Wife tired of saving...

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supersharpie
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Re: Wife tired of saving...

Post by supersharpie »

OP, please explain why you aren't utilizing tax advantaged retirement vehicles, especially the backdoor Roth. This is a foolish decision that may cost you millions in the long run.
an_asker
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Re: Wife tired of saving...

Post by an_asker »

pinhead wrote:[...]My wife' s sister + family also seem to enjoy their money and have told us few times that if they had our kinda money, they would have lived way better. To appease my wife somewhat, last year we changed one of our cars to a 2012 Lexus RX 350. Now she wants me to change our 2009 camry to a BMW. Honestly, all this will not even make a difference to the bottom line, but I feel she is tired and exhausted of seeing the nest egg being built with no 'current' enjoyment of it per say. I see her logic somewhat, but i think this is one of the warning signs of breaking away from the long term goal.
[...]
Didn't read the many replies, so these might already be answered, but I have two questions:

- what are your current income and savings? If you are not comfortable with ballpark figures, maybe just a figure for what fraction of your income are you saving? [already answered, please ignore]

- you talk about a "long term goal" - what is it?

After further reading, edited to add:
TomatoTomahto wrote:
8foot7 wrote:If I can't buy my wife the car she wants when I have $2 million in the bank, then what is the point?
Bingo!
Shouldn't this be rephrased as one of the below?

- If my wife cannot buy the car she wants when she has $2 million in the bank, then what is the point?
- If my wife cannot buy the car she wants when she earns $200k per year, then what is the point?
- If my wife cannot buy the car she wants when we have $2 million in the bank, then what is the point?
- If my wife cannot buy the car she wants when we earn $400k per year, then what is the point?

All of the above are (to me) acceptable variants of the question. What is not acceptable - in my opinion - is the following one (and you can create your own variants) ;-)

- If my wife cannot buy the car her sister thinks she should be driving when she (my wife) has $2 million in the bank, then what is the point?

So, OP, what is the actual situation like?
Last edited by an_asker on Thu Mar 05, 2015 8:51 am, edited 1 time in total.
North
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Re: Wife tired of saving...

Post by North »

pinhead wrote: Whoever gets a contract/client that is further, that person takes the more economical car because of gas mileage. Right now she drives 80 miles daily, therefore she takes the camry. And I currently work from home.
Go buy her a Tesla. Today
an_asker
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Re: Wife tired of saving...

Post by an_asker »

rayson wrote:We were in an exactly similar situation 2 years ago. Two kids and we are about same age as you. We were living in a townhouse, and it was enough house from my POV. But, DW wanted a bigger single family home in the same school district. DW is extremely frugal compared to me, but she didn't want to compromise on the house. We ended up buying a single family home and rented out the townhouse. Our mortgage+taxes almost doubled, but she has been extremely happy and very appreciative of the home purchase. Like another poster wrote above, "happy wife, happy life" :D
+1! We are in the same boat (almost) - I have to admit that I am more frugal/cheap/... than my wife! Our previous residence I thought was large enough, but DW wanted to move up a 1000 sq ft. One of the best decisions we made. We pay more in taxes, but have more personal space ... and we have rented out our previous residence as well.
Dyloot
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Re: Wife tired of saving...

Post by Dyloot »

Pinhead,

Really enjoyed reading this thread. To me, it sounds like you're grounded and have a great understanding of your situation.

Obviously you have everything you need. 2,000 square feet for a family of four is totally doable. You drive great cars. It sounds like you have a strong relationship. Well done!

I agree with the other posters who suggest that you need to sit down with your wife and agree with concepts of where you're going and what you'll need to get there. If the house is doable, and it's becoming one of those must haves, you may need to come to terms with what you consider a bad tax situation and move on to other things. It may be, as they say, the cost of doing business. If it isn't doable, it'll be a much better conclusion coming from your wife's mouth than your own. :)

It may also be a good exercise to discuss what happens to the home when the kids are gone. At that point do you get to downsize, walking away from the bad tax situation? Or will you be hosting family gatherings and holiday parties until the kids finally force you into the retirement home? :D The thought has been on my mind a lot lately--grandparents on both sides of the family have ridiculous large family homes--but ones that are locked into great tax situations via California's Prop 13 (which caps property tax increases of individual homes at about 1% a year since the late 1970s).

Anyway--thanks for posting! A very positive, responsible, grounded way to start my day.
Dave55
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Re: Wife tired of saving...

Post by Dave55 »

My mother was on her deathbed at 54. She was very frugal her whole life. Her advice to my older brother on her deathbed was to use the money while you can for the things you want and need, enjoy it, don't save all of it for some future at the end of the rainbow.

I don't mean, nor do I suggest that you be reckless - my advice would be: Be balanced in your use of money for your needs and wants and in your saving and investing too.

Re your thoughts on the new house, if you pay cash for it (as seems to be your MO), and you continue to earn the kind of money you do, don't fret over the property taxes. I would say buy the car & house your wife wants and continue to earn.

Best of luck,
Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
an_asker
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Re: Wife tired of saving...

Post by an_asker »

8foot7 wrote:
The Wizard wrote:
8foot7 wrote:If I can't buy my wife the car she wants when I have $2 million in the bank, then what is the point?
I think the wife may be an equal player in this game, not a subsidiary or dependent as this language tends to imply...
My wife is an equal, if not better, player in my game. She currently makes more than me. If I have $2 million in the bank, I'd buy her whatever car she wants. I stand by my statement.
Bfoot7:

I have listed a few alternative ways you could better spell your statement! I would hope that The Wizard would agree with one of them as well ;-)
an_asker
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Re: Wife tired of saving...

Post by an_asker »

pinhead wrote:
The Wizard wrote:
8foot7 wrote:
The Wizard wrote:
8foot7 wrote:If I can't buy my wife the car she wants when I have $2 million in the bank, then what is the point?
I think the wife may be an equal player in this game, not a subsidiary or dependent as this language tends to imply...
My wife is an equal, if not better, player in my game. She currently makes more than me. If I have $2 million in the bank, I'd buy her whatever car she wants. I stand by my statement.
OK, but I think my point is: why can't she buy her own car?
Is permission needed or something?
Our money is together....we just dump it together regardless who earns it. Because a car is a big purchase, it requires discussion and approval of each other. Its an understanding and respect we have built over 16 years together.
pinhead:

I think you are misunderstanding where The Wizard is coming from!
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midareff
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Re: Wife tired of saving...

Post by midareff »

pinhead wrote:As to the BMW, I want to clarify that its not FOR her....its for US. We can easily afford it, and we should. 20K and a lot more is sitting in the bank earning 0% (according to her). All our friends have it and say its an amazing drive and she kinda fell into that trap. Buying the BMW honestly not gonna break the bank. I get get a 2013 model 3 series for $20K+ or so.

The main issue is the house. I would buy it in a heartbeat if not for the 15 to 20K tax on it. In 5 years, thats a whooping $100K in taxes alone!! (Plus where we live, houses dont even appreciate by 1%)

As for why we dont have retirement accounts, I once was a firm believer in money now vs money later. Meaning, let me pay for everything cash right now and never take a loan ever. With this strategy, I bought 4 houses for cash and never had a mortgage or car loan. Why sock away money into something and take loans and pay interest. It balances out. A $700K house becomes $1 million in 8 years just on interest. That was my believe. Please dont massacre me on this as this was an old stupid strategy, perhaps. I never had matching 401K fyi.
I'm going to share some thoughts.... first on the car. She drives 80 miles a day and you work from home. Get her whatever she wants to drive and forget-about it. I'm assuming this is your business (since you used "client") so lease her a new BMW to use daily and the cost would be a write down business expense?, is that right?

Next on the $1.9M asset net worth. It seems half of your $$ are in the paper appreciation of rental units not producing much in the way of positive profitable cash flow and the rest in bank deposits and CD not producing much, if anything, over the inflation rate. You may want to rethink the $750K cash/CD vs. $150K equities at some point.

$400K or so income in a good year, $200K income in a bad year... let's say $300K average? I'd take one or two of the not particularly beneficial to cash flow properties and your townhouse and have a paid for $650K home for you and the family to enjoy. After all, it is where you live, and for you, live and work. Check school districts carefully. I think you can safely handle the $20K for real estate taxes on the $300K average income and no mortgage. That would seem to leave you with near the same $1.9 as you started, just distributed a bit different.

As far as the relative and the relative and the "if I had your money" statement. The concern is your wife discussing what should be personal finance issues with her sister that she should be discussing with you. It would seem her sister has provided some influence to wants and needs spending decisions. Is the sister a high life style person with a big income or just a malcontent trying to make issues in your marriage?

Good luck.
Carefreeap
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Re: Wife tired of saving...

Post by Carefreeap »

Anon1234 wrote:
Separately, does anyone know if OP can 1031 exchange rental properties to pay for some of the new primary residence?
You can but it's a two step process and you'd have to do the math to see if it makes sense.

You can't do a direct 1031 into a personal residence. You can exchange into a house that you rent out for one tax year (per my CPA) and then move in. Besides the extra hassle of the process you will have some extra costs. First is the cost of the "exchanger' or middle person who hold the funds. This is in addition to escrow or your settlement fee and is generally 1% of the exchanged property's sales price. The second cost is if you finance this purchase you will likely pay another .5% in interest costs because it's a non-owner occupied property. Also when you go to sell the property you'll have to bifurcate the capital gains between rental period and primary residence and exclude the rental period from the cap gains exemption. If the OP is planning on living in the property for a long time it might not be a big deal but it is something to keep in mind.

Do the math before going this route. We bought a property this way with the intention of moving into it as a retirement home. At the low of the recession we figured it was actually cheaper to just pay the cap gains taxes than the costs to move into the house!
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fanmail
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Re: Wife tired of saving...

Post by fanmail »

midareff wrote:
pinhead wrote:I'd take one or two of the not particularly beneficial to cash flow properties and your townhouse and have a paid for $650K home for you and the family to enjoy. After all, it is where you live, and for you, live and work. Check school districts carefully. I think you can safely handle the $20K for real estate taxes on the $300K average income and no mortgage. That would seem to leave you with near the same $1.9 as you started, just distributed a bit different.
I agree with selling a few of the rental properties that have allegedly appreciated but don't pay much rent along with your townhouse if you are going to upgrade to a bigger home.
fanmail
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Re: Wife tired of saving...

Post by fanmail »

Additionally, and perhaps before you do the above, I echo the sentiments of:

-sitting down and discussing this stuff with your wife in detail.
-funding retirement accounts yesterday.
-CDs are fine, but how much money is in checking/cash earning 0%? If a large amount, change that asap.
texaspapas
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Re: Wife tired of saving...

Post by texaspapas »

Your wife contributes fantastically to this very high income that you guys have and commutes 80 miles per day in a car, while you work from home. For the love of peat, buy her a nice, safe car, and don't worry if it gets 10 miles less per gallon in efficiency, and then make it her* car. She's earning it.

As for the house... Why don't you convert one of your rental properties to cash to offset your (seemingly) heavy weight in real estate and/or to offset the larger mortgage of the new place, and then enjoy the nice parts of having a bigger house. Just make sure it has something that you like as well, like big garage or whatever will keep you from dwelling negatively on it.

And whatever you do, try to get it to where your in-laws no longer know any details of your finances.
Logan T
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Re: Wife tired of saving...

Post by Logan T »

pinhead wrote:Clarifications: $1m in real estate (home plus rental properties), 750K in cash and CDs, 150K in stocks.
DSInvestor wrote:Why are not contributing to retirement accounts when you have that type of income? If you both max out Solo 401k for 53K each, the tax savings would be 35-45K/yr, which goes a long way to pay for the BMW or another home that you'd both be happy with.
That seems like way too much in cash and CDs. I'd take the cash and start investing it, especially to max out a Solo 401k for each of you and a backdoor Roth. Then like DSInvestor said, your tax savings will more than pay for the expensive property taxes of a new home.
You really don't need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you'll be able to retire comfortably at 70. -Jonathan Pond
anonyvestor
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Re: Wife tired of saving...

Post by anonyvestor »

I obviously don't know your circumstance well, but consider a few of the following possibilities.

If the problem is about a car, or your immediate budget within the parameters you have posted, then you don't really need any outside guidance - as the problem seems rather small. But I agree with others that designating a budget for retirement would seem constructive.

If your wife has a defined need like "nesting," which will be satisfied once this specific need is met (e.g. with a new home,) then this can be "solved" too.

But I fear it is commonly not so simple. My concerns are,...

1. Perhaps your wife is less than entirely satisfied, and believes the next material change will fill the hole. In this case, the problem would only amplify until her real need has been recognized and addressed.

2. You are both headed into your 40s, and one or both of you are bound to have a midlife "reassessment" very soon. Soon it must necessarily drift from building your future to realizing the present. Maybe she is just ahead of you in this regard.

3. Or perhaps your wife does not readily recognize (and is unable to state) what it is she really wants or needs.

Rather than focus on the finances, I would suggest the two of you have a lot of conversations about what is is you each really want in life. Maybe it is changing. Maybe you cannot yet answer for yourselves.

I cannot speak for her, but in your case, you need to be able to know and explain why you don't want to shoulder a higher annual tax burden. Do you want to work less? Are your fearful about your income security? Are you feeling "locked in?" Do you want to spend the money on travel or other experiences instead? Does the fancy house and car make you feel conspicuous? Do the financial assets in the bank otherwise validate you, or facilitate some other specific goal???

I would consider broadening the conversation to include values, fears and goals, rather than finances alone. Life is not about the numbers.

But this blog does tend to invite discussion about numbers rather than values or personality, and I could of course be ENTIRELY off-track.
dgdevil
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Re: Wife tired of saving...

Post by dgdevil »

texaspapas wrote:Your wife contributes fantastically to this very high income that you guys have and commutes 80 miles per day in a car, while you work from home. For the love of peat, buy her a nice, safe car, and don't worry if it gets 10 miles less per gallon in efficiency, and then make it her* car. She's earning it.
OP said his wife doesn't like to drive the Lexus: "My wife refuses to drive the Lexus because of how we have been all our lives. Its a habit to preserve the better car. Before the camry, she was driving a small Toyota Matrix with 175K miles to work."
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DonCamillo
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Re: Wife tired of saving...

Post by DonCamillo »

A Boglehead philosophy is to "Live below your means." LBYM

I like to break that into two parts; "Live" and "below your means." Savings should always be for something. Money is just a way to store your earnings until you have a use for them.

I like the song from Porgy and Bess; "They say that Methuselah lived 900 years. But who calls that livin' when no gal will give in to no man what has 900 years?" :shock:

Everything flows from purpose. If you have a purpose, you draw meaning from that, and your spending supports your purpose.
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sls239
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Re: Wife tired of saving...

Post by sls239 »

i think this is one of the warning signs of breaking away from the long term goal
What is the long term goal?
niceguy7376
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Re: Wife tired of saving...

Post by niceguy7376 »

dgdevil wrote:
texaspapas wrote:Your wife contributes fantastically to this very high income that you guys have and commutes 80 miles per day in a car, while you work from home. For the love of peat, buy her a nice, safe car, and don't worry if it gets 10 miles less per gallon in efficiency, and then make it her* car. She's earning it.
OP said his wife doesn't like to drive the Lexus: "My wife refuses to drive the Lexus because of how we have been all our lives. Its a habit to preserve the better car. Before the camry, she was driving a small Toyota Matrix with 175K miles to work."
But he also said that the wife wants a BMW!!!! Somewhere there is a disconnect.
an_asker
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Re: Wife tired of saving...

Post by an_asker »

DonCamillo wrote:[...]I like the song from Porgy and Bess; "They say that Methuselah lived 900 years. But who calls that livin' when no gal will give in to no man what has 900 years?" :shock:[...]
(American) Culturally semiliterate here. Who came first? "Porgy and Bess" or Anna Nicole Smith? If the former, then I get their point (of view)! If the latter was first, I question the wisdom of the songwriters! :oops:
an_asker
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Re: Wife tired of saving...

Post by an_asker »

sls239 wrote:
i think this is one of the warning signs of breaking away from the long term goal
What is the long term goal?
Thank you for reiterating that question - OP is yet to answer it (though it has been asked a few times already on this thread).
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JonnyDVM
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Re: Wife tired of saving...

Post by JonnyDVM »

Get your wife a new car. Start looking for a new house.

This is one of the rare cases where I would recommend you find a good financial advisor. You have limited to no retirement accounts and 750k in cash/CD's. That is terri-bad. You need some professional financial help. While the advice you will find on this forum is generally good, you may find the advice hard to implement on your own. This is a case where I think most would agree that you really need to make some radical financial changes. It might be easier for you with guidance from a good financial professional.
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supersharpie
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Re: Wife tired of saving...

Post by supersharpie »

JonnyDVM wrote:Get your wife a new car. Start looking for a new house.

This is one of the rare cases where I would recommend you find a good financial advisor. You have limited to no retirement accounts and 750k in cash/CD's. That is terri-bad. You need some professional financial help. While the advice you will find on this forum is generally good, you may find the advice hard to implement on your own. This is a case where I think most would agree that you really need to make some radical financial changes. It might be easier for you with guidance from a good financial professional.
+1

The guy's irrational aversion to retirement accounts absolutely blows my mind. He needs a serious education of tax implications of his poor financial decisions. They are costing him and his wife far more than the value of a luxury car.
dgdevil
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Re: Wife tired of saving...

Post by dgdevil »

niceguy7376 wrote:
dgdevil wrote:
texaspapas wrote:Your wife contributes fantastically to this very high income that you guys have and commutes 80 miles per day in a car, while you work from home. For the love of peat, buy her a nice, safe car, and don't worry if it gets 10 miles less per gallon in efficiency, and then make it her* car. She's earning it.
OP said his wife doesn't like to drive the Lexus: "My wife refuses to drive the Lexus because of how we have been all our lives. Its a habit to preserve the better car. Before the camry, she was driving a small Toyota Matrix with 175K miles to work."
But he also said that the wife wants a BMW!!!! Somewhere there is a disconnect.
Yeah, it's getting harder to play along. Modern Family is easier to follow.
ebv
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Re: Wife tired of saving...

Post by ebv »

supersharpie wrote:
JonnyDVM wrote:Get your wife a new car. Start looking for a new house.

This is one of the rare cases where I would recommend you find a good financial advisor. You have limited to no retirement accounts and 750k in cash/CD's. That is terri-bad. You need some professional financial help. While the advice you will find on this forum is generally good, you may find the advice hard to implement on your own. This is a case where I think most would agree that you really need to make some radical financial changes. It might be easier for you with guidance from a good financial professional.
+1

The guy's irrational aversion to retirement accounts absolutely blows my mind. He needs a serious education of tax implications of his poor financial decisions. They are costing him and his wife far more than the value of a luxury car.
Agree, to an extent, but let's not be too hasty to judge. We've all been where the OP is. Let's proselytize, not bully.

Ultimately, OP is still in great financial shape--he just needs to rejigger and reallocate some priorities and allocations, that's all.

OP--good luck with your dilemma. I think my advice would be to take care of your immediate needs and prioritized wants. While you have the expendable cash, do enjoy life a little bit. I doubt you'll regret a nicer home for the next 20+ years. Likewise, I doubt you'll feel the difference between a Camry and a BMW all that much. Sit down with your wife and have a long, serious talk about your goals. Immediate, short-term, and long-term.

Set your priorities together. Make spending and saving goals (putting X% into retirement accounts, Y% into real estate investment, Z% into vacations, XX% into education, etc.). Having those kinds of unified goals together can be one of the most satisfying experiences in marriage--building toward something together is invigorating. Make her a part of all of it and take joint ownership of your financial life and you'll be amazed at how any financial tension just melts away.

Just a couple of thoughts. Good luck and godspeed.
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Re: Wife tired of saving...

Post by IPer »

fanmail wrote:
pinhead wrote:My wife' s sister + family also seem to enjoy their money and have told us few times that if they had our kinda money, they would have lived way better.
I don't really have much advice for you. But this line kinda irked me for some reason.
Yeah, me too, like you really have to appease those that cannot appease you (or something like that)! These folk do not have your kinda money, they are not in your
category, and now you are thinking you need to emulate them?! Might make sense on some planet somewhere.
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jh-1391
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Re: Wife tired of saving...

Post by jh-1391 »

niceguy7376 wrote:
dgdevil wrote:
texaspapas wrote:Your wife contributes fantastically to this very high income that you guys have and commutes 80 miles per day in a car, while you work from home. For the love of peat, buy her a nice, safe car, and don't worry if it gets 10 miles less per gallon in efficiency, and then make it her* car. She's earning it.
OP said his wife doesn't like to drive the Lexus: "My wife refuses to drive the Lexus because of how we have been all our lives. Its a habit to preserve the better car. Before the camry, she was driving a small Toyota Matrix with 175K miles to work."
But he also said that the wife wants a BMW!!!! Somewhere there is a disconnect.
Exactly. Obviously the desire to have two nice cars outweighs having one "nice" car and one "not so nice" car.

If your wife is honestly fine with driving the Camry, then something else is going on that the two of you should discuss.
FredL
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Re: Wife tired of saving...

Post by FredL »

I remember an old story. Wife said to her husband about the new neighbor. Wife said they must be rich. Look at her, she wears fur, drives expensive car. Husband replied we should really look into their bank account. I have met someone with higher income than mine, but lives paycheck to paycheck. That's typical instant gratification Americans.
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Re: Wife tired of saving...

Post by Tamahome »

What about a compromise? Look at your finances. Agree to save somewhere around 20% (or whatever percentage works best for you). Then, figure out what kind of house you can afford. If you can afford the grand mansion, do it. If you can't don't. Either way, you have an agreed upon set savings rate. Beyond that rate, you can spend. If you happen to sock away a little more than the savings rate, no worries, but you agree that you do not go below it. So long as that is met, she can buy as many houses/BMWs as your income allows.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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SpringMan
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Re: Wife tired of saving...

Post by SpringMan »

8foot7 wrote:If I can't buy my wife the car she wants when I have $2 million in the bank, then what is the point?
I don't disagree about your point about them being able to afford a nice car with in reason but the OP said nothing about having that much money in the bank. At their ages they can not access tax deferred money such as 401(k) or IRA money with a 10% penalty and plus tax. A net worth of $1.9M is much different than $1.9M sitting in a bank earning next to nothing.
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JonnyDVM
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Re: Wife tired of saving...

Post by JonnyDVM »

ebv wrote:
supersharpie wrote:
JonnyDVM wrote:Get your wife a new car. Start looking for a new house.
This is one of the rare cases where I would recommend you find a good financial advisor. You have limited to no retirement accounts and 750k in cash/CD's. That is terri-bad. You need some professional financial help. While the advice you will find on this forum is generally good, you may find the advice hard to implement on your own. This is a case where I think most would agree that you really need to make some radical financial changes. It might be easier for you with guidance from a good financial professional.
+1

The guy's irrational aversion to retirement accounts absolutely blows my mind. He needs a serious education of tax implications of his poor financial decisions. They are costing him and his wife far more than the value of a luxury car.
Agree, to an extent, but let's not be too hasty to judge. We've all been where the OP is. Let's proselytize, not bully...
BULLY??? We are trying to save this guy literally hundreds of thousands of dollars. We most certainly have not all been where OP is. OP has 750k sitting in cash and CD's and nothing in retirement accounts. Many of the posts in this thread focus on sitting down with the wife and discussing why she feels she needs a nicer car and a nicer house. Talk about missing the forest for the trees! Lets get an extra 1% on 750K, I just bought a very nice BMW. Let's max out retirement accounts- the tax savings just covered property tax on a palace. A good financial adviser can help you arrange your financial situation and help you clarify your goals. Not everyone is good at this do it yourself thing. I would strongly consider it.

OP, you've been working hard and saving. That's great. That is the hard part. You enjoy experiences over things. I am the same way. You have a wife that is burned out from saving and living frugal. Perhaps you over did it a little. Your in-laws may be too far over to the right of the spending scale but you may be too far over to the left. Think about moving a few paces to the right. There is a balance between saving enough for the future and living life. Map out retirement goals (once again an adviser can help you with that). When you have your goals clearly visualized you can calculate how much more you need to save when what you already have is properly invested. After that you will then have a budget of leftover money to spend. Start spending it.
I’d trade it all for a little more | -C Montgomery Burns
absolutFinance
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Re: Wife tired of saving...

Post by absolutFinance »

pinhead wrote:
The main issue is the house. I would buy it in a heartbeat if not for the 15 to 20K tax on it. In 5 years, thats a whooping $100K in taxes alone!! (Plus where we live, houses dont even appreciate by 1%)
I just wanted to point out that instead of focusing on the 15-20k in absolute taxes, you might want to focus on the incremental amount of taxes in moving up, which could be as little as 9k. You are paying taxes regardless at this point, a change may just increase that amount.

I tend to agree with others' opinions here - in general, happy wife = happy life (assuming your wife is reasonable).
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

Thanks for the answers so far. As to why we dont have a retirement account, I dont have a good answer other than the fact we didnt know better.

I have read each and everyone's viewpoints and appreciate it.

As for my goals....honestly, I was dumbfounded...there was no end goal. It was to sock away as much as u can. Dont get me wrong, we are nowhere frugal. We drive nice cars, furnished the home well, buy good clothes, shoes, eat out, drink fine liquor, travel like crazy etc....whatever someone who is spendthrift does. We just dont buy stuff on credit. We do it once we have the money (delayed gratification).

In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
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bertie wooster
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Re: Wife tired of saving...

Post by bertie wooster »

OP - this may have been asked before but why does your sister in law know how much you make?
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bertie wooster
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Re: Wife tired of saving...

Post by bertie wooster »

pinhead wrote: In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
This sounds extreme to me. You want to set aside $500k each for your kids but you also want them to go to community college?
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

bertie wooster wrote:
pinhead wrote: In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
This sounds extreme to me. You want to set aside $500k each for your kids but you also want them to go to community college?
Is community college bad? I didnt know, I went to one. But one thing for sure, unless u go to the top 5 or top 10/20, does not matter where you graduate from. Thats my point really.
Last edited by pinhead on Fri Mar 06, 2015 12:19 am, edited 1 time in total.
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

bertie wooster wrote:OP - this may have been asked before but why does your sister in law know how much you make?
Cultural thing. Its changing.
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celia
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Re: Wife tired of saving...

Post by celia »

Pinhead, In regards to not wanting to pay 15-20k in property tax, you should realize you can easily pay MORE THAN THAT for tuition (2 kids) if you don't live in a good school district. And the property tax is tax deductible, so you are being reimbursed for some of it, in effect.

If you can get a breakdown of what the property tax in your area is being spent on, that may show you that you are getting 15-20k in value. It is probably paying for public schools, county services, fire, police, flood control, mosquito abatement, . . . I'll bet you could find a nice house that both of you would enjoy with lower taxes, but you may need to more to a different area. May I suggest closer to where your wife works?
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

celia wrote:Pinhead, In regards to not wanting to pay 15-20k in property tax, you should realize you can easily pay MORE THAN THAT for tuition (2 kids) if you don't live in a good school district. And the property tax is tax deductible, so you are being reimbursed for some of it, in effect.

If you can get a breakdown of what the property tax in your area is being spent on, that may show you that you are getting 15-20k in value. It is probably paying for public schools, county services, fire, police, flood control, mosquito abatement, . . . I'll bet you could find a nice house that both of you would enjoy with lower taxes, but you may need to more to a different area. May I suggest closer to where your wife works?
If we buy, it will be in the same school district we are in now. Rated very well.
Wife is a contractor/consultant too (no fixed location...3 months at client A, 5 months at client B etc). We need to live in a central strategic location that lets us go to various client sites easily.
WL2034
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Re: Wife tired of saving...

Post by WL2034 »

I feel like the decision regarding the house and car just depend on personal values. You can afford them if they are important to you and your wife. If it were me, it would be a higher priority to move into a single family home compared to buying the BMW. We have "His" and "Hers" primary cars, so the idea of buying 2 luxury cars despite the fact that you prefer to keep the Camry is foreign to me. I would just allow her to drive the Lexus full-time, and I don't think any quality argument can be made (mpg, cost of ownership, preserving the more valuable car, etc.) that it makes financial sense to buy a BMW to replace the Camry. It just comes down to whether owning the BMW makes your wife (and you) happy. If so, you can afford it!

I agree that you really need to open up solo 401k's for each of you and start doing backdoor Roths. You are paying an extra $40k+ in income taxes and have $750k earning little to no return. Make some changes here and it will more than make up for the extra spending.
virgingorda
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Re: Wife tired of saving...

Post by virgingorda »

supersharpie wrote:The guy's irrational aversion to retirement accounts absolutely blows my mind. He needs a serious education of tax implications of his poor financial decisions. They are costing him and his wife far more than the value of a luxury car.
There is definitely a disconnect since avoiding paying property tax is important to the OP.

2000 square feet is pretty big for a town home, but still, I think I'd want a single family house too. It would not have to be huge. Such a waste to have rooms you have to fill with furniture but never use. But I'd want the yard and more separation from neighbors.
dekecarver
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Re: Wife tired of saving...

Post by dekecarver »

After re-reading the thread and picking up on your wife's daily 80 mile drive, she should be the one defining what comfortable is. Hell look at what you guys have accumulated at a young age.

Finances is not all always about the numbers, open honest communication is priceless, maybe you guys have that, if not, its a lot cheaper than a house and car but sometimes harder to achieve. Just don't lose sight of the bigger picture. Discuss your family needs and wants and more importantly how you think you communicate to one another. You might find neither of you are entirely hearing each other or stating clearly what you want or need.
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Re: Wife tired of saving...

Post by an_asker »

pinhead wrote:[...]As for my goals....honestly, I was dumbfounded...there was no end goal. It was to sock away as much as u can. Dont get me wrong, we are nowhere frugal. We drive nice cars, furnished the home well, buy good clothes, shoes, eat out, drink fine liquor, travel like crazy etc....whatever someone who is spendthrift does. We just dont buy stuff on credit. We do it once we have the money (delayed gratification).[...]
Let's start with that goal thingy first. I would say sit down with your wife - after a good dinner out, like someone said elsewhere on this thread. Prepare your top five (or ten) financial goals; get your wife to do the same as well. Then draw up a path to get there. If you don't, then whatever money you have will never be enough! Make sure you have a number that will last long (of course)!

Here is one of my favorite bloggers. Yours could be $10 million if you want it to be that, but once you pick a number, you can be more at ease with your savings/frugality etc. for sure!

PS: It does appear that this thread has gone towards the "can you buy the car or not" vs. the "can you buy the house or not" question! Everyone seems to be putting the car(t) before the hou(r)se ;-)
jh-1391
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Re: Wife tired of saving...

Post by jh-1391 »

pinhead wrote:
bertie wooster wrote:
pinhead wrote: In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
This sounds extreme to me. You want to set aside $500k each for your kids but you also want them to go to community college?
Is community college bad? I didnt know, I went to one. But one thing for sure, unless u go to the top 5 or top 10/20, does not matter where you graduate from. Thats my point really.
Very strongly disagree depending on what your kids want to major in. School reputation and alumni network matters. You would be wise to re-think this.

There is nothing wrong with going to a community college, at all, but to pretend that nothing but top 5 matters is ludicrous.

And speaking as someone who went to a top 20ish type of public school (I know, how pointless right?!) for around $100k total, I wouldn't have my job if I hadn't graduated from my university, or a small handful of others around the region, and trust me, it's a pretty good job for a new grad.

While school may not matter for a generic degree, it definitely does for a specialized one. And there are some GREAT schools with amazing alumni networks (so good jobs afterwards) that your kid can attend for $100k-$250k all in.
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

jh-1391 wrote:
pinhead wrote:
bertie wooster wrote:
pinhead wrote: In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
This sounds extreme to me. You want to set aside $500k each for your kids but you also want them to go to community college?
Is community college bad? I didnt know, I went to one. But one thing for sure, unless u go to the top 5 or top 10/20, does not matter where you graduate from. Thats my point really.
Very strongly disagree depending on what your kids want to major in. School reputation and alumni network matters. You would be wise to re-think this.

There is nothing wrong with going to a community college, at all, but to pretend that nothing but top 5 matters is ludicrous.

And speaking as someone who went to a top 20ish type of public school (I know, how pointless right?!) for around $100k total, I wouldn't have my job if I hadn't graduated from my university, or a small handful of others around the region, and trust me, it's a pretty good job for a new grad.

While school may not matter for a generic degree, it definitely does for a specialized one. And there are some GREAT schools with amazing alumni networks (so good jobs afterwards) that your kid can attend for $100k-$250k all in.
Strongly disagree having been in 'education sector' for past 16 years. Networking means nothing unless in grad school. This is especially true for skilled workforce, even more so for a generic degree. Let's say you are the hiring manager....Do you care if person comes from West Mississippi State University or West Tennessee State University? (I am sure if u ask each of them, they will say their schools are wayyyyy better). Rankings fade the further they go. Is it a wonder foreigners are being hired regardless what university they come from?
Afty
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Re: Wife tired of saving...

Post by Afty »

I agree with jh-1391 that you shouldn't write off schools outside of the top 5. I went to a top 5 school for undergrad and a second-tier school for my PhD. The quality of instruction was better at the second-tier school, since the faculty weren't so busy and self important that they didn't have time to spend with students. I now work at a "top 5 company," and many of my coworkers have degrees from second-tier schools, but not so many from community colleges.

I also agree with the larger point that you and your wife need to sit down and define your financial goals. Consider when you want to retire how much you plan to spend in retirement, kids' college tuition, etc., and then figure out a goal savings amount that would support those goals. Then create a savings plan that will get you there. Don't just save for the sake of saving, but to achieve your goals. You might want to work with a financial planner for this.

My guess is that you are most of the way to your goals already, and you can easily afford the nicer house and the BMW. But there is no need to guess -- do the planning and the math and make a rational decision.
choices
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Re: Wife tired of saving...

Post by choices »

anonyvestor wrote:I obviously don't know your circumstance well, but consider a few of the following possibilities.

If the problem is about a car, or your immediate budget within the parameters you have posted, then you don't really need any outside guidance - as the problem seems rather small. But I agree with others that designating a budget for retirement would seem constructive.

If your wife has a defined need like "nesting," which will be satisfied once this specific need is met (e.g. with a new home,) then this can be "solved" too.

But I fear it is commonly not so simple. My concerns are,...

1. Perhaps your wife is less than entirely satisfied, and believes the next material change will fill the hole. In this case, the problem would only amplify until her real need has been recognized and addressed.

2. You are both headed into your 40s, and one or both of you are bound to have a midlife "reassessment" very soon. Soon it must necessarily drift from building your future to realizing the present. Maybe she is just ahead of you in this regard.

3. Or perhaps your wife does not readily recognize (and is unable to state) what it is she really wants or needs.

Rather than focus on the finances, I would suggest the two of you have a lot of conversations about what is is you each really want in life. Maybe it is changing. Maybe you cannot yet answer for yourselves.

I cannot speak for her, but in your case, you need to be able to know and explain why you don't want to shoulder a higher annual tax burden. Do you want to work less? Are your fearful about your income security? Are you feeling "locked in?" Do you want to spend the money on travel or other experiences instead? Does the fancy house and car make you feel conspicuous? Do the financial assets in the bank otherwise validate you, or facilitate some other specific goal???

I would consider broadening the conversation to include values, fears and goals, rather than finances alone. Life is not about the numbers.

But this blog does tend to invite discussion about numbers rather than values or personality, and I could of course be ENTIRELY off-track.
Right on, poster. I am feelin that the car and house "needs/wants is not really all that is at play here.
jh-1391
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Re: Wife tired of saving...

Post by jh-1391 »

pinhead wrote:
jh-1391 wrote:
pinhead wrote:
bertie wooster wrote:
pinhead wrote: In a way, I want to be able to send each kid to college (fully paid) and put aside $500K each. I do not believe in colleges that cost $100K or 250K etc. IF my kids cant get into the TOP 5, they are going to University of Mom and Pop, where a 4 year degree can be done under $30K (2 year community then transfer etc).
This sounds extreme to me. You want to set aside $500k each for your kids but you also want them to go to community college?
Is community college bad? I didnt know, I went to one. But one thing for sure, unless u go to the top 5 or top 10/20, does not matter where you graduate from. Thats my point really.
Very strongly disagree depending on what your kids want to major in. School reputation and alumni network matters. You would be wise to re-think this.

There is nothing wrong with going to a community college, at all, but to pretend that nothing but top 5 matters is ludicrous.

And speaking as someone who went to a top 20ish type of public school (I know, how pointless right?!) for around $100k total, I wouldn't have my job if I hadn't graduated from my university, or a small handful of others around the region, and trust me, it's a pretty good job for a new grad.

While school may not matter for a generic degree, it definitely does for a specialized one. And there are some GREAT schools with amazing alumni networks (so good jobs afterwards) that your kid can attend for $100k-$250k all in.
Strongly disagree having been in 'education sector' for past 16 years. Networking means nothing unless in grad school. This is especially true for skilled workforce, even more so for a generic degree. Let's say you are the hiring manager....Do you care if person comes from West Mississippi State University or West Tennessee State University? (I am sure if u ask each of them, they will say their schools are wayyyyy better). Rankings fade the further they go. Is it a wonder foreigners are being hired regardless what university they come from?
I'm not comparing two middle of the road, small to mid size schools. I'm talking about larger universities that have reputations in various industries and strong alumni networks. I went to school for probably $100k total at a larger university which has DEFINITELY helped me get where I am today thanks to the reputation of the degree. The case is true for a handful of universities that feed my industry. While it's possible for a strong candidate from a school no one has heard of to be successful, life is much easier when you are able to have that instant conversation starter.

Alumni networks do matter, especially in industries where a school has historically produced strong graduates.
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pinhead
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Re: Wife tired of saving...

Post by pinhead »

Afty wrote:I agree with jh-1391 that you shouldn't write off schools outside of the top 5. I went to a top 5 school for undergrad and a second-tier school for my PhD. The quality of instruction was better at the second-tier school, since the faculty weren't so busy and self important that they didn't have time to spend with students. I now work at a "top 5 company," and many of my coworkers have degrees from second-tier schools, but not so many from community colleges.
How would you know if they did at a community college or not? You just transfer to a 4 year university and on your resume, you mention the 4 year university you graduated from.
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pinhead
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Re: Wife tired of saving...

Post by pinhead »


I'm not comparing two middle of the road, small to mid size schools. I'm talking about larger universities that have reputations in various industries and strong alumni networks. I went to school for probably $100k total at a larger university which has DEFINITELY helped me get where I am today thanks to the reputation of the degree. The case is true for a handful of universities that feed my industry. While it's possible for a strong candidate from a school no one has heard of to be successful, life is much easier when you are able to have that instant conversation starter.

Alumni networks do matter, especially in industries where a school has historically produced strong graduates.
Does it matter to you if someone comes from University of Alaska or University of Utah? For me, I would call both, interview, check out their skills etc. I think this is how it works for the rest of the 95% of industries in the country. The workplaces that are more selective (For example, Google or McKinsey etc, they represent 0.00000000001% of the workforce and does not represent the 'norm')

Check out this Flat rate $10,000 University degree. (Funded partly by the Bill Gates Foundation)
http://collegeforamerica.org/

Georgia Tech (A very reputable University), Masters degree in Computer Science for $7K
https://pe.gatech.edu/degrees/online-masters-degrees
Last edited by pinhead on Fri Mar 06, 2015 12:38 pm, edited 2 times in total.
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