Is my husband a spendthrift? Or I a tightwad?

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Grt2bOutdoors
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by Grt2bOutdoors » Thu Oct 02, 2014 8:16 am

OP, if you haven't already read this, I recommend you read The Millionaire Next Door - although the book was released nearly 20 years ago, much of what is in that book holds true today. Media portrays the rich as having attained their wealth though stock options, IPO's, lottery winners. The real truth is much of the wealth in this country was generated through blood, sweat and tears, aka "hard work". The world has a finite set of resources, it is no different for you or me, however it is up to us to properly manage those resources before they run out. I have family members in situations similar to yours - wealthy family has supplemented their already high income earnings with largesse, the likes of which could only be attainable if you literally hit the lottery. Those family members will likely squander the wealth and not pass it on to future generations. The middlemen will help them in dispensing with their wealth. In your case, the middlemen have been already identified by you - Whole Paycheck, auto financing companies, second homes, frivolous spending and you may want to consider someone who starts one project and then moves onto to the next as having "bi-polar" tendencies (having seen this in my own family, I know what it looks like).

Good Luck to you as this exercise is going to be a work in progress, much like many of the forum members here.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ResearchMed
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 8:30 am

hcj wrote:
ResearchMed wrote: I sensed a fair amount of "control" in how you were writing about what should be a give-and-take between you and DH, especially about his spending money, and what seems like quite a modest "budget" including for his clothing, given your income level.
You may not be intending that, but that's how it sounds. And it might be how he feels it.
Again, TALK. Both of you will need to be tolerant and generous. A couple of sessions with a marriage counselor might be worth a try, if the talking starts to head sideways.

Good luck. At least you are now thinking about these issues, and before there is major trouble.

RM
Thank you for the really thoughtful and gently worded advice. It's not just how you read it, I am being a total control freak.

Not just to RM, but to the forum at large: I appreciate everyone calling out that it is the housing and childcare expenses that I/we should be looking at. I have always taken those as granted and that we had to figure out how to live on what's left. We even continued to make a 4k payment on the mortgage as we refi'd the payment down (well, until now).
Hi again hcj,

Whew... I was really nervous writing that bit. But I did think it was important, whether or not you were aware of the "tone".
And I think I read that you had *not* yet "confronted" DH on the $60 issue, and that was a relief. At your income/lifestyle, that's just not worth bickering or nagging - unless there are tons of separate $60 here, $60 there, etc. And life is too short for that kind of stressing for YOU, too.

I'll write more later (uh, I hope, unless "too much life happens" on this end today :wink: ) but first, I wanted to add something.

My opinion has really changed since you started adding more.
It sounds like you have had a remarkably privileged life, and yes, most people here on BH Forum are not in that category. You may have been experiencing a bit of "selective perception", noticing more those contributions/questions/suggestions that were more relevant to those in higher income/wealth categories.

But mostly, I want to mention how very impressive your openness is, your eagerness to learn, absorb, and re-think your priorities, and also - very importantly - some of the marital interactions.
I didn't expect that. It's very encouraging, in terms of whether and how you'll both be able to figure out a more comfortable, less-stress life, now and in the future.

RM
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Nestegg_User
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by Nestegg_User » Thu Oct 02, 2014 8:39 am

Well, I'll have to say it is interesting thread...given the start... and the eventual findings re, assets and income... and I'll have to admit to pilling on here...

Agree that childcare (@2600/mo) and groceries (@1600/mo) are excessive, and I question the 575/mo car (or is it two cars?) as that seems a bit large for many vehicles. I also agree that the ski lodge is NOT possible with the existing cash flow.

Questions: Assuming that you actually WANT the gifted house for the future and are keeping it for that purpose, why aren't you at least RENTING IT and getting some cash flow for two years (offset some property taxes, admittedly with concomitant increase in income at highest taxable level)? {Just saw posting of Alex, while I was typing this... so I agree} So I agree you are "house poor" relative to your income/expenses. I would also assume that occupancy would be needed to maintain insurance on said property. If you did not want to live in property, then sell it!

I saw life insurance as expense, but no where was there an expense for disability... a more likely event. [NOTE: I'm not an insurance agent..] Isn't this needed to protect long term viability of your plan?

FYI: we're in the same income area, but have ours as available cash/investments instead of in house; further, we plan on mortgage for next/final house and will pay off that house with sale of current residence.

cherijoh
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by cherijoh » Thu Oct 02, 2014 8:40 am

hcj wrote:
Dave1 wrote:
Re. your assets, I'd be uncomfortable with such a large percentage tied up in real estate, but that's a discussion for another time. Perhaps you are expecting other gifts from your family over time, or a large inheritance, which makes this better... dunno.

Good luck.
Wanted to touch on this part, our view on real estate, which I know most here don't share.

I've had terrible experiences with the stock market. I could not stay the course. It made me nervous as hell. I would like to change that but not there yet.

Real estate is something I've been more successful at and have a higher level of comfort with. Not just this house but others too. It's something I grew up with, it's where my parents made all their money. And since we have a hard time saving money, it functions well as a forced savings program in our case.
You need to be realistic about the risks you are taking by putting such a heavy bet into real estate - which is extremely illiquid and very prone to boom and bust. Since you are currently living in a high-end property and contemplating adding a vacation rental, you have also concentrated on the riskiest part of the market. These are the first to suffer downturns and - in the case of vacation property - the last to recover. You must be aware that very knowledgeable real estate professionals have gone bankrupt - your comfort with real estate vs. the stock market is strictly an illusion. You are NOT playing it safe!

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ixohoxi
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ixohoxi » Thu Oct 02, 2014 8:43 am

Reading suggestion: Green With Envy by Shira Boss. Psychology of consumption and comparing yourself with what you imagine your friends and neighbors are doing.

Also, although it is good to put aside the money before spending it, the "SAVINGS 1676" is really more consumption, not actual savings.
Henceforth, content shall be my aim, and anticipation my joy. -Alfred Billings Street

BuckyBadger
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by BuckyBadger » Thu Oct 02, 2014 9:09 am

I feel like the big piece we're missing is how much exactly you're getting from family every year, because as it is the numbers simply don't add up. And you seems to also be planning on getting enough that you're not even that concerned about retirement. Home equity isn't fail safe.

And, honestly, if you're getting money AND you make as much as you do, fretting about even $275 (much less $60) a month is pointless and is only going to make him angry. Other considerations are if the money is coming from his side or yours.

I agree with those who say you're in no way a tightwad, you're just in this weird place where you pinch pennies but hand over thousands in the blink of an eye. It's like ordering a diet coke with your big mac super sized extra value meal. You may feel like you're saving something, but you're missing the big picture. It really is laughable (at least to an outside observer - I'm sure it isn't to you) to be stressing out about $60 a month when you own two houses and are planning on buying a third vacation home.

I have a much smaller scale of family assistance, so I know what it's like to depend on something like that. But I am only gifted enough to max out two IRA contributions every year. All the rest of our savings is from our own efforts. Should that gift stop we would easily survive.

But the amount of money you're getting is paramount, as is the certainty that it will continue. Many people don't count on inheritances and gifted money just because of the disaster that can ensue should it fall through, but everyone has to make his or her own choice about that.

avalpert
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by avalpert » Thu Oct 02, 2014 9:24 am

hcj wrote:OK our budget. But first I want to say that, it has never occurred to me that we have too much house or too much car. Truly completely foreign ideas to me. I am digesting. Slowly.

Also: those of you who called out the psychological aspects of being given wealth instead of earning wealth: not something I really thought about, but I do think you are right. Should I be so lucky as to have money to help my kids when they are young adults, I will remember this and think on it.

AUGUST INCOME: 12,028 (take home pay)
(We use August income to fund September spends, per YNAB instructions)

SEPT SPENDS:
Childcare - 2600
Mortgage - 2020
Car payment - 565
Water/gas/electric - 400
Preschool - 352
Cleaners - 200
Gym membership (DH) - 105
Internet - 67
Gardener - 60
Life insurance - 46
Home phone - 28
Garbage - 24

Groceries (includes non-food/paper goods type items) - 1600
Gas, tolls and parking - 300
Gardening supplies - 274
Eating out / family outings - 150

Kid-related $411, breakdown as follows:
... load up school lunch account 50
... school supplies & donations 86
... school pictures (3 kids) 93
... bday party gifts 44
... tooth fairy 5
... kids allowance 40
... shoes 31
... Halloween costumes (3 kids + me) 62

Personal spends 400

Put aside a little money each month for non-monthly expenses 750, breakdown:
... school donation 100
... home/auto insurance + vehicle registration 500
... auto maintenance 50
... kids after school class 100

SAVINGS 1676
... this is the money I was going to put towards the ski condo

I also have other categories that I did not fund last month, like property taxes, kids summer camps, major home repair fund. I tend to fund these when we get that third pay cycle twice a year.

Your thoughts are very much appreciated! You are going to shed some light on something I've been wondering about for a very long time: how do other people do it.

P.S. Don't know if it matters but there are some things going on pre-tax, like HSA contributions.
As someone whose spend is not all that much different than yours (though my income is higher) including two kids (one in private school one in preschool) here is what jumps out at me:
1. That grocery bill seems quite a bit higher than necessary - we spend more than I would like and have chosen to pay for conveniences such as using Peapod/Giant's delivery service and it is still >$600 less a month than you spend
2. Why do you have car payments at all? Pretty good indication that you have bought to much car is when you have to finance it, and if you are leasing instead of buying because you like to get new cars every few years well recognize that is a pricey consumption decision that could crowd out some of your other goals like the ski condo - once you appreciate that you can decide if the tradeoffs are worth it.
3. Is your home/auto insurance really $6000 a year? Have you shopped around for better prices recently, that seems high.
4. You should aggregate how much the house is really costing you instead of separating mortgage/insurance/taxes/maintenance/reserve fund - it will give you a better appreciation for what a large expense it is - particularly when you have a second one just sitting there doing nothing.

Think of it like this, if you were to dump the unnecessary second house with its mortgage payment, get functional cars that don't need to be financed and cut your grocery bill by ~15% you would be able to increase your savings by $3,000 a month - or about the median family's entire take home pay.

lhl12
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by lhl12 » Thu Oct 02, 2014 9:30 am

swaption wrote: We should have a general rule of thumb that would get everyone on the same page when it comes to real estate. Just take the value of the house(s) you own and multiply by some percentage, call it 6%. This is how much you are consuming. It doesn't matter the size of the mortgage payment or whatever. It would also make a lot of these silly rent vs own threads much clearer. So as a result, your current housing consumption is probably in the neighborhood of $100k per year. In the case of the house that will be gifted, a big part of the return is what is called imputed rent, and in your approach this is something that you will be consuming. What you are left with is an asset that has very low expected returns.

Essentially, there is no basis for your view of stocks vs real estate that you summarized above, except for an emotional feeling about things. And as well it also happens to fit nicely into your preferred lifestyle that includes skiing, so very much a rationalization. Ultimately, there is a word for those that have significant assets, live beyond their means based on those assets, and are very conscious about their spending. It's called retirement. Obviously you are not fully retired, but it explains some of your thinking.

But more importantly, beyond not being fully retired, is that to some extent you and your husband have never been given the opportunity to fully grow up. A bird that lives in a cage, is cared for, and provided with food is not being done any favors if the plan is to be released into the wild. The bird has been crippled. There is something very gratifying about being productive, living within your means, providing for your family, providing yourself with a comfortable retirement, and possibly leaving something for your heirs. You have not done this and does not seem as if you are planning to do this.

I will leave you with one last thought. What are your children going to think? Surely they will figure out that you were given quite a bit, but it sounds like you plan to use much of that to fund your lifestyle and your retirement. If things go really badly, perhaps they might even need to support you. Trust me that this scenario is something I know all too well. It doesn't work well for anyone, but far worse for the parents than the kids.
OP, the quote above may be hard for you to read, and even harder to act on, but each of the four paragraphs is exactly on point. I recommend you read and re-read it.

crake
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by crake » Thu Oct 02, 2014 9:40 am

Enough advice has been given so I just thought I'd explain my own situation to provide some perspective.

My wife and I make less than half of what you and your husband make. We also do not receive any monetary support from our family. We max out both our 401k's and IRA's. Despite these facts we are able to live an extremely comfortable life without the need to budget the way you are trying to do. We buy whatever we want from the grocery store and if I want a 50 dollar gardening tool I get it. If I had to do things like keep track of the 5 dollars I gave my kid from the tooth fairy or worry about if a block of cheese would break my grocery budget I would be very unhappy.

Nisiprius hasn't responded to this thread but his signature rings very true.

"Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

avalpert
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by avalpert » Thu Oct 02, 2014 9:50 am

hcj wrote:
Dave1 wrote:
Re. your assets, I'd be uncomfortable with such a large percentage tied up in real estate, but that's a discussion for another time. Perhaps you are expecting other gifts from your family over time, or a large inheritance, which makes this better... dunno.

Good luck.
Wanted to touch on this part, our view on real estate, which I know most here don't share.

I've had terrible experiences with the stock market. I could not stay the course. It made me nervous as hell. I would like to change that but not there yet.

Real estate is something I've been more successful at and have a higher level of comfort with. Not just this house but others too. It's something I grew up with, it's where my parents made all their money. And since we have a hard time saving money, it functions well as a forced savings program in our case.
I think it is fine to concentrate on real estate for investing if you are going to put the effort to do it well - but you have a lot of money tied up in undiversified real estate holdings that aren't earning you income. That isn't exactly a recipe for real estate gold.

hcj
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 10:04 am

@Alex: the gifted home is a family home that my parents want to keep in the family. It is not an option to rent it out or sell it.

We do want to move there, are not delaying in order to not offend the generous gifters. I can't keep my current nanny or get my youngest into the same school as his older sibs unless I delay the move by 2 years to kindergarten entry.

I had an epiphany this morning. It only took 6 analogies of not flushing toilets in your mansion to save money, and ordering diet drinks with your extra size big mac meal. :D Plus some nice folks playing both psychology counselor and financial counselor.

I pinch pennies because it makes me feel like I have some control or some *deservingness* of our very fortunate financial situation. I know I didn't earn it. I pinch pennies to feel like I deserve it anyway.

And switching gears:
It's not making sense to me why we have "too much house". I understand from a net worth perspective that our entire net worth is tied up in an illiquid asset. But setting that aside and looking at ONLY the budget situation - are you guys saying $2k towards housing (whether in the form of rent or mortgage) is too much for a household bringing in 250k? I know that if we sold this house and rented or bought a smaller (i.e. if we had not been gifted the other one), we would be making a far larger housing payment each month. You can't even rent a crappy 2 bedroom apartment for 2k here.
Last edited by hcj on Sat Oct 04, 2014 1:28 am, edited 1 time in total.

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HomerJ
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by HomerJ » Thu Oct 02, 2014 10:05 am

Compound wrote:I must say, I'm getting more confused about your situation as I read through the post. Everyone seems to be focusing on how you can tighten your budget, but TO WHAT END?

When I look at the September budget you posted, you net around $1700 after expenses on a take home of $12k. Sure, you could do better, but the current budget seems sustainable.
Since college for your kids, and (presumably) your retirement is taken care of, I don't see any huge problems with your current budget either.

But you definitely can't afford a ski condo right now... You just don't have enough wiggle room in your budget to afford another mortgage, HOA fees, property taxes, insurance... You should wait 2 years when the child-care costs go down and/or when you move to your new house (Do you really want to move there at all?)

I get the sense that getting into the ski condo soon is a major priority for you; hence, you are stretching the budget to try to make that happen. I personally don't think there is enough room to comfortably do that, since you'd have to deplete your emergency fund (as I read it from your prior posts). If getting into the ski condo soon is a major goal, I'd suggest selling the current house to free up cash. Alternatively, if you can wait a while, save your monthly leftovers (and squeeze the monthly budget to get more out) until you have a down payment saved. Of course this only works if your family's priorities are aligned. If there isn't alignment, I suspect trimming the budget on paper won't materialize into real savings.
This. You guys have to decide what's important... You are extremely fortunate since you can have pretty much anything you want, but you can't have EVERYTHING you want. If the ski condo is that important to your family, you're going to have to make cuts elsewhere.

avalpert
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by avalpert » Thu Oct 02, 2014 10:27 am

hcj wrote: And switching gears:
It's not making sense to me why we have "too much house". I understand from a net worth perspective that our entire net worth is tied up in an illiquid asset. But setting that aside and looking at ONLY the budget situation - are you guys saying $2k towards housing (whether in the form of rent or mortgage) is too much for a household bringing in 250k? I know that if we sold this house and rented or bought a smaller (i.e. if we had not been gifted the other one), we would be making a far larger housing payment each month. You can't even rent a crappy 2 bedroom apartment for 2k here.
You should reread what swaption wrote above - your true housing cost isn't just the mortgage payment (even aside from not including insurance, taxes, maintenance, improvements etc.). Think of it this way, if you were to rent out your current house how much could you get for it? Well that is a good approximation of what your housing costs are - that is the opportunity costs you are giving up by choosing to consume the asset you have rather than sell it for others to consume.

ResearchMed
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 10:39 am

hcj wrote:Again a few quick responses from me before work - and will come back again in the evening. I haven't gone away.

@Alex: the gifted home is a family home that my parents still use occasionally and want to keep in the family. It is not an option to rent it out or sell it.

We do want to move there, are not delaying in order to not offend the generous gifters. I can't keep my current nanny or get my youngest into the same school as his older sibs unless I delay the move by 2 years to kindergarten entry.

I had an epiphany this morning. It only took 6 analogies of not flushing toilets in your mansion to save money, and ordering diet drinks with your extra size big mac meal. :D Plus some nice folks playing both psychology counselor and financial counselor.

I pinch pennies because it makes me feel like I have some control or some *deservingness* of our very fortunate financial situation. I know I didn't earn it. I pinch pennies to feel like I deserve it anyway.

And switching gears:
It's not making sense to me why we have "too much house". I understand from a net worth perspective that our entire net worth is tied up in an illiquid asset. But setting that aside and looking at ONLY the budget situation - are you guys saying $2k towards housing (whether in the form of rent or mortgage) is too much for a household bringing in 250k? I know that if we sold this house and rented or bought a smaller (i.e. if we had not been gifted the other one), we would be making a far larger housing payment each month. You can't even rent a crappy 2 bedroom apartment for 2k here.

TO WHAT END -- why are we trying to cut the budget, what is the goal
Argh ran out of time before work, but leaving this question here to remind myself to answer it next
First, a quick response about the $2k/month for mortgage.
I doubt many (if any) are suggesting that it's "too much" of a monthly housing cost for your income - and especially not in any high cost of living area.
But you have a lot of money tied up in the home you currently occupy AND in the home you were gifted.

However, you've just added some very important information, that your parents (who presumably did the gifting? or their parents?) STILL stay there occasionally.
How will this work once you move there in 2 years?

Also, absolutely do double (and triple) check about what happens if all children are enrolled in SchoolOfChoice and you move. Will they still go there? (This is a public school, so which district matters, correct?) How certain is that?

And WILL you be selling that home at that time?
(If so, that changes both the value of your net worth not tied up in illiquid real estate AND changes your cash flow by that same ~$2k.)

As for your "future security" in terms of college expenses for the children, and your *own* retirement (hopefully comfortable), is there "just an expectation" of assistance, or are there trust funds "locked away - and invested extremely safely"?
Those are two very different situations, in terms of "why should you be saving now for retirement" and how much (an early question of yours that brought me into this discussion originally).

Finally (for now :wink: ), here is some VERY sage advice from above:
HomerJ wrote: ...
You guys have to decide what's important... You are extremely fortunate since you can have pretty much anything you want, but you can't have EVERYTHING you want. If the ski condo is that important to your family, you're going to have to make cuts elsewhere.
[emphasis added]

RM
This signature is a placebo. You are in the control group.

lhl12
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by lhl12 » Thu Oct 02, 2014 11:01 am

hcj wrote: It's not making sense to me why we have "too much house". I understand from a net worth perspective that our entire net worth is tied up in an illiquid asset. But setting that aside and looking at ONLY the budget situation - are you guys saying $2k towards housing (whether in the form of rent or mortgage) is too much for a household bringing in 250k? I know that if we sold this house and rented or bought a smaller (i.e. if we had not been gifted the other one), we would be making a far larger housing payment each month. You can't even rent a crappy 2 bedroom apartment for 2k here.
It's not right to think of it just as a $2k monthly payment. There is also a huge opportunity cost associated with the capital invested in the house that is not earning a rate of return. (This is the point swaption was trying to make in his/her first paragraph.)

You have a certain net worth. You have chosen to deploy almost all of it in an asset that is purely for your personal consumption, not for investment return. The fact that the asset is illiquid isn't really a problem, by the way, since you have plenty of liquidity in your emergency fund and a good income. The issue is a misallocation of your net worth towards consumption rather than investment.

psteinx
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by psteinx » Thu Oct 02, 2014 11:05 am

hcj wrote:School/childcare and why I won't move for 2 years:
My kids attend a charter/immersion language program which we are very happy with. We do not plan to move them to the new school where the other house is. I want to wait 2 years so I can get my youngest into Kindergarten at our current school. I am 99% confident that once he is in, they will not kick him out even if we move. On the flip side, I am 99% confident that they would not let him in if we were not living in the district at the time of enrollment.
Obviously, you know the school policies of your own area better than a random internet poster.

That said, this sounds a little weird.

You plan to move from your current district to a new district, but keep your kids (3 I think?) in the current district?

To my understanding, in most parts of the country, even if the current district would allow this, they'd likely charge tuition. And if it's an upscale district (likely, given your house value), then the tuition might be pricey - perhaps 15-20K per kid, or ~45-60K total, per year. Again, lotta assumptions by me, but if I'm right, this would really dwarf $60/week for fun money.

If you've got a solid grasp on this and all is well, good for you (and my idle curiousity would like to hear the details). But if you're just guessing about policies on kids who are in-district vs. out, and making significant plans years ahead based on those guesses, then you should probably nail down the details as much as you can. Also, the charter school angle may complicate things a little more - perhaps the geographic boundaries and general limitations for these are different from the conventional school districts involved.

psteinx
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by psteinx » Thu Oct 02, 2014 11:27 am

Some more general thoughts.

1) You're nervous about stock market investing. This is perhaps because with stock market investments, you can see the valuations change day to day. Thousands of dollars up or down from breakfast until dinner, and you did nothing! I agree, it can be unnerving. Frankly, you sound like a good candidate to work with an AUM-based financial advisor (the kind disparaged by many here on BH). The hand holding on stocks would be helpful, and, if they're good, they can probably help a bit on the Dave Ramsey type stuff too, and in thinking through the big issues (which property to buy/sell/rent).

2) The (not quite) empty house that you will be gifted is interesting, and again, to get helpful responses here, and to satisfy the curiousity of nosey folks like me :) it might be nice if you provide a bit more detail about the house and the situation. Of particular practical importance, are both you and your husband on board with moving into a presumably smaller and less desireable house than what you currently have? Aside from the school issues, is it as practical in other ways (i.e. proximity to jobs). If you intend to keep your kids in school close to where you are now, is the new house close enough to be practical for the school(s) in question?

3) I think you're struggling a bit with long horizon budgeting. You're showing a monthly budget where the income is lower than the year-round average (because you got paid twice and sometimes you get paid three times), but you're also omitting a lot of irregular/annual payments.

I think you should learn how to use a spreadsheet (if you don't already know), and set up an ANNUAL budget, reflecting all the costs that are once a year, PLUS reasonable allowances for irregular, but expected expenses (medical bills, house repairs etc.) Remember that some of these may occur only once every 5 years or more, but be substantial when they do.

4) I don't think you've got a good grasp of the consumption costs of various assets you have. Just because you have a lot of equity in your house and therefore have a small mortgage, doesn't mean you aren't in a sense spending a LOT on housing.

Consider two families each with $3M houses. One has 100% equity, the other has a 90% mortgage. The latter family is obviously paying a lot for the house (just look at the mortgage bill), but the former is, in effect paying a lot as well. That $3M could be invested with an expected return of perhaps 4-7%, so the effective cost of that house is actually substantial.

Similarly, you show a car payment for one car that was presumably expensive (given the payment amount), but not for any other cars (I assume you have 2.) Better to think about how long you will keep each car, purchase and disposition price, averaged maintenance costs, and try to get to some sort of average, long term vehicle budget. If in fact one or both of you are continuously rolling over premium vehicles every 3-5 years, whether via leases or purchases that are traded in a few years later, then your consumption levels for vehicle expenses are likely to be quite high.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by swaption » Thu Oct 02, 2014 11:35 am

hcj wrote:Wanted to touch on this part, our view on real estate, which I know most here don't share.
Just one last thing, I don't really understand the above. How can you have any view on something like this? Granted finance is not science, but it certainly is not art. You can have a view on types of music, styles of clothing, and even a view with respect to economics. But how can you have a view with respect to real estate vs other things. They all operate under the same rules of finance. There can be some differences of opinion, but ultimately those can only really be on the margin.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by Hug401k » Thu Oct 02, 2014 12:27 pm

Ok, everyone has said it all, but as a fellow FT working mother who's shelled out 3k in daycare before, let's be frank. Are you SURE you want a ski house while your kids are this young? Oh yeah, it will be great when they are all 10 or 15, but now? You are going to pack up every kid, every weekend, maybe with some in diapers, drive god knows how many hours in traffic in the cold, to have your 4 yr old last 35 minutes skiing? Who is ALWAYS the one inside with the baby? Mom. And now you own this place, so when the pipe freezes or a the faucet leaks, you've got to do something about it, so you really aren't "getting away from it all". All your friends are somewhere else too. Then pack it all up again, traffic, unpack, do laundry, grocery shop, and start all over on Monday? When you are living in a big gorgeous house?

Just my 2 cents, but ski houses with small children = mothers nightmare, in my world.

Get the kids out of nanny/preschool days, move to the smaller house, and then see if they are independent enough to ski and pack on their own and if you have the money. Kids keep getting more and more fun for a while.

Good luck!

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by interplanetjanet » Thu Oct 02, 2014 12:35 pm

hcj wrote:
5buffalo wrote:This thread is very interesting. It's been a while since I've seen such strong evidence that the feeling of being rich or poor depends completely on who you spend your time with.
So true. In out case, probably not *everyone* around us, but it feels like we live amongst a significant percentage of people with bigger salaries than ours, who have fat bonuses in the 6 figures and stock options up to their ears. We wouldn't have been able to afford this neighborhood on our own, so that makes perfect sense.

Btw I didn't realize the very wide range of income and wealth spectrum here. I guess on my previous visits I somehow managed to only read threads started by people with way more than us, and all this time that was my conception of the posters here.
A quote that's come up many times is "it's not what you make, it's what you keep" - and many posters here are aggressive savers. I've been very impressed with how much some people even of quite modest income have managed to save over their lives. Obviously there are tradeoffs and a happy medium must be found for most people, but this probably contributed to your perception. When you see someone here with significant wealth, often income isn't mentioned (many posters are retired so it's usually not relevant what they were earning before). I've seen many people here manage to save more than $2M while never making more than $100k per year in their lives.

It's also possible that some of your neighbors are in debt up to their eyeballs, funding a lavish lifestyle.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by Meg77 » Thu Oct 02, 2014 12:47 pm

hcj wrote: I had an epiphany this morning. It only took 6 analogies of not flushing toilets in your mansion to save money, and ordering diet drinks with your extra size big mac meal. :D Plus some nice folks playing both psychology counselor and financial counselor.

I pinch pennies because it makes me feel like I have some control or some *deservingness* of our very fortunate financial situation. I know I didn't earn it. I pinch pennies to feel like I deserve it anyway.
This. I had a similar epiphany a couple of years ago and it has put my financial impulses into much clearer perspective. I am better off than most and making good progress every year, but I obsess over my financial statements daily - Mint, SigFig, my spreadsheets, you name it - simply for a feeling of control. I like it, and I indulge myself, but I have admitted that it's not because I need to be stressed about money or change anything. It does make me feel in control, and in addition I think I may even unconsciously think that my efforts and attention somehow justify the gifts I've been given. Like "see I'm not taking it all for granted; I'm obsessing about growing and preserving it!"

To me the much more interesting - and important - component of all of this is emotional/psychological. I am in a situation very similar to yours. My grandparents were wealthy and made annual gifts to my parents as well as into a "college fund" for me which had mid 6 figures leftover when I graduated. I used it to start investing in real estate and have since saved a lot on my own and also inherited additional real estate (which my dad still lives in). While I don't receive annual gifts anymore, I am familiar with all the moving financial pieces that come with family money. It's difficult to budget when you have gifts (much like annual bonuses), and it's difficult to have an investment plan when you don't fully control all your assets or if certain "buckets" were supposed to be used for certain expenses (like education). I recently got married and my husband and I make about $20K less than you BUT we don't have kids. If it makes you feel better I can totally understand how you are struggling on a $250K budget with three kiddos and a full time nanny AND daycare expenses. Of course you want to ski all winter!

Lots of great advice has been given so I won't repeat much, but let me highlight one element of this:

Please be mindful of your approach to financial matters with your husband, PARTICULARLY if he didn't have as privileged an upbringing as you did. You have been gifted hundreds of thousands of dollars, real estate, and you continue to get annual financial gifts which majorly impact his lifestyle. His kids' educations are "taken care of." This sounds great, but no matter how you approach it is going to negatively impact him in some ways. He may never fully adjust or feel in control of the budget, your joint finances, or - as a result - his life. If a few hundred bucks a month on beer and gardening help him escape or adapt to this train that he didn't earn and isn't driving but is stuck on for better or worse, then consider it an investment in your marriage and just log it in the budget. His spending is not unreasonable or my advice would be different. Besides, he's educated and earns good money too, and he's saving 10% of his pay.

My father appreciated my mom's family's money and their ongoing generosity, but it emasculated him. He didn't think he had the right to an opinion about how money was spent because much of their lifestyle was dependent upon on their annual and periodic gifts. He didn't feel like my mom needed him or appreciated his financial contributions (which were not insignificant) since it never could live up to her father's success and wealth. She never rubbed this stuff in his face, but she did what she wanted as long as the money was there, which galled him continually as a natural tightwad. He read a book about "learned helplessness" and it was revolutionary for him. She was in control, and he quit fighting it after 5 or 7 years. Over the years their relationship deteriorated although I never noticed as they were both loving wonderful parents and held it together for us. A few years after the last of my siblings left home, they divorced and live happily a few miles apart. As I got close to marrying (and as they were divorcing), he divulged a lot of this and I was shocked - but I took the warning to heart.
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 12:59 pm

Hug401k wrote:Ok, everyone has said it all, but as a fellow FT working mother who's shelled out 3k in daycare before, let's be frank. Are you SURE you want a ski house while your kids are this young? Oh yeah, it will be great when they are all 10 or 15, but now? You are going to pack up every kid, every weekend, maybe with some in diapers, drive god knows how many hours in traffic in the cold, to have your 4 yr old last 35 minutes skiing? Who is ALWAYS the one inside with the baby? Mom. And now you own this place, so when the pipe freezes or a the faucet leaks, you've got to do something about it, so you really aren't "getting away from it all". All your friends are somewhere else too. Then pack it all up again, traffic, unpack, do laundry, grocery shop, and start all over on Monday? When you are living in a big gorgeous house?

Just my 2 cents, but ski houses with small children = mothers nightmare, in my world.

Get the kids out of nanny/preschool days, move to the smaller house, and then see if they are independent enough to ski and pack on their own and if you have the money. Kids keep getting more and more fun for a while.

Good luck!
Okay, here is a different take on the practicalities of having a vacation place (but I still have serious concerns about the finances at this time in terms of purchasing something).

In part, having a place means NOT having to do all of that packing. The appropriate clothing (and cartons of diapers, and toys, and... and...) can be KEPT there. That makes "loading up the car" very different.

But that CAN be accomplished by a seasonal (or monthly) rental. Or even annual rental if it's a ski area, and there might be heavy discounts for summer use, and/or if this gives you a better choice of rentals.
Especially recently, many vacation homeowners are under water, can't sell, and want to rent it out.

This way, you get the "feel" of "a place to go where your things are stored", but do NOT have the down payment outlay or the heavy mortgage obligation.

I'm assuming that OP's family already skis, including the children.
Our little ones first learned to ski when about 3 -5, on little orange plastic (!?) skis. I took them up the rope tow between my legs, about two weeks after I learned to ski. Then I put them in Sunday ski school the next season, and I was the chaperone on the bus ("interesting"!!) to help pay for it all. Plus then I could work on improving my own skiing :happy

There have always been some amazingly young ones out there learning.
One advantage I noticed was that with their lower centers of gravity, they could soon whip around turns and not fall in what seemed an almost mystical way.

If this is an important family activity, there are ways to do it without *buying* a place at this time.

RM
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 1:13 pm

Meg77 wrote:
hcj wrote: I had an epiphany this morning. It only took 6 analogies of not flushing toilets in your mansion to save money, and ordering diet drinks with your extra size big mac meal. :D Plus some nice folks playing both psychology counselor and financial counselor.

I pinch pennies because it makes me feel like I have some control or some *deservingness* of our very fortunate financial situation. I know I didn't earn it. I pinch pennies to feel like I deserve it anyway.
This. I had a similar epiphany a couple of years ago and it has put my financial impulses into much clearer perspective. I am better off than most and making good progress every year, but I obsess over my financial statements daily - Mint, SigFig, my spreadsheets, you name it - simply for a feeling of control. I like it, and I indulge myself, but I have admitted that it's not because I need to be stressed about money or change anything. It does make me feel in control, and in addition I think I may even unconsciously think that my efforts and attention somehow justify the gifts I've been given. Like "see I'm not taking it all for granted; I'm obsessing about growing and preserving it!"

To me the much more interesting - and important - component of all of this is emotional/psychological. I am in a situation very similar to yours. My grandparents were wealthy and made annual gifts to my parents as well as into a "college fund" for me which had mid 6 figures leftover when I graduated. I used it to start investing in real estate and have since saved a lot on my own and also inherited additional real estate (which my dad still lives in). While I don't receive annual gifts anymore, I am familiar with all the moving financial pieces that come with family money. It's difficult to budget when you have gifts (much like annual bonuses), and it's difficult to have an investment plan when you don't fully control all your assets or if certain "buckets" were supposed to be used for certain expenses (like education). I recently got married and my husband and I make about $20K less than you BUT we don't have kids. If it makes you feel better I can totally understand how you are struggling on a $250K budget with three kiddos and a full time nanny AND daycare expenses. Of course you want to ski all winter!

Lots of great advice has been given so I won't repeat much, but let me highlight one element of this:

Please be mindful of your approach to financial matters with your husband, PARTICULARLY if he didn't have as privileged an upbringing as you did. You have been gifted hundreds of thousands of dollars, real estate, and you continue to get annual financial gifts which majorly impact his lifestyle. His kids' educations are "taken care of." This sounds great, but no matter how you approach it is going to negatively impact him in some ways. He may never fully adjust or feel in control of the budget, your joint finances, or - as a result - his life. If a few hundred bucks a month on beer and gardening help him escape or adapt to this train that he didn't earn and isn't driving but is stuck on for better or worse, then consider it an investment in your marriage and just log it in the budget. His spending is not unreasonable or my advice would be different. Besides, he's educated and earns good money too, and he's saving 10% of his pay.

My father appreciated my mom's family's money and their ongoing generosity, but it emasculated him. He didn't think he had the right to an opinion about how money was spent because much of their lifestyle was dependent upon on their annual and periodic gifts. He didn't feel like my mom needed him or appreciated his financial contributions (which were not insignificant) since it never could live up to her father's success and wealth. She never rubbed this stuff in his face, but she did what she wanted as long as the money was there, which galled him continually as a natural tightwad. He read a book about "learned helplessness" and it was revolutionary for him. She was in control, and he quit fighting it after 5 or 7 years. Over the years their relationship deteriorated although I never noticed as they were both loving wonderful parents and held it together for us. A few years after the last of my siblings left home, they divorced and live happily a few miles apart. As I got close to marrying (and as they were divorcing), he divulged a lot of this and I was shocked - but I took the warning to heart.
This is more detail about something I had been thinking (but didn't want to "pile on too much" right away).

From the "control tone" I had mentioned - even if NOT intended! - perhaps DH is, in a way, rebelling or asserting HIS way or even just sort of "hiding out" in his vegetable garden.
It's HIS place; he's in control, and HE gets the satisfaction of seeing the results. (And is there any chance that it's his "time away" from some of the stress? That's not necessarily a bad thing, either. Certainly better than heading off for weekend binges :shock: )

OP, is there any way you could include in your discussions something that would give him *more* autonomy with respect to his gardening, or woodworking, or whatever?
And try to share more of his pleasure? (No that doesn't mean you need to be digging up the carrots if you don't like doing that - but hey, the children might enjoy it, for a summer or two, anyway - but discussing it happily a bit more, not merely as "another expense"?)
And it should be okay if he changes hobbies occasionally, as long as he isn't sinking fortunes into each (like building a deep swimming pool with a 30-foot platform for his new diving passion, and the next year or two buying a race car for THIS new passion, etc.).
Just a thought, and it might be totally off the mark.

RM
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by interplanetjanet » Thu Oct 02, 2014 1:15 pm

Meg77 wrote:To me the much more interesting - and important - component of all of this is emotional/psychological. I am in a situation very similar to yours.
I just wanted to thank you for this.

Coming from a different situation - no family assistance at all, I started working at 17 and left home shortly thereafter, and am estranged from my parents - at times I've looked on those who received gifts from their family with a degree of envy. I don't mention my own situation to try to ennoble myself, it's just how it happened and what I had to do.

This thread has made me realize that while my financial life has been more difficult than some, there are some problems I've just never had. I suppose every situation has its bright sides. As a relatively high earning woman I have run into some of the partner-feeling-inadequate issues, but not to the same extent, I suspect.

I do hope that the moderators continue to let this thread slide for a little while longer. There have certainly been some off-topic diversions but I feel that real progress is being made on the OPs issues.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by fsrph » Thu Oct 02, 2014 2:02 pm

Lots of good advice already given. The root of the problem is the same if you are poor or rich. If you spend more than you take in you are setting yourself up for problems. Doesn't matter if you make $20k or $400k. And, imo, you spend on necessities, then retirement, then luxuries. In fact this advice has been quite eloquently provided by nisiprius' tag line on every one of his posts - "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by pennywise » Thu Oct 02, 2014 2:09 pm

hcj wrote:
I'd like to propose new "mechanics" for dividing up responsibility and paying bills. Open 3 checking accounts: his, hers, family expenses. Then you each get a separate credit card linked to your separate account and you each have a credit card for paying family expenses.
I think this is part of the answer, if I can free up enough funds to put in our individual accounts. I already have the accounts set up like this and it worked well before--except I need to pull the joint expenses out and have it just be personal spends this time.
We came to this system after realizing that our disagreements about spending/saving were serious enough and deep enough that 'one pot' was never going to work. Our 3-bucket system has served us well: from our individual paychecks, first we each fund our supplemental retirement accounts. For our monthly expenses as well as miscellaneous or less frequent expenses (children's school tuition, property taxes, maintenance donation to keep emergency fund solvent etc) we then place into a joint account a proportional share of the total need based on the percentage of what we each earn. So for example when I was working PT, my salary was 40% of our total income so that's how much I contributed to our monthly nut, while he put in 60% based on his higher salary. As I've ramped up my work hours and our salaries reached parity, we are now at a 50-50 split but regardless of how we arrive at the amount, the money goes into what we call our house account. The house account funds all joint operating costs of our family including groceries, credit card charges, capital expenditures from new tires to a new kitchen, and so on.

In addition to the house account we each have a personal bank account. Those accounts are not joint (although we are each other's beneficiary) and each of us can decide independently how, when and how much to spend or save as we wish. My husband also placed an inheritance he received into his account which is reasonable since inherited asset are not marital property. On rare occasions we've each contributed money from these accounts into the house account if there was a need for more funds than our usual monthly contributions but again, that hasn't happened often.

We've used this system for many years and it generally works fine. In practice, the house account both consumes most of our income and funds the vast majority of our expenses. It has turned out that it is less about the money than the perception of freedom to spend on items or services we want to buy for ourselves without any worries about the spouse granting approval or trying to veto our choices. As long as the house account is healthy and we're taking care of our responsibilities, the rest is gravy. I will add that because I handle the finances my husband has a bit of a disconnect about how much the house account should be growing; we basically spend what we put in each month so I do need to start explicitly showing him the accounts. He needs to realize that if he expects the house account to grow, we are going to have to either cut back or put in a bit more each month. But that's just a structural tweak; the basis of our system is sound.

In an ideal world I've thought it must be nice to have a one-pot family budget but we have such very, very different views of spending and saving that at one point the stress and conflict related to those differences caused me to consider ending the marriage. So the yours/mine/ours arrangement has worked to largely eliminate this source of dissent between us and allow us to live harmoniously.

As a happy postscript, thanks to sharing a LBYM overall philosophy and having finished with the expensive child-rearing stage of life, we now have enough in both income and savings that there's really nothing to argue about any more any way :D

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by Boats day » Thu Oct 02, 2014 2:13 pm

I just read all the posts on thIs topic.
YIKES I HAVE A HEAD ACHE !!
A lot of good advice has been given.
Here is my take.

I think you are headed towards a divorce if you don't get immediate counseling. You need help with mutual goals, communication , problem solving etc etc.
I sincerely hope you can save your marriage.

I went thru a similar situation 20 years ago. The Ex wife and I had a great combined income of Over $225 K in 1985 $$ . Had 2 kids and a lot of similar problems you site . We just could not get a handle on spending and our net worth just inched along. We never really argued about money but had very different spending habits.
Fast forward 20 years My net worth has quadrupled house is paid off and was able to save and retire extremely comfortable with a main residency and 2 vacation
homes ( 1 in Hawaii and a log cabin on a lake n MN) My income went up only incrementally but while I was working post divorce I down sized to a small house and
saved 30 % of my income I also cut back spending to college student mentality. It worked and I was blessed with a bull market good health and remarried a partner
with similar values. When we both retired we bot the 2 vacation homes and are extremely happy !!!!

Good Luck

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 2:21 pm

Hug401k wrote: Just my 2 cents, but ski houses with small children = mothers nightmare, in my world.
I know. But we love it and have figured out a pretty good system.
Last edited by hcj on Sat Oct 04, 2014 1:30 am, edited 2 times in total.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by stoptothink » Thu Oct 02, 2014 2:35 pm

I am glad to see that the OP has finally come to the realization that the issue isn't that her husband spends too much on hobbies, but that they have a totally unsustainable lifestyle altogether which neither one has been willing to give up. When I read the initial post, I thought to myself that I could totally relate. My wife and I have a decent household income (about half the OPs), but I am definitely a tightwad and she leans towards the other side of the spectrum. I literally spend zero on things outside necessities, while pretty much everyday she spends a few bucks on something I deem frivolous (to the tune of maybe $250/month). We've never truly fought over it and I very rarely bring it up, but my wife is very aware that it bothers me. Then again, we save ~40% of our gross income, have decent retirement portfolios for this stage in life, and have no debt. Have to pick your battles.

This thread has been a pretty interesting insight into something I have no experience with: family money, being gifted houses and cash, being in a world where $1.5m homes and ski lodges are deemed "necessities". I often think how life would be better if I was born into a family with money, but it comes with its own pressures and problems. I am very glad that I do not have to face many of them.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by denovo » Thu Oct 02, 2014 2:51 pm

I think we're in the twilight zone. I have no ideas why people are haranguing the OP. The recent posts indicate they have a big backstop with family money coming to them on a regular basis,gifted homes, and so forth , education is paid for, etc. I don't see why they need to cut back unless there is a worry the family money is going to dry up?
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 3:01 pm

denovo wrote:I think we're in the twilight zone. I have no ideas why people are haranguing the OP. The recent posts indicate they have a big backstop with family money coming to them on a regular basis,gifted homes, and so forth , education is paid for, etc. I don't see why they need to cut back unless there is a worry the family money is going to dry up?
That's why I inquired previously if "the money" (for college, for retirement...) is securely (and irrevocably) in a trust somewhere, invested conservatively, or if it is an "expectation" of continued support.

Those are two very different things - especially if retirement is involved and not just the next year or so worth of ski trips.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 3:02 pm

@meg77: thank you for sharing the information about your father and how he felt during their marriage. I am going to go back and reread again later, just want to say a quick thank you now.

Thanks also to others who have pointed out the marital issues that are surely beneath the surface: I do feel that tension. Your input is heeded. Just want to acknowledge that you are right.

OK back to the question I left off earlier: cutting budget TO WHAT END?

1) I wanted to evaluate whether we can afford the vacation home now. I hear you, the consensus is a resounding "no", at least not on the income we earn ourselves, or not until we sell the house.
2) So moving on, I think my goal is to get to a place with the budget where I can relax and not stew for 2 days because DH went out and spent $60 without discussing with me first.
2b) Address not having a system that emasculates husband. See above.

So based on that... maybe I'm good? I know we could do better, but it took some cutting back to get to $1600/month on the groceries and if we don't have to, I don't want to make us more crazy. If we don't do the vacation home, I still have to funnel funds from the SAVINGS 1676 to *rent* places to stay, but it would be 300-500 (to supplement what I've been putting away all year for this purpose). We would have over 1000 left to be divvied up into personal spends. What's a reasonable amount, to you? I know everyone is different but I appreciate having a barometer of what others think is reasonable. (I think $500 to do *whatever I want* is insanely rich, but we've already established that I have a funky baseline for this stuff.)

On "our own plans for retirement" front: I am thinking we stay at our current contributions for now, but in 2 years when we will have cashed out equity in the house, done away with the mortgage payment, and have very reduced childcare expenses (if any at all, depends on whether I work more or work less) -- then we could tackle that seriously. Right? Is this a bad plan? Tell me if it is.
Last edited by hcj on Sat Oct 04, 2014 1:32 am, edited 1 time in total.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by psteinx » Thu Oct 02, 2014 3:05 pm

denovo wrote:I don't see why they need to cut back unless there is a worry the family money is going to dry up?
At a minimum:

1) The wife is stressed by the situation
2) She (and presumably he) doesn't seem to have a very good grasp on things - assets, liabilities, cash flow

On top of this, I think many folks here (including myself) are skeptical of letting things all hang out, financially, to the point where if any of the backstops DID go away, they might face serious lifestyle issues. (Dependency on mummy's/daddy's/gramps' money to get by, especially when you have as high of an income as these folks do, seems fraught with issues...)

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 3:15 pm

deleted
Last edited by hcj on Sat Oct 04, 2014 1:33 am, edited 1 time in total.

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by lhl12 » Thu Oct 02, 2014 3:21 pm

Are you an only child?

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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 3:21 pm

ResearchMed wrote: From the "control tone" I had mentioned - even if NOT intended! - perhaps DH is, in a way, rebelling or asserting HIS way or even just sort of "hiding out" in his vegetable garden.
It's HIS place; he's in control, and HE gets the satisfaction of seeing the results. (And is there any chance that it's his "time away" from some of the stress? That's not necessarily a bad thing, either. Certainly better than heading off for weekend binges :shock: )

OP, is there any way you could include in your discussions something that would give him *more* autonomy with respect to his gardening, or woodworking, or whatever?
And try to share more of his pleasure? (No that doesn't mean you need to be digging up the carrots if you don't like doing that - but hey, the children might enjoy it, for a summer or two, anyway - but discussing it happily a bit more, not merely as "another expense"?)
And it should be okay if he changes hobbies occasionally, as long as he isn't sinking fortunes into each (like building a deep swimming pool with a 30-foot platform for his new diving passion, and the next year or two buying a race car for THIS new passion, etc.).
Just a thought, and it might be totally off the mark.

RM
Yes. and yes. Hadn't thought of it that way, but it is almost certainly true now that you mention it.

Thanks for the free marriage counseling :)

hcj
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 3:22 pm

lhl12 wrote:Are you an only child?
No.
Last edited by hcj on Sat Oct 04, 2014 1:34 am, edited 1 time in total.

lhl12
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by lhl12 » Thu Oct 02, 2014 3:25 pm

hcj wrote:On "our own plans for retirement" front: I am thinking we stay at our current contributions for now, but in 2 years when we will have cashed out equity in the house, done away with the mortgage payment, and have very reduced childcare expenses (if any at all, depends on whether I work more or work less) -- then we could tackle that seriously. Right? Is this a bad plan? Tell me if it is.
I do think this is a bad plan. Once those two years are gone, you can't get them back (from a retirement contribution standpoint).

I would do everything you could - including getting a HELOC to tap the equity in your home if necessary - to be able to max out your retirement contributions in the next two years (and thereafter). Maximizing your tax-advantaged space is a huge long-term benefit, and you both still have a long way to go until retirement (as well as some uncertainty about how much you'll have when you get there).

DTSC
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by DTSC » Thu Oct 02, 2014 3:27 pm

I do agree with others that you have spending issues.

Hopefully not going too far off topic, but would buying a time share instead of an entire house solve the ski lodge problem?

technovelist
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by technovelist » Thu Oct 02, 2014 3:29 pm

hcj wrote:
ResearchMed wrote: That's why I inquired previously if "the money" (for college, for retirement...) is securely (and irrevocably) in a trust somewhere, invested conservatively, or if it is an "expectation" of continued support.

Those are two very different things - especially if retirement is involved and not just the next year or so worth of ski trips.

RM
Good question. There is approximately 700k left in a trust fund, which will be given out over the next 7 years, at which point there will be no more.
DANGER, WILL ROBINSON!!!! You are acting like lottery winners who are getting large yearly payouts and don't think about what happens when they stop!

You must cut back to live within your ACTUAL means now or you will be in a world of hurt when the free money runs out!
In theory, theory and practice are identical. In practice, they often differ.

hcj
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 3:30 pm

The school situation was asked about upthread by multiple folks. Nothing is for sure. The district will take others from other districts on a case by case basis and based on whether they have room or not, and the decision is renewed annually. That's the official policy and the only answer the district will give me.
Last edited by hcj on Sat Oct 04, 2014 1:34 am, edited 1 time in total.

psteinx
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by psteinx » Thu Oct 02, 2014 3:30 pm

hcj - I alluded to this above, but I'm not sure I was explicit.

I would encourage you to create some financial statements for yourself (or, if you need help, hire someone to help you).

Basically, like financials for a business
Balance Sheet: Assets and liabilities
List the amounts from financial accounts (and estimates for the real estate)
As to how to treat money that is in trust for you and the like - hard to say - I guess it depends on how confident you feel that it will pass through to you. If it's really a trust in your name or for your benefit, I would probably list it (and you should try to get the financial details - how much and what it's invested in.
Include SOME of the major non-investment assets - mainly cars and other large toys like this, because you could sell/trade what you have, and at some point you will likely replace what you have with something new

Income/Cash flow statement
Earned income
Investment income

Outflow
Cash outflows

So, of note - keep in mind that flows FROM one account to another are not really income nor an expense (though they should be noted). If you're receiving income from a trust that is really a payout of the capital over a fairly short timeframe (7 years), then that, too, is not so much income as a flow from one account (the trust to your benefit) to another (your bank account, which is more liquid).

For the real estate, there are hard cash outflows (maintenance), financial outflows (interest on the mortgage), but, keep in mind that the principal portion of the payment is not really an expense, but rather, another form of flow from one account to another (from your bank account to your house's equity "account"). Add a few percent of the homes' value as expected annual appreciation (i.e. increase in home equity) if you like as well. Don't forget the property tax cost (big on your level of real estate, I assume).

Finally, if you want to get fancy, keep in mind that the real estate both throws off a steady income (the consumption value - roughly what a similar property would rent for), and you consume that income (because you live there). This raises both your effective income and expenses. Yes, it sort of washes, but it may help you put into perspective how much of your total possible income is going to real estate consumption.

You can do something similar with cars and other big ticket items, although they depreciate. Or, if you trade in an $50K old car for a new one every 3 years, for $30K out of pocket net of the trade value, then put down $10K/year in vehicle expense (plus other vehicle expenses like gas and insurance.

Anyways, the point of all of this is to get a picture of where you stand, assets, liabilities, inflows, outflows, all modelled over a reasonably long time period.

psteinx
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by psteinx » Thu Oct 02, 2014 3:38 pm

hcj wrote:I believe the reality is that because it's a language immersion program, it is very difficult for the district to place a new student in a more advanced grade, unless the child already knows the language. So if they kick us out, they lose funding from the state for 3 kids and they can't replace it with 3 new kids.
You didn't (directly) addess an important point I raised above.

If the district lets your kids stay, will they require you to pay tuition?

I don't know the dynamics of this program or of your state, but in our state, a student attending a district that's not their own generally has to pay tuition. 3x tuition on a probably pricey language immersion program is a lot.

If you don't know the answer to this question, call the district and ask them - it should be something they can answer for you (though policies can change, etc., but still...)

ResearchMed
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by ResearchMed » Thu Oct 02, 2014 4:02 pm

hcj wrote:
ResearchMed wrote: From the "control tone" I had mentioned - even if NOT intended! - perhaps DH is, in a way, rebelling or asserting HIS way or even just sort of "hiding out" in his vegetable garden.
It's HIS place; he's in control, and HE gets the satisfaction of seeing the results. (And is there any chance that it's his "time away" from some of the stress? That's not necessarily a bad thing, either. Certainly better than heading off for weekend binges :shock: )

OP, is there any way you could include in your discussions something that would give him *more* autonomy with respect to his gardening, or woodworking, or whatever?
And try to share more of his pleasure? (No that doesn't mean you need to be digging up the carrots if you don't like doing that - but hey, the children might enjoy it, for a summer or two, anyway - but discussing it happily a bit more, not merely as "another expense"?)
And it should be okay if he changes hobbies occasionally, as long as he isn't sinking fortunes into each (like building a deep swimming pool with a 30-foot platform for his new diving passion, and the next year or two buying a race car for THIS new passion, etc.).
Just a thought, and it might be totally off the mark.

RM
Yes. and yes. Hadn't thought of it that way, but it is almost certainly true now that you mention it.

Thanks for the free marriage counseling :)
Okay, and just so you understand, I've got several degrees, but I'm NOT A LICENSED THERAPIST, and I don't play one on TV.
(Apparently the same can no longer be said for "online"!?)
On the other hand, I really DID stay at a Holiday Inn Express once :happy

This isn't the right time of year (probably), but planning can start slowly for next spring/summer.

Is there ANY chance that you and especially the children could plan a little garden, too? Flowers OR veggies?
As a child, I had the most fun one summer, planting two little areas of corn the first summer we had a real house and not an apartment. One part was "regular"; the other was "with fertilizer". [Yup, I got my "professional start" quite early! See signature below.]
The next summer, zucchini, gourds, watermelon, and what not. Most pathetic watermelons anyone ever, ever saw. But the zucchini, we were trying to give bags of it away.
And that was the end of the gardening for a few decades. But it was fun and the family got involved a bit, too.
Now, we have a bit of fun with tulips one year (the squirrels made off with the bulbs!), and annuals in one little area each spring, emphasis on "little" area.

Or you might try to find some other FAMILY hobby, even if it is short term, and maybe changes often.
Hiking (cheaper than skiing, but keeps one in shape!) or canoeing? Or swimming? ANYTHING that you might all enjoy doing, other than skiing, which is both expensive, distant, and seasonal?
But something that DH *enjoys*, and gets some satisfaction?
Heck, you might end up deciding you want to enter some prize orchids in competition someday - who knows what? Life takes funny turns...

It really sounds like you can both benefit from something shared that is LOW STRESS, and also not expensive.
And if the children can join in, that could make some pre-teen and teen years just a bit easier. Or not :?

RM
This signature is a placebo. You are in the control group.

BuckyBadger
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by BuckyBadger » Thu Oct 02, 2014 4:39 pm

hcj wrote:There is approximately 700k left in a trust fund, which will be given out over the next 7 years, at which point there will be no more. I have not asked how it is invested, but since the horizon is relatively short and my dad is very very conservative, I feel 99% confident that it will come to pass.

Possibility/probability of an inheritance, but I really hate thinking about my parents passing on and whether I will get something when they do. They may live to 100+ and need all their assets. They may spend through all they put aside and I will have to help them out (which I would do gladly, since it's really their money I'm sitting on). So perhaps, part of my goal in budgeting/this whole discussion (it has gone well beyond budgeting), is to not blow through all the money we're given.
This is very concerning.

$700k to most people would be a LOT. To some it would be enough to retire for the rest of their lives. To people with spending habits like yours, it's a drop in the bucket. It's less than 3 years of your income, and you already spend like you have twice the income that you do.

You need to start living like you're going to have to live in 7 years, or it's going to be a really difficult transition for you and your family,

lhl12
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by lhl12 » Thu Oct 02, 2014 4:45 pm

BuckyBadger wrote: This is very concerning.

$700k to most people would be a LOT. To some it would be enough to retire for the rest of their lives. To people with spending habits like yours, it's a drop in the bucket. It's less than 3 years of your income, and you already spend like you have twice the income that you do.

You need to start living like you're going to have to live in 7 years, or it's going to be a really difficult transition for you and your family,
+1.

Also, what has been happening with the $100K/year that you have presumably been receiving annually in the past? You haven't included that as part of your income. Where did it go?

5buffalo
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by 5buffalo » Thu Oct 02, 2014 4:58 pm

5buffalo wrote:This thread is very interesting. It's been a while since I've seen such strong evidence that the feeling of being rich or poor depends completely on who you spend your time with.
So true. In out case, probably not *everyone* around us, but it feels like we live amongst a significant percentage of people with bigger salaries than ours, who have fat bonuses in the 6 figures and stock options up to their ears. We wouldn't have been able to afford this neighborhood on our own.
I wonder if that contributes to some of the guiltiness? Like, if you were living within your actual income, the family money would just be the icing on the cake. But in your case, the family money was your ticket to a neighborhood/lifestyle/social circle that you don't really "belong" in. I put belong in quotes because I believe anybody can belong anywhere, but you might feel like you don't belong and constantly have to justify yourself or catch up. And if YOU feel like you don't belong, your husband probably feels even more like that.

Not sure if there's any useful advice to be gained from this, but food for thought. More spending probably won't ever make you feel more relaxed, if the above is true...

swaption
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by swaption » Thu Oct 02, 2014 5:13 pm

I just want say that this may now officially be the most bazaar thread ever. I can't believe this started as what appeared to be budgeting for what most would agree are somewhat trivial amounts. But with each peel of the onion, we find a whole new onion, in fact an entire field of onions. Now we have a trust fund with $700k remaining, although we don't know what was there initially. I really don't have anything more to add, I think my prior thoughts remain. But this all is really quite stunning.

hcj
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 5:33 pm

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hcj
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Re: Is my husband a spendthrift? Or I a tightwad?

Post by hcj » Thu Oct 02, 2014 5:44 pm

swaption wrote:I just want say that this may now officially be the most bazaar thread ever. I can't believe this started as what appeared to be budgeting for what most would agree are somewhat trivial amounts. But with each peel of the onion, we find a whole new onion, in fact an entire field of onions. Now we have a trust fund with $700k remaining, although we don't know what was there initially. I really don't have anything more to add, I think my prior thoughts remain. But this all is really quite stunning.
I'm kind of with you, and I'm the OP. It went in a very different direction than what I was thinking. But I am really glad you (collective you) are uncovering so much for me. Many angles I never thought about, emotional, psychological, marital and on my own, as well as financial.

I did not mean to ignore your earlier statements about how to think about the house consumption. It's just a really really foreign idea to me and the first post you made about it made zero sense to me, I could not even begin to understand it. Now as others have jumped in and explained it different ways, I think I am starting to get it, but it's something I have not really wrapped my head around yet. I'm trying to though. I'm having a tough time with looking at my home through the investment-oriented lens (and by the way it seems very impersonal to me and that's why I am having a hard time with it). I could rent out the house for 6k, and have to pay the mortgage + insurance + property tax which adds up to just under 4k. So that means I am giving up 2k additional income to live there? That's my opportunity cost of not renting it out? Am I getting this right?

It's a bit academic because unless something really terrible happened I don't think we would move out of our home, but I just want to see if I'm even getting it right.

P.S. Earlier someone had asked am I really paying 6k in insurance each year: no I'm not, I did a bad multiplication in the dead of night. It's just under 3k for home + auto + umbrella.

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