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The drama with my residence proprietor’s affiliation is so unhealthy I would divorce my husband

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Dear Pay Dirt,

My husband and I had a house built in 2020/2021. We were very lucky in some respects—we signed our mortgage in early 2021 so the interest rate is super low, and the house appreciated ridiculously in the first year we owned it. But it came with a lot of unexpected drama. It’s complicated, but basically, the neighborhood includes private roads and an HOA to maintain them, but we and most of our neighbors were unaware of the HOA, which was entirely inactive.

This year, a group of neighbors decided to organize the HOA and start collecting dues in order to start maintaining the roads and water lines. That pissed off another group of neighbors and now there are lawsuits. The reputation of the neighborhood is getting around and houses are getting harder to sell. I want to sell ours ASAP while we can still likely make some money off of it. I’m terrified that one day it will become unsellable due to the drama or failing infrastructure, plus all of the animosity in the neighborhood is stressing me out. My husband thinks this will blow over, that I’m being overly pessimistic, and that giving up our low-interest mortgage is a terrible financial decision. I’m seriously considering divorce (and we have kids!), just to get out of owning this house. Is there any alternative I’m not thinking of? Or some source of unbiased financial/real estate advice that could convince one of us that the other’s point of view is correct?

—HOA Ruined My Marriage

Dear HOA Ruined My Marriage,

I’ve fielded a lot of questions and complaints about HOAs over the years. But I’ve never seen anyone threaten divorce over one.

I’m going to side with your husband here. Selling and moving now would be a lousy financial decision. First, you have an amazing interest rate that’s probably half of what you could get right now. Second, if you do sell, you’ll have to buy something far more expensive, with a much higher mortgage interest rate. Sure, you’ll make money selling your current home, which you could keep tax-free (up to $500,000), and, that’s helpful. But if your monthly payment doubles because the next house will cost three times as much and the interest rate will be twice as high, your profits will quickly get eaten up. Finally, although I hope you weren’t being serious about getting divorced over HOA drama, that would really be a kick in the wallet. Divorce can cost thousands (or hundreds of thousands) of dollars, your assets would be split in half, and you’d need a significant boost in your income to maintain your standard of living.

Take a minute. I sense that you’re reacting to the drama. You want to live in peace and harmony with your neighbors, but of course, people will be messy. Life is expensive, particularly now, post-pandemic and no one wants to add to their monthly expenses. But roads and common elements need to be maintained. Insurance needs to be bought to cover the common elements, or if there’s an accident, you could be sued personally and as a member of the development. An HOA with a modest annual fee might actually cover all of these costs.

The good news is that lawsuits generally take a long time to wend their way through the courts. By then, the energy around these lawsuits will die down. If the HOA has been prescribed, then that’s likely where you’ll end up: with a community-run HOA that keeps the proverbial trains running on time. Those who are unhappy with the judgment will sell and move. And you and your neighborhood (and hubby) will move on.

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Dear Pay Dirt, 

I (he/him, 21) am graduating from college at the end of this year, and I’m terrified I’m going to go broke. For mental health reasons, moving in with my parents, even temporarily, is not an option, but I also don’t want to be homeless. I’ve read so much about how difficult a time people have making ends meet in today’s economy, much less saving for retirement or having an emergency fund. To try and stave off that anxiety, I’ve been hoarding money (I’m lucky enough to be in a situation where I’m able to work while in school and won’t have any debt). If everything goes well over the next months, I’ll have $8,000-$9,000 in a bank account to start my Real Adult Life TM, but is that enough?

I don’t know how much I’ll be making at my first job, or where I’ll be living, because I’m still figuring that out. I guess my question is twofold: How do I stop worrying about money problems that don’t yet exist, and how do I best ensure they don’t later arise? Also, I should probably add that I’m double majoring in two fields that are both known for terrible pay. I love the fields and the work, and I thought I’d be able to live without owning a yacht, but now I’m panicking about just making rent.

—How Much Is Real Adult Rent?

Dear Real Adult Rent,

According to Apartments.com, the average monthly rent in the U.S. is $1,518. For that, you get on average a 699-square-foot apartment. The cost went up around 7 percent year over year, according to Rent.com. You’ll pay a little more in big cities and less in rural areas or smaller towns. Want to live in New York City or San Francisco? Expect to pay a whole lot more.

I start there because you’re already in great financial shape—you just don’t know it. You’ll be graduating without any debt. As of the third quarter of 2023, Americans owed $1.73 trillion in student debt. The typical college student graduates with more than $38,000 in loans. In 2023, the average student loan rate was 5.8 percent. As of July 1, 2024, the interest rate for new undergraduate loans is 6.53 percent, while graduate student loans and PLUS loans are 8.08 percent and 9.08 percent, respectively, according to the Department of Education. These are the highest rates in at least 16 years.

Being debt-free gives you a wonderful leg-up in life. And, you’ve already begun building your emergency fund. Having $8,000 in the bank means you’ve got the first and last month’s rent ready to go when you’re ready to rent an apartment. It also means you can cover most emergencies without turning to your credit card. In some areas of the country, that’s a down payment on a condo, even at today’s high interest rates.

The final piece of good news: You love the field you’re going into. Being engaged and passionate about your work is a huge gift, one that will pay off in unexpected ways later in life. Even if it’s lower-paying work to start, you’ll have benefits and the opportunity to invest in a qualified retirement plan of some sort. Make sure you put enough away to qualify for any match your employer provides. Over time, you’ll make more money and, if you’re careful about your spending, you’ll be able to save enough to achieve all of life’s major milestones: buying a house, living the life you want to lead, enjoying retirement.

The night before my father died, I told him I wanted to be a writer. He said, “Do what you love and the money will follow.” Forty-two years later, I’ll amend that slightly for you: “Do what you love and enough money will follow.” Good luck!

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Dear Pay Dirt,

I know this question is about money on the face of it, but it’s more about my relationship with my parents. I also recognize that this is a “first world problem” but it still bugs me and I’d like to figure out how for it not to anymore.

My question is: Why do my parents give everyone money except me and my brother? Over the years my parents have done fairly well for themselves and are pretty comfortable financially. At the same time, my brother and I have put ourselves through college through a combination of military service (my brother) and student loans (me) with no help from our parents. We’ve worked hard and are now doing OK for ourselves. We can each pay our bills and have a decent life. We don’t necessarily need any money from our parents… but it hurts to hear that they are always giving other people money. They subsidized my (much younger) sister’s college and entire life (housing, cars, food, everything) until she was well past 30 years old (she has not been able to hold a job, likely due to undiagnosed mental health issues). They’ve paid off relatives’ mortgages. They’ve paid for home renovations and vacations for other family members. But never anything to either my brother or me. They tell me every time I visit how proud they are of me and my brother for how well we’ve done, how happy with how successful we both are. I asked my mom one time why she helped our sister but never us and she basically said, “You never asked.”

Recently, there was a health scare with one of them, and my mom wanted my brother and his family to come visit. Plane tickets for his family would have been really expensive. I suggested that my parents help them out. They acted offended and then made excuses as to why they didn’t need them to visit. I’ve talked about needing to buy a new car and do some home repairs. I could do this by taking out a car loan and/or home equity loan. But would it be helpful to have a little money from them? Sure! Even though my mom suggested I just need to ask, I’m pretty sure they would act offended as they did with my suggestion that they pay for my brother’s travel. I don’t NEED the money, and neither does my brother, but I do have to admit that it hurts that they will seemingly help everyone out except for us.

My mom gets dramatic and pulls the old, “I know I’m a terrible mother!” if I ever so much as suggest that she’s done something that hurts, so I don’t know if I can talk to her about this. My dad is just stingy and out of touch. Do you have any suggestions on how I should think about this to “get over it”? I’m tired of visiting and hearing about the next “generous” thing they are doing for Relative X while I just shelled out hundreds of dollars to visit them.

—Confused About Parents’ “Generosity”

Dear Confused About Parents’ “Generosity,”

You’re right—this question isn’t really about money. But the lens through which you experience your relationship with your parents seems to be framed by how they’ve cheated you out of a better, more financially secure life.

You seem jealous that your parents haven’t put you and your brother first in line for their largess. You admit to living a good life, but somehow have equated their love with the amount of cash they’ve shelled out for you. They gave you a good start and then let you fend for yourself, which you’ve seemingly been able to do. Congratulations! What’s the problem now? Seems like you aren’t getting the pat on the back you feel you deserve. But your parents don’t owe you plane tickets, home renovations, vacations, a new or used car, debt repayment, or a better retirement. And, they don’t owe you any explanations for why they’ve shelled out for your sister, various relatives, and friends.

What they should give you is emotional support and strings-free love. But not everyone is lucky enough to have that sort of relationship with their parents. Yet, your mom tells you how proud she is of you. Why doesn’t that feel good to you? I get that you’re hurting. I understand you wish things were different. You can’t change their behavior but you can reset your expectation to zero. When you stop expecting anything, you might be surprised by what happens next.

Here’s how you change the script:

Mom: “I’m sick. Come visit me.”
You: “Gee, Mom, I’d love to, but plane tickets aren’t in the budget right now. I’m sorry you’re not feeling well. Want to Zoom?”

Stop interfering in your brother’s relationship with your parents. Stop being critical about the money they spend on everyone else. And, stop asking for and talking about money with them. Instead, focus on your life, your goals, and your family. In a short while, I’m guessing you’ll feel a whole lot better.

Dear Pay Dirt,

I am in the fortunate position of having recently changed jobs to receive a higher salary, and left my previous employer while they were offering a separation package equal to one year’s salary. My husband and I have no debt, and are considering how to use this unexpected bonus. We have three proposals: A) We are planning to buy a house next year. We already have a pretty decent down payment for the area (we could buy now but we aren’t because we relocated and want to explore neighborhoods first), but maybe adding it to our house savings is a good idea given interest rates. B) We are in our late 30s and have just over twice our annual salary saved for retirement. We already put the full amount in our Roth IRAs annually and max out our employer contributions to our 401(k)s. Maybe we should put it aside for retirement, perhaps in a regular IRA for tax benefits. C) We have a 1-year-old child.  We have a few thousand set aside in a 529 for him. Do we put this in there in hopes that 17 years of interest means college is taken care of?

—Nice Bonus—Now What?

Dear Now What,

What a nice problem to have. I like all of your options!

Let’s start with Option C. Establishing a 529 college savings plan with a significant amount, let’s say $50,000, means that you could have nearly $200,000 stashed away for his education by the time he turns 18, assuming a modest 7 percent rate of return. According to MEFA.org’s Estimated College Cost Calculator, your child will start freshman year in 2039 and continue through 2043. In 2039, the estimated cost for the first year of 2-year college will be $21,615.24, while in-state tuition at a national public college or university will run $37,310.20. Out of state tuition for a national public college or university will eat up an estimated $65,071.63, and a private university will cost $85,739.62. The calculator includes the cost of tuition, fees, food, and housing.

But my guess is that tuition, fees, food, and housing will cost far more than that by the time your toddler gets there. This year, the annual cost of attending the University of Pennsylvania was over $92,000. By the time your child is ready to attend, the list price for four years could easily be over $1 million per year, assuming costs rise 7 percent annually. Still, you’d have cash to contribute, and if your child chooses a different school that’s less expensive, whatever you’ve saved will just go that much farther.

When it comes to retirement, I don’t think you qualify for a regular IRA when you’re already maxing out your 401(k) and contributing to Roth IRAs. However, salting away some extra cash is never a bad idea. You could buy I bonds (current 4.28 percent composite rate), or just open up a brokerage account and plow some money into cheap index mutual funds.

As for buying a home, it’s likely going to cost more next year. Right now, there simply aren’t enough homes to go around, and even with today’s higher interest rates, there’s steep competition for what few homes are listed for sale. The only light at the end of that tunnel, which I’ll admit is a weak one, is that the Federal Reserve Bank has indicated it may start reducing interest rates near the end of the year. If that happens, and rates are lower than they are today, your buying power will be higher. But pent-up demand means housing prices could climb further. It never hurts to have a little extra cash on hand, so you can boost your down payment if you need to. I’d be all in on this option, except that you say you have a significant down payment waiting in what I hope is a high-yield savings account.

If it were me, I’d start by taking a significant chunk of your bonus and putting it into a 529 college savings account for your child. Over the years, encourage grandparents and other relatives to contribute to that account rather than overwhelm him with birthday and holiday gifts. You’ll be surprised how quickly the account begins to accumulate.

Take what’s left and put it into a high-yield savings account, some of which are paying 5 percent. You won’t get that forever, but it’s a nice place to park your cash right now. Next year, when you start looking for a home, you’ll have it if you need it. If you don’t, you can stick it into a brokerage account, add it to your child’s college savings plan, or spend it making family memories.


Classic Prudie

A few months ago I got engaged to a wonderful man. He’s kind and sweet and I love him very much. When I met him, he was fairly upfront about his past, which included a lot of drugs and illicit activities. After a friend of his overdosed, he decided to get clean. It’s been five years, and he’s doing great. The problem is that his past just caught up with him. He was arrested this week after an old associate was swept up in a bust and outed my fiancé’s previous activities.

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