Debt in the Dating World and Retirement Planning for Entrepreneurs and Business Owners

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. 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 gotta 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 Ayola.
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 Sarah beige flag.
I think for me, I would be trying to gauge their money value. 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, 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 mortgage.
That's a good kind of debt that you would want to see someone have, especially if it's affordable in their budget. But the study mentioned some entertaining red flags and some green flags that people should consider in a potential partner.
Can you talk us through those, Sarah? Yeah. And just because the red flags are entertaining from the outside, just when you're living it, 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 love 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.
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 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 to help.

Leave us a voicemail or text us on the Nerd Hotline at 901-730-6373.

That's 901-730-N-E-R-D.

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-N-E-R-D.
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.
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, Tenson, 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 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 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,

Thank you. 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 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're 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. 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? 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 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 derive 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.