Dear Mrs. Riches:
It was my wife's idea to buy our first house this spring, and I agreed. But now I'm finding myself trotted out to houses that either (a) are flat-out too expensive or (b) will break our budget once we remodel enough to make them livable. She regularly says things like, "It has so much potential," which to me translates to too much work and too much money. Can you help me talk some sense into her?
-- In the Money Pits
Dear Money Pit,
I've said it before: ground rules, ground rules, ground rules. You and your wife need to establish some if you're going to (a) successfully purchase a home this spring and (b) preserve marital harmony. A good approach is to base your ground rules on objective criteria -- say, the advice of a fee-only planner who can assess your financial health and determine how much house (repairs included) you can afford. Don't simply rely on what the mortgage brokers approve you to borrow, or you might find yourselves eating ramen noodles for the next five years.
Once you have a working budget, it's time to trot out the self-discipline. Tell your real estate agent that you want to see homes only within the affordable range. Riches just beyond reach can be disheartening, and the push-pull between you and your wife will only get more pronounced.
Factoring in the repairs and remodeling is important. But because this is largely a gray area (separating needs from wants is tricky business), the two of you will have to rely on two big relationship C's: communication and compromise. Rank the importance of each repair or improvement, determine the cost, pull out your common sense (repairing a leaky roof would obviously trump a new breakfast bar), and begin talking.
Work hard for win-win solutions. At the end of the day, a new home is much more homey if the two people in it are getting along.
Dear Mrs. Riches:
My husband and I are bickering over how to spend a recent windfall of $25,000 that came our way. He wants to put in a luxury pool; I want to refinish the basement. I argue that refinished basements are more practical; he says pools are more fun. Who wins?
-- The Basement Babe
Dear Basement Babe,
It's hard to tell from your letter whether either plan is a good idea. So ask yourselves these questions before you begin arguing the finer points of pools and basements: How much "bad" debt do we have? Have we saved enough for retirement? Do we have to pay for anyone's college education? Do we have adequate life and health insurance? Do we have an emergency fund that can cover at least three to six months of bills?
While not as "sexy" as a luxury item you can enjoy right now, your financial prudence could mean the difference between golden years and tight times.
If I play along and assume you have all of your financial bases covered, who wins? Even then it depends on perspective. If you look at your home as an investment, then the basement remodel "wins" because it will garner the highest resale value. If this is a family homestead you plan to keep until you die and your whole family swims like a school of fish, then the pool may be a really wonderful enhancement to your life. Perhaps deciding whether it's fun or practicality that's most important in your phase of life would be a good first step. Happy wrangling!
For past Foolish advice from Mrs. Riches, check out these stories:
- Ask Mrs. Riches: Home Sweet Home
- Ask Mrs. Riches: Little Green Lies
- Ask Mrs. Riches: For Love or Money
And for more information on making smart choices about where you live, visit our Home Center.
Fool contributor Elizabeth Brokamp is a licensed professional counselor who regularly talks money with her honey, Robert Brokamp, editor of The Motley Fool's Rule Your Retirement newsletter. She can be reached by email if you have a question about money and relationships.