The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: patch45 on February 21, 2020, 08:22:18 AM
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First off, this is a first-world problem, I am well aware of that.
I may be moving in with my girlfriend sometime in 2020. I always figured if we moved in together, I would pay a bit more. I make $128k per year, but she only makes ~$43k as a teacher, plus whatever job(s) she picks up in the summer. However, we talked about finances a bit and I learned that her inheritance (which I always knew she had, she made no effort to hide that nor does she have any of that trust-fund kid attitude about her) is currently ~$500k. She has never touched this money and doesn't have any plans to live off it any time soon. My stash, which I've saved from working (not that it really matters I guess), is just over $200k.
In this scenario, what do you Mustachians think would be a fair split on rent? I'm starting to think 50/50. Even though I make more her NW is significantly higher than mine, so purely in terms of fairness 50/50 seems to be about right to me.
Obviously this is a discussion I will have with her, I'm just curious what the community thinks
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This is MMM, so I suggest renting an apartment inexpensive enough so a 50/50 split is appropriate for someone making $43K per year. Or go full Mustache and purchase a house and rent out enough space to make your rent free.
The only time I've seen a split other than 50/50 that looked legit is when the higher earning partner was the one pushing for a much nicer place. They agreed to a split they felt was fair based on the level of housing the lower earning partner would have otherwise rented.
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How much do you each pay for rent now and how much will your total rent be if you move in together?
I don't see anything wrong with a 50/50 split for rent. But I also don't think she should have to touch the inheritance for her monthly expenses. Good on her for treating that as her retirement nest egg instead of going on a spending spree.
Basically, it shouldn't be hard for each of you to contribute half of rent in most places in the country. I think your conversation first needs to begin with how much each of you is willing to spend on rent and where you would be willing to live in town and what amenities or whatever you want out of a place. Those things might all fit together pretty easily. Problems could arise if one of you wants a significantly fancier and more expensive place than the other.
And frankly, you might need to do a bit of an attitude adjustment about what you deserve. You are clearly in a highly compensated field. But it's not like she's working part time or lazy or something. She is working her butt off as a teacher, it just isn't a high-paying field. Certainly the inheritance is a privilege. I'm sure you also have some privilege as well. I just want to encourage you not to let her savings be a Thing. Comparison is not helpful. And don't borrow a problem before it exists. Start with what you both want if you decide to move in together.
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I don't have an answer, but one way to think of it could be the difference the stashes, times 4%, added on to her salary for comparison purposes.
So
500,000-200,000 = 300,000
*.04= 12,000
+43,000 = 55,000
So compare your salary of 128,000 to 55,000 and go from there. Anywhere from 50/50 to 75/25 splits I think could make sense.
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Obviously this is a discussion the two of you should have, but another question I would look at is how the rent will compare to what you each pay now. Is either party going to be pushing lifestyle inflation on the other such that their percentage of the rent is more than that individual's current rent?
Edit: also make sure she doesn't end up house poor. Make sure you rent a place she can afford while still meeting all her other obligations and goals. My vote would be that you should just act like you also make $43k and match her lifestyle such that you save whatever she saves plus everything extra (minus taxes). A couple making $86k is plenty to live, save, and do all the things in most places. If you're in a VHCOL area then maybe you subsidize her a bit if that $86k isn't enough to achieve the lifestyle and goals you both want.
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If you save the difference between your salaries, your stash will match hers in about two and a half years, then start growing beyond hers. Does 50/50 seem fair in that light?
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I currently spend $920 per month and she spends about $850 on rent and utilities. We would be looking at places that are under double what she is paying, so her rent expenditure would go down with a 50/50 split, maybe even significantly. She would be the one pushing for a more expensive/fancier place if one of us did. I wouldn't mind sharing my current studio but I understand why she would want something bigger and nicer.
Also I fully realize that she works way harder than I do for 1/3 of the income.
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50/50 until you are married. Income and trust fund irrelevant.
I was in biglaw with a girlfriend at a non-profit and we did that. Some of our friends found out and thought that meant I was a horrible evil unloving person. Whatever. My girlfriend put up with me anyways and now we are married with three kids and everything is joint and we've got a big stash. So my cheapness worked out for everyone in the end.
Of course I was not pushing some fancy pants apartment. We got a non-profit salary apartment and both saved $$$.
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Agree that as long as you both are happy with something modest/affordable to both of you, a 50/50 split is fine.
If you want to push for higher-level amenities in either the basic living space or things you share connected to it (e.g. faster internet connection), then maybe you can pay the differential over what she would pay on her own for something less fancy.
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What is she suggesting?
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I don't know what the "right" answer is.
But I know that if it were me as the female and lower earner, I would want to do 50-50, with a place that I felt comfortable I could afford half the rent on.
My main reason for this is that I personally don't/wouldn't want anything in a relationship that would insert or create a potential power imbalance dynamic. In a couple, I expect to have 50% of the decision making power, be an equally "important" partner, and would never want to feel indebted toward my partner for anything, especially before marriage when resources are not assumed to be all part of one single "pot" that belongs to both of us equally.
Having one partner paying more is a recipe to insert that power imbalance into the relationship. And especially given that historically, women have had less power in relationships and marriages anyway, I would avoid it at all costs.
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She has not yet suggested anything, we haven't had that conversation yet. Our individual leases aren't up for a little while so we wouldn't be moving in together until late 2020.
I think I will start the conversation by asking her what she would prefer and think is fair and go from there. I have a feeling she may feel the same as Kris, even though I would never lord something like that over her
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Why would her inheritance/your savings come into the question at all? That penalizes someone for being a good saver, which as you're on an MMM board, I would think you'd be opposed to doing.
I think I will start the conversation by asking her what she would prefer and think is fair and go from there. I have a feeling she may feel the same as Kris, even though I would never lord something like that over her
Phrasing it that way may make it sound like a door is open to negotiating a different split, when you maybe don't want to open that door. I would instead ask her how much rent she thinks she can afford on her budget, then double it and ask if that budget sounds reasonable for what you guys want (location, size, amenities). If she says no, open the conversation for a broader discussion (e.g. can you compromise on what you want to stay in the budget? Is she willing to kick in more and you'll match it? etc.)
I lived with someone back in the day and it never occurred to me to split the rent anything other than 50/50. That said, they offered and continued to pay internet (I moved in when their prior roommate moved out) as they needed good internet for their job. Heat & hot water were already included so that was the only other expense. I don't think we even had cable back then - I certainly don't remember watching it there.
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I would also suggest the answer has a lot to do with where you are in your relationship. If you're still early in the relationship, 50/50*. If you are planning to get married soon, money becomes essentially 50/50 so it really doesn't matter who is paying what.
*The exception might be if she was willing to increase tax-deferred savings, I might decrease her share so she could max these out (if I loved her a lot).
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50/50 but a place affordable on her salary. When DH and I met he was earning 90k a year and had 400k stashed. I had 100k in student loans and was a grad student then making 40k a year. We rented a space I could afford to split 50/50, he paid all the utilities and internet and I handled all the food/cooking. I wasn't making enough to split the utilities as well but I was an excellent cook and couponed the heck out of healthy food. DH at the time ate out 2-3 times a day so his expenses actually went down too.
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50/50. Only way. Here is my reasoning:
If she is "the one", your finances will eventually be combined, or at least they should be in my mind. At that point it'd be 50/50 anyways.
If she isn't "the one", you're subsidizing a lifestyle for her and are not really getting anything out of it (other than the relationship benefits of companionship/friendship/etc., but she should be in theory getting the same out of it)
The only way I can work it out to anything other than 50/50 is if her current rent is less than 50% of yours. In that case, I'd have her pay her current rent (maybe -$50, because you're a nice boyfriend/girlfriend), and you pay the remainder - and the only reason for that is the assumption that you wouldn't have a roommate other than her, so why not take A reduction instead of no reduction?
If you owned the house, it would be a different story as a not-insignificant portion of your housing payment should be considered an investment. But renting is completely different.
Ultimately, the price of a house or a car or a computer or an Oreo doesn't change based on what you make and own. Why would rent change based on that?
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50/50. Only way.
It's not even close to the only way.
Not judging the OP or anyone else, but personally I'd feel like a schmuck if I made 3x what my SO made and wanted them to pay 50%. I couldn't even imagine presenting it to them.
Then again, I didn't charge my fiancee a cent when she moved in, though in fairness, she was a full-time student with only a part time job.
Obviously, people have different views on what constitutes fairness. I would tread carefully though, and start out by asking what she thinks is a fair split.
She may be perfectly happy, or even demand an equal 50/50 split. She may be pissed off for you even offering it. Or, she may grudgingly accept a 50/50 split and end up resenting you for it.
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Your situation is pretty similar to mine both currently and when I first moved in together with my now wife. Congrats on the big decision to live together - it is better overall provided there is enough space to not drive the both of you crazy.
My wife is also a teacher, will be receiving a mid six figure inheritance (I will not receive anything within two orders of magnitude, if at all), she grosses in the mid 40s, and I'm in the low 110s. I've never done 50/50 on rent/mortgage and our finances aren't split down the middle on other things either. Also, there is a big difference between gross and take home, especially at salaries below the median household income level that are significantly contributing to retirement. While unlikely, your girlfriend could easily have $0 take home pay as a result of 403b, 457, HSA/FSA/cafeteria plan, pension, fed/state/local tax, and FICA. You could max all of your retirement accounts and pay taxes and still have more in take home pay than she grosses.
If 50/50 works for you, great. It doesn't/wouldn't for me. My wife doesn't come close to maximizing her retirement accounts each year and her box 1 on her W-2 is in the mid 20s. If our arrangement were to be 50/50 on expenses today, then she'd have to sacrifice more of her retirement contributions (and I imagine our spending in retirement would be more slanted to my side). I don't want that at all - I want her to continue to increase her contributions to retirement each year* while paying a proportion of household bills that we've agreed upon.
*-She's never been the one that's into finance but now after a few years she loves getting the annual reports from her school district with projections and her account totals as it grows and she knows that's it only been her shoveling the money in.
Oh, I'd ignore her inheritance since she isn't touching it and it seems like it's earmarked more for "down the road", just like retirement accounts. A lot of this talk assumes you're going to be together long-term as if you're married. When my wife and I moved in together, we were engaged later that year as it was part of the plan. If you're just testing the waters and still not sure if she's the one, then definitely do 50/50 until you have a good idea who you want to spend the rest of your life with. Talk it over and see what arrangement works best, good luck OP!
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I learned that her inheritance (which I always knew she had, she made no effort to hide that nor does she have any of that trust-fund kid attitude about her) is currently ~$500k.
I'm a little unclear about the state of the inheritance/trust fund in the way that it is mentioned here. Is this something that is irrevocable hers? I'm just unclear about why a "trust-fund kid attitude" is mentioned.
Not to say that 500k is not a nice-sized inheritance to have - and it is certainly something that changes her financial picture quite a bit. But if someone close to her died and provided that as their life's work/life's savings to provide her the security that they were no longer there to do - I'm just confused as to how that could be conflated with trust-fund kid attitude.
I think it's fine to approach living together on a 50/50 basis - it seems like this should have already come up as a discussion point if you are thinking of moving in together this year?
But I don't think that should have anything to do with her inheritance money. It seem like you feel almost entitled to it somehow - or like the winds were taken out of your sails because her NW is larger than yours and you didn't expect it.
Based on income - you were expecting to do a different split. So - if her inheritance was only 50k compared to your NW of 200k - would you then have thought to kick in over and above what an equitable split based on income would be? I think that it would not have occurred to you to kick in your 200k as part of the equation. Why is her 500k different?
I think you need to sit and think about this a lot before you bring it up for discussion with her, get clued into your feelings, and what you ultimately want with any cohabitation arrangement. Be clear and think this through so that you don't say something that might not sit too well with her. Especially if you had previously mentioned paying a higher percent of expenses based on salary.
I mean - ultimately your current logic would have you paying close to 100% at some time in the future if NW is factored in and you continue to be a high earner and high saver. I just don't think the logic holds water - is what I'm saying.
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Hypothetically speaking, let’s say your girlfriend had acquired the 500K by diligently saving, even on her modest income, while you, on the other hand, have a more comfortable income and haven’t saved as much as you really could have. Does it make sense that she should have to contribute more because she’s been better at saving than you? I realize she didn’t save the 500K herself, and it’s completely possible your high income is new to you and you have a high savings rate. I just think you should take this into consideration.
In the end, I think you should get a place you can both comfortably afford to split 50/50 until you’re ready to merge finances.
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I don't know what the "right" answer is.
But I know that if it were me as the female and lower earner, I would want to do 50-50, with a place that I felt comfortable I could afford half the rent on.
My main reason for this is that I personally don't/wouldn't want anything in a relationship that would insert or create a potential power imbalance dynamic. In a couple, I expect to have 50% of the decision making power, be an equally "important" partner, and would never want to feel indebted toward my partner for anything, especially before marriage when resources are not assumed to be all part of one single "pot" that belongs to both of us equally.
Having one partner paying more is a recipe to insert that power imbalance into the relationship. And especially given that historically, women have had less power in relationships and marriages anyway, I would avoid it at all costs.
This sums up my feelings, except for the part about being me being female.
I don't like feeling like there's an inherent inequity in my relationship. If I can't cover half the rent on my own I feel like I am not an equal partner.
FWIW I was in a similar situation years ago when my fiancée earned 3x what i did in a HCOL area. We wound up living in a place we both felt comfortable with. She spent a crap-ton on trinkets for herself (designer bags, jewelry etc), but otherwise there was parity between us. That relationship desolved, but not because of money issues.
Also - like Kris I don't think there is a "right" answer. I've seen happy couples here who've been married for decades but still keep separate finances, and new couples with severe income disparities that share everything, including paying off one person's debt-load. Find what works for you and talk about this with your partner in an open, respectful manner.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
What if her inheritance was $10M?
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still not relevant to you or her own daily budget unless she's living on it instead of working.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
What if her inheritance was $10M?
It wouldn’t change how I would go about it.
Unless and up until we reached a point where all assets were shared is be most comfortable with a 50/50 split. YMMV.
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Get married, combine finances and then you pay the rent together.
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Suze Orman has a great formula for how much each should contribute with unequal income. Good for her not spending the inheritance.
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I may be moving in with my girlfriend sometime in 2020.
If you are living as though married, then live as though married, and have a joint account.
Into this joint account will go your regular income.
Out of this joint account will come regular direct debits for predictable expenses, like electricity, rent, etc, and agreed-on amounts for other regular expenses like groceries, and a certain agreed amount which will go to joint savings, and personal savings. As well, you will each have a certain agreed amount to splurge day-to-day; the total amount of the "splurge" money may be questioned, but not specifically what it's spent on.
If you are not willing to live together as married, then don't.
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You don't spend investments on current expenses. Both her $500K and your $200K should be ignored.
Rent something you both can afford, negotiate a split that you are both comfortable with.
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If 50/50 works for you, great. It doesn't/wouldn't for me. My wife doesn't come close to maximizing her retirement accounts each year and her box 1 on her W-2 is in the mid 20s. If our arrangement were to be 50/50 on expenses today, then she'd have to sacrifice more of her retirement contributions (and I imagine our spending in retirement would be more slanted to my side). I don't want that at all - I want her to continue to increase her contributions to retirement each year* while paying a proportion of household bills that we've agreed upon.
For me, this is one of the major differences between dating and marriage. Dating and such you're still two independent people, with the possibility that you will part ways in the future. Once you marry, you become one team ready to handle the world together. That's of course cultural and subjective.
For dating, 50-50 split (to me) is 99% of the time the way to go for living expenses. Once married, then it's all one pot to pull from. Otherwise, what's the point? Gotta put some skin in the game, and a lot of the fun of marriage is the unified teamwork aspect. Everyone's different, of course, but if you're paying your SO through college and financing their retirement accounts you should be married (or at least engaged).
I've seen it work successfully outside of this formula countless times. It's not a hard rule- marriages don't tend to be as committal as they were in the past (for good reason) and "common law" doesn't have as much stigma attached.
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It seems she is thinking of the inheritance as her stash. But you're thinking of it as income. I'd just be happy that my partner was as interested in being smart with money as I am.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
What if her inheritance was $10M?
It wouldn’t change how I would go about it.
Unless and up until we reached a point where all assets were shared is be most comfortable with a 50/50 split. YMMV.
I agree that the 50/50 split is correct for most cases, I'm just having a hard time understanding why so many people think this stash should not come into the equation when considering ability to pay. If she had $10M in VTSAX, she'd be receiving something like $200k in dividends per year. If she was retired and had no earned income and was living off these dividends, would it still be presumptuous to consider it a factor?
ETA: Let me put this another way: If I was a landlord, and had a tenant who came to me and wanted a stay on her rent because she just lost her job, I'd consider working with her for a couple of months as she got her feet on the ground. But if it comes out she has $500k in the bank, my approach would be quite different.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
What if her inheritance was $10M?
It wouldn’t change how I would go about it.
Unless and up until we reached a point where all assets were shared is be most comfortable with a 50/50 split. YMMV.
I agree that the 50/50 split is correct for most cases, I'm just having a hard time understanding why so many people think this stash should not come into the equation when considering ability to pay. If she had $10M in VTSAX, she'd be receiving something like $200k in dividends per year. If she was retired and had no earned income and was living off these dividends, would it still be presumptuous to consider it a factor?
This are personal questions (e.g. no "right" or "one" way) - and my personal answer is this:
The inheritance is not money s/he is living off of - it's not current income. The OP said as much. I don't consider bring the size of one's 'stache at all when pondering what a person can or should afford right now.
If a person was RE and had $10MM in VTSAX then s/he could have an income of $300k-400k (depending on their WR). But for now their income is what they earn from their job - their savings / inheritance are for some point in the future. When later (https://www.youtube.com/watch?v=mPrLiNseyCc&list=PLpZMjEEM864R-L5gXnpZkAAy-3C3E-ir3) comes, both parties can re-evaluate.
One thing that always surprises me is how many posters make a strict dichotomy between being married ("all assets are shared equally") and dating ("assets are you own, obviously"). I've never seen marriage as a requirement to share everything nor as a prerequisite to mingle finances. There's a whole spectrum on how to deal with money as a couple, and there's no "one way" to do it.
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I may be moving in with my girlfriend sometime in 2020.
If you are living as though married, then live as though married, and have a joint account.
Into this joint account will go your regular income.
Out of this joint account will come regular direct debits for predictable expenses, like electricity, rent, etc, and agreed-on amounts for other regular expenses like groceries, and a certain agreed amount which will go to joint savings, and personal savings. As well, you will each have a certain agreed amount to splurge day-to-day; the total amount of the "splurge" money may be questioned, but not specifically what it's spent on.
If you are not willing to live together as married, then don't.
I know lots of people on MMM are quite conservative when it comes to marriage, and I seem to be one of the few to question it, but I just wanted to point out that marriage ≠ all money in one pot. This is an option of course but it's just one of many options. Not having any joint pots or sharing some pots of money and not others are valid and legal choices. Not getting married at all, ever, is also a real option.
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I think a 50-50 split or an income-based split are both fair and common solutions.
But it would be wrong to bring her inheritance into it. She is not living off that money and I agree there is something presumptuous about you even thinking it would be a factor.
What if her inheritance was $10M?
It wouldn’t change how I would go about it.
Unless and up until we reached a point where all assets were shared is be most comfortable with a 50/50 split. YMMV.
I agree that the 50/50 split is correct for most cases, I'm just having a hard time understanding why so many people think this stash should not come into the equation when considering ability to pay. If she had $10M in VTSAX, she'd be receiving something like $200k in dividends per year. If she was retired and had no earned income and was living off these dividends, would it still be presumptuous to consider it a factor?
ETA: Let me put this another way: If I was a landlord, and had a tenant who came to me and wanted a stay on her rent because she just lost her job, I'd consider working with her for a couple of months as she got her feet on the ground. But if it comes out she has $500k in the bank, my approach would be quite different.
Different scenario. If you're retired and living off $10M, then yeah, charge rent based on an "income" of 4% of that $10M. But when you're in the accumulation phase, you don't touch that money.
Also, if you're going to consider assets, you need to consider assets in both directions -- i.e., both her $500K and his $200K, not just hers (I like the idea of "income + 4% of 'stache" above). But then to be "fair," I'd also want to consider his vastly superior earning potential -- she's got the jump on him now, but he's going to catch up in just a few years and blow right past. So do you re-allocate rent every year based on each party's combined income + 'stache? Because if that's the case, then in a few years, he's going to be paying a lot more.
Fundamentally, if I were earning 2x as much as my SO, I'd feel really weird asking them to pay more than 1/3, unless my SO were already FIRE'd. Of course, if I were the SO, I'd probably insist on paying half, for the reasons laid out above. But in any event, I'd be thinking income, not total wealth. Because the savings is for my future needs, not to subsidize my current lifestyle.
I look at it this way: I would never rent an apartment that would require me to draw down my savings to afford -- that's massively unMustachian. So why would I base what I think my SO can "afford" to pay on the assumption that it's perfectly fine to expect her to draw down her 'stache to cover her fair share? Sauce for the goose and all that.
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50/50 but you both live like you each make 40K. Get an apartment you can each afford and you'll each save a bit in rent. You save the rest of your salary and in a few years your stash will be huge. If you end up married you'll be glad you saved all that money and if you break up, well, you'll be glad you saved all that money.
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Laura summarized best how I would feel. I would want to move in with someone in a situation or place where I could pay half the expenses and not feel financially cramped. That means something affordable on her 43K salary.
But if the person I was moving in with made 3x my salary and wanted to nitpick splitting everything 50/50 that would bug me. I like the idea of one person taking over x bills, and the other person taking care of y bills rather than having to venmo each other for everything.
Inheritances as a thing even if you are married are separate. I would not consider it at all. It doesn't have any relevance to paying day to day expenses nor declaring to the landlord what your income(s) are to see if you can afford the apartment. And honestly it would make me question being with someone if they were liquidating their nest egg to pay day to day expenses, or in turn being with someone who wanted me to liquidate my nest egg to pay day to day expenses, which is what the op is essentially asking, by using her net worth to assess what she can afford rather than her income. The most I would do, is if she is taking money out as in a pension or 4% yearly to add that amount to her income. But not the whole amount.
Hopefully both of you will financially benefit by splitting housing, food costs, so over-splitting of hairs will not be so important.
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If 50/50 works for you, great. It doesn't/wouldn't for me. My wife doesn't come close to maximizing her retirement accounts each year and her box 1 on her W-2 is in the mid 20s. If our arrangement were to be 50/50 on expenses today, then she'd have to sacrifice more of her retirement contributions (and I imagine our spending in retirement would be more slanted to my side). I don't want that at all - I want her to continue to increase her contributions to retirement each year* while paying a proportion of household bills that we've agreed upon.
For me, this is one of the major differences between dating and marriage. Dating and such you're still two independent people, with the possibility that you will part ways in the future. Once you marry, you become one team ready to handle the world together. That's of course cultural and subjective.
For dating, 50-50 split (to me) is 99% of the time the way to go for living expenses. Once married, then it's all one pot to pull from. Otherwise, what's the point? Gotta put some skin in the game, and a lot of the fun of marriage is the unified teamwork aspect. Everyone's different, of course, but if you're paying your SO through college and financing their retirement accounts you should be married (or at least engaged).
I've seen it work successfully outside of this formula countless times. It's not a hard rule- marriages don't tend to be as committal as they were in the past (for good reason) and "common law" doesn't have as much stigma attached.
For sure - I assumed the moving-in-together step is just a precursor to being engaged/married or at least a civil union. If not and I assumed incorrectly, then I'm all for the 50/50 train as they're more of a roommate at that point. I personally wouldn't date a roommate unless I was pretty freaking serious but there is a wide range of living arrangements.
People keep talking about this "once married it's all one pot anyway". But what does this mean? They still might have disparate incomes. If I say my wife and I don't have any joint accounts and I take care of about roughly 3x the expenses she does - how is that any different than "one pot" where my share is still paying for 3x. It's a case of semantics I don't really follow.
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Just an aside. For second marriages, especially among older people who are coming into the marriage with children and assets, prenups and nonsharing of assets is common. It protects the children. It also gives some protection from "purse and nurse" marriages.
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Just an aside. For second marriages, especially among older people who are coming into the marriage with children and assets, prenups and nonsharing of assets is common. It protects the children. It also gives some protection from "purse and nurse" marriages.
what's a "purse and nurse marriage"?
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Just an aside. For second marriages, especially among older people who are coming into the marriage with children and assets, prenups and nonsharing of assets is common. It protects the children. It also gives some protection from "purse and nurse" marriages.
what's a "purse and nurse marriage"?
I looked it up. It's purse or a nurse. It means men 60 and up are either looking for a "purse" (someone with more money than them) or a nurse (younger woman who will take care of them).
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Just an aside. For second marriages, especially among older people who are coming into the marriage with children and assets, prenups and nonsharing of assets is common. It protects the children. It also gives some protection from "purse and nurse" marriages.
what's a "purse and nurse marriage"?
I looked it up. It's purse or a nurse. It means men 60 and up are either looking for a "purse" (someone with more money than them) or a nurse (younger woman who will take care of them).
thanks. I suppose "nurses with purses" are extra-hard for older men to find?
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In my brief and very informal dating I did, this issue comes up sooner than age 60. Basically looking for someone who will give them something they lack in their own life.
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One more vote that you ignore the NW difference, and do whatever split you would do if you didn't know about the inheritance.
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Just to clarify, my reasoning for thinking a 50/50 split is as follows:
- We are dating and not married, and very much have separate finances. I've tried to teach her as much as she cares to know of what I've learned about personal finance, but our financial decisions and financial lives are 100% separate, at least currently.
- When we move in together, she would be the one who would want a nicer/pricier place than I would. Though her tastes are frugal enough that the resulting rent would be less than double what either of us currently pays on our own.
- In general, the idea for the higher earning partner to pay more in rent is to allow the lower earning partner to save more
- Since she has more saved (and it is legally hers right now, it's not conditional on one of her loved ones passing away. She could spend it all tomorrow if she wanted to) than I do, the idea above doesn't apply quite as much to this situation
I didn't quite consider how quickly I might catch up to her stash, although it will take more time than others suggested, as obviously hers will gain more interest each year. The source of her stash does not matter to me, I would have the same reasoning if she had earned that money by working or selling a business or winning a half court shot contest.
I don't care about this issue enough to allow it to impact our relationship, but it is interesting to see how different people's definition of a fair split is!
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There are so many more things than just rent to consider.
My now DH was still quite young when he moved in with me. This meant that joint car insurance was less than he had been paying alone. So, he paid the whole car insurance bill and we both saved money.
My car is a hybrid, his was a Jeep, so we took my car whenever we went someplace together. No money was exchanged for this, as we were pretty much going to the same places we had met up before he moved in (ie, little to no additional wear and tear). He also used the car when his commute was longer than mine whenever work sent him across town.
Utilities and groceries can be a big deal. For utilities, one thing to consider is if you have an agreement of who will keep the apartment if you break up. DH moved into my condo, so I kept the utilities in my name. DH eats a lot more than I do. Rather than trying to figure out how much more, he took over the grocery bill as soon as he started staying at my place regularly.
Overall, we found it much easier to split up the bills than to split the bills themselves. We were both saving more than we had been as singles, so we didn't worry too much about the split.
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- In general, the idea for the higher earning partner to pay more in rent is to allow the lower earning partner to save more
- Since she has more saved (and it is legally hers right now, it's not conditional on one of her loved ones passing away. She could spend it all tomorrow if she wanted to) than I do, the idea above doesn't apply quite as much to this situation
But it does, unless you/she is planning on FIREing on $20K/yr.
IMO, it's probably in both of your interests for you to pay more -- assuming that it's a reasonably-priced place and not, as you note, something that is more than you need. At her income, she is not able to max out her tax-deferred savings. You can. So each of you paying half is failing to optimize the tax-protected savings options. You will do better overall if she puts more money to her retirement savings and you put more towards rent, so you can both take full advantage of the limited available tax-favored savings vehicles, and therefore hit your FIRE target faster.
Of course, that assumes you stay together. But if you're serious enough to be moving in together, then that has to be the assumption you're working on, right? So I guess the question is whether the risk that you will break up -- and thus be "out" whatever extra you paid toward rent -- is worth guaranteeing that if you stay together, you will be delaying your FIRE date because you didn't take full advantage of your tax-favored savings options.
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I have had a lower earning partner who wanted a pricier apartment than I did. I paid more of the rent, utilities, and groceries. I resented it. We had other problems in our relationship, but this building resentment was a huge factor in our ultimate breakup.
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I'd probably rent something affordable and go 50/50 on the rent/utilities at this point (as mentioned, if you eventually get married, it wont matter anyway). You'd both win as, I'd assume, the rent would be less than 2x her current rent.
As you have a higher income, you might pick up the check more often than she on everything else (groceries, going out...).
Lots of thoughts in this thread but, at the end of the day, what matters is what you're both comfortable with. You only find that out by talking to her and sharing your thoughts and getting hers. These type discussions are interesting as they can help you both understand how you deal with things together as a team.
Good luck and report back after the discussion!
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People keep talking about this "once married it's all one pot anyway". But what does this mean? They still might have disparate incomes. If I say my wife and I don't have any joint accounts and I take care of about roughly 3x the expenses she does - how is that any different than "one pot" where my share is still paying for 3x. It's a case of semantics I don't really follow.
It's more than semantics. Once you are together, all of your decisions become a team effort. Someone gets a career fulfilling job in a different city? You both move. Now the other partner might take a lower paying job or none at all. Do you still now re-adjust all of you bills to reflect the new pay ratio? Is the other person now "penalized" for moving with you or staying at home to raise kids? In your case, they would be because they have a lower income. The point of being married (as I see it in most cases) is that everything is shared. It's not my income and your income, its OUR income. It is partially symbolic, partially practical, and partially just to commit to the perception that you are making unified decisions. Keeping income separate works for many people in many circumstances, but I think the default should be to go all in and share it. Keeping tabs on the separate ratios would be no different than an individual putting their paycheck from two jobs in separate accounts, then paying their bills using splits of those accounts.
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Just an aside. For second marriages, especially among older people who are coming into the marriage with children and assets, prenups and nonsharing of assets is common. It protects the children. It also gives some protection from "purse and nurse" marriages.
what's a "purse and nurse marriage"?
I looked it up. It's purse or a nurse. It means men 60 and up are either looking for a "purse" (someone with more money than them) or a nurse (younger woman who will take care of them).
thanks. I suppose "nurses with purses" are extra-hard for older men to find?
I know several women who in their late 40s/50's hooked up with older men (65ish) with virtually no assets and no relationship with their own children. On the very of retirement - they were about to be poverty-level. I saw the women buy their stories. Never recovered from a difficult divorce 15 years ago? Ex 'poisoned' relationship with their kids?
the women did indeed go on to support, then nurse them.
Maybe it was true love, but - let just say I have my doubts about it.
But - better than being a spinster? Seems that was the worst fate imaginable back in the day. Still a bit of a ghost of it with older women I think.
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I may be moving in with my girlfriend sometime in 2020.
If you are living as though married, then live as though married, and have a joint account.
Into this joint account will go your regular income.
Out of this joint account will come regular direct debits for predictable expenses, like electricity, rent, etc, and agreed-on amounts for other regular expenses like groceries, and a certain agreed amount which will go to joint savings, and personal savings. As well, you will each have a certain agreed amount to splurge day-to-day; the total amount of the "splurge" money may be questioned, but not specifically what it's spent on.
If you are not willing to live together as married, then don't.
This could be the worst advice I've ever seen on this forum.
What is the basis of such a suggestion? It isn't financially based. And both the OP and the GF should feel free to explore living together in any fashion that they mutually agree upon - as are other couples.
I would never comingle my monies in an account with anyone else. I did that once when married - and no thank you. Even if I married again - which I have no interest in - no thank you.
Some people may be up for it. So - good luck to them. But this mandate? No. Try again.
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Just to clarify, my reasoning for thinking a 50/50 split is as follows:
- We are dating and not married, and very much have separate finances. I've tried to teach her as much as she cares to know of what I've learned about personal finance, but our financial decisions and financial lives are 100% separate, at least currently.
- When we move in together, she would be the one who would want a nicer/pricier place than I would. Though her tastes are frugal enough that the resulting rent would be less than double what either of us currently pays on our own.
- In general, the idea for the higher earning partner to pay more in rent is to allow the lower earning partner to save more
- Since she has more saved (and it is legally hers right now, it's not conditional on one of her loved ones passing away. She could spend it all tomorrow if she wanted to) than I do, the idea above doesn't apply quite as much to this situation
I didn't quite consider how quickly I might catch up to her stash, although it will take more time than others suggested, as obviously hers will gain more interest each year. The source of her stash does not matter to me, I would have the same reasoning if she had earned that money by working or selling a business or winning a half court shot contest.
I don't care about this issue enough to allow it to impact our relationship, but it is interesting to see how different people's definition of a fair split is!
Where are you getting this idea? Most people out there - especially young couples - are not really saving at all. That isn't what the income-based split is based on. It is based on an different idea of month-to-month equity compare to 50/50.
however - it seems that you have made up your mind already rather than a question as posed in the OP so seems pointless to discuss any further.
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The smartest thing to do is to ask her what she thinks is a fair split. Let her throw out the first number.
If she throws out 50/50 right away, then you are both on the same page.
If she throws out a different split, then you have some thinking to do.
Don't ever forget how low her salary actually is though. If she is paying half the bills, she has less left over for savings, apartment furnishings, date nights, nice vacations, weekend trips, etc.
When my wife was making around $40k/year, her take home was around $1,100 to $1,200 every two weeks. And that's without medical/dental/vision/etc (since I was taking care of that), and a small 401k contribution (just for the match since her plan was awful). So you may want to take a look at her paycheck and the perceived expenses before you decide what's fair.
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I would never comingle my monies in an account with anyone else. I did that once when married - and no thank you. Even if I married again - which I have no interest in - no thank you.
Some people may be up for it. So - good luck to them. But this mandate? No. Try again.
I both strongly agree and strongly disagree with this. I agree that it isn't a mandate; there's no hard rules and there's no one way of doing things.
I disagree with your personal sentiment of "good luck to them" on those who choose to do so. I think that it should be a lifestyle option to strive for, not one to dismiss with conviction. It sounds like you had a bad experience with marriage- bad enough to shadow your view of the whole establishment, which is fine, but you do recognize that it does work quite well for others, right?
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I don't think it's inherently wrong to do a 50/50 split if both partners are on board and agree to it, especially if it's not meant to be an explicit step towards marriage/forever relationship. You can always reevaluate later as the relationship progresses. I do think that the current stash should be kept out of it if both of you are still in accumulation phase. It doesn't sound like she plans to retire on the 500k, but it is a good head start considering her low income otherwise.
Overall, if I was earning 1/3 of my partners income, I would want them to pay a bit more towards living expenses, so that I wouldn't have to spend all my income on bills while they were able to save a significant amount. If I was earning the larger income, I'd probably also want to pay a larger share, as long as my partner wasn't using me as a cash cow to wildly inflate our standard of living. But either way, it would be good to keep the shared cost to something that could be shared if each of you were earning the same lower salary.
A joint credit card is also a useful way to split shared expenses, if you put all household bills on the same card you can split it either 50/50 or according to whatever percentage you decide.
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I may be moving in with my girlfriend sometime in 2020.
If you are living as though married, then live as though married, and have a joint account.
Into this joint account will go your regular income.
Out of this joint account will come regular direct debits for predictable expenses, like electricity, rent, etc, and agreed-on amounts for other regular expenses like groceries, and a certain agreed amount which will go to joint savings, and personal savings. As well, you will each have a certain agreed amount to splurge day-to-day; the total amount of the "splurge" money may be questioned, but not specifically what it's spent on.
If you are not willing to live together as married, then don't.
This could be the worst advice I've ever seen on this forum.
What is the basis of such a suggestion? It isn't financially based. And both the OP and the GF should feel free to explore living together in any fashion that they mutually agree upon - as are other couples.
I would never comingle my monies in an account with anyone else. I did that once when married - and no thank you. Even if I married again - which I have no interest in - no thank you.
Some people may be up for it. So - good luck to them. But this mandate? No. Try again.
Have been following this thread with interest (no pun intended) and have to agree here.
It's fine if they are both broke engaged 19 year old college students with no assets who will marry soon. It's problematic when both parties are coming in with varying levels of income and net worth i.e. established financial lives and patterns.
I will have to grapple with this problem one day. One of a number of realistic scenarios will be me having a NW over a 1.5 million, living in a mortgage free home earning three times as much as my partner who might be in net debt due to student loans.
There isn't any way known that 50/50 is a reasonable proposition here, and both sides will agree for different reasons as already explored in this thread. People are entitled to draw a line of their choosing around their financial selves - their partners can take it, leave it or negotiate it.
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People keep talking about this "once married it's all one pot anyway". But what does this mean? They still might have disparate incomes. If I say my wife and I don't have any joint accounts and I take care of about roughly 3x the expenses she does - how is that any different than "one pot" where my share is still paying for 3x. It's a case of semantics I don't really follow.
It's more than semantics. Once you are together, all of your decisions become a team effort. Someone gets a career fulfilling job in a different city? You both move. Now the other partner might take a lower paying job or none at all. Do you still now re-adjust all of you bills to reflect the new pay ratio? Is the other person now "penalized" for moving with you or staying at home to raise kids? In your case, they would be because they have a lower income. The point of being married (as I see it in most cases) is that everything is shared. It's not my income and your income, its OUR income. It is partially symbolic, partially practical, and partially just to commit to the perception that you are making unified decisions. Keeping income separate works for many people in many circumstances, but I think the default should be to go all in and share it. Keeping tabs on the separate ratios would be no different than an individual putting their paycheck from two jobs in separate accounts, then paying their bills using splits of those accounts.
Maybe I'm just not fully grasping what you're saying - how would a spouse in my case be penalized due to a lower income? Yeah, if one of us has a significant raise or decrease in pay - bills could be changed if that's what we decided. My wife, a teacher, is finishing her Master's degree next year and will have a decent initial pay bump (~10%) plus yearly ~5% bumps for several years as her new pay scale separates from the Bachelor's scale. I expect at some point we'll discuss if our bill allocation should change or not. My guess is that most couples look at their finances together (bills, retirement, taxable accounts, vacations, gifts, etc.) from time to time regardless if they have joint accounts or not.
The part that I bolded seems like the definition of semantics, it all works out the same which is my point - when it's not a 50/50 split someone is paying more regardless if the accounts are joint or not. My wife and I have separate accounts not to shut each other out or anything, just because it seems (or seemed, and now we're too lazy to change since this works and we're used to it) easier for the main purpose of paying bills in line with take home pay. We have most of them automatically withdrawn from our paychecks so that the leftover amount each month is roughly the same for both of us. It's de facto lazy budgeting and mitigates nitpicking leisure spending, I'm not claiming this is a panacea by any means, just what works for us and has since we first moved in together (which was right after the decision to move to the East Coast for a career). Of course all our major life decisions are joint - that has very little to do with how bills are paid or who makes more money, it's much more about respecting each other as equitable complements of the relationship.
Some (many?) couples share a social media and/or non-work email account. We do not do that either. Whatever works, variety is the spice of life.
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This could be the worst advice I've ever seen on this forum.
What is the basis of such a suggestion?
A successful marriage.
And that of a friend of mine who wrote a book (https://barefootinvestor.com/books/) on ordinary people's finances, which many people have followed with both financial and relationship success. One of the things he suggests is a monthly "financial date night" where you sit down and discuss your mutual desires and goals financially. Over time as you get things sorted there's less finance talk and more other talk. Obviously there are other ways to do it, but the point is that you're a couple and you sort things out together, and check in regularly to see if anything's changed.
We watched Marriage Story recently, and felt this depicted a lot of failed marriages we've seen. They didn't have any fundamental incompatibility, they just got caught up in the everyday bullshit and grind, and the woman sort of feebly raised some of her dreams which he ruthlessly ignored in favour of his own. Having regular talks one-on-one about their goals and lives might have avoided that.
I've been reading Mistakes Were Made: But Not By Me recently, and they've a whole chapter on marriage, saying, "self-justification is the assassin of marriage." We all do good things and bad things, but are the things I do because of circumstance, or because it's who I am? Are the things you do because of circumstance, or because of who you are?
If I yell at the kids and my wife, is it because it was a busy hot day, or because I'm an arsehole? If my wife yells at the kids and me, is it because it was a busy hot day, or because she's a bitch? Obviously, some people are fundamentally incompatible, some are abusive or unfaithful, and so on. But a lot of the time it's just self-justification. "I yelled at you because I had a rough day, this is forgiveable - but you, you yelled at me because you're a bitch!"
I would suggest that a financial date night or something similar, if approached with an open mind, not seeking to justify your own misdeeds while condemning the other for theirs, can improve the chances of a successful marriage. But the basis of this must be trust, and trust requires a leap of faith. At some point you must go all in.
As well, consider that many jurisdictions will treat a couple cohabiting for a certain period as married. In many cases, the law will treat your finances as one big pot whether you like it or not. You may as well get ahead of the law and act that way anyway. Some people think that because the relationship may end some day, they should approach it with defensive wariness. I think approaching marriage with defensive wariness makes it more likely it'll end.
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The part that I bolded seems like the definition of semantics, it all works out the same which is my point - when it's not a 50/50 split someone is paying more regardless if the accounts are joint or not.
What I'm saying is that it's NOT semantics when you fundamentally change the nature of your relationship. Any money earned is family money. Any money spent is family money. No one is paying more because there are not two different spenders, nor two different earners. There may be two different incomes (similar to a person having two jobs), but the idea is that you are now working as a team. You win and lose together. The commitment is the point.
My wife and I have separate accounts not to shut each other out or anything, just because it seems (or seemed, and now we're too lazy to change since this works and we're used to it) easier for the main purpose of paying bills in line with take home pay.
It's not that hard to combine accounts. If you wanted to, you could make it work. I'm not saying you need to (or that you're a bad person for not doing so). But combining accounts, from a technical perspective, is quite easy in terms of hurdles to cross for a marriage couple.
I'm not passing judgment on your choices, by the way. If you're happy then far be it from me to throw a wrench at ya. Just pointing out a different view.
Edit, here's how I think we're differing in conversation:
https://www.gocomics.com/calvinandhobbes/1990/09/18/
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People keep talking about this "once married it's all one pot anyway". But what does this mean? They still might have disparate incomes. If I say my wife and I don't have any joint accounts and I take care of about roughly 3x the expenses she does - how is that any different than "one pot" where my share is still paying for 3x. It's a case of semantics I don't really follow.
When you are married, and it is one pot -- that means that you don't get a "My share" anymore. It all belongs to the marriage. Think of marriage like a business entity and you and your spouse are co-owners / employees.
Your portion or "My share" is actually only the small cash spending allowance that you may or may not set up each month. Even your savings / retirement accounts created during marriage in your indivduals names are technically owned by the "Marriage" in many states, and split equally.
This works because many marriages have vastly differing incomes, (due to training, one person becoming trailing spouse, illness, child care, other reasons) yet should have common goals.
Some marriages maintain separate accounts, at least in name. That is not what the other poster was describing.
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Just to clarify, my reasoning for thinking a 50/50 split is as follows:
- We are dating and not married, and very much have separate finances. I've tried to teach her as much as she cares to know of what I've learned about personal finance, but our financial decisions and financial lives are 100% separate, at least currently.
- When we move in together, she would be the one who would want a nicer/pricier place than I would. Though her tastes are frugal enough that the resulting rent would be less than double what either of us currently pays on our own.
- In general, the idea for the higher earning partner to pay more in rent is to allow the lower earning partner to save more
- Since she has more saved (and it is legally hers right now, it's not conditional on one of her loved ones passing away. She could spend it all tomorrow if she wanted to) than I do, the idea above doesn't apply quite as much to this situation
I didn't quite consider how quickly I might catch up to her stash, although it will take more time than others suggested, as obviously hers will gain more interest each year. The source of her stash does not matter to me, I would have the same reasoning if she had earned that money by working or selling a business or winning a half court shot contest.
I don't care about this issue enough to allow it to impact our relationship, but it is interesting to see how different people's definition of a fair split is!
Mostly a logical answer. One option would be to find a place where 50% of the rent is no more than she is paying now.
BUT -- you are not realizing that with the income differences, it may end up that she takes on more of the house care / cooking / household tasks. Maybe not. I know lots of guys that are very particular about their places, but most often, the guys I know are more relaxed about it, are perfectly fine not stopping someone else from taking these chores on, are fine with ordering take out for their cooking night (because they make a lot more), etc.
At least with the large $'s invested, you don't have to worry so much that your disposable income would be VASTLY different from hers.
Have you thought about 50/50 split for now, and you take your extra contribution and put it into an account to use for her savings / student loan debt, or whatever, that you hand over after you are married?
Also, please make 100% certain that she agrees to the "roommate / split" concept and is not thinking "long term pre-married coupling up / merging our efforts, etc". Again, it really sucks to be thinking the second and then seeing your SO with tons and tons of spending cash while you have very little monthly cash flow.
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I would never comingle my monies in an account with anyone else. I did that once when married - and no thank you. Even if I married again - which I have no interest in - no thank you.
Some people may be up for it. So - good luck to them. But this mandate? No. Try again.
I both strongly agree and strongly disagree with this. I agree that it isn't a mandate; there's no hard rules and there's no one way of doing things.
I disagree with your personal sentiment of "good luck to them" on those who choose to do so. I think that it should be a lifestyle option to strive for, not one to dismiss with conviction. It sounds like you had a bad experience with marriage- bad enough to shadow your view of the whole establishment, which is fine, but you do recognize that it does work quite well for others, right?
I said I wouldn't do it and good luck to those who want to. You're reading way too much into this. It was a sincere good luck, not anything else.
Most will do ok with combining, some will do awesomely, and some will get burned. A few - really badly burnt. So - good luck to those who do want to. I don't get what you find dismissive?
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This could be the worst advice I've ever seen on this forum.
What is the basis of such a suggestion?
A successful marriage.
OP is not asking about marriage. You advocated full combining of finances for a non-married couple because.....
?
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For the sake of simplicity I would do 50/50 on rent and utilities.
Maybe you could help out in other areas like picking up the tab for dinner, or paying for vacations.
As time passes, and you both approach FIRE, you could come up with a plan for you both to reach the finish line at about the same time.
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This could be the worst advice I've ever seen on this forum.
What is the basis of such a suggestion?
A successful marriage.
OP is not asking about marriage. You advocated full combining of finances for a non-married couple because.....
?
100% agree that combined finances is best setup for marriage, at least for me and my sample size of 1 marriage.
While dating though, I disagree on combined finances but would still advocate a 50/50 split on expenses.
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I said I wouldn't do it and good luck to those who want to. You're reading way too much into this. It was a sincere good luck, not anything else.
Very fair! I definitely read the tone of that wrong based on your response ;)
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When my (now DH) and I first lived together we split our expenses based on percentages of our incomes at the time. He made 3x what I did (similar to you guys) so he paid roughly 66% of our expenses and I paid the rest. (For the record, I was working close to 60 hours/week between my two jobs - I just did not have the earning power he did.)
For us that meant he paid the rent, and I paid all of our household bills.
For groceries and most of our other fun stuff we kept a similar thing going - he picked up the tab twice as often as I did. We never calculated this consciously but seemed to gravitate to it naturally. Once we got married, he helped me clear out my (small) student loan and we have had shared accounts ever since.
We always considered ourselves a team, so we operated like one, and that was well before marriage was even on the table.
OP- If you are going to move in together and are going to be hyper-aware of ever dollar so that things remain "fair" (not saying you will, but be aware) you are already setting yourself up for failure. The picture you have painted for us thus far seems to indicate that she pulls her own weight, and if you are considering moving in together you obviously care for each other a lot. Do what your heart says is right for your relationship, just do not be foolish. :) Clear as mud, right?
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When DH and I first moved in together, he made 150% of what I did. We had a shared account where we contributed 60/40 and used that for paying all household bills. That worked well.
I would find it only reasonable that a person who makes that much more contributes with more than 50% of common expenses. Just to give her the option to also save some money. Or spend a bit more of her own money on herselv. Still, you should not contribute with more money in total than what you are willing to pay on rent. So maybe you should not be looking for an apartment that costs 2 x your current rent, but rather 1,5 x your current rent.