Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena, Kristin, and Ilyce here. (It’s anonymous!)
Dear Pay Dirt,
I have a friend who called me one day in a panic. She couldn’t pay her credit card bills and she wanted some assistance with paying it off. I offered to help and gave her $3,000 (her actual debt was $8,000).
She agreed to pay me back over the following months in $800 installments, which she did without a problem. For what it’s worth, she’s married but has an arrangement where her husband pays the mortgage and she pays all the other bills. I personally think that’s an unfair arrangement because some months that amounts to a lot more monthly than the mortgage payment. I really care and love my friend, so what advice can I give her so she doesn’t find herself in this predicament in the future?
—Friend With the Dough
Dear Dough,
Unless you have more information about your friend and her husband’s finances, I would tread lightly here. Since she’s already opened the door to her finances by asking you for a loan, there may be some room for you talk to her about your concerns. But keep in mind that she and her husband might have an arrangement that works for them. Did he know about the debt? Does he earn significantly more or less? Who pays for discretionary expenses, like travel or restaurants? How did she rack up the debt in the first place? Was it an issue with monthly budgeting or did an emergency arise?
It’s wonderful that you were there to help her out when she needed it, and her debt amount may be concerning, but there are so many factors that could be at play here. A simple solution, should they have a problem splitting things fairly, is to average the past 12 months of their bills to find out what their average spending is, then split the bills and mortgage accordingly.
If you want to say something to her, I would do so gently. Try something like, “I don’t know your full financial situation so it’s hard to tell, but it seems like you contribute more than your husband. Is that the case?” If she feels like the situation is unfair, she could be defensive or brush off your concern, but this might give her a little nudge to rethink their budget. If she feels the situation is fair, she’ll let you know, and that’s that. If her husband is actively doing something to suggest he’s taking advantage of or controlling her, that’s another story. But as it stands, put the question out there, and then accept her answer.
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Dear Pay Dirt,
I (40 F) purchased a house built in 1905 for $105,000 in 2010 that will be paid off in 2030. There is $33,000 left on the mortgage. In 2021, a realtor estimated the value at $200,000. The area is likely to become gentrified in the next 10 years. I have always viewed this as my starter house that would ideally become passive income and help fund my retirement. In 2021, I met my fiancé, and we moved to a new state and have been renting, while I rent out my starter home for $1,300/month (mortgage, taxes, and insurance are $745/month). We are now looking to buy a home together.
I’ve been sticking to my guns about wanting to keep the house to fund retirement, but is that the right move? I think the income will cover repairs plus provide a surplus for the next 25 years, at which point it would make sense to sell because the lump sum would be similar to the rent I could collect the last decade or so of my life. Am I missing something? I just keep telling my fiancé that’s not my plan, but I can’t necessarily back it up with a logical argument.
—Passive About More Than Income
Dear Passive,
Your plan sounds logical to me, but there’s a case to be made for selling, too. For one, there’s the opportunity cost. The funds you have tied up in the property could potentially be invested somewhere else, possibly giving you higher returns—a financial planner can help you do the math here. Also, property values fluctuate. In your case, it sounds like this property will continue to appreciate as you ease into your retirement years, but that’s not guaranteed. Market downturns, natural disasters—lots of things can change in the next couple of decades, and relying on a single asset to fund your retirement is risky. Finally, there’s the commitment to being a landlord for the next 25 years, which comes with a lot of responsibility: dealing with tenant issues, handling repairs, and finding new tenants when vacancies pop up, to name a few.
Overall, your plan to keep the house as a rental property seems like a solid one (assuming you’re simultaneously saving for retirement), but you definitely want to weigh the benefits against all of the concerns outlined above. And how do those concerns fit with your broader financial goals?
Go over each of these points clearly with your fiancé. Run through some scenarios together looking at your future cash flow, expenses, and savings goals, and see how keeping or selling would affect each scenario. Ideally, you would enlist the help of a Certified Financial Planner to look through these scenarios with you and help you make an informed decision. But ultimately, whatever choice you make isn’t just about numbers. It’s about getting on the same page and creating a financial future that aligns with both your values and goals. It sounds like you’re already on the right track.
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Dear Pay Dirt,
My parents were fanatical about saving for retirement my whole life. We lived carefully my whole childhood. They talked frequently about how they planned to travel and looked forward to it. They have a paid off house that skyrocketed in value, they have long-term care insurance. They both have generous pensions from state jobs, and regular retirement accounts from private sector work after. They are richer than they’ve ever been. My mom is in great health and still working. My dad developed a mild disability shortly before retirement but is active and bored despite significant volunteer commitments.
My dad had mild seasonal depression his whole life but it’s become very serious post retirement. Past winter trips to sunny places have been amazing for him and he talks about them fondly. But he refuses to travel now because he’s scared his disability will make it too hard. I know it can be accommodated if he’s just given extra time places, and I’ve seen it go well for him! But he refuses. Another cold dark winter is coming up and he’s basically sitting on trip of a lifetime travel money while he develops predictable symptoms from the dark winter. My mom has washed her hands of this, saying she’ll accompany him anywhere but won’t push. He can live out his retirement dreams but he just refuses. I am not living this type of life at all so maybe I don’t have enough sympathy. Is there anything I can do?
—Champagne Problems
Dear Champagne,
This might seem like just a champagne problem, but I wouldn’t dismiss it as such so easily. It sounds like your dad is grappling with some rough mental health issues, which are common later in life, especially as health issues emerge. If he’s depressed, travel might not hold the same luster as it once did for him. Are there support groups he can join for other people with his disability? Would he be willing to talk to a therapist? If he feels bored, that’s a huge sign that he might feel like he’s languishing in life. When those sorts of feelings go unchecked, it can snowball into severe depression, and your dad might be creeping to that point.
If he truly thinks traveling will make his disability worse, you want to respect his concern. When you talk to him about this, I would start there, with something like, “You know your limits better than anyone else, so I don’t want to push you.” Then ask questions that might help you get a better idea of his headspace. Is he just worried about the effect on his health, or are there other reasons he doesn’t want to travel? Would he be willing to start small? Maybe you could plan a local trip that you offer to join him on for a couple of days and see if it lifts his spirits. If so, would he be motivated to go on a longer vacation? Offering to do the planning, and getting him involved in your research might help him take those first steps. Make sure to look into places that might offer accommodations for his disability or feature accessible attractions.
It’s easy to see travel as a cure-all to his problems, especially if he enjoys a break from those long and dreary winters. But if he’s refusing, I’m guessing there are some big existential questions he’s facing right now. I wonder if his willingness to travel is more so a sign that he’s feeling good, rather than the thing that’s going to make him feel good. Find some options to support his mental health and the specific issues he’s going through, and start there.
—Kristin
Classic Prudie
My sister “Simone” lives abroad and has for almost five years. She has been in a relationship with “Jay” for almost three years, but we only met him last fall. Jay is a public figure, and for career reasons, he must be perceived as being single. He is under a tremendous amount of scrutiny, and from what I understand, Simone has signed several NDAs. Jay’s employers only recently allowed her to disclose his identity to us. Simone adores Jay, and Jay seems to love her right back. I get the impression it’s been very difficult to keep him a secret from our parents, other sisters, and me. At the same time, she’s terrified someone from our family will accidentally disclose Jay’s identity and “ruin everything.”
