Dear Caroline, I am getting married next month and I am deeply in love with my fiancé, but he recently told me he owes $30,000 on his credit cards and a line of credit. I had no idea he had any debt and we’ve been together for two years. I felt sick when he told me. What should I do? I can’t live with this level of dishonesty.
A: You think it’s dishonesty, but to him debt might not be that big a deal. In his mind he’s not hiding anything or being dishonest (he did tell you after all). The important thing here is your reaction. To you, debt is a big deal, which is a red flag: you are not comfortable with debt and clearly he is. Have you two sat down and had a good talk about money? Do you know how much each of you earns and where you see yourself in 10 years? Did you ask how your guy managed to rack up that much debt? And does he know that to you debt is a big deal? Is he willing to work with you to come up with a plan to pay it off?
Here’s the thing: as a married couple, his debt is your debt. You and your fiancé need to be on the same page regarding your finances – it might not happen overnight but you do need a commitment that the debt will be paid off and that any debt you take on going forward will be discussed and agreed upon together. If you can’t get to that point then it might be time to rethink your commitment to him.
Dear Caroline, My best friend is having a hard time financially. She went through a messy and expensive divorce and I lent her $5,000 to help her out (she has two kids). That is a lot of money for me and I had to tap out my savings account. My friend is working again and I’ve tried to talk to her about the money she owes me, but the discussion never goes anywhere. I don’t want to be a nag, but I really need at least some of that cash back to cover some other expenses I have coming up. What should I do?
A: If you’ve been reading my blog for awhile, you know how I feel about lending money to friends – don’t lend it unless you can afford to lose it. Many a friendship has been lost over money. Let’s look at this objectively: your friend probably racked up a lot of bills during her divorce (legal and otherwise) and she’s just getting back on her feet – I don’t know what her current financial situation is but I do know lawyers and kids are really expensive. So realistically, she probably won’t be able to come up with five grand right away.
But you can and should talk to her about the money you lent her. Maybe she could pay you some back and the two of you could put together a payment schedule that works for both of you? It’s a hard conversation to have, especially given everything your friend has been through. Just be clear and direct about what you need and expect from her. You’ve been a supportive friend and you should be able to talk about it. If you can’t, then that raises questions about how strong your friendship was in the first place.
Dear Caroline, I was just promoted to marketing manager at the company where I’ve worked for two years. Now I have to negotiate for more money. How much should I ask for?
A: When it comes to money, there’s no hard and fast rule. It depends on the size of company and the sector you work in (are you at a bank or a small non-profit for example?). Also, are you doing a lot more work or has your role changed (ie. are you managing people now)? Make a list of all your new duties so you can make the case for why you deserve to be paid more. You can also do your own research. The website Salary.com has a comparison tool you can use to find out what other people are getting paid in your job and in your region.
Dear Caroline, My husband and I had our first child a few months ago and now we want to buy life insurance. We’ve been told we should buy term insurance but I don’t know what that is. Can you help?
A: Basically, term life insurance just covers you for a “term” or a certain number of years – usually 10 years. It pays out if you die before the term is up and it’s usually the cheapest life insurance out there. It’s good for families on a tight budget who rely on the insurance to pay off a mortgage or loan in case the insured dies and you lose their income. My husband and I both have term life insurance policies – the only drawback is that when you go to renew your policy in ten years you’ll be older and probably more expensive to insure. The other option is permanent life insurance which gives you lifetime coverage and the option to save and invest the money you pay into it. It’s usually a lot more expensive though.
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