Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Kristin here. (It’s anonymous!)
Dear Pay Dirt,
I recently, unexpectedly, inherited a life-changing amount of money. I do have a lot of student loan debt and I have been considering paying them off all at once. A few things are holding me back and the big one is that I have a disability that affects my ability to work. I got really lucky finding a job where I only have to work part-time while getting paid a full-time, albeit fairly low, salary. I also have amazing health insurance, which is such a necessity now. My manager knows and is fine with this, but I am constantly worried that someone is going to find out how little work I do or that I will get a new manager and will no longer be able to work. I have not worked enough or made enough to get a decent amount of money on disability.
I also work at an organization that qualifies me for the Public Service Loan Forgiveness program. With what I am making and my income-based repayment plan, I will likely only have to pay back a fraction of what I borrowed. That is as long as the program stays in place, which is uncertain. I’m freaking out that I should pay it off now before my interest accrues more and I can’t pay it off. I’m about to buy a house and if I pay off my loans, I will have enough left over for a one-year emergency fund, an emergency fund for the house, and a little money to do something fun like go on a trip. If I don’t pay off my student loans, I will have all of that plus a safety net in case my health really tanks.
I’ve heard horror stories of really sick people getting turned down for disability. And, on top of all of this, I have family that is pressuring me to pay back the loans. They already hate that I’m in the loan forgiveness program, they think all debts should be paid back, but now they are calling me selfish for even considering not paying it off with my inheritance. I just can’t keep their words out of my head because, before university, I also thought debts should be paid, in full. I just can’t get their words out of my head and I feel like I can’t think clearly about what I should do. Every option feels like a risk and a moral failing on some level. Can you give me some advice?
—Morals About Money
Dear Morals About Money,
You’re smart to consider all the potential pitfalls that this money could help you avoid. Between your disability, the cost of interest, and the precariousness of Public Student Loan Forgiveness (PSLF), your head is in the right place. Unfortunately, it’s hard to think clearly when you’re also considering how to avoid feeling like a moral failure. So much pressure!
But here’s the thing: Money is just a tool, a resource. Yes, you want to use that tool productively and thoughtfully, but taking advantage of a program designed to make your financial life easier is not a moral failing. You would be simply utilizing a resource that has been granted for that exact purpose. If we really want to talk about moral failings, perhaps we should ask predatory lenders to join the chat—but I digress.
The point is, you need to do what’s best for you and your future self. In the meantime, you’re on the hook for at least some of your loan with the possibility that you might get relief in the future. (If you haven’t already, you should be submitting PSLF forms each year or anytime you change employment to make the process of applying for forgiveness easier down the road, should you go that route.)
Do you pay it off now and free up your money but miss out on potential forgiveness? Or do continue throwing away your money on interest and wait it out to see what happens with PSLF? It’s your decision, but deciding is a simple matter of weighing risk against reward. In your case, the reward is having a bigger emergency fund in case of future health issues. If you wait for PSLF, you have more money to save now and might have even more money to save in the future. If you pay off your loan, you lose your money but you also don’t have to worry about that monthly payment, which you could also use to save up. Again, the choice is yours, but morality isn’t the issue—your financial security is.
One option you didn’t mention that might be worth your consideration: Are you able to postpone buying a home? If you’re concerned about saving up for potential issues with your disability, you could prioritize beefing up your emergency before buying a home. Contrary to popular belief, buying a home is not always a smarter decision than renting one. It’s complicated, but here’s an explainer and a calculator. And postponing your homeownership might give you more time to see what happens with PSLF.
Need Parenting Advice?
For questions on parenting, kids, or family life, try submitting to Care and Feeding!
Dear Pay Dirt,
My partner moved into the house I own (well, pay a mortgage on) just before the pandemic. They lost their full-time job during the pandemic. Every day brings news of more layoffs in their profession, more friends who’ve lost their income, and more scrambling within the industry for lower salaries than ever. And it’s no different for my partner. They’ve dipped to the bottom of their savings. They’re applying for things, working several related angles, and taking every bit of freelance work they can, but a professional living simply isn’t there. Age discrimination is pretty much a given. There doesn’t seem to be any light at the end of the tunnel.
I am employed and well compensated. My salary alone will keep the household afloat, although leaner than is comfortable. I have so far maintained my expectations that my partner contribute to the household, but I fear they’ve been doing so by running up credit card debt. We’ve already cut some expenses together but it’s a teacups/tide situation for them, I think.
We came into this relationship well into middle age and agreed that we would share common expenses but would otherwise keep our finances separate. But we do talk about it, and I feel like such a jerk saying, “Yeah, that sucks… Hey, it’s your turn to buy groceries this week.” If I take on ALL the expenses, there will be no more vacations, no more nice restaurant meals, and potentially a little less in the 401(k) and the 529s. (My kids are a few years away from college. My partner doesn’t have kids.) But I feel selfish saving while my partner is racking up debt. It feels like they’re funding my and my kids’ future to their own detriment. Should I drop my expectation that my partner pays a (much less than half) share of the mortgage, pick up every other grocery bill, and split our entertainment expenses, and instead, encourage them to work on their debt with what little they bring in?
—Love Vs. Money
Dear Love Vs. Money,
Financial disparities in relationships are always tough—it sounds like your partner is struggling to keep up with your lifestyle. But don’t think of saving as selfish. You’re helping your kids pay for college (which is kind of the opposite of selfish, no?) and funding your own retirement to take care of your future self. These are responsible goals. At the same time, I understand that you don’t want to put your partner in a financially hazardous situation. So it’s time to come up with a budget—one that works for both of you.
For starters, you need a little more financial transparency. Is your partner actually racking up credit card debt, or is that just a hunch? Put it all out on the table. How much debt have they accumulated? How much interest are they paying every month? The two of you should sit down and have a frank conversation about money: Take a look at all of their accounts, all of their income, and all of your shared and individual expenses. This can feel intrusive, so make sure you’re willing to do the same and share all of your financial information, too. If you’re already sharing expenses, you should be willing to share a budget, which means swapping all those details.
From there, help them come up with some goals to pay down that debt (I like the debt snowball method if they have multiple debts), save for an emergency, and fund their own retirement. There are so many different approaches to budgeting, but here’s a primer that can help you get started. Once you figure out what their numbers are, you can better calculate what percentage of their income they can contribute to your shared expenses, like mortgage, groceries, bills, and so on. Ultimately, you’ll need to make a decision: Ask them to continue contributing a higher percentage and cut back on some of your “nice to have” expenses so they’re able to stay afloat, or keep your current lifestyle but foot an even bigger portion of the bill. There’s no right or wrong answer. Every couple decides what works for them. The main thing is that you both agree on what your shared budget looks like. This helps ensure that neither of you will become resentful of the situation: you, for paying more, and your partner, for racking up debt.
Want more Pay Dirt every week? Sign up for Slate Plus now.
Dear Pay Dirt,
I make a good amount of money. It puts me decently in middle class in most cities in the US. I don’t live on a coast so even though my city is expensive, it isn’t crazy expensive. As such, I’ve had money for one big trip almost every year, and usually a few little small ones. I’m a single mom so it makes me happy that I’m able to provide for my teen. Most of the trips are with them as well. I didn’t just fall into this money. I worked hard for it. When my child was little, and just after my ex and I divorced, I took a hit to my pride and moved back in with my parents. I went back to school, worked for my parents, and took my child to my study sessions (my parents would only watch them when I was in school). I studied a lot at night and really worked hard to pass the difficult program. That was over a decade ago. I struggled with some poor workplaces before finally settling into the job I have now. I work three to four 12 hour shifts at a hospital.
I’m also in contact with friends from college. Not all of them have been so lucky. Many of my friends are just scraping by. Some of them are in the fields they want to be in, but many are not. Lately, I’ve been feeling a lot of guilt over the fact that I’m not struggling. I’ve been in a chat with some of my friends for a while. It’s a chat to both celebrate wins and just help support each other through the hard times. I’m feeling guilty celebrating my first real trip away from my child while another friend is talking about how they are struggling to make rent. While my dream would be to cover my friend’s housing costs, that isn’t realistic. I don’t make that much extra. My friends always say they are happy for me, and enjoy living vicariously through my trips and the like but I wonder if that’s true. How do I get over this guilt?
—I Did Work For It!
Dear I did work for it,
Maybe the guilt you feel is less about your financial situation and more about sharing your wins. You said it yourself: You’ve worked hard and have been through a lot. Divorce is an incredibly stressful and costly experience. You seem rightfully proud of what you’ve accomplished. More than guilt, it sounds like you feel a little ashamed about the possibility of flaunting those accomplishments with people who aren’t quite there yet.
It would be easy to tell you to not be shy about celebrating your achievements—and I do think you should celebrate yourself unabashedly. But friendships are also built on empathy, which it sounds like you have for your friends. It might be hard for them to relate to your financial lifestyle right now. You shouldn’t have to downplay your wins, because your friends are there to celebrate you, too, but finding other, non-financial wins to share with them might help address some of that nagging guilt. Or, maybe it would help to contextualize what something like this first solo trip means to you, in light of the struggles you’ve overcome to get to this point.
You can be mindful about not flaunting, but ultimately, your friends might not be happy for you all the time, and that’s OK. It’s not up to you to guess how they might feel and look for ways to fix it. They’ve told you they’re happy for you—you’ll need to start believing it.
Dear Pay Dirt,
I (27F) am constantly torn between two fighting thoughts when it comes to spending my money and making bigger purchases/investments. In the past year, I’ve made a few bigger purchases that have cost in the thousands range: big vacations, going to friends’ weddings, enrolling in an expensive extracurricular class. These purchases have all vastly improved (or will) my life! I’m so happy I’ve spent the money. This is where the first line of thinking comes in: I’m young, in my 20s, and should be a bit freer with my money. But, I also feel very guilty every time I go to make one of these major money decisions (despite saving about half my salary or a little under that every month). Then the thinking is: I should be saving more for the future, and some of this could be seen as irresponsible spending. How do I figure this out once and for all?
—Money Stuck
Dear Money Stuck,
Could you reframe this question for yourself? Instead of feeling like you’re choosing between enjoying life and being financially responsible, what if you thought about saving as a way to allow your future self to enjoy life, too? I totally agree that it’s OK to be free with your money when you’re young and you can enjoy it—you will have those memories forever. But saving for the future ensures that you’ll be able to do lots of fun stuff later in life, too.
We often think of saving money as a responsible thing to do. Like there’s some gold star we get for being frugal or sticking to a budget. But you’re saving for a reason: so that your future self will be financially set. And maybe your future self wants to go on big vacations, too.
If you’re already putting away half your salary, you’re probably doing great. It seems like you’ve already found a pretty ideal balance between saving for the future and enjoying the present. But if it doesn’t feel like enough, just do some math. Look at an online retirement calculator and figure out how much you want to have saved by a certain age. Then calculate how much you need to potentially increase your savings to get there.
Once you’ve crunched the numbers and decided on an amount, let go of the guilt that you could be doing more. Money is not meant to be hoarded. It’s meant to be used on the things that matter to you now—and to your future self.
—Kristin
Classic Prudie
I adopted a cat, Zayn, four years ago. He is a great cat, and I love him to death. I recently allowed him to be an indoor/outdoor cat. Normally he’d stay out for a few hours then come home, but now he doesn’t come home till 10 p.m. It turns out Zayn has been paying visits to my next-door neighbor. It started with him just hanging out in her backyard, but now he is allowed in her home. He even cuddles and takes naps with her.
