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Dear Pay Dirt,
My spouse’s older sibling and their spouse relocated to our state a few years ago and live a few miles from us. They are of lesser financial means than ourselves. They repeatedly make awkward snarky comments about our financial situation, such as suggesting they could be our butler, live in our basement, or most often stating we have “more money than God.” Logically, I know this likely comes from a place of insecurity and jealousy but that doesn’t make it okay. My spouse and this sibling had the same educational opportunities; my spouse chose to put themselves through undergrad and grad school and work long hours for years in corporate America before retiring.
We are far from the wealth that normally would receive such comments—no private jets or luxury cars. We have made good financial choices, saved, and do have a comfortable life. The sibling and spouse did not pursue higher education, had long periods of unemployment/underemployment, and make less sound financial decisions. They have received two large loans from my spouse which they never paid back or even spoke of again. We also gave them money a third time, knowing a loan would not be repaid. We are sick of the comments. I know it drives my spouse crazy. We have tried ignoring it and laughing it off but the backhanded comments continue. What advice do you have for something we could say that would be clear we aren’t okay with it, and shut it down, but not destroy the relationship? We like to spend time with them if not for this problem. We wouldn’t dream of making snarky comments about their lives/choices, we would just like them to stop making them about ours.
—Definitely Less Money Than God
Dear Less Money,
It’s not uncommon for siblings to take different paths after being given the same opportunity—sometimes leading one of them to blame the other when things don’t turn out their way. But that’s not on you, and you’re right; the jabs aren’t okay. The easiest way to shut it down and to keep it from happening less often is to set a boundary and stick to it.
Next time they make a snide comment about having a lot of money, try saying, “I understand that our dynamic with money makes you feel uncomfortable, but that does not mean it’s okay to take jabs at us. Please stop the backhanded compliments moving forward.”
Boundaries do require action, so it’s important to have a game plan in case they continue. If they keep up the remarks, reiterate your previous statement, firmly, “I already expressed that we are no longer doing this,” and leave the room. You might want to consider spending some time away from them so they will understand how seriously you’re taking this. Good luck.
Dear Pay Dirt,
My husband and I have had a bit of a lucky windfall over the last couple of years. After struggling to get careers off the ground, we sold our home at the height of the housing boom, made a nice profit, and moved into a lovely home in a nice town. Shortly after moving into our home, we both landed jobs that drastically increased our incomes. Last year we added solar panels to the home, which got us the max tax return. I recently opened up a high-yield savings account to begin contributing to. We both also contribute healthy amounts to our company-matched 401(k)s. I never would have believed we’d ever be in this situation.
We have almost $100,000 in the bank now doing nothing. My husband has some student loans and we have a single car loan that we could technically pay off, but it would wipe out a lot of the money we currently have. We’d still have an emergency fund, but it still makes me nervous. My husband floated the idea of paying off the student loans and the car and taking the amount he’d be paying on the loans and throwing it all into the high-yield savings account. Is this a good idea? It’s a bit overwhelming to think about! Help!
—Lucky Windfall
Dear Lucky Windfall,
Keeping $100,000 in cash is a hefty emergency fund that may be providing security, but isn’t doing much else. Having that much put in only an high-yield savings account isn’t doing you a lot of favors, especially when the interest rate on both the student and car loans may be eating up the interest earned in the HYSA.
For an emergency fund, I always suggest keeping three to six months of living expenses for those that are hesitant to withdraw from their savings. Your living expenses should take into account things that are essential such as rent, food, transportation to get to and from school or work, and required medical care. Any extra money for occasional variable expenses like services you could do yourself, entertainment, and new, nonessential clothing should be kept in your HYSA.
After you have that amount put aside, use the remaining amount to pay your debt. You’ll want to pay down the loan with the highest interest rate first. After that’s been taken care of, tackle the next loan with higher interest and so on until they’re paid off. This debt payoff method is known as the “debt avalanche” and helps you save the most money in interest payments. If you still have loans once you’ve used up this money, use his income to pay off that loan with the amount of money he’s been using to pay off the entirety of the debt. But if you’ve got money leftover after paying those debts, consider opening a brokerage through Fidelity or Vanguard to invest excess money (perhaps in index funds) in a way that makes more sense.
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Dear Pay Dirt,
I have a dear friend who has always lived far away. When he moves to the U.S. this fall, it will be the first time we’ve lived in the same country! We’ve cared for each other for years. We’re taking this move as our opportunity to finally turn a friendly relationship into a romantic one. I’m thrilled! He’s kind, generous, sensitive, and quirky in all the right ways. He’s also quite well off financially, and eager to share his fortune with me.
I have been poor my whole life. I grew up on canned food and donated clothes. In adulthood, debilitating mental illness has kept me well below the poverty line. I’ve had exactly one experience, living for one month with a wealthier friend and her family, in which I found myself struggling to adjust to their lifestyle (name-brand foods! designer dogs!) without resentment. I couldn’t figure out how to reconcile my lifelong day-to-day struggles with the sheer privilege of upper-middle-class living. Now, I’m staring down a relationship that could potentially thrust me back into that privileged world, and I want to do better. I want to be able to handle comfort without resentment. I want to accept nice things without guilt. I want to believe money does not mark an inherent separation from reality. I just don’t know how.
—Prince Charming and the Pauper
Dear Price Charming and the Pauper,
I have a very similar experience to yours, and I understand how hard it can be to build an uncomplicated relationship with money when you’ve struggled financially before. Well into my early-30s, I resented people who had financial help from their parents or simply those who just had their finances figured out. But I learned that my past no longer determines my future, and as of today, you have to think of it in the same way. Money is a tool that you can use to design a life that makes you forget about the one you once had where you had to learn to live without.
You (and everyone) deserve to use money as a tool to help you live a life you love and are grateful for. First, journal what your ideal day looks like. Get into the details: Write down what coffee you’re drinking, what sort of home you’re living in, and even the kind of pajamas you see yourself wearing to bed. Once it’s all written down, look over it and note what you’ve already incorporated into your life and what you’re still missing. Now think of examples where having more money could help you add those missing elements to your life. For example, I make coffee at home every day before turning on my laptop. But I wish I had a cool espresso machine that included a milk frother so it could be a latte. The money will help me buy the espresso machine so that I can enjoy my coffee and, in return, my day a bit more.
I know you’re also concerned about coexisting with your partner. To overcome that anxiety, try finding ways you can reciprocate his generosity. You don’t have to shell out hundreds of dollars either. Pick up coffee as a morning surprise. Suggest going to a place for lunch you can afford and then get the tab. If you’re grabbing a gift, use coupons and consider a gift that’s small but still meaningful. Last but not least, always be yourself. He knows exactly who you are and if you start to pretend to be someone you’re not, things will get awkward quickly.
I also recommend reading “You Are a Badass at Making Money: Master the Mindset of Wealth” by Jen Sincero. This book teaches you to pinpoint your blocks to having a healthy relationship with money and then gives you tips and exercises to work on moving forward.
Dear Pay Dirt,
I’m terrified of being house poor. I just got a huge promotion, and my wife and I will go from $170,000/a year to double that. But at the same time, we are moving to a city with a high cost of living and we want to start our family, including buying a house that could be $1 million or more.
We are in our 30s and healthy. We have a down payment of $200,000, $100,000 of emergency funds, and $700,000 in our retirement accounts. But this is all thanks to living markedly below our means for almost 10 years (during a historic bull market). I want to transition to spending more of what I earn so we can enjoy the lifestyle we’ve deferred, but I’m terrified of overdoing it and losing my security. How do I determine how much we should be saving? How do I set a reasonable monthly budget for our growing family? Once I know those things, can I spend the rest on housing without fear?
—Mo’ Money Mo’ Problems
Dear Mo’ Money Mo’ Problems,
With so many life changes you’re currently facing, it’s not hard to see why you’re a bit anxious to see how far your money can go exactly. You should always be saving an adequate amount toward retirement and an emergency fund. At age 35, the general rule is that you should have saved one to one-and-half times your annual salary. You’re in a great spot. I would continue to max out your retirement accounts, but I think for now, you can take a break from saving for your emergency fund.
Most experts suggest not spending more than 33 percent of your salary on housing. Based on a salary of $340,000, you’d be able to spend $112,200 a year or $9,350 a month to live comfortably.
Children do come with additional costs, so it’s great you’re thinking about this now. Some expenses you can expect when starting a family are child care, formula, diapers, car seats, strollers, furniture, and clothing. You should be thinking about medical coverage for labor and delivery, too. It’s hard to determine how much you should budget for because every location is different, but this calculator lets you plug in your location to get a more accurate estimate.
Overall, for your situation, I recommend trying out the 50-30-20 budgeting method. The gist is that 50 percent of your income should be spent on your needs, 30 percent can go toward wants, and 20 percent can go toward savings. You can always play around with the percentages, but I think having this framework to start with will help ease anxiety so that you can spend this new money without guilt.
—Athena
Classic Prudie
My spouse and I are expecting a child in early spring. This is particularly joyous, as we struggled with infertility for many years. Unfortunately, there was a recent death in the family. My in-laws included our unborn little one in the obituary—and they also included a name. The problem is that we haven’t named our little one. This gesture, while I’m sure kindly meant, was really bizarre and surprising.
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