Debt in the Dating World and Retirement Planning for Entrepreneurs and Business Owners
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Hey, Elizabeth, what's the last red flag that you saw on a guy that made you say, no, sir, this is not it. I got to go. Oh, you must want me to be talking all day, Sean. But I'm proud to say that I'm now well versed in red flags and they're no longer a carnival for me. So with that said, the last red flag for me was a guy I was dating calling my son a third wheel. What?

Wow. And for good measure, I'm going to throw in another one. So I also met a guy who wanted to have more kids. He had six already, but he did not have a plan for more income. Wow. Well, I got to say, those make me glad that I'm not in the dating pool. Well, for some people, the amount of debt that you carry might just turn them away from dating you.

Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Elizabeth Ayala. This episode, we talk with a listener to help them figure out what their retirement might look like, including whether they should leave the farm that they built their life around.

But first of all, we're talking about a new NerdWallet survey that tells us how much debt might make you seem like a walking red flag to a potential romantic partner. And we are joined by Sarah Rathner for this conversation. Hey, Sarah. Hey, everyone. Let's tell listeners how to avoid being a hot mess. Well, financially, anyway, I can't help you if you're a hot mess in other areas of your life. All right. Well, Sarah, tell us how much debt makes someone undateable.

So on average, about $20,000. That's a lot, so it's pretty forgiving. And even more forgiving, a lot of people would actually be okay if their partner has any amount of debt. That really stood out to me in the survey. Nearly 40% of respondents said that they don't care how much debt their partner has of any kind.

I found that kind of shocking because if I was dating someone and I found out they had a huge amount of debt due to discretionary spending, that would certainly make me question things. Me too. But I think what I'd also be looking for in a potential partner is what sort of plan they had for dealing with their debt. If they're paying it off, if they're not asking to borrow money from me. I mean, I would consider that a green flag or maybe at least a beige one. Yeah. I like that, sir. A beige flag. Yeah.

I think for me, I would be trying to gauge their money values. So are they in the trenches of their financial trauma? Also, do they have a basic understanding of their financial snapshot, like where their debt fits into that? And also, do they have a basic understanding of their financial

And also, like you said, Sarah, a goal for getting out of debt. So for me, it would also be about what their expectations are for me. Are they expecting me to pay their debt off or contribute to it? I think those are some factors that would matter. And context is really important here, too. If someone has a bunch of medical debt or student loans, I think that's easier to sympathize with because our educational and medical systems can sometimes force people into debt just to get by or to get ahead.

Absolutely. And because I'm a little empathetic, I think that would be a soft spot for me for sure. But beyond debt, what did this study have to say about how people weigh the financial management of a potential spouse? 85% of Americans say that financial responsibility is an important quality in a romantic partner. Hard agree with that, of course. I'm one of the 85% for sure. Yes, I sign on to that.

What does that mean? What is financial responsibility in this context? So that includes things like living within your means, saving toward your goals, investing for the future. And if you put it another way, few people are attracted to overgrown children who can't handle the logistics of their own lives. Go figure. Yeah. If that sounds pretty harsh, well, maybe this is a wake-up call for some of you out there who can't handle the financial logistics of your own lives.

I am seconding that and I had an ex who had this exact problem and it's one of the reasons he is an ex.

So how can people maybe make themselves a little more financially appealing to a partner, Sarah? Well, as we've said, the fact that you're in debt for any reason is likely not going to hurt your dating prospects, which is a good thing because like we also talked about, there are a lot of reasons why people end up in debt that have absolutely nothing to do with their character. But prospective partners like to see progress on financial goals. Are you making regular payments towards your debt?

Are you adjusting your spending habits to free up more of your cash every month to pay off your debt more aggressively? Those types of actions communicate to other people that you're not sticking your head in the sand. You are addressing your debt head on. I also want to throw out there that sometimes debt can be a green flag. Like I, for one, have hundreds of thousands of dollars in debt with my

Yeah. And just because the red flags are entertaining from the outside, just when you're living it, it's like, oh, my God, I'm going to die.

It's not great. Not so fun. I want to mention that. But a big thing is honesty. Being honest about your financial situation, being honest about your plan to pay off your debt and meet all of your financial goals. Those are the green flags. People just want to know that you're going to be a life partner, not a financial burden.

But if you lie about how much debt you're in, if you lie about your financial situation, big waving red flag right there. Around two thirds of Americans say they would not continue to date somebody who lied about how much debt they have. Yeah, I don't blame them. That's a tough one to work through. Sarah, do you have any other advice for people so that their finances don't get in the way of their loved lives?

Yeah, if you happen to be the one who's in debt, it's totally fine to use dating as a motivation to get out of debt. But ultimately, pay down that debt as a gift to yourself, not to somebody else. Because if anything, if you do find a partner later on, you'll feel more like you have your life in order and you have more to give to another person. But even if you don't find another partner later on, then you've done yourself the tremendous service of paying off your debt and gives you lots more options in life.

I'll also say something to all those couples out there who struggle to talk about money. A big thing to do is to try to create a culture of safety within your relationship because it's really hard to be honest about being in debt if you think your partner is going to judge you instead of hear you. If you're safe to talk to, your partner will talk to you. And if they lie to you, it could actually be because they're a dishonest person, but it could also be because you can't handle the truth and they're afraid to tell you the truth.

And this goes for all parts of a relationship beyond just money management, too. Remember that you and your partner are on the same team and do what you can to support each other. Exactly. I feel like it's always so romantic to me when I hear about couples who maybe started off with, I don't know, $200,000 debt, and then they worked as a team and paid it down together. So I think that's a huge part of love, too, like working towards goals together. Yeah.

With that said, we are about to turn to this episode's money question where Sean and Sarah talk with a listener about how they can plan for their dream retirement. But before we get into that, we are at one of my favorite parts of the show, the part where we ask you to take a second and think about where you need some guidance with your money. And

And I'm betting a lot of you have received your W-2s or 1099s and other tax documents in the mail. And you're starting to wonder about filing your taxes this year. Hmm, talking to myself. We're working on an episode all about your tax questions, so let us know where you need help. Leave us a voicemail or text us on the Nerd Hotline at 901-

That's 901-730-NERD. Or you can pop us an email at podcast at nerdwallet.com. And a reminder that one of our goals on Smart Money this year is to talk with more of you live on the podcast to help you with your money questions.

So if you want to hang out with Elizabeth and me for a bit and get some nerdy wisdom, let us know. One more time, leave us a voicemail or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD or email us at podcast at nerdwallet.com. All right, let's get to this episode's money question segment where we talk to a listener about their retirement goals. That's up next. Stay with us. Today's episode is supported by Range Rover Sport.

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We're back and answering your money questions to help you make smarter financial decisions. On this episode, we're joined by Smart Money listener Tenzin, an organic produce farmer with some questions about how to plan their retirement and manage their business. Tenzin, welcome to Smart Money. Thank you. Glad to be here. Before we get started, I just want to remind you that everything we talk about today is just for educational purposes and is not specific financial advice. And while Sean is a CFP, he's not your CFP. So does that sound good? Definitely.

All right, great. So to start, Tenton, tell us a little bit about your life personally and financially. A lot of it revolves around the farm with your wife, right? Yeah, that's correct. That's our primary and basically only source of income. We are both all in on the farm. As you might guess, it's a highly variable source of income. It changes a lot throughout the season. It changes a lot season to season. And then there's a lot of little, this

decisions made along the way that can multiply or ripple out and make a big difference throughout the course of any given season. Tell us a little bit about the farm itself. So before we get into all the money stuff, give us an idea of your work.

We run about a 10-acre vegetable farm in north central Wisconsin. We have a very short manic growing season, so there's a high level of intensity. We've got about five employees on the farm. It's just kind of go, go, go between last frost of the spring and the first frost of the fall. Tenzin, I also saw on your website that you have some animals that roam around the farm.

I'm imagining some idyllic scene with cats roaming around and carrots being harvested. Is that what it's like or am I overly romanticizing it a bit? It's not all Facebook posts, but that is definitely something that happens around here. Much of it is idyllic. I do love cats with jobs, so. Yeah, the cats here pull their weight. They do a good job as part of our integrated pest management program. So Tenzin, what vegetables do you grow?

We grow pretty much all the standard vegetables. We don't do a lot with potatoes, although one of our employees has his own potato operation here on the farm. We grow a lot of carrots, a lot of onions, a lot of salad greens, a lot of brassicas, cabbage, kale, kohlrabi, that sort of stuff. We grow a lot of spinach and strawberries, melons, squash.

And do you sell in your local community or are you distributing nationally? We sell primarily in our local community. We started as a CSA and farmer's market farm, and we still do both of those things. We are doing some, I would call it regional wholesale, but it's all pretty much still within the state with a couple of small exceptions.

But within a few hours of here, we're doing more larger wholesale orders of bulk crops once in a while. Are these to like restaurants and other clients like that?

We do also sell to restaurants and grocery stores in our area, but these are more like we would sell to maybe another CSA farm. I want to turn to how you and your wife have managed your money over the years. You mentioned earlier that there is some seasonality to your focus on money, much like how you have to focus seasonally on different parts of your farm. Describe that for us. The farm and we are maturing alongside each other.

And I would say before the farm, we were good at not spending money we didn't have, but we did that by just not spending it. Then we got into farming and obviously that came with a mortgage and all that sort of stuff and a certain amount of operating loans and different stuff.

We did set up our business. The CSA model kind of works like an operating loan that we're getting from our members. So people pay us throughout the off season and they sign up for shares coming the following season. So that has really helped us not have to go many months throughout the winter with no income. But it is still it slows to a trickle.

I imagine that there's a lot of overlap between how you and your wife manage your household finances and how you're managing the finances of the farm. How have you been able to make it so that you are getting income stream in a somewhat stable way from the farm, but also not intermingling too much the business finances and your personal home finances?

We are getting better at that. It used to just entirely be two separate bank accounts, but we would just pull money from one and put it into the other as needed. Now we're getting much better at keeping those things separated where we've been using QuickBooks for two years now to actually keep track of expense and income categories.

I feel like that's really common for small business owners, regardless of what industry you're in. When you first start the business, it's very informal when it comes to managing your personal finances and your business finances. And then as you become more established, you formalize things more and more. And then you begin to do things like pay yourself a salary rather than just take money when you need it, things like that, and handle your accounting differently and your accounts differently. I think listeners who maybe don't run a farm, but who do run a small business can see a lot of themselves in your experience. Yeah.

Yep. And this is very much a small business. I mean, all farms are, but ours, because we do the direct marketing and a lot of the distribution and transportation and everything, the income and the expenses are widely varied. And a lot of what we're doing is marketing and communication. Tenzin, you and your wife are at points in your lives where you're beginning to really seriously consider what your retirement will look like. What kind of retirement planning and saving have you done so far?

We have fully funded our IRAs almost every year, I think, since we started the farm about 10 years ago. So we had kind of sporadic contributions to them prior to that. But since getting the farm up and running, I think we've fully funded them pretty much every year. But that is about it. And is that a traditional or a Roth IRA? Yeah.

So we have both. And then we just ask our tax person which one we should fund this year based on our tax situation. A lot of farms have a lot of tax advantages. So we try to make use of those depending on how the season was. I like to hear that you're working with a tax professional because that is often essential when you're managing a business. And even if you just have somewhat complex finances as a non-business owner, it can be really beneficial to have a CPA that you're working with.

Definitely. I am sure in our case that she has more than paid for herself every single year. From what you mentioned earlier, Tenzin, it sounds like it's really just been in the past decade or so that you and your wife have begun to seriously save for retirement. Is that correct? That's correct. Yep. We both had some other investment savings coming into this. So there's a little bit more in that nest egg than just that. But that's what we're contributing on a regular basis.

When would you like to retire? Do you have a year or an age or some other sort of milestone in mind where you think, okay, this is when we're going to flip the switch and retire?

Yeah. So part of my question is how to sort of monitor where we're at to be able to continue to change that. Because if you ask me in August, I am ready to retire next year. And then this time of year, I'm like, I could do this for the rest of my life. I love it so much. So it really, it bounces around a lot. I sort of see like three or four different options playing out for the future of

of the farm into our retirement. And one of my personal favorites is to just transfer day-to-day operations of the farm or ownership of the farm in whatever way, but continue to just kind of like stay here and play tractor hero. Tractor hero. I've not heard that term before. Yeah, it's a good one. I think it needs its own comic book.

That could be a retirement project for you. My wife and I both have just no shortage of interests and passions. So I could really see either of us stepping away from the farm to pursue some other project that we're passionate about. We have a couple of kids who don't really show much interest in running the farm, but they're only nine and 11. So they're off the hook for now.

I'm not going to try to put that pressure on them. I don't expect them to do that or need them to do that for any reason. So really just kind of depending on who is interested in running the farm and in what capacity, that will determine a lot of what we do. One of my big questions kind of coming from back when we started and we weren't keeping track of finances

we sort of felt like, well, the retirement is the farm. So you build up this farm and eventually the bank doesn't own it anymore. And then you can sell that and retire. And that made sense to me once upon a time. Now I'm kind of aware of the fact that if I sell the farm, I don't get to live here anymore. And it's no longer doing its job, both in terms of feeding the community, but also in terms of keeping the people who work there gainfully employed.

So I'm sort of interested in just different ways of figuring that out. But also we direct markets so we know the people who are eating our food and we like them and care about them and want to continue having food for them. We do a lot of work with food insecure communities in our area and we want to continue that.

So maybe retiring in air quotes looks more like continuing to farm, but sort of changing how much income we're expecting the farm to generate and how much passion project it can support. Right. Well, I think that would make sense considering that it seems like you and your wife may not have a huge nest egg saved up for retirement, but you do have this great asset that's making money, this farm.

and you have workers who are passionate and care about what you're doing and its impact in the community. So what you might want to look into is a shared ownership model that might be a way for you to slowly transition ownership over time. You also might want to consider some kind of business arrangement where you are really just minimally involved in the company but can drive income from it. Like an LLC that's managed like a partnership could be a good option here.

But one thing I'm going to recommend is that you connect with a certified financial planner who has specific experience in managing businesses and transitioning owners from active management to maybe a less active role or even selling a business. We do have a financial planner who we use and adore. She has some experience with small business ownership.

Our farm is not unique. There's not a whole lot of our type of farm, you know, direct marketing sort of stuff. So I don't know how easy it would be to find a financial planner with any sort of very relevant experience. Selling a farm more of a commodity farm is a different thing. It's just easier to identify clients.

what the value of things is. The value of the farm as a functioning farm, somebody who wants to run it in a similar way is very different from the value of the assembled parts if we were to auction them off, for example. Luckily, there are financial planners who specialize in all different areas, not just, for example, small business owners, but your particular type of small business. And in

In any small business, succession planning is so important. Finding a way that you can transition out of the day-to-day operation of your business in a way that makes sense for you. And in your case, it sounds like a succession plan that you could execute more gradually over time.

There are two resources we wanted to point out for anybody listening who is asking the same questions you are. If you are looking for a financial planner that specializes in a specific area, you can check out the Garrett Planning Network and also the XY Planning Network.

Both of those networks can connect you with fee-only financial planners. And also NerdWallet has content and tools that can help you find financial advisors. Perfect. This is really important to do right now because if you have a good certified financial planner who understands your position, they can serve as sort of the quarterback or the coach of your financial team where they are directing your tax pro and maybe they can connect you with an estate planning attorney.

they can really help you connect the dots and get a comprehensive plan so you can get what you want from your money and have the retirement that you and your wife wants so you can focus on those passions that you mentioned earlier that's great i didn't even know that that was an option

Yes, there's a lot out there. But one thing I want to go back to is what you imagine your retirement to be. So when you and your wife are having these conversations, what does that look like? What are those passions that you want to spend time on? When are you going to make this amazingly successful tractor hero comic book series? What is it that drives you to have a retirement?

Yeah, that's a great question. We have always sort of been the kind of people who have like five plans at once with low attachment to any one of them necessarily. So much will depend on just the way that it plays out. But I also, as we've been farming, have really come to value the process of making a detailed plan and witness the power of having a detailed plan and reaching goals.

I don't want to just neglect that. We definitely would like to travel. We spent a lot of time traveling earlier in our lives. We never completed a one-year lease anywhere before purchasing a farm.

And we do travel still some now in the off season, but there's a lot of places that we'd like to visit not in February. Well, one thing that might be helpful is for you and your wife to think about what are maybe the top two, maybe three scenarios for your retirement. Are there a couple ideas that you keep coming back to besides travel?

One of them is staying on the farm. If we could come up with a good gradual succession plan, staying involved on the farm, helping facilitate that transition, still being able to derive some purpose from that and have the farm and us derive some benefit from that sounds great. That's sort of my ideal.

the little bit of looking into transitioning and succession planning it seems like a challenge to come up with a good streamlined plan and i think the other thing is that i tend to look around and i see a lot of farmers 10 and 20 years older than us who are kind of up against that and

I'm reading into it, but it seems like if they had started 10 years earlier making some sort of a gradual plan, it would be an easier transition than to suddenly hash it out in a hurry or under some amount of financial strain. I feel like we're in a really good position

position financially. The farm is working well, not that it's any sort of get-rich-quick scheme, but it is definitely a bigger economic engine than I thought it would be when we set out and knock on wood, more reliable. Part of why I really encourage you and your wife to get clear about what your goals are for retirement, what you imagine your retirement to be, is because retirement planning really has this qualitative element that I just laid out, knowing what you want your retirement to look like,

Whether you're going to travel a lot, stay in a specific area, move around, completely retire, semi-retire, all of these different factors.

And then you want to turn more to the quantitative side, really knowing how much money you would need to save to live that life that you want in retirement. And this is where that CFP with succession planning and retirement planning can help you make a very specific plan for your needs and your goals. I think that's absolutely right. I really don't know is the problem. And so I guess some of the things that I'm looking for are very broad benchmarks. I mean,

I mean, luckily there are benchmarks like these when it comes to retirement saving and also estimating how much you might spend in

in retirement versus how much you spend while you're still working full-time anyway. Play with a retirement calculator. We have a good one at NerdWallet, and that can help you map out a couple of different scenarios and maybe start formulating some ideas with real numbers behind them. Many people can live off of around 70% to 80% of their pre-retirement income in retirement because there are some decreased costs. A lot of times, people are no longer paying a mortgage.

That's not always the case, but in many cases, if you've lived on the same property for a long time, it could be. You're not paying payroll and social security taxes. Work-related expenses like buying equipment or if you work in an office like dry cleaning, parking, things like that are no longer a factor.

But you are potentially paying more for travel if that's part of your plan, but also for health care, because that's the unfortunate reality is health care costs obviously go up for many people as they age. And so there are some interesting benchmarks for many people saving between 10 and 15 percent of their gross income is a good goal. You may want to save even more as you get close to retirement. So in case you have some catching up to do, this can help you increase your likelihood of hitting your goal number.

I have played with NerdWallet's retirement calculator. I love it, actually. Thank you. I find it the easiest one, and then it maps it all out on a little chart. I've

I very much appreciate that tool. So then once you have an idea of how much you need to have saved, you will also want to factor in a potential stream of income from your business. And a lot of people count out social security, which I think is maybe a little bit misguided. People will just buy into the fact that they won't have it. That can be a good conservative estimation. But

I also don't want people to just assume that it won't be there for them. And then they just give up on the idea of it existing in general so that when it comes to the chopping block in Congress, people already think it's already dead. So I like to say consider Social Security, but try to have a plan for what your retirement savings might look like without that too, just so you can play with a few different scenarios. Well, Tenzin, thank you so much for taking the time to talk with us. I really appreciate it.

Yeah, thanks for taking my question. This is pretty exciting. Well, please keep us posted. And we want some photos of cats on the farm, please. All right. Yes. Can do.

That's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Also visit nerdwallet.com slash podcast for more info on this episode. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.

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