Anxiety disorder. Depression. Panic attacks. Intense phobias.

Our brains are incredibly complex pieces of meat. Just like other parts of their body, they can break down and not work quite right. Yet, society often treats ailments of the mind as something either not to be spoken of or something to be looked at as an intense personal flaw.

Yet, just like any other medical ailment, the cause is often out of the person’s control.

I have battled depression on and off for years. I often convince myself that I am a failure at writing (or whatever else I’m doing) and I then convince myself not to do it any more. I am a ridiculously tough critic on myself and I often turn combative about the work that I do produce, because I often think that if the stuff I create after all of this effort still isn’t good, I must truly be a failure. There are times when I can write tons and tons of words. There are other times when I simply can’t make myself write. That’s depression at work, my friends.

A few stories from baseball along these same lines:

Kansas City Royals kid pitching sensation Zack Greinke started last season 5-0 with a 0.50 ERA (not a misprint) and 44 K’s, and he went on to win the Cy Young [award given to the best two pitchers in baseball]. Just four seasons ago, depression and social anxiety nearly caused him to quit baseball. A sports psychologist and anti-depressants helped him recover, as did the Royals. “We’ve been able to create an environment that has clear direction and a consistent way of doing things where Zack feels comfortable,” GM Dayton Moore told USA Today.

In 2000, St. Louis Cardinals pitcher Rick Ankiel, then just 21 years old, was unexpectedly thrust into starting Game 1 of the NL Division Series against future Hall of Famer Greg Maddux and the Atlanta Braves. After two solid innings, Ankiel cracked, walking four hitters in the third. More critically, he threw five wild pitches in the third inning alone — becoming the first major leaguer to do that in more than a century. He later joked about it, but he never pitched well again.

One can find thousands of stories from other fields, but baseball alone, as a singular example, has a mountain of them.

Here are some sure signs that mental health may be standing in the way of your success.

You experience a loss of desire to do things that once filled you with passion. Yes, people have changing interests over time, but if you find yourself walking away from many of the things you used to love and instead spending time alone or involved in sedentary activties, that’s often a sign of a mental health concern.

You find it difficult to do the routine things in your life. If you were once a good housekeeper and find yourself not keeping house, that’s a sign. If you’ve started to allow your personal hygiene to slack off, that’s another sign. If you eat nothing but convenience foods, that’s yet another sign.

Your thoughts are filled with negativity toward yourself. Most people are hard wired to think of themselves in a positive fashion, not a negative one. If you continually think negative thoughts about yourself and the things that you do, you might want to take note of it and do something about it.

You drift away from lots of existing relationships at once. If you find yourself suddenly avoiding people and spending a lot of time alone because you don’t want to face them, that’s another potential cause for concern.

Your finances, once solid, are spiraling out of control. When people feel their happiness slipping away, they’ll often throw whatever they can at the problem – and in many cases, this takes the form of unnecessary spending.

All of these are possible signs of a mental health concern. All of these are also things that can have a severe detrimental effect on your level of personal, professional, and financial success.

At the same time, here are some things you can do to improve your mental health state.

Go outside. This is the first step anyone should take. Instead of sitting inside, sit outside on the front step or on your balcony. Breathe in the fresh air. Read outside. Most importantly, get a little sunshine. Sunshine on your skin produces vitamin D, of which many people are somewhat deficient. Vitamin D has profound effects on the brain and adequate amounts of vitamin D are almost always a net positive.

Whenever I begin to feel seriously down, I usually go outside for a while, if nothing else. It helps more consistently than any medicine under the sun, at least for me.

Get some exercise. Even if it’s something as simple as taking a walk around the block, getting a bit of exercise can always be a help. Exercise not only alters your metabolism, it also causes your body to release endorphins which trigger positive feelings.

Eat a healthier diet. What you put into your body makes a huge difference in how you feel. Try eating some very healthy foods as part of your routine. Eat some fruit for breakfast and a spinach salad for lunch for a few days and see what happens.

Seek out new friends. One’s mood can be seriously affected by the people around us. If your friends are making you feel worse about yourself, seek out new friends. Look for other social opportunities, often in a place very different than where you usually go. Try something completely different. The best place to start is by doing something that seems intriguing to you, but your friends would ridicule you for it.

Talk to your doctor. Medical help can be a powerful course of action if the above techniques do not help you get to a better place. If you sincerely try the above tactics and do not find any success, seek the advice of your most trusted doctor.

Most importantly, don’t be ashamed. You’re not alone in feeling this way. You’re never alone unless you choose to be.

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 (April 4 – April 10, 2009)
Trimming the Fat from Your Work-Related Spending The act of working can be expensive: work clothes, eating out for meals during work time, travel, commuting, and so on. Here are some tactics for trimming that extra expense.

The Neighborhood Cooperative If you can find ways to share costs with your neighbors, you both win. Here’s some advice on how to get the ball rolling on such cooperation.

The Stroop Effect and Your Wallet Our mind does funny things. Here’s a great example of one of the quirks – and how it affects our spending.

Everything You Ever Really Needed to Know About Personal Finance On Just One Page – Download My Personal Finance eBook for Free! This little document includes all of the key concepts and ideas that fill up my personal finance philosophy. Best of all – it’s free.

Rounding Up Debt Payments: Does It Really Help? It certainly does, even if you just round up to the nearest dollar. How much? Click into the article to find out.

Two Years Ago (April 4 – April 10, 2008)
Making Your Own Laundry Detergent: A Detailed Visual Guide Homemade laundry detergent is a surprisingly large money saver, especially if you do a lot of laundry. Here’s a detailed post discussing how I make mine.

The Value of Personal Trust In a world where we’re trained not to trust others, extending some personal trust can have a great deal of value.

Ten Killer Tactics for Developing a New Skill I make an effot to work on a new skill each and every day. I think it’s a very powerful way to grow as a person.

Inspired By Carrie, Our Experiments in Disposable Diapering The title here is a bit of a misnomer, as it describes our transitioning from disposable diapers to cloth diapers.

Personal Finance 101: Comparing Debts and Developing a Debt Repayment Plan If you have any trouble at all with managing your debts, this article is an absolute must-read.

Three Years Ago (April 4 – April 10, 2007)
The Tao of Setting Concrete Financial Goals Coming up with specific, rational goals and putting them down on paper is a huge part of personal finance success.

15 Ways Department Stores Try To Trick You Into Spending More Than You Need To – And 10 Ways To Fight Back Department stores use a lot of little tricks to subtly convince you to buy, buy, buy. Here are fifteen of those tricks, along with ten general tactics to minimize the impact of such psychological traps.

Orson Welles, A Zither, and Personal Finance The Third Man is one of my favorite movies of all time. Here’s how some of the ideas from the movie pop up again in personal finance and career management.

Short Term Savings – How To Plan For Upcoming Vacations, Auto Purchases, And So On Short term savings goals (three years or less) are incredibly useful for helping you make significant purchases like automobiles and vacations. It just takes discipline and some of the tactics in this article to help you come out on top.

Ten Financial Reasons To Turn Off Your Television – And Ten Things To Replace It With This is one of my most controversial articles. I believe television is one of the biggest enemies to personal finance and career success, if not the biggest enemy.

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!

Henry writes in (I edited a few minor details to help with privacy issues, because I think without edits it might be possible for people to easily figure out who Henry is):

Six months ago, I lost my six figure job as a database administrator. A month after that, just before Christmas, my wife left me, taking the kids with her. She filed for divorce claiming negligence because I didn’t have a job. Soon, I was forced to move out of our home and into an apartment. I got a job working in construction in February. Two days after starting the job, I suffered a broken hip thanks to falling debris. I’m currently in a wheelchair, undergoing therapy, and I hope to walk again by the end of the summer.

Needless to say, my life is very different now. I’m not down about it though. I realize that I have a great chance right now to completely restart my life. I received a decent cash settlement from work and will be receiving steady compensation as well, so my financial situation is pretty good. Plus, right now I have all the time in the world to figure out what comes next.

If you were in my shoes, where would you start? What would you do with a year’s worth of time and a steady income to build a new future for yourself?

Henry, you’ve had a doozy of a six month period. It is absolutely to your credit that you’re still in a positive frame of mind after all of this. That speaks very well for whatever you wind up doing from here.

I would suggest doing two things over the next month.

First, limit your media intake. Yes, I know it’s easy to just sit there and watch television and surf the internet when you’re laid up, but doing that not only delays the inevitable things you’re going to have to do, it also establishes some pretty awful routines and it just gives away the time you could be using to build the life you want.

Instead of sitting there surfing the web or watching the ol’ telly, try doing things. Yes, obviously, keep this within the things you’re capable of doing, but try doing whatever comes to mind. Whatever seems interesting to you. What things have you wanted to try in the past that you’ve never had the time for or that the people around you have resisted?

It can be anything. Don’t be ashamed of what it might be – that’s often the echo of people trying to tell you what your limits are.

Try some things. Eventually, you’ll find yourself gravitating away from some things that you don’t like and towards some things that you do like. You’ll also notice that some things seem to come easy to you and other things feel difficult. To put it simply, move towards the things that come easy and also excite you.

Don’t worry about whether these things can make you money or not yet. What you’re trying to find are things where your passion and your skill meet together, because those are the things where you’ll have the magic touch. You’ll enjoy what you’re doing, you’ll produce great stuff, and people will want to pay you for it.

Don’t be afraid to just spend a few months trying new things and seeing where you naturally gravitate. Most people simply don’t have the time in adult life to do this, but doing this can actually point you straight towards the career that you should have – the one you’ll both enjoy and excel at.

Once you find the right thing, you’ll know. You’ll find yourself waking up in the morning with an itch to do it. You’ll find yourself creating things left and right. Better yet, those things you create will draw a positive response from others, even if they’re still a bit amateurish.

When you find that thing that you love to do, look for how others make money doing that thing. Research your field of interest online and find leaders in the field. How do they make money? What kinds of things do they do? What sort of education do they have? How did they get started? Biographies can help. Wikipedia can help. Sometimes, contacting the person can help.

Once you have this information, create a game plan for getting to where you’d like to go with this passion. Will it require schooling? Will it require the formation of a small business? Will it require some apprenticeship? Figure out what it will take to get there and how financially lean things will have to be to reach that point.

Hand in hand with this, you should live as cheaply as you reasonably can. You don’t need to live like a hermit, but you should be mindful that such a career switch might be very expensive.

As you heal and recover, simply follow through with your game plan. Seek out a mentor to help you refine your plan and to get you on the right page. Get involved in communities that relate to the area you’re seeking, both in your local area and online.

If you do these things with sincerity and honesty, you’ll find yourself headed down a great path to a powerful new life. Good luck.

One of my readers recently wrote to me, telling me about the “family dinner night” they host. Here’s how it works.

Once a month, on a set day that everyone knows about (they do it on the second Friday of each month), they have a “family dinner night.” Once you’re invited to this event, you’re always invited. “Family,” to them, includes everyone important to them, regardless of whether they’re

About a week beforehand, they send out an email to everyone who is invited and whose address they have, announcing the theme and asking for help in preparation. Attendance is not required; it’s just something available for those who want to attend.

Those who can help will show up about an hour before the meal to assist in dealing with the meal prep and often bring an item or two to pitch in.

The meals themselves are “assembly line” meals – tacos, grilling, salad night, soup night, finger food night – which means that as people arrive, they can go through the “buffet line” and fill up their plate.

They usually put extra effort into a few specific elements of the meal, like making fresh salsa for the taco night or carefully marinating a pork loin on grilling night or making a great from-scratch dressing on salad night or from-scratch breadsticks for soup night. You get the idea.

This provides a social evening for the hosts without an incredible cost (yes, there’s the food cost, but it’s often reduced by people showing up early and bringing stuff). Even better, a few of their friends have started hosting their own “family dinner night” on different nights during the month.

I think this is a spectacular idea in many, many ways.

It’s a great way to add a low-intensity regular social event to your calendar. These are the kinds of things that build bonds long-term with your friends and acquaintances.

It allows you to mix social circles. You likely have valued friends and family from different “circles” who have never met each other and interacted. Having them meet in a very casual environment like this is a very good thing, as you can often bring about new connections, friendships, and even (sometimes) deeper relationships.

It’s inexpensive. Such buffet-style meals are usually fairly inexpensive on their own and they get cheaper if you have friends that bring pieces of the buffet, too.

It’s replicable. It often spawns similar events from other friends and family members on other nights during the week. Obviously, you have a very high likelihood of being invited.

In fact, my wife and I are considering starting our own “family dinner night” in June or July, once our child has arrived. We have hosted dinner parties before, but this moves the whole thing into a more casual domain.

What’s the single most important piece of personal finance advice you would give a person?

I’ve heard this question (or variations on it) many times. I have a very simple answer to it.

Whenever you buy anything, ask yourself why five times.

That seems really off the wall at first glance, but I firmly believe that no single piece of advice can match it in terms of getting your money under control.

I’ll show you what I mean through the lens of three purchases I considered recently.

I have about $1,000 saved up for a big personal purchase. I had been considering buying an iPad with it, even before the Apple announcement in January. I held one in my hands a couple days ago and considered it.
Why do you want an iPad? It’s an impressive gadget to hold in your hands. I can see myself using it and enjoying it.
Why would you use it? I can surf the web on it and read books on it and periodicals, too.
Why not just use your laptop? This is more portable.
Why not just use your iPod Touch? …
Why not just read a paperback? …

And, boom, my argument for buying an iPad goes down the chute. Sure, I can afford it, but why? It doesn’t fulfill a need in my life that isn’t already fulfilled by something else, or at least not in a compelling enough way to pay hundreds for it. Yes, I’ll probably buy a tablet computer someday, but not yet. It doesn’t actually fiil any sort of need.

I allow myself $30 a month to spend on books. I was in the bookstore recently, considering whether to pick up a copy of a novel I’ve been looking forward to for a long while.
Why do you want this novel instead of the books you already have? It offers a compelling story, but I do already have a few to read.
Why not just wait until it’s on sale or in paperback? I want to read it now!
Why not just ask for it on PaperBackSwap? It’ll take some time to get it there because it’s such a new release.
Why not just request it at the library? I could do that… it might take a few weeks.
Why not see if one of your friends has picked it up and swap with them when they finish? Even if the library doesn’t have it, one of them might.

And, boom, I’ve got several avenues for reading the book without spending the money. This keeps me from buying a lot of books because my actual need (to read) is fulfilled in other ways for much less cost.

Another example: I’m considering buying a one pound small wheel of Maytag blue cheese at the store.
Why are you buying this cheese? I want to make some good blue cheese burgers and I want some to sprinkle on my salad.
Why are you buying a pound for that? It’s cheaper per ounce.
Why would you let the eight or so ounces you won’t use go to waste? I, uh, wont?
Why not get feta for your salad because it’s cheaper and tastes more appropriate? Hmm… that seems reasonable.
Why not just get a four ounce piece of the blue cheese? …

And there you have it. Instead of buying the one pound chunk, I bought a four ounce chunk and some feta.

In each example, I came up with a result that either made me realize I didn’t really need the item at all or pushed me to another purchase that met my needs for a much lower cost.

The five whys push me there every time. The simple process of thinking through a purchase almost always leads me to a better solution that my first impulse points me to. This saves me money and prevents me from making impulsive, wasteful buys. Instead, I find I have plenty of money left for the things that really do matter in my life.

My biggest problem in terms of personal organization: whenever my “must be done” list reaches a certain length, I have this incredibly strong desire to just shut down and give up.

If I can handle things in manageable chunks, things are good. When things build up, though, and alter my routine, I run into trouble.

Right now, the birth of our child is the big “deadline” sitting just down the road and there is so much to do. Focus, Trent, focus.

Over the course of the past year or so, thanks to your advice, my live-in boyfriend and I– both about thirty years-old– have cut back a LOT on our eating-out spendature– instead of having brunch with our friends every weekend, we cook breakfast at home and meet up with the friends for post-brunch board games. Instead of eating out at medium-priced restaurants every night, we go out to one nice meal per month and cook at home the rest of the time. Instead of exercising our sushi-obsession at sushi restaurants in town, we go to the wharf and buy fresh sashimi-grade fish and cut it up at home. And we almost NEVER buy expensive drinks when we go out anymore, but sometimes have drink-themed nights at home.

Do you have any suggestions for simplifying our recipes, critiquing generic brands, and just reducing the overall cost of our grocery bill?
- Jamie

We somewhat fall into the same situation you do. We tend to buy high-quality ingredients for our meals and we’re fairly picky about what we eat and consume.

There are really three things that guide us. First, we recognize that eating well is something we value. I’m willing to pay more for organic produce, good cheese, or other specific ingredients. Second, we don’t shy away from at least trying lower-cost alternatives sometimes. We rarely spend more than $10 on a bottle of wine – in fact, most of our wine purchases are straight from a local winery we quite like (if you happen to go there, tell them you heard about it on The Simple Dollar!). Third, we don’t strive to spend a lot on food or drink – we focus on the meal and appropriate beverages to accompany it, not on “expensive.”

In short, if good food is something you deeply value, don’t sweat it too much. That doesn’t mean you should ignore the sticker price, but it does mean you don’t have to feel too guilty about it.

I need some advice. I am 24 and have been working as a freelance theater lighting technician in New York City since graduating from college in 2008. I have about $17,000 worth of debt in student loans which my parents are helping me out with and $3,000 owed to my dentist (I’d neglected my dental care during college resulting in more cavities than I feel comfortable disclosing. Get those twice-yearly cleanings!). I made roughly $21,000 last year but thanks to your blog and Your Money or your Life I’ve managed to scrape by without using credit cards and have created a two-month emergency fund.

Would love to hear your thoughts.
- Barb

Go for the education.

Education is one thing that I don’t mind telling people to go into debt for. When you couple that with a career you’re unhappy with and an educational route that deeply excites you, then you need to chase that.

Don’t worry about employability too much post-graduation. Instead, just throw every ounce of energy you can into learning, creating, and making connections. Throw your passion out there and run hard with it when you’re in school. Dive in deep and don’t be ashamed of it.

If you don’t do it, you’ll spend an awful lot of time regretting it. Go.

I really love your blog and have taken a lot of advise from it. I was wondering, what you think about school portraits and their costs. When I was young, we got our pictures taken every year and got a few pictures, group pictures and wallet sized pictures for a reasonable price. And it’s also a great memory and we love to look at our pictures.

Would love to read your opinion about this.
- Sabine

This is very much a personal value thing. I don’t think there’s a strict right or wrong when it comes to school pictures.

They are unquestionably overpriced for the item you get in the end. On the other hand, they’re very convenient (compared to the effort it would take to produce professional-grade stuff at home or to take the kids to a studio) and they have the benefit of those class pictures (I still enjoy my class pictures from grade school).

If you can take some good “portrait-style” photos at home and have a chance to capture a lot of your child’s playmates in other images, it’s completely fine to skip out on the portraits at daycare. It’s really up to you, I think.

I have a question about “renting out” a room & capital gains. I am considering renting out a room in my primary residence, to generate some extra income. It would probably generate about 7000/yr, less taxes. I’m assuming I would pay taxes on that money as rental income. My question is if I rent the room does this make my property a rental (for capital gains purposes)? I would still be living there & likely living at the property until I sell it. I would only anticipate renting the room for a year or two max. If doing this makes me have to potentially pay capital gains in the future, it’s probably not worth it to me to do so. I have read some things that say if you take a depriciation on the property, that will make you have to pay cap. gains. Can you just declare the extra income & not take a depriciation? I need an answer sooner than later, because I have a potential renter/colleague who is looking for a place now.
- Jenny

I contacted a friend who not only rents two homes he owns, but also rents out part of his own home.

He told me that the correct way to do it is to, on paper, divide your home into two separate properties. Calculate how much of your home’s square footage you’re actually renting out (what portions will they be using? what portions will you share?). Then, figure out the fair market value of your home before you begin to rent and calculate the market value of that portion of your home.

So, for example, if you’re renting out 800 square feet of your 2,000 square foot home and the home’s fair market value is $200,000, then the value of the part you’re renting is $80,000.

Once you’re done renting, figure out the fair market value of your home again, and again figure out the value of the rented portion. So, let’s say your home’s value went up to $250,000 during the rental period. The value of the part you rented would thus be $100,000, meaning your rental unit gained $20,000 in value. You would then have to pay capital gains tax on that $20,000 gain. Obviously, you’d have to be renting for quite a while to see that kind of jump given how housing markets are right now, but you get the idea.

His explanation made perfect sense to me, plus it logically makes sense within how I would expect tax laws to work.

I lost my job about 3 months ago and have not been able to find another position. Meanwhile, my wife and I have pared back expenses so that we are able to live on her salary (which isn’t much) and my unemployment. We have not dipped into our emergency fund yet, which is $50,000. This is about 10 months of expenses for us.

We put that off for a while, but now that it seems like we are able to meet our expenses without dipping into the emergency fund, I wonder if it would be a good move to go ahead and pay off the car, or just keep the money in the emergency fund until I at least secure another job.
- Bruce

If you are able to meet your expenses without tapping your emergency fund and your emergency fund accounts for about ten months worth of expenses, I think it would be reasonable to take four months of those expenses to pay off that debt to improve your monthly cash flow.

In the end, that’s really what this question is about: cash flow and discipline. If you can improve your cash flow without letting your emergency fund get too low, you should do it. Why? If your cash flow is better each month and you already have shown financial discipline, you’ll have less likelihood of actually tapping that emergency fund in the future.

You clearly have the discipline. You’re clearly in a situation where cash flow will help you out. I’d go for it.

I am a 31 yr old living in NYC (Manhattan) for the past 13 yrs. I have been living downtown all those years in a tiny apartment averaging around 450 sq feet to where the rent averaged around 1700-2000 per month. I had roommates majority of the time so in average, my rent plus utilities came out to be $1000/month. For the past 2 1/2 years, I have been splitting the rent plus utilities again, costing us each $1000/month. Both of our jobs are pretty close to us where we can either walk or ride a bike and get there within 25mins max so we don’t have to rely on the subway. Note, a monthly subway cards would add $178($89 each) to our expenses.

My question is, at this moment in my life, 31, not married, no kids, no real attachment to my job, should I be purchasing a home? With the rent vs mortgage calculations, I feel like I can go either way but I can’t help but to think I am throwing money down the drain with rent but I also feel like I am not stuck although I don’t know where I plan on going since I’ve been in New York forever. I am looking to do this solely under my name. My boyfriend and my plan is to be together (but really who can predict the future). Instead of looking for a 2 bedroom (mortgage of 2300-2500), should I be looking for a one bedroom (mortgage of 1700-1900) or should I just keep renting since realistically I’m just paying $1000 a month for an good location apartment that fits my needs in my life right now?
- Rika

Keep paying rent on the apartment and keep socking away for the house.

Right now, you don’t need the house. Yes, that might change in a year or two or five, but if you went for the house now and things didn’t turn out exactly like you’re dreaming they will, you’ll be stuck in a house that will be sucking every dime from your wallet.

Don’t make a $450,000 purchase based on what you think might happen. If I were you, honestly, I would probably wait until you were pregnant to start apartment shopping, because the bigger the down payment is, the easier the move will be.

Another factor: owning a home has many more expensive factors than renting. You’re usually in charge of maintenance, whereas in an apartment you usually have a landlord to call. That’s an additional layer of expense.

A big change is coming up – we´re moving with my husband to Virginia, from Latin America, where we currently reside, because of a great job opportunity for me.
It as been a difficult stretch, since the exchange rate is 8.5 to $1, so we`ve been saving like crazy, and managed to put together a nest egg of about $4000. I will start working about two weeks after we arrive, and will earn about $50 k a year.

And, what bank would you suggest for us to open our accounts in?
- Mel

It sounds like you have a job in place already, which is a great boon.

My biggest advice for making the move is to go minimal at first. Take as little stuff with you from Latin America to the states, then when you arrive, furnish your home minimally. Shop at Goodwill stores and buy very low end stuff, just enough to provide the very basics at home. You can upgrade all of that stuff as needed later on.

As for a bank, I would find one in your community. I would start by checking into the credit unions in the area, as credit unions often have very good banking choices as compared to the large for-profit banks. From there, once you’re settled, you can look at online banking options if the credit union doesn’t match your needs.

My wife currently operates a small business from our home. In late 2008 we obtained a personal loan through our credit union to procure the initial startup equipment and supplies. This loan currently has a balance of $14k at 11% interest. We are currently making full payments towards this account but wondered if there would be a benefit in taking out a home equity loan (HEL) to pay off the loan with a much smaller interest rate.

Do banks (or credit unions) typically allow a HEL to be used to pay off personal loans?
- Bill

Usually, HELs can be used for pretty much whatever you please, and a personal loan at a credit union falls under that umbrella.

Does the initial loan have any collateral (I’m not sure based on your email)? I’m guessing by the interest rate that it does not. If that’s the case, you’re essentially swapping a high interest no-collateral loan for a low interest loan that uses your house as collateral.

There are risks and benefits on both sides of this. Obviously, if you default on either loan, your credit is shot, but your HEL can put your home ownership in danger. On the other hand, the high interest loan is eating away more at your raw dollars.

If you have a very steady source of income that exceeds your bills by quite a bit, I would probably go ahead with the HEL. Otherwise, I would consider it too big of a risk.

We have very little non-tax deductable debt left and all our spare money goes into paying off the last 10K of that loan which should be paid off by November. This money is in a flexi-mortgage from which we can withdraw or pay off as we want to. We also have a $140K mortgage which is on a rental property, and in Australia is tax deductable against the rental income. After we pay the 10K off, we will then concentrate on paying this $140K off as soon as possible.

Regarding the emergency fund. Do you think we need to have savings or would it be best to leave the flexi mortgage open and concentrate on paying the rental property mortgage off? This is what our accountant has recommended, but you are very big on recommending the emergency fund. I figure if the worst happens, we can redraw on the flexi mortgage and if it gets really bad we can always sell the rental property, which is worth multiple times the value of the loan, allbeit not very portable.
- Louise

The big problem with using a line of credit as your emergency fund is that it’s trivial for a bank to close that line of credit at the very point where you’re having a true emergency. For example, if you lose your job and are suddenly struggling with bills, the bank may see this on your credit report and clamp down on your line of credit, leaving you in a very serious pickle.

That’s why, for emergency funds, nothing ever beats cash. This money is for genuine emergencies and do you trust your bank, which likely has policies right now to cut lines of credit at the first sign of trouble, to be there for you when you need them?

I don’t. You shouldn’t either. Cash is king. Keep a cash emergency fund.

I am a 20 year old college student who is having a lot of trouble trying to build up credit. When I was 13 years old, some debt collections were put on my credit report (these were medical bills put under my name that my mother was not aware of. She isn’t aware of her finances AT ALL). I was not aware of this until I was 18. I fought those debts but they were counted as legitimate under the law even though they were established when I was still under 18. At the end of last year and the beginning of this year, I finally paid off those medical debts. However, I am still being denied for a credit card, even those that are targeted towards college students! The only other way I can start building credit is by paying my student loans but early payments to those aren’t counted (I have to officially start paying after I graduate in June 2011). In the meantime, how else can I build credit without a credit card? Also, the new laws requiring that parents co-sign with children for student cards if the latter doesn’t have any income will only serve to hurt me because my parent has really bad credit. I feel very frustrated that I worked hard to pay off bills that weren’t really my responsibility from when I was 13, and yet am still being punished by lenders for it. Is there any way out? I have heard of secured credit cards but I am unsure which ones are trustworthy. What do you recommend?
- Valery

A secured credit card is one way to help you build credit in this situation. Unfortunately, they’re pretty expensive.

In order to get a secured credit card with a $500 limit, you have to deposit $500. You only get that deposit back when you cancel the card and have made all payments on it. Once you’ve made that payment, the card works like a normal credit card.

If you decide to go that route (and, yes, your options are pretty limited for building credit in your situation), I would start by looking at offerings from one of the large banks, like Citi or Chase. The biggest reason here is that you want a bank that has a strong standard of accurate credit reporting, which sometimes doesn’t happen at smaller banks.

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.

An old friend of mine sent me some pictures of her refinished living room. In it, I noticed a few interesting items – an obviously expensive leather couch and a elegantly weathered old Victrola.

Curiosity got the best of me and I wrote her back asking about those two items. Where did she pick them up? I fully expected to hear that the couch had come from some ludicrously high-end furniture store and that the Victrola had come from an antique shop.

Nope. She found them both on the curb, about to be thrown out.

With the leather couch, a family was about to move to another country and was getting rid of things. She noticed the moving people placing the couch along the curb, along with a myriad of other items of lesser quality.

The couch, it turns out, has a large scratch on the back of it, but in the position it held in her living room, the scratch was unnoticeable. She asked the movers if she could claim the couch and they said it was fine with them, but to check with the homeowner, who also approved of it. So she returned an hour later with a friend’s truck, loaded it up, and brought it home.

The Victrola was simply sitting on another curb next to a trash can. She simply stopped, looked it over, and placed it in her trunk, happy as can be.

I would have happily put either item in my own house had I spotted them.

On a lark, I decided to drive to the most affluent neighborhood I knew of within a fifty mile radius of my home, just to observe for myself what items find their way to the curb. I didn’t collect anything, I just merely wanted to observe.

I saw two lamps I would happily use at home, even if their wiring were messed up (that’s fixable, after all).
I saw a beautiful desk that I was almost tempted to claim for my office.
I saw a wonderful rocking chair made from beautiful old wood that appeared to have been scratched a bit by a dog or a cat, but nothing that a bit of sanding and care couldn’t neaten up.
I saw what appeared to be a pile of new, very plush green towels in a box (I’m guessing they didn’t match the bathroom?).

This was what I observed in a fifteen minute drive.

Now, I don’t begrudge people for upgrading their stuff. If you really enjoy having perfect bathrooms and find a great deal of value in redecorating regularly, go for it. It’s not something I value, but what I value and what you value don’t have to be the same thing.

What’s troubling is that perfectly good stuff – stuff I’d happily use in my own home – is just getting thrown away.

There are a lot of things that can be done with such items that don’t involve throwing them away. Here are several options to follow if you have anything that might be of genuine use to someone else. These options keep stuff out of landfills and add additional value to your life.

Take it to Goodwill. All of the items I saw (save the lamps, if they didn’t work) would have been welcomed at a Goodwill store. The lamps might have been too if they had a handy person on staff there. Not only that, you can get a receipt for the items you donate, which helps with your tax bill.

Offer it to your friends for free. There are fewer ways to build a relationship with someone you care about that work better than giving a friend something really useful to them. I would have been thrilled had a friend given me any of the items mentioned in this article. It would have definitely cemented our bond a bit.

Offer it on Craigslist or Freecycle. If you don’t want to worry about the hassle of moving the stuff, just announce that you’re giving this item away on Craigslist or Freecycle. Attach a digital picture and give it to the first person who responds. They’ll come and get it for you.

Donate it to a group or a nonprofit that could use it. In a nearby community, there’s a house that’s something of an “open house” for the teenagers in the town. They’re allowed to freely use it without supervision provided that a few very simple rules are followed. The house has been entirely outfitted with donated items – chairs, couches, flatware, and so on. It’s been a wonderful boon to the community. Beyond something like that, many nonprofits in your town would be thrilled to receive good furniture and other items they could utilize.

Throwing something out should be the last resort. If you have something that could be of use to anyone else, pass it on. By passing it on, you get some value in return as well – better friendships, a better community, and maybe even a tax benefit.

I’m always fascinated by ideas that are attempted way before their time. My favorite one recently has to do with grocery stores.

In the 1930s (!), there was an attempt at opening a chain of fully automated grocery stores (called Keedoozle). In a Keedoozle, all of your dry goods were displayed in glass cases in the store and you could examine them by flipping a switch to rotate them. If you wanted the item, you merely put a paper “key” into the slot in the case, hit a button, and a special hole was punched into your key. When you were ready to check out, you took your “key” (which had punched holes for several different items) to the cashier, who ran it through another machine, which caused the items you want to come rolling down a conveyor belt to you and your total to be quickly calculuated.

In the 1930s.

Unsurprisingly, there were some significant technical issues with this, but beyond that, customers just weren’t ready or willing to do this at the time. It was just a step too far and the chain failed in the 1940s.

The funny thing is that we’re just now moving in this direction, with self-checkouts and other “new” ideas at grocery stores. Honestly, if it meant lower prices, I’d love it if a grocery store did things this way.

How To Find Your Passion Passion is a very beautiful and powerful thing. Without it, it’s almost impossible to really succeed to your potential in life. (@ dumb little man)

How Long Can You Stay in Your Home After You Stop Paying the Mortgage? I’ve actually witnessed this exact phenomenon. I know of at least one person who hasn’t made a mortgage payment in eighteen months without a peep from his bank. I’m guessing they decided the cost of dealing with it was more than the value of the mortgage? (@ wisebread)

Calculate How Much Your Debt Costs You Per Month I think the costs go beyond dollars and cents. One big cost of my own debt was quite a few sleepless nights in 2005 and 2006. (@ get rich slowly)

How to Set Financial Goals – 3 Financial Goals Worksheets Sometimes, a tool like this can make it a lot easier to sit down, figure out your goals, and get them down on paper. (@ squawkfox)

Extreme Couponing: Do Some People Go Too Far? I think anything can become psychologically addictive, especially if it becomes a competition at which you can keep some kind of score. Couponing definitely falls into that. (@ rainy day saver)

31 Days to a Better Grocery Budget The early entries in this series are quite good. (@ money saving mom)