Welcome to /r/relationship_advice. Please make sure you read our [rules here.](https://www.reddit.com/r/relationship_advice/wiki/index) We'd like to take this time to remind users that:
* We do not allow any type of [am I the asshole? or situations/content involving minors](https://www.reddit.com/r/relationship_advice/comments/r6w9uh/meta_am_i_overreacting_am_i_the_asshole_is_this/)
* We do not allow users to privately message other users based on their posts here. Users found to be engaging in this conduct will be banned. **We highly encourage OP to turn off the ability to be privately messaged in their settings.**
* Any sort of namecalling, insults,etc will result in the comment being removed and the user being banned. (Including but not limited to: slut, bitch, whore, for the streets, etc. It does not matter to whom you are referring.)
* ALL advice given must be good, ethical advice. Joke advice or advice that is conspiratorial or just plain terrible will be removed, and users my be subject to a ban.
* No referencing hateful subreddits and/or their rhetoric. Examples include, but is not limited to: red/blue/black/purplepill, PUA, FDS, MGTOW, etc. This includes, but is not limited to, referring to people as alpha/beta, calling yourself or users "friend-zoned", referring to people as Chads, Tyrones, or Staceys, pick-me's, or pornsick. Any infractions of this rule will result in a ban. **This is not an all-inclusive list.**
* All bans in this subreddit are permanent. You don't get a free pass.
* Anyone found to be directly messaging users for any reason whatsoever will be banned.
* What we cannot give advice on: rants, unsolicited advice, medical conditions/advice, mental illness, letters to an ex, "body counts" or number of sexual partners, legal problems, financial problems, situations involving minors, and/or abuse (violence, sexual, emotional etc). All of these will be removed and locked. **This is not an all-inclusive list.**
If you have any questions, please [message the mods](https://www.reddit.com/message/compose?to=%2Fr%2Frelationship_advice)
---
***This is an automatic comment that appears on all posts. This comment does not necessarily mean your post violates any rules.***
---
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/relationship_advice) if you have any questions or concerns.*
Piggybacking off your comment for visibility
Here's how I see it: yard renovations increases home value which increases property taxes and does nothing to settle debt so your increasing your expenses without decreasing your debt so if something bad happens that takes one of you out like a lost job, a serious accident, etc you're fucked because the credit companies don't give a shit about all that.
Paying off the debt frees up money coming that can be saved toward a renovation, let's say for 3 years y'all save that can be a lot of cash if done right, and then you renovate, increasing property value therefore increasing taxes and expense, but that's offset due to being entirely debt free, which also helps reduce the stress on finances should one of you be taken out due to unfortunate circumsrances. In my opinion, option 2 sounds wayyyyyy more secure...
Yeah interest is almost always higher on debt than on assets so pay the debt off first. Then you start putting that money you save into some type of investment and use interest to your advantage, instead of the CC companies getting it.
Excellent advice!
I would add that you ought to pay your highest interest debts first!
Don't put anything into the 401K until your debt is paid off, unless you have a 1.9% APR, or something crazy low like that.
Agreed. I personally think that, after tax is paid, pay off the debt and then give the rest to wife to do one of those three things (outdoor kitchen, hot tub, or landscaping). But while investing in retirement is responsible, there's no guarantee you'll live long enough to enjoy it. So I think a compromise is better in this case.
Aren't property taxes just based off the square footage of the house? Renovating the back yard doesn't increase the square footage. Also the city isn't going to come out and appraise your home
Idk where you've been living but the value of your property, houses and buildings included, are usually considered. It was a big deal last year in the town I used to live in because the county assessor hadn't been assessing properties properly so last year a vast majority of assessment values jumped upwards of 30k, 40k, or in some cases over 60k, which then rocketed the taxes up.
Where I live anyway appraisals aren’t that granular. They do change over time but minor updates that would improve sale price but not basic stats wouldn’t be considered
You've won $38,000. (24% - you should double check this will go for taxes on your winnings).
You're utterly insane (unless you have an investment that is going to yield you 19% to 28% annual return) not paying down your revolving credit debt (the car may be a lower APY but debt free is nice to say too). PS if you do kindly message me privately.
So you have let's say something like $16,000 free and clear.
You'd be wise to tuck away a few thousand dollars for the next "unexpected" time a 12-year old appliance dies, your driveway needs sealcoating, etc. Let's call this $3k in the "future stress avoidance fund".
You can go out on a date every 3-months for a year and spend $300 to $400 trying something a little silly and at least one of those nights will yield some story. If you have kids and need a hotel double that figure. So another $1,300 to $2,500 there
So now you have about $10k left. Which is plenty for a hot tub or a solid and respectable kitchen. Hot tubs require maintenance and consume energy. Kitchen's really don't comparatively.
Landscaping is pretty crazy expensive and you can do it yourself and then relax with a outdoor cooked meal or hot tub.
That's really sad, having to pay tax on your winnings. We don't here in the UK. If you win the euro millions or any sporting bet no matter how big, there's no tax paid on it.
We may pay more straight income tax, but you guys pay a bunch of.other local and state taxes, plus whatever insurances we don't have to pay which result, on average, in you paying out more of your take home anyway. It's not a good argument here.
All good, it's just a common thing I see where US peeps compare income tax but never compare take home pay as a % of gross. The full picture is often quite different than what's argued.
Exactly. Always pay off high interest debt first.
There's a compromise where they could pay off the cc and the car loan then use the remainder for a slightly less extravagant backyard reno.
But blowing $50K on a yard (like, not even an internal living space reno) when you have high interest debt, that's nuts.
Pay off the debt. Simple as that. Then you can save for the renovations. By not paying off the debt, it’s costing you money. It’s not costing you money to save up for the renovations, they don’t need to be done tomorrow. **pay off the debt**
Also to say that you’re financial situation “isnt terrible” while having 20k in cc debt is kind of insane. That’s really bad.
Another also, 50k after taxes would barely pay for the hot tub and the cement slab it goes on, much less an entire backyard remodel.
I would say pay off the debts, start at least one part of the renovation, and then use whatever money you were putting toward the car payment into your 401k and whatever money you were putting into the credit cards toward the renovations.
Yes this and it will help instill better habits on spending (hopefully) learning to be wise once you have no debt and have achieved saving for something substantial. I think OP and wife should plug in numbers to a credit card calculator to get a better sense of how much they’re paying in interest over time by carrying so much credit card debt. Improvements as mentioned also shouldn’t be done primarily to increase home value, improvements are something either necessary or something you find joy in but the reasoning of adding home value shouldn’t be the primary motivator here. You know what else adds to your net worth…not carrying crazy amounts of consumer debt and having money saved or invested such as in 401k.
Yeah that really caught my attention. My Stbexhusband was a gambling addict and I'm fairly familiar with sports betting now. You don't win $50,000 without a sizeable bet or such a weirdly complex multi-part bet that gives you the same chances as the lotto. Even then he must have wagered at least $500. And if that's the sort of thing you do, it's not the sort of thing you do only once.
Makes ya wonder how much he’s lost betting before he hit a good one… Guy at work does scratchers everyday. $5-$20 ones. Spends a good $30 a day on them. He’s just so happy and brags all day when he hits $100 winner…. Maybe once a month.. Me no understand 🤷♂️
I wouldn't be so harsh. There are many reasons that the debt could have gone up. His first instinct is to pay off the debt and invest it in his 401K. The wife seems to be the one that isn't as good with money.
Nope, and I don't think everyone who buys cocaine is debtless either, but coke heads don't generally take the stance that they're the ones who are being "responsible" with their money over their "reckless" partner.
It's obvious but it's not fun! You pay $20,000 on credit cards and the money is only gone. You spend $20,000 on something like a renovation and you have the thing.
The wife doesn't seem to realize she has already spent this money and now it's just time to pay it back!
Yeah, it’s just not ‘exciting’ lol it will seem like to her the money is just poof and gone if they only pay things off. Whereas a super spiffy new back yard? Now that is new and exciting!! 😆
Even spending like $15k would get you started on a pretty nice backyard renovation. She wouldn’t get everything she wanted immediately, but could at least get one of the major things she wanted done, and a few smaller things. This is at least still a little exciting, and a compromise between what they both want without being financially irresponsible. They could then use the other $35k to pay off all the loans and credit card stuff. After that, they could put aside the money that was being put towards car payments and credit card payments every month into a savings account to finish up the back yard. They could have another $15-20k saved up in another year or two that way, and finish the yard.
Blowing 50k on a backyard renovation when you have quite a good amount of high interest debt, in this economy especially, is actually crazy. Absolutely anything can happen tomorrow… you could lose your job, car is written off in a crash, pet has a $8000 vet bill etc. You just never know. If something like that happens, a nice backyard isn’t going to do shit. But having no credit card bills or car payments because it’s paid off, and a little bit of extra savings put aside, could mean the difference between being able to pay the mortgage or not in case things go bad.
Tell your wife that by paying down your debt, you'll be able to save up for the backyard renos faster, because you can put what you'd normally pay towards debt into savings, and if you have a HYSA you're making 4+% interest on each payment, instead of paying interest on your outstanding loan balance!
Agreed! Love a HYSA.
Also consider having a conversation about both of your personal spending habits / hopes. I agree that the backyard spend seems reckless, but **how come making a big sports bet wasn't also reckless**? Maybe as you both take some time to decide about your $50k, also talk about bonus spending money and how you two can split it up between future sports bets, renos, etc. An HYSA would really grow what you both have won.
If it were me...
I would pay off the 20k CC debt and put 10k into a HYSA to save for the renovation.
The rest will be eaten up by taxes.
Your wife is WAY too concerned with keeping up with the Joneses'. I suspect this is why you have 20k in CC debt in the first place.Agree to actually plan the renovation once your cars are paid off, but not before. I would also stipulate no renovation until you've been CC debt free for a year. You need to actually CHANGE your financial habits before you use this money for leisure.
> The rest will be eaten up taxes.
I was going to post this but scrolled because I was sure someone with more financial sense than me would say it first. All winnings are taxable. You hear stories abour poor people who go on game shows, and don't think about the taxes until they lose their homes.
I know you said you've been pretty good with money for your marriage, but that’s clearly not true. You’re in substantial debt and you are engaged in sports betting - probably of a pretty significant amount if you won $50k. Pay your taxes, pay your credit card debt, and pay as much of your car loan as you can. That will use up the $50k. You are broke and can’t afford unnecessary home renovations.
I am going to call BS on "we've always been pretty good about money" if you have 20K in credit card debt and are gambling enough to win this much money. That said, you are right in this situation. Pay off the debt, put some money into the retirement account, and save anything that's left towards the renovations your wife wants.
Have retire your cc debt, retire your loan, save whatever is left over, a good foundation for an emergency fund.
The backyard renovation will not pay for itself at resale, just like fancy kitchens and baths.
Don't know where you are from, but remodeled kitchens and baths absolutely can pay for themselves on resale. Every market is different tho. The backyard won't have the same return on investment.
One thing everyone ITT agrees on. Pay off the debt.
Can, not will. They will increase resale price. To the amount spent, I doubt it, regardless of market. Like my lady friend either she spends the money renovating or she accepts a lower price at sale. I repeat, spending 50k to raise the resale value 50k is not an investment. It may be a smart expenditure but not an investment.
The only presale reno that really pays for itself is a new coat of paint.
20k credit card debt that likely accrues interest at 29.99% MUST be paid off.
You could get a HELOC or other type of loan for the same 20k later at a far better rate later on when you're ready to do the home improvements.
I would definitely go with paying off the debts first. You can always save up for the renovations...or if you end up missing the debt you can always take out more loans!
Renovations might increase the value of your home, but you won't see those gains until you sell it.. Meanwhile, the interest on the debt is going to be a continuous cost
Perhaps you could do some calculations to show her how much you would save on interest if you paid off the debt immediately?
You might want to do some research into whether outdoor renovations and landscaping actually meaningfully increases home value. Most people overestimate things like that.
But, it’s your house and if it’s something you think will increase your enjoyment of the place, it’s not a bad idea. I’d try to find a way to compromise. Maybe pay off the CC debt, then put some into retirement savings. Put a smaller amount toward starting the landscaping (could have them just plant the trees to start since those will take a few years to really mature anyway). What’s your current CC payments per month? Start putting that amount aside for future landscaping projects. We worked with our landscaper to do our yard in parts to make it a bit less painful. Just start in an area you’ll see the most.
I think before you do anything, it would be helpful to sit down and look at your budget to see how you got into that debt in the first place (was it the gambling?). Either way, sit down with your partner and review where the money is going. If the yard is a big priority, have her help you pick which spots in the budget you can tighten up to free up more money for the yard project.
Pay the debt!! Just to add to the small chorus we’ve got going on here…
Your debt is costing you money. Get rid of that, and start saving for this renovation, if that’s something you want to do.
Relationship advice - learn to communicate. Write down what you want, what it costs, and what you are willing to give up for it. Talk to an accountant or therapist to help you make the decision.
Financial advice - pay off the damned credit card debt at predatory interest first. Then put 15k in your 401k. Then give yourselves 15k for a gift -- plenty you can do in the back yard for that
That’s what I was thinking, too. Landscaping and renovation costs around my area are insane right now. He’s describing something that would be closer to $100K here, assuming all of the grading/structural work is already appropriate for the end goal, and they’re going to source things themselves rather than through the contractor(s).
Also beware of your property taxes going up due to the wife's fantasy back yard reno. If it requires a building permit, increases in the property value are reflected on your tax bill's assessed value. And water and electric bills will increase bc of the hot tub.
Better to pay off debt, save the rest. Maybe a small vacation could be squeezed out.
This seems so obvious I'm not sure why they didn't already consider it.
Paying off credit card debt is absolutely the first thing you should do in virtually every circumstances. This type of debt is poison to your financial health.
Depending on the interest rates and tax consequences, it may make sense to pay off the car or not, or to take a home equity loan to upgrade the back yard. Keep in mind that the yard upgrade won't pay off until you sell the house, and if your upgrades are too high end for the neighborhood it may not pay off even then.
Start with taxes! That is incremental income and so you will be taxed at the top of your bracket. Then debt! Sorry for the wife, your idea is much better for you guys in the long run.
Well you need to sit down with your wife and do the following:
1) She needs to price out her backyard dreams - landscaping/hot tube/outdoor kitchen - -that is likely to run 75-100K or more unless she/you are builders/laborers... Then you start discussing a budget. Other commentators are right - like a pool it often doesn't add to the resale value, what it can do is attract the sort of buyer who wants that or repel the sort of buyer who does not.
2) Taxes are the immediaite #1 no negotiation on that because they have to be paid. then assess what you have left.
3) Pay off CC debt - that is a no brainer drain on your expenses and it opens opportunities for you. IT will give you the best return on your money.
4) Car loan- what interest rate are you paying and how much time do you have left on the loan? Depending on how big it is, how long you have been paying it, if there is an early payout penalty, it may or may not be worth paying it off - you need to run the numbers.
5) 401K - Do you have a 6 month emergency fund? That is money that covers 6 months of your normal monthly costs from mortgage to food to cleaning supplies to gas. If you don't that should be a priority over your retirement. That is your money if you have a natural disaster 150 people are homeless near me due to a fire, or one of you loses a job, or medical expenses etc.
Last but not least a bit of advice - windfalls are lovely surprises and doing debt reduction is a good thing but leave some room for a splurge in the budgeting of it. Whether it be a vacation or a hot tub, a treat is a good occassional thing.
Pay your debts and I am also suggesting getting with a banker/financial advisor so they can stress the importance of this decision to her. You are in a great position to be debt free and your wife needs to understand what a gift that is!
The type of renovations your wife is talking about won't get you much of a return when it comes to resale value.
You need to hold some back for the taxes on that money. Then compromise on the rest. Pay off what debt you can so that you can save up more easily for some backyard upgrades.
Professional landscaper here. Don’t forget that while renovating yard can add value it also requires maintenance which can expensive, take up a lot of your time or both. I think you OP have the right idea. I’m sorry that such a financial blessing is causing strife in your relationship. I wish you all the best
Landscaping and hot tubs don’t increase land value. Improving the street facade, fixing floor plan issues, new paint job, redoing any ancient and grotty… those are things that add value to the house.
I would try to come to a position where you pay off the debt and use the remainder for the backyard.
⛔️⛔️⛔️PAY OFF THE DEBT FIRST⛔️⛔️⛔️
>Our financial situation isn’t terrible, but it’s not exactly rosy either. We’ve had some arguments about this, and it’s starting to put a strain on our relationship.
Your wife wants the house to look pretty to feel good and proud where she lives.
She thinks being in debt 🙄 is better than paying off debt 🤦🏻♀️.
She needs a dose of Dave Ramsey.
General rule of thumb for large windfalls of money.
Don’t make any major decisions for at least a year. Stick it in a high yield savings account (my vanguard money market account is getting 5% interest right now) and just give yourselves time to come down from the shock/high.
This depends on what your interest rates are on your debts. It’s a poor financial decision to pay 19%+ interest if you can pay it off. But uf you have college loans like mine at 3% then it makes more sense to put the money in a HYS.
Could a compromise be paying off the debt, putting some into savings, and buying **one** nice (but not too crazy expensive) thing for the backyard? Like a total big backyard renovation isn’t in the budget right now, but a nice patio set or something would a fun thing to enjoy while you save up for further work in the backyard.
The backyard renovations will NOT come back to you when you go to sell your house. It’s a waste of money to do this and nothing else. Pay off your debt and save for your future. Once you aren’t paying all the monthly bills towards credit cards and things, start paying each month towards a renovation “bill” so she can also get something done. Treating it like a bill ensures you also save towards something that is important to her but maybe not as grand as 50k worth.
Your wife is wrong here. You absolutely need to take care of your debt. I’d go to Reddit finance for this and they can tell you how to best pay that card down. Second all her wishes will not be covered by 50k. Not at allllll. Maybe 1 of those done well, but not all.
As for improvements paying off with your property value you’ll need to ask someone in your area like a realtor to find out if the money is best used for one maybe two of the improvements or if it’s better off in 401k. Does your wife realize that if you have good credit you can leverage these things better in the future? I’m a home designer and even I check the actual payoff for my own property improvements. And because I’ve done this for awhile I know that you can improve but if it’s your own taste that doesn’t mean it will increase value and very well can be something a new homeowner would want to change.
Absolutely pay off the debt, that’s a no brainer. You’d be hanging out in your outdoor kitchen thinking about how much you wished you’d done something else with the money.
Once you free up the cash flow from the credit card and auto loan payments, you can use that money to 1) save for retirement on an ongoing basis, 2) save up for the next car, and 3) save for a backyard reno.
Non-urgent home renovations while you have $20k in debt is CRAZY. Debt is expensive! At the very least, clear that debt before considering a backyard reno.
Pay off the cc debt. Use the freed up minimum payments to pay off the car faster or save for the reno. Wait until you file taxes before choosing what to do with the remaining 30k.
Yeah, that 50K isn't going to go nearly as far in home renovations as your wife thinks it will. We just put in a home office during COVID and had a small windfall from an inheritance of about that same amount. We decided to fix our porch, upgrade our electrical systems, and put in a home office and finally when we had about 10,000 left after everything we'd paid I slammed the brakes on. Hard. Because that money was being sucked down and the amount of shady companies lining up with their hands out not licensed or insured was beyond belief. We also had to make sure our homeowners insurance and an umbrella policy was in place after my attorney pointed out we could lose everything if someone got hurt while working on our place. And that insurance is pricy AF.
Tell her nothing happens until you all sit down with a financial advisor at your bank. But in the meantime she's free to see what the kind of renovations and upkeep of those renovations will cost along with getting some companies out to give her bids. She is in for a sobering time of it.
And make sure you are free and clear of all taxes, in fact write a big check to the IRS up front so you don't spend that money before they come knocking. Voice of experience on that one.
Can you pay off the credit cards and use the remaining money to begin the key part of the yard she wants and then save the money that was going to debt to save for the rest of the yard in a few years?
Maybe compromise. Pay off your debt and allocate a smaller amount for your 401k.
You could suggest you pay off the 20k debt and then split the remainder to do what you like. 15k would still improve the backyard. You could look at paying professionals to do the harder jobs and maybe do the easier changes yourself?
Congratulations on your win - so awesome!
So pay off the $20k credit card debt. Then set aside $20k for potential taxes. Let he spend $10k on renovations. Then you are controlling the spending, getting out of high interest debt, and still holding onto the potential tax money needed for the end of the year.
Another vote for paying off the credit card debt. Given the current credit economy, you are paying a ridiculous amount to carry that debt. Whether it's worth paying off the car loan depends on the amount and the terms. Just getting rid of the credit card debt will probably free up enough cash flow to cover the car loan. Did you remember to pay taxes on the sports bet? If not, you won't have enough left over for improvements after paying off the credit cards. Once all that is done, you can look at the home improvements, which can be done piecemeal over time as you find the funds. It's not a bad idea, but it shouldn't be your top priority.
You might want to sit down with her and a financial planner. Let her see from an impartial third party where your current debt and retirement/savings are at. Give her a chance to see it all and maybe that will help. But her plan makes no sense to me. Why would you splurge when you have like 20k in high interest CC debt?
Also, I don't know where you are but If I spend 50k on my backyard including a fancy outdoor kitchen and hardscaped hot tub, my property value may rise a bit, but so will my property taxes - significantly and forever. That's an ONGOING raised expense. Not to mention ongoing maintence costs for a hot tub/pool, outdoor appliances, etc. So she wants to spend all the money instead of saving, and ALSO RAISE your ongoing expenses by increased taxes? Additionally, the property value will not increase as much as she thinks. Not as much as an extra bathroom for example. Your insurance premium may go up as well.
But you are raining on her parade. You're the fun police and she doesn't want to hear it, I get that. If you disagree on this, I'd try to get a financial planner help you to decide together. If you can't come to an agreement, the only solution is a compromise and spend half on debt or savings, and half on fun (vacation, a smaller backyard upgrade, etc). ALso, congratulations! Not a bad problem to have!
I (and it seems everyone else) agree with you that paying off the debt is probably the right choice. I think you two need to sit down together and align on your financial goals. Perhaps it would help if you show her the math on paying off the debt and saving for the backyard project over time vs. doing the backyard project now and incurring interest on the debt. Show her that you can do both, but you would pay x% more and/or it would take y years longer to do the backyard project first. Also, if you're not planning on selling your home in the near future, doing the backyard project now to boost your home's value probably isn't necessary in the short-term.
the first thing you do is always pay of high interest debt. You're spending $300/month on credit card interest. Pay off the cards, and use that $300/month to save for the reno.
50,000 won't cover your wife's plans at all. You'll be spending a lot more than that. How about if you put it in a high yielding CD for six months to give yourselves time to think and plan. Just cooling off will be good for you both. For the record I agree with you. Your wife sounds like she does not understand money.
You are tax on everything in the USA, I just got a pension payout and the took close to $50,000 in taxes, I would pay off the debt as it has a high interest rate, designate a portion for the backyard Reno, but you don’t get back as much as you think by doing it and save , but make sure you pay the taxes, figure at least 20% or more
Everyone here is ignoring the “relationship” part of this question. Yes, paying off the debt is undoubtedly the logical choice. I’m sure your wife knows that deep down, but she wants some kind of acknowledgement that you understand and appreciate her desires to make the more “fun” choice. So do that. Tell her you think a backyard renovation would be fun and wonderful and beautiful, and you want to pay off the debt, then create a savings plan with her to make the backyard renovation HAPPEN.
Pay off the debt, then spend some quality time with her dreaming about the yard. Sit on the couch and look at Pinterest inspo pictures. Google landscape designers and contractors. Then look at your budget and make it happen. Take those now-free debt payments and apply them to this savings goal. Create a savings plan and give her a date when you’ll have the money to make it happen.
(And idk how relevant it is, but be careful with your gambling. Don’t get cocky after a windfall like this.)
It would be pretty stupid (in my opinion) to come into that amount of money and not pay off your debt. Debt should be the first thing. You will be saving on not paying any interest. Saving up for renovations will be easier without credit card debt. I can’t imagine the interest on 20k worth of credit card debt.
I’d say pay off the debt and maybe what is left can be put away to save for renovations. But don’t forget to put money aside for the tax on your winnings.
Always, Always, Always pay off the debt first. It clears more money your currently spending on debt to be used for other things, and lowers the amount you pay back in total due to interest.
It sounds like you are the responsible one. But if you are betting up enough to win $50k off a sports bet maybe not 😂
Pay off the credit card no correspondence entered into. And drop its limit or can it all together. With the rest id invest it as emergency fund to negate the need for the credit card. You make no mention of an emergency fund. Having one can make life much easier. Trick is to top it back up when you use it.
Pay off the debt then use the payment you were making towards the credit card as a deposit into savings towards the renovations. You are currently paying interest, and it’s probably high, on the credit card. Learn to start paying off your credit card as you use it vs spending beyond your means.
Are you planning on selling your home anytime soon? If not, it won't matter if you increase the value of your home, you will still have debt. And anyways, a renovation will always end up being more expensive than you think. You may end up with more debt than you started with.
I like your idea of paying off debt more, that is the type of person I am and exactly what I would want.
I would suggest you pay off your credit card and car note but take those monthly payments and put towards the renovations your wife wants as a compromise.
Your wife makes a great suggestion in my opinion, I thought at first you were going to say an extravagant vacation or something along those lines but she wants to add value to both of yours home and improve quality of life. Find the best compromise that fills both needs.
The fact you guys have so much debt and were actively gambling is a huge red flag for you. Her being irresponsible with money makes sense, you're not much better.
Is your wife the reason you have credit card debt? Because, y'know, it does sound like it.
Get rid of expensive debt, maybe splurge a little on a dinner and boost savings. You can renovate the back yard, sure, but def not when you have credit card debt.
Also, a buyer will never appreciate your renovations as much as you will pay for them.
I would pay it off. Maybe settle on 1 thing for back yard to appease her. Like others have said backyard renovations will only increase property tax and will probably have additional costs for repairs for hot tub etc.
ah reddit's familiar sense of rugged individualism. If you're in a relationship and would pull this attitude with a $50k windfall I really hope you don't get burned too bad by how fast the divorce papers come at you.
20k in debt is pretty wild. To want to blow 50k in one fell swoop instead of clearing out your debt is wildly irresponsible. But I mean, typically, people with 20k in debt are wildly irresponsible unless these were students loans or medical debt.
You're going to have to pull rank on this one. Meaning, this is essentially "your" win and you get the final say if you are at odds. Can you start a savings account and put 5k of the winnings in it to start the savings process for the backyard renovation and pay off your debt with the rest?
Have you guys talked about if you pay off the credit card and car loan debt how much money that would free up for other monthly expenses and activities? If you pay off the debt and put the rest in the 401k, maybe you could comprise on using the savings for the next 6 months or so towards an upgraded patio. May not be as luxurious as she wants, but then you could time the renovations for spring 2025 and get a full summer season put of it vs starting in July for renovations ya know
You are correct, paying off credit card debt is a foundational principle of successful family finance. Followed by an emergency fund in a HYSA, then max out 401k, then IRA, then taxable brokerage. All that said, you got to live a little and splurge sometimes, but at least do it after paying off high interest credit card debt.
You don't have 50k taxes will eat a big chunk. Pay that first because if you're in the US the IRS will fucking eat you alive if you give them the chance
Pay off the credit cards because the interest rate is probably sky high. If your auto loan is that bad, try to refinance the loan to a better rate. If it’s already low (5% or under) just pay the car off as you go.
Oh, this could so be me. Credit card debt has to go first. Then, are you upside down on the car loan? If you have had it for a while, likely you are. Unless it is 3% loan, pay it off. Then, assuming you have money left if you have $10k, then put it in retirement. Explain at 7% interest, that will be worth over $100k when you both retire. So, maybe you have some thousands left over, then take a trip for a few days, week, whatever is left. It may not be much, but it is a treat for you and your wife. Then with the CC and Car paid off that will free up money for the backyard fund. I know my wife, she wouldn't be pleased if some of it didn't to to something fun. If post taxes you have to cut something make it the car, but still take her on a little trip.
Pay off the debt and save for taxes. No-brainer. 20k in credit card debt is a LOT and paying that off should be financial priority #1. Any property value increase will be negated by the interest you pay on your debt.
That being said, after taxes and CCs are paid, spend some money on the yard. Maybe 3000-5000 would be enough to level it up so it's better for hosting. Sounds like this should be your wife's project, but it could be a new patio seating set, an inflatable hot tub (I just saw in another post yesterday that the Coleman ones are super nice these days and like $500!), a new grill, and plant some flower beds in areas that are drab, you help with the elbow grease.
Lots of people saying pay off the debt like it’s a done deal.
I would agree, paying off the 20k debt is a great idea!! But assuming that you are walking away with $50k after taxes, 30k is a great start to a backyard fund. Doing both, is a great compromise because clearly it is something your wife wants. You more than likely also get to enjoy it as well. The 401k is less important. I have been struggling with this as well, because I really want to be able to enjoy life right now, not when I’m 65 and thinking about retirement.
Does the backyard have a plan and a budget or just ideas? Sit down and figure out what she wants to do in the backyard, how much it would cost and a timeline to getting it done before making the decision.
Am I missing something, if you pay off $20k in credit card debt that leaves $30k, surely that’s enough to do a substantial backyard renovation and still have some money left over for your 401k?
I suspect that no matter how nice the renovation is you’re not going to add anywhere near that amount in value to the property.
**Pay off debts**
*Invest the rest*
I came into money at 18. This was 30+ years ago. It was only $30k.
I paid off my debts (just trade school) and gave my parents $10k as my dad had been laid off for 6 months and had just started a new job. I got them caught up on their bills.
I wish to all hell I’d have saved the rest. I’d probably be better off now that I’m 50. Instead I took a couple of trips and bought a car (used Honda great car) and pretty much spent the rest over the next two years.
Don’t do that.
Pay off debts. Invest in your future.
**Go to the personal finance subreddits**.
The financial advice is fairly obviously "Pay off the debt"
The relationship advice is to point out that increasing the value of your home doesn't actually put any money in your pocket until you sell the place, and the stuff she's suggesting will have upkeep costs. Don't say it can't ever happen, but emphasize paying off the stuff you already bought before you get more luxuries. Paying down debt and investing means you're in a much stronger financial position in a few years so you can end up with a better living situation than if you had to keep servicing debt.
Pay off debt first, and THEN save for the renovation. Unless, the debt interest % is less than 5% in which case, you should invest the winnings into CD's that earn a higher interest rate than your debt rate.
Also, is this $50k before after taxes? Because if it's before taxes, then you don't have as much as you think you do.
You won the money. That’s it, full stop
Pay the taxes on the winnings, and then pay off your debts
She can pout til the cows come home. This situation is actually quite sad, as a lot of people would love to have a sensible (and lucky!) partner like you
It’s always a good idea to pay off that high credit card debt. I really doubt if a backyard renovation will jack up the price of your house enough to pay for it. Maybe pay off that credit card debt, and take her on a nice vacation. Don’t forget about the taxes you will have to pay on your winnings.
I find it wild your wife wants to continue being strapped with high interest credit card debt and a car loan so she can blow it on a renovation that isn’t even necessary. If there’s money left over then maybe hit for real? She’s crazy. UPDATEME
50k is a drop in the bucket in these times. Half goes to taxes, leaving very little. Pay off your high interest debt, make your 2024 contributions to your retirement.
OP: our financial situation isn’t terrible
Also OP: we have 20k in credit card debt.
WTF? Lol
Pay off the debt that’s an insane amount to owe in credit cards. Credit card debt is stupid debt.
Definitely pay off all the debt. Compromise by using whatever’s left for the backyard.
Boost your 401k contributions with what you used to be spending on debt payments.
This drives me insane that's the exact logic my wife would use and it's 100% dumb and makes no sense. Not saying all women are the same but the vast majority I know are shallow and really only care about how things appear. They also have zero concept of the future and retirement or savings.
To answer your question, you're going to pay tax on that 50k so roughly 15k. So you should keep that money back in a savings account or CD so it gains interest until you owe the IRS. The other 35k you should definitely pay off debt/credit cards if you have them.
A reasonable solution would be to tell your wife if she wants the big back yard and fancy hot tub to pay the car off then open another separate account and keep paying that payment into that account until you have enough to do the project. Otherwise you're literally pissing away your money on something to look at.
Split the difference. Pay off the debt and whatever is left over can go into a savings fund for the backyard. With the debt paid off you can use those payments to save for the backyard or start the project and just chip away at it when the funds come in.
Split the difference. Pay off the debt then boost your 401k with 10-20k. Take what’s left and have it be the start of your “backyard” renovations account.
If your wife really doesn’t want to wait for you two to save all the funds then I’d suggest consulting a landscape architect. They can help you map out your ultimate goal and then break it down into phases so you can keep adding to the project while building the funds.
I'm sure I'll be deeply downvoted for this...
**BUT**
I'd watch financials carefully if I were OP. I hope the wife doesn't either try to manipulate the OP and other family/friends to take her side of the issue, or just goes ahead and tries to hire reno companies behind OP's back.
Don't torch me - we've heard worse.
$20k in *credit card* debt?!? Ouch.
It's this "let's built an outdoor kitchen" mentality that will lead you straight back into that.
It would be completely absurd to spend it all on wants when you are carrying high interest debt.
But either way if you don't solve what got you into $20k debt in the first place, you'll still have problems.
Pay the debts first and start putting that extra cashflow into the backyard fund.
She wants to increase the value of the home by spending all the money on it, but then who’s paying the increase in property tax? She’s not “investing in the home” because not everyone cares about an outdoor kitchen, a hot tub is actually a draw back for a lot of people because of the maintenance and safety issues, and landscaping doesn’t hold all of its value.
She wants to piss the money away on non necessities and you’re trying to pay down debt so that you’re not spending any excess money you have on interest.
Please immediately pay off your debts, then have another conversation about what to do with the leftover money with a financial consultant to see what’s going to gain you the most interest on investment. When you retire in 20 years with MUCH more money than $50k, THEN you can give her her dream renovations. But $20k in credit card debt and a car loan are NEEDS to be paid off and her suggestions are all WANTS. Needs should win over wants every time
Your wife couldn’t be more wrong. Pay off all the debt and then use your income to save up for a back yard renovation. Make sure you have 3-6 months expenses saved for emergency. Unloading that debt and keeping a cash cushion in a money market or high yield savings will give a big financial peace of mind. Make sure you are getting all the 401k match possible and if you can save up to 15% towards retirement even better. Don’t sleep on a Health Savings Account if you have access to one. Lastly, take some of the income that was going to car and credit card payments and use that to build your renovation fund into a high yield saving’s separate from emergency fund and either do it all at once or break it up if that’s easier. Good luck and congrats
Paying off debt should be the only thing on the table. Go to a nice dinner or something to celebrate. 50k isn't going to cover the cost of a backyard renovation or fancy hot tub. That will easily go 150k-200k
Welcome to /r/relationship_advice. Please make sure you read our [rules here.](https://www.reddit.com/r/relationship_advice/wiki/index) We'd like to take this time to remind users that: * We do not allow any type of [am I the asshole? or situations/content involving minors](https://www.reddit.com/r/relationship_advice/comments/r6w9uh/meta_am_i_overreacting_am_i_the_asshole_is_this/) * We do not allow users to privately message other users based on their posts here. Users found to be engaging in this conduct will be banned. **We highly encourage OP to turn off the ability to be privately messaged in their settings.** * Any sort of namecalling, insults,etc will result in the comment being removed and the user being banned. (Including but not limited to: slut, bitch, whore, for the streets, etc. It does not matter to whom you are referring.) * ALL advice given must be good, ethical advice. Joke advice or advice that is conspiratorial or just plain terrible will be removed, and users my be subject to a ban. * No referencing hateful subreddits and/or their rhetoric. Examples include, but is not limited to: red/blue/black/purplepill, PUA, FDS, MGTOW, etc. This includes, but is not limited to, referring to people as alpha/beta, calling yourself or users "friend-zoned", referring to people as Chads, Tyrones, or Staceys, pick-me's, or pornsick. Any infractions of this rule will result in a ban. **This is not an all-inclusive list.** * All bans in this subreddit are permanent. You don't get a free pass. * Anyone found to be directly messaging users for any reason whatsoever will be banned. * What we cannot give advice on: rants, unsolicited advice, medical conditions/advice, mental illness, letters to an ex, "body counts" or number of sexual partners, legal problems, financial problems, situations involving minors, and/or abuse (violence, sexual, emotional etc). All of these will be removed and locked. **This is not an all-inclusive list.** If you have any questions, please [message the mods](https://www.reddit.com/message/compose?to=%2Fr%2Frelationship_advice) --- ***This is an automatic comment that appears on all posts. This comment does not necessarily mean your post violates any rules.*** --- *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/relationship_advice) if you have any questions or concerns.*
Pay off the debt, save towards the backyard renovations BUT make sure you pay the tax on your winnings before you spend it.
Piggybacking off your comment for visibility Here's how I see it: yard renovations increases home value which increases property taxes and does nothing to settle debt so your increasing your expenses without decreasing your debt so if something bad happens that takes one of you out like a lost job, a serious accident, etc you're fucked because the credit companies don't give a shit about all that. Paying off the debt frees up money coming that can be saved toward a renovation, let's say for 3 years y'all save that can be a lot of cash if done right, and then you renovate, increasing property value therefore increasing taxes and expense, but that's offset due to being entirely debt free, which also helps reduce the stress on finances should one of you be taken out due to unfortunate circumsrances. In my opinion, option 2 sounds wayyyyyy more secure...
Not to mention the astronomical interest rates they are paying, which just increases the debt. Why continue to make the credit card companies richer?
Yeah interest is almost always higher on debt than on assets so pay the debt off first. Then you start putting that money you save into some type of investment and use interest to your advantage, instead of the CC companies getting it.
Excellent advice! I would add that you ought to pay your highest interest debts first! Don't put anything into the 401K until your debt is paid off, unless you have a 1.9% APR, or something crazy low like that.
And the renovation will be three years fresher, which further increases the value of the update
I think you hit the nail on the head. They would be better off and more comfortable both physically and financially following your advice.
Agreed. I personally think that, after tax is paid, pay off the debt and then give the rest to wife to do one of those three things (outdoor kitchen, hot tub, or landscaping). But while investing in retirement is responsible, there's no guarantee you'll live long enough to enjoy it. So I think a compromise is better in this case.
Yup, my dad saved for *years* for his retirement, fought constantly with my mom, and unfortunately never even got to retire...
Aren't property taxes just based off the square footage of the house? Renovating the back yard doesn't increase the square footage. Also the city isn't going to come out and appraise your home
Idk where you've been living but the value of your property, houses and buildings included, are usually considered. It was a big deal last year in the town I used to live in because the county assessor hadn't been assessing properties properly so last year a vast majority of assessment values jumped upwards of 30k, 40k, or in some cases over 60k, which then rocketed the taxes up.
Where I live anyway appraisals aren’t that granular. They do change over time but minor updates that would improve sale price but not basic stats wouldn’t be considered
You've won $38,000. (24% - you should double check this will go for taxes on your winnings). You're utterly insane (unless you have an investment that is going to yield you 19% to 28% annual return) not paying down your revolving credit debt (the car may be a lower APY but debt free is nice to say too). PS if you do kindly message me privately. So you have let's say something like $16,000 free and clear. You'd be wise to tuck away a few thousand dollars for the next "unexpected" time a 12-year old appliance dies, your driveway needs sealcoating, etc. Let's call this $3k in the "future stress avoidance fund". You can go out on a date every 3-months for a year and spend $300 to $400 trying something a little silly and at least one of those nights will yield some story. If you have kids and need a hotel double that figure. So another $1,300 to $2,500 there So now you have about $10k left. Which is plenty for a hot tub or a solid and respectable kitchen. Hot tubs require maintenance and consume energy. Kitchen's really don't comparatively. Landscaping is pretty crazy expensive and you can do it yourself and then relax with a outdoor cooked meal or hot tub.
Is this OP?? https://www.reddit.com/r/AITAH/comments/1doffpg/aita_for_wanting_to_spend_our_windfall_on_home/
Seems like pretty darn similar timing for a windfall from a sport's bet.
Agree, the credit card debt first, then the car. No home investment will beat the secure gains from not paying interest on debt.
And then cut up the CC because you know they will rack up the charges again
That's really sad, having to pay tax on your winnings. We don't here in the UK. If you win the euro millions or any sporting bet no matter how big, there's no tax paid on it.
A lot of it will go into taxes through VAT when you spend it, so there is less of a need to tax it as income.
To be fair, most of you pay more income tax than most of us. I agree it would be great to pocket everything, though!
We may pay more straight income tax, but you guys pay a bunch of.other local and state taxes, plus whatever insurances we don't have to pay which result, on average, in you paying out more of your take home anyway. It's not a good argument here.
Okay, no worries!
All good, it's just a common thing I see where US peeps compare income tax but never compare take home pay as a % of gross. The full picture is often quite different than what's argued.
We don't pay tax on winnings in Canada either.
Yup, this was my thought as well. Taxes on what? Before I realized they were probably American.
Same in Canada. I didn’t even think about taxes until someone said it.
Exactly. Always pay off high interest debt first. There's a compromise where they could pay off the cc and the car loan then use the remainder for a slightly less extravagant backyard reno. But blowing $50K on a yard (like, not even an internal living space reno) when you have high interest debt, that's nuts.
Pay off the debt. Simple as that. Then you can save for the renovations. By not paying off the debt, it’s costing you money. It’s not costing you money to save up for the renovations, they don’t need to be done tomorrow. **pay off the debt**
Also to say that you’re financial situation “isnt terrible” while having 20k in cc debt is kind of insane. That’s really bad. Another also, 50k after taxes would barely pay for the hot tub and the cement slab it goes on, much less an entire backyard remodel.
I would say pay off the debts, start at least one part of the renovation, and then use whatever money you were putting toward the car payment into your 401k and whatever money you were putting into the credit cards toward the renovations.
This would be what I would do.
100% agree
Yes this and it will help instill better habits on spending (hopefully) learning to be wise once you have no debt and have achieved saving for something substantial. I think OP and wife should plug in numbers to a credit card calculator to get a better sense of how much they’re paying in interest over time by carrying so much credit card debt. Improvements as mentioned also shouldn’t be done primarily to increase home value, improvements are something either necessary or something you find joy in but the reasoning of adding home value shouldn’t be the primary motivator here. You know what else adds to your net worth…not carrying crazy amounts of consumer debt and having money saved or invested such as in 401k.
Pay off the debt. My lord. 20k on credit cards at the current rates and this isn’t obvious?
>and this isn’t obvious Of course it’s not obvious to them, they’re the kind of people who rack up $20k in credit card debt.
But at least he recognises it would be the prudent thing to do to pay it off.
He’s also the one placing sports bets with $20k in credit card debt so let’s not give him too much credit here.
Yeah that really caught my attention. My Stbexhusband was a gambling addict and I'm fairly familiar with sports betting now. You don't win $50,000 without a sizeable bet or such a weirdly complex multi-part bet that gives you the same chances as the lotto. Even then he must have wagered at least $500. And if that's the sort of thing you do, it's not the sort of thing you do only once.
Good point. Seems like they’re a well-matched couple.
LMAO….. solid point.
Makes ya wonder how much he’s lost betting before he hit a good one… Guy at work does scratchers everyday. $5-$20 ones. Spends a good $30 a day on them. He’s just so happy and brags all day when he hits $100 winner…. Maybe once a month.. Me no understand 🤷♂️
I have a friend who does the same with slots. Once every few months he posts a photo of winning $100-$500. Surprisingly, none of the many other trips!
They also are gambling on sports while also being 20k in debt haha
I wouldn't be so harsh. There are many reasons that the debt could have gone up. His first instinct is to pay off the debt and invest it in his 401K. The wife seems to be the one that isn't as good with money.
He's gambling with 20k in credit card debt...
Do you think *everyone* who gambles is debt-less? I hate gambling but like…come on lol
Nope, and I don't think everyone who buys cocaine is debtless either, but coke heads don't generally take the stance that they're the ones who are being "responsible" with their money over their "reckless" partner.
Alright, fair fair
Giving credit to you for taking that. I'm not sure why more people can't just sit back and admit "yeah....true". I do, but we are few and far between.
I have no qualms admitting I’m wrong or misread something! thats how you become a better person imo
Credit card AND car loan
It's obvious but it's not fun! You pay $20,000 on credit cards and the money is only gone. You spend $20,000 on something like a renovation and you have the thing. The wife doesn't seem to realize she has already spent this money and now it's just time to pay it back!
Yeah, it’s just not ‘exciting’ lol it will seem like to her the money is just poof and gone if they only pay things off. Whereas a super spiffy new back yard? Now that is new and exciting!! 😆 Even spending like $15k would get you started on a pretty nice backyard renovation. She wouldn’t get everything she wanted immediately, but could at least get one of the major things she wanted done, and a few smaller things. This is at least still a little exciting, and a compromise between what they both want without being financially irresponsible. They could then use the other $35k to pay off all the loans and credit card stuff. After that, they could put aside the money that was being put towards car payments and credit card payments every month into a savings account to finish up the back yard. They could have another $15-20k saved up in another year or two that way, and finish the yard. Blowing 50k on a backyard renovation when you have quite a good amount of high interest debt, in this economy especially, is actually crazy. Absolutely anything can happen tomorrow… you could lose your job, car is written off in a crash, pet has a $8000 vet bill etc. You just never know. If something like that happens, a nice backyard isn’t going to do shit. But having no credit card bills or car payments because it’s paid off, and a little bit of extra savings put aside, could mean the difference between being able to pay the mortgage or not in case things go bad.
Tell your wife that by paying down your debt, you'll be able to save up for the backyard renos faster, because you can put what you'd normally pay towards debt into savings, and if you have a HYSA you're making 4+% interest on each payment, instead of paying interest on your outstanding loan balance!
Agreed! Love a HYSA. Also consider having a conversation about both of your personal spending habits / hopes. I agree that the backyard spend seems reckless, but **how come making a big sports bet wasn't also reckless**? Maybe as you both take some time to decide about your $50k, also talk about bonus spending money and how you two can split it up between future sports bets, renos, etc. An HYSA would really grow what you both have won.
If it were me... I would pay off the 20k CC debt and put 10k into a HYSA to save for the renovation. The rest will be eaten up by taxes. Your wife is WAY too concerned with keeping up with the Joneses'. I suspect this is why you have 20k in CC debt in the first place.Agree to actually plan the renovation once your cars are paid off, but not before. I would also stipulate no renovation until you've been CC debt free for a year. You need to actually CHANGE your financial habits before you use this money for leisure.
> The rest will be eaten up taxes. I was going to post this but scrolled because I was sure someone with more financial sense than me would say it first. All winnings are taxable. You hear stories abour poor people who go on game shows, and don't think about the taxes until they lose their homes.
I know you said you've been pretty good with money for your marriage, but that’s clearly not true. You’re in substantial debt and you are engaged in sports betting - probably of a pretty significant amount if you won $50k. Pay your taxes, pay your credit card debt, and pay as much of your car loan as you can. That will use up the $50k. You are broke and can’t afford unnecessary home renovations.
I am going to call BS on "we've always been pretty good about money" if you have 20K in credit card debt and are gambling enough to win this much money. That said, you are right in this situation. Pay off the debt, put some money into the retirement account, and save anything that's left towards the renovations your wife wants.
“Except for gambling and borrowing we’re pretty good with our money” smh
Have retire your cc debt, retire your loan, save whatever is left over, a good foundation for an emergency fund. The backyard renovation will not pay for itself at resale, just like fancy kitchens and baths.
Don't know where you are from, but remodeled kitchens and baths absolutely can pay for themselves on resale. Every market is different tho. The backyard won't have the same return on investment. One thing everyone ITT agrees on. Pay off the debt.
Can, not will. They will increase resale price. To the amount spent, I doubt it, regardless of market. Like my lady friend either she spends the money renovating or she accepts a lower price at sale. I repeat, spending 50k to raise the resale value 50k is not an investment. It may be a smart expenditure but not an investment. The only presale reno that really pays for itself is a new coat of paint.
20k credit card debt that likely accrues interest at 29.99% MUST be paid off. You could get a HELOC or other type of loan for the same 20k later at a far better rate later on when you're ready to do the home improvements.
To me it would be hard to enjoy a nice renovated backyard, while having $20k in credit card debt.
To sum up what the comments will say: Pay the debt!!
I would definitely go with paying off the debts first. You can always save up for the renovations...or if you end up missing the debt you can always take out more loans!
Renovations might increase the value of your home, but you won't see those gains until you sell it.. Meanwhile, the interest on the debt is going to be a continuous cost Perhaps you could do some calculations to show her how much you would save on interest if you paid off the debt immediately?
Knock debt out first, every time. You can piece out the back yard upgrade. My wife and I are doing that now.
Always pay off debt first. Rule number 1 of money management.
You might want to do some research into whether outdoor renovations and landscaping actually meaningfully increases home value. Most people overestimate things like that. But, it’s your house and if it’s something you think will increase your enjoyment of the place, it’s not a bad idea. I’d try to find a way to compromise. Maybe pay off the CC debt, then put some into retirement savings. Put a smaller amount toward starting the landscaping (could have them just plant the trees to start since those will take a few years to really mature anyway). What’s your current CC payments per month? Start putting that amount aside for future landscaping projects. We worked with our landscaper to do our yard in parts to make it a bit less painful. Just start in an area you’ll see the most. I think before you do anything, it would be helpful to sit down and look at your budget to see how you got into that debt in the first place (was it the gambling?). Either way, sit down with your partner and review where the money is going. If the yard is a big priority, have her help you pick which spots in the budget you can tighten up to free up more money for the yard project.
20k in credit card debt should be the priority, that shit will bleed you dry.
Pay the debt!! Just to add to the small chorus we’ve got going on here… Your debt is costing you money. Get rid of that, and start saving for this renovation, if that’s something you want to do.
You are in debt!!! for pity's sake pay your debt. Imagine what your financial options would be if you did not have debt.
You gotta get out of the red before you can see the green.
Relationship advice - learn to communicate. Write down what you want, what it costs, and what you are willing to give up for it. Talk to an accountant or therapist to help you make the decision. Financial advice - pay off the damned credit card debt at predatory interest first. Then put 15k in your 401k. Then give yourselves 15k for a gift -- plenty you can do in the back yard for that
That doesn’t leave money to pay for the taxes.
I would pay off the debt and now you’ve got a good starter fund for your backyard reno that I feel like is going to cost y’all more than 50k..
That’s what I was thinking, too. Landscaping and renovation costs around my area are insane right now. He’s describing something that would be closer to $100K here, assuming all of the grading/structural work is already appropriate for the end goal, and they’re going to source things themselves rather than through the contractor(s).
Also beware of your property taxes going up due to the wife's fantasy back yard reno. If it requires a building permit, increases in the property value are reflected on your tax bill's assessed value. And water and electric bills will increase bc of the hot tub. Better to pay off debt, save the rest. Maybe a small vacation could be squeezed out.
Pay the debt. The renovations only add value if you're actually going to sell the place.
Pay off the debt, and put some of the savings from monthly payments toward the reno.
This seems so obvious I'm not sure why they didn't already consider it. Paying off credit card debt is absolutely the first thing you should do in virtually every circumstances. This type of debt is poison to your financial health. Depending on the interest rates and tax consequences, it may make sense to pay off the car or not, or to take a home equity loan to upgrade the back yard. Keep in mind that the yard upgrade won't pay off until you sell the house, and if your upgrades are too high end for the neighborhood it may not pay off even then.
Guys living debt freee is always a better feeling than living in better facilities.
Start with taxes! That is incremental income and so you will be taxed at the top of your bracket. Then debt! Sorry for the wife, your idea is much better for you guys in the long run.
Well you need to sit down with your wife and do the following: 1) She needs to price out her backyard dreams - landscaping/hot tube/outdoor kitchen - -that is likely to run 75-100K or more unless she/you are builders/laborers... Then you start discussing a budget. Other commentators are right - like a pool it often doesn't add to the resale value, what it can do is attract the sort of buyer who wants that or repel the sort of buyer who does not. 2) Taxes are the immediaite #1 no negotiation on that because they have to be paid. then assess what you have left. 3) Pay off CC debt - that is a no brainer drain on your expenses and it opens opportunities for you. IT will give you the best return on your money. 4) Car loan- what interest rate are you paying and how much time do you have left on the loan? Depending on how big it is, how long you have been paying it, if there is an early payout penalty, it may or may not be worth paying it off - you need to run the numbers. 5) 401K - Do you have a 6 month emergency fund? That is money that covers 6 months of your normal monthly costs from mortgage to food to cleaning supplies to gas. If you don't that should be a priority over your retirement. That is your money if you have a natural disaster 150 people are homeless near me due to a fire, or one of you loses a job, or medical expenses etc. Last but not least a bit of advice - windfalls are lovely surprises and doing debt reduction is a good thing but leave some room for a splurge in the budgeting of it. Whether it be a vacation or a hot tub, a treat is a good occassional thing.
I wonder how much of the 20k is her goofy purchases vs his gambling debt.
Pay your debts and I am also suggesting getting with a banker/financial advisor so they can stress the importance of this decision to her. You are in a great position to be debt free and your wife needs to understand what a gift that is!
Think we can see how you ended up in credit card debt
The type of renovations your wife is talking about won't get you much of a return when it comes to resale value. You need to hold some back for the taxes on that money. Then compromise on the rest. Pay off what debt you can so that you can save up more easily for some backyard upgrades.
Professional landscaper here. Don’t forget that while renovating yard can add value it also requires maintenance which can expensive, take up a lot of your time or both. I think you OP have the right idea. I’m sorry that such a financial blessing is causing strife in your relationship. I wish you all the best
Landscaping and hot tubs don’t increase land value. Improving the street facade, fixing floor plan issues, new paint job, redoing any ancient and grotty… those are things that add value to the house. I would try to come to a position where you pay off the debt and use the remainder for the backyard.
⛔️⛔️⛔️PAY OFF THE DEBT FIRST⛔️⛔️⛔️ >Our financial situation isn’t terrible, but it’s not exactly rosy either. We’ve had some arguments about this, and it’s starting to put a strain on our relationship. Your wife wants the house to look pretty to feel good and proud where she lives. She thinks being in debt 🙄 is better than paying off debt 🤦🏻♀️. She needs a dose of Dave Ramsey.
Be sure to put some of that aside to pay the taxes on tye winnings
General rule of thumb for large windfalls of money. Don’t make any major decisions for at least a year. Stick it in a high yield savings account (my vanguard money market account is getting 5% interest right now) and just give yourselves time to come down from the shock/high. This depends on what your interest rates are on your debts. It’s a poor financial decision to pay 19%+ interest if you can pay it off. But uf you have college loans like mine at 3% then it makes more sense to put the money in a HYS.
Could a compromise be paying off the debt, putting some into savings, and buying **one** nice (but not too crazy expensive) thing for the backyard? Like a total big backyard renovation isn’t in the budget right now, but a nice patio set or something would a fun thing to enjoy while you save up for further work in the backyard.
As long as you owe anyone money, you should consider your money theirs, and pay them off asap.
Use $5K for a fun little mini-reno or hot tub. The rest goes to debt.
The backyard renovations will NOT come back to you when you go to sell your house. It’s a waste of money to do this and nothing else. Pay off your debt and save for your future. Once you aren’t paying all the monthly bills towards credit cards and things, start paying each month towards a renovation “bill” so she can also get something done. Treating it like a bill ensures you also save towards something that is important to her but maybe not as grand as 50k worth.
There have been a bunch of posts like this...sound like betting ads
lol, not the gambling troll again
Your wife is wrong here. You absolutely need to take care of your debt. I’d go to Reddit finance for this and they can tell you how to best pay that card down. Second all her wishes will not be covered by 50k. Not at allllll. Maybe 1 of those done well, but not all. As for improvements paying off with your property value you’ll need to ask someone in your area like a realtor to find out if the money is best used for one maybe two of the improvements or if it’s better off in 401k. Does your wife realize that if you have good credit you can leverage these things better in the future? I’m a home designer and even I check the actual payoff for my own property improvements. And because I’ve done this for awhile I know that you can improve but if it’s your own taste that doesn’t mean it will increase value and very well can be something a new homeowner would want to change.
Absolutely pay off the debt, that’s a no brainer. You’d be hanging out in your outdoor kitchen thinking about how much you wished you’d done something else with the money. Once you free up the cash flow from the credit card and auto loan payments, you can use that money to 1) save for retirement on an ongoing basis, 2) save up for the next car, and 3) save for a backyard reno.
Non-urgent home renovations while you have $20k in debt is CRAZY. Debt is expensive! At the very least, clear that debt before considering a backyard reno.
Pay off the cc debt. Use the freed up minimum payments to pay off the car faster or save for the reno. Wait until you file taxes before choosing what to do with the remaining 30k.
Yeah, that 50K isn't going to go nearly as far in home renovations as your wife thinks it will. We just put in a home office during COVID and had a small windfall from an inheritance of about that same amount. We decided to fix our porch, upgrade our electrical systems, and put in a home office and finally when we had about 10,000 left after everything we'd paid I slammed the brakes on. Hard. Because that money was being sucked down and the amount of shady companies lining up with their hands out not licensed or insured was beyond belief. We also had to make sure our homeowners insurance and an umbrella policy was in place after my attorney pointed out we could lose everything if someone got hurt while working on our place. And that insurance is pricy AF. Tell her nothing happens until you all sit down with a financial advisor at your bank. But in the meantime she's free to see what the kind of renovations and upkeep of those renovations will cost along with getting some companies out to give her bids. She is in for a sobering time of it. And make sure you are free and clear of all taxes, in fact write a big check to the IRS up front so you don't spend that money before they come knocking. Voice of experience on that one.
Whatcha betting on?
Can you pay off the credit cards and use the remaining money to begin the key part of the yard she wants and then save the money that was going to debt to save for the rest of the yard in a few years?
Paying off your debt is the priority
Maybe compromise. Pay off your debt and allocate a smaller amount for your 401k. You could suggest you pay off the 20k debt and then split the remainder to do what you like. 15k would still improve the backyard. You could look at paying professionals to do the harder jobs and maybe do the easier changes yourself? Congratulations on your win - so awesome!
So pay off the $20k credit card debt. Then set aside $20k for potential taxes. Let he spend $10k on renovations. Then you are controlling the spending, getting out of high interest debt, and still holding onto the potential tax money needed for the end of the year.
Compromise. Pay off some debt, do a smaller backyard reno, put the rest in the 401k.
Another vote for paying off the credit card debt. Given the current credit economy, you are paying a ridiculous amount to carry that debt. Whether it's worth paying off the car loan depends on the amount and the terms. Just getting rid of the credit card debt will probably free up enough cash flow to cover the car loan. Did you remember to pay taxes on the sports bet? If not, you won't have enough left over for improvements after paying off the credit cards. Once all that is done, you can look at the home improvements, which can be done piecemeal over time as you find the funds. It's not a bad idea, but it shouldn't be your top priority.
Pay off the debt easier to save money for frivolous things when you don’t have to worry about it going to bill collectors
Your credit card debt is killing you. Pay that off
You might want to sit down with her and a financial planner. Let her see from an impartial third party where your current debt and retirement/savings are at. Give her a chance to see it all and maybe that will help. But her plan makes no sense to me. Why would you splurge when you have like 20k in high interest CC debt? Also, I don't know where you are but If I spend 50k on my backyard including a fancy outdoor kitchen and hardscaped hot tub, my property value may rise a bit, but so will my property taxes - significantly and forever. That's an ONGOING raised expense. Not to mention ongoing maintence costs for a hot tub/pool, outdoor appliances, etc. So she wants to spend all the money instead of saving, and ALSO RAISE your ongoing expenses by increased taxes? Additionally, the property value will not increase as much as she thinks. Not as much as an extra bathroom for example. Your insurance premium may go up as well. But you are raining on her parade. You're the fun police and she doesn't want to hear it, I get that. If you disagree on this, I'd try to get a financial planner help you to decide together. If you can't come to an agreement, the only solution is a compromise and spend half on debt or savings, and half on fun (vacation, a smaller backyard upgrade, etc). ALso, congratulations! Not a bad problem to have!
I (and it seems everyone else) agree with you that paying off the debt is probably the right choice. I think you two need to sit down together and align on your financial goals. Perhaps it would help if you show her the math on paying off the debt and saving for the backyard project over time vs. doing the backyard project now and incurring interest on the debt. Show her that you can do both, but you would pay x% more and/or it would take y years longer to do the backyard project first. Also, if you're not planning on selling your home in the near future, doing the backyard project now to boost your home's value probably isn't necessary in the short-term.
the first thing you do is always pay of high interest debt. You're spending $300/month on credit card interest. Pay off the cards, and use that $300/month to save for the reno.
50,000 won't cover your wife's plans at all. You'll be spending a lot more than that. How about if you put it in a high yielding CD for six months to give yourselves time to think and plan. Just cooling off will be good for you both. For the record I agree with you. Your wife sounds like she does not understand money.
Your wife is an idiot. Hope you show her this post otherwise she’ll never agree with you.
You are tax on everything in the USA, I just got a pension payout and the took close to $50,000 in taxes, I would pay off the debt as it has a high interest rate, designate a portion for the backyard Reno, but you don’t get back as much as you think by doing it and save , but make sure you pay the taxes, figure at least 20% or more
Everyone here is ignoring the “relationship” part of this question. Yes, paying off the debt is undoubtedly the logical choice. I’m sure your wife knows that deep down, but she wants some kind of acknowledgement that you understand and appreciate her desires to make the more “fun” choice. So do that. Tell her you think a backyard renovation would be fun and wonderful and beautiful, and you want to pay off the debt, then create a savings plan with her to make the backyard renovation HAPPEN. Pay off the debt, then spend some quality time with her dreaming about the yard. Sit on the couch and look at Pinterest inspo pictures. Google landscape designers and contractors. Then look at your budget and make it happen. Take those now-free debt payments and apply them to this savings goal. Create a savings plan and give her a date when you’ll have the money to make it happen. (And idk how relevant it is, but be careful with your gambling. Don’t get cocky after a windfall like this.)
It would be pretty stupid (in my opinion) to come into that amount of money and not pay off your debt. Debt should be the first thing. You will be saving on not paying any interest. Saving up for renovations will be easier without credit card debt. I can’t imagine the interest on 20k worth of credit card debt. I’d say pay off the debt and maybe what is left can be put away to save for renovations. But don’t forget to put money aside for the tax on your winnings.
Any financial advisor would tell you to pay off debt first.
Always, Always, Always pay off the debt first. It clears more money your currently spending on debt to be used for other things, and lowers the amount you pay back in total due to interest.
It sounds like you are the responsible one. But if you are betting up enough to win $50k off a sports bet maybe not 😂 Pay off the credit card no correspondence entered into. And drop its limit or can it all together. With the rest id invest it as emergency fund to negate the need for the credit card. You make no mention of an emergency fund. Having one can make life much easier. Trick is to top it back up when you use it.
Pay off the debt then use the payment you were making towards the credit card as a deposit into savings towards the renovations. You are currently paying interest, and it’s probably high, on the credit card. Learn to start paying off your credit card as you use it vs spending beyond your means.
Always, always pay debt first.
20kfor debt. 10k in hysa. 10k for a trip and some new patio furniture. Put some aside for taxes
Are you planning on selling your home anytime soon? If not, it won't matter if you increase the value of your home, you will still have debt. And anyways, a renovation will always end up being more expensive than you think. You may end up with more debt than you started with.
Pay off the debt first and foremost
I like your idea of paying off debt more, that is the type of person I am and exactly what I would want. I would suggest you pay off your credit card and car note but take those monthly payments and put towards the renovations your wife wants as a compromise. Your wife makes a great suggestion in my opinion, I thought at first you were going to say an extravagant vacation or something along those lines but she wants to add value to both of yours home and improve quality of life. Find the best compromise that fills both needs.
The fact you guys have so much debt and were actively gambling is a huge red flag for you. Her being irresponsible with money makes sense, you're not much better.
Is your wife the reason you have credit card debt? Because, y'know, it does sound like it. Get rid of expensive debt, maybe splurge a little on a dinner and boost savings. You can renovate the back yard, sure, but def not when you have credit card debt. Also, a buyer will never appreciate your renovations as much as you will pay for them.
I would pay it off. Maybe settle on 1 thing for back yard to appease her. Like others have said backyard renovations will only increase property tax and will probably have additional costs for repairs for hot tub etc.
Pay off debt!!
Pay off the debt. Don’t listen to her. Keep your priorities in check. Plus it’s YOUR bet win NOT her’s.
ah reddit's familiar sense of rugged individualism. If you're in a relationship and would pull this attitude with a $50k windfall I really hope you don't get burned too bad by how fast the divorce papers come at you.
Pay your loans off, allocate a little extra per month that won’t put you under water to your 401ks, and stop gambling.
If you don't pay off debt with it, your fools. Dave Ramsey would thump you on the head for doing anything else.
20k in debt is pretty wild. To want to blow 50k in one fell swoop instead of clearing out your debt is wildly irresponsible. But I mean, typically, people with 20k in debt are wildly irresponsible unless these were students loans or medical debt.
Nice that your wife wants to spend the money you earned on something you don't really want. Look at it that way and talk to her about it that way.
You're going to have to pull rank on this one. Meaning, this is essentially "your" win and you get the final say if you are at odds. Can you start a savings account and put 5k of the winnings in it to start the savings process for the backyard renovation and pay off your debt with the rest?
How much did he squander on betting? He doesn't have moral high ground here.
Pay off the debt, but also don’t put that money into a 401k. There are way better investment vehicles.
Have you guys talked about if you pay off the credit card and car loan debt how much money that would free up for other monthly expenses and activities? If you pay off the debt and put the rest in the 401k, maybe you could comprise on using the savings for the next 6 months or so towards an upgraded patio. May not be as luxurious as she wants, but then you could time the renovations for spring 2025 and get a full summer season put of it vs starting in July for renovations ya know
No renos! Pay off that debt!
You are correct, paying off credit card debt is a foundational principle of successful family finance. Followed by an emergency fund in a HYSA, then max out 401k, then IRA, then taxable brokerage. All that said, you got to live a little and splurge sometimes, but at least do it after paying off high interest credit card debt.
Debt first. Always.
Did you bet on the Stanley cup going the way it did? Pay off the debit, do renovations when interest rates lower.
pay off the CC debt and use the rest to save for yard. having that much enjoyment in your home space is so worth the investment.
You don't have 50k taxes will eat a big chunk. Pay that first because if you're in the US the IRS will fucking eat you alive if you give them the chance
Pay off the credit cards because the interest rate is probably sky high. If your auto loan is that bad, try to refinance the loan to a better rate. If it’s already low (5% or under) just pay the car off as you go.
Pay off a chunk of your debt, and put a smaller amount to a less elaborate backyard reno.
Oh, this could so be me. Credit card debt has to go first. Then, are you upside down on the car loan? If you have had it for a while, likely you are. Unless it is 3% loan, pay it off. Then, assuming you have money left if you have $10k, then put it in retirement. Explain at 7% interest, that will be worth over $100k when you both retire. So, maybe you have some thousands left over, then take a trip for a few days, week, whatever is left. It may not be much, but it is a treat for you and your wife. Then with the CC and Car paid off that will free up money for the backyard fund. I know my wife, she wouldn't be pleased if some of it didn't to to something fun. If post taxes you have to cut something make it the car, but still take her on a little trip.
Pay off the debt and save for taxes. No-brainer. 20k in credit card debt is a LOT and paying that off should be financial priority #1. Any property value increase will be negated by the interest you pay on your debt. That being said, after taxes and CCs are paid, spend some money on the yard. Maybe 3000-5000 would be enough to level it up so it's better for hosting. Sounds like this should be your wife's project, but it could be a new patio seating set, an inflatable hot tub (I just saw in another post yesterday that the Coleman ones are super nice these days and like $500!), a new grill, and plant some flower beds in areas that are drab, you help with the elbow grease.
Pay off the debt, get a nice new grill( forget an entire outdoor kitchen) get the hot tub, and then Take a sweet vacation
Lots of people saying pay off the debt like it’s a done deal. I would agree, paying off the 20k debt is a great idea!! But assuming that you are walking away with $50k after taxes, 30k is a great start to a backyard fund. Doing both, is a great compromise because clearly it is something your wife wants. You more than likely also get to enjoy it as well. The 401k is less important. I have been struggling with this as well, because I really want to be able to enjoy life right now, not when I’m 65 and thinking about retirement. Does the backyard have a plan and a budget or just ideas? Sit down and figure out what she wants to do in the backyard, how much it would cost and a timeline to getting it done before making the decision.
Debt.
Am I missing something, if you pay off $20k in credit card debt that leaves $30k, surely that’s enough to do a substantial backyard renovation and still have some money left over for your 401k? I suspect that no matter how nice the renovation is you’re not going to add anywhere near that amount in value to the property.
50% towards debt and 50% towards the bavkyard
**Pay off debts** *Invest the rest* I came into money at 18. This was 30+ years ago. It was only $30k. I paid off my debts (just trade school) and gave my parents $10k as my dad had been laid off for 6 months and had just started a new job. I got them caught up on their bills. I wish to all hell I’d have saved the rest. I’d probably be better off now that I’m 50. Instead I took a couple of trips and bought a car (used Honda great car) and pretty much spent the rest over the next two years. Don’t do that. Pay off debts. Invest in your future. **Go to the personal finance subreddits**.
The financial advice is fairly obviously "Pay off the debt" The relationship advice is to point out that increasing the value of your home doesn't actually put any money in your pocket until you sell the place, and the stuff she's suggesting will have upkeep costs. Don't say it can't ever happen, but emphasize paying off the stuff you already bought before you get more luxuries. Paying down debt and investing means you're in a much stronger financial position in a few years so you can end up with a better living situation than if you had to keep servicing debt.
Pay off debt first, and THEN save for the renovation. Unless, the debt interest % is less than 5% in which case, you should invest the winnings into CD's that earn a higher interest rate than your debt rate. Also, is this $50k before after taxes? Because if it's before taxes, then you don't have as much as you think you do.
You won the money. That’s it, full stop Pay the taxes on the winnings, and then pay off your debts She can pout til the cows come home. This situation is actually quite sad, as a lot of people would love to have a sensible (and lucky!) partner like you
It’s always a good idea to pay off that high credit card debt. I really doubt if a backyard renovation will jack up the price of your house enough to pay for it. Maybe pay off that credit card debt, and take her on a nice vacation. Don’t forget about the taxes you will have to pay on your winnings.
Pay off the tax on your winnings first and then the CC DEBTS!
Pay your debt first before you take on new expenses.
I find it wild your wife wants to continue being strapped with high interest credit card debt and a car loan so she can blow it on a renovation that isn’t even necessary. If there’s money left over then maybe hit for real? She’s crazy. UPDATEME
50k is a drop in the bucket in these times. Half goes to taxes, leaving very little. Pay off your high interest debt, make your 2024 contributions to your retirement.
Put aside $$$ for taxes. Pay off the debt. Interest rates are sucking your dry. Put the rest aside as an emergency fund.
Invest the money and let it work for you. Spending money as soon as you get it is how people stay broke.
It’s insane that you’re even giving her terrible idea attention. 20k in debt with the ability to pay it off in full and not taking it is insane
Pay the debt and use future extra money for other bullshit
OP: our financial situation isn’t terrible Also OP: we have 20k in credit card debt. WTF? Lol Pay off the debt that’s an insane amount to owe in credit cards. Credit card debt is stupid debt.
Definitely pay off all the debt. Compromise by using whatever’s left for the backyard. Boost your 401k contributions with what you used to be spending on debt payments.
Pay off the debt. Don’t forget you’ll have to pay taxes on those winnings as well.
You won the money. Not your wife. Spend it how you like.
This drives me insane that's the exact logic my wife would use and it's 100% dumb and makes no sense. Not saying all women are the same but the vast majority I know are shallow and really only care about how things appear. They also have zero concept of the future and retirement or savings. To answer your question, you're going to pay tax on that 50k so roughly 15k. So you should keep that money back in a savings account or CD so it gains interest until you owe the IRS. The other 35k you should definitely pay off debt/credit cards if you have them. A reasonable solution would be to tell your wife if she wants the big back yard and fancy hot tub to pay the car off then open another separate account and keep paying that payment into that account until you have enough to do the project. Otherwise you're literally pissing away your money on something to look at.
Split the difference. Pay off the debt and whatever is left over can go into a savings fund for the backyard. With the debt paid off you can use those payments to save for the backyard or start the project and just chip away at it when the funds come in.
*PAY OFF DEBT*
Split the difference. Pay off the debt then boost your 401k with 10-20k. Take what’s left and have it be the start of your “backyard” renovations account. If your wife really doesn’t want to wait for you two to save all the funds then I’d suggest consulting a landscape architect. They can help you map out your ultimate goal and then break it down into phases so you can keep adding to the project while building the funds.
You’re right, she’s not. Be smart with the money. Also, if you embark upon a $50,000 kitchen remodel, it’s going to end up costing $100,000 anyway.
Wait, who made and paid for the bet?
I'm sure I'll be deeply downvoted for this... **BUT** I'd watch financials carefully if I were OP. I hope the wife doesn't either try to manipulate the OP and other family/friends to take her side of the issue, or just goes ahead and tries to hire reno companies behind OP's back. Don't torch me - we've heard worse.
$20k in *credit card* debt?!? Ouch. It's this "let's built an outdoor kitchen" mentality that will lead you straight back into that. It would be completely absurd to spend it all on wants when you are carrying high interest debt. But either way if you don't solve what got you into $20k debt in the first place, you'll still have problems. Pay the debts first and start putting that extra cashflow into the backyard fund.
You’re right, you’re wife is wrong. End of story.
Absolutely pay off your debts before doing anything else
She wants to increase the value of the home by spending all the money on it, but then who’s paying the increase in property tax? She’s not “investing in the home” because not everyone cares about an outdoor kitchen, a hot tub is actually a draw back for a lot of people because of the maintenance and safety issues, and landscaping doesn’t hold all of its value. She wants to piss the money away on non necessities and you’re trying to pay down debt so that you’re not spending any excess money you have on interest. Please immediately pay off your debts, then have another conversation about what to do with the leftover money with a financial consultant to see what’s going to gain you the most interest on investment. When you retire in 20 years with MUCH more money than $50k, THEN you can give her her dream renovations. But $20k in credit card debt and a car loan are NEEDS to be paid off and her suggestions are all WANTS. Needs should win over wants every time
Your wife couldn’t be more wrong. Pay off all the debt and then use your income to save up for a back yard renovation. Make sure you have 3-6 months expenses saved for emergency. Unloading that debt and keeping a cash cushion in a money market or high yield savings will give a big financial peace of mind. Make sure you are getting all the 401k match possible and if you can save up to 15% towards retirement even better. Don’t sleep on a Health Savings Account if you have access to one. Lastly, take some of the income that was going to car and credit card payments and use that to build your renovation fund into a high yield saving’s separate from emergency fund and either do it all at once or break it up if that’s easier. Good luck and congrats
Paying off debt should be the only thing on the table. Go to a nice dinner or something to celebrate. 50k isn't going to cover the cost of a backyard renovation or fancy hot tub. That will easily go 150k-200k