Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
My spouse and I are once again taking our adult child (plus their spouse and child) on a week’s summer vacation. They both work now with decent incomes, as do we, although we are retiring soon. We have always paid for the rental and at least half of the other expenses. They have never offered to contribute to the rental, just paid for a couple of meals. They take their own (not inexpensive) vacation as a couple once a year, too, with us babysitting back home.
I am starting to feel uncomfortable with this and somewhat taken for granted, especially in light of our being extremely generous both financially and with babysitting during the rest of the year. How we could bring this up without jeopardizing the relationship?
—Feeling Like an ATM
Dear Feeling Like an ATM,
Your requests are not unreasonable. I would venture to say most people agree that when your children hit their 20s, they should be able to contribute to a vacation. Granted, your child may feel like they are chipping in by covering meals, but that doesn’t make up for the hefty price of a vacation rental.
I think the issue can be solved with a few conversations at different times. If you haven’t gone on your trip yet, call your child to explain that you would like to make this trip something everyone can afford and ask to split the costs of the rental. Since it’s an unexpected expense they’ve never paid, they may balk, or they might completely understand. If they’re unable to kick in, ask yourself if this is something you’d really like to go through with. You might need to eat the costs this year if it’s short notice, but set a precedent for the following. Or if the costs are refundable, you might want to reschedule at a time that works better for everyone and their finances.
In the chance that you have already taken the trip, casually bring up to your child that this is the last year you can afford to cover everything, and that in preparation for next year, you all must discuss a financial arrangement that works for future vacations.
It sounds like you might not be happy with how much babysitting you’re currently doing, too. You’ll want to bring that up in a separate conversation. But try to be understanding (child care is difficult to find) and don’t bombard them with these changes all at once.
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Dear Pay Dirt,
My fiancé and I are about to close on our first house together. We currently contribute proportionally to a shared checking account to cover our rent (soon-to-be mortgage), groceries, utilities, and other shared expenses. I make about $70,000 a year and currently have $70,000 saved in an individual emergency fund which I’m realizing might be excessive. Other than the mortgage we have no debts and pay off our credit cards in full every month.
My fiancé would like us to make a shared emergency fund to cover six months of our shared expenses (around $33,000). We have already talked about keeping our own bank accounts for our own interests/independent expenses, and as a woman, it is definitely important to me to keep some funds I only have access to in case of an emergency. I guess I am wondering what would be the right number for me to keep on the side for my own personal emergency fund. Anything extra I could contribute to my portion of the shared emergency fund and/or would love to have a little bit to set up our new home.
—Overfunded Emergency Fund?
Dear Overfunded,
Usually, I preach about the importance of having a large emergency fund, but even I can agree that the amount of cash you have stashed away is excessive. You should always be putting your money to work for you. Depending on where you’re housing your emergency fund, you could lose out on compound interest. For example, if you put an initial deposit of $30,000 into an investment vehicle that averages a return of 8 percent per year, you’d end up with about $64,767, even without putting an additional cent in, after 10 years. If you kept $30,000 at the bank, making you 2 percent interest a year over the same 10 years, your total would be about $36,569. Compound interest makes a difference.
For your $70,000, I would put aside $16,500 for your joint emergency fund and $10,000 for a personal one. With the remaining $43,500, I would put $33,500 into a brokerage account at Fidelity, Vanguard, or Charles Schwab. Then, use the last $10,000 to treat yourself and decorate your new home in style. Don’t forget to invest in a good rug!
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Dear Pay Dirt,
I have two siblings, both of which have children. I am certain they intend to provide for their children when they pass, as I would expect. I have no children so intend to leave most of my assets to my favorite charities, in addition to smaller amounts for my siblings, when I go. (I am 62.) My net worth is currently about $3 million and I am concerned my siblings will be offended, maybe even bitter, that I did not leave the bulk of my money to them. Their spending habits are much more extravagant than mine, and I know that one of my siblings has never made an effort to seriously save money. In the absence of children, I consider this money in my legacy and would like to provide for charities that I believe can leave the world a better place. Do you have any advice for me to prevent hard feelings?
—Don’t Spit on My Grave
Dear Grave,
Donating the bulk of your estate to organizations you trust to use your funds wisely is very kind of you. I understand your reasoning, especially if your wealth would be wasted on those who already have enough. It’s not uncommon—many people now leave their wealth to charity instead of family members. Not to mention, you are still leaving your siblings something, even if it’s a smaller amount than what they might’ve expected. That’s kind enough on its own.
After you’ve met with your lawyer and have solidified your estate plan with the required paperwork, ask to meet with each sibling separately. Let them know that you’ve finished your estate plan and, at this time, you have decided you will be leaving your assets not only to your siblings but also to charities of your choice. You do not need to tell them how much money you have accumulated nor the amounts you will bequest. This conversation is mainly a courtesy so that if the day comes, they can focus on grieving instead of who gets what.
—Athena
Classic Prudie
I just came out of a toxic divorce. I messed around online and found out my 23-year-old stepsister has several profiles on “sugar daddy” websites. She still lives with our parents and has college loans. My mom thinks she does web design. In the most awkward email of my life, I told her she needs to clean her accounts and come up with an alias. This will haunt her later in life and ruin her reputation now, plus it will kill our parents. She never responded but her accounts vanished.
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Personal finance advice: I'm still paying for my adult kid's vacations. I've had enough. - Slate
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