We React to Crazy Money Reddit Stories With Paula Pant

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2:00Just go to indeed.com slash personal finance right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash personal finance. Terms and conditions apply. Hiring Indeed is all you need. Unfortunately, put herself in the position where she got screwed. you know uh uncle is a jerk for putting his sister in a position to screw her over and son is being not compassionate buddy like it doesn't even make any sense whatsoever i mean this is just a crazy scenario that i think is honestly just one of those situations where she says she doesn't know what to do i think you got to break up with them is what you're gonna do that's clear the parents do not value her getting educated right you know they don't value her future prospects because and fundamentally what does that mean it means they don't value her being able to be an independent adult.

2:54All right. So Paula, welcome back to the personal finance podcast. Thank you. I'm excited to be here. So we're going to react to some crazy Reddit situations that we have found. And Paula, I can't wait to hear some of the reactions that you have to some of these, because some of these are absolutely wild and hilarious. And I know our audience has asked for a ton more of these coming up. So we're going to go through a bunch of these and we'll see what happens here. My friend thinks he's hot shit since he inherited his grandparents' home. It's a large house worth approximately a million dollars.

3:25He rents out several bedrooms to make up for the taxes because he can't afford the upkeep of the home on his own. He went to the club and introduced himself to a couple of girls as an investment advisor and took them back to his place to have a swim in the pool. He told the girls he's a millionaire and whatever. I told him it's cringe because he's not even a millionaire. just because his house is worth it. My friend laughed in my face saying, since the home is an asset and paid off, technically he is a millionaire if he decides to sell his house today. I told him houses aren't liquid assets, so it's not really like he's one.

3:59He blocked me and all of our other friends. It acts like I'm the a-hole for saying anything, but I think he's deceiving and cringe for him to go around telling people he's a millionaire. Paula, what do you think about that. And is he a millionaire? He is a millionaire. He's also cringe and a douchebag. I think that's one of those areas too. Like it's, if you're walking around announcing that you're a millionaire, just based on, you know, inheriting an asset and you have, you know, that asset in place. I mean, that's just a huge red flag in and of itself starting off there. Yeah. He is technically a millionaire, you know, home's worth a million bucks.

4:32It's paid off free and clear. He has an asset that's over a million dollars. He is a millionaire. He's also super cringe by lying to people and saying that he's an investment advisor. He's not, you know, like he could just say, hey, I got super lucky and like I have the world's greatest granddad, you know, God rest his soul. And like he could be honest or he could just like not mention where the house came from. And, you know, like, so, yeah, I think he's a douchebag for lying, but he is technically a millionaire. But the fact that his friend, this guy, cares enough about this to think that he, like, needs to call him out on it and then to post about it on Reddit, like, his buddy is also jealous.

5:16Right. There's definitely some insecurities going on on both directions there. And I think for most of them, they're either overcompensating for something. I don't know what they're doing there. But both of them seemingly are, you know, one is jealous and the other one is trying to just show off in some way, shape or form. So that that is the very interesting one for sure. Yeah. Everyone's insecure here. Exactly. Overall. Yeah, for sure. And we can see if you haven't heard our other episode that we did with Paul, we talked deeply about money psychology. There's a lot of money psychology going on in these situations that I think are really going to become present here in a second.

5:49Am I the a-hole for pretending I don't have money so my family won't bother me? My wife, 52, and I, 51, recently partly retired with$4 million in savings,$1 million of which is our home. I am a systems engineer, and my wife is a registered nurse. I still work part-time slash contract, but less than 20 hours per week, and my wife is fully retired. We are very frugal people and try to save where we can. I've also made it clear to my wife to never tell my family we have money and to pretend that we are dead broke. Look, her family knows we do well, but they never ask about money. My family won't stop asking me for money.

6:25My mom, dad, and brother are terrible with money. My dad and brother both work in oil and gas, which results in a few fat years and tons of money coming in, followed with layoffs. Not saying the layoffs are their fault, but they have never saved anything, so they run up credit cards to pay for everything. My parents have borrowed against their house so many times, they effectively haven't paid anything towards principal and have had that house for 35 years. They should be retired, but can't. And my dad recently had to go back to work as a school bus driver because they have so much debt and no money.

6:55My brother inherited their spending issues and had alcohol struggles, and he's currently going through his second divorce. I didn't tell my son not to tell his grandparents we recently retired, and they found out from him recently and have been calling me livid because we pretended we were broke for years. But clearly, if we can retire, we have savings. I didn't tell them because I know the results are they would just ask us for money constantly. They have on several occasions when we went on vacation, found out via Facebook and have since learned not to post. And they come knocking for money every single time.

7:27We lied and told them we won some money, but had spent it all on vacation. Am I obligated to help them? I don't feel so because both of my parents and brother made lots over their career, but my dad is in his 70s and still working. I'm sure they are contacting me to ask for money. But am I the jerk if I continue to pretend I have none? man first props to this person for being surrounded by people with bad money habits and being the one person in family he and his wife have great money habits props to him for that and i think it's perfectly reasonable to pretend that you don't have money because a it shows that he lives below his means i mean the only way you can pretend you don't have money is if you're like living a cheap life um which is great he's happy doing it wonderful uh but yeah man pretend you're don't have money, that's a great way to go.

8:18It avoids, you know, it avoids conflict. It avoids these awkward conversations. The best battle is the one never fought, Sun Tzu. Exactly. And I think overall, especially with family situations, but in any situation, if someone's going to ask you for money, you have one of two options. You can either give them the money and not ask for it back. So if you have to give somebody money, you can either give them the money or ask for it back. Otherwise, if you do give them the money and they don't pay you back, then you are going to resent them for not paying you back. But if you give them the money and then you are asking for the money back, then they're going to start resenting you even though you gave them that money.

8:50There's a whole dynamic there that could cause just so many different issues. So you have one or two options. Either you say, hey, it's just I don't give money out to family or friends and you just let them know, set those boundaries. If they don't respect those boundaries, that's a whole another red flag. But then secondarily, again, you can continue to pretend like you're broke and it's not their business to know how much money you have in the first place. And so that's completely okay in my book. Do you agree? Yeah, totally. I'd say just flat out, if you're going to give them anything, like, look, this is not a loan.

9:18This is a gift, right? And be really upfront. This is a gift because people will fool themselves into the I'll pay you back thing in order to absolve themselves of guilt, right? If you straight up, flat out, no holds barred, say this is a gift, people are often, they don't want to accept something that is just a gift because when it's so blatant that it's a gift, you know, like there's a level of awkwardness there versus if people can fool themselves into thinking, no, I'll pay you back eventually. Right. Right. So if you're going to give someone a gift, tell them I'm giving this to you. You do not have to ever give it back to me.

9:55This is a gift for you. And if you're not going to do that, that which I think that this guy shouldn't. Right. Because his family has proven to have bad money habits, you know, then then just say no, I'm retired, that means I'm on a fixed income. I'm a pensioner now on a fixed income. Exactly. And I think overall, that's the two options. It's either it's gifting it, but if you see this perpetual money behavior that just over and over and over again, they're bad with money, usually that's a situation where I'm not interested in it. That's enabling. It is. Yeah, then you're just enabling them and that does them a disservice.

10:28Exactly. And I think the more you enable people, I mean, there's so many studies on this, but the more you enable people who are just not good with money, it just really just compounds over time. And I think that's the biggest thing. am i the jerk for asking my wife to spend all her savings so i'm a 34 year old male married to the love of my life who is a 33 year old female my wife is kind nurturing and motivated in her career she does a lot for me at home and i work long hours we married four months ago dated for eight years and we're both easygoing and have the same sense of humor and rarely argue i make four times more money i'm in health care but she makes a good salary as well since i make four times what she makes, I tend to pay for most things, dinners, weekend trips, mall shopping, which I absolutely do not mind.

11:12With bigger purchases, we pay for things together in proportion to what we make. And she's usually okay with paying her share of things, a quarter of the rent and groceries and everything else. And we'll sometimes offer to pay for dinners and dates. She's very close with her friends. She has four. They're great people, but they're basically attached at the hip and talk daily in a group chat, which is fine. Everyone needs a support system. I have similar friends. Her and her four friends have a combined savings account together for investing in something together, and they've each been putting in a few hundred dollars per month each.

11:43I've known about this for years and didn't love the idea initially, which I expressed, but she was adamant she wanted this. And at the time, we were hurting for money, and it was ultimately her money and her decision. We are now looking to buy a home in one of the most expensive real estate markets in the US, and she expresses that she doesn't have much in her own savings, but has 20k of her own money tied up with her friend's combined savings. Over the last year, they've been told by two financial advisors that five people attempting to invest together in real estate or stocks or a business wasn't a good idea.

12:15And they also recommended to split the funds to five separate accounts since the account is under one of the friend's names and there are taps implications for having that amount of money to her name, which is like$100 ,000. The homes we were looking at were around$60 ,000 to$70 ,000 for the down payment. I stated I was willing to spend nearly all of my savings for the down payment for a home, so I told her she should pull all that money from her joint friend's account to help with the down payment. It's a huge purchase, and I don't think it should be my burden alone. She got really upset with me and told me, I don't want to touch that money.

12:46I promised my friends it would be for us investing together, and we should look for a less expensive home then, maybe a fixer-upper. She stated, it would be easier for you to accrue the money back since you make so much more. Now, this is very frustrating, and I told her it's unfair. I have to spend nearly all of my savings and you don't. Your friend front is stupid and it's stupid not to use that money on our future home. Am I the jerk for asking her to use her own cash from her friend's account and break her promise to her friends so that we can buy a nice home together? There's a lot going on there.

13:17Let's unpack it because there is some boundary setting and independence and like there's some stuff that needs to happen here. First of all, I fully support. This is she promised her friends. She made a promise to her four best friends that this money is earmarked for them. I actually applaud her for being true to her word, for not going back on her word. And I do think that he's a jerk for asking her to violate her word, right? To break a promise to her best friends. Like it is unprincipled to break that promise. That being said, the money that's in the account, all five of their names should be on that.

13:57The money belongs to all five of them. So all five of their names should be on it or it should be held in the name of an LLC and all five of them should be equally owners of the LLC. Like there needs to be the proper paperwork drawn up to legally protect all of them. Exactly. And I think if you look at one account with one person, the tax implications are the first part. And that's just one huge thing that I think, you know, that person, depending on what's going on there, they could have some massive tax implications. Number two is that, you know, having only one person on there without the rest of them associated with that.

14:34I mean, she could if she wanted to, she could take the money and run if she wanted to, even though each person is contributing money into that account. It's a liability. I know they're best friends, but it is a liability. And I do agree with you. If they had an agreement even prior to them being married, you know, they were dating at that point in time and they had an agreement with, you know, all of their friends. It's not like it's their combined money. It's her money that she had separate. I think that's a place in time where, you know, he he should not be asking for that. They just need to find a different way or find another house that that kind of works for them.

14:59And so overall, there's a lot of things going on here, but it's really a wild situation. Honestly, I would never I mean, we don't recommend things here, but I would never say I would never invest with a bunch of my friends, you know, into something specific that could just cause friendship rifts. There could be a lot of different relationship issues that could happen there. Money tears people apart if you start to to bring it into relationships. And I think that is one of the areas where if I was her, I would try to get it separated or, and, or just put it into a business or an LLC and just consider that money gone if you lose it.

15:29Yeah. Yeah, exactly. I agree. Uh, I would, I would not want, you know, and it's funny to me, like they don't even have an idea of what kind of business or investment they want to be like, it's just this amorphous, like we, we all want to work on a project together. Um, it's, it's so ambiguous. Like, I don't know what they're going to do with that money. Honestly, they'd be better off just taking that money and spending it on a big trip or spending it on, or maybe they all want to like jointly make some big charitable donation together. I don't know. I certainly can see some issues coming if they all decided that they were going to like have a side hustle together as the five of them.

16:11Yeah. And talk about lost opportunity costs too. I mean, yeah, exactly. But, you know, the promise is a promise. And I do applaud her for like state. She promised her friends this and they've all been making sacrifices of their own in order to put this money in. So like, you know, it wouldn't be fair for one person to go back on their word when the other four people have, you know, stood by their word. Agreed. You got to stick with it. And I think, you know, for for this, they got to find another way to buy a house. But it is just a wild situation. I've never heard of that. Have you ever heard of me doing that?

16:42No, no. Especially, you know, man, with just one person's name on it, it's like there's so much risk there. Yeah, that person can totally if they wanted to. And, you know, when it comes to like trust, people often are so blind to like the risks. You know, you'll protect yourself from risk in all of these other ways. But you trust somebody, you don't want to think the worst of them. But the reality is they have the right to completely screw you over. And that's a that necessarily creates a power imbalance. Right. And I think, you know, I've heard the reference of the saying, partnerships are ships that never sail.

17:17And I think in large groups like this, that could be a lot more true where there's just too many personalities, too many things going on, and it becomes a lot more difficult. Yeah. So am I the jerk for suing my parents for my college money? So my great aunt set up savings accounts for all her female relatives. In our culture, education for women is not really valued. And she thought that was BS. She lived with her father in London and she was educated and she went on to attend university and become a doctor. She married a British man and they moved to America and had a great life. And she funded the education of as many of her nieces and grand nieces as she could.

17:54When she passed away, she left money for every girl relative she could. My parents managed to access the accounts that were set up for my sister and I, and they used it to pay for my brother's wedding. My sister didn't care because she got married two years out of high school and had no intention of going to college. When I graduated, I went to the bank to get money for school, and it was almost all gone. There was like$13 ,000 left. I asked my parents about it, and they said they had needed the money. I finally found out where the money went, and I was furious. I got student loans and moved out.

18:25I am a great source of shame to them, and I don't give two Fs. I am currently suing them for the money that was left to me. My entire family is against me. They think that I am a complete a-hole for airing private family business in public, and that I am putting money ahead of my family. My friends are all on my side, but they are all Americans and they don't really get my culture. Neither do I, to be honest. My brother called me up and offered to pay for my university if I dropped the lawsuit. I agreed as long as we had a legally binding contract. He said I was being a jerk for not trusting him.

18:57And I said he should not have accepted the money for his wedding. It is causing all kinds of embarrassment in our community. I'm somewhat ashamed to be doing this, but I don't want to have this debt. I should not have. So am I the jerk for suing my parents? Wow. This, oh my goodness. So, all right. First of all, all of the accusations that her family is hurtling towards her, let's flip that around. They are embarrassed that she's airing family laundry. She's not posting about this on TikTok. She's going to a court of law, right? That's not airing dirty laundry. That is seeking justice for money that was stolen from her.

19:36If they're embarrassed that she's airing family business, they created family business, right? They created the dirty laundry. They dirtied that laundry, right? Second of all, the fact that the brother will not sign a legally binding document shows that he doesn't ever intend to actually pay her. Right. You know, if he intends to pay her, then sign the document. And the fact that he's putting it on her, like, what, you don't trust me? Oh, no, you know, like, really? It's really? Those guilt trips are the biggest red flag overall. I've seen it time and time again, where people will try to have these conversations.

20:16They will not sign, you know, a legal document, but they will try to say, hey, you know, we have this bond. We have this trust. We're family. They'll say, you know, use terms like that, where it ends up becoming a situation that maybe they'll pay you for a month or maybe it's three months. But then all of a sudden down the line, you will see they will stop paying. You can see even, you know, in the real estate world, you know, you and I have had rental properties and you'll see tenants say stuff like this. Hey, we would, I've been a tenant for a really long time. You know, maybe I don't need to sign a lease or we can go month, you know, month to month, some of these other things.

20:42And you see it over and over again where people will try to use your psychology or try to use emotion in order to get you to do what they want you to do. And it usually never lasts. You got to have the contracts in place. You know, it's funny because the only time that people want you to avoid a legally binding contract is when it benefits them. Right. Right. You never hear that argument the other way around. You never hear somebody who's like trying to get you to avoid a legally binding contract in a situation in which that the avoidance of that contract would benefit you and harm them. Exactly.

21:13People only ever try to get you to avoid the contract if they're the ones who benefit from it. And the parents caused a huge rift here because it really it's not their money to take. The aunt left it for them. So they go to college. It was a huge thing. It was a huge thing of value to her. You can see right here that she talked about this, that she she was educated and it made a huge impact on her life. and that's what her wishes were for her nieces. And so I think that's just a really, really important thing that they are kind of stealing from her. And it's something that, you know, they have no right to take that money whatsoever.

21:43Now, if the parents actually, this is something interesting, Paula, if the parents contributed money for her college and then needed to use it for something, what do you think? You think they'd be in the right for taking it then? Yeah, yeah, I don't think, I think once you turn 18, your parents' financial obligations to you are over. And so from the moment that you are 18, you're an adult, you're out of the house, like, good luck, kid. See, you know, like exactly. So, yeah. So the the parents are well, totally, completely within their right to cut off all support from the minute she turns 18. That's totally fine.

22:17But this is different. This is money left to her from a great from a great aunt. Right. And I think it's it's just it's one of those things where they cause the parents cause a rift right there. I mean, that's a huge, huge deal. So even like maybe the brother understood ahead of time that that money was coming from that account and didn't tell her. That'd be a bigger issue too. Yeah. But that is just a crazy family dynamic and I would not want to be involved in that situation whatsoever. Right, yeah. And I got to admit, when I saw the headline and it was like suing my parents, my first – I was like, wow, the entitlement.

22:45Right. Right? But then, man, hearing the story, it's like the parents just – it's clear the parents do not value her getting educated. Right. You know, they don't value her future prospects because and fundamentally, what does that mean? It means they don't value her being able to be an independent adult. Right. You know, they think that she should probably just get married and depend on somebody else and not have any form of financial independence of her own. Right. And I think that's just overall is just they robbed her of that. And her having to go into debt because of it is another big thing.