Do-It-Yourself Photography Works for Me

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Do you cringe when you hear the words “school picture day”? I know when my kids were in school, I dreaded the day they would bring home the note that said, “Tomorrow is picture day. Please dress your best”. When I got this note, I knew that it would soon be followed by the envelope asking me to purchase photos.

Can I just be real for a moment?

Those. photos. are. outrageously. priced.

I would do my best to buy the smallest package they had just so I wasn’t spending so much money. I felt the kids would be upset if I did not purchase a picture package. One day however, my daughter said to me, “Mom, you take tons of pictures of me already. Why do you keep buying these picture packages if they are so expensive?”

That made me really think about ways to get beautiful photo shots wherever we happened to be. Then I could take these shots, go to the photo kiosk and print my own wallet size prints for family members. I checked out Wal-Mart’s prices and they are very reasonable. You can get a family package for only $20 that includes 4 (8×10’s), 8 (5×7’s), and 24 wallet size prints. They also have a standard package for only $5 that has one 8×10, 2 (5×7’s) and 16 wallets. A package like this from a school would cost you anywhere from $25-$30! (You can check out those Wal-Mart photo packages HERE).

My advice is to shop around for a great package price and ditch the school photo packages! They are less personal and much more expensive. Besides, when taking your own photos you can get creative and really let the personalities shine! (Check out my November 2009 Digest for some creative Family Photo ideas)

You can find more Works For Me Wednesday tips at We Are That Family.

Continue reading Do-It-Yourself Photography Works for Me …

From Econobusters.

It Doesn’t Matter What Your Position Is Right Now, You Can Do Better

An obviously upset Sam writes in:

You think your world is all rainbows and puppies. Guess what? Karma will eventually bite you in the [rear]. Seven months ago I got fired from my job for no fault of my own the company was going under. Now I cant pay my bills and Im going to lose my house. Your life isnt a real life.

In 2006, I did not have enough money to pay my bills even though I was working at a great job and everything seemed (on the surface) to be great in my life. My dreams of being a writer were quickly disappearing, as were my dreams of ever being able to adequately take care of my child. I reached a point where I had fleeting thoughts of whether I could kill myself for the insurance money to put my son and my wife on a better track and give them a life that I felt like I was incapable of helping them with.

Guess what? I got out of that situation. It wasn’t easy. I had to face a ton of my own flaws along the way, most of which are still a difficult part of my own life.

The biggest thing I learned is that no one is perfect, and every single person is in a situation that they can improve. Period. There are no exceptions to this. No one is living the best life they could be living. Why? Because, again, no one is perfect.

I’m certainly not perfect. I spend too much money on books and games. I have a hard time resisting a delicious well-prepared meal. I spend far too long on important decisions, to the point that I lose opportunities because of it. I get very down on myself and my own abilities all the time (truly, thank goodness Sarah is there to help me with this). I talk myself into purchases that I shouldn’t make. I lose track of routines that I really, really tell myself that I want to establish. I regularly find excuses to avoid social interactions that I should engage in simply because they make me uncomfortable.

I know very well that I can improve in each of those areas if I put my time, focus, and heart into it. I can cut my entertainment spending (and I’ve been doing pretty well at this as of late). I can eat better. I can be more decisive. I can focus on the good things that I do and not my failings. I can avoid making unnecessary purchases. I can convince myself to do that daily walk. I can go to that dinner party and interact with people.

What does this have to do with karma and me being “lucky,” though?

First of all, the best method to keep karma at bay is to constantly try to improve yourself and your own situation. Look at the areas where you don’t do well and strive to improve them.

Here’s a good exercise: imagine where you’d be if you suddenly lost your job. Would you be able to pay your bills for the next few months? If not, then you’ve identified a weakness, one you can solve by saving some money each week.

Here’s another one: imagine someone might offer you a great job in two weeks. Would you be presentable enough for them to take interest in you? What skills would you be able to say that you had? Would you have a great resume on hand to give them? If you answered poorly to any of these questions, then you have a personal weakness, one you can work on. Make that resume. Keep yourself presentable and sociable. Make a good resume and keep copies with you wherever you go.

The truth of the matter is that bad karma happens to all of us sometimes, but the truly devastating effects of that bad karma are often directly connected to our own choices. If we’re flying high and don’t prepare for the inevitable fall, things will hurt when we fall from that pedestal. If we’ve already fallen and aren’t preparing ourselves to rise again, we’ll stay down for the long count.

It is about us. It is about what we choose. It is about overcoming our individual flaws – and we all have them, and we all have different ones – and making the best of what we have.

No one does this perfectly because no one is perfect. One thing we can all do, though, is strive to improve ourselves and our situation no matter what that situation currently happens to be.

Don’t spend a second worrying about what or how someone else is doing. You can’t control that. What you can control (at least to some extent) is your own situation. Take charge of every element that you can and walk forward with it.

What can you do, right now, to start improving your situation? That’s the only question that matters.

Continue reading It Doesn’t Matter What Your Position Is Right Now, You Can Do Better …

From The Simple Dollar.

Can You Actually Make Money Chasing Rates?

One common tactic I see on personal finance blogs is what I like to call “rate chasing.”

This tactic usually involves carefully watching the yield rates on savings accounts over at Bankrate.com (or a similar service), always signing up for one of the top accounts, and transferring their savings to that highest-yield bank.

For me, at least, I don’t find this tactic of much use at all. Here’s why.

The interest difference between a good bank’s interest rate and the top interest rate is pretty small. I took a look at Bankrate’s 50 newest additions to their database and sorted them by APY. The best rate found on that list was 1.40%; the median one (the one in the middle) was 0.95%. In other words, you’re gaining just 0.45% by choosing the top bank over a random bank.

That’s not much money. Let’s say you have $5,000 sitting around to play with in this fashion. The amount you’ll gain over the course of a year is $22.50 by rate hopping from the median bank above to the top bank above. And, in truth, it’s usually worse than that.

It takes time to locate the right offers. In order to keep up with these offers, you have to visit sites like Bankrate very regularly to find out what’s on top today. This is a small, continual drag on your time as you have to actually evaluate the top offers to make sure there’s not some sort of catch and to make sure that the rate was actually reported correctly to Bankrate.

It takes time to sign up for new accounts. If you do find a new offer, you have to sign up for that account. This can be an arduous process depending on their sign-up procedures, sometimes requiring mailing documents back and forth and waiting quite a while – another source of eating away at your valuable time.

The more accounts you have, the more identity risk concerns you have. While banks have amazingly strong security procedures, no security system is perfect. Each individual bank might have a 99.9% chance of keeping your personal data safe this year, but if you have fifty accounts out there, the chance of all of your accounts being safe this year drops to 95%. Identity theft is a real mess to clean up, so it’s worth your while to minimize the number of access points to your personal data.

Diminishing returns are in effect. Let’s say you’re at a bank offering 0.5% on your savings account. You can earn at least a little by hopping to an account earning 1.3%, right? That’s $80 extra per year on $10,000.

But once you’re in that 1.3% account, the benefit of the next leap is much smaller. You might dig for a while and find a 1.5% account, earning you $20 for the jump per year. The next time, you have to search a long while to get 1.6%, earning you $10 more.

My approach is simple. I usually encourage people to simply get an online savings account with a great customer service reputation and a reasonably competitive rate and just stick there without worrying about what other banks are doing with their rates.

Would I ever rate hop? Yes, in certain situations, I would rate hop. First, the interest rate competition in online banks would have to heat up. If you were seeing a top rate of 6% APY versus a median of 3%, then you’re talking about some significant interest. This is particularly true if you’re dealing with a large balance – say, $50,000 or more. 3% of $50,000 is $1,500 – that’s definitely worth your time.

But that doesn’t reflect the reality of the banking market and it also doesn’t reflect the day-to-day reality of most people. So, for now, I have to say that rate chasing is a pretty ineffective tactic for spinning more money out of your savings.

Continue reading Can You Actually Make Money Chasing Rates? …

From The Simple Dollar.

Four Atypical Things to Do Before You Consider Buying a House

Most articles focus on the financial nuts and bolts of the things you should have in order before you consider buying a home. You’ve got to have good credit. You’ve got to have a down payment. You’ve got to know the housing market. And so on.

Yet those aren’t the only important things to be thinking about. Here are four somewhat unorthodox things I would strongly suggest any prospective homeowner seriously tackle before buying a home.

Save a significant amount each month like clockwork for at least two years.
A mortgage payment requires financial discipline as well as enough money, period. Can you cover the mortgage? The insurance? The taxes? The constant expenses that go with homeownership?

Use a mortgage calculator to figure up what your monthly mortgage payment will be. Tack 50% on top of that for insurance, taxes, and other expenses. Subtract your current monthly rent payment from that.

If you can’t save that amount each month, then you’re not ready to buy a house of that size.

People will give all sorts of reasons why such a statement isn’t true.

“You really don’t need that much money each month.” Let’s hear that refrain again when your hot water heater fails at the same time as you need a new lawnmower and your lawn needs re-seeding.

“Our lifestyle will be different when we own a house.” In what way? The only major change will be that you have less spending money and, most likely, more room to store stuff.

Such statements are merely ways to pass the buck on to your future self, the responsible one who owns a house and makes more money and makes all of the payments. If that person doesn’t exist now, merely owning a house won’t make that person exist in the future. Don’t ever base your plans on what you hope might happen someday.

Take responsiblity now. See whether or not you actually can make it work in terms of your month-over-month finances. If you can’t do it now, then you won’t be able to do it then.

Sell off all of your stuff that you don’t use.
The less stuff you have, the less space you need. The less space you need, the smaller house you need. The smaller house you need, the more likely it is that you’ll be able to afford that house.

Go through your closest. Pare down. Get rid of stuff that you don’t use.

If you sell off a lot of your stuff that you don’t use, you’ll not only realize you don’t need as much space as you thought you did, but you’ll also find that you suddenly have some cash in hand that can help you move towards actually owning a house.

Even better: the less stuff you have, the easier (and less costly) it is to move.

I’m not arguing on behalf of selling off stuff that has value to you. I only suggest that you go through your closets and cupboards and get rid of the stuff that you don’t use. It’s just sitting there taking up space, convincing you that you need more living space, when in fact it could be money in your pocket and freedom in your life.

Fix some stuff.
If you’re a renter or you live at home, it’s easy enough to call a landlord or a parent when there’s a problem. “The toilet seems to be broken.” “There’s no hot water.” “Why won’t the dryer dry my clothes?” “There’s water flooding the basement.”

Here’s the catch: when those things happen in a house of your own, it’s up to you to fix it. If you can’t, you’re going to be shelling out fistfuls of cash to pay someone to do it.

When you’re living in such an environment, you’ve got a perfect opportunity to learn how to do such things with something of a safety net. When the toilet breaks, try to fix it yourself. Watch some YouTube videos on toilet repair. Identify what parts you need, find a good hardware store, and pick them up. Give the repair a serious attempt all by yourself.

If you can’t do it, then report the problem. Don’t just walk away, though – watch and learn from someone who can do it. Watch your landlord or the repairman. Try to figure out where you went wrong and how you can avoid it next time.

Even if you fail, you’ve learned some things. You’ve learned how to use tools. You’ve learned how to identify problems. You’ve learned what the equipment looks like. This will make solving future problems much simpler and much more cost-effective, especially when you’re living in your home and something goes wrong for the first time.

Figure out why you’re buying a home – there are lots of bad reasons and non-reasons to buy.
Don’t buy a home because that’s what you’ve been told you’re “supposed” to do.
Don’t buy a home because that’s what you think you’re “supposed” to do.
Don’t buy a home because it’s a good investment for the future. It’s really not all that great of an investment.
Don’t buy a home because you might get married and have kids someday and you need the space for this hypothetical future.
Don’t buy a home because you think it will lead you to some sort of idealized suburban life. A home won’t change who you are.
Don’t buy a home because you’re trying to “keep up” with someone in your life. It’ll make you fall further behind in the long run.

Buy a home because you it truly makes sense financially and you’re ready (and excited) to deal with the challenges of homeownership. Buy a home because it’s better for your housing dollar than the other options available to you.

Buy a home because it’s what you want and it’s what you can handle, not because it’s what others want.

Continue reading Four Atypical Things to Do Before You Consider Buying a House …

From The Simple Dollar.

Do You Really Save Money By Not Always Flushing?

Jennifer writes in:

My husband grew up in an area that often had summer droughts and water rationing. Because of that, he was trained as a child to stick to the “if it’s yellow let it mellow if it’s brown flush it down” mantra. We’re married and live in an area that doesn’t have any water issues at all. In fact, we live near an immense reservoir.

My husband still sticks to that same mantra, but now he claims it’s to save money. I can’t find any evidence one way or another when it comes to this concern. I can’t believe it would save much money at all.

I’m surprised how often I’m asked this question. It must be something that comes up pretty frequently in marriages and relationships. Interestingly, it’s almost always the guy who lets the “yellow mellow” and it’s almost always his female partner complaining and saying it doesn’t save that much.

The big question, of course, is how much does it save? Let’s find out.

The national average for a gallon of water is 2/10ths of a cent per gallon. Many municipalities also charge sewer rates based on water usage, so to compensate for that, we’ll calculate it at a rate of 3/10ths of a cent per gallon.

The average amount of water used in a flush has varied over time. Toilets from the 1950s use as much as eight gallons per flush. Over time, the total amount per flush has gone down drastically. Currently, the average toilet manufactured today uses about 1.5 gallons per flush. Since many people aren’t necessarily using brand new toilets, I’ll calculate the average at two gallons of water use per flush.

So, how many times does a person flush per day? This AWWARF study indicates the average person flushes a toilet 5 times per day. This survey would indicate that the average person has 1.5 “brown” flushes per day.

We have our data – now let’s do the math.

If Jennifer’s husband flushed every time he used the toilet for a year, that would be five flushes per day times 365 days, equaling 1,825 flushes. Each flush uses two gallons of water, meaning he would use 3,650 gallons of water in a year. Each gallon of water used costs Jennifer and her husband 3/10ths of a cent, so the total cost for a year’s worth of normal flushing is $10.95.

Under the “if it’s yellow let it mellow if it’s brown flush it down” philosophy, that would add up to 1.5 flushes per day times 365 days, equaling 547.5 flushes in an average year. Each flush uses two gallons of water, so he would use up 1,095 gallons. Each gallon of water used costs 3/10ths of a cent, so the total cost under this philosophy for a year’s worth of flushes is $3.29.

Jennifer, your husband’s prudence in flushing is saving you guys $7.66 per year. Assuming, of course, you follow the national averages on everything. Most likely, you don’t follow it in some areas, but the variation is probably a mix on both sides of the line, so I think this is a pretty reasonable estimate.

Is it worth it? That’s for Jennifer and her husband to figure out. I don’t think it’s worth $7.66 in a year’s time to deal with the odor of toilet stagnation or potential health concerns, either.

However, if you do live in an area with water rationing, such a philosophy does save 2,565 gallons per year per person that adopts it (on average, of course). It does cut down on water consumption, but as a purely financial move, it’s just not worth the $7 to me.

Good luck! If nothing else, the numbers should give Jennifer and her husband something to talk about!

Continue reading Do You Really Save Money By Not Always Flushing? …

From The Simple Dollar.

Do You Really Save Money By Not Always Flushing?

Jennifer writes in:

My husband grew up in an area that often had summer droughts and water rationing. Because of that, he was trained as a child to stick to the “if it’s yellow let it mellow if it’s brown flush it down” mantra. We’re married and live in an area that doesn’t have any water issues at all. In fact, we live near an immense reservoir.

My husband still sticks to that same mantra, but now he claims it’s to save money. I can’t find any evidence one way or another when it comes to this concern. I can’t believe it would save much money at all.

I’m surprised how often I’m asked this question. It must be something that comes up pretty frequently in marriages and relationships. Interestingly, it’s almost always the guy who lets the “yellow mellow” and it’s almost always his female partner complaining and saying it doesn’t save that much.

The big question, of course, is how much does it save? Let’s find out.

The national average for a gallon of water is 2/10ths of a cent per gallon. Many municipalities also charge sewer rates based on water usage, so to compensate for that, we’ll calculate it at a rate of 3/10ths of a cent per gallon.

The average amount of water used in a flush has varied over time. Toilets from the 1950s use as much as eight gallons per flush. Over time, the total amount per flush has gone down drastically. Currently, the average toilet manufactured today uses about 1.5 gallons per flush. Since many people aren’t necessarily using brand new toilets, I’ll calculate the average at two gallons of water use per flush.

So, how many times does a person flush per day? This AWWARF study indicates the average person flushes a toilet 5 times per day. This survey would indicate that the average person has 1.5 “brown” flushes per day.

We have our data – now let’s do the math.

If Jennifer’s husband flushed every time he used the toilet for a year, that would be five flushes per day times 365 days, equaling 1,825 flushes. Each flush uses two gallons of water, meaning he would use 3,650 gallons of water in a year. Each gallon of water used costs Jennifer and her husband 3/10ths of a cent, so the total cost for a year’s worth of normal flushing is $10.95.

Under the “if it’s yellow let it mellow if it’s brown flush it down” philosophy, that would add up to 1.5 flushes per day times 365 days, equaling 547.5 flushes in an average year. Each flush uses two gallons of water, so he would use up 1,095 gallons. Each gallon of water used costs 3/10ths of a cent, so the total cost under this philosophy for a year’s worth of flushes is $3.29.

Jennifer, your husband’s prudence in flushing is saving you guys $7.66 per year. Assuming, of course, you follow the national averages on everything. Most likely, you don’t follow it in some areas, but the variation is probably a mix on both sides of the line, so I think this is a pretty reasonable estimate.

Is it worth it? That’s for Jennifer and her husband to figure out. I don’t think it’s worth $7.66 in a year’s time to deal with the odor of toilet stagnation or potential health concerns, either.

However, if you do live in an area with water rationing, such a philosophy does save 2,565 gallons per year per person that adopts it (on average, of course). It does cut down on water consumption, but as a purely financial move, it’s just not worth the $7 to me.

Good luck! If nothing else, the numbers should give Jennifer and her husband something to talk about!

Continue reading Do You Really Save Money By Not Always Flushing? …

From The Simple Dollar.

Reader Mailbag: Cycles

I find that my passions are cyclic. I have about three or four things I’m deeply passionate about, but the time I have in my average day doesn’t afford me the space to follow up on each of those things to the level I’d like. So I cycle a bit.

I’ll go on a reading binge where I’ll read as much as four or five hours a day. That will ebb and I’ll go on a cooking binge, where I prepare meals that take an entire day. It cycles back and forth, but I find myself always happy with the choices I’m making.

I am 25 and have $7,300 in credit card debt (all on one card, the rest are paid off…). My 401k is currently worth $20,000. I already have one loan against it for $5,030. If I am able to throw as much money as I’m calculating right now, ($480 a month, my two “extra” paychecks since we’re paid bi-weekly, and a bonus at the end of the year for about $1,000) I should be able to have the card paid off by next March.

The interest rate on the credit card is 9.9%. I can borrow another $8,000 from my 401k account with an interest rate of 4.25% – which gets paid to my 401k account (with a one-time fee of $50, which is less than I’m paying a month in finance charges on the credit card). I am debating if I should take out the $7,300 and pay it off in one fell swoop, or if I should stick it out and pay the card off slowly.

If I pay the card off, I intend to lock it up and not use it. I already have an Amazon rewards card I use for gas, or other small purchases and pay it off in full each month. (And the 14.99% or whatever it’s up to is enough to make me stick with paying it off each month!)

My husband and I are trying to have a baby, and would like to be debt free before the child arrives. I would be socking the extra money away into my ING savings account to build up our e-fund for the extra baby expenses since we hope we’ll be able to have the baby within the next year (or sometime in 2011). I have to pay the loans from my 401k off all at once, so I’ll wait until I have the extra $5,000 or $7,000 in my account and pay it off before the loan expires.
- Jessica

Here’s the thing, though. You might be paying 4.25% interest on the loan, but you’re also “paying” the lost returns you would get on the money. If your 401(k) investments go up 6% in the next year, you’re effectively paying 10.25% interest to pay off a 9.9% interest debt. Really, it’s a coin flip and, to tell the truth, if I were to guess, you’re probably money ahead leaving the cash in your 401(k).

If you’re focused solely on debt freedom as your goal, you’ll find an easier path to get there if you take out the loan. However, it may result in you having a weaker financial position overall, especially if 2010 turns out to be a good year for your 401(k) investments.

The number one thing you need to do is to start living on less than what you’re bringing home, because your biggest danger is simply racking up more credit card debt. Don’t “lock up” that credit card later, do it now.

Do you have some suggestions for good two player games? My wife and I are newly married and don’t have that circle of friends that you seem to have that enjoy such activities. Most board games (I feel) aren’t very fun with only two people. I enjoy strategy games such as Risk, chess, Diplomacy. She likes less complicated things. Anyway, if you have any suggestions (whether you think we’d like them or not), I’d love to hear them.
- Andy

These are my four favorite two player games, listed in order of complexity with the simpler ones first. This list is looking solely at two player playability – if you want a game that’s also great with more… that’s a very different list. I’m also not suggesting any games that are “collectible” or require you to buy an unending number of expansions for play. The links go to BoardGameGeek, a website where you can learn a lot more about these games.

Lost Cities is a card game where you and the other player are competing to make ordered sets of cards. It plays very fast, takes about two minutes to learn, and has a lot of replay value.

Ticket to Ride: Nordic Countries is a board game where you and the other player compete to connect cities on a map with railroads. It also works well with three players. The basic “Ticket to Ride” game doesn’t work well with two – “Nordic Countries” works the best with two players.

San Juan is a card-based game where you and the other player are both attempting to build a successful city. This one is very interesting in that there are six “phases” each turn, but you only ever take two of them – one phase chosen by you, and one chosen by the other player.

Race for the Galaxy is probably my favorite two player game (it actually works well with up to four), but it’s got a very steep learning curve. I would not choose it first. It’s very similar to San Juan, mentioned above, but with some refinement and a bit more complexity.

An aside: I don’t view Risk as muchof a strategy game as too much of the game is resolved by dice rolling. Diplomacy, on the other hand, is great.

I am married, we are in our late forties, 2 kids 8 and 13. We have had our 1200 square foot colonial on the market for 1 year. No offers many lookers. At this point I am ready to be done trying this. Our main needs: a little more living space, half bath and updated kitchen. If we are going to stay we have to update the kitchen for sure, it is very old. And I spend alot of time there. The house is also inferior though since there is no bath on the main floor. We have about $70,000 equity in our house now. We would need to use that to make these changes. I have not even started the research needed to find out cost etc. Does it make sense to do this? I know that this is part personal decision. I have done alot of sould searching about want versus need. I don’t really want to have more space to heat etc. We are happy there but would be happier once at least the kitchen is done. Any advice on where to start with this type of project as well?
- Mary

I think you need to spend some time figuring out specifically what you would like to change. Unless you have some unused space, adding a little more living space and a half bath sounds rather difficult to me.

Sit down with your husband and figure out exactly what you want from your house. What do you want the kitchen to look like? Where would you put a half bath? Where would you eke out a bit more living space? Can you actually do all of these things?

You need to move from general ideas to specifics. Once you have specifics, then you can either decide to try to tackle it yourself – which means hitting the carpentry and home renovation section at the library – or hire a contractor to do it. In either case, the first step is specifying exactly what you want.

I’m currently living in my boyfriend’s country, which is culturally quite different from mine. Although I am able to live and work here legally, my residency status does place some restrictions on us. In order to be covered by the public health insurance (by far the best option), I do need to be employed. My language skills aren’t great – I can get around an average day, but can’t yet work in the language. Our finances are merged, and we have roughly 2.5x my monthly income in savings.

In the last week and a half, 3 big things have happened. First, my boyfriend took out a bank loan on my behalf (I’m not able to borrow it myself – residency status. The loan is to pay off a student loan in my home country, and we saw it as a way to simplify paying it). The loan is for a year, and monthly payments are roughly a third of my current income. This is our only debt. A few days later, I was fired from my job. This was completely unexpected. I have up to 2 months to go, but the atmosphere has become toxic for me and I want to leave as soon as possible. A few days after that, my boyfriend proposed. The wedding will be small, probably some time early next year. We haven’t started planning or budgeting for it.

At this point, I don’t have concerns about the loan being paid because my boyfriend is able and willing to cover it (as well as other expenses), but I do want to avoid ‘my’ problem becoming ‘his’ problem (the original loan is from before I met him, and I feel it’s therefore my responsibility). When we get married, the residency restrictions will go away.

From here I can see 3 options: 1) find a new, full-time job. 2) I have a possible options of interesting short-term work (1-2 months, maybe longer), whenever I want it. 3) find a part-time job either in my field or elsewhere, and spend more time focusing on the language (intensive course).

There are a few things complicating this. This is my 4th job in 3 years, and all have ended in a similar way (I think this comes down to communication/cultural differences). As a result, my confidence in job searching is shattered. We’re expecting to start a family very soon (ideally a birth within maybe 6 months of the wedding). The maternity benefits here are amazing – I will receive just less than a third of my current income monthly for 2 years, so we plan that I will spend at least that time at home with the baby. I also have constant doubts that my chosen career is right for me.

So I want would like is advice on what to do now. I really want to avoid ending up in this position again in a short time, knowing I only plan to be working for a short time.
- Mel

My first reaction to this is to do what my parents did: elope quickly and then have a “traditional” wedding later on. Yes, my parents eloped – they were already engaged, but they eloped because there were other legal benefits for doing so.

If you do that, you’ll be able to resolve your residency status and likely be covered by the health insurance there. That will also make your employment a bit easier as well.

If that doesn’t float your boat, I would probably consider finding a job that allows you to absorb the culture and language as quickly and intensely as possible. It can be very difficult culturally to fit in sometimes in a new country and culture and language exposure is the best way to solve that problem.

I’m wondering if it might be a good idea to slightly over-estimate one’s taxes and instead of having it automatically deducted from your paycheck, have the money directly deposited to a savings account like at ING. I’m single so I’m not even sure you can legally eliminate your paycheck deductions but in theory, if you are disciplined enough to not touch this savings account, you could make money on your savings, then pay your tax bill on 4/15. You would be earning interest for 15 ½ months too. For some it might just be $80-$100 a year but with compounding interest, it could turn into a nice chunk by retirement. I am one of those people who hates getting a refund b/c I know it was like giving the gov’t a free loan but I realize some people like it, even though it is essentially a 0% saving account if they do get a refund. What are your thoughts?
- Shannon

For starters, your employer actually pays taxes on your behalf every quarter to the IRS. Taxes are due quarterly, whether you’re employed or not – you just don’t see this if you’re employed.

Also, most employers are required by law to withhold taxes on your behalf. You don’t have the option for them to not withhold money for you. The best you can do is modify your withholding status to minimize what they hold out for you.

I do agree that for many people, it does make sense to overestimate on taxes. It’s far better to receive a refund (even though you weren’t able to earn interest on it) than it is to have to pay a large unexpected bill in April.

My wife and I have some pretty ambitious goals for the next 2-3 years. We want to save a pile of money for either a down payment on a new house or to pay off our second mortgage on our current house if we decide to stay there. We want to be in a place financially that we can afford for my wife to stay home full time when we have our second child (date TBD) and we want to pay off all of our non-mortgage debt other than a couple of subsidized student loans. Every month as I’m writing extra checks to pay off debt or put into savings, I ask myself if life wouldn’t be more fun if I just spent that extra $1000 a month on something fun that I could enjoy now. It’s just very frustrating to think that we could buy new clothes, go out to dinner several times a month and go on a couple of nice vacations a year with this money. We’re not struggling financially at all have have no CC debt, so sometimes I wonder if we’re doing the right thing sacrificing now for the benefit of our future. My rational mind knows we’re doing the right thing, but it’s difficult at times. Please assure me that I’m doing the right thing and that it’s worth sacrificing a bit to reach your goals!
- Nate

I can’t answer that for you. It depends on what you value.

Simply put, do you value that nicer home or debt freedom more than you value eating out or trips or clothes? That’s your values, and it’s what you have to figure out.

For me, the big thing I’m staring at is the house in the country with some woods out back, as well as long-term financial stability. That trumps an awful lot in my life – new clothes, new books, extensive travel, and so on.

You’ve got to sit down and ask yourself which is more important. That takes some soul searching. There is no right or wrong answer to the question.

I am writing on behalf of my ex-husband, Bill (who is still a good friend). Currently, he’s 49 years old and has worked for over 20 years as a cameraman/videographer for a local TV station. That has been his whole career since college – running camera since he was 21. He also gets some freelance work on the side including about 4 months a year running camera for the local hockey team. He is completely burned out by his television station job. He’s a night owl but for 20 years has had to get up at 2:30 in the morning in order to be at work at 3:30 a.m.

He would love to quit his job. He doesn’t know if he wants a whole new career or whether to work by strictly freelancing. He lives in Nashville which offers a fair amount of freelance work but there are a lot of other freelancers out there too who are all looking for work.

Financially he is in pretty good shape. He owns his own home – has approximately ten years left on the mortgage, but would be willing to sell it and move to a smaller condo. He hates apartments. He is also in excellent health, he exercises regularly and eats the right foods. I am guessing that his annual income (including freelance work) is around $75,000. And knowing him, I would guess he has at least that much in savings and stock.

He has been reading books including one called “The Lemming Conspiracy” and has recently decided to consult a finance person (but doesn’t know if that should be a CPA or a Financial Planner) and a career consultant. Beyond that he does not know what steps to take. I have told him that if the very worst happened he could always live in my guest room for awhile. His parents have a fair amount of money and have bailed out his siblings before but he has never asked for a penny from them and I don’t think he ever would.

I keep telling him that if he could come up with a plan he might be able to leave his job within six months to a year. But he is having trouble figuring out what steps he should take in order to come up with a plan for exiting his job. Also, and I don’t know if this matters at all – there have been layoffs at his job and the severance packages have been very generous – two weeks pay for every year worked. He would be thrilled to be laid off. Is there any way to “make that happen”?

Could you offer some advice on what steps he needs to be taking? He’s not the type to just quit his job on a whim and he would feel a lot better about it if he had what he thought was a sound plan.
- Terry

If he’s having a difficult time assembling a plan for where to go next with his career, a career consultant might be a good choice. Some people are simply more able to plan than others, and career consultants are there to help those who have difficulty planning in that way.

Given his position, I think his big question would be what he truly enjoys doing. What things really get him excited? What is he really good at? Where do those two lists overlap? That’s a good pointer as to the direction he should be going.

I will say this: money isn’t everything and if his job is making him deeply unhappy with his life, he should move on. The key now is to figure out what that direction is.

Do you read spoilers of upcoming episodes of television shows that you like? Or do you wait until they air?
- Kim

I usually avoid spoilers if I can. I prefer not to know what’s going to happen next, no matter how curious I am. It makes speculation fun with my wife, since we generally watch the same things.

In the case of Lost, this is actually fairly tricky, as I have a pair of readers who seem determined to email me spoilers. I’ve seen very detailed descriptions of things that have yet to air, which has been frustrating.

I don’t mind seeing minor spoilers, though – the types of things that show up in an Entertainment Weekly article. I just get frustrated by detailed ones, the type that removes the fun from actually watching the show and discovering things as you go along.

I am 33 years old, married, no children. I make approximately $45,000 per year with bonuses/incentives. I am currently in sales. Until last year, I was making $68,000 per year with bonuses/incentives, I have been at this current job for 3 years. I am currently $44,0000.00 in credit card debt, living paycheck to paycheck. Before coming to this job, I was making $32,000 a year, and $50,000 in debt. While making the $68,000 (1.5 years), I was able to pay off some debt, and was working on paying it down vigorously. Since my incentives were cut, I am living paycheck to paycheck and incurring more debt. I also pay much more for benefits here than at previous employer.

My husband is currently making $52,000 per year, and he is also almost $40,000 in credit card debt. He has no 401k, very little savings, and no life insurance. I on the other hand, have $41,000 in 401k at my former employer, and $13,000.00 at my current employer, and $275,000 in life insurance. I was contributing 10% until my pay was cut last year, and have since only contributing 5%. I have a very small savings ($700). Contributing $150 per month (have to withdraw some most months)! I do pay extra each month on all my minimum payments, anywhere from $20-$50 per bill. Interest rates range from 2.99-25%.

My question is I am currently thinking of withdrawing the entire 401k ($41,000) from previous employer and paying off my debt. I realize there would be many penalties, and have to pay taxes in 2011. Currently, I would have to pay 10% penalty, and any remaining above 20% withheld. But, I believe this would help me to pay off debt, help my husband with his, and I could save the 10% penalty for next year. I feel I still have plenty of time to build a retirement, and could contribute more once out of debt.

We do own our house, we currently pay only $500.00 mortgage per month, 4% interest rate (personal loan from husband’s family) ran loan for 20 years, 15 years remaining on loan! Purchased family home for tax assessment only ($60,000) from family, put $20,000 into renovations, personal loan for $80,000!

What are your thoughts? Please help!
- Curious

$88,000 in credit card debt is painful. For those who aren’t math folks, if they have an average of 20% interest, that means $17,600 a year in interest – or about $1,700 a month (or so) in minimum payments.

The first thing you need to do is cut up the credit cards and do not use them again until you’re debt free and have been for a while – probably a long while. You have to start living within your means, period. If you do not do this, it doesn’t matter what you do to pay off the debt because the debt will just come back. You have to make that commitment.

If you’ve done that and have no access at all to the credit cards, then I would consider taking a loan from the 401(k) instead of just withdrawing all of it. Many 401(k) plans allow you to borrow against them for various reasons. Use that loan to take out credit card debt. This will drastically reduce the interest you owe and won’t, in the long run, completely destroy your retirement savings.

Other than that, it’s going to simply be a long slog. You’ve got a large mountain to climb.

Why do you allow negative comments? I’m so tired of them.
- Kelly

First of all, disagreement is not negativity. Saying, “Trent, I disagree, this is how I see it” isn’t negative, although it’s easy to see why it might be.

Personal finance is not black and white, not cut and dried, no matter what your favorite personal finance guru might say. Personal finance is a long series of choices, and often those choices have some logic on both sides of the coin. I might think that one side of the coin has more logic, but others, with other perspectives, might see the benefit of the other side.

I don’t like true negativity. Just because someone sees a situation different than you is not a reason to attack them personally. In fact, the world (and especially the internet) would be a better place if everyone felt that way.

However, disagreement and different perspectives are valuable, and we all learn from them. Don’t attack people or ideas, just offer your perspective.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Continue reading Reader Mailbag: Cycles …

From The Simple Dollar.

Job Club: 10 Biggest Job Search Mistakes

The Job Club at ABC.com has this article: 10 Biggest Job Search Mistakes.

A snippet:

Don’t focus on your needs. Too many cover letters and objective statements on resumes focus exclusively on what you, as the job seeker, want. “I want stability, I want growth, I want this much money.” All of that is no doubt very true, but that’s not what any employer wants to hear. If I’m going to hire you, I want to know that you have the ability to bring value to my organization. I need to know that you understand the needs of my company and you have the skills, education, experience and interest to make a positive impact. Hiring decisions are about the company’s needs, not yours. Ultimately you’ll have to decide if it’s what you want, too — of course — but your needs aren’t first and foremost when applying.

Continue reading Job Club: 10 Biggest Job Search Mistakes …

From Monroe on a Budget.

Spending Plan, Budget, Budgets, Budgeting, Household Budget, Household Expenses

Do you have a spending plan? We all have to deal with having just so much money to cover expenses. Without a spending plan, trouble’s brewing.

Continue reading Spending Plan, Budget, Budgets, Budgeting, Household Budget, Household Expenses …

From The Dollar Stretcher Featured Content.

Wisebread: How debt fools people

Wisebread is bringing up some points about debt that are easily overlooked at How debt fools people.

A snippet:

The reality of debt spirals is more insidious. It results from the loss of flexibility when a household incurs a perfectly reasonable amount of debt — or even no debt at all, but some amount of fixed monthly expenses — and then suffers a negative economic event such as a large unplanned expense or a drop in income.

Because that’s the way that debt really works its harm. It’s not that it costs so much money (although it can), nor is it people obligating themselves beyond their means (although some do). It’s that it makes the household finances so much less flexible. It’s not the extra $28, it’s the inability to adapt.

Continue reading Wisebread: How debt fools people …

From Monroe on a Budget.

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