Cheap Easter egg coloring tricks

Yes, I know. It is not very expensive to buy Easter egg dye kits.
But since the task can be done very effectively with food coloring, you may as well go “old school” on this project and save a little bit of money.
There are a lot of instructions on the Internet on how to use food [...]

Continue reading Cheap Easter egg coloring tricks …

From Monroe on a Budget.

Reader Mailbag: More Time for Reading

I find that, whenever I get busy with things in my life, the first thing I cut out is the hour or two a day I spend reading. If I do that for a few days, I begin to intensely miss it.

Just yesterday, I was talking to a friend of mine who’s a stellar athlete. He expressed to me the exact same thing about training – if he skips a couple of days due to personal issues, he REALLY misses his daily hours in the gym.

Exercise your body, exercise your mind, I guess.

I’ve always been very financially responsible and rather frugal. I might occasionally allow myself to purchase a bottle of wine at the end of a week or a new book once a month or so, but I’ve never been a spender. I very much believe that I’d rather struggle (not that my husband and I really struggle) now and relax when I’m older.

However, the last year has brought considerable change in my attitude. In the last year, [my family has experienced several tragedies]. Due to these things, I’ve become a much more in the moment liver, than living for the future. I’ve spend quite a bit more money lately than I ever have before. I’m not spending out of control or over our means, but I’m still concerned.

I had such a tight string on my wallet for long it felt good to just buy stuff for the first couple of months. But now I’m afraid I’m going to fall into some kind of spending spiral. I would like to find a balance between incredibly frugal and lightening up a little bit. I don’t know what tomorrow is going to bring I don’t want to live entirely in the future any more. I need to enjoy the life I’m living now too. Do you have any advice?
- Dana

I edited Dana’s question a bit to eliminate some of the more personal elements, which weren’t really relevant to the issue at hand but might be embarrassing if someone she knew were to read the question.

I don’t see anything to be concerned about in your email, Dana. As long as the things you’re spending your money on in the now are things that are genuinely important to you, there’s no problem with spending money today.

Of course, you should always keep a few basic principles in mind. Even if you’re spending more than before, you should still strive to spend less than you earn – keep that as a firm cap. You should also reflect on the things you’ve spent money on to make sure that they’re bringing you genuine happiness.

From your email, you’re clearly already doing the reflecting, and it seems as though you’re spending less than you earn. All that’s happening is that your values are shifting a bit due to changes in your life – and that’s completely normal, even healthy.

We have $5800 in a money market account for savings. After a recent look at that account, I noticed that it’s returning 0.5%. Obviously, I want to improve that rate of return. I’ve contemplated a CD ladder, but CD rates at my credit union are well below the return I get on my checking account (with very simple stipulations to meet) that gets me 3%. Is there any reason to not move this money into my checking account? We have another $4000 in savings in the checking account currently and don’t have a problem with keeping the mental separation of savings vs. spending money being in the same account.
- Joseph

The entire purpose of a CD – and thus a CD ladder – is to earn rates that exceed what you can get in your checking or savings account in exchange for losing some liquidity (i.e., you can’t just remove money from a CD at will without paying a penalty).

If you’re earning more in your checking account or savings account than you can earn with a CD, then you shouldn’t have that money in a CD. It’s earning less (a negative) and you have less access to it (a negative), with no corresponding positives.

You’re doing things right.

I have been reading a while and looked around a lot on the “should I cash out my 401k to pay off debt?” question. I’m still stuck as to whether I should or should not. I have reduced my expenses, stopped using cards, have a $1,000 safety fund/savings, but still have $18,851 in credit card debt. I am not depositing in to my 403b now so i can use that to pay down debt, but at this rate, it looks like 5 years for all of it. I have a 401K from an old job valued at about $11,380 right now. I was thinking about waiting till it’s at about $12k, that way, after tax and penalty, I would have enough to pay off one card, $7791 at 19.99% ! and then snowball the other card payments from highest interest down and that would take overall two years (or less depending on refunds etc that could be applied). I’m in a better paying job now and employer is putting a tiny amount in to 403b even though i am not contributing right now. I am 32 yo, have a condo and car payment, and once credit card debt is paid off (about 500 a month), i could put a lot into savings, start an IRA, and resume 403b contributions. I guess I just want to see some more rapid progress on paying off this debt, but am I betting my future by cashing out the 401k?
- Christopher

If I were you, I would not touch the 401(k) and I would also start contributing more to the 403(b), even if it adds some time to the debt payoff.

Why? You can never get those contributions back into your retirement plan. If you take that money out of your 401(k), you have permanently hindered your retirement. The only way to approximate it is to contribute quite a lot extra to your 403(b), but that would be even later, after your debts are gone, so it would require a lot of contributions.

In fact, I would contribute to my 403(b) up to the top of the employer’s match, starting right now. Again, you can’t ever get this contribution opportunity back – it’s free money that your employer is handing you that you’re turning down right now.

Yes, your credit card debt might take a little longer, but a 20% loss on your credit card interest rate is well worth a 100% gain on your 403(b) contributions from the match.

My husband and I are trying to decide when we should start a family, he is 28 and I am 27. One of us plans to stay home with the baby so we need to be able to live off of one income. I am a registered nurse and he is a Commercial Truck driver with a class A. The issue is we have debt and need to fix our house up, our current plan we would have this done in 2 1/2 years, 3 1/2 and we could have no mortgage. We are starting to feel this is too long to wait to try to start a family. Total income 2009 $90,000, debt: CC $4500 9.8%, car $14,000 7.8%, student loan $24,000 5.5%, Mort. $42,000 6%, about $15,000 needed in home repairs. In 2009 we paid off $12,000 in CC debt and put $5,000 into our home. We both do 6% of our income to 401K, emergency savings is $2000, and I am furthering my education and we are paying cash for it. I am starting to feel that we are overly preparing to have a family. Any thoughts?
- Lindsay

I think you should move forward with your family plans when you’re sure you can make it financially after having the child. For you, this means not only adding the child costs to the equation, but it also means one of you staying home with the child.

You should spend some time planning out exactly what will happen in that case. You mention that you’re getting further education (to be a nurse practitioner, I’m guessing?) – if you’re going to be the one that stays home with the child, cut that expense right now.

It’s also worth noting that even when you decide to go forward with trying to have a child, that child won’t arrive in a stork tomorrow. Even if you conceive almost immediately, you still will have most of a year before you lose one or the other of your incomes.

My suggestion? Right now, make up a very detailed plan for how you will do things after the child is born. How much income will you have? Will you be able to cover the bills? Who will stay at home with the child? How many years will that person stay at home? Some of these questions may alter what you’re doing with your money and time right now – if you’re staying at home, for example, you may not want to invest a lot of money into furthering your education at the moment.

If it looks like you could make it with the way things are right now, then I’d start trying to conceive. If it doesn’t look possible, I’d wait a bit longer, then re-evaluate.

There’s a lot of conflicting information out there and I’m curious what you would do. When I go on vacation I often rent a car and never know what to do about insurance. I don’t own a car at home and therefore don’t have any auto insurance policy for myself. I have the option of getting non-owners auto insurance from my insurance provider for $20/month but, based on the explanation of the coverage, my understanding is that all that covers is medical and damage liability if I hit someone else. I do have a visa that could presumably provide collision and damage insurance beforehand but doesn’t cover liability for another person if I collide with them. However, I’m not ready to pay $240/year so that I have that coverage for the 2x a year I drive a car. What do you suggest I do when I rent a car? Just use my credit card coverage? Get one month of liability coverage (if that’s even an option)? I paid an arm and a leg last time I rented because my parents and boyfriend freaked me out and demanded I get it but from my research they don’t understand what sort of coverage I need either. What would you do in my situation?
- Arlene

Most likely, you won’t be able to buy that policy on a month-by-month basis. Most policies are drawn up to cover six months or a year and your monthly payments are fractions of what you owe for that policy.

My first suggestion would be to look at the insurance offered by the rental companies. Typically, such policies are redundant for people who have auto insurance themselves, but they may not be redundant for you.

I would also take a look at what exactly your credit card offers in terms of coverage. It seems that your card just offers liability coverage, so I would look at the company you typically rent from and get quotes on insurance for the passenger and rental car. This will probably be in the ballpark of $10-15 a day, so this will save you money if you rent only for short periods, but if you rent for two weeks a year, it won’t be much of a savings.

If you have a well-stocked emergency fund, you may want to consider just having liability coverage (as provided by your card) and calling it good enough. After all, if you’re not driving the rental too much, your risk of a major accident is relatively low – and that’s what we’re talking about here, risk.

I have been working as a software developer for around two years. It’s a steady job and pays fairly well and I do enjoy it at times. I find though my concentration span really holds me back from enjoying this more and from progressing in my programming ability. Sometimes I can almost do a full day doing no work. I just can’t keep focus long enough.

At first I wondered if perhaps this job just doesn’t interest me enough (i.e. perhaps lack of concentration is due to lack of enjoyment and not vice versa) but looking back this is something that has plagued me all my life and I think it really held me back at school. I even struggle reading a couple of pages of a novel (that I find interesting) without having to go back and read. my mind just starts thinking of other things even while I’m saying each word in my head!

I haven’t received any warnings about the lack of work I sometimes produce (yet) but would like to get on top of this so I don’t stay at the same level of ability all my life and narrow my future horizons.

I have recently pondered the idea of hypnotherapy but to be honest I’m a little scared of this. Do you have any suggestions to improve my concentration span?
- Ben

I’ve thankfully never really had this problem. In fact, I tend to have the opposite – when I bear down on a task, I can lose all track of time and even reach the point where I literally don’t hear people around me.

Anyway, one of my mentors once suggested a five-prong plan for maintaining concentration. He used the word FOCUS as an acronym for it. I’ve seen variations of it floating around online, but here’s how my mentor defined it.

Five more means that if you’re doing something and feel your focus wandering, always challenge yourself to do five more. Five more pages. Five more minutes of coding. Five more emails. It’s like endurance training for your mind.

Only the thing you’re working on means that you should try to look at the task you’re doing with fresh eyes if you find your mind wandering. Look at what you’re doing and ask yourself if you’re doing it well or why you’re doing it. It often refreshes the task.

Complete the little things now means that if you have a task you’re putting off, start working on it immediately. This helps with concentration because a task that’s been put off is a task that’s weighing on your mind.

Understand the details means that, instead of thinking about the big picture of the project you’re working on, you should try to break it down into the smallest detail you can, then just focus on that detail. It makes the task seem much shorter and manageable, which again helps with concentration.

Silence means that you should cut off interruptions. Unplug your phone. Close your web browser. You can even go so far as to rest your face on your hands and cup your hands around your eyes so that they function as peripheral blinders.

Good luck!

I’ve been reading The Simple Dollar for about a year now and really enjoyed the series you did a while ago on cooking. Quick question, I’ve tried Eggplant several times (never as Eggplant Parmesan) and not had much luck, however I found a recipe for Eggplant Parmesan and wondered if you’ve ever attempted to cook it at home. The particular one I found says to peel the eggplant and I’m wondering if that’s the reason all my other eggplant attempts have failed. Any thoughts?
- Shawna

You didn’t really specify what the problem was with the eggplant. For the most part, the peel makes little difference – it’s mostly a matter of personal preference, like a potato peel (I prefer them, myself). My guess is that the problem is not with the peel, but with the sweating.

Sweating? Try salting the outside of your eggplant about a half an hour before you tend to use it. Just take some table salt and rub it on the outside. When you’re ready to use it, you’ll find that the outside of the plant is now moist with some very salty and bitter water. Rub the water off and slice it.

I don’t know if that’s the solution for your problem, because I’m not entirely clear on what’s wrong with the eggplant when you cook it. I’m just assuming that the problem is bitterness.

It may also be that you simply don’t like eggplant, for which there is no real cure other than just trying it in different ways on an irregular basis.

My husband and I are in our late 20s and don’t yet have any kids but are thinking about it – we’d like to have a baby in the next year, but obviously there are no guarantees on timing. I’m currently making about $45k and my husband $75k; when we have a baby we plan on me staying home, so we’ll be losing that income.

We already have an emergency fund with 6 months of expenses in it, we’ll be paying off my student loans in May (that bill had been about $100/month), and after that we’re debt free except for our house! We currently have a budget excess of about $2500/month (give or take depending on the month) that we’ve been putting toward my student loans, and I am on the hunt for my next financial goal to knock out. The only retirement savings we have is a 401k for my husband that we started this year, putting 4% of his salary into it. Looking ahead, I think we’ll have about $20k extra to play with this year, and this is where you’re advice comes in. We are definitely going to open an IRA (undecided as to traditional vs Roth) and with the max contribution of $10k between us for the year, that leaves an unaccounted-for $10k or so.

Option 1: We only put 10% down on our house when we bought it almost two years ago, so we’re paying PMI of about $60/month. We have $16k left to get to the 80% mark where we can get rid of PMI (and potentially adjust our monthly payment to reflect the new principal). We could put the other $10k this year toward our mortgage principal and get the last bit paid down early next year, so provided we don’t have a baby and drop income in the meantime, we could be PMI-free by next year this time.
Option 2: Alternatively, since we’ll have a more limited budget when we go down to one income, we could put the $10k in savings to put into the IRA in 2011. We’ll be able to save something when we have one income, but while I’m not sure what our budget will look like with a baby, I’m almost positive we won’t have $10k a year to put toward retirement (beyond the 401k).

That’s the scoop – thoughts?? Also, input on whether to do traditional IRA vs Roth IRA would be helpful, I think. We’re in a very blessed and pretty fantastic stage of life right now, and really want to take every advantage that we can while we can.
- Marisa

As I mentioned above, the first thing you need to do before considering going ahead with a child is to make a post-baby budget. Spend some time really contemplating how your life will look at that point. Is one of you going to stay home with the child? What will child care costs be like? Do some research and find some real answers here, then figure out what things will look like financially for you. I encourage you to estimate high, because it’s going to cause a lot less problems than estimating low will.

If you make that budget and decide that things look doable but close post-baby, put that $10k into savings for now. It may wind up being a “baby emergency fund” as you find that there are lots and lots of baby expenses you didn’t consider. If you get through 2011 without a child, then contribute to the IRA.

If you make that budget and decide you’re good to go with a fair amount of room to breathe, I’d sink it into the mortgage, mostly to get you below the PMI mark, which will make breathing even easier for you.

In the two years after graduating college, I learned a fantastic lesson about living on credit cards (badidea!) and living without health insurance, and had to go through CCCS to pay off the impressive debt that I accrued– About $20k in credit cards and $10k in medical bills. During this time, I had to sign a agreement with CCCS that I would not use any credit card until my debt was paid off.

Now I’m 28 years old, single, working a job with great medical insurance, have paid off those medical and credit card bills and have not used– or even opened– a credit card since I was 22 years old. I’ve been putting aside a little money each month into an emergency fund and into retirement, but otherwise I’m basically living paycheck-to-paycheck.

Understandably, I have a mild phobia of opening and using a credit card, even though I’ve matured and learned a lot since my wild (stupid) days. However, it seems like a credit card would make my life a lot easier at times– like when I have to pay upfront for a business trip in which I will be reimbursed, or if I loan a friend money and I am scraping by at the end of the month.

Would you recommend that I open a new credit card and pay it off each month? And if so, what advice can you give me about going back into the world of credit?
- Jamie

If you’re truly living paycheck to paycheck, the first thing you need to do is either increase income or cut spending (or, ideally, both). Perhaps you need to change your living situation or your energy consumption or your food consumption (do you constantly eat out?). Maybe you can get a second job. Whatever it is, you need to be spending a bit less than you earn or you’re always in danger of getting into financial trouble when something unexpected happens – and it will happen.

If I were you in this situation, I would get an extremely focused credit card that you use for just one specific purpose so that you’re not tempted to use it outside of that context.

The idea that comes to mind for me is a credit card (Visa or Mastercard) offered through a gas station chain that you frequently use. Sign up for one of those cards, but use it ONLY for gas. The giant gas chain logo on the card should be a strong reminder of that. Then, at the end of the month, pay off the bill in full.

This simple step will allow you to re-establish your credit without opening the floodgates. Just keep that card for one purpose and one purpose alone.

I would not use it for any other purpose – don’t “pay up front for trips” with it or anything like that. Use it simply as a means of improving your credit and maybe reducing your gas costs a bit.

My husband and I own a reasonable home in Pennsylvania, and are hoping to move to Maryland to be closer to my family in the next couple of years. We also just welcomed our first child about 7 months ago. I am a full-time working mom and am growing weary of being away from my home and family 10 hours a day, but my family relies on my income (which is significantly higher than my husband’s: $56k to $38k) and my health insurance.

My question is sort of two-fold:

(1) Is it selfish of me to want to stay home and care for my family? I have done contract work in the past and could make up a great deal of my salary, but not the health insurance, which is much more expensive through my husband’s job and very limiting in its offerings.

And (2), would it be a bad idea to rent for a while once we move to Maryland in order to save money? Housing is substantially pricier there, so we were planning to build on family land, but that could take a while since my husband would do much of the building himself, while also working a full-time job.
- Jen

(1) It is not selfish of you to want to stay at home with your child. Having a child is an intensely personal and emotional thing and, for many people, staying at home is something they strongly desire simply because of the emotional attachment and quality of care that they would provide to the child. It’s your child. You love that child. Wanting to care for that child and protect it is completely normal.

(2) It is never a bad idea to rent housing, particularly if you don’t plan to live in the house for seven years or more. It’s the first years of the mortgage that are the most painful ones – most of your mortgage payment goes towards interest and the power of compound growth on your home’s value really hasn’t had time to work yet. If you can find a good deal renting, renting absolutely should be on the table.

As for the building, a close friend of mine did that (and I’ve asked him for a guest post to discuss it). It can work and it can save a lot of money, but you really need some serious passion about carpentry and plumbing and electrical work to make it happen.

Good luck.

Got any questions? Email me or leave a comment and I’ll try to answer it in a future mailbag. Please note, however, that I get many more questions than I can answer in any sort of reasonable mailbag length.

Continue reading Reader Mailbag: More Time for Reading …

From The Simple Dollar.

Reader Mailbag: More Time for Reading

I find that, whenever I get busy with things in my life, the first thing I cut out is the hour or two a day I spend reading. If I do that for a few days, I begin to intensely miss it.

Just yesterday, I was talking to a friend of mine who’s a stellar athlete. He expressed to me the exact same thing about training – if he skips a couple of days due to personal issues, he REALLY misses his daily hours in the gym.

Exercise your body, exercise your mind, I guess.

I’ve always been very financially responsible and rather frugal. I might occasionally allow myself to purchase a bottle of wine at the end of a week or a new book once a month or so, but I’ve never been a spender. I very much believe that I’d rather struggle (not that my husband and I really struggle) now and relax when I’m older.

However, the last year has brought considerable change in my attitude. In the last year, [my family has experienced several tragedies]. Due to these things, I’ve become a much more in the moment liver, than living for the future. I’ve spend quite a bit more money lately than I ever have before. I’m not spending out of control or over our means, but I’m still concerned.

I had such a tight string on my wallet for long it felt good to just buy stuff for the first couple of months. But now I’m afraid I’m going to fall into some kind of spending spiral. I would like to find a balance between incredibly frugal and lightening up a little bit. I don’t know what tomorrow is going to bring I don’t want to live entirely in the future any more. I need to enjoy the life I’m living now too. Do you have any advice?
- Dana

I edited Dana’s question a bit to eliminate some of the more personal elements, which weren’t really relevant to the issue at hand but might be embarrassing if someone she knew were to read the question.

I don’t see anything to be concerned about in your email, Dana. As long as the things you’re spending your money on in the now are things that are genuinely important to you, there’s no problem with spending money today.

Of course, you should always keep a few basic principles in mind. Even if you’re spending more than before, you should still strive to spend less than you earn – keep that as a firm cap. You should also reflect on the things you’ve spent money on to make sure that they’re bringing you genuine happiness.

From your email, you’re clearly already doing the reflecting, and it seems as though you’re spending less than you earn. All that’s happening is that your values are shifting a bit due to changes in your life – and that’s completely normal, even healthy.

We have $5800 in a money market account for savings. After a recent look at that account, I noticed that it’s returning 0.5%. Obviously, I want to improve that rate of return. I’ve contemplated a CD ladder, but CD rates at my credit union are well below the return I get on my checking account (with very simple stipulations to meet) that gets me 3%. Is there any reason to not move this money into my checking account? We have another $4000 in savings in the checking account currently and don’t have a problem with keeping the mental separation of savings vs. spending money being in the same account.
- Joseph

The entire purpose of a CD – and thus a CD ladder – is to earn rates that exceed what you can get in your checking or savings account in exchange for losing some liquidity (i.e., you can’t just remove money from a CD at will without paying a penalty).

If you’re earning more in your checking account or savings account than you can earn with a CD, then you shouldn’t have that money in a CD. It’s earning less (a negative) and you have less access to it (a negative), with no corresponding positives.

You’re doing things right.

I have been reading a while and looked around a lot on the “should I cash out my 401k to pay off debt?” question. I’m still stuck as to whether I should or should not. I have reduced my expenses, stopped using cards, have a $1,000 safety fund/savings, but still have $18,851 in credit card debt. I am not depositing in to my 403b now so i can use that to pay down debt, but at this rate, it looks like 5 years for all of it. I have a 401K from an old job valued at about $11,380 right now. I was thinking about waiting till it’s at about $12k, that way, after tax and penalty, I would have enough to pay off one card, $7791 at 19.99% ! and then snowball the other card payments from highest interest down and that would take overall two years (or less depending on refunds etc that could be applied). I’m in a better paying job now and employer is putting a tiny amount in to 403b even though i am not contributing right now. I am 32 yo, have a condo and car payment, and once credit card debt is paid off (about 500 a month), i could put a lot into savings, start an IRA, and resume 403b contributions. I guess I just want to see some more rapid progress on paying off this debt, but am I betting my future by cashing out the 401k?
- Christopher

If I were you, I would not touch the 401(k) and I would also start contributing more to the 403(b), even if it adds some time to the debt payoff.

Why? You can never get those contributions back into your retirement plan. If you take that money out of your 401(k), you have permanently hindered your retirement. The only way to approximate it is to contribute quite a lot extra to your 403(b), but that would be even later, after your debts are gone, so it would require a lot of contributions.

In fact, I would contribute to my 403(b) up to the top of the employer’s match, starting right now. Again, you can’t ever get this contribution opportunity back – it’s free money that your employer is handing you that you’re turning down right now.

Yes, your credit card debt might take a little longer, but a 20% loss on your credit card interest rate is well worth a 100% gain on your 403(b) contributions from the match.

My husband and I are trying to decide when we should start a family, he is 28 and I am 27. One of us plans to stay home with the baby so we need to be able to live off of one income. I am a registered nurse and he is a Commercial Truck driver with a class A. The issue is we have debt and need to fix our house up, our current plan we would have this done in 2 1/2 years, 3 1/2 and we could have no mortgage. We are starting to feel this is too long to wait to try to start a family. Total income 2009 $90,000, debt: CC $4500 9.8%, car $14,000 7.8%, student loan $24,000 5.5%, Mort. $42,000 6%, about $15,000 needed in home repairs. In 2009 we paid off $12,000 in CC debt and put $5,000 into our home. We both do 6% of our income to 401K, emergency savings is $2000, and I am furthering my education and we are paying cash for it. I am starting to feel that we are overly preparing to have a family. Any thoughts?
- Lindsay

I think you should move forward with your family plans when you’re sure you can make it financially after having the child. For you, this means not only adding the child costs to the equation, but it also means one of you staying home with the child.

You should spend some time planning out exactly what will happen in that case. You mention that you’re getting further education (to be a nurse practitioner, I’m guessing?) – if you’re going to be the one that stays home with the child, cut that expense right now.

It’s also worth noting that even when you decide to go forward with trying to have a child, that child won’t arrive in a stork tomorrow. Even if you conceive almost immediately, you still will have most of a year before you lose one or the other of your incomes.

My suggestion? Right now, make up a very detailed plan for how you will do things after the child is born. How much income will you have? Will you be able to cover the bills? Who will stay at home with the child? How many years will that person stay at home? Some of these questions may alter what you’re doing with your money and time right now – if you’re staying at home, for example, you may not want to invest a lot of money into furthering your education at the moment.

If it looks like you could make it with the way things are right now, then I’d start trying to conceive. If it doesn’t look possible, I’d wait a bit longer, then re-evaluate.

There’s a lot of conflicting information out there and I’m curious what you would do. When I go on vacation I often rent a car and never know what to do about insurance. I don’t own a car at home and therefore don’t have any auto insurance policy for myself. I have the option of getting non-owners auto insurance from my insurance provider for $20/month but, based on the explanation of the coverage, my understanding is that all that covers is medical and damage liability if I hit someone else. I do have a visa that could presumably provide collision and damage insurance beforehand but doesn’t cover liability for another person if I collide with them. However, I’m not ready to pay $240/year so that I have that coverage for the 2x a year I drive a car. What do you suggest I do when I rent a car? Just use my credit card coverage? Get one month of liability coverage (if that’s even an option)? I paid an arm and a leg last time I rented because my parents and boyfriend freaked me out and demanded I get it but from my research they don’t understand what sort of coverage I need either. What would you do in my situation?
- Arlene

Most likely, you won’t be able to buy that policy on a month-by-month basis. Most policies are drawn up to cover six months or a year and your monthly payments are fractions of what you owe for that policy.

My first suggestion would be to look at the insurance offered by the rental companies. Typically, such policies are redundant for people who have auto insurance themselves, but they may not be redundant for you.

I would also take a look at what exactly your credit card offers in terms of coverage. It seems that your card just offers liability coverage, so I would look at the company you typically rent from and get quotes on insurance for the passenger and rental car. This will probably be in the ballpark of $10-15 a day, so this will save you money if you rent only for short periods, but if you rent for two weeks a year, it won’t be much of a savings.

If you have a well-stocked emergency fund, you may want to consider just having liability coverage (as provided by your card) and calling it good enough. After all, if you’re not driving the rental too much, your risk of a major accident is relatively low – and that’s what we’re talking about here, risk.

I have been working as a software developer for around two years. It’s a steady job and pays fairly well and I do enjoy it at times. I find though my concentration span really holds me back from enjoying this more and from progressing in my programming ability. Sometimes I can almost do a full day doing no work. I just can’t keep focus long enough.

At first I wondered if perhaps this job just doesn’t interest me enough (i.e. perhaps lack of concentration is due to lack of enjoyment and not vice versa) but looking back this is something that has plagued me all my life and I think it really held me back at school. I even struggle reading a couple of pages of a novel (that I find interesting) without having to go back and read. my mind just starts thinking of other things even while I’m saying each word in my head!

I haven’t received any warnings about the lack of work I sometimes produce (yet) but would like to get on top of this so I don’t stay at the same level of ability all my life and narrow my future horizons.

I have recently pondered the idea of hypnotherapy but to be honest I’m a little scared of this. Do you have any suggestions to improve my concentration span?
- Ben

I’ve thankfully never really had this problem. In fact, I tend to have the opposite – when I bear down on a task, I can lose all track of time and even reach the point where I literally don’t hear people around me.

Anyway, one of my mentors once suggested a five-prong plan for maintaining concentration. He used the word FOCUS as an acronym for it. I’ve seen variations of it floating around online, but here’s how my mentor defined it.

Five more means that if you’re doing something and feel your focus wandering, always challenge yourself to do five more. Five more pages. Five more minutes of coding. Five more emails. It’s like endurance training for your mind.

Only the thing you’re working on means that you should try to look at the task you’re doing with fresh eyes if you find your mind wandering. Look at what you’re doing and ask yourself if you’re doing it well or why you’re doing it. It often refreshes the task.

Complete the little things now means that if you have a task you’re putting off, start working on it immediately. This helps with concentration because a task that’s been put off is a task that’s weighing on your mind.

Understand the details means that, instead of thinking about the big picture of the project you’re working on, you should try to break it down into the smallest detail you can, then just focus on that detail. It makes the task seem much shorter and manageable, which again helps with concentration.

Silence means that you should cut off interruptions. Unplug your phone. Close your web browser. You can even go so far as to rest your face on your hands and cup your hands around your eyes so that they function as peripheral blinders.

Good luck!

I’ve been reading The Simple Dollar for about a year now and really enjoyed the series you did a while ago on cooking. Quick question, I’ve tried Eggplant several times (never as Eggplant Parmesan) and not had much luck, however I found a recipe for Eggplant Parmesan and wondered if you’ve ever attempted to cook it at home. The particular one I found says to peel the eggplant and I’m wondering if that’s the reason all my other eggplant attempts have failed. Any thoughts?
- Shawna

You didn’t really specify what the problem was with the eggplant. For the most part, the peel makes little difference – it’s mostly a matter of personal preference, like a potato peel (I prefer them, myself). My guess is that the problem is not with the peel, but with the sweating.

Sweating? Try salting the outside of your eggplant about a half an hour before you tend to use it. Just take some table salt and rub it on the outside. When you’re ready to use it, you’ll find that the outside of the plant is now moist with some very salty and bitter water. Rub the water off and slice it.

I don’t know if that’s the solution for your problem, because I’m not entirely clear on what’s wrong with the eggplant when you cook it. I’m just assuming that the problem is bitterness.

It may also be that you simply don’t like eggplant, for which there is no real cure other than just trying it in different ways on an irregular basis.

My husband and I are in our late 20s and don’t yet have any kids but are thinking about it – we’d like to have a baby in the next year, but obviously there are no guarantees on timing. I’m currently making about $45k and my husband $75k; when we have a baby we plan on me staying home, so we’ll be losing that income.

We already have an emergency fund with 6 months of expenses in it, we’ll be paying off my student loans in May (that bill had been about $100/month), and after that we’re debt free except for our house! We currently have a budget excess of about $2500/month (give or take depending on the month) that we’ve been putting toward my student loans, and I am on the hunt for my next financial goal to knock out. The only retirement savings we have is a 401k for my husband that we started this year, putting 4% of his salary into it. Looking ahead, I think we’ll have about $20k extra to play with this year, and this is where you’re advice comes in. We are definitely going to open an IRA (undecided as to traditional vs Roth) and with the max contribution of $10k between us for the year, that leaves an unaccounted-for $10k or so.

Option 1: We only put 10% down on our house when we bought it almost two years ago, so we’re paying PMI of about $60/month. We have $16k left to get to the 80% mark where we can get rid of PMI (and potentially adjust our monthly payment to reflect the new principal). We could put the other $10k this year toward our mortgage principal and get the last bit paid down early next year, so provided we don’t have a baby and drop income in the meantime, we could be PMI-free by next year this time.
Option 2: Alternatively, since we’ll have a more limited budget when we go down to one income, we could put the $10k in savings to put into the IRA in 2011. We’ll be able to save something when we have one income, but while I’m not sure what our budget will look like with a baby, I’m almost positive we won’t have $10k a year to put toward retirement (beyond the 401k).

That’s the scoop – thoughts?? Also, input on whether to do traditional IRA vs Roth IRA would be helpful, I think. We’re in a very blessed and pretty fantastic stage of life right now, and really want to take every advantage that we can while we can.
- Marisa

As I mentioned above, the first thing you need to do before considering going ahead with a child is to make a post-baby budget. Spend some time really contemplating how your life will look at that point. Is one of you going to stay home with the child? What will child care costs be like? Do some research and find some real answers here, then figure out what things will look like financially for you. I encourage you to estimate high, because it’s going to cause a lot less problems than estimating low will.

If you make that budget and decide that things look doable but close post-baby, put that $10k into savings for now. It may wind up being a “baby emergency fund” as you find that there are lots and lots of baby expenses you didn’t consider. If you get through 2011 without a child, then contribute to the IRA.

If you make that budget and decide you’re good to go with a fair amount of room to breathe, I’d sink it into the mortgage, mostly to get you below the PMI mark, which will make breathing even easier for you.

In the two years after graduating college, I learned a fantastic lesson about living on credit cards (badidea!) and living without health insurance, and had to go through CCCS to pay off the impressive debt that I accrued– About $20k in credit cards and $10k in medical bills. During this time, I had to sign a agreement with CCCS that I would not use any credit card until my debt was paid off.

Now I’m 28 years old, single, working a job with great medical insurance, have paid off those medical and credit card bills and have not used– or even opened– a credit card since I was 22 years old. I’ve been putting aside a little money each month into an emergency fund and into retirement, but otherwise I’m basically living paycheck-to-paycheck.

Understandably, I have a mild phobia of opening and using a credit card, even though I’ve matured and learned a lot since my wild (stupid) days. However, it seems like a credit card would make my life a lot easier at times– like when I have to pay upfront for a business trip in which I will be reimbursed, or if I loan a friend money and I am scraping by at the end of the month.

Would you recommend that I open a new credit card and pay it off each month? And if so, what advice can you give me about going back into the world of credit?
- Jamie

If you’re truly living paycheck to paycheck, the first thing you need to do is either increase income or cut spending (or, ideally, both). Perhaps you need to change your living situation or your energy consumption or your food consumption (do you constantly eat out?). Maybe you can get a second job. Whatever it is, you need to be spending a bit less than you earn or you’re always in danger of getting into financial trouble when something unexpected happens – and it will happen.

If I were you in this situation, I would get an extremely focused credit card that you use for just one specific purpose so that you’re not tempted to use it outside of that context.

The idea that comes to mind for me is a credit card (Visa or Mastercard) offered through a gas station chain that you frequently use. Sign up for one of those cards, but use it ONLY for gas. The giant gas chain logo on the card should be a strong reminder of that. Then, at the end of the month, pay off the bill in full.

This simple step will allow you to re-establish your credit without opening the floodgates. Just keep that card for one purpose and one purpose alone.

I would not use it for any other purpose – don’t “pay up front for trips” with it or anything like that. Use it simply as a means of improving your credit and maybe reducing your gas costs a bit.

My husband and I own a reasonable home in Pennsylvania, and are hoping to move to Maryland to be closer to my family in the next couple of years. We also just welcomed our first child about 7 months ago. I am a full-time working mom and am growing weary of being away from my home and family 10 hours a day, but my family relies on my income (which is significantly higher than my husband’s: $56k to $38k) and my health insurance.

My question is sort of two-fold:

(1) Is it selfish of me to want to stay home and care for my family? I have done contract work in the past and could make up a great deal of my salary, but not the health insurance, which is much more expensive through my husband’s job and very limiting in its offerings.

And (2), would it be a bad idea to rent for a while once we move to Maryland in order to save money? Housing is substantially pricier there, so we were planning to build on family land, but that could take a while since my husband would do much of the building himself, while also working a full-time job.
- Jen

(1) It is not selfish of you to want to stay at home with your child. Having a child is an intensely personal and emotional thing and, for many people, staying at home is something they strongly desire simply because of the emotional attachment and quality of care that they would provide to the child. It’s your child. You love that child. Wanting to care for that child and protect it is completely normal.

(2) It is never a bad idea to rent housing, particularly if you don’t plan to live in the house for seven years or more. It’s the first years of the mortgage that are the most painful ones – most of your mortgage payment goes towards interest and the power of compound growth on your home’s value really hasn’t had time to work yet. If you can find a good deal renting, renting absolutely should be on the table.

As for the building, a close friend of mine did that (and I’ve asked him for a guest post to discuss it). It can work and it can save a lot of money, but you really need some serious passion about carpentry and plumbing and electrical work to make it happen.

Good luck.

Got any questions? Email me or leave a comment and I’ll try to answer it in a future mailbag. Please note, however, that I get many more questions than I can answer in any sort of reasonable mailbag length.

Continue reading Reader Mailbag: More Time for Reading …

From The Simple Dollar.

Reader Mailbag: More Time for Reading

I find that, whenever I get busy with things in my life, the first thing I cut out is the hour or two a day I spend reading. If I do that for a few days, I begin to intensely miss it.

Just yesterday, I was talking to a friend of mine who’s a stellar athlete. He expressed to me the exact same thing about training – if he skips a couple of days due to personal issues, he REALLY misses his daily hours in the gym.

Exercise your body, exercise your mind, I guess.

I’ve always been very financially responsible and rather frugal. I might occasionally allow myself to purchase a bottle of wine at the end of a week or a new book once a month or so, but I’ve never been a spender. I very much believe that I’d rather struggle (not that my husband and I really struggle) now and relax when I’m older.

However, the last year has brought considerable change in my attitude. In the last year, [my family has experienced several tragedies]. Due to these things, I’ve become a much more in the moment liver, than living for the future. I’ve spend quite a bit more money lately than I ever have before. I’m not spending out of control or over our means, but I’m still concerned.

I had such a tight string on my wallet for long it felt good to just buy stuff for the first couple of months. But now I’m afraid I’m going to fall into some kind of spending spiral. I would like to find a balance between incredibly frugal and lightening up a little bit. I don’t know what tomorrow is going to bring I don’t want to live entirely in the future any more. I need to enjoy the life I’m living now too. Do you have any advice?
- Dana

I edited Dana’s question a bit to eliminate some of the more personal elements, which weren’t really relevant to the issue at hand but might be embarrassing if someone she knew were to read the question.

I don’t see anything to be concerned about in your email, Dana. As long as the things you’re spending your money on in the now are things that are genuinely important to you, there’s no problem with spending money today.

Of course, you should always keep a few basic principles in mind. Even if you’re spending more than before, you should still strive to spend less than you earn – keep that as a firm cap. You should also reflect on the things you’ve spent money on to make sure that they’re bringing you genuine happiness.

From your email, you’re clearly already doing the reflecting, and it seems as though you’re spending less than you earn. All that’s happening is that your values are shifting a bit due to changes in your life – and that’s completely normal, even healthy.

We have $5800 in a money market account for savings. After a recent look at that account, I noticed that it’s returning 0.5%. Obviously, I want to improve that rate of return. I’ve contemplated a CD ladder, but CD rates at my credit union are well below the return I get on my checking account (with very simple stipulations to meet) that gets me 3%. Is there any reason to not move this money into my checking account? We have another $4000 in savings in the checking account currently and don’t have a problem with keeping the mental separation of savings vs. spending money being in the same account.
- Joseph

The entire purpose of a CD – and thus a CD ladder – is to earn rates that exceed what you can get in your checking or savings account in exchange for losing some liquidity (i.e., you can’t just remove money from a CD at will without paying a penalty).

If you’re earning more in your checking account or savings account than you can earn with a CD, then you shouldn’t have that money in a CD. It’s earning less (a negative) and you have less access to it (a negative), with no corresponding positives.

You’re doing things right.

I have been reading a while and looked around a lot on the “should I cash out my 401k to pay off debt?” question. I’m still stuck as to whether I should or should not. I have reduced my expenses, stopped using cards, have a $1,000 safety fund/savings, but still have $18,851 in credit card debt. I am not depositing in to my 403b now so i can use that to pay down debt, but at this rate, it looks like 5 years for all of it. I have a 401K from an old job valued at about $11,380 right now. I was thinking about waiting till it’s at about $12k, that way, after tax and penalty, I would have enough to pay off one card, $7791 at 19.99% ! and then snowball the other card payments from highest interest down and that would take overall two years (or less depending on refunds etc that could be applied). I’m in a better paying job now and employer is putting a tiny amount in to 403b even though i am not contributing right now. I am 32 yo, have a condo and car payment, and once credit card debt is paid off (about 500 a month), i could put a lot into savings, start an IRA, and resume 403b contributions. I guess I just want to see some more rapid progress on paying off this debt, but am I betting my future by cashing out the 401k?
- Christopher

If I were you, I would not touch the 401(k) and I would also start contributing more to the 403(b), even if it adds some time to the debt payoff.

Why? You can never get those contributions back into your retirement plan. If you take that money out of your 401(k), you have permanently hindered your retirement. The only way to approximate it is to contribute quite a lot extra to your 403(b), but that would be even later, after your debts are gone, so it would require a lot of contributions.

In fact, I would contribute to my 403(b) up to the top of the employer’s match, starting right now. Again, you can’t ever get this contribution opportunity back – it’s free money that your employer is handing you that you’re turning down right now.

Yes, your credit card debt might take a little longer, but a 20% loss on your credit card interest rate is well worth a 100% gain on your 403(b) contributions from the match.

My husband and I are trying to decide when we should start a family, he is 28 and I am 27. One of us plans to stay home with the baby so we need to be able to live off of one income. I am a registered nurse and he is a Commercial Truck driver with a class A. The issue is we have debt and need to fix our house up, our current plan we would have this done in 2 1/2 years, 3 1/2 and we could have no mortgage. We are starting to feel this is too long to wait to try to start a family. Total income 2009 $90,000, debt: CC $4500 9.8%, car $14,000 7.8%, student loan $24,000 5.5%, Mort. $42,000 6%, about $15,000 needed in home repairs. In 2009 we paid off $12,000 in CC debt and put $5,000 into our home. We both do 6% of our income to 401K, emergency savings is $2000, and I am furthering my education and we are paying cash for it. I am starting to feel that we are overly preparing to have a family. Any thoughts?
- Lindsay

I think you should move forward with your family plans when you’re sure you can make it financially after having the child. For you, this means not only adding the child costs to the equation, but it also means one of you staying home with the child.

You should spend some time planning out exactly what will happen in that case. You mention that you’re getting further education (to be a nurse practitioner, I’m guessing?) – if you’re going to be the one that stays home with the child, cut that expense right now.

It’s also worth noting that even when you decide to go forward with trying to have a child, that child won’t arrive in a stork tomorrow. Even if you conceive almost immediately, you still will have most of a year before you lose one or the other of your incomes.

My suggestion? Right now, make up a very detailed plan for how you will do things after the child is born. How much income will you have? Will you be able to cover the bills? Who will stay at home with the child? How many years will that person stay at home? Some of these questions may alter what you’re doing with your money and time right now – if you’re staying at home, for example, you may not want to invest a lot of money into furthering your education at the moment.

If it looks like you could make it with the way things are right now, then I’d start trying to conceive. If it doesn’t look possible, I’d wait a bit longer, then re-evaluate.

There’s a lot of conflicting information out there and I’m curious what you would do. When I go on vacation I often rent a car and never know what to do about insurance. I don’t own a car at home and therefore don’t have any auto insurance policy for myself. I have the option of getting non-owners auto insurance from my insurance provider for $20/month but, based on the explanation of the coverage, my understanding is that all that covers is medical and damage liability if I hit someone else. I do have a visa that could presumably provide collision and damage insurance beforehand but doesn’t cover liability for another person if I collide with them. However, I’m not ready to pay $240/year so that I have that coverage for the 2x a year I drive a car. What do you suggest I do when I rent a car? Just use my credit card coverage? Get one month of liability coverage (if that’s even an option)? I paid an arm and a leg last time I rented because my parents and boyfriend freaked me out and demanded I get it but from my research they don’t understand what sort of coverage I need either. What would you do in my situation?
- Arlene

Most likely, you won’t be able to buy that policy on a month-by-month basis. Most policies are drawn up to cover six months or a year and your monthly payments are fractions of what you owe for that policy.

My first suggestion would be to look at the insurance offered by the rental companies. Typically, such policies are redundant for people who have auto insurance themselves, but they may not be redundant for you.

I would also take a look at what exactly your credit card offers in terms of coverage. It seems that your card just offers liability coverage, so I would look at the company you typically rent from and get quotes on insurance for the passenger and rental car. This will probably be in the ballpark of $10-15 a day, so this will save you money if you rent only for short periods, but if you rent for two weeks a year, it won’t be much of a savings.

If you have a well-stocked emergency fund, you may want to consider just having liability coverage (as provided by your card) and calling it good enough. After all, if you’re not driving the rental too much, your risk of a major accident is relatively low – and that’s what we’re talking about here, risk.

I have been working as a software developer for around two years. It’s a steady job and pays fairly well and I do enjoy it at times. I find though my concentration span really holds me back from enjoying this more and from progressing in my programming ability. Sometimes I can almost do a full day doing no work. I just can’t keep focus long enough.

At first I wondered if perhaps this job just doesn’t interest me enough (i.e. perhaps lack of concentration is due to lack of enjoyment and not vice versa) but looking back this is something that has plagued me all my life and I think it really held me back at school. I even struggle reading a couple of pages of a novel (that I find interesting) without having to go back and read. my mind just starts thinking of other things even while I’m saying each word in my head!

I haven’t received any warnings about the lack of work I sometimes produce (yet) but would like to get on top of this so I don’t stay at the same level of ability all my life and narrow my future horizons.

I have recently pondered the idea of hypnotherapy but to be honest I’m a little scared of this. Do you have any suggestions to improve my concentration span?
- Ben

I’ve thankfully never really had this problem. In fact, I tend to have the opposite – when I bear down on a task, I can lose all track of time and even reach the point where I literally don’t hear people around me.

Anyway, one of my mentors once suggested a five-prong plan for maintaining concentration. He used the word FOCUS as an acronym for it. I’ve seen variations of it floating around online, but here’s how my mentor defined it.

Five more means that if you’re doing something and feel your focus wandering, always challenge yourself to do five more. Five more pages. Five more minutes of coding. Five more emails. It’s like endurance training for your mind.

Only the thing you’re working on means that you should try to look at the task you’re doing with fresh eyes if you find your mind wandering. Look at what you’re doing and ask yourself if you’re doing it well or why you’re doing it. It often refreshes the task.

Complete the little things now means that if you have a task you’re putting off, start working on it immediately. This helps with concentration because a task that’s been put off is a task that’s weighing on your mind.

Understand the details means that, instead of thinking about the big picture of the project you’re working on, you should try to break it down into the smallest detail you can, then just focus on that detail. It makes the task seem much shorter and manageable, which again helps with concentration.

Silence means that you should cut off interruptions. Unplug your phone. Close your web browser. You can even go so far as to rest your face on your hands and cup your hands around your eyes so that they function as peripheral blinders.

Good luck!

I’ve been reading The Simple Dollar for about a year now and really enjoyed the series you did a while ago on cooking. Quick question, I’ve tried Eggplant several times (never as Eggplant Parmesan) and not had much luck, however I found a recipe for Eggplant Parmesan and wondered if you’ve ever attempted to cook it at home. The particular one I found says to peel the eggplant and I’m wondering if that’s the reason all my other eggplant attempts have failed. Any thoughts?
- Shawna

You didn’t really specify what the problem was with the eggplant. For the most part, the peel makes little difference – it’s mostly a matter of personal preference, like a potato peel (I prefer them, myself). My guess is that the problem is not with the peel, but with the sweating.

Sweating? Try salting the outside of your eggplant about a half an hour before you tend to use it. Just take some table salt and rub it on the outside. When you’re ready to use it, you’ll find that the outside of the plant is now moist with some very salty and bitter water. Rub the water off and slice it.

I don’t know if that’s the solution for your problem, because I’m not entirely clear on what’s wrong with the eggplant when you cook it. I’m just assuming that the problem is bitterness.

It may also be that you simply don’t like eggplant, for which there is no real cure other than just trying it in different ways on an irregular basis.

My husband and I are in our late 20s and don’t yet have any kids but are thinking about it – we’d like to have a baby in the next year, but obviously there are no guarantees on timing. I’m currently making about $45k and my husband $75k; when we have a baby we plan on me staying home, so we’ll be losing that income.

We already have an emergency fund with 6 months of expenses in it, we’ll be paying off my student loans in May (that bill had been about $100/month), and after that we’re debt free except for our house! We currently have a budget excess of about $2500/month (give or take depending on the month) that we’ve been putting toward my student loans, and I am on the hunt for my next financial goal to knock out. The only retirement savings we have is a 401k for my husband that we started this year, putting 4% of his salary into it. Looking ahead, I think we’ll have about $20k extra to play with this year, and this is where you’re advice comes in. We are definitely going to open an IRA (undecided as to traditional vs Roth) and with the max contribution of $10k between us for the year, that leaves an unaccounted-for $10k or so.

Option 1: We only put 10% down on our house when we bought it almost two years ago, so we’re paying PMI of about $60/month. We have $16k left to get to the 80% mark where we can get rid of PMI (and potentially adjust our monthly payment to reflect the new principal). We could put the other $10k this year toward our mortgage principal and get the last bit paid down early next year, so provided we don’t have a baby and drop income in the meantime, we could be PMI-free by next year this time.
Option 2: Alternatively, since we’ll have a more limited budget when we go down to one income, we could put the $10k in savings to put into the IRA in 2011. We’ll be able to save something when we have one income, but while I’m not sure what our budget will look like with a baby, I’m almost positive we won’t have $10k a year to put toward retirement (beyond the 401k).

That’s the scoop – thoughts?? Also, input on whether to do traditional IRA vs Roth IRA would be helpful, I think. We’re in a very blessed and pretty fantastic stage of life right now, and really want to take every advantage that we can while we can.
- Marisa

As I mentioned above, the first thing you need to do before considering going ahead with a child is to make a post-baby budget. Spend some time really contemplating how your life will look at that point. Is one of you going to stay home with the child? What will child care costs be like? Do some research and find some real answers here, then figure out what things will look like financially for you. I encourage you to estimate high, because it’s going to cause a lot less problems than estimating low will.

If you make that budget and decide that things look doable but close post-baby, put that $10k into savings for now. It may wind up being a “baby emergency fund” as you find that there are lots and lots of baby expenses you didn’t consider. If you get through 2011 without a child, then contribute to the IRA.

If you make that budget and decide you’re good to go with a fair amount of room to breathe, I’d sink it into the mortgage, mostly to get you below the PMI mark, which will make breathing even easier for you.

In the two years after graduating college, I learned a fantastic lesson about living on credit cards (badidea!) and living without health insurance, and had to go through CCCS to pay off the impressive debt that I accrued– About $20k in credit cards and $10k in medical bills. During this time, I had to sign a agreement with CCCS that I would not use any credit card until my debt was paid off.

Now I’m 28 years old, single, working a job with great medical insurance, have paid off those medical and credit card bills and have not used– or even opened– a credit card since I was 22 years old. I’ve been putting aside a little money each month into an emergency fund and into retirement, but otherwise I’m basically living paycheck-to-paycheck.

Understandably, I have a mild phobia of opening and using a credit card, even though I’ve matured and learned a lot since my wild (stupid) days. However, it seems like a credit card would make my life a lot easier at times– like when I have to pay upfront for a business trip in which I will be reimbursed, or if I loan a friend money and I am scraping by at the end of the month.

Would you recommend that I open a new credit card and pay it off each month? And if so, what advice can you give me about going back into the world of credit?
- Jamie

If you’re truly living paycheck to paycheck, the first thing you need to do is either increase income or cut spending (or, ideally, both). Perhaps you need to change your living situation or your energy consumption or your food consumption (do you constantly eat out?). Maybe you can get a second job. Whatever it is, you need to be spending a bit less than you earn or you’re always in danger of getting into financial trouble when something unexpected happens – and it will happen.

If I were you in this situation, I would get an extremely focused credit card that you use for just one specific purpose so that you’re not tempted to use it outside of that context.

The idea that comes to mind for me is a credit card (Visa or Mastercard) offered through a gas station chain that you frequently use. Sign up for one of those cards, but use it ONLY for gas. The giant gas chain logo on the card should be a strong reminder of that. Then, at the end of the month, pay off the bill in full.

This simple step will allow you to re-establish your credit without opening the floodgates. Just keep that card for one purpose and one purpose alone.

I would not use it for any other purpose – don’t “pay up front for trips” with it or anything like that. Use it simply as a means of improving your credit and maybe reducing your gas costs a bit.

My husband and I own a reasonable home in Pennsylvania, and are hoping to move to Maryland to be closer to my family in the next couple of years. We also just welcomed our first child about 7 months ago. I am a full-time working mom and am growing weary of being away from my home and family 10 hours a day, but my family relies on my income (which is significantly higher than my husband’s: $56k to $38k) and my health insurance.

My question is sort of two-fold:

(1) Is it selfish of me to want to stay home and care for my family? I have done contract work in the past and could make up a great deal of my salary, but not the health insurance, which is much more expensive through my husband’s job and very limiting in its offerings.

And (2), would it be a bad idea to rent for a while once we move to Maryland in order to save money? Housing is substantially pricier there, so we were planning to build on family land, but that could take a while since my husband would do much of the building himself, while also working a full-time job.
- Jen

(1) It is not selfish of you to want to stay at home with your child. Having a child is an intensely personal and emotional thing and, for many people, staying at home is something they strongly desire simply because of the emotional attachment and quality of care that they would provide to the child. It’s your child. You love that child. Wanting to care for that child and protect it is completely normal.

(2) It is never a bad idea to rent housing, particularly if you don’t plan to live in the house for seven years or more. It’s the first years of the mortgage that are the most painful ones – most of your mortgage payment goes towards interest and the power of compound growth on your home’s value really hasn’t had time to work yet. If you can find a good deal renting, renting absolutely should be on the table.

As for the building, a close friend of mine did that (and I’ve asked him for a guest post to discuss it). It can work and it can save a lot of money, but you really need some serious passion about carpentry and plumbing and electrical work to make it happen.

Good luck.

Got any questions? Email me or leave a comment and I’ll try to answer it in a future mailbag. Please note, however, that I get many more questions than I can answer in any sort of reasonable mailbag length.

Continue reading Reader Mailbag: More Time for Reading …

From The Simple Dollar.

How To Melt Chocolate: {Tip Sheet}

Here are special directions for ease and economy plus a handy tip for getting every-little-bit of that melted chocolate out of the bowl.
How To Melt Chocolate Easily
Quick Tip: Break chocolate into pieces before melting, this will make the process go faster.
Double-Boiler Method:

Use a double-boiler or put chocolate chunks in a small round-bottomed bowl (glass) and [...]

• Also See These Tips:
• How To Make Chocolate Covered Strawberries: {Recipes & Tips}
• Chocolate Covered Pretzels: {Recipe & Tips}
• Chocolate Mint Sticks Recipe

Continue reading How To Melt Chocolate: {Tip Sheet} …

From TipNut.com.

Sprouted Rice "Oatmeal"

After I wrote about oatmeal a while back, I did a little bit more research on the topic. Oatmeal is one of the grains with the highest level of phytic acid content. Phytic acid blocks the absorption of nutrients. I couldn’t find a definitive answer to whether or not soaking oatmeal broke down the phytic acid in rolled oats, so I started looking for alternatives.

I thought rice might be a good place to start, especially since it can be sprouted. After sprouting, I cook up a big batch of rice to put in the fridge. When the boys want oatmeal, I put a bowlful in the microwave with a splash of milk. At first, we added cinnamon and stevia so that Daniel would try it, but I slowly cut back on the stevia to the point that cinnamon alone is fine, just like with real oatmeal.

The boys eat “oatmeal” the same way that they eat everything, in phases. Some days, all they will eat is “oatmeal”. Other days, they will eat everything but “oatmeal”. Thus, some batches last a day and others last almost a week.

This has been tricky with providing a fresh supply of sprouted rice. If they finish a batch too soon, I have to do an overnight soak with a few tablespoons of whey, instead of waiting for the next batch to finish sprouting. When they start one batch, I start sprouting the next, which generally works out fine. This is how I sprout rice:

Day 1-
At night:
Put one pound of rice in jar (I divide it into two jars), cover with water and let sit overnight, about 14 hours.

Day 2-
In the morning:
Cover with mesh cloth. Pour out water.
Refill jar immediately with water, and pour out the water.

At lunch
Refill jar with water, then pour out the water.

Before bed:
Refill jar with water, then pour out the water.

Day 3
In the morning
Refill jar with water, then pour out the water.

At Lunch
Refill jar with water, then pour out the water.
Check for a “tail” on the rice. It should be done soon. You can continue to let the tail grow up to 1/8″. After that it will start to change the flavor of the rice.

Only brown rice will sprout. I get cheapo Walmart brand brown rice for $0.72 per pound and have gotten decent tails from it. (It’s cheaper than the oatmeal I was getting, too!) Any brown rice will do, but white rice and wild rice will not sprout since they are already dead.

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Copyright Under $1000 Per Month, 2009-2010

Continue reading Sprouted Rice "Oatmeal" …

From Under $1000 Per Month.

Optimizing the Value of Your Commute

Kelly writes in:

For the first time in my life, I have a daily commute to work. I drive about 45 minutes each way to work each day of the week. According to my math, I’m going to be spending about $125 a month just on gas, let alone maintenance, upkeep, and so on. When I look at it that way, my new job isn’t as awesome as I thought it was! What can I do to trim that amount?

Here are ten things I would suggest for anyone who is seeking to optimize their commute and minimize the financial cost of it.

1. Start (or join) a carpool. I wrote an article recently on how to start a carpool, but if you can find one that already exists, join that one instead. It not only reduces the number of days per week that you have to drive, it also allows you to use the more efficient HOV lanes during the commute.

2. Properly inflate your tires each month. Few things damage your gas mileage than poorly inflated tires. Think of a bicycle and how much extra effort you have to exert when your tire is even a little bit flat. The same is true for your car – it might be plenty inflated to make the trip, but if it’s even a bit under the recommended maximum level, your car is working harder to go the same distance, and that eats gas.

3. Find the optimum route. Unless the route to your job is incredibly straightforward, there are several different routes you could potentially take to your job. Spend some time to figure out the optimum route – the one that eats the least amount of gas, in other words. Use Google Maps to help you in this regard. Finding a more efficient route will simply shave transportation costs (and possibly time) off of your daily commute.

4. Identify the low-priced gas stations along your route. Take note of the gas stations available to you along the route and identify the ones that consistently have the best prices (if there is variance – usually, there is). Then, make that station (or stations) your regular stop to fill up your tank.

5. Use a “gas card” for that chain of stations. Once you’ve identified the inexpensive station, sign up for their gas card. Use it just for gas – nothing else – and pay the card off in full each month. The rewards on such cards are often quite nice and can add up to a free tank of gas every few months or so.

6. Examine public transportation options for all or part of your commute. Just because there isn’t a train straight from your home to your place of employment doesn’t mean public transportation isn’t an option. Perhaps you can drive to a nearby station and take a train/bus combination to your place of work. If there is a combination that can strongly reduce (or even eliminate) your commute, you should take it.

7. Use your A/C and heater less. Just use them to get your car to the right temperature then turn them off. You don’t need to leave them running during your entire commute – they just eat fuel. If you find the temperature getting uncomfortable again, just flip the A/C or heat back on.

8. Ask about subsidies at work for commuters. Some places of employment offer benefits for commuters, such as reimbursement for miles driven. Don’t be afraid to ask your human resources contact about it, just to see if it’s available. If it is, it’s cash in hand for you.

9. Leave a bit early to avoid the rush and to avoid the need to speed. In the morning, get in the swing of leaving a little bit earlier. This way, you can avoid speeding (which conserves gas and also helps to ensure you don’t get a ticket) and also potentially avoid the worst part of the rush hour traffic.

10. Look into telecommuting. If your job allows it (and the workplace allows it), consider telecommuting a day or two a week. Those are days where you’re not commuting at all, which means a nice net savings for you.

Beyond these tips (which are things you can do right now), I would suggest car shopping with fuel efficiency in mind when you go car shopping the next time. It’s okay to pay more for a more fuel-efficient car. For example, let’s say your commute is 40 miles each way, which totals up to 2,000 miles a month. Assuming gas is $3 a gallon, if you get a car that gets 20 miles to the gallon, you’ll be spending $300 a month on gas. On the other hand, if you buy a car that gets 40 miles to the gallon, you’ll only be spending $150 a month on gas. That’s a $150 savings each month, more than enough to make up for even a sizeable difference in car payments.

Good luck with your new job!

Continue reading Optimizing the Value of Your Commute …

From The Simple Dollar.

Dealing with Dissatisfaction

What do you do if you’re dissatisfied with your cell phone? You find that it endlessly frustrates you. It’s constantly interrupting you. It doesn’t have the features you want. Quite often, you just want to throw it in a desk drawer and forget about it.

Quite often, in this situation, people will go shopping for a new cell phone. They’ll feature-hunt, find one that matches what they think they need, and go out and buy a replacement.

Quite often, though, that’s money lost.

Why not step back a little bit more? Do you need a cell phone at all? Or, perhaps, maybe you only need a prepaid phone for emergencies or occasional mobile calls? If you find that the regular ringing of the cell phone is annoying you and you often just ignore it or turn it off, why are you paying for that service and that expensive phone?

What do you do if you’re dissatisfied with your television? The screen seems to be starting to go bad. It’s not giving you images in HD. It doesn’t “wow” you when you go into the room. In fact, you find yourself watching it less and less.

Sometimes, people will head to the store and pick out a nice new flat screen as a replacement in this situation. They’ll go home, install it, enjoy it for a while, and then find that it’s gathering dust, just like the one before it.

Why not step back? Do you really even need a television at all? Maybe you watch the few television series that you enjoy on your laptop or desktop computer instead – and you get your news there, too. If you’re just not using it as much, why are you buying an expensive replacement?

What do you do when you’re dissatisfied with your living room decor? The colors have been the same for a while and it’s just time for something fresh.

Do you start looking to replace all the furniture in the room? Do you spend your time sitting on that couch flipping through home decor magazines and websites, dreaming of how the room could look better?

Why not step back? Quite often, a room can look fresh and new with just a few simple changes, like a fresh coat of paint or a few alterations in the decorations. After all, repainting the walls and matteing a few photographs to hang on the walls is a lot less expensive than a new living room set.

When you’re dissatisfied with something, it’s rarely a good idea to just go buy a replacement for it. Stop for a bit and ask yourself why you’re dissatisfied. It might be that the item isn’t functional, but it might just be that you don’t really need that function in your life.

The best solution to dissatisfaction is, in the long run, rarely found in the wallet.

Continue reading Dealing with Dissatisfaction …

From The Simple Dollar.

Dealing with Dissatisfaction

What do you do if you’re dissatisfied with your cell phone? You find that it endlessly frustrates you. It’s constantly interrupting you. It doesn’t have the features you want. Quite often, you just want to throw it in a desk drawer and forget about it.

Quite often, in this situation, people will go shopping for a new cell phone. They’ll feature-hunt, find one that matches what they think they need, and go out and buy a replacement.

Quite often, though, that’s money lost.

Why not step back a little bit more? Do you need a cell phone at all? Or, perhaps, maybe you only need a prepaid phone for emergencies or occasional mobile calls? If you find that the regular ringing of the cell phone is annoying you and you often just ignore it or turn it off, why are you paying for that service and that expensive phone?

What do you do if you’re dissatisfied with your television? The screen seems to be starting to go bad. It’s not giving you images in HD. It doesn’t “wow” you when you go into the room. In fact, you find yourself watching it less and less.

Sometimes, people will head to the store and pick out a nice new flat screen as a replacement in this situation. They’ll go home, install it, enjoy it for a while, and then find that it’s gathering dust, just like the one before it.

Why not step back? Do you really even need a television at all? Maybe you watch the few television series that you enjoy on your laptop or desktop computer instead – and you get your news there, too. If you’re just not using it as much, why are you buying an expensive replacement?

What do you do when you’re dissatisfied with your living room decor? The colors have been the same for a while and it’s just time for something fresh.

Do you start looking to replace all the furniture in the room? Do you spend your time sitting on that couch flipping through home decor magazines and websites, dreaming of how the room could look better?

Why not step back? Quite often, a room can look fresh and new with just a few simple changes, like a fresh coat of paint or a few alterations in the decorations. After all, repainting the walls and matteing a few photographs to hang on the walls is a lot less expensive than a new living room set.

When you’re dissatisfied with something, it’s rarely a good idea to just go buy a replacement for it. Stop for a bit and ask yourself why you’re dissatisfied. It might be that the item isn’t functional, but it might just be that you don’t really need that function in your life.

The best solution to dissatisfaction is, in the long run, rarely found in the wallet.

Continue reading Dealing with Dissatisfaction …

From The Simple Dollar.

Dealing with Dissatisfaction

What do you do if you’re dissatisfied with your cell phone? You find that it endlessly frustrates you. It’s constantly interrupting you. It doesn’t have the features you want. Quite often, you just want to throw it in a desk drawer and forget about it.

Quite often, in this situation, people will go shopping for a new cell phone. They’ll feature-hunt, find one that matches what they think they need, and go out and buy a replacement.

Quite often, though, that’s money lost.

Why not step back a little bit more? Do you need a cell phone at all? Or, perhaps, maybe you only need a prepaid phone for emergencies or occasional mobile calls? If you find that the regular ringing of the cell phone is annoying you and you often just ignore it or turn it off, why are you paying for that service and that expensive phone?

What do you do if you’re dissatisfied with your television? The screen seems to be starting to go bad. It’s not giving you images in HD. It doesn’t “wow” you when you go into the room. In fact, you find yourself watching it less and less.

Sometimes, people will head to the store and pick out a nice new flat screen as a replacement in this situation. They’ll go home, install it, enjoy it for a while, and then find that it’s gathering dust, just like the one before it.

Why not step back? Do you really even need a television at all? Maybe you watch the few television series that you enjoy on your laptop or desktop computer instead – and you get your news there, too. If you’re just not using it as much, why are you buying an expensive replacement?

What do you do when you’re dissatisfied with your living room decor? The colors have been the same for a while and it’s just time for something fresh.

Do you start looking to replace all the furniture in the room? Do you spend your time sitting on that couch flipping through home decor magazines and websites, dreaming of how the room could look better?

Why not step back? Quite often, a room can look fresh and new with just a few simple changes, like a fresh coat of paint or a few alterations in the decorations. After all, repainting the walls and matteing a few photographs to hang on the walls is a lot less expensive than a new living room set.

When you’re dissatisfied with something, it’s rarely a good idea to just go buy a replacement for it. Stop for a bit and ask yourself why you’re dissatisfied. It might be that the item isn’t functional, but it might just be that you don’t really need that function in your life.

The best solution to dissatisfaction is, in the long run, rarely found in the wallet.

Continue reading Dealing with Dissatisfaction …

From The Simple Dollar.

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