Dear Penny: My Husband’s Overspending Is Destroying Our Finances

Dear A.,

You must feel like you’re talking to a wall whenever you want to discuss finances. A very expensive wall.

It sounds like you’re doing everything right by presenting evidence and making the case for cutting back. But since your message isn’t getting through, it might be time to take a few steps back and explore a new approach.

Have you asked questions when you talk about money with your husband, or do you just charge ahead, spreadsheets a-blazing?

Try starting the conversation with something like, “I know we’ve talked about trying to save money before, and you probably remember that I have a lot of ideas for how we can go about it. But I want to learn from you: What are your priorities when it comes to money?”

Even if you’ve argued about this a dozen times before, approaching your husband again with curiosity and a genuine desire to learn can help get you started — and on the right foot this time.

The answers might surprise you. Your husband might say that he thinks cable is worth having in exchange for spending less money on nights out, for example. Or he might reveal that he’d love to avoid paying the late fee on a certain bill, but he can’t figure out how to set up autopay without getting frustrated and giving up — we’ve all been there.  

You may think some of his justifications are dumb or that his priorities are off-base. But that doesn’t make his thoughts less valid. Investigating his point of view should help you identify areas where you agree, as well as areas that might be lost causes.

It’s also important to highlight the “why” as much as the “how.” If you aren’t unified in your goals for saving money, you’re going to be at odds trying to make those changes happen.

It’s only then that you can start re-examining a game plan for your family’s finances. He may be willing to let you take the reins of accounts and subscriptions if he doesn’t have the patience to nickel and dime them.

But you, the go-getter, will not know how to proceed productively until you get to the core of what motivates (and demotivates) your husband.

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Dear Penny: I’m in So Much Debt My Teenage Son Is Afraid of Student Loans

Dear J.,

Your debt has consumed you. You probably thought you hit your lowest financial point years ago, when you were a new mom; then you probably thought you were at the bottom again when you defaulted on your student loans. And now, here you are with the added burdens of medical debt and your son’s misconceptions about how investing in college could derail his future.

There’s a lot you can’t change right now. But one area where you can make a major change right away is in how you and your son discuss his options for higher education.

Your family’s income is not the sole determining factor for how much financial aid your son is eligible to receive. The size of your family, for instance, will also be considered. Applying for federal student aid is a must-do if your son wants to pursue college, as it’s the first step toward figuring out what sort of grants, loans and work-study programs will be available to help him cover the costs.

Once he receives financial aid offers, he can truly evaluate the affordability of school. He may have to start at community college or another lower-cost option, but he shouldn’t count out college solely because of your family’s financial struggles.

Next, it’s time for you to get help sorting out the options for your own finances. Calling for assistance from an impartial third party can help you make sense of your situation instead of spinning your wheels and feeling desperate. A debt counselor in your area can review your credit report and provide free educational resources that can help. They can also help you enroll in a debt management plan that will make your debt easier to manage.

In extreme cases, a debt counselor may recommend that you consider filing for bankruptcy, which can discharge some of your debt. There’s a lot of shame around the idea of doing this, but it could be the lifeline you need to find stability for your family.  

And that may be the hardest part of taking your next financial step: letting go of the shame. More people than you can possibly imagine have struggled to gain financial stability, let alone success. I won’t be glib and say you’re in good company. But you at least have company.

You may be surprised at how understanding your peers are as you seek help and start to work your way out of debt.

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Dear Penny: I’m Debt-Free! But What Should I Do With All My Money Now?

Dear N.,

Congratulations on being debt-free! Your world is filled with nothing but possibility.

I was you once. I paid off all my business, credit card and undergraduate debt, rejoiced for but a moment, and then turned around and took out a car note. We all make our choices. Don’t make the same one I did!

The trouble with possibilities is that it’s easy to start disbursing money into so many different buckets: savings, other savings, a rainy day fund, a house fund and so on. If you try to divide and conquer too much, you’re not going to conquer anything. Those small achievements for each of your goals could actually leave you feeling disheartened instead of empowered.

For your best next step, I turned to Jen Smith, a fellow writer at The Penny Hoarder who paid off $ 78,000 of debt with her husband in two years. Smith is my savings role model.

Smith recommends starting your debt-free life by first saving three to six months of expenses in a high-yield savings account, and then making sure 15% of your income goes toward retirement. “Fifteen percent isn’t a hard-and-fast rule,” she said, “but if you want to retire on time, then prioritizing it is essential. Then, any extra can go toward saving for a house.”

Since you’re already saving, you can probably skip ahead to focusing on your retirement accounts. Smith is a fan of contributing to your company-sponsored 401(k) up to the offered match. Then it’s time to open a Roth IRA if your income permits.

“Roth IRAs are great because you have full control over the investments, and the contribution limits are reasonable enough to be able to max it out,” she explained. (The contribution limit for 2019 is $ 6,000; if you’re 50 or older, you can contribute an extra $ 1,000.)  

If you still aren’t setting aside that full 15 %, go back to your 401(k) or HSA and contribute more to one of those. If you’re not catching the drift, your priority should be to stash as much money as you can for retirement now, before a house or kids enter the picture.

But while you’re making these plans, don’t forget to pat yourself on the back. The progress you’ve made is noble and worth celebrating. Smith and I salute you!

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Lisa Rowan is senior writer at The Penny Hoarder, and the voice behind Dear Penny.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Dear Penny: I’m Retiring Soon. How Do I Protect My 401(k) From a Downturn?

Dear M.,

Economic ups and downs are inevitable, but sometimes it’s hard to think beyond the downturns.

We seem especially sensitive to the condition of the stock market, since we’ve just passed the 10-year anniversary of the start of the Great Recession. Those memories of turmoil and heartache bubble right back up, and suddenly, we’re checking our retirement account statements with a bit more interest than usual.

To calm your nerves about the state of our economy, I called upon Bridget Todd, head of client strategy and development at New York-based coaching firm the Financial Gym.

“I usually tell clients to think about the 2008 financial crisis, when the Dow Jones Industrial Average lost more than 50 percent of its value,” she explained by email. “In the nine years since, it is up about 200 percent.”

While there are periods of discomfort, she said, the market will always recover. “The most important thing to remember is not to sell when things get bumpy,” she said.

Your 401(k) is a place to hold your investments. You can make decisions about what’s inside that account — stocks, bonds, mutual funds, derivatives, exchange-traded funds — depending on the level of risk you’re comfortable with.

If you’re at least 10 years from drawing from your 401(k), Todd recommends allocating 90 percent of holdings to stocks and the remainder to bonds.

“Stocks are the riskier asset,” she said, likening them to a roller coaster. But that fluctuation is OK. It will all settle out eventually, helping you earn that average stock market return of 7 percent per year that you hear about.

If you’re closer to retirement and nervous about the health of the market, you can pull back on how much you allocate to stocks to reduce your risk. But you still want some of your investment to be in stocks to help that nest egg grow.

In short: Hold on and enjoy the ride. Even if the economy takes a temporary dive, your contributions will still have value to carry you through to retirement.

If only we had that crystal ball in the meantime. Wait. That would probably be insider trading. Maybe skip the crystal ball.

Worried about managing your money in trying times? Write to Dear Penny at https://www.thepennyhoarder.com/dear-penny/

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny. For more practical money tips, visit www.thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Dear Penny: I Want to Help My Elderly Parents by Buying Their House

This sounds like a super generous move. After so many years of turning to your parents for care and advice, this is, for many, the dream: to be able to return the favor. But caring for your parents in this way can have a lot of complications.

I called in help from two experts: financial adviser Stephanie McCullough, and financial adviser Andy Wang, who also hosts the “Inspired Money” podcast.

First: Can you afford to take on another mortgage in addition to your own? It’s worth spending the money to discuss the long-term impact of this move with a tax professional and an attorney, Wang advised.

McCullough took her warning even further. “If I were your financial planner, I’d be advising you to look out for yourself and your husband,” she wrote in an email.

Consider your upcoming retirement. What will happen when the paychecks stop and you have to start living on your savings? Look carefully at your cash flow and imagine what would happen if you or your husband lost your job, or became disabled prior to your target retirement date, she recommended.

Two technical matters Wang said to check on before moving forward: whether the loan is assumable, meaning you could take over mortgage payments by assuming the loan; and whether the loan has a “due on sale” clause that would require the loan balance to be paid upon transfer of property. The former might provide an alternative option for you, while the latter could lead you to pause on your plan to buy.

If there’s a reason you want to own the house beyond your parents’ tenure there — maybe it’s been in your family for some time — you’ll need to plan for that future, McCullough said. Unless you plan to eventually live there yourself, keep in mind that managing a rental from far away can be stressful.

Wang brought up one more “what-if”: the possibility that your parents could outlive you. “You’d also need contingency plans in case something were to happen to you to ensure your parents may continue to reside there,” Wang said.

What’s your real motivation here: to keep the house in your family, or provide financial stability for your parents? If it’s the latter, it may be worth thinking about alternative options to support them while ensuring your own long-term financial security.

Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.

Lisa Rowan is senior writer at The Penny Hoarder, and the voice behind Dear Penny.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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Dear Howard Schultz, You Don’t Understand the American Dream

Photo Illustration by Elizabeth Brockway/The Daily Beast

The term “American Dream” gets tossed around a lot. Politicians promise to deliver it. Pollsters poke and prod it, asking for the public’s opinion on its attainability. The American Dream is a handy metaphor for journalists writing on a subject’s upward ascent, and the concept gets namechecked in countless songs across every genre, often with an overtone of aspiration or braggadocio. Yet no matter who’s invoking the American Dream, they almost always misuse it by framing it in material terms: two cars in every garage; exceeding the previous generation’s wealth—owning a home is a perennial favorite, too.

Only last week, former Starbucks CEO Howard Schultz, who’s thinking of running for president, provided a fine example of our collective conception of this idea, telling the Morning Joe crew, “I’m self-made. I grew up in the projects in Brooklyn, New York… I thought that was the American Dream.”

Schultz—and most of us—thought wrong, because the original American Dream—that is, the term’s first usage, in author James Truslow Adams’ 1931 history The Epic of America—was far more nuanced, and far more radical, too.

Read more at The Daily Beast.

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Dear Penny: I Make Way More Than My Boyfriend. How Do We Combine Finances?

Dear M.,

If your boyfriend feels threatened by the fact that you make more money than him in our modern era, he can take a hike.

But don’t let me jump to conclusions and/or your defense right away. Let’s assume that your boyfriend is worried that he won’t be able to contribute enough to your household expenses.

To figure out how to combine finances when you’re living in two very different financial worlds, you need to stop thinking of your relationship as a 1 + 1 equation. Sure, emotionally and physically, it’s 1 + 1. But financially, you’ve got to work out the percentages. Splitting your expenses half and half is just not going to work.

Instead, try this method I learned from my colleague Lauren Sieben: Add both your salaries together, and then determine how much you each contribute to the overall pie.

I’ll give you an example. Say you make $ 50,000 per year before taxes, and your boyfriend makes $ 25,000. Together, you make $ 75,000 each year. He makes one-third of that total, whereas you earn two-thirds of the total. Therefore, he’d contribute about 33 percent of your household expenses and savings goals, and you’d contribute about 66 percent. To look at it another way: He’d kick in one-third of the rent each month, and you’d pay the remainder.

This may not be the most ideal setup for your relationship, but it’s one example to get the conversation started. When it comes down to it, you can combine finances any which way that makes you both comfortable — emphasis on both.

Be prepared to discuss combining your finances several times (before you get engaged, ideally) before agreeing on a plan. Rushing to pick a method without buy-in from both partners can lead to resentment. That being said, there’s no reason you can’t switch up your method if you figure out a better one or if one of you experiences a substantial career change.

Not sure how to discuss money matters with a partner? Write to Dear Penny at https://www.thepennyhoarder.com/dear-penny/

Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny. For more practical money tips, visit www.thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.

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BWW TV: THE PROM & DEAR EVAN HANSEN Continue the Holiday Season at Broadway Under the Stars- Watch Live at 5pm!

Later today, December 3,The Shops at Columbus Circle10 Columbus Circle will continue its third year of Broadway Under the Stars, a five-week series of free public performances taking place this holiday season. Select cast from today’s hottest Broadway musicals will perform against the backdrop of the famous twelve massive stars. These stars are the largest specialty crafted exhibit of illuminated color display in the world, which hang from the 100-foot-high ceilings. Performances are free to attend and open to the public, no reservations or tickets are required.
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