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Chapter 1: How can sinking funds be misused as debt?
I know. That's right. More money. Let's go to Daniel. He probably wants to make a little more money, too. Daniel in Pensacola, Florida. What's up, Daniel?
What's going on? How are you guys doing?
We're good. How can we help? All right. So I just got a quick question. I'm wondering whether or not me and my wife are using the sinking funds. Almost like debt. I know that sounds funny, but I want to make sure we're not using this wrong.
We kind of disagree on this, and it doesn't come up often, but when it does, it's this whole thing on using the sinking funds in a way I think is not the correct way. So to give an example, let's say we have a planned fund for Christmas, and just to make it easy, I can say $100 a month. We start it in January. and we're going to plan on having the $1,200 by the end of the year.
But something comes up in June, oh, hey, I want to buy this thing. And I say, well... Let's say before, let's, you know, let's plan ahead for that. We don't have the money right now. And the response is, well, no, we have the money. There's $600 in the Christmas fund. Let's just use the Christmas fund. We'll pay it and then we'll pay that back before the year's over.
And then it just feels like, well, if we do that, then the margins are going to be lower for the rest of the year, meaning we can't. Yeah.
Yeah, that's a problem.
Yeah, I mean, I could I could definitely see that being a frustration if Sam and I say, hey, we're pooling this money and this money is going to be used for a car. And we do that all year long. And then at the very end, Sam is like, hey, actually, I'd rather use this for X, Y, Z. And if I don't agree with that, then, yeah, I feel like, hey, you're going back on what we agreed on.
And that's a problem. I do think it might feel a little differently if both of you agreed, Hey, I know we put this money aside for Christmas or we put it aside for a car. But both of us agree something else has come up that's more important, and we both agree that this money should be spent in this way. I don't have a problem with that because it's your money. You get to decide.
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Chapter 2: What should you do if your in-laws live too close for comfort?
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Back to the phone lines we go. We got Jen in Calgary, Alberta. What's up, Jen?
Hi there. We have ourselves in a bit of a pickle, and I'd like to hear if you guys have some advice. Yes, ma'am. So what has happened is that my in-laws have built a granny flat, like a suite, attached to our house. And they've been living here for about two years now. And we find that my husband and I are not... It's just not what we imagined it would be.
We're not really enjoying the dynamic and just the arrangement anymore. And we don't know how to separate financially. And just it's been a relational toll, taking a toll on our relationship with my in-laws. And yeah, we're really not sure what to do.
The in-laws paid for the suite to be built onto your house? Yes. Ooh. Yes, they did. Yeah. How much money did they sink into that? It was $200,000. Oh, my word.
That's not a suite. That's like a full-blown house they put on there.
And how much did it raise the property value? From what to what?
Like maybe $100,000. Oh, gosh. So it didn't even break even yet? No, like... Yeah, it didn't. And now it's kind of created this unique house that it doesn't really raise the property value because it's not... It's not normal.
Was it licensed? I mean, I don't know what it is in Canada, but you have to get a permit for that in the United States. So did that change any of the titling at all? Or is it all still in your name?
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Chapter 3: Is it wise to delay debt repayment for a major purchase?
Okay.
Do you agree?
Yeah, I definitely agree. I just finished. I listened to the Total Money Makeover earlier this morning at work, actually. Good. I was able to.
Okay, so then you know the first step here. I mean, you mentioned the $26,000 of debt, the $52,000 of income. Do you have any money saved anywhere?
No, that's the thing. I don't have any money saved. I was looking to start the Baby Step 1 to save the $1,000. Although I got an email today from Chrysler Capital wanting me to call them, so I did. And they're offering me a payout. for an old auto loan that I have.
Yeah? Tell us more about that. What's the loan for and what are they offering?
The loan for that, it's owed about $13,000 left on it.
And what are they offering?
They're offering a $500, $600 payout, but it has to be paid by the 30th of this month.
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Chapter 4: Should financial stability come before having children?
Yeah, so I'm in a bit of a predicament. So essentially, I'm looking to see whether I should get married sooner than later than I thought. Oh, I like these.
Ken loves these questions. I love these questions. Okay, you got to give us the case. You got to lay this out for us because you're getting a great female point of view and maybe a decent male point of view. We'll see. Give us the reasons why you would get married sooner rather than later. Give us sooner first.
Sooner because, okay, so Sooner is kind of like an unfortunate thing. So me and my, well, I'm engaged already. So me and my fiance are kind of in a predicament where she's in the process of transferring schools from CUNY College to a four-year university. And she's applied to various safety schools and like a target school, which is like one of her dream schools. And we're waiting.
We've heard back from safety schools that she can get into. she's still waiting on. And our issue is she lives in a home where her father is very against school. He has a very traditional mindset. And he's essentially telling her and has threatened her that if she doesn't go to her target school or if she doesn't get in, she can't go to school anymore.
That's interesting. Okay. How old is she?
We're both 21.
And he's paying for school? He's the moneybags? Yes.
No, she's been doing it all on herself.
Okay, well, he has no say in that. That's easy. Literally, he has no say. I'm not sure. I get the reason for the threat, but that doesn't make us have to move up the wedding date yet. I haven't heard any evidence for that. So that's one reason, right? That's the primary reason to move it up. All right, what was the actual date of the wedding that we were planning on before this phone call?
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Chapter 5: What are the benefits of credit unions over traditional banks?
We're talking about this probably from the time you hit freshman year of, hey, college is coming in four years. Your mother and I are saving. We don't know what school you're going to end up with, but just know if there's a deficit, you're going to be on the line for it. That's right. And even if there's not, you're applying for scholarships.
I expect, you know, depending, there's going to be some work aspects on your end. And so really clearly setting that guideline, I think is the most important part.
I think so. And so just a quick review here. I would put the 35 in each kid's account today. 35 here, 35 there. Yes. And I talk with your SmartVestor Pro, the person you're using, and go, let's play this out. Let's do our best calculator guess or amortize this, whatever you want to call it. And now we can look back and go, okay, based on this new 35 and 35 in each kid's account,
Um, what's that going to end up being? And I believe it's going to take one of the kids to 120 and I think the other one 90 something or somewhere in that range.
So I mean, it's $72,000 for the 10 year spread for the six year old and the nine year old if they keep putting in what they've been putting in.
Yeah. So you got options, but I would honor grandma's request. I wouldn't take her money and put it towards the mortgage. I feel gross about that.
I agree. Especially it would be one thing if you already fully had education covered, but with your, what you've said you want to pay, you don't have it covered. So I would put it towards, I agree with Ken. Let's get that mass summon there right now. Let that start building. I know that's right. And yeah, you're right, Ken. Yes.
Wow. Somebody write it down. Ken is right. I had to call my wife and daughter immediately and tell them. Hang on, I'll be wrong later.
Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order?
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Chapter 6: When is the right time to get married?
You know what I'm saying? Like, but that's what I'm saying. You're looking for inspiration. You're looking, it's not making you feel bad or less than, it's making you feel great.
Yes, of course.
Anything's possible. Then there's the comparison. That's the bad side. That's, hey. Everybody's doing this. Why can't I? Am I bad compared to this? Is this better? And I'm not meeting the bar. And so really knowing how to shift that from the negative comparison to the positive comparison. And I think, Ken, the way that you shift that is by asking the right questions.
And now I'm going into your lane because you're the question asker.
Thank you.
But when you're looking at what other people are doing and you're just internalizing it, saying, oh, how did they get that? Should I be doing that? No, take it outside and go, hey, you know, how did you make that business plan?
Where do I want to be financially in 30 years? Let's start there. Yes. What do I want to bless my family with financially?
Yes.
Where do I want to live financially? Yes. All the things. You start asking those questions, that becomes very personal to your point. And now this young man, Declan, with the cool name, goes, all right, this is the vision for my life. And I'm going to have to do this, this, this, and this to fund that. And you can ask those people.
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