Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
I recently had an online friend visit me and my partner for the first time in real life. We spent the weekend doing various activities and eating at restaurants. By the end of the weekend, it had become clear to me that she wasn’t someone whose company I particularly enjoyed and I didn’t want to deepen or really even continue the friendship. The issue I need help with is that I spent roughly $1,000 entertaining her over the course of four days, which I didn’t even enjoy. This is a LOT of money for me. She paid for one meal (despite her talking frequently about how well she was doing financially). Is there a way I can recoup some of these costs? What would be a polite and non-confrontational way to ask her to contribute to the things she participated in? Or should I just drop it and cut my losses?
—Down and Out
Dear Down and Out,
Before your online friend came down, did you both discuss who would pay for what? It’s not out of the ordinary to treat someone to a meal or activities if they spent their own money coming to see you. What’s not normal is spending $1,000 over the course of four days and never discussing how to split the bill. She might not be as loaded as you think, which could explain why she was OK with letting you cover her trip.
Your approach to getting reimbursed is dependent on what was said during the transaction. Did she offer to help, and you told her to send you money later? Did you tell her not to worry about it? Or, did she not offer to help at all, and you swiped your card anyway? For the first two scenarios, it’s pretty cut and dry. The last one not so much.
If she offered to pay you back, thank her for visiting and share the amount that she owes you with details on how to transfer the money to you, along with asking when you should expect the payment. If you told her not to worry about it, ask her if it’s too late to take her up on her offer to chip in, then ask how much she can contribute toward the amount of money dropped over the weekend. (Sure, this might be awkward—but you don’t seem keen on developing the friendship anyway!) If neither of you mentioned payment, tell her you had a great weekend, and you’re reaching out because you just realized you had never discussed how you would be splitting the bill. Yes, it will be out of the blue and just as uncomfortable for both you and her. Hopefully, she’ll agree and have the money to pay you back. Moving forward, always discuss who owes what before picking up the tab.
Dear Pay Dirt,
I found out I will be getting an overpayment refund of $5,700. My initial idea was to put it in my savings account, which is currently at $7,500, and it would put me over my $10,000 savings goal. But, I also am taking on an additional $130/month in house expenses due to a situation change and have about $1,500 in medical debt. My second plan was to pay off a high-interest credit card with a $3,700 balance, pay the medical debt, and put what is left in savings. My boyfriend suggested replacing my 20-plus-year-old roof. I had an inspection and YIKES. But, the roof will cost $7,000. I can afford to replace the roof by only cutting into a little of my savings, but paying the extra house expenses and medical bills each month will make it hard for me to put much in savings each month. If I pay off the credit card and medical bills, I can keep saving at the same rate and if work picks up we should be getting some bonuses. That will let me replace my roof in six to 12 months. I know my boyfriend is going to say replace the roof NOW, but after a life of financial struggle, I want to keep my savings account. It has already bailed me out several times and the thought of taking so much out again makes me very anxious.
—Can Only Spend the Refund Once
Dear Can Only Spend The Refund Once,
I love the idea of you using your refund to pay off your credit cards and the medical debt you owe. Before paying the medical bills, I would call your providers to see if they’ll offer a reduced bill. Once, I owed an ambulance company $2,000, and they agreed to an arrangement of $500 instead. Your provider might not offer that extreme of a discount but they may offer a hundred or two off if you can pay in full when you call.
After paying off your outstanding balances, put the rest of your refund toward your savings account. You’ve mentioned that your roof is in bad shape—if you pay off your bills, you can save for it with the space you’ve cleared up in your budget. My fear is that you’ll need to have it done sooner rather than later, but in that case, your emergency fund can cover it if need be. So continue saving but don’t feel bad if you need to use the money you have already saved to fix your roof. After all, that’s the purpose of an emergency fund.
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Dear Pay Dirt,
I’m a college student in a pretty fortunate financial position, but I don’t have a lot of insight into what I should do with the money I’ve earned so far. My parents are funding my tuition, so I’m lucky that I will graduate debt free in two years. I’ve worked a summer job for a couple of years, and I have about $20,000 in savings with about half of that invested in a mutual fund. I know I’m in a very stable position right now, given I don’t have any major draws on my savings, but how can I increase the growth on this over a long period of time?
—Not a Finance Major
Dear Not A Finance Major,
College is the perfect time to get started with investing in your future. The younger you are, the more you can take advantage of compound interest, which is the “interest on interest” you earn. I reached out to Steven Keys from the personal finance blog Trip Of A Lifestyle for some added expertise on investing. “One of the biggest factors with investing is compound growth,” Keys concurred.
According to a compound interest calculator, if you make a $500 initial deposit into a brokerage account with an estimated return of 8 percent, and contributed an additional $100 a month into the account with an estimated average 8 percent return over 45 years, you would end up with about $479,766. If you make the same investment with a return over 35 years instead, you’d have about $214,172.
Keys advises that once you have an emergency fund secured in an FDIC-insured account, feel free to dump all excess income into investments, but make sure you understand the risks first. “A total stock market index fund such as VT or VTI is an excellent choice for young people,” Keys said. “You have more potential for higher returns in the long run for money that isn’t intended for access for at least 10 years.” Stock market index funds also carry lower fees compared to actively managed mutual funds. T. Rowe Price, Fidelity and Vanguard are all great places to start your investing journey.
Dear Pay Dirt,
I am 70 years old and have a daughter in her 40s. She has asked me for money for at least 15 years. Sometimes she pays it back. Sometimes she doesn’t. I am retired on a fixed income. I have enough for my needs and sometimes hers. I have always helped her and she always promises to pay me back, but she doesn’t always follow through. After requesting more money, I told her I was concerned about the amount she has borrowed. She got angry and isn’t speaking to me. What am I to do?
—Not a Bank
Dear Not a Bank,
Your daughter is angry because she is being held accountable for her lack of money management. As her mom, you’re doing it out of a place of love, even if she doesn’t see it. One day you will be gone, and then what will she do? I acknowledge we all have different circumstances that affect our finances, but she’s in her 40s. She needs to get it together and stop living off of her mother, who survives on a fixed income.
As much as it may hurt that she’s not speaking to you, do not lend her any more money. If she reaches back out, do not bring up the subject. If she brings it up, let her know that you are done lending her cash, and that she needs to figure her finances out on her own. You know in your heart that you’ve taken care of her, now it’s time she takes care of you by honoring your bank account.
—Athena
Classic Prudie
I’ve been dating my boyfriend for about nine months now. He’s very caring and supportive, and we enjoy spending time together. We’ve met each other’s families and have talked about moving in and getting married in the future. There’s one aspect of our relationship that has been consistently bothering me: My boyfriend tends to succumb to symptoms of the common cold (a runny nose, congestion, fatigue) about once a month.
