I have a question for you for the next reader mailbag. My husband and I bought a house in February 2009 and got a 30-year mortgage at 5.5%. The mortgage amount was for $62,100.

We both have neither student loans nor outstanding consumer debt. As a result, we send two full mortgage payments to the bank every month in an effort to reduce the principal as much as possible, while still contributing to IRAs and an emergency fund.

Through my own ineptitude as to how the bank was withdrawing the funds for these doubled payments, our next payment is due June 1, 2010. However, I have managed to work it out so that the second payment I send each month goes directly to pay down the principal and isn’t applied to the next outstanding mortgage payment.

We are also anticipating a hefty tax return for 2009, as we bought the house (qualifying for the 10% of purchase price tax credit), were having taxes withheld at the single rate for the whole year, and have maxed out our IRA contributions for the year. We plan to apply this large return directly to the mortgage principal.

After all this background, my question is: Should I apply my doubled mortgage payments directly to the principal until June, which is when the payments will be caught up; or should I just keep doing what I’m doing and prepaying the payments as well as paying on the principal?

Please let me know if you need more clarifying information – I’ve tried to explain this as best I can, but I know it’s not a typical situation.

For example, if I owe $10,000 for 2009 and have already paid $2000 in 2010 then I know I need to pay another $8000 for the remainder of the year. Divide $8000 by however many pay checks are left in 2010 and adjust withholding as necessary. My problem is the opposite of yours. (I have non-W2 income so I need more taken out to preclude penalties for under withholding.) The same idea should work for over withholding.

The year before I left the workforce, we paid the credit cards and banked the remainder of my salary. After four years, only about half of that money is left in our account. It does take a lot of adjustment to wean yourself from two paychecks to one. In our case, we moved four times for my husband’s job – which was a large source of drain on that pot of funds.

I agree with a previous commenter that time with children who are older is at least as important as time with them during the earlier years. Wouldn’t it be nice if work arrangements that accommodate afternoons with children were more widespread?

Question for Trent: Can you suggest some ways to best adjust your income tax withholdings? We have over the past several years gotten large tax refunds at tax time, and despite our best efforts to adjust this, we haven’t quite cracked the code.

I like quinoa a lot, and I find that it goes well with semi-sweet seasonings like coriander, cardamom, cloves, and so forth. I also like to add a little dried fruit (raisins, currants, cranberries, or cherries) and some chopped nuts (almonds, cashews, or walnuts). You can add them before or after you cook the quinoa, although the textures will be different.

Cooked quinoa grains are nicely translucent, so you can work with that to make some really visually appealing dishes. For example: Adding a few saffron threads while the quinoa is cooking will stain some of the grains yellow. Then, if you add some cooked, finely chopped beet to the cooked quinoa, it’ll stain some grains pink. Then you can mix in some cooked, finely chopped spinach (or other leafy green) – the green won’t come off on the quinoa, but it makes a nice color contrast. You can serve the mixture cold as a salad (with a light vinaigrette dressing) or hot.

Millet has a different sort of texture that takes some getting used to. The grains cook unevenly, so you might get some that feel overcooked and some that feel undercooked. That’s just the way it is – doesn’t mean you did anything wrong. I tend to cook millet with lots of dried herbs (like oregano, sage, or thyme) and serve it with a rich tomato-based dish with lots of olive oil. But I’m not really sure why I do this.

That’s what I did. DW waited until that “Big Fat Positive” before we bought a new car, with the cash we’d been saving for years for just that purpose.

I personally wouldn’t try to fit a car seat in a 2-door car if I could avoid it. However I would strongly disagree with anyone that claimed you need an SUV or minivan just to put two car seats in. That’s ridiculous. It’s even possible to put three car seats in most vehicles, though you have to put some effort into selecting just the right car seats. Just search for “three across in a [car model]” and you’ll find pictures, specific seats to buy, advice, etc.

Also, on another topic, the reason VULs are a bad idea has (almost) nothing to do with tax law changing, and (almost) everything to do with high fees and hidden gotchas.

For Anne KD, about the garden, start small. I am really good about planting in the spring, I can put a huge garden in, but the real work comes in the weeding, watering and picking, in the summer when you would rather be at the beach… Have fun with it this year, and if you still love it, try to expand next year. Who knows if you have a green thumb or not? I’m bad with houseplants but do ok outside, where God waters everything.

Trent, thanks for all your practical advice every day!!!

The Sunshine Kids Radian series child seats are specifically designed to fit three in the back of most cars.

I’d post links, but this post would then go into “Your Post is Awaiting Moderation” purgatory, never to be seen by anyone.

I should add that the timing of this was critical because we’re expecting baby #2 in May. We decided to buy a bigger car (8 seats) instead of a smaller car (5 seats), because with our family plans, we could easily outgrow the smaller vehicle before it’s paid off. And we needed to upgrade to something, so the timing worked.

My advice on the car front is to stay exactly where you are for now, but pay into a savings account whatever the difference between your current payments would be and the higher price of a bigger car. If you can afford to make a payment to yourself for the full cost per month that the bigger car would be… good. Do it and put it all into savings. Wait until you are at least expecting the first one to upgrade, though honestly, one infant carrier for a child under a year isn’t hard to put into a small car; most of those carriers come with bases that you can just install and snap the carrier into place anyway.

As it is, if you buy now, you lose a lot of benefits that waiting gives. You don’t know exactly when you’ll have kids. You don’t know if there will be infertility issues (I know more than a dozen couples who took 5+ years to conceive.) Your smaller car is probably more fuel efficient. Maintenance on a slightly older vehicle that is smaller and in good condition will probably cost you less than a brand new big shiny car. Registration and insurance will cost less. And the reliability of a new car will go down year by year… and then it may not be as reliable as you like when you are actually traveling with kids in it.

As for Heather… I highly recommend being a SAHM. It is worth the sacrifice to me, and we really don’t miss the second income more than I’d miss spending such great time with my daughter.

I suggest you call up Vanguard and tell them your situation, and see what they offer you. They will probably try to steer you away from variable annuities (though if you’re dead-set on buying one, they offer them in low-fee, non-commission form) and they’re the only financial services company I would trust not to push me into something that’s better for them than it is for me.

What I’m saying is that if you pay them a small fee for some advice (there may be no fee considering the assets you’re bringing to the table) then considering your goals they will likely try to get you into some income-producing Admiral share funds, even though they would make more money if they just did what you want and sold you a variable annuity. On the other hand, if you just call them up and say you want to drop $500k into a variable annuity, they will assume that you’ve done your homework and decided that it’s the best thing for you, and probably just sell it to you.

And yes, interest is still building up — plus the borrower has almost certainly had collection fees of 18.5% of the outstanding balance added at around 120 days after default. And yes, those fees are also now collecting interest.

There are ways out of default: Call the Department of Education since they’re holding your loans now. They will work with you, and and it won’t hurt to ask for a break on the principal… but they’re not required to give it. They will renegotiate the size of your payments based on what you can afford (ask about Income-Based Repayment).

Then top it up with some “fun” stuff like reading all the Booker prize winners or eating at all of the top ten restaurants in your city or climbing the CN Tower steps or whatever. That’s what I did anyway, although like a lot of people I abandoned the project part way through. You can also google other people’s lists. I agree 101 is difficult!

After reading this reader mailbag and your original article on your own goals, I decided to try it. At first I thought it would be easy. I looked to my own financial short, mid and long term goals and hobbies. I quickly began to run out of ideas after #3o or so. Any advice?

Then start saving all of those payments you would have been making on The old car plus $100/month plus the lower fuel bills etc. Buy the time 5 years rolls around – you will have the cash saved to buy the car you want – and it will be 5 years newer!

@heather – Dave Ramsey would say to go for it – but to live on Rice and Beans and work your budget tight.

I’m also part of a mom’s group in our area which organizes regular playdates and other events, and a frequent comment at our events is how much of a blessing and sanity-saver the group is. And of course, it’s better for the kids too to have social activities with other kids.

Get started on the cheap…construct beds from scrap lumber rather than more expensive commercial plastic beds. Grow as much as possible from seed rather than 6-pks.

With 80 sf of beds (5 4×4 beds) you’re unlikely to grow enough to sell much…trade with a neighbor, maybe.

You should consider putting the funds in a low-fee mutual fund that invests in dividend paying companies – but instead of reinvesting the dividends, use that as your income.

You should be able to find funds that pay out between 5 and 7% annually of the invested amount while at least maintaining what you put in. This would give you a good starting point from which to budget.