Pay Per Touch

Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)

Dear Pay Dirt, 

I’m the breadwinner of the family. My husband has not been able to hold a full-time job for the last 10 years. He claims it was to support my career, but he was never able to find a job when I said I would follow him. I have a decently paying job, and we have two children. The problem is my husband has complete control of the finances. He will not give me access to the saving account which holds all our savings, and which my paycheck has helped build. I have tried talking to him several times, but he makes excuses that I was living beyond my means when I was a graduate student, and that he is better with money. I don’t have any bad habits—I don’t get my nails or hair done on a regular basis, and hardly buy anything without discussing it with him. He thinks I will spend all the money if I find out about it. I only want to know how much money we are saving since I have two young children and need to think about my future. Am I wrong in asking for access to the savings account?

—Right or Wrong

Dear Right or Wrong,

I’m trying to give your husband the benefit of the doubt here: I hope he has been managing the household while you’ve been building your career, and that he’s a great and loving partner beyond this financial issue. But completely controlling the finances and limiting your access to joint bank accounts is concerning. Both of these traits are listed as financially abusive behaviors.

I firmly believe all partners should have access to some of their own (separate) money in a marriage, especially stay-at-home parents. But this isn’t just about your husband’s “walking around money.” He’s not earning any of the money while also not giving you access to joint accounts. He is treating you like a naughty child (based on your spending habits over a decade ago?), not an equal partner who earned the money he’s controlling.

I’m concerned that your husband’s refusal to even show you your account balances hides some deeper financial issues: gambling, addiction, financial infidelity, or significant debt. I hope it’s not true, but there may be nothing in your savings account. The best-case scenario is that he’s been diligently saving and is simply anxious because he still has some outdated image of you as a graduate student who splurged. But he doesn’t get to use his nervousness as an excuse to keep you in the dark about your own money. I think you need to look at what you’re getting out of this marriage—do you feel that he’s using you for your income and is using access to your money to control your behavior? Are there other signs he might be concealing a gambling habit or addiction?

If you are the joint owner of the bank accounts where your paychecks are deposited, you can go to the bank in person and request information and account access with your ID. It’s your right to access accounts in your name. Finding out the balances and recent transactions will give you better insight into whether your husband is actually nervous about you potentially overspending or if something bigger is happening. Pull your free credit reports from annualcreditreport.com to make sure there are no other surprises.

If, for some reason, your paychecks are being deposited to an account you are not listed on, you can open a new account and change your direct deposit form at work to have all or part of your paycheck deposited there. You can also insist your husband add you as a joint holder to your main accounts. There’s no reason you shouldn’t have access to the money you worked for (which is marital property). If your husband is responsible for paying household bills, you obviously have to discuss this with him. His reaction to this news will tell you a lot—does he only seem concerned about making the bills get paid? Or does he react aggressively or violently? Or does he just seem worried about his security as the financially dependent partner?

In the best case, where he is willing to give you more insight into the finances but is just worried about you overspending, you’ll likely benefit from convincing him to attend a few joint sessions with a financial planner or a financial counselor. Not only will you get a third party to help mediate these discussions, but you’ll also get a better sense of where your financial goals are for your children.

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Dear Pay Dirt,

I am a veteran teacher of 22 years, and like many educators right now I am fed up with the state of education in this country, sick of being disrespected, and have a cohort full of students with myriad needs not being met by insufficient mental health resources. My own mental health is in tatters, I want a change, and I’m feeling ready to leave the classroom.

But… I need the pension. Right now, according to my age and years of service, I qualify for a pension of approximately 20 percent of my current salary. I would need to stay 12 to 13 more years in order to get the maximum annual pension, which would be 80 percent of the average of my last three years’ salary. Our current financial resources are OK but not stellar—we own a home in a valuable neighborhood where we’ve lived for 12 years, and it’s now worth a lot more than what we paid for it. My spouse was unemployed for almost two years and supporting a family of four on one teacher’s salary consumed any savings we had. He has been back to work since the summer of 2020 and we’ve managed to pay down our credit card debt, but we don’t have much in our emergency savings and we’re not putting anything away for our kids for college.

How much of a financial hit would my family be taking if I were to leave teaching and do something else? I know I will still qualify for some social security, but I believe it gets reduced if you are receiving a pension. I feel like it would be irresponsible of me to leave, and I feel stuck.

—At Least I Still Get Summers Off

Dear Summers Off,

I’m sorry that many veteran teachers like yourself are fed up with cracks in the public school system. Unfortunately, I can’t tell you how much of a financial hit your family would take if you left to do something else without knowing your alternative career options. But know that your teaching skills are valued in the private sector and government jobs. First, you should research the compensation for careers you could transition into. Once you’ve got some options on the table, you’ll get a better idea of what kind of hit you would take without your full pension.

It’s worth noting that some former teachers who stay in the same pension system in a public sector job get to continue building it—it may be tied to your state or county and be portable. So explore those options if you want to leave the classroom but stick with your pension. But even if you don’t get to port your pension to a new employer, you can use the smaller payout as part of your overall retirement income plan (as long as you’re vested). For example, if you switch to an employer with a 401(k) and can max your contribution for the rest of your working career, you might be in good shape. You would get a combination at retirement age: social security, a reduced pension, and your 401(k) withdrawals.

If you want to understand how much social security you’re currently entitled to and how much has been withheld, create an account on the Social Security Administration website, download your statement, and use their benefits planner. You’re right: Certain pensions may reduce your social security payout. You’ll need to understand if the Windfall Elimination Provision (WEP) applies to you; WEP minimizes the amount of social security you receive if your employer doesn’t withhold it from your paycheck. But if your pension amount is low, WEP will only reduce your social security payment by half of your pension.

Once you have a good idea of the likely compensation and retirement structure of possible other careers, it’s worth booking a few hours with a fee-only financial advisor specializing in retirement planning (specifically one familiar with your pension system). The WEP calculations are complicated, and an advisor will have the software to do them. A few hours with an expert will likely give you the precise information you need to know when and for how much money you can afford to leave teaching.

Money advice from Athena and Elizabeth, delivered weekly.

Dear Pay Dirt,

I realize I’m getting a little ahead of myself and that no one can predict the future. But the current wacky housing market is really throwing off our family’s plans. We (me, husband, and 2-year-old) are living in a two-bedroom townhome that has already gotten a bit too small for us (we didn’t know when we bought it in 2019 that we’d soon need extra space to work from home full-time). Our plan was to wait until our daughter was close to going to school (i.e., when we’re no longer paying the equivalent of our mortgage for daycare each month) to buy a larger single-family house in a neighboring town, which we like better than our current town.

I really don’t want to have to switch school districts later (my parents switched me from public to private school my freshman year and I had a really hard time with it). So we have a few years, but if interest rates don’t decrease by then… what’s one to do? Just wait and HOPE that interest rates go back down? I’ve heard people say that the right time to buy a new house is when you need a new house, but if you literally can’t afford a new mortgage that you otherwise would have been able to afford just a couple of years ago, when interest rates were lower, I don’t see this as practical advice. My parents also like to remind us that interest rates were 16 percent when they bought their home in the 1980s, but their home also cost $55,000, not in the $300,000s. Our new home will likely be a bit more expensive than our current home, but we’d also be saving on daycare and homeowners association fees by then.

—Our Five-Year Plan Is Shot

Dear Five-Year Plan,

If I could predict the future of interest rates and the housing markets with the level of certainty you seek, I would be very, very rich. Even professionals don’t have a crystal ball when it comes to forecasting (just a lot of computer terminals). In 1966, Nobel prize-winning economist Paul Samuelson joked that the markets had “predicted nine out of the last five economic recessions.”

While the current interest rates are high compared to the past decade, your parents are correct that they are still low on a historical level. Housing prices, however, have risen at a rate that has outpaced inflation and salary growth. Nothing is particularly fair about the current housing market, but interest rates are the most responsive part. Instead of going only up like the price of cereal, interest rates wiggle around based on many factors.

I’ll inject some of my dismal science here: Saying that a recession is on the horizon doesn’t sound optimistic, but in a buyer’s housing market, there are some positives to recessions. The forecasted recession will likely put downward pressure on housing prices (a trend that has already begun). And that starts a cascade effect: Cooling house prices will bring down inflation. Once inflation is under control, the fed will slow down its interest rate hikes. Once the fed funds rate comes down, mortgage interest rates will follow. It’ll just take a little time, which you have. Your plan for buying a house when your daughter is school-aged makes a lot of sense. Don’t worry about what interest rates and housing prices will be like in three to five years. If interest rates and prices are still high, you can either buy a more modest house or stretch the budget and aim to refinance down the line. Either way, worrying now won’t help—you’ll cross that bridge when you come to it.

Dear Pay Dirt,

My friends and I (five of us total, two of whom are married to each other if that’s relevant) want to purchase a house and land together and live there together, maybe building more houses on that land so we’d each have our own one day. From a financial perspective, what should we be considering here when we start this process? Should it be set up like a co-op, with shares of a whole? Does everyone just go on the mortgage? We will not be coming in with equal resources or spending an equal amount of time at the house, especially at the beginning, so figuring out maintenance is also something we’re not sure how to divide.

Also, we do not need any advice on the people parts of this, we’ve been friends and roommates in various configurations and are good at resolving interpersonal issues!

—Millennial Commune Aspirers

Dear Millennial Commune,

Yay for building intentional communities with chosen family. You have a few different options when approaching the legal structure of this purchase—each with its own benefits and drawbacks. It can be challenging to find a lender willing to finance a group of unrelated people wanting to buy a house (especially if it is not an investment property). Sometimes, lenders will require each borrower to qualify for the purchase individually, which can be a tall order for a larger house or piece of land or if one person has fewer assets and worse credit.

It’s best to figure out the legal structure and co-ownership agreement before you even start looking for a property and lender. The most accessible option is to create an LLC or another corporate entity like an S corporation that acts as the “umbrella” for the group. This will require you to outline each person’s initial capital, ownership percentage, and roles in the operating agreement. Make sure you understand the differences between joint tenancy and tenants-in-common.

Even if you’re good at handling interpersonal conflicts as friends and roommates, the stakes go up when you have a property (and debt) involved. Creating legal documents that outline how you will govern future situations is essential. This can either be done as a “cohabitation agreement,” or as part of the incorporation documents for a legal entity like an LLC or S corp.

You want to address how the following issues will be handled:
—An owner needs to sell to relocate
—An owner has a change in family status (marriage, divorce) or dies
—How equity and expenses are divided when there are land improvements, especially on
—Individual land or when done with “sweat equity”
—Borrowing against the property value
—An owner cannot pay their portion of expenses
—How many votes an owner is entitled to in decisions (one per person? or by shares?)

Cooperatives can be an excellent option for co-owning property, but you will want to explore which flavor of co-op makes the most sense. The most common are Market Equity or Shared Equity co-ops. In this case, a housing corporation will own the property, and each owner will buy a share (or multiple shares) of that corporation rather than part of the building itself. This means when the market value of the property goes up, the value of each person’s shares goes up, and they gain equity. The advantage of this method is that each individual or couple could take out a mortgage for just their slice of the co-op.

If your primary concern is keeping the co-op affordable and accessible to your friends without as many resources, you can consider a Group Equity co-op. Group equity would involve an entity (such as an LLC, a trust, a nonprofit corporation, or S corp) owning the property, and each person living there is an owner and/or board member of that company. Everyone pays rent to the entity that owns the property. Group equity co-ops are rarer but have a big advantage: there are ways for folks to enter and exit the co-op more easily and affordably. But because the equity stays with the entity that owns the co-op, you don’t build equity on an individual level. A final type of co-op falls in between the above: a limited equity co-op, common in Resident-owned Communities. Any increases in equity are split between the individual owners and the combined entity that owns the land.

If you decide to go with a co-op, I recommend hiring a co-op financing consultant to help you navigate the process of financing and setting up incorporation documents. While it will be an additional expense, it will save you lots of time and money down the line. When a group equity housing co-op I lived at was refinanced in 2008, we hired a consultant from NASCO to help us prepare our books and balance sheets for banks (who struggled with understanding how 25 unrelated adults owned two houses). Even if you don’t use a consultant, I recommend you check out the Foundation for Intentional Communities and National Association of Housing Cooperatives resources on forming and structuring your community. Good luck in going forth and building your 21st-century commune dreams!

—Lillian

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