HerMoney Podcast: Bonus Mailbag #19: Love & Money Special

Saving money on hermoney podcast bonus mailbag does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.

Key Takeaways

• This week we’re diving into a special edition mailbag where we’re tackling all your questions around love and money.  To say “I love yo...
• But when you mix love with money (which we all do in countless ways over the course of our lives) complications can arise.
• Sorting through our feelings and our financial data, joint accounts, mortgages, and more can be incredibly difficult, but diving in with bot...

Happy Valentine’s Day! This week we’re diving into a special edition mailbag where we’re tackling all your questions around love and money. 

To say “I love you” to our HerMoney family this Valentine’s Day, we’re bringing you a special love and money-themed mailbag episode and we’re tackling all your questions on the topic.  

Perhaps The Beatles said it best when they wrote that “money can’t purchase me love.” While this is certainly true, money can improve your bargaining position, and having enough of it can absolutely make life easier. But when you mix love with money (which we all do in countless ways over the course of our lives) complications can arise. Sorting through our feelings and our financial data, joint accounts, mortgages, and more can be incredibly difficult, but diving in with both feet and coming up with answers is the only sure way to move forward. 

In today’s episode, Jean advises a couple struggling to get on the same page with budgeting, even though they agree on their bigger life goals. The couple is unsure if they should ramp up their retirement savings, or spend more money enjoying their life now. They’re also dealing with a substantial amount of credit card and student loan debt, and are unsure how much they should eliminate before they start saving for other goals. 

We also hear from a mom wondering if her daughter should put her boyfriend on the lease for her new apartment or not , her daughter could manage the monthly rent by herself if they broke up, but is it smarter to have him on the lease to start with? 

Jean also guides a woman wondering how she can best support her sister-in-law who has spent years in an abusive relationship and faced homelessness. She’s hopeful she can help get her sister-in-law back on track financially and moving past her traumatic history. Lastly, Jean offers her thoughts to a woman debating a prenuptial agreement before she enters her second marriage and combines homes with her husband. 

Thanks so much to all our HerMoney listeners for sharing their wonderful questions with us… We love to see your passion for the people in your life, as well as for your money! 

Transcript

Jean Chatzky: (00:07) HerMoney is supported by Fidelity Investments. We want to inspire you to demand more from your money by first knowing what you own, what you owe and what you want from your money. We’ll help to reach your financial goals faster at fidelity.com/demandmore. HerMoney comes to you through PRX.

Jean Chatzky: (00:27) Hey everybody. It’s Jean Chatzky. Thank you so much for joining us today on a very special Valentine’s Day episode. We are going through all your mailbag questions and we’ve pulled those that revolve around yes, love and money. Maybe the Beatles said it best when they wrote “Money Can’t Purchase Me Love.” Well, while this is certainly true, money can improve your bargaining position and having enough of it makes life, well, easier and when you mix love with money, something that over the course of our lives we do in countless ways, with spouses and kids and family, complications can arise. Sorting through our feelings, sorting through our financial data, but diving in with both feet and coming up with answers - that’s the best way to move forward. Kathryn and I are both here at the ready. We are hopeful that today’s bonus mailbag episode brings some of you at least the answers that you’re looking for. Hey, Kathryn. Happy Valentine’s Day.

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Kathryn Tuggle: (01:37) Happy Valentine’s Day.

Jean Chatzky: (01:37) So you’re a Valentine’s Day hater or a Valentine’s Day lover?

Kathryn Tuggle: (01:42) Both? I don’t know. I like any excuse to celebrate, but my husband and I don’t ever go out on Valentine’s Day.

Jean Chatzky: (01:50) Yeah. We don’t go out either because the restaurants are crowded and frequently overcrowded.

Kathryn Tuggle: (01:57) Right.

Jean Chatzky: (01:57) Right. The service is not necessarily the best, it’s just one of those days. But I do like any day that gives me an excuse to eat chocolate.

Kathryn Tuggle: (02:06) Exactly, and I think show gratitude.

Jean Chatzky: (02:08) Yes.

Kathryn Tuggle: (02:08) Send cards.

Jean Chatzky: (02:09) You’re a better person than I am.

Kathryn Tuggle: (02:13) Eat candy.

Jean Chatzky: (02:13) Yes. I agree.

Kathryn Tuggle: (02:14) I just think the love flows more freely on Valentine’s Day and who can argue with that?

Jean Chatzky: (02:18) I think that’s right.

Kathryn Tuggle: (02:20) Yeah.

Jean Chatzky: (02:20) So, all good. Let’s take a look at what we’ve got.

Kathryn Tuggle: (02:23) Our first note comes to us from Mary Kate. She writes, hi Jean. My husband and I have been married a few years and we are 30 and 31. I make $70,000 a year and my husband makes it a little less than that and is self-employed. I’m really proud of him for striking out on his own, though it has come with a pay cut and some risk. We are very good at budgeting and are not extravagant. We talk about money frequently and have fully combined our money. We’re on the same page with all of our bigger life goals and enjoy dreaming of what our money may someday do for us. However, we both have significant health problems that may reduce our individual life expectancies. While I’d love to ramp up our retirement savings significantly, it’s really hard for us to not prioritize our other wants because we’d like to enjoy life now and not defer to an uncertain future. I know numerous can relate even without health problems. Our biggest goal is to own our own little home and have a garden and a dog. We have nothing saved for this goal and we also have significant debt. $25,000 in credit card debt, $200,000 in law school debt and a $17,000 car loan. When it comes to saving for retirement, I currently save 5% of my income and get an employer match, while my husband hasn’t saved anything. We’re at a bit of a crossroads in deciding where our money should go. Do we increase our savings to invest? Do we press pause on retirement to save for a house? How much of our debt should we eliminate before we even think about these other goals? Thanks so much.

Jean Chatzky: (03:46) Mary Kate. Let me just say thanks for writing. I hope that you are having a happy and healthy Valentine’s Day. It’s a really tough question. And not knowing specifically the time frames that you’re dealing with or the interest rates on that debt - let me give you some general advice. I think that you should try saving a little bit starting now while emphasizing payment of those highest interest rate debts to hopefully put you in a position where you can ramp up that savings in future years. I frequently like to say that credit card debt is a savings killer and I think $25,000 in credit card debt is definitely a savings killer. I would look to, if your credit scores are good, to refinance that credit card debt at the lowest possible interest rate, maybe transferring some of it to 0% cards if you have the opportunity to do so. And then I’d really wail on that credit card debt and try to move it out of the way. Because if you think about it, $25,000 in credit card debt on which you’re paying interest is, once you’re free from it, money to save. So if you can clear that obstacle, you can take all of the money that you were flowing against that credit card debt and you can throw it against your savings. Same thing basically with the law school debt and the car loan. Refinance them as much as possible. If you haven’t refied that law school debt, then look to see if there’s a lender out there that’ll help you pay it off at a significantly lower interest rate, so that you can pay it off a little bit faster, so that you can pay it off a little bit less expensively and so that you can flow a little bit more of your money toward that savings cushion. Even if your husband is earning slightly less than you are now, he should be able to, the two of you together should be able to save something from his income. I’d probably open a Roth IRA for him because you can use that Roth IRA in order to purchase your first house as well as for retirement, even though it has the advantages of being a retirement savings account. You can use it for other purposes. It’s that flexible. And I try to automatically make a Roth contribution on his behalf and maybe on your behalf if you can do it as well and use that as the cushion that you’re building for your home. Start small, you know, start with $25 every pay period, $50 every pay period,. The money will be there. The money will start to grow. And I hope that you’ll be able to get into your own home for little more than you’re actually paying in rent. It is possible, but you gotta clear that big significant obstacle out of your way. And I see that credit card debt being the biggest of those obstacles.

Kathryn Tuggle: (06:56) I agree. And it sounds like they’re on the same page, so they should both be saving for retirement and keeping with their joint goals.

Jean Chatzky: (07:04) Look, I think when retirement is an uncertainty, we look at ways to be able to access our money for other things. When retirement is not a certainty, we look at ways to be able to access our money for other things that are more of a priority for us. And the beauty of a Roth IRA is that it gives you that. You can pull out your contributions at any time. You can pull out your money for that first home, for education. It’s really, really flexible. So I would say give that a go.

Kathryn Tuggle: (07:44) Fantastic. Our next question comes to us from Laura. She writes, hi Jean. My daughter will be graduating from college soon and will be looking for an apartment with her boyfriend in Iowa. She’ll be working full time making a decent paycheck and he’ll still be a student incurring debt from grad school. She asked me if she’s better off adding his name to the lease or leaving it off. I’m not sure how to answer this. If something were to happen and they broke up, she could manage the monthly rent by herself. Do you have any advice?

Jean Chatzky: (08:11) So, I am not a lawyer. I’m not an expert in landlord tenant law, but that’s basically the area that we are talking about here. I’d put his name on the lease. The landlord wants to know who is living in that apartment and if the landlord’s not aware that another person is actually living in that apartment, it could get your daughter in trouble if not evicted. So, I would just say come clean. And it’s excellent that she has the ability to pay the rent on her own if something were to happen, but in order to really protect her right to live there, I would say just sure that they both apply to do that. They will probably want to let the landlord know that she could pay the full rent if she needed to because the landlord, in looking at her boyfriend, may be wary since he will have no income and he may need some sort of a guarantor. As a parent, I’ve co-signed on a lot of apartments lately for my son and for my daughter because they frequently don’t have the income requirements that landlords like to see. And your daughter’s boyfriend, his parents should probably be his guarantor, not your daughter, just to keep it nice and clean and simple since they’re not married. That’s what I would say.

Kathryn Tuggle: (09:37) Right, and in my experience, oftentimes the landlord only needs to run the credit on one person, but then both of their names can be on the lease.

Jean Chatzky: (09:45) Yeah, and you know, it depends on the landlord, right? If you’re talking about renting from a mom and pop who are living downstairs, it may be a very different procedure than living in a big building that has people moving in and out all the time. But I’d say keep it clean, keep it honest a

Final Thoughts

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Originally published at savingswitch.com.