As most of you know, my wife and I have two preschool-aged children and a third one on the way. From April/May of this year to September of 2011, we will have three preschool-aged children in our home, which will be an interesting experience with a lot of unique challenges.

Currently, my wife works outside the home as a teacher. She commutes almost an hour each way to work, which means that she often leaves before seven in the morning and doesn’t return home until five in the evening. While I’m (luckily) flexible enough in my scheduling to take care of some family matters, she often feels as though she doesn’t get to spend enough time at home in the evenings with the children (and with me, too).

Thus, we’re strongly considering utilizing the Family Medical Leave Act (FMLA) to have her take a one year sabbatical from her job once her normal sick leave from the birth of the upcoming baby runs out. This would allow her to be a stay-at-home mom until our oldest child is in school – a fifteen or sixteen month stretch.

This is a major shift with several financial consequences.

First, her salary would go away. Our income for that period would come solely from my writing. Our numbers on paper show us that this is in fact doable, but it’s still a drastic change from where we’re at.

Second, we would be responsible for health insurance coverage (out of our own pocket) for that year. We would be able to continue using her school’s insurance package if we so chose, but we would have to pay the portion they typically cover out of our own pocket. Again, we’ve already figured this up and we can afford it, but it’s another radical shift.

On the plus side, our child care costs would basically vanish. We would (tentatively) send our oldest child to a private preschool in the area for a portion of the day, but the other two children would remain at home full time.

Our food and recreation costs would go down as well. Such a change would give us more time for meal and recreation planning – and I’m not just talking about Sarah, either. I would have more time as well for these activities because tag-teaming child care with my wife is much easier than bundling kids up for day care when I need to focus on work activities.

We’ve done our best to estimate these costs and savings and our conclusion is that we’ll be able to financially pull it off with some significant breathing room. A big help in easing our minds through all of this is the fact that we have a very healthy cash emergency fund and that the FMLA guarantees her a job if she returns after the year.

I really only have two concerns with this.

First, will I be challenged to have uninterrupted work stretches with three kids at home? I do most of my work in big uninterrupted blocks. In years past, I’ve tried to get significantly ahead on posts for the summer break so that interruptions wouldn’t be as bothersome, but I can’t get a year and a half ahead. Will I be able to find the right balance here?

Second, will Sarah be burnt out and miss her teaching work? I know that she loves her job and she’s a highly regarded teacher (back in the day of RateMyTeacher.com, I saw evidence of that). Will she be happy with this transition, or will she find herself going stir crazy this November because she misses the teaching?

The most important thing to notice is this: because we’ve been making little financial choices all along – minimizing our spending and saving for the future – this decision isn’t being made by the almighty dollar. Money isn’t forcing us to do this or to not do this. Our little choices all along are enabling us to make this decision on the merits of what’s best for our lives and, more importantly, what’s best for our children’s lives.

That’s the real power of frugal, financially sensible living.

I’ll keep you up to date on what we decide.

Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, two years ago this week, and three years ago this week. I call it … the Time Machine.

One Year Ago (February 14 – February 20, 2009)
Using a Gratitude Journal as a Personal Motivator to Save Money and Enjoy Life I’ve been using one of these for quite a while. It really, really helps to step back very regularly and ask yourself what matters in your life.

Struggling with the Guardianship Question Guardianship is an issue that all parents have to struggle with at one time or another. Who do you choose to take care of your children if you suddenly pass on? It’s not an easy question.

Bulk Breakfast Burritos: Convenient, Cheap, Healthy, and Easier Than You Think I love these things! We make batches of them fairly regularly and I thoroughly enjoy them for breakfast in the mornings.

Ten Vital Tactics for Making the “Money Talk” Work The “money talk” is when you sit down with your partner and discuss financial issues for the first time (or for the first time in a long time). It can be painful – but it doesn’t have to be.

About My Wife, Sarah The Simple Dollar wouldn’t be here if it wasn’t for her.

Two Years Ago (February 14 – February 20, 2008)
Training Wheels: Why I’m Spending Less and Less Time Managing my Personal Finances Once you have your finances properly in order, it takes much less time than before to keep them working the way you want.

Defeating Superman Syndrome: How to Progress Beyond the “Need” to Be the Financial Hero This was actually a pretty major step in my own financial journey.

Financial Independence: Defining It and Figuring Out How to Get There What does financial independence mean to you? It has very different meanings for different people.

Little Income, Big Debts: Managing Your Money in Your College Years The financial realities of a college student are much different than they are in other stages in life – and thus different concepts are needed to manage money appropriately.

Nine Techniques for Developing Patience Patience is a key part of surviving the long slog of financial recovery. Here are nine ways to cultivate patience in your own life.

Three Years Ago (January 31 – February 6, 2007)
The Art of the Thank You Note A well-timed handwritten thank you note can make all the difference when it comes to securing a job or cementing a personal relationship.

10 Options To Consider Before Getting A Payday Loan Payday loans are financial poison. Here are ten things to try before even considering one.

A Fascinating Look At Edward Bellamy, Inventor Of The Credit Card I really enjoyed researching and writing this article. It let me dig deep into an area I often don’t get to touch on on The Simple Dollar.

15 Things You Can Do Right Now To Help Your Career Yes, right now. You can make a difference sitting at your desk or standing in your workstation.

Is It Unamerican To Invest In International Funds? Does The Question Even Matter Any More? Here, I address nationalism and investing. I tend to think that globalism is here to stay, myself.

If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.

Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.

1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.

2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!

3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.

4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.

5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.

I also participate on several other social networks. Feel free to check me out on del.icio.us (it’s where I collect links, from which I select the ones that appear in my weekly roundups), wakoopa (what software I use), GoodReads (what books I’m reading), Facebook, and FriendFeed (which aggregates everything). I also have an irregularly-updated personal site, TrentHamm.com.

6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.

7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!

8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.

9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” – just click on that, type in your friend’s address, and send it right along to them!

Monica writes in:

The one financial thing I haven’t done for myself yet is start saving for retirement. The problem is that I don’t ever want to retire and if I imagine a situation where I actually am retired, I just don’t want to envision it at all. I just can’t convince myself to take money away from my needs now for a future that isn’t very bright.

Monica is a forty year old single woman with a career she clearly loves. Other than the retirement thing, she has her financial house very nicely in order, with only a mortgage on a townhouse as an outstanding debt, a nice emergency fund, and a great paying job that she never wants to leave.

So why should she be saving for retirement?

I think that “retirement” is the wrong word for Monica to be using when she thinks about saving in this way.

Let’s look at what a Roth IRA actually is. A Roth IRA is an investment account to which you can contribute money each year (in whatever way you want – weekly, monthly, one lump sum). Once the money is in the account, you can withdraw your contributions whenever you’d like with no penalty – but you can’t put them back.

The big catch is with the gains on that money. If you withdraw them before age 59 1/2, you pay a stiff penalty – you have to pay all taxes on those gains, plus an additional 10% tax penalty. On the other hand, if you wait until you’re 59 1/2, you can withdraw it completely tax free.

The Roth IRA is often viewed as a retirement vehicle because people who are of that age are often planning to use it for retirement.

But it doesn’t have to be a retirement vehicle at all.

I look at my Roth IRA as my “second life” vehicle. When I turn sixty, my worries about choosing a job or career path that provide me a stable income go away because I now have access to my Roth IRA money. In effect, that Roth IRA money becomes a huge emergency fund – a big enough one to last for years and years of living expenses.

What would you do if you suddenly had an emergency fund that would cover years and years of living expenses? I plan to spend my time doing volunteer work and trying to make a second career out of writing fiction (something I deeply enjoy on a personal level).

That’s not retirement. That, to me, means a lot of options that wouldn’t have existed before.

Instead of thinking of retirement savings as truly retirement savings, instead look at it as an opportunity to save for a big dream you have down the line. For Monica, that means twenty years from now. Whatever that dream is, whether it’s retirement or something entirely different, a retirement savings account will be there for you.

Good luck.

When I hit my financial bottom, I realized that a lot of things in my life needed to change. I went through my closets and sold off a lot of my entertainment collections. I started trying out every frugal tactic under the sun. I created a debt repayment plan and hammered some of my debts with the money I made from the sales and from the frugality.

Yet the biggest shift – naturally choosing not to spend money at every opportunity – was much more of a gradual change. I didn’t wake up one morning with complete success in this area. In fact, it took quite a while before my “default” mode when I went into a bookstore was not to buy a book. It took a long time before I stopped putting unnecessary stuff into my shopping cart.

Why did it take a long time? For one, the old ways were my normal behaviors. It was just the way I had done things my entire adult life, and bulldozing those patterns – especially bulldozing a lot of patterns at once – is easier said than done. For another, I still derived a lot of personal short-term comfort from those choices. I got a nice rush from owning a new book or something like that in the short term – it was only later on when that book was read (or sitting unread on my shelf) and I realized that it had gobbled down $15 or so that I felt bad about it.

What caused an overall mind shift away from that? Obviously, from the subject of this post, it was a gradual shift. However, there were three big key elements that convinced me to break the habits of unnecessary spending in my life.

First, I focused in on one or two key areas where I had a lot of money leaks. For me, the big one was the book store. I love to read, don’t get me wrong, but buying three or four new books a week isn’t exactly a habit that creates long-term financial security.

So, to start with, I really focused on my book-buying habit. I went on a lengthy sabbatical from bookstores. I just didn’t buy any new books.

The effect of this is that it forced me to discover and utilize other methods for feeding my book-reading hobby. I found PaperBackSwap (one of my first orders from there was the remaining four Douglas Coupland novels I’d never read, for example). I rediscovered the library – and I started utilizing the waiting lists for big new releases. I started swapping more books with friends as well.

By the time I gave up on the book store sabbatical, I found that my tendency to buy books with reckless abandon had been broken. I still pick up a book on occasion, but more often than not, it’s one that I’m pretty sure I’m going to read multiple times and thus mine extreme value from.

Second, I tried to be mindful of spending in other areas but I didn’t beat myself up over failures. I found that, time and time again, if I beat myself up over a mistake, I would be much more prone to just repeat that mistake.

A much better approach for me was to simply say, “I made a spending mistake. That’s okay, though – one mistake doesn’t break me. What can I do in the future to not repeat that mistake?”

From there, I’d try different things. I eventually adopted a new driving route to work, for example. I altered my evening routine so that I’d often have a lunch packed for me to take to work the next day so I didn’t have to eat out each day.

I was mindful of my mistakes and I constantly experimented. Sometimes things would click and just work. Sometimes I’d repeat a mistake a few times. It was a learning process.

Finally, I got more involved in communities and interpersonal relationships that didn’t value spending. I started spending more time with some community groups while spending less time with my buddies that were spending money left and right in a seemingly never-ending game of one-upsmanship. I focused a lot on a small handful of personal relationships with people who reflected where I wanted to be with my life and didn’t focus as much on relationships that pulled me away from that ideal state.

Over time, I found myself doing less “going out with the boys” to do expensive things and more evenings inviting people over to our house to play board games. I found myself filling my evenings with community meetings instead of going out with people who spent most of their time being negative. I joined groups that matched my interests instead of just trying to keep up with the others in my usual gang.

The people I surrounded myself with began to gradually reinforce good spending behaviors instead of reinforcing bad ones. I no longer felt a social need to have the latest and greatest thing – and that helped a lot.

A final tip that helped: I reduced my mass media consumption. I’m not talking about the advertisements – I’m talking about a lot of the content itself. Shows where people demonstrate unbridled excitement at the possibility of winning some material item. Magazines that talk breathlessly about the latest and greatest product. Whenever I see those things, I just toss them out. I have no need to be influenced by what other people want.

It takes time – at least, it did for me. Good luck.

I originally included this email in the reader mailbag this morning, but my answer to Susan’s email (below) went on so long that I thought it warranted a post of its own.

Yesterday my husband found out he has lost his job. We don’t know what to do.

He was making $38,000 a year as an IT specialist. I make about $36,000 a year as a school teacher. We have about $10,000 in credit card debt spread across three cards and a $1,300 a month mortgage payment. We don’t have anything saved either other than some retirement account money.

I am so scared we are going to lose our house and lose everything! What do we do? Help!

First and foremost: don’t panic. No problem is solved well in panic mode. Bad choices – choices that you’ll regret down the road – are made when you panic.

Take a deep breath. Here are seven things that you should attempt to do in the coming days.

Be proactive. Some people “turtle up” in bad situations like this and spend their time avoiding the problem, doing things like playing video games and watching television. Now is the time not to do these things to excess.

Instead of withdrawing, fill as much of your time as you can with one simple question: what can I do right now to fix our financial situation? Don’t turn away from the problem – grab it by the horns.

Get that second paycheck back as soon as possible. Your husband needs to find work quickly and get back in a situation where there is a second stream of income coming into your home. He should not be picky at this point. Look for a job in retail where there is often work available for people.

Once he has that in hand, he can then spend his spare time searching for a job that matches his resume and skill set. However, it is vital that you not “hold out” for a better job right now. If you do that, you are going to dig yourself into an even worse hole than you’re in right now.

Cut all unnecessary services. Yes, that means canceling the cable. That means canceling the cell phone. That means canceling the internet – you can access it in the ways that you “need” at the library. Cancel Netflix. Cancel any and all extra services that don’t cover your basic living needs.

This sounds painful, but you need to pare down to nothing before you start putting extras back into your life. Cut, cut, cut. When things smooth out later on, you can restore those services that you find that you actually missed.

Clean out your closets. Look for things that you don’t use every day that are sellable on eBay or Craigslist. Look at your collections as well – do you really need all of those DVDs or CDs or whatever else you’ve accumulated?

You might be tempted to hold onto things for sentimental reasons, but ask yourself this: what sentiment is being represented by stuffing something into a box in the back of your closet?

Prioritize your debts. Obviously, it’s better if you pay off your debts, but if you have to make a choice between which payment to cover each month, put the priority on the ones that have collateral – like your mortgage – over the ones that do not.

Yes, that means skipping some payments on your credit cards if you need to. It’s a better option than losing your house.

Cut each other some slack. Times are tough right now and there may be a tendency for each of you to want to blame your partner for the situation you’re in. Here’s the truth: both of you are to blame and it will take both of you to get out of it.

Do not blow up and turn on the one person who’s in this situation with you. If you’re angry, channel it into something else.

Utilize friends and camaraderie in your time of need. Don’t be afraid to talk to your true friends about your situation. They may have ideas and resources that you never expected them to have that can make your situation far better – anything from a job lead to dinner invitations.

Remember, the purpose of a friendship (in part) is to help each other in times of need, and this is certainly a time of need for you. Don’t be afraid to open up.

Finally, don’t forget this moment. It is so easy to make short-sighted choices when things are going well, but Murphy’s Law catches up to us in the end. It is always better to spend a little less now to have a little bit more buffer later on.

Good luck.

Lots of questions this week dealing with the workplace. Let’s dig in.

My work is now offering a Roth 401(k) option in addition to the normal 401(k). We’re down to one income right now so I reduced my contribution to 6% which still gets me the full company match. Raises come out next month so I was thinking of adding a percent or two to my contribution. Would it be worth it to start a new Roth 401(k) with only 2% contribution, leaving my initial 401(k) as is? I’m at around six figures now, barely, but don’t want to assume I’ll be in a lower tax bracket in retirement… I do have a Roth IRA with ING, but I rarely contribute to that since it requires a lot of extraneous paperwork related to my job. I hope to continue increasing my contribution rates, but I’m not sure if I should go with the new option.
- Christina

The Roth 401(k)’s advantage is that it’s funded with after-tax dollars, which means that you’ll pay the taxes on the money now instead of later. If you have a high income and anticipate it dropping significantly in retirement, then there is no real benefit to the Roth 401(k) in comparison to a normal 401(k) – in fact, the latter is probably better, assuming investment choices are the same.

If I were you, I’d probably just contribute more to my normal 401(k) at this point, unless you have reason to believe yuor income in retirement will be comparable to what you make now.

Also, I’m not sure why an external Roth IRA requires paperwork for your job. The usual method of funding those is to simply withdraw money from your personal checking account, which shouldn’t involve your employer at all. If your employer makes this difficult, don’t involve your employer in it at all.

My husband has a Citi credit card for about 20 years. This was his first and only credit card until they started increasing the rate about 5 years ago. They would also charge for random things like credit protection services that were never authorized. He would call and get the charge removed, but all the actions just felt very smarmy. We decided that we wouldn’t close the card due to the long history, but he just wouldn’t use it anymore. He opened a credit card with his credit union five years ago and usually pays it off each month. Yesterday we received a letter from Citi saying that they would begin charging a $60 annual fee, but he could avoid the fee if he charged $2,400 annually on the card.

My question is would his credit be greatly affected if we closed the card?
- Tina

Given that you have a credit card with a five year history, an outstanding mortgage, and a solid credit score right now, I’d assume you must have a history of making payments on time and likely don’t have a big outstanding balance on either card.

If those things are true, I wouldn’t worry a bit about canceling the old card. You might receive a small negative bump right after the cancellation, but that bump would be small and temporary, vanishing over the next year or so.

The truly frustrating thing about credit scores is that we don’t know exactly how they’re calculated – all we can do is make best guesses based on observations and the guidelines the credit agencies provide.

My husband and I have the opportunity to sell our long time business that is actually still doing ok here in MI. We want to relocate and have picked out a place to go, Raleigh, NC. I interviewed for a job down there two weeks ago. This is with a major company that actually does what I do (only in a different way and with a little different philosophy). At the end of the interview, they sent me for a urine test and said they would also do a background check.

I don’t mean to take up your time but I don’t know who else to ask. You don’t have to write back a long note, just do you think I should call them again, write them,ignore them? I really want the job but if I appear too eager, they would surely offer me less, if I ignore them, they will think I’m really not that interested.
- Millie

Given the current job market and the fact that they posted the job on Monster, my guess would be that they have a fat pile of applications and they’re sifting through them.

You may or may not be their leading candidate – that’s hard to determine from this information. My suggestion would be to be patient with it and give it a little more time. They may be interviewing several people before making a decision.

One other thing: never put all your eggs in one basket when it comes to a job search. Keep looking and keep applying. The businesses you applied to are certainly going to look at plenty of applicants – there’s no reason you shouldn’t apply to plenty of businesses.

What is your opinion on life insurance – do you need term or whole life and how much?

I would appreciate your thoughts on this. My husband and I will be meeting with our insurance representative on Friday this week so a quick answer would be appreciated if it could be done.
- Connie

If you’re just starting out, the best move is usually to buy term life insurance. In general, the first few years of investment-based insurance models have pretty poor returns.

However, once you’ve been through that first decade or so with a whole life policy, you have to tack those first years up as water under the bridge. Those years are lost. You can’t worry about them now.

In your current position, the whole policy might actually be a good thing. It sounds like you’ve had the whole policies for a while. I would spend some time looking at the actual returns they’re providing today and see whether or not you feel that it’s giving appropriate value.

The key, though, is to recognize that the past years are past. The choices you make today can’t alter what happened then. Make the choice based on where the policies will go from here.

We are expecting $50,000 inheritance shortly and we don’t what to do with it. At issue is that we have a balloon note for our second mortgage coming due next October in which we will owe about $45,000. We are underwater on our house so it seems to me that I should try and negotiate this loan instead of paying it off since we will still be underwater, effectively throwing the money away for nothing. I was thinking about putting half toward debt (we have about 80K in various types of debt at various interest rates) and half in savings in anticipation of the bank not willing to work with us and demanding the money. The money we save each month from eliminating debt, combined with the other half we put aside should give us some options when the note comes due.

What do you think?
- Eric

If your lender is open to negotiation or refinancing, that’s the road I would go down before doing anything else. Balloon notes are mighty dangerous things for both the lender (risky) and the borrower (painfully expensive).

I would hold off on making any decisions about the money until the refinancing is finished up. Put the money in a savings account for now and sit on it until that’s taken care of (except perhaps to use some of it to cover any fees related to the refinance).

Once everything is in place, I’d then look at all of your finances and see where the remaining money should go.

In 2004 I bought a condo. I knew at the time I would only need it about 2 yrs, as I was just using it as an office. Had I put it on the market a few months earlier in 2006 I would have made about $40K, Today, I am underwater $40K.

Currently, I rent an apt on the other side of the state, with no desire to ever live in the town the condo is located in again. Financially, the condo is draining and burdonsome. Morally, I don’t feel comfortable to think about turning the property back over to the lender. My credit score is in the 750 range. What would you do if you were in my shoes?
- Mary

Sell it and take the loss.

All of those extra costs are adding up quickly. You’re losing $500 a month to this situation – for what? Every month you hold onto it, the financial situation gets worse and the only way you’ll recoup any of it is if the housing market suddenly undergoes a tremendous rebound, something which I don’t anticipate happening in the next couple years or so.

Much like the previous question, you have to ignore what might have been and look at the situation as it is now. What nets you the most money? Selling it now? Or holding onto it, watching $500 a month vanish, and hoping the housing market rebounds enough that you can recoup that $500 a month in lost money?

I wouldn’t bet on the housing market.

How is your “losing weight” resolution going? What strategies are you using?
- Sammie

It’s going fairly well. I set a goal of losing an average of a pound a week in 2010 with the knowledge that it would be harder for me to lose it in the winter months than the summer months because, where I live, you can’t really do a whole lot outside in the winter unless you want to freeze or you want to bundle yourself up like that younger brother from A Christmas Story. So far, I’ve lost an average of 0.6 pounds a week, which I’m happy with.

I’ve decided to use the idea that Michael Pollan proposed in his excellent In Defense of Food – namely, I’m acting as a vegetarian until 6 in the evening, at least during the week. That means that my breakfasts and lunches are strictly vegetarian right now.

As for exercise, I’m mostly just playing exercise games on the Wii (mostly EA Active, lately) when I can fit them into time gaps in my day. I’m at a point where I have a nearly-overstuffed schedule of things to get done each day so this is a convenient way to simply get my heart rate up.

I look forward to more outdoor activities when the huge piles of snow on the ground melt and spring comes to Iowa. I vastly prefer to take long walks.

I have a secure job (I know I’m not irreplaceable, but my work is unique) with good pay and benefits, while my husband is laid off for the second time since we’ve been married (12/01 & 9/09, economy both times). I have no education beyond high school, while he has an MBA. We live in the second largest city in Michigan but even so, his employment prospects are not good. We are at least $20K underwater on our mortgage and we couldn’t get enough in rent to cover the mortgage payment, so we are unable to move to where the jobs are.

We could almost live on my salary alone but our mortgage payment would eat up a little over 2/3 of my monthly pay. We’re hoping it doesn’t come to that, but we just don’t know if my husband will be able to find a job before his unemployment runs out. Not having that debt would give us at least $300 more breathing room each month, but $10K would give us about 8 months of mortgage payments. Both options have benefits as well as drawbacks; which one makes the most sense to you?
- Cassandra

I would choose the path that keeps your head above water the longest in the event that your husband doesn’t find work. From my perspective, that would mean leaving the cash in the emergency fund for now and using it to cover the mortgage payments down the road.

The enormous uncertainty of your husband’s job is the real crux here. At this point, I think you have to bank on the idea that he’s not going to be bringing in a large income for the near future. In that situation, your best bet is to have the cash on hand to cover your mortgage payments and not worry as much about paying off unsecured consumer debt – that can wait a bit.

I would also suggest that your husband try to find any work he can during this rough stretch, even if it means working at a store or something like that. Income is income. When he’s not actively working – and even during the evenings right now – he should also be trying to make a name for himself in his career path online. Start a blog. Find people on Twitter in his career area and interact with them. He needs to get his name out there as much as possible.

How do I find paid blogging work on the internet that’s not a scam? My neighbor blogs once a week for amazon.com giftcards which would be the most awesome thing ever since it would make it so much easier to be able to buy books for my family guilt-free (I re-read almost every book I own so paperbook swap and the library just make me grouchy) guilt-free. Unfortunately, my neighbor won’t tell me what the name of her site is, for some reason or other. So, how do I find these things on my own? Thanks so much.
- Erin

Hello, I live in Canada and I am looking into ways to boost my income. Can you recommend any websites that promote legitimate work at home opportunities, websites for bloggers (who want to be professional), or any other reasonable possibilities?
- Tina

I’m combining these two questions because I get them – or some variation on them – all the time. I’ve even answered similar ones in earlier mailbags. This is going to be my definitive answer on the subject.

There are very few legitimate work-at-home jobs that can be found on the internet for people to simply show up and apply for. Most of the legitimate jobs are either self-made (like mine, where I started The Simple Dollar from scratch and built it in my spare time) or take more of a “we’ll call you” approach (where people approach you with writing opportunities).

There are many ways to earn a little bit of money online via things like Mechanical Turk, but those are good to earn a few supplemental dollars while watching television or something like that. They don’t earn enough to actually be a functional income.

How do you get involved in opportunities where they will want you to work for them? For starters, you have to show what you can do. Start your own blog. Write your best stuff there. Then, you have to get the word out. Join Twitter and talk about your area of interest. Converse with people there. Share links to your best stuff – and links to stuff you really like.

It takes time. It doesn’t happen overnight, no matter what you want to do.

Most importantly, ignore the people who tell you that you can start earning tons of money quickly via a work-at-home opportunity. Think about it – if that legitimately worked, wouldn’t they be doing it over and over again themselves instead of trying to sell you some shifty product? If something is a guaranteed money maker, it’s not sold as a product – it’s used by the person who throws their energy into the money maker, not into packaging something up to sell to you.

Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.

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!

For the last year and a half, I’ve used Skype for my business phone – through book edits and interviews and so on, it was used daily (if not more often). During that time, I’d been making calls using my computer’s speakers (for the audio) and my webcam (for the microphone).

Of course, this has a big drawback – namely, echo. It’s usually not bad at all provided that I sit in one particular spot and don’t move from that spot. However, if I move to even scratch my elbow or something like that, the echo can become overwhelming on the call.

After trying several different mic and speaker positions, I finally spent the money to buy a USB headset to handle the calls – and it’s made an enormous difference. Echo-free calling is much, much better.

Sometimes it’s worth it to spend $30 to fix a problem like that.

The Anatomy of a Sucker Some excellent musings on why people fall for scams. At the end, though, I disagree – he says “not all cons are illegal,” while I’d say “most cons are legal.” (@ pop economics)

Personal Branding: For Moguls, Morons or Megalomaniacs? Personal branding means that when people see your name, they think of something – preferably something that’s positive. What do people think of when they think of your name? (@ awake @ the wheel)

7 Financial Moves to Make in Your 20s I’m glad to see that there are a lot of things called “financial moves” that involve building interpersonal relationships on this list. (@ money ning)

Four Small Things You Can Do To Be An Exceptional Communicator More and more, I believe communication skills are the key to success in whatever you want to do in life. (@ dumb little man)

Keeping children’s toys from overwhelming a room This is a familiar problem at our house. Our key is toy rotation – limit the toys in the room, but keep some more of them in a tub elsewhere. Then, once in a while, rotate the toys, bringing some out of storage and putting most of the ones already out away. This keeps the toys fresh for the kids – meaning less need for new ones – plus it reduces the clutter in the room. (@ unclutterer)