or any readers' stories about how couples have managed this kind of quasi-joint situation. We have a shared household budget, but the rest of what I make is mine and the rest of what he makes is his. On one hand, we want to plan for the financial future together, but on the other hand, we've not reached the point where we are ready to share all our money. We have no plans yet to get engaged or married, although that is the hope for many years down the road. How do we plan for a future together, work towards joint goals, and maintain a trusting relationship while we're in this I-love-you-but-I'm-not-ready-to-give-you-access-to-all-my-money period?
If there's anything we do know about finances, we do know the difficulties of the cohabitation without commitment. In fact, we ourselves lived in sin for a whole year before we were engaged. For what I'm going to write, I'm going to assume that engagement time may be a little more in the future than you'd like. Here's how we made it work without jeopardizing our individual futures if the relationship turned sour.
1. COVER YOUR ASS. And by that I mean sign a cohabitation agreement. Hey look, we even have a whole post dedicated to the subject. No, these aren't romantic, but neither is morning breath. Her also has a great post on a book you may want to read: Shacking Up: The Smart Girl's Guide to Living in Sin Without Getting Burned.
2. KEEP ACCOUNTS SEPARATE. By the looks of it, you're already doing that. For the joint household account, in the interest of fairness, I'd suggest that you each put in an amount of the household stuff that is proportional to your salary. For Her and I, it was easy since we made exactly the same salary when we first moved in together. Also, keep a firm list of what is "household" - and only allocate money to that account for items on that list. Keep your own money your own money.
This also goes for savings accounts. You should each have one in your name. See #1. If things go sour, you'll need to have some money saved to get your ass out in one financially okay piece. Agree to save a proportional amount of savings, with the intention that in the future that will all become both of your monies.
Anyway, how is he going to save for an expensive nice engagement ring without you knowing?
3. START SMALL. You're timid about sharing your financial life together, and you have everything separate. But you have to start somewhere, right? For that, I'd recommend that you take baby steps. Open up a joint savings account. Agree to a smallish amount that you'd like to save together - for example maybe $50 a month from each of you. As time goes on and your comfort level increases, increase the amount. You can also agree to dump some of your personal savings into that joint account. Just make sure that there is a consistent method to allocating these funds.
4. DEVELOP A PLAN. You want to plan a future together? Work towards mutual goals? That's great! Now you need a plan. A great book that will help you get started is Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner. Write down your values. Write down your goals. Prioritize them and spend and save accordingly. Check out our value based plan for a start.
I hope that what I've written helps with your fledgling cohabitation. It may not have the feminine touch that Her graces her posts with, but I think it's good enough, right? (Remember, we are not responsible for the actions that you take as a result of anything said on this blog. Please don't sue if it doesn't work out.)
Cheese Graters and the Force
Posted on March 29, 2007 by Him
Yesterday's post by Her garnered some good discussion, and there are a few details that I'd also like to address.
This whole issue is not about a cheese grater or a vase, or any ONE particular item. Admittedly, I'm not that much of a cheese fan (lactose intolerance does that), but the grater was a really cool purchase for its ability to shred parmesan with ease.
From her post:
Stuff like a vase, a kitchen grater, etc. (emphasis mine)
It is the et cetera that I was beginning to worry about. Magically, more and more household items were beginning to appear. Some napkin rings here. Some placemats there. Associated charges from Bloomingdale's and Williams Sonoma appearing on the joint account. Since they were relatively small purchases, it didn't really have a significant effect on our overall finances. Yes, they were small purchases that we'll both end up using, but ultimately I feel like they were Her purchases.
I'm guessing it wasn't so much WHAT was purchased, but that you were the one that got to choose the exact item, buy it, and spend the money.
That is in stark contrast to the purchases that I like to make on the joint account. I feel like I have to ask for every purchase, not because Her is in control of the account, but because I want to make sure that it is a purchase we're both going to be on the same page about. 99% of the time Her just tells me to go ahead and buy it.
The real issue here is that with the increase of our available cash flow, the Force method of budgeting is failing us (but we already knew that). Many have commented along the lines of "well, if it is in your household budget, then it shouldn't be a problem."
The problem is that we don't have a budget for household items. Just the Force.
If we have, say $500 left over at the end of the month, what's to stop Her from buying $500 of household items? Or me from buying a Mac Mini and say that's what the Dark Side of the Force wanted me to do? (okay okay, I'll stop with the incredibly dorky Star Wars references)
When we discussed this, we agreed that an arbitrary amount of leftover money could lead to a slippery slope of buying a lot of et cetera for both of us. By actually having a budget for household items, Her can have more freedom to buy whatever household items she wants as long as it fits in the budget.
I'll just have to make sure there's an electronics budget, too.
Money Discussions Still Uncomfortable
Posted on March 28, 2007 by Her
I can tell when something is bothering Him. Him gets all quiet and skulky, and last week Him had been skulky for over a week. Uh-oh. I finally pried out the problem: Money and Us. Yikes.
Turns out I have been spending my allowance, plus some of our joint account money, on stuff that I thought was "for our house." In Him's opinion, that stuff was more "for Her's house." Stuff like a vase, a kitchen grater, etc. Yeah, it is stuff for the house, but I'm the only one who is ever going to use them!
Him reminded me that I should use my allowance for stuff that only I want. We both talked about how the allowance can sometimes suck, because it seems we never have enough money to buy ourselves anything nice. The allowance basically covers a few lunches with co-workers or drinks with friends, but certainly not a nice piece of clothing or an electronic gadget. We're both frustrated. At the same time, we don't want to increase our allowances because we're focusing on saving for the wedding right now. During our conversation, our emotions boiled over and it was hard to work things out.
I was surprised that after all this time, we still have difficulty talking about money. It is a skill we will be working on forever, I guess.
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