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Other people's money stuff

July 31st, 2016 at 07:56 pm

One interesting thing that a lot of us seem to deal with is unexpected or unwelcome visibility into other people's money lives; their priorities, decisions, mistakes sometimes come through loud and clear.

AS's mom asked for money again a couple months ago (I think I wrote about it here), and as part of the condition of giving it to her, AS asked to get some detailed info so we could see why she was struggling and whether she had a plan that would work.

She sent us a confusing muddle of emails where often the important piece of info would be hidden within rambling that wasn't helpful. Some attachments as well. I was rather shocked to see that she was not bringing in very much; just over $2000 a month, I believe, from disability and military spouse benefits from her ex. Her rent alone is over $1000 per month, plus she has debt payments, medical expenses and just general living expenses. She has no savings and owes about $9000. Several things were delinquent, including electricity and cable. She lives in a moderately HCOL area (DC metro part of Virginia).

It was a pretty bleak picture. We recommended bankruptcy, and I was starting to think we'd need to help with housing somehow. Someone on here (Joan of the Arch?) had mentioned considering buying some relatives a condo, and that seemed like something we could consider. Rather than helping with rent, we could just forgive rent as long as we knew we could afford the payments on our own, and we'd have something to show for it at the end (the condo). Of course we don't have money for a down payment and wouldn't want to risk that hit to our budget at this point, but I started considering it as a down-the-road contingency plan.

Well, we heard back that she has the bankruptcy in beginning stages. She also thinks next year she'll qualify for housing Section 8, as she's been on the waiting list about 5 years and it usually takes 6. It could bring her monthly rent responsibility down to about $200.

With most of her debt discharged and her housing expenses cut by 80%, suddenly her situation wouldn't seem as bleak. So we're in a holding pattern. She might need some bridge loans to get through the next year, but hopefully not. And if she can pull off these two things, we may be off the hook. Fingers crossed!

***

My friend who I helped with her finances seems to be stuck in a holding pattern of her own. She hasn't slipped back into NSF territory, but neither has she decreased her CC debt very much in the past couple years. One thing is that she herself brings in about what AS's mom does, and has a bit more debt than $9K, so there's not a big margin for error. But the other is that she can't seem to say no to any invitation (or mention) of a show, concert, restaurant or anything. If she could tame her social life for a year, she could probably pay down that debt and then have more flexibility to go to the shows and everything. Her debt payments are about 25% of her income, almost as much as her rent!

I hope she does buckle down at some point. She is trying, but she has this disconnect between intention and action. I see the same thing when she tries to avoid gluten, or when she's on a diet. Her hand just goes toward food and it finds its way to her mouth almost like she doesn't realize she's doing it.

I'm happy to help however I can, but it's one of those things people have to decide for themselves. Credit allows so many untenable situations to float along for years, even for most of one's life. Fingers crossed she will sort it out in time for retirement someday.

***

Our downstairs neighbors are pretty much our closest friends as well. I love just about everything about them -- except their bizarre financial behavior. It's bothered me for years, but now that we live together, certain things nag at me.

For one thing, NJ (the main one we talk to due to his husband working all the time) let AS know sometime last year that he hadn't filed his taxes in several years. He left law to become a freelance photographer, and after a while found a very lucrative niche. Basically he's able to book several big shoots and then coast on that income for a few months.

The first return he didn't file was right after leaving law, and typically he would get a huge tax refund. So he thinks that the money the IRS has from that year will cover most of the other years.

Which may be true, but he won't find out until he files all those years. And the more years he doesn't file -- and doesn't send in any estimated tax -- the less likely that is. If he makes about what AS makes, that money from his unclaimed refund may cover one or two years at best.

So he had a bunch of money from a big photo shoot, and he was going to use it to remodel their kitchen. Then he decided instead to work on a subscription website that could pull in a lot of passive income. His business partners flaked, and so he still had this chunk of money sitting there.

Plus, his husband just got a second (part-time) job that pulls in a ton more money.

So this would be a great time to do all his taxes, right? Wrong. First, he gave us another $4K toward buying their share of the house ... which is great, except he hasn't finished the paperwork that would make this official. And I'm not promising anything until I see the paperwork and get it vetted by another lawyer.

Second, he buys a used car for about $7,000. I was kind of pissed because they were carless when we bought together and seemed committed to that lifestyle. We were even thinking of turning the garage into a tiny home for my other friend (from section 2 above) because none of us had any plans to have a car. Then boom, out of the blue, he buys a car. Now we have to accommodate a car that I don't believe they really need. (His main reason was to be able to take his dog to the dog park because there were none nearby. When questioned, he said the nearest one is about a mile away. Wouldn't the dog be able to walk a mile each way? I don't know. My kids walk minimum half a mile each day, and can walk a lot more than that if necessary.)

But the main reason I was pissed is because he STILL hasn't handled his taxes; I feel like both of those big outlays of cash were partly to avoid that further. And I feel like I'm stuck in this place where I'm worried about that, and wanting the documents for the house to be drawn up but wondering if I will need to say I can't go into this agreement with you knowing you might be evading taxes and digging a big hole for yourself. But at the same time, until they start to buy their share of the house, I'm paying $150-$160 per month for water/sewer/gas, and not feeling like I can ask them to pay their share (2 fifths) until/unless they begin to co-own the place.

I feel like I can't talk too much about the home ownership thing until I know he's handled his taxes, but I'm not really in a place where I can make him do his taxes either. I've offered to help, I've given him the name of my tax guy; I don't think I should push it anymore since ultimately he's an adult. But waiting on the home ownership thing is making me feel a bit taken advantage of from the utilities standpoint among other things. I'm keeping track of what we pay into the house and what they pay into the house, so I'm hoping they would want to pay to make up for the utilities paid, since they've always declared their intention (and we've always agreed to it) to purchase a share of the house.

***

Petty, petty, petty. That's how I feel. I just try to deal with it in my own head, but I feel like this is a fairly safe place to air said petty thoughts. This post may self-destruct; I'm not sure.

8 Responses to “Other people's money stuff”

  1. VS_ozgirl Says:

    I have had the unfortunate experience of our finances taking a hit due to another person who is super awful with money. He is a friend of B's and B was working for him and for nine months any time he paid B it would only be half of what B was owed. We lost about $10k playing catch up. Eventually B got work for a better paying company and working with this guy was history. Said guy has already been bankrupted and opened up business number 2 in his wife's name. Doesn't pay his bills yet leases an Audi four wheel drive in his wife's name. So I understand people like this annoying people like us who take care of our finances and always tries to do the right thing. Pretty much the only thing we can do is offer help or try to lead by example without seeming like we are preaching.

  2. MonkeyMama Says:

    You only have 3 years to claim a tax refund so I expect that won't help your neighbor at this point. What a mess he has gotten himself into.

  3. snafu Says:

    I suspect your friend and AS's mom are unaware of how much of their payments goes to interest. Their current income is still paying for stuff bought 3 years ago! Is there a way for you and AS to advocate for her mom to get her [senior's] aid and figure out how far she is from placement for section eight housing?

    Tenant...not filing tax leaves this guy vulnerable to penalties and fees for breaking the law! I suggest you pleasantly explain in person and send an amiable tone email as paper trail, changes to terms of agreement to include 2/5 utilities and garage rental. These will change again when the share agreement finalizes in the future.

  4. ceejay74 Says:

    Thanks so much guys--MM, I used that revelation as a reason to send him a message about his taxes. I realize at some point my pressing the point will be unwelcome (if it isn't already) but I at least have to try. I want to do this house agreement, but I cannot do it in good faith if he hasn't cleaned up this mess.

    snafu, luckily AS's mom worked a long time in social services, so she's helped others navigate the system and can now do it for herself. That's how she knew that it will likely be next year that she qualifies for Section 8.

    As for my friend, I set up her debt spreadsheet to show her what percent of her payments goes to interest. I think I've done everything I can without, again, getting to the point where my input is unwelcome.

    It's so hard when it's people you love very much, who have tons of other good qualities or reasons they are important to you. I've made tons of financial mistakes and don't judge people solely on that, but it's frustrating when I feel like I could just dig in there and fix everything but know it's not my place to do so. I appreciate everyone's feedback and welcome any more.

  5. MonkeyMama Says:

    Yeah, non-payers isn't an area I really have any experience in, so I did google the 3-year thing to be sure. I do know that if anyone asks me if they can pay their taxes later (if they file but can't pay) I always tell them they'd be better off putting it all on a high-interest credit card. The penalties for not paying your taxes on time are massive. I am sure the non-filing penalties just compound that. Plus interest on top of that. Plus any state penalties and interest too.

    I am guessing that he has a substantial tax debt. Ignoring it will just make it worse.

    Here is a good article:

    http://taxation.lawyers.com/if-you-havent-filed-your-taxes-i...

  6. Bluebird Says:

    I would not sell a portion of the house. Even if your friend files the taxes, how do you know it won't happen again in the future when he is an owner of the property? The IRS can probably place a lien on his share of the house and then you would be stuck dealing with the ramifications of that situation. It could get really ugly and this is your home where you are raising your family. I would keep the downstairs as an income producing property.

  7. ceejay74 Says:

    I hadn't even thought of that -- or really known that was something that could happen! Thanks for the warning. I believe the agreement he's drawing up is the sort where they won't own any of it until they pay in full, so if something happened in the next 20-25 years, their name wouldn't be on the deed. That's a lot of time to get themselves straightened out, but it's still concerning to make that kind of commitment not knowing if they'll still be doing this kind of thing that puts our home at risk.

    I think some frank discussions are in order. Hopefully he'll get back to me on the message I sent regarding the 3-year limit on federal tax refunds and I can piggyback onto that with a discussion about this.

  8. Bluebird Says:

    One other point I wanted to mention, thinking about your long term situation and knowing you may move to the UK later...if you owned the entire property it would be more desirable to an investor if you choose to sell. Two unit/multi-unit properties are in demand. I think selling half of a duplex would limit your potential buyers and the value.

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