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,
How do you encourage someone’s dreams when you’re afraid if they are truly dedicated to them, it’ll lead to financial and relationship ruin? I love my husband, we’re a great team, I think he’s a genius, but he also has severe ADHD. He’s been asking me why I start to panic when he starts talking about the hypothetical company built around his latest invention. He wants to know why I refuse to dream big when for most of our marriage I’ve been his biggest supporter.
He only recently was diagnosed and before that, I handled the house and kids, worked so we made rent when he couldn’t keep a job, and pushed him to hold on when he nearly failed out of college. He says he’s started to avoid talking to me about this endeavor even though it takes up literally every spare minute of his time and he talks about nothing else. Getting medication saved our marriage since he could give us his attention, then he found a job that accommodates and builds him up (and pays the bills!), and he’s on track to finish school. It feels like we’re finally about to crawl out of exhausted poverty into a good life. I’m really scared of jeopardizing that. He thinks his dreams will get us to that good life. I think it’s better if he finds someone to pay him to invent things and let them handle the risks and taxes, payroll, etc. even if he loses the fame and a bigger slice of fortune.
—Thinks a Mediocre Life Is Enough
Dear Mediocre Life,
I hear your frustration. ADHD affects all areas of your life, including your money management skills and ability to stay employed. Your husband getting an actual diagnosis was a significant step in fixing your finances, and you never want to go back.
You’re right: Inventions can be hit or miss. Your husband could make a fortune or just continue to put cash toward a money sink. People with ADHD can be very creative but struggle with paying attention to the many small details required by patents and other paperwork. Inventing for a company through a work-for-hire contract can alleviate all that stress for him, but he’ll make much less than he could have done on his own (assuming his product was a hit).
Sit down with him and explain that you believe he can be a successful inventor but don’t want to jeopardize your recent financial progress. Try saying, “I love you, and believe you can be a successful inventor. But inventions and starting a business require a lot of initial investment, which isn’t conducive to our current finances. How can we meet in the middle so I can help you support your dreams?” Besides working for a company, he could also take on an additional side gig to fund his business without the family incurring any other expenses.
Dear Pay Dirt,
I’m rethinking who should be the executor of my will. This isn’t an urgent matter; I’m healthy and my family is long-lived. I am married (58F) with no children and my husband (68M) is the executor should I die first. So far, so good. But if I outlive him my niece is listed as the executor. Initially, that made good sense, but over the past few years I’ve had doubts about 1) whether I should burden her with that and 2) whether I trust her judgment in executing the will. I have my assets split between my two nieces and am rethinking whether it should go to charity instead. I have no other family and my husband’s daughter is doing fine on her own and wouldn’t need my money for an inheritance. Do you have a suggestion for an outside executor? Or for a way to dispose of my possessions in a charitable way with nieces getting a smaller amount and charity getting the majority?
—Child-Free Auntie
Dear Child-Free Auntie,
Good on you for getting ahead on changing this critical part of your estate plan. You have a few options. I reached out to money coach Darius Smith from Wealth Is My Worth, for some added expertise on picking the right person. He suggests you look for someone trustworthy and responsible, who can confidently execute your wishes. “Don’t pick the cousin or nephew who can’t keep a job or stable living arrangements,” Smith advises. While giving them money is fine, don’t trust them to manage yours. Preferably, you’d be looking for someone who has demonstrated the ability to manage wealth independently. “Be hesitant to choose the young grandchild who has not yet accumulated any wealth of their own unless they will also be the beneficiary of your estate,” he said. “Consider giving them time to mature by granting access to your assets over time.”
If you don’t have someone who meets the criteria above, consider having a third party execute your will. Look for a lawyer or accountant with a legal commitment like a fiduciary oath. This oath ensures they’ll represent you with your best interest in mind. An outsider, like an estate attorney, can be best for navigating complicated emotions your family may have during the distribution of your assets. Estate attorneys can also make logical decisions without outside influence.
Smith also shares that while family is usually the default inheritor, be intentional about what you want. If you can make a difference in your family’s life, you can also make a difference by supporting a cause. Bill and Melinda Gates, Warren Buffet, and other wealthy people have committed to donating most of their fortunes to a charity instead of family members. “You may not have billions, but whatever you have can change a person’s life, a community, or a cause, Smith advises. Whatever you decide, be clear with your family about your wishes. It’s not uncommon for family members to have a falling out if they disagree with how you divide your estate. A conversation now can avoid a lifetime of hurt later.
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Dear Pay Dirt,
What do I do when I have to use my emergency fund? A few months ago our household ran into some big house emergencies that we couldn’t ignore, that needed to be fixed as soon as possible and that cost multiple thousands of dollars that we were not expecting to spend. You know the old question: How many people can afford some kind of unexpected life emergency that will cost thousands of dollars? Well, there was a time when I would have proudly said, “Me! I can!” and it was true, we paid for the emergency and then realized that without that fund, we were feeling very vulnerable. How many people can afford to pay for more than one life emergency?
So my question is: What now? I spend my emergency fund and it’s not like I don’t have other, possibly expensive emergency issues that could pop up. We can not afford another emergency. So is it just time to start over? What’s the best way to pick yourself up from this kind of situation and begin again? And what options do homeowners have when things pop up that can’t be ignored that cost thousands of dollars they don’t have anymore?
—When It Rains It Pours
Dear It Pours,
Just because you had funds designated for emergencies doesn’t mean it doesn’t hurt when it’s spent. Give yourself a break, you should be proud of yourself. You were able to use those savings for their exact purpose: to cover a financial emergency.
But yes, it’s time to start over. Starting an emergency fund from scratch can be discouraging, but it’s essential to prioritize. If another emergency happened without it, you’d be in a tough spot. So, treat it like any other goal. Decide on a target amount and put whatever cash you can toward it. Start small if you have to, then look at ways to amp it up. Go over your expenses to cancel subscriptions you’re no longer using, eat out less and negotiate with bill providers to get a lower discount rate. Rocket Money is a great budgeting app that can help with all three. You can also look for ways you could potentially earn more to hit your goal faster.
If you haven’t already done so, you need to look into homeowners insurance. Homeowners insurance covers some losses (including your personal belongings) and damage done to your property due to disasters. It also typically includes coverage for medical care in case an accident should happen at your home.
But also, look into a home warranty—it covers other items your homeowner’s insurance doesn’t. Think appliances and home systems, such as plumbing and electrical work. While you may never need it, homeowners insurance plus a home warranty can help you take on much of what happens to your home. If another emergency should happen that’s not covered under while you’re still building up your savings, a home equity line of credit (HELOC) could also be an option.
Dear Pay Dirt,
My husband and I are due to retire soon and we are in good financial shape but want to move to another part of the country which will be more expensive. Staying where we are is not something either of us is willing to do. We will probably buy a house with cash but why wouldn’t we take out a Reverse Mortgage afterward? We don’t have children so we have no need to leave money to anyone. Even if it isn’t a great deal, why would we care if it frees up money to travel more or buy a nicer home than we could otherwise afford? Is this a bad idea?
—Who Should Own My House?
Dear Own My House,
Despite the increase in housing prices, home ownership is an essential question during retirement. I reached out to financial advisor Walter Russell, CEO of Russell and Associates, who suggests you do some research on Home Equity Conversion Mortgages (HECM), which are the only reverse mortgages that the Federal Housing Administration backs. “This program allows seniors 62 and older to purchase a house with less money,” Russell said. “I’ve worked with some clients that have utilized this program. The true benefit is they can invest additional cash based on risk tolerance.”
Russell advises you to make an appointment with your financial advisor and go over a hypothetical plan (as well as pros and cons) for purchasing a house completely with cash versus going the reverse mortgage route. An advisor can also help walk you through any unforeseen costs you may need to expect and plan for during retirement.
—Athena
Classic Prudie
My partner and I (both male) have been together for two years. He’s wonderful and I love him immensely. His family went through a rough patch when he was a kid; his parents could no longer take care of him, so he lived with an aunt until he was 10 years old. In that time he suffered from a variety of behavior disorders and underwent intensive therapy. He’s pretty much fine now: loving, caring, attentive, socially intelligent. The one “leftover” from this tumultuous childhood is his eating habits.
