My husband is spending way too much money on his hobby
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 manage our family finances/budgeting. Built into this is money (thousands!) for my husband’s hobby: gardening. He exceeds his budget annually. His rationale? “I make a lot of money.” (He does). He is an impulse buyer, has ADHD, and, I suspect, high-functioning autism. This can be crazy-making for money management. I’m thinking of loading an account with his “hobby money” for the year. Once it’s gone, that’s it. We’re not doing any major landscaping; he chooses expensive trees (one tree specimen was $800), flowers that are pricey, and gadgets, some of which he has two or three of. I do have discussions about this but he “forgets” our agreements. Any other suggestions?
—Handling the Hobby
Dear Handling the Hobby,
I agree, he’s allowed to have an expensive hobby if he can afford it! Money is for spending on things we value, including fancy fruit trees and flowers. He has shown he values his garden by consistently spending time and energy tending to it. I know many high-earning individuals with far more expensive hobbies than fruit trees (many of which are also far worse for the environment). Polo, recreational aviation, scuba diving, boating, and even marathoning can run into the tens of thousands annually. Despite my frugality, I still figure skate, a sport where a single bedazzled dress can cost $800. Expensive hobbies become an issue if they get in the way of other shared goals (like retirement, child’s education, emergency fund, etc.) or if the spending goes to waste, like purchasing three identical weed whackers that rust in the yard or building a graveyard of unplanted shrubs.
Perhaps he genuinely forgets your “agreements” when caught up in the fervor of a new seed catalog, or maybe these discussions hold more weight to you than they do to him. It sounds like he doesn’t see this spending as a problem, so I suspect the latter. In this case, he needs to understand how the unpredictability of his garden spending affects the rest of the household finances. For example, $1,000 extra on marigolds might equal another year of work before retirement or four more hours of you trying to rebalance your shared budget. It would be best if he grasped the consequences of this overspending before you try to impose constraints. If he doesn’t buy into the idea that there’s a problem, he won’t buy into the solutions.
Your strategy of a separate account for garden money could work—as long as he checks the balance before purchasing anything and doesn’t use another card. If he’s likely to overdraft the account, you will need to find an option with more sticking power. Perhaps he could only bring cash to plant sales and garden stores, and when he runs out, that marks the end of his spending spree. Implementing waiting periods can also be an excellent way to reduce regrettable purchases, but they’ll need another guardrail for someone with impulse control issues. Work with him to find a strategy that hits on the thrill of impulse purchases without the regret. Maybe all garden purchases have a waiting period of 24 hours, or there’s a policy of discussing all purchases over $50 with you first.
Sometimes the research phase of a hobby is just as fun as clicking “add to cart.” The thrill of browsing and planning, imagining your life with the item, putting it on a wishlist, and then excitedly explaining the item’s value to your partner can provide the same serotonin jolt that the actual purchasing can (especially for us neurodivergent folks). I’ve been keeping a “Thing I Want” log for 16 years now where I write down everything non-essential I want over $10. It’s helped me cut down on impulse spending and take advantage of sales (without being worried it’s a passing fancy). If you can’t get your husband bought into a strict budget, consider just upping his gardening category and stop investing your energy into trying to curtail his spending on something he loves. If your financial situation gets tighter, then you can revisit the conversation.
Dear Pay Dirt,
I’m in bedside healthcare but not a nurse or a doctor. Ten months ago, after working through nearly two years of COVID and running into difficulty with my manager, and low pay, I opted to find a new job. I kept contact lines open with the old one and came back periodically to work in a specialty unit that prior to COVID could be difficult to find a foothold in. My new position is at a different hospital but in the specialty unit. I was given a $10,000 signing bonus, split into two halves with the second paid out in a year. Based on what people had told me, including my new boss and my new supervisor, I agreed since I would be heavily involved and do new things. I took a small pay cut ( about 50 cents/hour), which I made back with a shorter commute and a change in parking fees.
At first, everything was good. There were some growing pains that I assumed would go away… Only they haven’t. I was blatantly lied to about the procedures we did and what we did. We are barely involved at all. Even our bread-and-butter procedures are often done by others! I find my brain going fairly numb and I’m just bored. I don’t get along with some of my co-workers, another one constantly pressures me to pick up because we are short-staffed, etc. In addition, things dramatically shifted at my old place. I got a 3 percent pay bump which puts the pay issue closer to $5/hour. Three people suddenly left the specialty unit and no one is interested in training there now. I’ve had two people begging me to come back and I was really happy there until the end.
The problem is that I don’t have the money to pay back the $5,000 I’ve already gotten or the full $10,000. One co-worker there thinks I might be able to convince my old boss to give me a signing bonus or something similar but I don’t think he can. Still, the idea of another year here makes my stomach churn. Do I have a path I’m not seeing to switch jobs sooner or am I stuck for another 18 months?
—Job Regrets
Dear Job Regrets,
You have three options:
1) Find a way to repay the bonus and return to your old job
2) Negotiate to be released from repaying the bonus and return to your old job
3) Stick it out for 18 more months
The healthcare industry is currently desperate for experienced staff, and employees have the upper hand in negotiating when starting a job. Signing bonuses are typical for senior positions in in-demand fields. You should ask your old boss for a signing bonus, especially if your former co-workers think it’s a possibility. A $5,000 hiring bonus from your former employer would be the easiest path to repayment and returning to your old job.
If my math is correct, a 3 percent raise increasing your hourly wage by $4.50 means you make over $145 per hour. With such high compensation, you should be able to earn the $5,000 to pay your employer back quickly. If you can’t secure a signing bonus with your former employer, you may be able to work with your current employer on a long-term repayment schedule or negotiate to keep the half you’ve already received while foregoing the additional $5,000.
If none of these options are attractive, you can try to find workable ways to manage a slow transition over the next 18 months. Perhaps reduce your hours at your current job or move to on-call while remaining on the roster for your specialty procedures. If you feel confident you won’t last another 18 months in this boring role, decline the second $5,000 of your signing bonus in two months while you look for another job. That will halve the amount you need to come up with to repay. Good luck finding the right fit, and don’t be afraid to ask your old employer for a $10,000 signing bonus. You managed to secure it once. You can do it again.
Want more Pay Dirt every week? Sign up for Slate Plus now.
Dear Pay Dirt,
About six years ago, I co-signed student loans for my former stepdaughter. (I paid cash for her first two years of college.) She was not on good terms with her dad at the time. She had always been a responsible teenager, getting straight A’s in high school and college. She earned her bachelor’s and two master’s degrees in special education. In 2019, although she was gainfully employed, she fell behind on payments, and our relationship, which had always been close and loving, fell apart when I told her she needed to take care of her loans and remove me from them by refinancing. She didn’t and they have now gone to a collection agency. She is still employed and planning a wedding, so she has money. I am single, so only have one income. I have tried to negotiate with the collection company to no avail. The next phase will most likely be garnishment but the collection agency will not tell me if she will get garnished first, or if both of us will. I am so stressed out that I cannot sleep!
—Co-Signer Regret
Dear Co-Signer Regret,
I’m sorry you’re in this challenging situation. You aren’t alone. A 2019 AARP survey found that 25 percent of student loan co-signers (ages 50 and older) make at least one payment because the primary borrower failed to. Unfortunately, as a co-signer, you are equally liable for the debt as the primary borrower. Despite the strained relationship, you are bound together by this debt. The default affects her credit as much as yours, as you’re both on the hook.
You should reach out to your former stepdaughter again and talk to her about the student loan. At the very least, you will get more context on why she’s fallen behind on payments and if there are any extenuating circumstances. She will likely want to clear this up from her credit report before marriage, as it could also affect her future spouse. You will have to work together to reach a solution, whether negotiating a lower payment, a lump sum settlement, or working toward co-signer release. You are not the only person affected by this debt, so you should not be the only one up at night. You are both equally liable for garnishment of wages and tax refunds.
I recommend any co-signers get a low-cost term life insurance policy for the loan amount on the primary borrower. While it sounds macabre, private student loans with co-signers do not die with the primary borrower. When one of the borrowers dies, the entire balance of the loan immediately becomes due to the co-signer.
If you have been paying on this loan, you have the right to sue the primary borrower to collect the money you have paid toward the student loan, but that will require suing your former stepdaughter in court. Try to work with her again before working against her.
Dear Pay Dirt,
My parents purchased a house nine years ago in Portland, Oregon where I have lived for the past two decades. I have been the renter of the house (I pay the mortgage and utilities etc.) and the plan has always been that I will buy it from them. I am in a position to start that process but what we have discovered is their purchase price and the price they would like to sell it to me for leaves a lot of equity in the home for me. They’ve been told they would need to pay a 40 percent tax on the monies they are “gifting” to me via equity in the home. This seems wild to be considering they had already paid taxes on the money they pulled out of their 401(k). This doesn’t sit right with myself or my parents. What, if any, are our options for me to purchase/willed/gifted, etc. to avoid them being “punished” financially for the transfer of the house?
—Don’t Want to Screw My Parents
Dear Don’t Want,
It’s fantastic your parents were able to support you in this way—what a beautiful gift to receive. I know Portland’s housing has appreciated significantly in the past nine years, but unless your parents are multi-millionaires, they will not owe the 40 percent federal gift tax.
Your parents will have to file IRS form 709 for the gift of equity if it exceeds the reporting threshold of $16,000 (they can double that to $32,000 if married, but they will need to fill in a form that indicates they’re splitting the gift). The gift form is simply a tax record, not a tax bill—until one of them passes. When they die, the total of the gifts they’ve made in their life will be subtracted from their lifetime exclusion. This lifetime exclusion (for 2022) is $12.06 million for individuals and $24.12 million for married couples.
For most people, the current Trump-era, colossal $12.06 million lifetime gift and estate tax exemption will allow for the tax-free transfer of wealth from one generation to the next. The gift tax and the estate tax work hand-in-hand. The gift tax aims to prevent very rich people from giving away all their wealth during their life, thereby reducing the size of their estate and resulting estate taxes.
Your parents would benefit from making this gift of equity to you before 2026, when the larger exclusion amount is scheduled to drop to pre-2018 levels. Even if the exclusion decreases again, their estate will not be penalized for gifts made between 2018 and 2025. However, Congress loves multi-millionaires passing on generational wealth and might extend the exclusion again.
If your parents have significant wealth and expect their estate (including the gift of equity in your house) to be worth more than $24.12 million combined, then there are a few different ways to avoid the gift tax at the federal level. They could create a contract to gift you the equity in chunks below the gift limit over the next few years. They could also make an irrevocable trust containing the home and utilize “Crummey Powers.” Your parents should get the assistance of an estate attorney who is informed about their estate if they want to use any of these strategies. Though, if your parents have a multi-million dollar estate, they should be paying that 40 percent gift tax.
While Oregon has a lower estate tax threshold of $1 million, it does not have a state-level gift tax form (similar to nearly all states, with the notable exception of Connecticut). Your parents can give as much as they want during their lifetime without it counting against the state estate tax limit.
—Lillian
More Advice From Slate
My sister recently made the decision to medicate her 5-year-old daughter with Adderall. To give some background, my sister has mental health issues and has struggled with motherhood (she openly admits to this and has started therapy). There is very little structure, and the language she uses when talking to my niece is difficult to hear. There are extreme consequences for small behaviors, seemingly constant yelling, and my niece is often told to “go away” or to leave my sister alone…