Our advice columnists have heard it all over the years—so we’re diving into the Pay Dirt archives to share classic letters with our readers. Submit your own questions about money here. (It’s anonymous!) 

There was a really difficult situation that just happened in my life that ended up with me either needing to find a roommate or moving out with my daughter because I couldn’t afford rent on my own. My best friend, who is also a single mother, ended up in a similar situation.

My daughter is 7, and her two kids are 4 and 2. The 4-year-old has autism and ADHD and gets violent, screams, and demands things. If you don’t comply, the violence worsens, and he throws and breaks things and screams in your face. The litter sister does the same, because it’s what she sees. I don’t pass judgment on how a single mom handles two little kids, especially when one has disabilities, but it is very hard to witness the passive way she parents them.

This has affected my daughter. She brought it up to me last night on her own. She was having a hard time sleeping and seemed stressed and started crying. I told her to tell me what was bothering her and she said their “screaming and crying and throwing things is really hard for me” and went on to talk about how their behaviors are stressful to her.

It is very hard for me as well. Our daily routines are obstructed by them. Meanwhile, my best friend is very defensive. I’ve never really been able to say anything to her without her taking it to the extreme and having an incredibly defensive stance. I believe it would be an even stronger reaction if I said anything about her kids. I have no idea how to talk to her about these issues, including that the behaviors are affecting my daughter. I have no idea how I am ever going to be able to move out if she’s not holding up her end and saving money (not to mention I had to pay the utilities this month because once again, no money). I don’t want to say she’s taking advantage and really leaning heavily on the fact that I’ve helped her, but it’s starting to feel that way. I can’t stay in that house forever. I don’t know how to talk to her about any of this. Help!

Dear What Do I Do, 

Ideally, you’d find a different roommate, but it doesn’t sound like you’re in a position to do that right now. If it were just you, it would be one thing. But you have a kid to look out for, too, and your kid is telling you outright that this living situation is stressing her out. I don’t want to suggest that your best friend is the bad guy, because it sounds like she’s struggling, too. But if living with her is your only option, you need to set some rules and boundaries. (I know that’ll be easier said than done since she has two very young kids and some additional parenting challenges.)

Have a serious conversation with your friend about this. It sounds like she hasn’t responded well to feedback in the past, so be careful not to approach her in a way that might make her feel on edge. Don’t just jump right into the conversation, either. Let her know in advance that you want to sit down and talk—so when might it be a good time for her? If she can find childcare for an hour or so, even better—you two could go someplace neutral and wouldn’t have to wrangle two toddlers while trying to hash this out.

When you do sit down and talk, give her the floor. Ask how she feels about your arrangement. Is it working for her? What is she finding challenging, and what’s working? Once she says her piece, tell her that the situation is taking a toll on your daughter. Make sure to focus on the difficulties of having three young kiddos living under the same roof and not on your friend’s parenting, her child’s neurodiversity, or her financial choices. Those issues are her own business, and while they might affect you, the conversation will be a lot more productive if you can focus on the problem at hand.

Then talk about potential solutions. Again, give her the floor by asking her what she thinks might help fix the situation. You might be surprised at what you both come up with together. Maybe you two can establish an hour or two of quiet time in the evenings, while she takes her kids for a walk or a drive and you and your daughter get the house to yourself. If bedtime is the issue—her kid is having big feelings during the nighttime routine, and it’s triggering your own kid’s big feelings—maybe schedules can be adjusted. Your kid could stay up a little later to have some quiet time to herself before bed.

While ideas like these might do the trick, you’ll also want to discuss long-term plans. How much longer will you be living together? When do you think you’ll have enough saved to move out on your own? Having an end date in mind might give you and your daughter the peace of mind of knowing that this won’t last forever. It’s great that you wanted to look out for your best friend, but it sounds like this was always a temporary solution, anyway.

All of this can be painful for her to hear, especially when she’s already in the trenches and going through her own issues. She might even have some of her own grievances about living with you. Reassure her that she’s your friend and you care for her, and you just want what’s best for everyone. Approach the conversation with grace and compassion, and it will go much smoother and, hopefully, lead to solutions that will make your arrangement a little more sustainable for the time being.

From: My Friend Gave Me A Free Cruise Ticket. Then Came Her Conditions. (September 4th, 2024).

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Does loan history itself matter at all or just credit score? I am about to buy a car for the first time (in my late 20s) and am fortunate enough to be in a position where I can pay cash outright if I need to. However, I’m wondering if it’s prudent to take out a small loan (for which I’ll set aside the money and feel confident I can pay back on schedule). I have a high credit score due to having two credit cards since college, and always paying my rent on time, but I have never had a loan of any kind and don’t want this to be an issue for possibly buying a house one day. Does that matter to lenders, or do they only care about your overall credit score?

Your credit score matters, but lenders look at everything. Lenders take a comprehensive look at a person’s credit, credit history, and current financial situation to decide whether or not they want to extend a loan. This is especially true for mortgage lenders. When you apply for a mortgage, lenders look at something called your debt-to-income ratio—that is, how much debt you have compared to how much money income you have. The lower the ratio, the better. A car loan shouldn’t keep you from getting a mortgage in the future, but if you have a big car payment, that might affect how much you can borrow for a home. If you can afford to pay for the car in full, that’s something to seriously consider.

Like everything else, cars have gotten wildly expensive, so yes, it would be a big chunk of change to pay for the car outright. But you said you can afford it, and there’s another reason to consider doing so: Interest rates on loans have been on the rise. Depending on the rate you get for your car loan, and the amount of the loan itself, you could end up paying thousands of dollars more for this car over the years. That extra cost might be worthwhile to you (maybe you’d rather have the cash on hand) but if you have a healthy emergency fund, you’re saving for retirement, and you’re putting money toward your other goals, like that home down payment, it might be prudent to pay cash for the car—or at least put more money down in exchange for a smaller loan.

Whatever you decide, in an ideal world, you would pay off that loan before you go house shopping. And once you start that process, the process of getting pre-approved for a mortgage, avoid making any big financial moves. Some experts say you should avoid applying for any type of credit, even credit cards, in the six months before trying to get approved for a home loan. You’re in a good financial position right now. You might as well take advantage of it by avoiding debt as much as you can and preparing for the scrutiny of lenders.

From: My Partner’s Dysfunctional Daughters Caught Wind Of How Many Properties I Own. Oh No. (September 11th, 2024).

How much money should I (32 F) have in my bank account, and what should I do with the rest? Thanks to a combination of relatively low expenses (no kids, no mortgage, no student loans or other debt) and a hefty dose of economic privilege, I have roughly the amount of my annual salary sitting in my checking account, and another $10,000 in savings. I already contribute to an employer-matched retirement fund and the maximum to a Roth IRA, and I send about $100/month to an investment account where I just buy exchange-traded funds. I don’t really want to do anything complicated or super risky, but it feels like I’m right now I’m letting a lot of value get drained away by inflation.

—Ridiculously Lucky to Be In This Situation

Dear Ridiculously Lucky to Be In This Situation, 

Congrats on getting to a place where you can save a good chunk for whatever you want in the future. But you’re right that your money could be making you some extra cash if it was parked in the right place. So what can you do?

If you haven’t yet, make sure your savings account is a high-yield account and not a regular one. A high-yield savings account (HYSA) pays anywhere from 10 to 20 times more interest than a regular savings account you might have through a typical brick-and-mortar bank. HYSAs that earn the highest interest are usually found online through places such as Capital One and Marcus by Goldman Sachs. One reminder though: Make sure any account you open is either at a bank insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union insured by the National Credit Union Share Insurance Fund (NCUSIF).

Along with HYSAs, some of the lowest-risk investment options available are certificates of deposit (CDs), money market funds, and treasury securities. You can find CDs and money market funds at almost any major financial institution like Fidelity and Vanguard. Keep an emergency fund in a high-yield savings account and look into some of these other options for the rest!

From: My Sister And I Have Finally Gotten Close. Her Wedding Invite Threatens To Ruin Everything. (September 5th, 2024).

My wife “Jenny” has recently been diagnosed with cancer. Prognosis is cautiously hopeful, but the last few months have started me wondering if I should broach the long-ignored fact that my eldest (who is 15) maybe isn’t biologically mine. The thing was that when Jenny got pregnant, we both knew that her family would kick her out, whereas mine would be more willing to help out, especially since I was going to juvie for a while. So even though there were two other guys it might have been (neither of us were exclusive, or smart, looking back), we just said it was mine. When I got home, “Ronnie” was a few months old, the apple of everyone’s eye, and I think Jenny had just gotten used to the idea he was mine. We never talked about the fact that he maybe wasn’t again.