Pay Dirt is Slate’s money advice column. Have a question? Send it to Lillian, Athena, and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
I use to give my co-worker, “Carrie,” rides to work since we lived close by and worked similar shifts. Then I met my boyfriend and we planned to move in together and his place in the opposite direction. When I told Carrie she got very upset at me and started crying. She didn’t have a car, it was too far to walk, and it would be my fault if she lost her job. I felt trapped and ended up promising to continue to give Carrie rides even after the move.
Later I started to regret that promise. Even if Carrie pays for gas, it will add an extra hour to my commute and I don’t want to do that. My boyfriend suggested I find someone else to give Carrie rides, but there is no one really reliable like that at work. What should I tell Carrie and how else can I help her? She was a foster kid and doesn’t have much family to fall back on.
—No More Rideshare
Dear No More Rideshare,
Sorry, Carrie will have to figure out how to get to work without relying on you. An extra hour on your commute is too much. You can’t be her only plan: what if you’re out sick, get moved shifts, change jobs, or move houses, as you have done? She has a right to be upset, but she doesn’t get to guilt you into such an inconvenient commute. You should help her—former foster kids are not given a level playing field—but she needs to find solutions that don’t involve you being her driver.
I work with young adults aging out of the foster and juvenile detention systems. After housing, transportation can be one of the most challenging parts of their independence, especially in areas with poor public transportation. Many young people under the state’s care cannot access licenses or driver’s education and cannot be affordably insured without an adult policyholder. If Carrie is under 26, she may be able to access resources from her foster age-out program. There is sometimes state or non-profit funding to assist with accessing transportation and driver’s education. Embrace Families offers to co-sign car loans for former foster youth.
As someone who has never had a car and has had many jobs with weird hours, finding reliable transportation can be challenging, and it sucks when you lose a good option. Carrie will have to get creative so that you’re not her only way to get to work. I recommend she contact the local transportation management association to get matched with someone who can rideshare, carpool, or investigate the public transit options. She could also see if a neighbor has a similar commute. Sometimes a short Lyft or Uber can combine with public transit to make commuting more efficient. She could bike or scooter if reasonable (an e-bike is far cheaper than a used car now and often quite a practical solution for commutes up to 10 miles). Some local bike advocacy organizations offer “bike buddies,” where an experienced commuter helps her find safe routes. Good luck!
Dear Pay Dirt,
My wife and I have opposing views on tipping when ordering takeout for pickup. I always tip on the bill. I’m not sure how tips are handled by restaurants in take-out situations, but I figure my tip either goes to the person who brings my food to the car or is split between the cook, waiter who boxed the meal, etc. I also feel that since restaurant workers usually make below minimum wage and are reliant on customer tips then it is a poor move on my part not to tip. My wife rarely tips in these situations. She assumes that the workers are being tipped in other ways during their shifts. And that bringing an order to our car or handing it to her at the counter does not rise to the level of service that requires tipping.
So, which of us has the right take on tips for takeout? And how do tips on take-out orders actually work? Who is getting the tip money I add to the bill? Is my wife correct that take-out service doesn’t rise to the level of tipping except in those rare “above and beyond” situations?
—To Tip or Not to Tip
Dear to Tip or Not to Tip,
As a former service worker, I will always side with the more generous tipper. I’m with you. My general rule in the U.S. is to tip slightly lower on take-out orders, in the range of 5 to 15 percent, compared to the 18 to 25 percent I would at a dine-in restaurant. While you’re not getting table service, many services still go into take-out—boxing the order, bringing it out to you, and ensuring you have all the condiments and utensils. If the restaurant also has dine-in, the server that prepares your meal loses out on tips while she packages your order.
As for who is getting your tip, restaurants approach this differently. Every restaurant I’ve worked at has a tip pool that includes back-of-house staff. I made more tip money when I worked as a dishwasher at a counter-service deli than I did serving tables, thanks to a great tip pool. Depending on state law, the workers preparing your lo mein or burger might be paid a tipped sub-minimum wage. We must change restaurant wage laws in the U.S.— but until then, if you can’t afford a tip, you can’t afford take-out.
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Dear Pay Dirt,
My friend Sarah is 42 and was fully supported by her parents until they passed away, leaving her penniless. She’s now struggling to support herself on $27,000 a year and figure out all the adulting stuff most people went through 20 years younger. Although we’re the same age I’ve found myself filling sort of a surrogate parent role through this process. Sarah has a 2014 Chevy Spark that she’s had since 2018 and still owes just over $2,000 on, paying $136 a month. This car seems to be on its last legs. It has several minor but annoying problems she can’t afford to fix (for example, the key fob doesn’t work, and one small back window consists of duct tape). Yet in the past year, she’s spent over $2,000 on major repairs, almost halving her emergency savings, and now she’s suffering constant anxiety about it breaking down again or anything else going wrong.
I know new cars are hard to come by, and even used cars are going for more than they normally would. But I’m still finding local ads to lease really nice new or almost-new Toyotas and Hondas for under $200 a month, which would be her absolute limit—even under $150 a month, which is her preferred budget. But Sarah refuses to consider this, because of the conventional wisdom (handed down by her sainted father) that leasing a car is a bad deal because you can never stop making payments, whereas when you own it you have it payment-free once it’s paid off. But does this still apply when you can only afford a crummy used car, to begin with, and have to stretch the payments out as long as possible, so that there’s unlikely to be a significant period between paying it off and it dying—even a chance it will die before you pay it off? I just imagine her paying about the same amount, having a way better car, and being free from constant worries and massive out-of-nowhere expenses. Am I off-base or is she?
—To Lease or Not to Lease?
Dear Not to Lease,
While Sarah may have gotten a later start on her financial independence, she’s making an intelligent decision. Car leases are rarely a sound financial decision (except in very specific circumstances). In addition to not owning the vehicle at the end of the lease, she might find that she has other unexpected expenses like mileage charges, repairs not covered under the lease, monthly sales tax on the lease, and higher insurance costs for a leased car. Most of Sarah’s minor issues with her current car—like a missing window and malfunctioning fob—would still be at her expense on a leased car. If the leased car is totaled, she would still have to pay the remainder of the lease and possibly additional charges, but she wouldn’t have a car. Leases can be a risky business, especially for someone low-income.
Sarah has researched how much she can afford to spend on her car—the rule of thumb is at most 10 percent of take-home pay. Her take-home pay for a $27,000 income is likely around $1,850 (depending on state taxes and health insurance), and her car spending limits are right in line. She’d likely be better off putting aside an extra $70 a month in a separate “car repair fund” than leasing a car for $200 per month. Plus, the lease prices you are comparing against are a hypothetical option based on advertisements— they’re not an actual offer Sarah has on the table. They likely wouldn’t be available to Sarah at her income and credit score.
If Sarah’s current vehicle isn’t working for her, she can sell it to a place like CarMax or Carvana (even with issues and a loan), use her equity to pay off her remaining loan, and contribute toward the down payment on a new car. As you mentioned, used car prices are high right now. She couldn’t sell a leased vehicle, would likely get trapped in a car leasing cycle, and might owe expensive fees at the end of her loan.
While you come from a good place, you’re giving Sarah advice that isn’t rooted in her financial situation or common sense. I have seen far too many low-income people stuck paying off car leases for a totaled car. There’s a reason the conventional wisdom is to avoid leasing—for most people, and in most circumstances—they are a terrible deal.
Dear Pay Dirt,
I bought a house in October 2021 that was built in 1972 with only one set of previous owners. While they meticulously maintained the house (there are logs of all HVAC maintenance! They left me almost all owners manuals!), it has not been updated. There are newer appliances in the kitchen, but the cabinets and countertops have not been updated and they put down a very (very) brown tile that is just not my taste over the linoleum. The bathrooms are the same, except for a white tile with gold speckles halfway up the walls that my mom said she had in her house growing up (it’s just so much grout to keep clean).
I bought the house planning to renovate the kitchen and bathrooms eventually, and thanks to a new job, and an even newer promotion, that is no longer a far-off possibility but a “maybe in two to three years” reality (the two to three years timeline would probably need a HELOC or other financing to do it all at once, but probably not to do one or the other).
What’s the best mechanism to save for this? A CD? After a bonus coming in quarter one of 2023, I’d have a good $10-15,000 to deposit while not sacrificing my emergency savings. A high-yield savings account? A combination? Something else? I have a steadily growing if still small investment account with one of the micro-investing services as well.
—Don’t Want a Kitchen Funding Nightmare
Dear Don’t Want a Kitchen Funding Nightmare,
Congrats on the new job and promotion! You’re wise to wait to fix purely cosmetic issues until you can afford them. I believe HGTV and its ilk significantly contributed to the current messed up housing market. They created unrealistic expectations about buying and renovation, emphasized the appearance of homes over structural integrity, and empowered a rash of “flippers” doing a shoddy job covering up “dated” design finishes. Home buyers should ask themselves, “Can I live with it?” rather than immediately start planning to rip out functional but ugly design choices.
Your plan to wait a few years for the cosmetic changes makes sense, especially with labor shortages and supply chain issues. I would wait to see if you can pay for expected renovation costs with cash rather than utilizing a HELOC while you’re still in the early years of mortgage amortization. While you wait, it’d put your bonus money in a place that earns a bit of interest but preserves the principal. A CD, I bonds, or a high-yield savings account are all excellent places to store money for two to three years.
Also, while you save the funds for a significant remodel, investigate smaller, affordable options to improve what bothers you most. For example, see if your grout can be re-sealed to make it easier to keep clean. Grout has improved a lot since the 1970s. It’s cheaper than a new bathroom and might make your life easier short term without replacing the entire kitchen.
More Advice From Slate
My wife and I and our 4-year-old son were out to dinner last week. It was a medium-nice restaurant, not fast food, but not super fancy either. My son is a normal, active little boy, and it’s hard for him to sit through a whole dinner, so we let him explore the restaurant a little. I noticed our waitress giving him the hairy eyeball, so we asked him to stop running. He was pretty good about it after that, but he did get underfoot when she was carrying a tray, and she spoke to him pretty sharply to go back to our table and sit down.