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People think very irrationally when it comes to money and who "deserves" what. Does it matter that they use some voodoo magic system, as long as it works for them and they hit responsible savings goals?
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Apr 16, 2015 22:33
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I think many people ITT who are advocating against separate finances are missing the salient features of the percentage based approach. It has the same incentives as the joint model (maximize overall income to maximize couple budget) but also allows for some flexibility in terms of personal spending. Same as a fun budget but more formal.
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Apr 16, 2015 23:36
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Evil Robot posted:I think many people ITT who are advocating against separate finances are missing the salient features of the percentage based approach. It has the same incentives as the joint model (maximize overall income to maximize couple budget) but also allows for some flexibility in terms of personal spending. Same as a fun budget but more formal. This is good because it can save a bunch of lovely arguments. It is also an easy mental separation as well which can help control spending. I was talking with a couple and my friend's wife is going to start up full time work. She'd said that she wants a better house than their current one. I pointed one way they could do that is if her husband keeps working and they maintain the same lifestyle she could save the majority of her income for a deposit. While it's not a real separation it's a way of thinking about increased income going directly to savings instead of just spending it.
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Apr 17, 2015 01:29
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Radbot posted:I'm referring to employer provided defined benefit pensions. How can those be poo poo, unless it's specifically used as a reason to pay you less than you should be paid? Pretty much that. I have both a defined benefit pension and a defined contribution plan. Woop.
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Apr 17, 2015 03:58
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She works for the uk government so its a final salary pension. Contributions are fixed as are payouts. Its something like 8% contributions and 1/60th? Of salary for each year worked. Its pretty boss. As for why we split. Its easier, we have the same goals but im way more interested in investing and watching accounts go up and working out weather to overpay the mortgage or put more into pensions vs investing into what etc and shes more focused on save for a year or two get a holiday reward or a new boiler or convert to attic and so on. We both get to focus on the bits we like while hitting our overall joint goals. If there wad a huge income diaparity then maybe this wouldnt work but the income splits work well with our budgeting splits so its easy to say you cover that ill do this and we have a chat about how its going every few months.
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Apr 17, 2015 08:57
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This reaction to keeping (part of) the finances separate in a household interest me. Maybe it's interesting for others if I share our perspective. We've been living together for nine years now to put things into perspective. Me and me partner have shared and private bank accounts. Shared accounts are accounts we use for shared expenses. We're not married, but have a 'samenlevingscontract', a Dutch living arrangement recognized by public organizations which is signed into force at a notary instead of city hall (as is marriage). Two of the things we defined within is possession of assets and contributions to costs within the household. We specifically chose to keep certain assets separate, defined ownership of the house (not 50/50) and contribute in ratio of our income. Our incomes are within a 20% range of each other. Net worth difference is more significant. Now, why go through all that trouble? First of all, as finances need periodic revisionist I don't see it as bothersome at all. All our bill payments are planned in advance. Grocery shopping is the same as otherwise. Our combined accounts get fed appropriately monthly from our private accounts. Everything on shared accounts is the same as with couples sharing everything. Secondly, there is never any discussion on private purchases since we do those from our private accounts and shared costs are already accounted from. It may help in this regard that we do not live from paycheck to paycheck. Lastly, we've made this agreement in good faith while we both expect to spend the foreseeable future with each other. At the moment we both expect this to be the rest of our lives. However, we think it would be naive to accept this as a certainty. As it is now, it is very clear what is owned by who. This prevent arguing over this division when understandings between each other are worse.
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Apr 17, 2015 18:05
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To me, the most interesting part is when it comes to retirement. Are you both going to retire independently and just pay into the shared account out of your individual retirement accounts? What about trying to decide how to spend retirement? What if one person saves $2 million for example and the other saves $500k. While you could most likely just go on living your normal lives and just stop working but what if the $2M person wants to travel extensively or buy a beach house but the $500k partner can't afford it? I guess the answer probably is that these types of goals/plans are discussed periodically over the course of your lives and a general consensus/agreement is reached. In that case it wouldn't be much different than retirement goals for couples with combined incomes. For me it seems a lot easier for people's goals to diverge over time if finances are separate but good communication should prevent that I suppose.
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Apr 17, 2015 18:21
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Saint Fu posted:While you could most likely just go on living your normal lives and just stop working but what if the $2M person wants to travel extensively or buy a beach house but the $500k partner can't afford it? What if they pooled the money and had $2.5M, one wants to spend $500k on a beach house, and one wants to put it a trust fund for their grand kids. Either way it comes down to talking about your goals and coming to an agreement, someone not getting what they want, or splitting up.
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Apr 17, 2015 18:56
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Zool posted:What if they pooled the money and had $2.5M, one wants to spend $500k on a beach house, and one wants to put it a trust fund for their grand kids. Either way it comes down to talking about your goals and coming to an agreement, someone not getting what they want, or splitting up. Except that in scenario 1, you've spent decades making large financial decisions from the perspective of it being "our money", and in scenario 2 you have spent decades spending "your" money on whatever you want. And clearly the person who saved the $2 million dollars in that scenario would have more input into the decision if you are splitting money, because if they didn't then in my opinion you aren't actually "splitting" money. Since I kind of started the discussion, I'll summarize what I've gotten from it. I posted two lists of specific issues that I saw as negatives for the "splitting it" side, and asked what benefits people get that I'm not seeing. No one really disputed any of the things I listed, except to say that splitting the money by income % is somewhat more fair (although it clearly must be somewhat unfair in some categories of spending still, or else you aren't really "splitting" or you happen to have identical incomes right now). In addition, people said they would abandon the system very quickly if any issues came up, such as a job loss or medical impairment. The main reason that people seem to do it is because it's what they did when they dated, and it just kind of carried over into marriage. Many people have stated that "it works for them, so who cares?" which is certainly true. I guess my response to that would be "If something else works better for all the reasons listed previously, why wouldn't you be open to change?"
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Apr 17, 2015 19:17
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Droo posted:The main reason that people seem to do it is because it's what they did when they dated, and it just kind of carried over into marriage. Many people have stated that "it works for them, so who cares?" which is certainly true. I guess my response to that would be "If something else works better for all the reasons listed previously, why wouldn't you be open to change?" I think that's what they say is the main reason. It's been mentioned here a few times but I think that at least one partner wanting to retain sole control over what they've earned is the real reason. That desire for control can be based on valid points, perhaps because they don't believe most marriages last, or that they think their partner doesn't spend money wisely (or vice versa, they think their partner will judge them for how they spend money), or that they know someone personally who got financially screwed by a spouse. To some people the risk of combining finances isn't worth the change.
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Apr 17, 2015 19:47
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We're still a long ways off from being FI so there's a strong chance this will change, but what I and my wife have discussed that we'll do once we're FI is that since our FI money should be able to cover all the basic life expenses, at that point any extra money we make from choosing to work will be under the sole control of the person who made the money. We'll probably have to throw some caveats in there (e.g. if you're only able to go to a job at a certain time because the other spouse watches the kids right then, would need to account for that), but I like the general idea of it. It probably favors me since my chosen career is much higher-paying overall (programming vs music performance), but on the other hand it's a lot easier to split music up into little jobs (teaching lessons and performance gigs) than programming.
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Apr 17, 2015 19:55
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Zool posted:It is, in a way, used to lower your pay. It is a part of your total compensation package, if you would have done a better job investing that money yourself, you are worse off. If you would have blown it on something else, you're probably better off. I don't buy this. By the same logic, 401(k)s should raise people's pay, and that didn't happen. As a business owner, *why* would you take all of the money you paid for a pension and slot it into 401(k)s if you could pocket the majority of that money and get away with it (which is statistically exactly what happened)? Besides, pension funds are insured by the Feds, are they not?
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Apr 17, 2015 20:55
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Radbot posted:I don't buy this. By the same logic, 401(k)s should raise people's pay, and that didn't happen. As a business owner, *why* would you take all of the money you paid for a pension and slot it into 401(k)s if you could pocket the majority of that money and get away with it (which is statistically exactly what happened)? They are insured, but look at how it played out for United. Benefits were cut significantly. If you were to hold compensation constant while eliminating a pension plan, employees would get a raise. That many employers used a change in the way retirement savings worked to obscure a cut in compensation doesn't change that.
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Apr 17, 2015 22:20
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Employers don't like pension funds because it turns out there are a ton of problems that make pension funds way more expensive than people thought they would be when they were initially created, and large companies ended up paying way more to keep them funded than they ever anticipated. Some of these problems: 1. Average lifespan keeps getting longer 2. A 30+ year decline in interest rates makes the funding requirements MUCH higher now than they would have been in the 70's and 80's 3. Pension managers making poor investment decisions (bad timing, high fees, etc) end up adding to the annual funding requirement I think the theory of a pension fund was a very good idea ... in theory a large company is better equipped to manage a retirement portfolio than individual people, the risk is spread out across a large pool (like an annuity with less cost), access to investments might be improved, etc. However, I think a combination of bad management, falling interest rates, governments "borrowing" against public pension funds, and the generally massive variable costs to fund them were all legitimate reasons that they fell out of favor for most companies. It will certainly be interesting to see what happens when the generation that mostly had no pension funds starts retiring in a couple decades. I was talking to a friend about retirement stuff one time, and they basically said that no one they knew had any retirement savings, so obviously "the government will have to do something". I was like yeah.... it's called social security? I think a lot of people are going to have a crappy retirement.
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Apr 17, 2015 22:34
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It's going to happen sooner than a couple decades, I'd say a decade at the max and we're going to see huge swaths of formerly affluent Boomers eating poo poo during retirement.
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Apr 17, 2015 23:09
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Or scrambling to keep their position in the workplace making life hell for every level workers.
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Apr 17, 2015 23:13
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Radbot posted:It's going to happen sooner than a couple decades, I'd say a decade at the max and we're going to see huge swaths of formerly affluent Boomers eating poo poo during retirement. MrKatharsis posted:Or scrambling to keep their position in the workplace making life hell for every level workers.
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Apr 17, 2015 23:21
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MrKatharsis posted:Or scrambling to keep their position in the workplace making life hell for every level workers. On the flip side all of the workers who are past retirement age will still be spending money which should contribute to creating more jobs. People on low fixed retirement incomes tend not to contribute a lot of spending, even though they technically free up a job. I'm not sure when peak retirement age population will hit the US but it will happen in NZ in about 28-30 years. So I'm expecting government retirement benefits to be slashed heavily right before I retire. So there's going to be a lot of people still working well past retirement age. It's all the baby boomer kids that are going to be hit really hard.
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Apr 18, 2015 01:25
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Droo posted:Employers don't like pension funds because it turns out there are a ton of problems that make pension funds way more expensive than people thought they would be when they were initially created, and large companies ended up paying way more to keep them funded than they ever anticipated. Some of these problems: Most mutual fund managers are terrible and I would hate being compelled to rely upon the luck of that draw as my retirement plan. Certainly a pension fund has it's advantages but there's so much that can go wrong. It seems sort of like holding your savings in company stock - job loss and pension fuckery are going to be correlated. If anything I'm relieved that I no longer have any reason to remain at a single company for long and can instead hop around, giving me additional rounds of salary negotiation. There are certainly disadvantages to the current system, but I've sworn to throw off the chains of feeling loyal to any employer , so for me a 401k match is a nice improvement.
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Apr 18, 2015 01:56
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Devian666 posted:On the flip side all of the workers who are past retirement age will still be spending money which should contribute to creating more jobs. People on low fixed retirement incomes tend not to contribute a lot of spending, even though they technically free up a job. NZ has a relatively friendly immigration policy though, doesn't it? I know that immigration (mostly undocumented) in the US is what's keeping our population levels healthy, Australia's also doing pretty OK there too. I dunno what your situation is now, but I wouldn't be surprised if the NZ government didn't start trying to tax overseas earnings more, given how many New Zealanders work abroad.
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Apr 18, 2015 02:10
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Immigration will prop things up a bit and keep the population growing. It will still be skewed towards an older population though, just something the nation has to deal with. There's retirement fund from a previous government that is growing at about 10% per year, and retirement accounts that most workers have now. They will lessen the blow on the government accounts. Taxing overseas earnings won't happen. People won't pay the tax (already an issue for student loans) and if there are too many financial barriers people will never return to the country. Skilled and educated workers with a decent net worth are the ones we want back to help the economy. Even if it did happen our income taxes are low enough that a tax certificate from most western countries would counter any claim (unless you are declaring in a tax haven or in Iran). I don't think we'd repeat the mistake that the US is making and ending up with a lot of people renouncing their citizenship. It only leads to short term gains.
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Apr 18, 2015 02:55
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As long as old people vote selfishly (not meant pejorativly there different debate) enmass there will be some provision for old age. The rest of us might get hosed but as the grey vote expands it becomes a political win to give oldies more money and political suicide to take it away.
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Apr 18, 2015 09:00
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Doing an MBA's really brought home how financial (in)dependence distorts people's incentives and emotions. A top tier 2-year MBA costs 200 grand including living expenses and potentially half a million once you include the opportunity cost of foregone salary. With most of the students leveraged to varying degrees, there's a lot of pressure to seek out high paying jobs regardless of their personal interest in the field. I honestly don't get the point of going back to school to get a job you hate.
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Apr 18, 2015 18:54
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shrike82 posted:Doing an MBA's really brought home how financial (in)dependence distorts people's incentives and emotions. A top tier 2-year MBA costs 200 grand including living expenses and potentially half a million once you include the opportunity cost of foregone salary. With most of the students leveraged to varying degrees, there's a lot of pressure to seek out high paying jobs regardless of their personal interest in the field. The answer is most people don't know they'll hate the job until they get it. Most people (including myself when I was in school) think high paying job in big city = exciting, challenging (in an interesting/fulfilling way), prestigious, respected. Then they get there and realize high paying job = stress, no life, insane hours, unrealistic expectations, sleep deprivation, unhealthy lifestyle, boredom, taxes and cost of living that make your high pre-tax compensation seem tiny. Swingline fucked around with this message at 19:22 on Apr 18, 2015 |
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Apr 18, 2015 19:18
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I was thinking more of the huge bullet of students that do the jump from consulting to IB or IB to consulting. It's like jumping from the frying pan into the fire. I mean we're going into summer internships and all the kids going into IB are fatalistic about the death march they'll be undertaking this summer.
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Apr 19, 2015 08:21
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Droo posted:Except that in scenario 1, you've spent decades making large financial decisions from the perspective of it being "our money", and in scenario 2 you have spent decades spending "your" money on whatever you want. And clearly the person who saved the $2 million dollars in that scenario would have more input into the decision if you are splitting money, because if they didn't then in my opinion you aren't actually "splitting" money. I think you misunderstand splitting by percentage. A percentage of all income that comes in is considered communal (your shared system is this with the percentage set at 100%) and this can be allocated towards emergencies, retirement, houses, savings, bills, etc. Retirement can be a shared or split goal, depends on the couple. Emergency fund ("any issues came up") should probably be a shared goal and thus money should be flowing in from both partners. A few good reasons to do split accounting for at least some money: * Keep separate fun money for each partner * Mental accounting for saving for individual goals (e.g. he keeps working to save for deposit, she pays for living expenses) * Keep pre-marital assets separate so there are no arguments in the case of divorce * Pre-nup because of large wealth/income disparity. Evil Robot fucked around with this message at 00:04 on Apr 22, 2015 |
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Apr 22, 2015 00:01
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I think it's probably far more important that you marry someone with similar life goals in the first place. If you aren't going in the same direction then it's going to breed hostility if one person doesn't care about early retirement and wants to have nice things and lots of travel experiences, and the other wants to be frugal and life a much more simple lifestyle. Have these conversations early and regularly if you want to stay happily married. I'm lucky that I met a woman who generally agrees with me in regards to money matters. Not that we haven't had our disagreements or failures from time to time, but we don't see the point in splitting up the money we make. It's easier for us to put it into the same bucket, but I can understand some people have success doing it their own way. It seems like a lot of extra math and work to divvy up "yours" and "mine" when, in reality, it's "ours."
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Apr 23, 2015 15:46
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Evil Robot posted:[Excellent explanation] I would like to add protection, during marriage, of assets owned by one partner from bankruptcy of the other partner to the list. This might be specific to the Netherlands however.
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Apr 23, 2015 17:44
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Nocheez posted:I think it's probably far more important that you marry someone with similar life goals in the first place. If you aren't going in the same direction then it's going to breed hostility if one person doesn't care about early retirement and wants to have nice things and lots of travel experiences, and the other wants to be frugal and life a much more simple lifestyle. I feel the same way. The fact that that we both are pretty opposed to conspicuous consumption, luxury for luxury's sake, etc...I was going to say you can't put a price on that, but you can. The price is 20+ years of having to work a job under someone else.
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Apr 23, 2015 19:08
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pig slut lisa posted:I feel the same way. The fact that that we both are pretty opposed to conspicuous consumption, luxury for luxury's sake, etc...I was going to say you can't put a price on that, but you can. The price is 20+ years of having to work a job under someone else. This doesn't seem to mesh with your My Wife Wants a Mega Honeymoon thread at all.
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Apr 23, 2015 19:10
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GoGoGadgetChris posted:This doesn't seem to mesh with your My Wife Wants a Mega Honeymoon thread at all. Yeah, it's always amusing to get actual insight into people's lives after reading their posts here.
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Apr 23, 2015 19:14
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Nocheez posted:It's easier for us to put it into the same bucket In reality, our split is just a continuation of the way we did it when we lived together for about 3 years. When we first got married, assuming it was the way you were "supposed" to do things we actually created a joint account with the intent of joining finances, but never actually got around to it. We ended up closing that account later when some fraudulent charges were put on its debit card (despite literally never using it for anything but withdrawing $60 out of that bank's ATM once). If something starts to not work with our split by percentage method, I don't think either of us would have a problem reassessing... No reason to force it just for the sake of it though. In my mind it is easier to not futz around with a system that has worked for over 15 years now 
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Apr 23, 2015 19:49
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pig slut lisa posted:The fact that that we both are pretty opposed to conspicuous consumption, luxury for luxury's sake, etc... I know, like all those morons that stay at expensive hotels because they saw it in a movie once.
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Apr 23, 2015 20:20
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GoGoGadgetChris posted:This doesn't seem to mesh with your My Wife Wants a Mega Honeymoon thread at all. excuse me, who is to say that a $5000 four night hotel stay financed by looting retirement savings is luxury for the sake of luxury?
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Apr 23, 2015 20:33
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BEHOLD: MY CAPE posted:excuse me, who is to say that a $5000 four night hotel stay financed by looting retirement savings is luxury for the sake of luxury? I'm pretty sure you said it. Right there. Just now.
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Apr 23, 2015 20:58
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GoGoGadgetChris posted:This doesn't seem to mesh with your My Wife Wants a Mega Honeymoon thread at all. that thread is a performance piece 
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Apr 23, 2015 23:12
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Fuuuuuckin' thought so, haha. I thought you'd lost your mind.
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Apr 23, 2015 23:23
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What does a really nice hotel room actually get you? Like, what's the benefit? I'm pretty content grabbing a six pack from the store and drinking in the common room in a hostel and sleeping relatively well in a dorm. I can't see how the experience would be like, 10-100x better if the dorm was just a really fancy room with a nice bathroom, so I imagine that there must be some other aspect to staying at a $1000/night hotel in order to justify the difference. Is there a difference? I've worked in a Radison suite hotel and it was a good 300-400 a night in downtown Halifax and it looked like people just used it to have nice little house parties or sleep after their day of doing business poo poo, which would be exactly the same in a place costing like a quarter of the price.
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Apr 23, 2015 23:32
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I am an admitted hotel whore and love sleeping in crisp clean sheets on a bed someone else made. Room service blueberry pancakes eaten while lying in those high thread count percale sheets is even better. The trick is having work pay for it, or amassing enough points so it's no cost to you.
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Apr 23, 2015 23:51
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tuyop posted:What does a really nice hotel room actually get you? Like, what's the benefit? Beats me. In truth, our upcoming trip will be spent primarily in AirBnBs for approximately $100 a night. We are doing what this guy astutely suggested and staying at a very nice (and pricey) traditional ryokan for two nights. But with that, we're getting top notch kaiseki breakfasts and dinners, a private bath in our room, and access to several other amazing baths in a highly secluded environment. It's our only splurgey lodging and meals on the trip, and also the most I will ever spend on a hotel room again in my life. But yeah, when we're in the cities we're not going to be much spending time in our lodgings. Airbnb is perfect because it's cheap, it's in non-hotel neighborhoods, we get access to laundry machines and kitchen gear, and (most exciting) we get bikes in the Tokyo one.
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Apr 23, 2015 23:59
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