Comments on: Reader Mailbag #72

By: Angelo

Angelo — Thu, 23 Jul 2009 18:10:38 +0000

Hi Trent, do you have any opinion on the device known as Majicjack? It seems like a reasonable way to save money on my phone bill(I have a land line and a Tracfone) but have read some extremely various opinions and reviews on the device. Thanks, Angelo.

By: Jackie

Jackie — Thu, 23 Jul 2009 17:57:10 +0000

(long-winded) Question:
I just changed health insurance to a high deductible plan. On this plan I am allowed to get a Health Savings Account (HSA). HSAs are kind of like IRAs for health care. Contributions are tax deductible, but limited to $3,000 per year and the account can only be accessed for medical costs. I’m trying to decide how much to fund this account. For tax purposes, it seems beneficial to max out my contribution, but trying to put contribute $3000 within this year would have me putting in $600/month which is way out of my budget! I’m thinking about transferring $3000 out of my emergency fund (I would still be left with 3 months salary in the fund) and putting it into the HSA. I’m not sure if that goes against the whole idea of the emergency fund. The money will no longer be totally liquid, but I wouldn’t have to dip into my emergency fund for medical emergencies. The plan would be to throw any extra money at the emergency fund (including the expected tax refund from the HSA) into emergency savings in order to rebuild it to it’s current level and start saving for 2010′s HSA contribution. My other option is to not touch the emergency fund and instead put any extra money each month into the HSA, not max it out, but still contribute. What are your thoughts?

Also, HSAs are all over the board in terms of returns and plans. Some are simple savings accounts that are riddled with fees and currently giving very low returns (monthly fees outweigh returns). Others allow you to put your HSA into a brokerage and use it to buy stocks and funds. I’m not sure which kind to choose. I don’t like the idea of too much risk with this money, but since I’m young and healthy it may not be an issue.

If you’ve already discussed HSAs then let me know, I couldn’t find anything about them.

By: es

es — Wed, 22 Jul 2009 12:56:53 +0000

MAILBAG QUESTION: I NEED ADVICE. The short story is that my divorced parents are each in financial ruins. When is it the kids’ responsibility to support the parent??

Here is the long story. Growing up mom stayed at home while dad worked and we had a nice life. I am the oldest of 3; we are now 41 married with 2 kids, 39 single, and 33 recently married trying to have kids. I am the only girl. My dad left my mom about 10 years ago when they were about 55. My dad remarried right after the divorce. January 2008 he bought a B&B and is now bordering bankruptcy for various business and health reasons. He is also supporting his new wife’s 2 grown children and grandson who live with him and help at the B&B. My mother has never wanted to work; ‘she didn’t sign up for that’. She gets defensive whenever I mention getting a better job. She has no college degree and is very insecure about her abilities. Every time I talk to her about getting a better job (she’s making 9.49/hr in the Balt/DC suburbs) she tells me no one wants to hire her but she’s never tried. It was suggested by my grandmother (her mom) that all kids and her pay mom $50 a month ($200 total monthly) because she’s ‘broke’. My dad filed for bankruptcy and said he couldn’t pay her the indefinite alimoney she was originally awarded. My mother is frugal while my dad is a risk taker and frivolous. Here is where it gets messy. My mom refuses to help herself by trying to get a better job or get a second job or rent out her spare room. She feels she ‘deserves’ a certain life. I tell her that might be true but it is not her reality. Not only does she not help herself, she doesn’t help me with the kids or around my house. My dad is halfway across the country but is confident and resourceful so there is not as much concern about his ability to find some kind of work. He helps and is generous if he can be. I think he made some stupid decisions on the business coupled with his wife’s cancer has really set him back. His decisions though have directly affected mom’s life and mine because I’m the first person she calls when she has a problem. Mom does not outright ask for money but talks about not having any. Dad tries to shield us from his issues if he can. I don’t get along with my mom well and my husband does not agree with supporting someone who will not support themselves. My brothers want to minimize upsetting my mom so they are inclined to pay her $50 a month presumably for the rest of her life. Her mom who she can barely stand is still living at 90 and just gave her money. Ironically, my grandmother has been supported in her late life by my aunt, my mom’s sister. Any money grandma has is really my aunt’s. The original question is when are the kids responsible for supporting their own parents?

By: Lynne

Lynne — Wed, 22 Jul 2009 04:43:48 +0000

I find that asking the specific doctrine of the ELCA Lutheran Church a bit disturbing. If I really wanted to know the answer to that, I wouldn’t google or ask on a blog, but rather I would go to one or more ELCA churches and talk in depth with the pastor about it. I also believe that regardless of specific church doctrine, most people of any denomination have their own personal beliefs, which may or may not agree with those held by the church. I think most of us agree in principal with many, just not necessarily all, of the various tenets of their chosen church/religion.

By: slccom

slccom — Tue, 21 Jul 2009 18:15:25 +0000

Chewing gum can be crucial for those of us with dry mouth, though. Try chewing in private and drinking lots of water in public. People for some reason will praise you for drinking so much water!

By: Andrea

Andrea — Tue, 21 Jul 2009 16:16:16 +0000

@ gum chewer: I’ve had great success following the Walgreens ad (buy 2 get 1 free) and they often use in store coupons as well which they will let you use as well. With that I have paid as little as $.20 per pack. When I cant get that deal, or someone chews faster than the sale cycle, I buy at Sam’s. :)

By: Jessica

Jessica — Tue, 21 Jul 2009 16:02:14 +0000

My husband and I earn good livings but we have a lot of relatively low interest debt that we would like to start paying off in anticipation of buying new cars and having children. I’ve managed to save about $5000 so far, at a rate of a couple of hundred dollars per month. Our debts are mainly low / no interest (about $14,000) plus a mortgage on an “investment” property that is losing money every month but that we cannot sell in this economy. Should we keep saving for now or should we start paying off the smaller debts and/or the mortgage (in hopes of refinancing to a lower rate)?

By: Karen

Karen — Tue, 21 Jul 2009 15:36:17 +0000

Joe – I agree, a liquor store? I’m sure there is a reason and am interested in knowing more. In SC we usually get gum at the grocery store, gas station or Sam’s. I also agree with Michael. Gum chewing should be a private activity.

By: Matt

Matt — Tue, 21 Jul 2009 13:46:22 +0000

@#18 Marcus:
Do the right thing: Take out the longest long possible at the lowest interest rate (in your case, 72 months at 4.95%?). Pay your monthly payments and save the amount you would have had to put into the loan in an emergency account. If you ever need to pay the car off early, use the money in that savings account.
Simple as that. But you have to have the strength to not touch that money for something else not related to paying off the car. That way, you’ll still make all your payments, and have the confidence of knowing you’ll be able to pay off the car at any time.
There is no mathematical formula for life events. Best scenario is risk reduction.

By: michael bash

michael bash — Tue, 21 Jul 2009 13:42:09 +0000

FOR THE GUM CHEWER: Just don’t chew it – outside your house. Can you imagine Walter Cronkite, Larry King or Opra chewing gum? The cheapest way for Hollywood to make a person look stupid is to put gum in his/her mouth. Not to mention the smell.

By: Andrew

Andrew — Tue, 21 Jul 2009 12:49:15 +0000

For the golfer. Try disc(frisbee) golf if there are courses in your area. Most courses are free to play. Those that do charge are usually around $5. The equipment to get started is cheap compared to clubs and balls. You can find courses and more info at http://www.pdga.com.

By: Charlotte

Charlotte — Tue, 21 Jul 2009 12:25:29 +0000

Brooke, it’s as simple as this: When in doubt, don’t. A money problem is basically the same as a drug or alcohol problem. Sure, people can — and sometimes do — change, but don’t plan on it. Listen to your head, not your heart. Following a passion is great, but being financially responsible is even better. Pay attention to those red flags.

By: plonkee

plonkee — Tue, 21 Jul 2009 11:46:20 +0000

There isn’t a Christian denomination in existence that isn’t criticised by other Christian denominations for being either too vague, or to dictatorial. Or believing in *wrong things*.

It would have some kind of poetry in a conversation about the ELCA if I could blame it on Luther, but I’m certain it goes back to within the first 500 years of Christianity. Just one of those things – if you’re happy where you are, don’t sweat it.

By: deRuyiter

deRuyiter — Tue, 21 Jul 2009 09:48:52 +0000

The benefit of prepaying on your mortgage EARLY in your mortgage’s life is that you earn / save MUCH MORE THAN THE 6.5%. Friends foolishly took out a 25 year mortgage for what seemed to me a rather small amount of money when buying a house. Their monthly payment was approximately $250. Downloadeing an amortization schedule they found to their shock that the first few monthly payments they paid off two or three dollars a month on principal and the rest was interest! By prepaying $3. one month they were able to save the $247. interest payment off the end of the mortgage and shorten the loan payment by a month, a pretty good investment of three dollars, saving. A few months into the mortgage they took $2,000 from savings for prepayment on the mortgage and shaved YEARS off the mortgage. You NEED an emergency fund. You also NEED to prepay at THE BEGINNING OF THE MORTGAGE, THE FIRST QUARTER OR THIRD OF THE MORTGAGE TERM. After that it doesn’t pay to prepay because the amount of interest saved is so small compared to amount of principal. THE MONEY SAVED BY PREPAYING IS AFTER TAX INCOME. If you pay off your house, you have your house. With the current government plunging the country into unsustainable debt, there is a chance that eventually the government wil NATIONALIZE your retirement account, fold it into Social Security to keep that system from going bankrupt, and ASSIGN you a monthly amount for retirement. If your mortgage has been paid in full, at least you’ll have your house!

By: spaces

spaces — Tue, 21 Jul 2009 03:21:14 +0000

Brooke — Me too, welcome to the club! I didn’t grow up with much of anything, but by the time I met my spouse I was solidly into my career, while he was still in grad school not making ends meet. My guy overspends, period. I have to be the financial cop, and sometimes be the bad guy. It stinks sometimes, and does cause friction, but what makes it work is that he is willing to let me run the financial show without too many questions, and though he is forgetful, he is honest. That, and being madly in love. There are worse flaws than my spouse’s IMO.

By: Kelly

Kelly — Tue, 21 Jul 2009 00:56:45 +0000

I know I’m behind in starting a retirement fund, but I want to get started now (I’m almost 30 and I finally have a steady full time job). My company doesn’t offer a 401k, but they have something called a 401an (whatever that is-I don’t get any choice in it). I think that a Roth IRA is where I need to go, but how do you go about getting one? I guess I’m pretty ignorant when it comes to this sort of stuff and I don’t even know where to begin. Thank you so much for your time and your column. I may not understand it all, but I’m trying to learn.

By: katy

katy — Tue, 21 Jul 2009 00:12:27 +0000

Do you know of groups that have meetings for people interested in reducing debt or improving personal finance habits?
-

Debtors Anonymous (sorry for the double post previously)

By: Joe

Joe — Tue, 21 Jul 2009 00:07:34 +0000

Ok, I’ve read all of the comments, but nobody seems to ask: Why would you buy gum at a liquor store (see question #1)?

Maybe it’s because I’m in Oklahoma and we have draconian liquor laws, but I don’t even think our liquor stores carry gum.

Did nobody else find this strange about the gum-purchasing question?

By: Sophie

Sophie — Mon, 20 Jul 2009 22:32:53 +0000

Many of your posts indicate that you cook often and enjoy it. Do you have any knowledge/opinion on health issues concerning the various types of cookware (i.e. Teflon/non-stick vs anodized aluminum vs cast-iron)? I worry about this when I cook for my family and was wondering if you’ve done any research on it.

By: Marcus Murphy

Marcus Murphy — Mon, 20 Jul 2009 21:45:39 +0000

QUESTION

Calculating Depreciation:

I am going to buy a used car and my CU offers a really great rate (4.95%) and for up to 72 months. I am trying to balance the loan length with the rate of depreciation, so at any point in time if I need to sell the car and I still owe, that I am not upside down on my investment. What is the best way you think to do this? The reason for this exercise is because I also have some CC debt I am trying to pay off that will have higher interest rate than the car. Should I not need the car I don’t want to have to dip into savings to pay the difference of what I owe vs. what I can sell it for. Your insight (opinion) is appreciated!