Ask The Money Coach

Posts Tagged ‘Couples and Money’

A subscriber wants to know if he should get married even though his girlfriend has a lot of debt.
Click now to hear Lynnette’s answer.

A new study out claims that a man is more likely to cheat on his wife or live-in partner if she earns considerably more money. We found this to be the case when Sandra Bullock and Jesse James very publicly ended their marriage. Plus, Bobby Brown’s infidelity was the final nail in the coffin of Whitney’s ill-fated marriage to the less-wealthy crooner. But why would this be the case? Wouldn’t a man so financially dependent on his mate want to keep his partner happy, and thus keep the gravy train flowing? Not so. In this study that was just published, researchers found:

Cheating may be a man’s way of trying to restore his gender identity when he feels it is under threat, Christin Munsch, a sociology doctorate candidate at Cornell University, says in the study, which she authored and presented at the annual meeting of the American Sociological Association.

Read the rest of this post on Black  Voices

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• Men more likely to cheat on women with bigger paychecks, study says (cnn.com)
• Men more likely to cheat if they earn less than their wives (telegraph.co.uk)

It sounds like you have little or no equity in your house. I’m guessing that’s the case based on a number of things. You bought your house in 2006, during the “no money down” era, when most homebuyers put little to no down payment for homes. You stated that your mortgage is “more than it should be”.  And you indicated that your lender won’t do a refinance. Given all of this, you have a couple of options: One, try to refinance your home with a different lender so that your payments are more affordable. There’s no reason for you to be locked into your current lender – unless you have a loan with a hefty prepayment penalty or something like that. Getting a refi done will take equity in the home and good credit. If you can pull one off, then at least you’re not as cash-strapped.

Moving to a bigger home is another matter entirely. Not only do you need a down payment (that’ll be your equity) and good credit, you also need to come up with closing costs, and to figure out how to first unload your current property. I have no idea what your budget looks like, what you and your spouse’s combined income or expenses are, nor what the real estate market is like in your area. So it’s difficult for me to offer you options that would help you to out of a financial jam. But you haven’t expressed any other financial problems, outside the fact that your mortgage is too high and that you really want to move to a bigger place. Recognize that having a bigger house is a “want” at this point, and not a “need.” If selling or renting are not feasible, I don’t see many options left. You may have to wait until the market turns around and you can sell your existing house in order to come up with the cash necessary for another residence. It would not be wise to buy another house and simply default or “walk away” from your current condo solely because you want a bigger house. If the house was greatly under water – say 25% or more – and you and your husband just couldn’t afford it, maybe because you were unemployed or something, then I might suggest considering your options regarding walking away. But nothing you’ve said to me indicates this. So I think you should try to have a little patience, beautify the home you currently have, and try to ride out this housing downturn. I know it’s not a pretty picture right now. But in the long term you’ll be glad if you wait and buy your new home under the right conditions, with your finances and your credit in tact.

Start by asking your husband’s employer what relocation benefits, if any, they are willing to provide. Some companies will do just the basics: like paying for moving costs. Others will offer more assistance, like reimbursing you both for house-hunting trips, putting you up in hotels during temporary stays in your new state, or even paying for meals and local transportation during the transition period. With really generous companies, they may offer to fund some of the cost of buying a new home (like providing money for a new down-payment), or may consider buying your existing home, or perhaps reimbursinig you at some level if you have to take a loss to sell it quickly. Relocation packages vary greatly based on the industry, region of the country and, of course, the specific employer involved. But you should ask about any or all of these options. Also inquire about neighborhoods and the cost of living in your new region. Do some basic online research, yet ask your husband’s soon-to-be boss or his colleagues about desirable communities and where there are good schools in your new state. This later area will be of particular importance if you have kids. Ask too about taxes in your new state. Not just property taxes, but also ask whether or not your husband’s employer may consider “grossing up” his income to cover some of the taxes you’ll have to pay if he gets a cash relocation stipend or bonus.

Regarding your existing house, I don’t have to tell you that it’s a buyer’s market – particularly in Florida. Without knowing any specifics about your home or your particular neighborhood, I can only really tell you to price it agressively (i.e. make it attractive to potential buyers) if you want to move quickly. Also, if you need to sell your current home in order to afford a new home (as most people do), then you might as well get the ball rolling and put your home on the market as soon as possible. Ask for referrals or drive around your current neighborhood and look for signs to find a local, experienced real estate agent. Then call that person and have him or her come by your house to do a complete market analysis and tell you what your house is likely worth. Good luck!

No, there’s no general rule of thumb regarding how much school-related debt a parent should take on relative to his or her income. But frankly, you don’t need broad guidelines or even specific rules of thumb to decide what’s best here from an economic standpoint. Private school is already relatively costly, certainly compared to getting a free public education. If you had to pay twice the amount for a new private school that would no doubt crimp your budget and set your family back in numerous ways.

Think honestly about what you’ve already said: namely that you’re in debt, trying earnestly to get out of your financial bind, and that paying double what you’re accustomed to for your daughter’s schooling would be a financial hardship that would derail your efforts to become debt-free. I applaud you, of course, for wanting the best possible education for your child. As parents, we all want that. But sometimes you have to make tough choices because it’s in the entire family’s long-term best interest. It sounds like you’re grappling essentially with the decision to sacrifice an awful lot of money by sending your child to private school versus sending her to public school. Obviously, I can’t make that decision for you. But I can share with you my own story, because I’ve dealt with this very issue.

To make a long story short, I had my two older children in private school – at a time when I was in debt, as you are – at a cost of about $20,000 per year. This was when my kids were only 3 and 5 years old, mind you. Ultimately, I made the choice to take them out of that school. They transferred into a different private school that was about 1/3rd of the cost. They continued to do outstanding in school. And now, for the past couple of years, they’ve been in public school. My kids remain pretty much straight-A students and they are thriving in public school — doing far better than I’d imagined they would through these two transitions. Thank God that everything actually went very smoothly.

I say all this because so often as parents we worry about all the “what if” scenarios and think that we might be “harming” our children by “not giving them the very best.” In my case, I ultimately came to the conclusion that I had to “get real” about my finances, and that the “best” that I could offer my kids was to be honest about what our family could realistically afford. Also, by not spending so much money on private school now, our family is able to better save for my kids’ college education, which we all know will be outrageously expensive. My older two children are now 12 and 10 and again, they’re doing very well. I also have a four-year-old who will start public school in the fall.

So generally speaking, I’d recommend that you not over-extend yourself by sending your daughter to a new private school when you know that financially, you simply can’t afford it at this time. There’s no shame in that. And that decision certainly wouldn’t preclude you from letting your child do extra curricular activities, having academic tutors, etc., if you felt it was necessary. But again, the decision is best left to you and your family after you carefully consider all your options, as well as the short and long-term impact that private or public school would have on everyone involved. Good luck!