The Rachel Cruze Show - 3 Conversations That Can Affect Your Home and Your Marriage

Episode Date: May 27, 2024

💵 Sign up for EveryDollar today. Create a free budget!   From talking about money in your marriage, to smart insights on home refinancing, to which home renovations really add value—in this week's episode, I'm sharing my tips for navigating major financial decisions with confidence. In This Episode: ·      How to Talk About Money in Your Marriage (Without Ending It) ·      Is Refinancing Always a Good Idea? ·      Home Upgrades That Are (and Aren’t) Worth the Money   Next Steps   ·      🎥 Watch my video on my most hated financial advice . ·      🤫 Check out my interview with my husband on TRS about real estate. ·      ✅ Go to my video on the weird things people do to save money. ·      🏠 Find financing options with the trusted pros at Churchill Mortgage. ·      💵 Make a monthly budget today with my favorite budgeting app, EveryDollar. ·      💰 Use our calculator to calculate your mortgage payoff date.   Offers From Today's Sponsors ·      🏥 Learn more about Christian Healthcare Ministries. Listen to More From Ramsey Network 🍸 Smart Money Happy Hour 🎙️ The Ramsey Show 🧠 The Dr. John Delony Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

I always talk about you being on the same team, having one checking account, your money being combined. Let's talk about that one time that I had a caveat when it comes to this financial advice. Hey guys, welcome to this episode of the Rachel Crewe Show podcast. I'm so glad that you're here. So in this episode, we'll talk about when the best time to refinance your home is. Then I'll chat about some home renovations that are and are not worth the money. But first, let's discuss how to talk about money in your marriage. Take a listen. So it's no secret that financial stress has been one of the leading causes of conflict and even divorce in marriages.

And according to a recent study, 54% of people believe that having a partner with debt is a good enough reason to even consider divorce. But what's worse is that the median cost of divorce now has reached over $7,000 or more. So if finances are the main issue between you and the person that you love, you're not making that issue any better for either of you if you decide to bail. But here's the thing. Money is a major part of any relationship, but it can be a sensitive and emotionally charged topic to wrestle with when it comes to your marriage. And then you throw in in-laws, kids' summer camps, you know, that cost of a billion dollars, student loans, throw that all in the mix, and you've got a pretty big elephant in the room. So today I want to cover how to talk about money and your marriage without ending it altogether. And I'll be responding to some skeptics online and sharing my own lessons that I've learned over the years at the end. And I'm also going to reveal a time that I recently disagreed with my own money advice when it comes to all of this that we're talking about.

So stay tuned for all of that. But first, let's go over a few general principles that I believe in when it comes to money and marriage. So I really do believe that when you marry someone, you become one in every aspect of your life. And the more you see yourself as a team, the easier, honestly, it is to win. And this can be in your parenting, this can be in any topic when it comes to your relationship, but money is also that. When you see yourself as one, that when you both are contributing to the household, whether it's two incomes or one income, but it hits the account and you see this as our money,

what are we going to do with it? And you have a plan on where your money's going. And like, all of that is just to me a symbol that you guys are united. You're building trust. You're communicating. And again, I think this is really important. So even things like combining checking accounts, doing a budget together, having goals together long term to know where are you heading.

Again, you see yourself as a team. And then from like a mathematical standpoint, too, you guys, you're going to build wealth faster if you do it all together. I mean, you will make progress faster. Now, at the end of the day, you can believe in all of that. But there's still a chance that you and your spouse will disagree. So how do you communicate with your spouse when it comes to finances, even if they don't want to start the conversation? What do you do? So one of the biggest things that you can do when you start off this conversation, I always talk about is your why. Why are you having this conversation in the first place? Is it because you feel like you're working hard and you feel like you have nothing to show for it? Is it because you're stressed? Is it because you're losing sleep at night? What is the why you want to get control of your money? And then I would also say, go ahead and map out like a high-level plan of what you're thinking. because sometimes when you start these conversations, it can feel like, okay, then what are we supposed to do?

But you could say, hey, I've been so stressed about this, and I just did some quick math if we tried to pay off debt. We'll use paying off debt as an example. And this is what I saw. You know, as I'm looking at our numbers, like, we could be out completely in a year and a half and, like, have a date out there. Like, this is what we could do? Like, what do you think? Because sometimes, again, having these ideas in a tactical sense really does help the conversation. All right, now before I respond to some of your hot takes from social media.

let's talk about that one time that I had a caveat when it comes to this financial advice. Because, again, I always talk about you being on the same team, having one checking account, your money being combined. Now, there are some reasons why I would not combine finances and actually say, no, you need to separate them in order to keep you safe. And that's things like abuse, if there's addiction that's not being addressed, if there's financial infidelity and you found out all this stuff. If there's one spouse that is absolutely spending everything and you literally have nothing to save and they won't stop because they're completely out of control. Like, there are these extreme situations, you guys, that you're like, okay, I have to protect myself financially or I'm

not going to have money, right? So there is a point there, or maybe I'm going to have to leave, right, if that's the case, too. There are parts of this that you do need to protect yourself and I'm all about that. But again, if you are just a couple, it's like, well, you should never depend on a man. I'm never going to depend on him. Or like, she doesn't get to see what I spend. I work so hard. Like, whatever the thing is, and that's your attitude. Just because it's your attitude, get over your attitude.

She can combine your finances because there's so much benefit to it as a married couple when you are one. If there's not other issues, big issues like those going on that I mentioned earlier, combine your accounts. Jade Warshaw and I were recently hosting the Ramsey show. And we got this call from a woman who said her husband would not give her the login information to their checking account. She couldn't even log in to see their checking account.

And then he would give her money once a week to go and buy groceries and do what she needs to do, basically an allowance. Okay, at that point, you guys, like that is financial abuse. When you don't have a say, when you can't even log in and see numbers, there are some major issues going on. So people in that scenario, and I even told her, like, give them an ultimatum tonight. Either I have access to our money or I'm going to the bank tomorrow. I'm opening up another checking account.

and then we're going to have a bigger marriage discussion because the truth is, if he's acting like this when it comes to their money, he's probably acting like that in other parts of their marriage. So what happens is that money, it reveals too sometimes how things are going on in the marriage. And so you want to make sure that you do protect yourself and that there are boundaries in place if you have to draw those. And for some people, they do. Now, recently I put a question box on my Instagram stories just to ask out there,

okay, if you don't combine finances, tell me why. So I got some really interesting responses. So let's go over some of what you guys said. One person said, we just have different habits. Neither of us are good or bad. We just spend differently. So it's easier to separate. Okay.

So my question would be like, that's great that you spend differently, but you each can have your own line item in the budget. Let him go spin differently how he wants and you spend differently how you want. And then other things just put in the budget. It's fine. Like, it's okay if you guys are different, that's going to happen. but at least like do it together and know what's going on. One person said, we have a blended family with different spending priorities for each set of kids.

That one is interesting. So what I would say, though, for the overall household, I would still have one account. And then if you each had separate accounts, specifically for the kids, again, like if there's alimony and child support, all of that, for different kids, I get that. That makes total sense to kind of keep it clean and separate just so you know what's going on. But for the overall house and functioning in that, I still think there's benefit to have. having one account. I'm still paying off credit card payments, but my wife has significant savings. Okay, so here's my point that you guys can be moving through this so much faster. If you took that savings, because it's not just your wife's savings now. You guys are married. It's your money.

There are savings there. Take that and pay off the debt, and then you guys start investing, and it's going to go so much faster. We've never combined because it's a logistical nightmare. Okay, I could see how, especially if you're two adults and you've been living your separate lives coming together, it can be exhausting. So there could be some inconveniences at the beginning because you're changing bills or addresses or whatever, but just go down to the bank and open up a new checking account, close an account here, close an account there, put the money in because the benefit of that is so much greater than the annoyance of trying to put it all together that may take, you know, a few weeks. You're going to have a lifetime together. So that benefit is so much greater.

I've seen the way my husband spends money on my in-laws, and I'm not here for it. we'd fight about it too much. Okay. So some in-law stuff here, which is very interesting. And here's the thing. We would fight too much. A lot of people say that. We just separate it so we don't fight.

But what you would fight about is the exact issues that you actually want to dig into to have a richer, deeper marriage. Like, you're just avoiding it. And then you're going to get in the habit of avoiding other stuff when hard things come up. Oh, just over here, over here, over here. And again, this isn't to like be legalistic about it.

This is an order for you and enabling you to have a better marriage. So when you actually put all that out and talk about why it annoys you, what's going on? Like, actually digging into the issue is going to yield a much better, deeper marriage than, again, just avoiding it and doing your own thing. My wife has a really large inheritance and I don't want to impose. That's interesting. Still at that point, I would say, still having one account.

And, yeah, if there's some legality or something else, like with her name specifically, maybe you guys figure that out. But again, having one account when it comes to your life and your everyday expenses, like, there's still benefit to that. I'm a divorce attorney and I've seen issues this can cause in the long run. That is fair. I'll give that one. I get it. Totally. Absolutely. There's a lot and even state by state with how the laws are represented. It is pretty wild. It is. But again, going at it, not with the end of mind, right? because that's not how you're going to want to start off a marriage anyways. We've combined savings, but separate checking accounts, it's a nice balance of the autonomy and the

teamwork. Okay, that's fair. But with separate checking accounts, just because of that, I'm like, is it because you don't want him to see what you're spending or you don't want her to see? At the end of the day, it's like, okay, great, you're spending on this, you're spending on that, but we're agreeing on where our money's going in general together. I don't care if you see what I spend at Target because that's what I'm going to spend, and it's the plan that we talked about, and it's fine. One thing that the internet and personal finance have in common is a lot of mysterious lingo. You know, you get LOL, OMG, Helock, Roth, Repo, IRA, you know, all these terms, all these letters.

And you're thinking, what the heck? I mean, the more progress you make with your money, it feels like the more vocabulary you have to learn. So today, I'm going to talk about one of my favorite financial abbreviations, the refi. So refi is short for refinancing. and if you are a new homeowner or if you've never refinanced alone before, this might be an unfamiliar concept to you, or maybe the concept of refinancing makes total sense, but you're a little confused on why you would ever need to do this, or maybe you have a lot of questions around it. So today, I'm going to walk you through all of it, because the truth is that sometimes refinancing

is a great way to save money, but other times it can actually cost you money. So stick around to the end, so you know the difference. But first, let's go over the basics. What exactly is a refi? So when you refinance a loan, you exchange the loan you currently have on your car, on your house, college education, for a new loan that usually you can pay off faster or it has a better interest rates. The result is basically a redo of your agreement with the bank about when you'll have all the money paid back to them and how much extra money you'll give them along the way in interest. interest rates fluctuate and change all the time. And when you have a lower rate, that means

you give less extra money away to the bank every month until you actually pay off its total value, which is called the principal. So speaking of interest rates, let's talk about a few reasons why you might want to refinance a loan. But be sure to stay tuned because there are reasons why you shouldn't refinance a loan. And we'll talk about that in a second. So the first thing to clarify is that ideally, you should only ever refinance your home because a mortgage is the only kind of debts that I ever recommend you taking out or thinking about. And interest rates are one of the top reasons why a lot of people refinanced. So, for example, a coworker of mine bought her first place in 2018 for $205,000 at a 5.5 interest rate. And by 2021, the rates had already dropped

down to 2.6%. So she refinanced to lock in a lower interest rate. And she ended up reducing her monthly payment from somewhere around $1,400 to just over $900. And having that extra, almost $500 a month is a huge win and a perfect reason to refinance. So then she could invest that money in retirement or start saving for a new car. I mean, the possibilities are endless, and it's great. Another common reason people refinance is to shorten the timeline of their mortgage. So I always recommend a 15-year fixed rate over a 30-year or an adjustable rate. mortgage. So a 15-year fixed rate, it locks you in. You know what the rate is, and it kind of forces

you in the system that you're going to pay your house off early. But a 30-year mortgage is still the most popular choice, so a lot of people end up going this route. And anytime you're able to pay off your house earlier, that's what we want you to do. With the baby steps, this is baby step six, it's pay off your home early. And a 30-year mortgage is going to have a higher interest rate, and it takes almost double the time if you follow that formula, which means you'd be throwing a way hundreds of thousands of dollars just on interest alone over the life of the loan. So again, with a 15-year fixed rate, you're going to have a higher payment month to month, but a lower interest rates, and it puts you in a system that's going to make you pay it off faster, which is awesome.

Now, let's talk about when not to refinance. So the first reason you want to avoid refinancing is if you're trying to consolidate existing debt. So listen, a lot of people are like, well, if I take my car loan and my credit cards and this personal loan and this key, if I do all of this and put it into a lower interest rate, that's better. But listen, what we have found with personal finance is when you have your debts separate and you list them out smallest to largest and they're in multiple debts, original debts, that's what's going to get you to pay off your debt faster. It's not this idea of math of, well, if I just had a smaller interest rate, everything would be better.

Because the proven momentum of paying off your debt faster is you. And one of the best ways to do that is to pay off that smallest debt first and feel that momentum. Now, the second reason not to refinance is, if you're a good, closing costs add up to more than what you'll save an interest. So it takes time to do a little bit of calculating and find out if you'll break even. So refinancing includes closing costs that are about two to six percent of the loan amount. And those costs cover everything from your refinancing application, home appraisal, title search, home inspections fee, lender's attorney's fee, origination fee, points fee, all of it. But if the total outweighs which you'll save on interest in the long run,

then you may want to wait until interest rates get even lower before you do that. I'll link my go-to mortgage payoff calculator for you to test out some of the numbers on your own. Now, the third reason to hold off on refinancing is if there's a chance that you're going to move in the near future. So if you have plans to sell your place or relocate or upgrade or downsize, you may want to hold off on refinancing now, again, because you're going to pay so much upfront with the closing cost that you may not get back in interest over the course of loan if you end up housing houses. So be thinking about that as well. Like many things in the world of personal finance, refinancing, it can be a great tool if it's used the right way. So just make sure you crunch the numbers and weigh the pros and cons of this. And if you're in need of a little pro help to think through

your options, my friends over at Churchill Mortgage, they're an amazing resource. So make sure to check them out the link below. Again, this can be a very complicated thing. So reach out to a professional. And if you didn't already know, my husband, Winston, he's in the real estate world. And I had him on the show, the Ramsey show, a couple of years ago, to talk about some things like refinancing. So you should check that out as well. Hey, you guys, so do you remember back in 2013 when everyone first discovered Chiplap? Mm-hmm. And all their home renovations overnight were like fixer-upper and we had like Chip and Joe

inspirations everywhere. Well, sadly, most renovations eventually go out of style. But investing in a house and making upgrades to your home along the way continues to be a great way to increase your net worth and build wealth down the road when it comes time to sell your house. So today, I want to share with you a few home renovations that are worth the money and others that are more likely you're going to lose some money. So be sure to stick around to the end because I have a little confession to make. Quinceton and I may or may not have been actively saving for something that, again, can be a little taboo when it comes to home upgrades and if they're

actually worth it. But I'll tell you all about it. First, let's kick things off, though, with the general rules when it comes to doing work on your home. Never outspend your neighborhood. You don't want to be the nicest house in the neighborhood. Even if you choose the nicest tile and light fixtures, the reality is that other houses in your neighborhood are going to influence the resell of the price of your home, regardless of all the upgrades that you make. So houses are a great investment because they tend to grow in value over time, but can quickly put you in the negative. if you spend more than you'll be able to make when you sell. Also, never take out a HELOC or an additional loan to do renovations. We hear this all the time, you guys, and I know it's very expensive and it's very easy,

but it actually ends up putting you backwards. You actually are putting your home a little bit at danger when you're taking out a he lock and all of that because it's the second mortgage on your house and all of it. It's just not great, okay? And you're taking the equity from the house that's already built. So listen, just save up and pay cash for your renovations. you may have to go slower in that process, but it is worth it than taking on more debts. Also, think about your timeline, and if you're going to be selling in the next few years,

try to make improvements that are going to be neutral enough for future buyers. And I'm not saying that you have to make every single renovation decision catering to some stranger out there in the future. But if you know you won't be in your current home forever, try to make some more universal design decisions so that it attracts some future buyers. So speaking of, let's talk about home upgrades that will increase your home's value. A neutral tile backslash in the kitchen will instantly add value. So steer clear of bright colors or really loud design.

But again, classic subway tile, classic colors, all of that really will never go out of style. Also, hardwood floors. So these can be expensive, but when you're looking at hardwoods, again, the range can be like really expensive, really treat. Go mid-range if you can. just do a pretty traditional brown finish, all of it, again, very timeless. And when it comes to the appearance of hardwoods, it's going to be in your favor. And luxury vinyl planking is about half the cost, and again, more durable, all of it than real wood. A fresh coat of paint. So choose a classic tan, gray, white. It'll make your home look cleaner and newer.

A couple hundred bucks and a weekend of teamwork, you guys will put thousands back on the price. It's amazing what a new coat of paint will do. It will feel very moving ready when people walk through your home. Also, updated bathrooms. So you can do a lot to a bathroom on a modest budget. No need to get custom cammer tree and all of that. Just grab some updated vanity from Lowe's for a couple hundred bucks. Go to home goods and get a mirror for 40 bucks to replace that 1980s mirror that's up there.

I mean, again, some really simple things can go a long way. and then order some subway tile. Again, a few cents per sheet. Again, the tile, when it comes to your shower, when it comes to your bath, it is going to be huge, you guys. And it will look like a completely renovated bathroom because it is, but you did it on a budget. Also, new closet systems. So these are super affordable, and they go a long way in maximizing your space. So take some measurements to Home Depot, and they can cut out your closet, put new shelves in, match the size, and it's great. Also, think about new fixtures. so doorknobs, air vent covers, light switches, outlet covers, blinds, all of these things, you guys, you can buy really inexpensively on Wayfair or Amazon, and they can give a really cohesive, updated look. All right, the moment of truth. What about home upgrades that could potentially lose you money? New carpets.

So if you're going to replace carpet, you might as well find an affordable tile or laminar option instead. Because a lot of people are going to rip up carpets when they move into a new home. Ultra custom choices. So don't choose like a wild paint color or really loud, obnoxious light fixture. So no custom mural of your cat in a tree or any of that. Okay. So let's just go simple. All right.

Next, getting rid of rooms. So in general, people would rather have more smaller bedrooms than fewer larger bedrooms. So keep this in mind if you get inspired to knock down a wall. Eliminating variety in your home's. features. So a coworker of mine recently renovated a two-bed, two-bath house. One bathroom had a shower, and the other one had a tub shower combo. Her realtor advised her to keep the tub and the guest bath, because that will be family-friendly for people that may move in that have children. So again, sometimes it is best to keep some variety when it comes to the features in your home, even small

things, like tubs and showers and all of it. Be thinking about that. Now, this last one is a dude. and it's one that Winston and I are doing. So we are, some people would say, being crazy, but we're doing it. And that's a pool. Okay. So a pool is very expensive, right? But you usually do not get out of the pool what you put in financially. But here's what I want you to remember. With all of this that we're talking about, this is your money, right? And there's going to be things in your life that you just want to do regardless of resale value or not. So we want to be wise, and part of being wise is making sure that you're cash flowing things, but also it's your life, and you want to be able to enjoy it. So that's my justification of us putting in a pool.

We've been saving for like five years, and we're like, we're going to do it. And again, we're going to spend more money on this. We know than when we sell and what the value will bring to the home, but that's okay, because we plan on being here for decades. We're going to enjoy it with our family, and that's going to be true with you and your home. So if there's something you want to do renovation-wise, that probably is not great, but you know you're going to be there for a while. It's something you really want and you have the cash for it. Go for it. But just know, going in that you're not like, oh my gosh, they don't love the cat mural on the wall. What do they? Why not? It costs us thousands of dollars and they're not going to pay us for that.

So just don't be shocked. Okay? That's it. We're going to go in to all of these decisions with reality and facts. So again, this is your house and enjoy it, you guys. Use the money on things that you want and just making sure that you're doing it responsibly. Right, you guys, home renovations. in the middle of it, good luck and be wise. Some of them are worth it. Some of them are not. But enjoy the process because making your home feel more like you, it's the best feeling. So listen, if you love the show, make sure to leave a review. We'd love to hear your feedback and subscribe and share the show that is always so helpful for us, you guys. So if you have friends or family out there, and you're like, they would love this episode. Go ahead and send it to

them. And I'm so thankful for you all. Thanks for listening to this episode. And remember to take control of your money and create a life you love.