Dear Helaine: My girlfriend and I moved in together about six months ago, right after she took a new job with a 30 percent pay raise. We immediately sat down and agreed on a budget that would allow us to meet our bills, provide a very reasonable social life and still save a significant amount for the future. We've done a good job of sticking to it.
We're now engaged, and that's given rise to some new financial controversy. She comes from a significantly more affluent family than myself, and our attitudes about debt and money are very different. Her parents have generously given us enough money to cover the majority of our wedding expenses, but she also wants to spend the majority of our savings on a wedding, while at the same time purchasing a home with little down payment. I see this as a poor ordering of our financial priorities, and feel we could save enough for a 20 percent down payment within two or three years.
Also, she would like to buy a home in the top range of our affordability, rather than one we could buy for a lower price and improve ourselves over several years. I don't want to give the impression she's high maintenance and spoiled. She simply has a different view of what is affordable and prefers to purchase things in their finished form rather than buy basic and improve. What do you suggest? -- Hoping for Richer Rather Than Poorer.
Dear Hoping: The financial baggage from our families is with us for our entire lives. For many of us, it becomes a set point. Grow up in straitened circumstances, and you are forever convinced the financial wolf can arrive at the door at any moment. Those who grow up wealthy, on the other hand, frequently start from the opposite position -- things will always work out for the best. Money is viewed as something that will be forever replenished.
This seems to be the primary issue between you and your future wife, and it is emerging whenever a major purchase -- from a wedding to a home -- is involved. I suspect this is something you will need to come to a middle position on, something that will be hashed out over time.
In the meantime, I will point out that real estate investors often say the home to buy is the worst house on the best street, which sounds like a compromise between your two positions. But spending the majority of your savings on a wedding? I'm with you. A party -- and that's what a wedding reception is -- comes to an end within a few hours, but you'll need to live in and pay for a home you purchase for a long time to come. You'll likely need that money.
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