Happy Valentine's Day!
Today, we're exploring a unique mailbag episode focused on the intersection of love and money.
As The Beatles famously sang, "money can't buy me love," but it certainly can influence financial conversations. Blending finances with romantic relationships can lead to complications. Addressing these issues is essential for moving forward.
This episode features a couple seeking guidance on budgeting. They share common life goals but struggle to balance retirement savings with enjoying life now. With considerable credit card and student loan debt, they're unsure about their next financial steps.
We also help a mother contemplating whether her daughter should add her boyfriend to the lease of her new apartment. While the daughter can afford the rent alone, is it wise to include her boyfriend from the start?
Additionally, we discuss how one woman can support her sister-in-law who has endured an abusive relationship and homelessness. She hopes to assist her sister-in-law in regaining financial stability and overcoming past trauma. Finally, we advise a woman considering a prenup ahead of her second marriage.
Transcript
Jean Chatzky: (00:07)
Welcome to this Valentine's Day episode! We're tackling your questions about love and finances. Mixing these two can lead to challenges, but addressing them head-on is crucial. Kathryn and I are here to help you find answers.
Kathryn Tuggle: (01:37)
Happy Valentine's Day!
Jean Chatzky: (01:37)
Are you a fan of Valentine's Day?
Kathryn Tuggle: (01:42)
I'm a bit of both. I enjoy any reason to celebrate, even if my husband and I usually stay in.
Jean Chatzky: (01:50)
We prefer to avoid crowded restaurants.
Kathryn Tuggle: (01:57)
Exactly.
Jean Chatzky: (01:57)
Plus, the service isn't always great.
Kathryn Tuggle: (02:06)
Right.
Jean Chatzky: (02:08)
But I love any excuse for chocolate.
Kathryn Tuggle: (02:08)
Agreed, and it's a good time to express gratitude.
Jean Chatzky: (02:09)
Absolutely.
Kathryn Tuggle: (02:13)
And send cards.
Jean Chatzky: (02:13)
You're kinder than I am.
Kathryn Tuggle: (02:14)
I just enjoy sharing love.
Jean Chatzky: (02:13)
Yes, indeed.
Kathryn Tuggle: (02:14)
Love seems to flow more freely on Valentine's Day.
Jean Chatzky: (02:18)
I agree.
Kathryn Tuggle: (02:20)
Yes.
Jean Chatzky: (02:20)
All good. Let's see what questions we have.
Kathryn Tuggle: (02:23)
Our first note is from Mary Kate. She says, Hi Jean. My husband and I have been married a few years, and we're both in our early thirties. I earn $70,000 annually, while my husband makes a bit less as a self-employed individual. We're diligent budgeters and have merged our finances completely, aligning on our big life goals. However, we both face health issues that may impact our longevity. While I want to boost our retirement savings, it's tough to resist spending on current joys. We also have a goal to own a home and have a garden and a dog, but have significant debt: $25,000 in credit card debt, $200,000 in law school loans, and a $17,000 car loan. Currently, I save 5% of my salary with an employer match, while my husband hasn't begun saving. We're at a crossroads on our financial priorities. Should we focus on saving for retirement or the house? How much debt should we clear first?
Jean Chatzky: (03:46)
Thanks for your question, Mary Kate! It's a challenging situation. Without knowing specifics about your debts, here are my suggestions. Start saving a little now while focusing on paying off high-interest debts to improve your future savings potential. High-interest credit card debt is a significant barrier. Consider refinancing to lower rates or transfer balances to 0% cards if possible. Eliminating that $25,000 in credit card debt will free up funds for savings. The same applies to your law school and car loans—look into refinancing options. Even if your husband earns less, both of you should aim to save something. A Roth IRA could be a good choice for him, offering flexibility for both home purchases and retirement. Start with small contributions; the money will grow over time. Clearing the credit card debt is your main priority.
Kathryn Tuggle: (06:56)
I agree. It's great they're on the same page about finances.
Jean Chatzky: (07:04)
When retirement feels uncertain, we often prioritize different financial needs. A Roth IRA lets you access contributions anytime, which is beneficial for your situation.
Kathryn Tuggle: (07:44)
Excellent advice. Our next question comes from Laura. She writes, Hi Jean. My daughter will soon graduate and search for an apartment with her boyfriend in Iowa. She'll have a steady job, while he's still in grad school and accumulating debt. She wonders if it's better to include him on the lease or not. Her ability to manage the rent alone makes this a tough decision.
Jean Chatzky: (08:11)
While I'm not a legal expert, I recommend putting his name on the lease. Landlords need to know who lives in the apartment, and failing to disclose this could lead to eviction risks. Assure the landlord that she can cover the rent on her own if needed, as the boyfriend may require a guarantor due to his lack of income. As a parent, I've co-signed for my children in similar situations, ensuring everything stays straightforward.
Kathryn Tuggle: (09:37)
Often, landlords only require credit checks for one person, allowing both names on the lease.
Jean Chatzky: (09:45)
This varies by landlord. Maintaining transparency is key. Good luck to them on their apartment search!
Kathryn Tuggle: (10:08)
Definitely.
Jean Chatzky: (10:09)
Let's pause to remind everyone that this podcast is brought to you by Fidelity Investments. You don't need all the answers about your financial future, but it's crucial to know what you want from your money. Fidelity can assist you in achieving your financial goals faster. Start with a financial checkup and understanding your assets and liabilities. They'll help you explore investment options and grow your savings at Fidelity.com/demandmore.
Kathryn Tuggle: (11:00)
Let's continue with the mailbag. Our next message is from an anonymous listener. She writes, Hi Jean and Kathryn. I recently discovered this podcast and I feel like I'm chatting with friends during my walks. I'd like your advice on helping my sister-in-law. She's been in a long-term abusive relationship, leading to mental health struggles. Living paycheck to paycheck and dealing with debt, she's currently living with us. While we assist with her expenses, I worry about her future. What steps can I take to encourage her to manage her debt and save for the future? I considered adding her as an authorized user on our credit card to improve her credit, but I'm concerned about potential liabilities. Should we explore credit counseling or debt consolidation services? She aims for a stable life and I want to support her in achieving that.
Jean Chatzky: (12:52)
Your letter shows immense care. Your sister-in-law is fortunate to have you both. I advise against adding her as an authorized user since any charges she makes would become your responsibility. Instead, seek a nonprofit credit counselor. They can help her assess her debts, income, and create a manageable plan. If necessary, bankruptcy may be an option, but a credit counselor is the first step. Visit debtadvice.org to find one near you. They can help her establish a debt management plan that reduces interest rates and fees, simplifying payments.
Kathryn Tuggle: (14:59)
That's true love—supporting her like this.
Jean Chatzky: (15:04)
Exactly. It's also vital to ensure your own well-being, as you can't support her indefinitely while neglecting your needs.
Kathryn Tuggle: (15:14)
Yes.
Jean Chatzky: (15:15)
We have one more question.
Kathryn Tuggle: (15:16)
Yes. Our final note is from an anonymous listener. She writes, Hi Jean. I'm 52 from New Jersey and a new listener. I love catching up on your discussions. My question is about second marriages and combining homes. I own my townhome in New Jersey outright and plan to move to Pennsylvania with my fiancé, whose house needs renovations. Should I rent my property or sell it? Rentals in my area go for $2,200 monthly, netting about $1,000 after expenses. I could sell it for around $275,000. Is it better to rent and invest the income, hoping for a better real estate market later, or sell, fund renovations, and invest the rest? If I rent, I might need to borrow for renovations, but selling would provide cash upfront. Also, do you recommend prenuptial agreements in second marriages?
Jean Chatzky: (16:27)
Addressing your second question first, prenups are advisable in second marriages, especially when assets and children are involved. Having one drafted by a lawyer is straightforward and essential. Regarding your other question, I recommend selling the townhome. Managing a renovation alongside a new marriage with six adult children is quite a challenge. It's best to simplify your life as you start this new chapter.
Kathryn Tuggle: (18:36)
It sounds like quite the blended family.
Jean Chatzky: (18:38)
It certainly does! Please keep us updated.
Kathryn Tuggle: (18:43)
For sure.
Jean Chatzky: (18:44)
Thank you for your thoughtful questions! We appreciate all our listeners for their engagement. We plan to continue these special mailbags throughout the year, so feel free to reach out at info@savinghunt.com. If you enjoyed this episode, share it with a friend and subscribe at your favorite podcast platform. We also thank our sponsor for their support. We record this podcast at CDM Sound Studios, with music by Video Helper, and our show is produced through PRX. We look forward to connecting again soon.
