The Moneyologist: This thrifty millennial bought her first home — and her family offered to shower her with cash
The Moneyologist is catching up with some of the most popular and controversial letters of 2016.
Exactly one year ago, this 26-year-old woman wrote to the Moneyologist to ask whether she should accept cash gifts from her family after she bought her first home. Tempting, right?
“After thinking about it for a long time and reviewing my finances and what costs I could expect, I made the significant decision to purchase a house,” she wrote. “I scrimped and saved every penny, withdrew from my Registered Retirement Savings Plan, and temporarily withdrew from school to get the money together for a down payment.”
But she worried about what it would mean to accept gifts from her family members, given that they should be investing in their own futures. “Am I being foolish about this, or am I right to encourage them to invest in themselves?” she asked.
The Moneyologist warned her about a “gift tax” (not to be mixed up with the gift tax from the Internal Revenue Service). That is, the giver feels like he/she has a hold over the person who received the gift. Giving money to family members can also create jealousy among those who like to keep score. I suggested she ask for practical housewarming gifts over cash.
“The financial gifts mostly didn’t materialize, due to people’s own circumstances,” she says. “I was able to redirect those who did offer cash to more practical things using your advice: One person recommended a good electrician to me, another gave me a bookcase; others gave me wall art, linens and decorative mirrors. So far, no one has come to collect on the gift tax.”
“I’ve done some updates to the house, mostly small repairs and some new appliances that have brought up the value of the home a modest amount,” she says. “I also managed to pay down my remaining debt from the move and re-enrolled for the January semester. I’ve contributed a good amount back to retirement savings and I’m on track to rebuild that within a few years.”
For all of the heat young people take for being irresponsible, immature and bad with money, here is one millennial — a sales and customer representative at a major office supply store — who has (i) managed to purchase a home and (ii) is ahead of schedule with her repayments. “I’ve paid an extra year off the mortgage and will continue to put down extra payments as I can.”
Happy New Year from the Moneyologist!
Read previous responses from letter-writers to the Moneyologist and whether (or not) they took this column’s advice. “Moneyologist revisited: Did this mother refuse her abusive ex-husband’s inheritance or accept it for her two daughters?”
Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyologist and please include the state where you live (no full names will be used).
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