Comments on: Reader Mailbag #52

By: dlm

dlm — Wed, 15 Jul 2009 20:14:53 +0000

Condo noise: the top floor can be noisy from rain on the roof, fans, elevators, etc. I thought condos would be better constructed than apartments – but they certainly are not. You take your chances with any any any condo. And for a noise machine — I’ve found a fan helps, even running all night.

By: Liz

Liz — Mon, 09 Mar 2009 13:00:00 +0000

Hey Trent, I wanted to ask you about owning a rental property. My husband and I want to take advantage of the low housing prices in SE Michigan to get into a larger house. We are expecting our second in September and plan to have at least 4 kids altogether. We need a larger kitchen and bathroom for sure, but another bedroom wouldn’t hurt either! My husband’s job is still secure (not related to the auto industry) and we are considering keeping our current home as a rental property. We don’t think we will be able to sell it now for enough to cover what we owe currently (around 90,000 and houses are selling for around 70,000). We plan to keep it for a few years until the market improves and then sell it off. We’ve already been approved for a second mortgage (and FHA loan for 180,000 with 3% down) for the new purchase. If we lost a renter for a few months we would be able to pay for both mortgages without it affecting our regular costs/savings goals. (we would be able to pay both and still have about 400 a month after we pay all our other bills, tithe, and sock away for retirement) We don’t have much of an emergency fund (we have enough for the down payment and about 3000 above and beyond that), but we are currently able to put about 2000 into our savings account each month (when we really stick to our budget!)

My question is this: Is that taking on too much risk in your opinion? Or should we try to take advantage of the market and get into a house we will stay in until we retire? Also, without an emergency fund built up, should we just wait a bit longer to try and cushion ourselves a bit more? (we’re worried house prices will rise and we’ll be priced out of the neighborhoods we’re looking at!) Thanks for the advice!

By: m

Sun, 08 Mar 2009 16:03:55 +0000

Sophia #45
I’m as shocked as you are, we make a lot less then that. It seems to revolve around what people think is important. I grew up in a 2 bedroom apt, 1 bathroom and there were 6 of us and we had a SAHM. My sisters slept in a double bed, mom would not have bunk beds after the sales guy told her if there was a fire the one on the top would probably die from smoke. I love these TV shows about how people need more room for their growing family, every kid needs his own room, they need more room for their stuff, I see how we got into this financial mess in the first place. I find it sad.

By: sophia

sophia — Thu, 05 Mar 2009 16:25:28 +0000

Ok, I just read the MSN “Getting by on…..” series, and I want to puke a little bit.

The “Getting by on…. $400,000 a year couple” just blew my mind into bits. Especially the caveat “$400,000 may SOUND like a lot, but remember, in Kansas that’s only $180,000.” OH! Thank you MSN! Now thanks to that example I can finally see the poverty they are living in, struggling to raise two whole kids.

Anyone else read it and have the same reaction? Or am I just being classist here?

By: Dave

Dave — Wed, 04 Mar 2009 18:39:47 +0000

I’ve got a question that is probably one that you get pretty often…

I recently made a pretty bad purchasing decision which involved me opening a new line of credit at a store (online) and cost me quite a bit of money. I was tempted because of the no interest/no payments deal they had going, but in retrospect I regret spending so much. The deal expires in July, a year after the purchase, and I’m struggling to make ends meet as it is. I’m sitting on an ‘emergency fund’ that is about half of what I owe, plus I have other credit card debt as well. My job situation is bleak at best; I’m currently making minimum wage and the job market around here is horrible. I’ve tried to apply for many other various positions, but it seems that nobody is hiring.

I don’t know what to do exactly – I could pay off most of it and completely deplete my ‘emergency fund’ (keeping in mind I’m in college, so it’s not large AND I could probably turn to my parents still if worse came to worst), I could pay off some of it while still being able to maintain some emergency money, or I could turn to my parents to see if they could give me some money to pay off my debt.

What are your thoughts on the situation? Obviously I’ve learned from my mistake and I’ve been saving diligently as much as I can, but I still can’t make ends meet. Please advise!

By: Ellie

Ellie — Wed, 04 Mar 2009 03:30:31 +0000

@Brian:
Thanks for mentioning the mythbusters episode on the lightbulbs! I was going to bring that up as well.
http://video.google.com/videoplay?docid=180639728096740394 –>the video of the segment
http://kwc.org/mythbusters/2006/12/episode_69_22000_foot_fall_lig.html –>breakdown of the experiment and the results.

By: Lady Jane

Lady Jane — Tue, 03 Mar 2009 19:27:24 +0000

Michael @ 30, yes I should have said earnings rather than profit. If the business earns the same amount every year before expenses are deducted, the value of the earnings will decline but the cost of the expenses will increase. The business will go backwards if it does not increase earnings at least in line with the growth in expenses.

By: ami

ami — Tue, 03 Mar 2009 19:14:40 +0000

Re turning lights on/off, I think there is one exception- outdoor lightbulbs in cold weather- the bulb next to my door seems to last much longer if left on through the winter rather than turned on and off.

Also I have a question-
I’m in my 20s, watching the real estate bubble start to pop in my area (Arlington VA), and thinking maybe I could afford to buy a home in a few years, so I’m wondering how to improve my credit score while saving for a downpayment. I don’t have anything BAD on my credit report, but I’m not sure if I have enough of a positive credit history to get a mortgage with a good rate. I’ve had one Visa with a $500 limit that I’ve used/paid over the last 5 years (before that I had a secured card I cancelled after a year because of the fees; I also have a company credit card I can and do use for personal charges but it doesn’t show up on my credit reports). Over the years I’ve also opened 3 store card accounts for discounts on large purchases, but don’t regularly use any of them (one is closed, 2 are still open). I’ve never had student loans or car loans (family is wonderful!). What, if anything, would you suggest I do over the next few years to improve my credit history/score so I can get a mortgage? Also, at some point I’d like to change employers, is there a minimum length of employment at your current job when looking for a mortgage?

By: Richard

Richard — Tue, 03 Mar 2009 18:59:33 +0000

Question for mailbag – For your online business, how do you go about doing all of your taxes? Did you setup an LLC or something similar?

By: no_sked

no_sked — Tue, 03 Mar 2009 16:53:36 +0000

about the condo- units that share a common wall along the garage have much less noise than units that share a common wall along a living or sleeping area. hard to find, but well worth it.

about the lightbulbs- the tv show “mythbusters” actually tested this on an old episode. they found that more energy was used by keeping the light on when not needed; energy was saved by turning the light off when unused, even for a short time.

By: Otis

Otis — Tue, 03 Mar 2009 16:20:17 +0000

@Dru

There’s actually a lot you can do to eliminate noise, but most aren’t really cheap.

1. Insulation. Most places have poor if any insulation in the walls. Look towards putting some sort of foam insulation in the walls and you can greatly reduce noise.
2. More barriers. Add storm windows or something like that to increase the difficulty for sound to come in.
3. Noise machines. Look to get a good white noise machine (like the ones by Marpac) to help drown out the little bumps in the night. This is also the cheapest option.

Don’t forget though, that if you are dealing with cheap construction even cats above can sound like elephants. So I would recommend getting the condo on the top if you’re aiming for peace and quiet.

By: Lisa

Lisa — Tue, 03 Mar 2009 16:02:58 +0000

Question for a future mailbag – Do you listen to your local NPR station? If so, do you pledge during their fund drives?

By: Michael

Michael — Tue, 03 Mar 2009 15:13:48 +0000

Lady Jane, that is not a good answer because growth is considered to be net of inflation and the costs of doing business.

By: Nicole

Nicole — Tue, 03 Mar 2009 14:30:26 +0000

I just recently got an iTouch as a present. What apps and features do you like and use the most on yours?

By: Maggie Shaw

Maggie Shaw — Tue, 03 Mar 2009 14:17:50 +0000

I’ve volunteered with Habitat for Humanity since 2002. It’s a great way to learn homebuilding skills. Plus, I’ve been all over the word: New Zealand, Poland, Argentina, to name a few. I consider it a volunteer vacation. There are so many benefits: I’ve made some amazing friends and helped so many families. But an earlier commenter was right: Don’t go in expecting to learn specific skills. There is already a list of tasks made before you even step foot on a site as a team. You can then volunteer for whatever you want. Just don’t be disappointed. You really are there to help others, not yourself.

By: Zemog

Zemog — Tue, 03 Mar 2009 14:07:38 +0000

Habitat for Humanity is a great experience.
You can deduct the miles for the trip for going to meeting on your taxes schedule A.

By: Lady Jane

Lady Jane — Tue, 03 Mar 2009 10:37:28 +0000

Regarding companies and growth, Trent is right that public companies are under constant pressure to design and deliver on ‘the growth strategy’. At a more fundamental level, however, all businesses must pursue growth or suffer themselves to go backwards. A business that makes $100K clear profit every year will have, over time, less and less money to spend on the things it needs to run. This is because the value of a dollar declines over time. The value of the business’s profits decreases but the cost of machinery, supplies, stock, wages, premises etc increases. The only way to keep the business afloat is to grow profits to stay ahead of inflation. As that would be running just to stand still, most businesses try for a better growth rate, one that gives the owners a reasonable return for the money they’ve invested. This is as true of the local hairdresser as it is of Coca Cola.

By: Strabo

Strabo — Tue, 03 Mar 2009 10:16:16 +0000

“About the light bulbs (I’m talking here specifically about CFLs). While it doesn’t take (significantly) more electricity to start a bulb than it does to run it, turning it on is one thing that contributes significantly to the wearing-out of the bulb.”

That’s true, although newer ones are rated for 500 000 or more switches, which should still last a few years even when switching them often. They aren’t the cheapest ones though, and are usually sold by brand names.

By: Carmen

Carmen — Tue, 03 Mar 2009 09:47:22 +0000

Trent,

Is it possible that your DS Lite is actually faulty? That battery life is shocking. We’ve had two consoles for three years now and our battery life has not noticeably changed during their life so far. I would say that compared to some kids I know that play on them for hours after school every day (parents?), ours have light to medium use. However, this would run into the several hundred hours each too. They’re great for travelling, from the 90 minutes to the beach to the 28-41 hours (depending on flight prices) to visit Grandma on the other side of the world that we’ve done twice.

By: antiSWer

antiSWer — Tue, 03 Mar 2009 03:34:47 +0000

So the growth thing only really applies to publicly traded companies? Interesting.

I’ve always wondered why companies change and shift when they have a good thing going. Expanding and adding new things usually kills the integrity of the company and turns me off of them. I might just be too idealistic for my own good…