Our finances are in a lot less of an emotional state at this time this year than last year, which is lovely. Talking regularly about money is so, so key to where we are with it.
From the outside, if you look at our cash flow, it now looks like we’ve philosophically combined money. But we haven’t. And it isn’t a black and white combined or not like so many people make it out to be.
My husband says there’s enough money to go around that it’s not worthwhile for either of us to stress about money so he’s happy to share <3
We still firmly believe that the person earning the money is the one earning the money and it isn’t by default shared with the other person. My husband, for example, has had a really kick-ass income year in 2018. He has been choosing to use that income to cover expenses for both of us in our current lifestyle and also to put towards our joint savings goals. I don’t, however, see it as half my income or that I’ve had a part in him earning this income. So many women (even educated, high-earning ones I am friends with) actively see their husband’s income as theirs because they’re married, which is not me. We have talked too about how once we are FI, then maybe he should keep some more of his income to himself, but he’s also said that by then, we will have been together for long enough that it won’t matter.
We do both now own the condo! Well, we signed documents saying we did months ago. We haven’t actually seen the new deed recorded with the county yet though. (It must have gone through because we have been getting so much new mortgage junk mail.) That means too, that we’re sharing the appreciation of the condo, which is a huge part of why my husband is sharing all of his income: 2017’s condo increase was about 25% of our net worth increase versus savings being 35%. This year, we’re forecasting the condo increase to be about 30% of our net worth increase and then savings about 45%.
We both feel really weird about the current financial arrangement. As you can see with the condo appreciation though, it doesn’t feel like there is a better option without shutting me out of the condo. The current setup feels more advantageous to me, but at the same time, there are many benefits my husband has from our financial situation:
- I bought this condo six years ago. Yes, he bought into it at full value as of the date we got married rather than my purchase price, but he didn’t pay me any interest.
- The condo appreciation over the last six years alone is responsible for a substantial portion of our current net worth. Had I not bought it when I did, we would have had to cover much of that portion with savings instead to buy it now.
- I paid off about 55% of the original mortgage before he started paying the mortgage last year. That means that our huge interest years are behind us on this mortgage. Even if we take 10 years to pay it off and the rate resets the worst it can each year, it’ll cost us at most $25,000 in interest over its remaining lifetime. If we had paid 3% interest for 30 years, that would have cost $150,000 in interest. But, we’ve already paid $25,000 in interest and will pay at most $50,000 total over at most 15 years.
- He lived here for two years rent free while we were dating, which saved him about $50,000 in rent.
- I saved for my retirement pretty aggressively in my twenties. To balance that out, we agreed that all of our retirement account funds are our own. Ideally, no one should touch those until our 60s anyway and I have about enough to cover current expenses at 60 already. Even if I never worked again, it would take him over 10 years to catch up to my retirement savings balance when we got married.
- The tax savings of my not working (versus my husband filing a Single tax return) at the moment covers 2/3 of “my” portion of the household budget and accounts for about 5-10% of our forecasted net worth increase this year, which brings the savings portion of the net worth increase down to basically exactly the condo increase.
- Lastly, my financial planning has had a large influence on my husband’s as well. This is evidenced by the fact that we have the same US vs international stock allocations and use the same index funds in our accounts.
We understand now how people say that it becomes difficult to measure how much each spouse financially contributed and why many don’t do it.
Even though it’s weird in the short-term, we also both recognize that in ten years, we likely won’t care much about these differences, but also, we have the same long-term goals:
- Be mortgage free by age 40. (end of 2027)
- Have enough saved for both of us to fully retire by age 40. (again, end of 2027)
- To be tax-efficient where possible.
- To increase our charitable donation strategy over time. (Currently at 2% of gross income!)
- To be able to financially support parents as needed without impacting our own goals. (We expect all of our parents to hopefully retire in the next ten years.)
YNAB has been a huge, positive change for us. We are both super respectful of what the other spends money on, which seems to be the hardest part about combining finances for many couples. We still like having the personal budget category groups though as it gives us each a bit more autonomy and even though we spend similar amounts, we spend them in different patterns, e.g. my husband spent more than half of his YTD personal spending in one of the months, whereas mine is more consistent month to month. This system has given us both similar levels of visibility into the overall spending and into how we allocate the money. We would both prefer to save more money each month, but we’re also accepting of it with our current financial situation and the level of non-salary income.