One of the most common themes I see in questions I receive from readers is an uncomfortable sense of what financial roles are in a relationship. A person lives with someone/is engaged to someone/is married to someone and is unsure about how to handle their partner’s debt/spending/shared purchases. That sentence covers the core of a lot of the questions in the reader mailbag.

There are a few key elements that seem to often come up in my responses to these questions as well, and those elements really form a strong foundation of how people in relationships should think about and handle their money.

It really boils down to four key principles that really flow together.

Talking about money in a relationship is absolutely essential. When you’re in a relationship intense enough that you’re sharing many of the costs of life, you have to be able to communicate clearly about those costs, as well as the income you both have with which to cover them and the plans you each have for the future.

Why?

The debts and expenses of your partner are also your debts and expenses. If you owe a debt and have to make a monthly debt payment, that takes money out of the shared pool that you both have with which to cover your monthly expenses. If you spend money somewhere, that money is removed from the overall pool that you have to cover your monthly bills.

Let’s say you’re out and about on the town. You tell yourself that your partner is going to be able to cover the rent this month, so you convince yourself it’s okay to spend some money. Because you spent that money, you’ve eliminated your ability to help pay the rent.

Now, what happens if your partner isn’t able to pay the rent? You’re suddenly in a serious pickle, one that’s caused not only by a communication failure, but by the reality that your spending, bills, and debts affect your partner’s spending, bills, and debts.

Whether you like it or not, if you’re in a relationship, your finances are shared, whether in actual practice or not. Your actions affect your partner and vice versa.

The third principle is something of an extension of this one.

Hiding debts and expenses from your partner affects them in many ways and is deeply dishonest and damaging to your relationship. Since your spending alters how your partner is able to spend money, hiding a debt or an expense from your partner is essentially the same thing as taking money out of their pocket without telling them why.

It undermines financial stability. It undermines the trust in your relationship. It ensures that your partner is unfairly being asked to shoulder an additional burden without even knowing why.

Usually, the root cause of this is a communication breakdown. You’re afraid to tell your partner because you’re afraid of the retribution you envision in whatever form that may take. You can’t bring yourself to admit a mistake to your partner because that shows weakness.

All of this culminates with a simple statement about the stability of one’s relationship.

If you can’t talk about money with each other, then your relationship is on tenuous ground.

A relationship is about mutual support. If you can’t talk about your financial situation because it shows weakness, then you’re not mutually supportive. You’re antagonistic and combative. If you can’t talk about your financial situation because you fear retribution, then your relationship is at best combative and at worst abusive.

If you can’t communicate through your mistakes and honestly evaluate your full financial situation together on a regular basis, your entire relationship is on tenuous ground. You need to take a serious look about whether this relationship is something you should be continuing, because there are some deep trust issues (and other problems) running right through the relationship you’ve built.

The solution to all of this is simple, and it’s right there in the first principle. Communicate. Talk about everything with your partner. Admit your failings, and don’t brow-beat your partner over his or her failings. You’re both human beings. You’re both going to make mistakes. The entire purpose of a relationship is to be there for each other through both the high points and the mistakes. Otherwise, there’s no point in having a long-term relationship.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Am I oversaving for retirement?
2. Same-sex marriage and taxes
3. Pricing of e-books
4. Handling a complex debt snowball
5. The very first step
6. Next steps for young programmer
7. Sharing costs of electronics
8. Calculating cost of bread
9. When should I begin investing?
10. Unexpected retirement funds

Over the last year, my children have absolutely fallen in love with Vincent van Gogh and impressionist and post-impressionist art. Sometime in the next week, they’re going to go to an art museum with a huge impressionist and post-impressionist exhibit.

Of all of the things we’re going to do this summer, a trip to an art museum is easily in the top five for both my five year old son and my three year old daughter. (And, yes, they know what an art musem is and, yes, they know they should be relatively quiet and sedate while there.)

My son says, “I want to get up close and see the brush strokes.” Me, too.

Q1: Am I oversaving for retirement?
I’m 31 years old and have worked in IT at a mid-western university for the last 10 years. I now make $52k/year. My university puts 14% of my income into a retirement fund with no matching required. Many years ago, I started my own Roth IRA and at this point I put aside another $333 into this Roth IRA.

But here’s the catch. I feel like I’m not saving for other things that might be necessary like home improvement projects and emergencies (I do have another $6k as an emergency fund).

I’m mostly looking for some sort of affirmation that maybe I’m putting too much into retirement.
- Aaron

If you’ve been putting 14% of your income away for retirement since you were 21, you’re almost assuredly in very good shape today. By my back of the envelope math, you should have somewhere near twice your annual salary in that account (depending on a lot of factors). That’s a very good amount to have at age 31.

At this point, if you feel your retirement savings is keeping you from other goals, you’re probably okay cutting back on the Roth contributions. Your 14% in your retirement plan is a very good amount for retirement and will leave you in very good shape if you stay in your position for thirty years.

Before you switch, though, I’d make sure that you know why you’re switching. What are your goals with the money if you make a change in your savings? If you can’t identify a clearly stated purpose, leaving the contributions in the Roth is just fine.

Q2: Same-sex marriage and taxes
My partner and I now have the opportunity to marry in the state of New York, but we are confused as to how this will impact things like filing taxes. I know that other states have allowed same-sex marriage before this, but it seems difficult to find firm answers for how this will work. Since Iowa has granted same-sex marriages for the last two years, I wonder if you can speak to it at all?

For example – one particular hurdle that comes to mind is what filing status do we even use on the Federal return? Can we even say that we are married? Or do we file as two single people?

Any information you can point me (and I’m sure the many other similar couples that read your blog) towards would be greatly appreciated.

Thank you so much for all of the help you give to so many people. I was always pretty good with money, but mine and my partner’s lives (we’ve been together for over 6 years and celebrated a wedding, though not legal, one year ago) have benefited greatly from so much of what you have written and shared freely.
- Sarah

First of all, responses about the morality or legality or constitutionality of Sarah’s marriage are not welcome here, whether in favor of it or opposed to it. She’s asking a relevant question about taxes, nothing more, nothing less, and this should not turn into a battle over the morality or legality or constitutionality of same-sex marriage. If you wish to engage in that battle, try this site or something similar.

In Iowa, and the same certainly should apply to New York, same sex couples may file their state income taxes as “married filing jointly” or “married filing separately.” However, federal law does not recognize the marriage (for now), so you will have to file federal taxes as “single.”

The Iowa Department of Revenue has special calculating rules for people who are filing “single” federal returns along with state “married” returns, as our state income taxes are directly based on data entered on the federal income taxes. The calculations are pretty straightforward and will likely be handled in common tax filing programs such as TurboTax.

Q3: Pricing of e-books
i’m in the process of writing an e-book. been reading John Locke’s book on self-publishing ebooks. He says that he only charges $.99 for his ebooks and that this strategy has helped him outsell many more well-known authors.

Just curious as to your strategy of charging only $2 for your ebook on blogging (which i bought and found very helpful by the way). Was there a specific reason you priced it so low? Also, if you are comfy sharing it, how many copies have you sold at this price?
- Mark

I originally priced it low for the same reason that Locke did: if you price it low, you’ll get a lot of buyers because the book is a bargain. Plus, there’s the added factor that the content in those e-books is already available on my website (but spread across a large pile of posts). The e-book is just a convenient way of packaging those posts all into one place.

I sell an average of about six a day. It tends to sell more on weekdays, with a peak often coming on Tuesdays.

It’s not a big revenue stream. The six e-books add up to $12 total each day, but when you subtract out the PayPal transaction fees, the occasional people who try to play games by revoking their payment, and the cost of the e-commerce setup, my daily gains on it are quite low. I usually roll that money straight into upkeep costs on The Simple Dollar.

Q4: Handling a complex debt snowball
I’m wondering if we should start contributing to my husband’s 401K through work or wait. The past few years have been very tough financially; one blow after another. Most recently he was injured and was out of work for almost 6 months. Thankfully, he is back now and even got a raise. We expect to net about $75 extra per week due to the raise. We intended to pay down credit cards before beginning a retirement plan (at least the high interest ones), but now with the raise, I’m not so sure. His company will match half up to 3%. So if he contributes 6%, they will contribute 3%. How do we balance debt vs. free money in retirement.

I am a teacher so I have an automatic pension. We both plan to work as long as possible (he does not like to be idle) and we have not made retirement a priority. We have $30,000 in IRAs at our credit union (low interest rates but no fees).

Credit card debt is as follows:
Home Depot – $772 – 0% but goes to 25% in Dec.
Sears – 417 – 25%
Chase – 10,443 – 8.9% fixed (account bought from countrywide and closed)
Lowes – 4,040 – 4.9% fixed and closed to preserve low rate
Penneys – 3,081 – 6.9% fixed and closed to preserve low rate
Capital one – 5049 – 0% until next May, then 18 %
Credit Union – 4840 – 7.9% variable, but always good rate
Chase (TRU) – 503 – 19%

I usually use a hybrid snowball plan, meaning I focus on the highest rates first, unless there’s a low rate with a really small balance I can just pay off. I’m just unsure how to use the extra $75 each week; all on debt repayment, or part to retirement, and if so, how much?
- Emily

The only time I would ever suggest that someone forego matching money in their retirement plan is if they’re on the verge of bankruptcy. If you say no to it, you’re saying no to free money.

Another way to think of it is this: when he deposits that 6% into his retirement savings, he immediately gets a 50% return on that money. That 6% turns into 9%. That $100 turns immediately into $150.

Unless you are absolutely desperate, don’t turn down that free money.

Now, as for your debt snowball, I would always order debt by what they’re going to be. Ignore the “teaser” rates that are low for the moment, because if you ignore them, they’ll rebound on you and you’ll essentially be charged painful interest on the high balance that you didn’t touch earlier.

Q5: The very first step
Prior to 2002, I had a good job, earned about $48,000 year and was happy. In 2002 I was diagnosed with breast cancer, which changed my life drastically. I no longer liked my life, quit my job and went to massage therapy school and now I am finally back to a normal life as life can be normal. During my cancer treatment, I made some horrible financial decisions and it is going to take me a long time to dig myself out but I am confident I can do it, just need some guidance. I now have a steady income plus extra income coming in, so I want to see if there is a book and a good budget form to use to help get me started. I currently work full time for a hospital and make about $1,200.00 per month, plus my massage income and I just published a book on amazon.com. I have already noticed that as the money for the book comes in I have been paying bills but not really seeing any income for me to save. I have sold 250 copies but feel the money is going out as quick as it is coming in. I am a single mother and my son is going off to college this fall, but thankfully his college is covered by financial aid this year.

I have decided this week is the week that I really understand my finances so I am taking each bill as I open it and looking but it gets frustrating. If you know of computer program that I could download or a form I can copy off that will help me get started I would appreciate any assistance. I do have microsoft excel to design a spread sheet but don’t know what to put on it.
- Kelly

I’m not sure you’ve exactly figured out what you’re looking for in a computer program. A computer program usually solves a specific problem that you have, but I’m not sure you’ve really sat down and pieced out what that problem is yet.

The first step I would take in your case is to simply start jotting down every purchase I make of any size in a pocket notebook. If you put a quarter in a parking meter, jot it down. If you spend $2 at a coffee shop, jot it down. If you spend $50 at the arcade playing Pac-Man, jot it down.

At the end of the month, go through all of the things you have written down and figure out which ones were useful and which ones were not, then strive to cut out the activities in your life that led to the ones that didn’t bring you much value in life.

That seems to be what you’re going for here, and a pocket notebook solves that problem better than a computer program because of the portability and flexibility.

Q6: Next steps for young programmer
I am 24, I have a full-time job as a programmer. But my salary is low for this type of position, about $2800/month before taxes. I rent a studio with my husband, we don’t have join budget, but we pay a half for rent (about $400 each). I don’t have any student loans, I got my bachelor’s degree outside of the US, I bought a used car for cash and don’t have any other debts. I am trying to buy just necessities, don’t go out very often, try to save as much as I can. I have a good credit, about 720 and about $7000 in savings.

I am a little bit confused what I should do further. I am able to save about $700 each month, but I don’t have any investments, IRA accounts, etc. My question is.. what is your opinion by looking at my situation would be a smart way to manage my money. Should I open an IRA account and start saving for my retirement, or.. just saving to get a mortgage in the future, or maybe I should go back to school to get a degree in the US? I am afraid of having debts and loans, and would like it to be smooth. I am also trying to do some side-programming, to increase my income, but it doesn’t go pretty well yet. At the same time I want to have a kid eventually and I have a goal to earn at least $6K by that time when I will ready to have it.

Is there anything you an advice in my situation? Right now my money is just sitting there without bringing me any profit. But also I read that we should always have an emergency-money just in case.
- Nina

$7,000 amounts to an emergency fund of roughly four months of living expenses (based on what you’re describing), which is appropriate. If you feel it’s a bit on the large side, though, it’s fine to cut your emergency fund down to two months (or so) of living expenses and invest the rest. It’s hard to tell exactly how much that is from your email – you’ll have to run the numbers yourself.

So, what do you do with the excess? The first thing is always to set a goal with it. If you don’t have a goal when investing your money, you’ve got an incredibly good chance of incorrectly estimating your risk. The longer term your goal is, the more risk you can tolerate right now.

If you overestimate your risk (meaning you need the money earlier than you expected), for example, you would put your money into something with too much risk and you’re likely to find that investment with a loss when you actually need it. If you underestimate your risk (meaning you don’t need the money as soon as you expect), you’ll be where you’re at now.

Figure out what your goals are, how long the term is with those goals, and how much risk you can tolerate with those goals. This will lead you right to the appropriate investment.

Q7: Sharing costs of electronics
My boyfriend and I started living together a year ago. We don’t have plans to get married at this point. Other than groceries, all items in our condo are “owned” by one person or the other. Because my boyfriend owns the mortgage, he generally pays for any home repairs or upgrades.

However, we recently decided to mount both of our flat screen TVs, one of which is his and the other is mine. Because it is my TV that is being mounted, and the cost of doing this is pretty high, I volunteered to pay for my portion of the cost of mounting (the mount itself, labor, additional parts, etc.). We decided that if anything is to happen to us, that my boyfriend will pay me back for these costs and purchase my TV from me.

Do you have any suggestions for how we put this to paper? Will he owe me the exact amount I paid for the mounting + an agreed upon price for the TV? Or should the cost of the TV degrade over time? Does this need to be a legally binding document or will a simple agreement signed by the both of us work? Any other suggestions?
- Anna

The concern here isn’t just the television. How much of your arrangement is actually on paper? If your answer is none, your arrangement is a much bigger problem than just your television.

If you feel you need legal documents to ensure the future of this television, then you should ask a lawyer to help you draft an agreement that clarifies your entire property arrangement, because there are clearly some property ownership issues going on here.

Don’t just solve the television problem. Solve the problem in a broader way.

Q8: Calculating cost of bread
I’m trying to calculate the cost of making my own bread vs. store-bought. I’m having to make bread every 3rd day and it takes right at 3 hrs. 40 min. to bake from start to finish.

I have the cost of the bread flour figured out and the cost of the yeast. The salt, sugar and oil are negligible, so I’m not counting them, but the only other high cost would be the electricity used in my bread machine.

Which also brings to mind another question — which is cheaper, bread machine vs. manual bread making? With my machine, I can make one, 2.5 lb. loaf of bread. Making it by hand, I can make 2 to 3 loaves (2 loaves plus some rolls).

Am I getting too critical about the cost of this?

I thought you mentioned that you made your own bread. Do you still do that? Do you make it by hand or with a bread machine? If by machine, do you have a favorite recipe that you follow?
- Carol

I think you’re worrying about it too much. My experience has been that making my own bread is less expensive than buying it, but not inexpensive enough to make it worth the time investment.

If you want to calculate the energy use of your bread machine, the easiest way to do that is to look in the instruction manual for wattage use. If you no longer have the instruction manual, search on Google. What you’ll want to do is convert it to kilowatts (if the unit given is in watts, divide it by 1,000), multiply that kilowattage use by 3.7 (the hours you’re using it), then multiply that by about $0.11 (the cost per kilowatt hour).

For me, though, it’s really all about the enjoyment of making homemade bread. The process is fun for me, so the fact that it saves a bit of money is just icing on the cake.

Q9: When should I begin investing?
My question for you is at what point would you recommend that someone begin investing? By investing I mean stocks, bonds, mutual funds, etc… My current financial picture is this: I have $13,000 in a Roth IRA, which I contribute $50 to every month. I have an ING emergency fund of $4,000, which I contribute $75 to every month. I don’t have any other savings account. I am 26 years old, single, and will be finishing graduate school next year, after which I can expect to earn around $40,000 in my first post-grad school job (in education). I do have student loan debt: $17,000 at 4.2% IR from undergrad (in deferment) and will have about $36,000 at 6.8-7% IR from grad school. The recommendations I have heard regarding investing in stocks/bonds/mutual funds is that you should have eliminated all of your high-interest debt before you do invest. However, if I wait until this happens, it will likely be ten years before I can invest. My long-term goals are pretty simple – be debt free, get married, own a home, be able to contribute a little to my future children’s education, and have enough to retire in my 60s and spend my time volunteering, spending time with family, and traveling. Based on my financial picture, do you have any recommendations on what I could be doing to put myself in a better position as I move towards my goals, and would this include investing in the next 5-10 years?

I currently work part-time while in graduate school and bring home about $1000/month. This goes right to rent, groceries, and the contributions to the emergency fund and Roth IRA. I will also one day inherit approximately 140 acres of land, which could potentially be a great financial asset, but this will be upon the death of my parents and hopefully that is still 20-30 years down the road.
- Katie

The word “investing” is a tricky one. Most people associate it with the things that you mention, but that’s just one part of it. Money sitting in a savings account is invested – it’s about as safe as can be and is incredibly liquid, but earns only a small return. You can look at almost any financial investment from the same light. Beyond that, there are investments in things like bulk food (which saves you money by exploiting the marketplace on things that you consume) or in things like education (which earns you more money over the long run).

Debt repayment is certainly a form of investment. If you make an extra debt payment, it’s the same as making a very secure investment that returns an amount equal to your interest rate on your loan for as long as you hold the loan, but one that isn’t liquid at all. If you owe $40,000 and you make a $1,000 early payment, you now only owe $39,000. 10% interest on a $40,000 debt is $4,000 per year, while on $39,000, it’s only $3,900 per year. That $1,000 investment reduces your interest by $100 for each remaining year of the loan – a 10% return on your money. That’s a very good investment that you’ll never consistently beat in the stock market.

Aside from an emergency fund and a bit of retirement savings, your focus right now should be on wiping out those debts. Every extra payment you make on those debts is one of the best investments of your money you could possibly make.

Q10: Unexpected retirement funds
I was working outside the US for three years. The laws of that country dictated that I contribute 4% of my salary to a pension, and my company contributed 8%. I had assumed that these were pre-tax contributions and I would be able to roll over this sum to my existing 401k. I have just moved back to the US, and right before I left I found out that my pension was post-tax rather than pre-tax, and as such, was paid out to me directly.

So I have a chunk of money that was intended for retirement, and I’m really confused about what to do with it. I have no credit card or non-mortgage debt and an emergency fund of six months expenses, so I don’t need it for those things. I am not eligible for a Roth, and there are limits to how much one can contribute to a regular IRA per year. I have always liked the essential nature of a 401k in that it is untouchable. I need to find an investment option that makes the money less easy to access, isn’t as risky as stocks but has better yields than bonds. Any advice on options to consider?

I know this is a good problem to have, I’m not complaining. I’m just confused.
- Kevin

The better the returns you get, the more risk you take on. If you’re looking for something with the security of bonds, you’re going to have to accept the returns that bonds give you.

If you’re looking for a stable stock investment, your best bet is probably in a large company that has a very long history of paying dividends – or, even better, an index fund of nothing but a set of those companies. The Vanguard Dividend Appreciation Fund is a great example of this.

If I were in your shoes, though, I would probably put this money into a savings account, then max out my IRA contributions with that money for the next few years. This effectively locks it away for retirement, which is how you invested it in the first place.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Mark sent me an email regarding my recent article, Some Thoughts on the Long Term, in which he asked the following question:

I still don’t see any compelling reason to worry about my future more than about five years down the road. I can think about where I’d like to be in ten years, but life shifts so rapidly that no matter what I think of it won’t happen. Why should I even think for a second about anything beyond five years or so?

It’s a good question and Mark does make a good point. I think there are a few pieces, though, that he’s missing.

Unless you unexpectedly die at an unnaturally young age, you will grow old. It doesn’t matter where your path leads you. Eventually, you will grow old. Eventually, you won’t be able to keep up with the levels of productivity that you have right now. Eventually, you will be less employable.

Retirement is a long-term savings goal that makes a lot of sense to participate in for those reasons. It’s preparation for a situation that you know will happen down the road. Unlike many long-term goals, aging will happen and it’s worth your while to be prepared for it.

Most other worthwhile long term goals are centered around the accumulation of flexible skills and resources. Many people set goals in the five to ten year range in many areas: career advancement, business building, personal growth, a house down payment, and so on.

The vast majority of these goals have results that are incredibly flexible.

For example, if you’re saving for a down payment and your life path changes so that home ownership is no longer a goal you’re interested in, you still have a significant amount of financial resources saved up that you can apply toward whatever direction your life is now headed.

Another example: if you’ve set a long-term goal of heading the IT department at your company and you spend years building an appropriate resume and skill set, only to see your company fold up, you’ve still got a great resume and skill set to shop elsewhere and help your career.

I can go on and on with such examples. The core principle holds throughout all of them: a great long-term goal usually creates resources and skills that are still valuable even if the goal changes.

Many people are motivated by having goals of all terms. I find a big, ambitious long term goal to be really exciting and invigorating. The vision of doing something that leaves a major mark in my life and the lives of others keeps me wanting to move forward on that goal.

Short term goals motivate me as well, but in a different way. They often feel very reachable, as though it’s almost inevitable that I get there.

I can describe the difference as if you were a person standing on a hilltop in Seattle. There’s a street sign nearby and you could reach it quite quickly. It’s easy to see yourself walking half a block to get there.

On the other hand, you can see Mount Rainier off in the distance, about fifty miles away. Reaching it on foot is a long journey, but the idea of going there often seems exciting (particularly if you’re new to Seattle).

Long term goals are like Mount Rainier. They feel almost impossibly far away, but they look enormous and inviting in the distance. The idea of journeying there excites you and you can’t wait to get going.

I’ve been bicycling a lot this summer after previously not bicycling much at all for several years. I’ve learned three simple things that really make bicycling enjoyable for me rather than the punishing exercise I imagined it to be.

Go slow. It’s not a race. You don’t have to fly along the road or bike trail you’re on. Build up a little speed, then coast for a while and enjoy the environment. Sure, if you feel up to it, go faster.

Keep your tires highly inflated. Before you go, every single time, make sure your tires are inflated well into the range noted on your tire’s side wall. I usually try to push the upper end of that range. This makes a huge difference when riding.

Avoid steep hills until you’re in great shape. Going up long steep hills is miserable for a lot of people on bicycles. Don’t start your bicycling journey by climbing a small mountain or you’ll grow to hate it.

I absolutely love pedaling around my neighborhood, rolling over to the post office, or going to the town grocery on my bike.

The best goal is no goal That’s not entirely true, because if you have no goals at all, you have no reason to ever work toward anything. Instead, work towards flexible positions so that you can do whatever you want to when you get there. Don’t work toward a goal that inherently boxes you in. (@ zen habits)

Everything Else Is Icing Whenever I get nervous about something, I think about my children and my wife. I have a great relationship with them. Everything else in my life is really just icing on the cake. (@ jonathan fields)

Paid to Eat Pancakes: The Truth About Passions Making money from your passion requires both a legitimate, deep passion and someone willing to pay you for that passion. I think the former is more important than the latter. (@ nerd gap)

31 Life Lessons in 31 Years This is simply a great list of little life lessons well worth reading and reflecting on. (@ think simple now)

Are Your Finances Fragile? I tend to believe that most people have more fragile finances than they think they do. (@ wise bread)

The Value of Following Passion in a Jobless World This is a great article about how a down economy is a great time to chase something you’ve always wanted to do so that you’re set up with a unique resume and set of skills and experiences when the economy rebounds. (@ the atlantic)

What will I do with my life? How will I leave my mark on the world?

These questions have been a constant part of my life since I was very young – and it’s still a guiding question in my life. Now that I’m a parent to three children and a mentor to other adults, I can see clearly how the same thoughts float through the heads of others.

What will I do with my life? How will I leave my mark on the world?

Let’s look at those questions through the stories of three people and see where they lead.

Her Dream
Right now, I’m serving as something of an informal mentor to a 19 year old young woman who is incredibly passionate about photography. She’s one of those types who can spend hours examining lenses and she’s beginning to develop an innate sense of lighting, framing, and lens selection.

She rarely spends even a few hours of freedom without getting out her camera and taking pictures of whatever she finds, putting her composition skills to work. The past few times I’ve seen her with her camera out, I’ve just enjoyed watching her work with the same enjoyment I take watching anyone performing something they love with skill.

Here’s the challenging part: while photography is something she deeply enjoys, she’s unsure whether or not it’s something she actually wants to make a career out of.

Instead, her path to her dream is through a side business, one where she’s not reliant on it for income and can scale it back when she wishes. Right now, she’s building a client list and has taken on a healthy number of professional jobs, and is slowly expanding operations into marketing and promotion.

However, her major in college is business-oriented. She’s not majoring in anything directly related to photography at all. Instead, her studies will make it possible for her to find a role in a corporate structure while also building a small business around her photography passion.

She’s using her career to support her talent and passion.

His Dream
Another young man, aged eighteen years, is about to start college. He’s passionate about music. He has some dreams of being able to play music professionally for a living, with his backup plan revolving around teaching music.

His path to his dream is taking advantage of everything his college has to offer. His intent is to bury himself in his music while in school, not only maximizing his skill, but trying to gain exposure.

His coursework will be fairly easy and not highly time consuming as he is focusing on education classes and a fairly low credit load. His spare time will be used to improve his skills and to build connections and a following by meeting other musicians, sharing his music online, and being involved in the music community on campus.

He’s using his collegiate years to open every possible door.

My Dream
All throughout my early life, I dreamed of writing for a living. I have always felt most at peace when communicating through the written word, whether reading it or writing it.

When I attended college, however, I didn’t believe that such a path held a real future for me, so I studied the sciences and got a high-paying job out of college.

Even after that, however, I spent my spare time reading and writing until I eventually found some success with my writing after years of failure. When that foundation was strong enough, I made the leap into the long-term career I had always dreamed of.

I used my first career to lay a foundation for a second career utilizing my talents and passion.

What Does This All Mean For You?
The biggest lesson is that there are many, many paths to making your career dreams a reality. You don’t have to start off in that career path or plan your entire life around it.

However, there are a few central elements all of these stories have in common.

All three of these people dream of doing something they enjoy with a significant amount of their time. One person loves photography. Another loves music. Another loves writing. I have friends who love everything from packing meat to programming computers. Find whatever productive thing there is that just feels right to you and that you love doing as much as possible and do it. Don’t worry about the long term plan.

All three of these people have spent a lot of time “woodshedding.” By woodshedding, I mean that they’ve engaged in this activity they love for a long time without any profit. The young woman has taken tens of thousands of photographs without a dime of compensation. The young man has practiced his music for thousands of hours, again without compensation. I’ve written far more words without compensation than I’ve ever written for compensation.

We do these things because we’re passionate about it. We love doing them so much that we’ll spend our time doing them anyway just because we enjoy it so much. When you find something that you’ll do for years and years without any compensation at all, you’re probably onto something that may earn you a great deal of compensation – or at least a career ticket – later on.

All three of these people share what they make. The young woman I mentioned is perhaps the newest to this, but she’s now sharing photographs by the bucketload online. The young man has a healthy pile of his music out there on YouTube and on other websites. You’re reading The Simple Dollar, which is my writing shared quite freely.

All three of these people are on different life trajectories. One is likely to become a music teacher. Another person is heading straight for middle management. Yet another is self-employed and deeply involved in parenting. It doesn’t matter what your path is – you can find room for what you want to be doing.

These traits seem to be common among anyone who has a dream and a passion. They’re passionate about something, so passionate in fact that they’ll do it for free. They share what they make with the people around them. They’re doing this no matter what path their life seems to be following.

What’s holding you back from doing the same?

Recently, someone I care about named me as an executor on their will. This is something of a new experience for me, so I naturally spent some time reading up on what’s required of an executor in that state as well as trying to understand what exactly they wanted to happen with their assets (which aren’t tremendous).

What does an executor do? What typically happens is that, when you’re named as an executor on a will, you’re put in charge of handling the business of the estate when that person dies. The will is submitted in probate court, the judge checks who the executor is, and then the judge signs an Executor Letter of Appointment which allows the executor to execute any and all business that needs to be done by the estate. This is usually quick and is done pretty quickly after the passing of the person involved.

An executor’s job is threefold: you have to secure the assets of the deceased (mostly, just make sure you know where the valuable items are and that they’re secure), determine who the legal heirs are, and pay any outstanding debts of the deceased. The second part of that – determining who the legal heirs are and what they’re entitled to – is the part that can be tricky, and it’s the part for which you may want to have a lawyer of your own.

There’s also the matter of an executor’s fee, which is an amount that’s paid to the executor out of the estate for the work they’re doing. This amount is usually set by the judge and is heavily guided by statute (usually ending up somewhere near 3% of the estate). The executor can waive this if they wish.

This left me with a few concerns.

First, it’s good for both the person and their executor to have a clearly-stated will. This is why it’s often good to have a lawyer involved in the writing of the will. You want as little ambiguity as possible, because greedy people will root out that ambiguity and possibly pursue legal action to manipulate that ambiguity to their favor. One method is to explicitly name people in the will. Another method is to proportionately share the estate among a certain closed set of people, such as your children.

Second, the person and the executor need to trust each other and the person knows that the executor is reliable. An executor who really does not have the best interests of the deceased in mind often has at least some power to manipulate the estate.

I am quite sure the person who wished me to be executor trusts me – in fact, that’s the primary reason this person chose me to be executor, according to their own words.

It’s the flip side of this coin that is on my mind. Who will I choose as my executor? Obviously, my wife handles it in a situation where just one of us passes, but our will is a joint one. Who should be that executor?

It must be someone I trust and someone that I can rely on. I’ve been working on such a list for a while and weeding people off of it for various reasons. (We do have a “temporary” executor in place, but we’d like to eventually have someone else for age-related reasons.)

For me, such decisions aren’t easy ones. If Sarah and I were to pass on at the same time, I’d want someone to handle our estate with the best interests of our children in mind.

Why does this concern me so much? I’ve witnessed disastrous situations resulting from unclear wills and greedy executors and heirs, both from readers and in my own life. A very clear will and a strong executor can go a long way toward heading off such issues. Again, a big reason why I care so much about this is because I have young children who will rely to some degree on what’s stated in that document and how the executor behaves.

It’s one of those decisions that I must get right.

Quite often, when I write answers to reader mailbag questions, I encourage people to keep pushing hard against their debts no matter the interest rate. Almost everyone agrees that it makes sense to rapidly pay off the 15% debts, but I’ll often get a lot of disagreement about the 3% debts. People will often ask why they should hurry to pay off a 3% debt. After all, they can get a better return in other investments.

The reason is simple. It’s all about the cash flow.

Let’s start off with the basics and explain what cash flow is. Cash flow refers to the amount of income you take in minus the required bills you have to pay. Ideally, you have money left over at the end of this process, and the more cash you have left over, the better. That cash can be saved for the future, invested, or applied to extra debt payments.

Let’s say, for example, that you’re bringing home $3,500 a month. You have a $1,000 mortgage at 6.75%, a $500 student loan payment at 3%, and another $1,000 in required bills (electricity, food, fuel, etc.). At this point, you must have $2,500 in monthly income to pay for your minimum required bills. At the end of the month, with a $3,500 income, you’re left with $1,000 to do with what you please.

Now, let’s look at your situation if the mortgage is paid off. You still has a $500 student loan payment and another $1,000 in required bills. You must have $1,500 in monthly income to pay for your minimum required bills. At the end of the month, with a $3,500 income, you’re left with $2,000 to do with what you please.

Because your mortgage is paid off, your monthly cash flow is far better than before. This helps you in countless ways.

Let’s say you lose your job and can only find one that gives you a 40% pay cut. At this point, you’re bringing home only $2,300 a month. In the first scenario, you have $2,500 in required bills. You’re going to have to make some major scary cuts in your life in order to make ends meet. In the second scenario, you have only $1,500 in required bills. You’ll be just fine and still have a surplus.

There are countless other examples of life changes, planned or otherwise, that can significantly alter your income. The greater the amount of required bills each month, the more difficult it is to swallow those life changes.

This is why it’s nearly always useful to improve your cash flow. Improving your cash flow improves your life options. It makes job transitions far less painful, for one. When you’re fired or “downsized,” you can take a lower paying job without pain. On the other hand, you also have a lot more flexibility with your career choices as you’re able to take a lower-paying but more career-building job. In fact, this is exactly what I did: I paid off a lot of debts, which reduced my monthly required payments and made it easier for me to live on less income, which enabled me to switch to writing The Simple Dollar full time because my cash flow was in much better shape.

The worse your cash flow situation is, the more you’re tied to your current job. It gives your boss more power and you less power because the threat of losing your job is devastating. Your job becomes more stressful by default because the always-present threat of losing that job – and the pain it would cause – is always hanging over your head. Your career options are limited, too, because you can’t deal with a reduction in pay.

In short, pinching your cash flow pinches your options.

Debt pinches your cash flow, of course. For example, getting a car loan pinches your cash flow because you’re now responsible for those payments. On the other hand, living without a car loan for a while and saving up for your next car is a much better cash flow option, as it allows you to simply pay cash for the next car, keeping your cash flow as wide as possible.

Overspending pinches your cash flow, too. If you needlessly spend a lot of money, you’ve pinched your cash flow for that month. You take money away from your savings. Thus, at a later point when you need that cash for a purchase, you’re forced to rely on debt, which forcibly pinches your cash flow.

It’s because of these things that I usually encourage people to just get rid of all of their debt. Eliminating all of your debt opens that cash flow up, making it easy to save for the future, change to a different job, or make other significant life changes that would be nearly impossible with a constant debt payment hanging around your neck.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Student loans and retirement
2. Being a frugality mentor
3. Food shortages
4. Selling unused items
5. International transitions
6. 2011 versus 1980
7. Annuity rollover?
8. Establishing a budget
9. Wedding registry ideas
10. College savings made easy

A close family member serves as the keyboardist for a great band that seems to be in the process of disintegrating. The lead singer and guitarist of this band has tons of talent and charisma, but just doesn’t quite have the desire to do something amazing with it.

I’ve got really mixed feelings about it. On the one hand, if you’re not happy doing something, don’t do it. On the other hand, if you’re giving up just because success didn’t happen just like you dreamed… don’t give up. Ask for help.

I’m talking right to this person, right now. He knows who he is. If you enjoy the music and want to do this, don’t give up on it. You’re too good at this to just give up on it if it’s something you want to do.

Q1: Student loans and retirement
I have a follow-up question regarding your post about paying into both student loan repayments and building up you emergency fund (http://www.thesimpledollar.com/2007/06/08/student-loans-and-the-philosophy-of-debt/). I’m in a similar boat, with about $40,000 worth of students loans with a 6.5% interest rate. I’m currently paying the minimum because my student loan company makes it difficult to pay more, but I’d like to pay more. I’d also like to build up my emergency fund (I almost have 3 months’ worth of living expenses saved, but I’d like 6). But I also wonder about my 401(k). I’m currently putting in 6% of my paycheck, which is being matched by my employer (who doesn’t match above 6%), but should my priority be to keep my 401(k) payments at 6% and pay off my student loan faster (after building up my emergency fund), or should I keep my loam payment low and increase my 401(k)?
- Alisa

It depends on how much you’re socking into retirement in total with your employer’s match.

If your employer is matching dollar for dollar up to 6%, that means you’re contributing a total of 12% to retirement, which is a healthy amount for someone freshly out of college. If that’s the case, I’d stay at 6% and get rid of those student loans.

If your employer is matching at a lower rate, that means that you’re probably only getting about 8% or 9% of your income into your retirement savings, which isn’t as good. In this case, I’d add more to your retirement contribution to make sure that you’re at least at 10%.

10% is a very good rule of thumb for people freshly out of school and already contributing to their retirement while also facing student loans.

Q2: Being a frugality mentor
We are unofficial mentors to a family that has 3 children (and a fourth older child who lives with his mother but they still pay child support). Our interest, frankly, is mostly with the 3 children as we have none of our own, and we are not going to be blessed that way. But we know the parents and interact with them as well.

The family is financially hurting, and there are emotional/psychological issues as well, tho not as extreme as some. (We do not need to get Child Protective Services involved at this point).

The problem that we see on the one hand is that they are very limited in income and in potential to make income. The other is that when they do get some sort of windfall (a tax return earlier this year) they make poor choices with that money that could have helped them down the road had they made better choices. They did some extra work this last month and are going to use it to vacation somewhere, when we live in a resort area with lots of vacation potential, and they are struggling to pay rent. I think they live with the idea that life is so hard day to day, when they get some sort of windfall they need to “reward” themselves for having it so hard.

Our desire is to show/model to the children that there are alternative ways to live. (We don’t shout at each other in our home, and we attempt to show consequences for actions rather than punishment for behavior.) I’m not sure that we are actually able to model these things well (i think the children see us as “rich” when we are simply mid level income and trying to make good choices). We do try to talk about “saving our money” for things in the future. We also are very aware that we cannot “rescue” the family or fix things for them, simply try to share choices that will make things different for them.

The problem, of course, is that the parents believe things are “easy” for us because we do have higher income and no children. Every suggestion made is countered with a “We can’t do that because . . . ” or “Yes, but . . . ” So i am aware that we are not able to help them much. People only change when they are motivated to do so.

Because this family’s life seems to be so similar to that of your childhood in some ways, i wonder if you could comment. Most of your site seems to be focused on folks who are making an adequate income to make changes in their lives. I’m interested what you would say to a family who is struggling so much to put food on the table that at times they have to decide whether to pay the electric bill or the gas. Also, they drive a big, old gas-guzzler. Their large vehicle uses as much gas in a 80 mile trip as our small Honda uses in 300. And it is unreliable as it has continued to break down. But with no money, i just don’t see how they can replace that vehicle to one that would be more reasonable for them. What would you say to a family in such a status? It seems to be such a deep money pit that it is impossible to know where to start.

What would you say to us trying to be a help but not “rescue” them? We have helped on occasion, mostly by choosing to pay for the activities of the children (baseball/tee ball for the boys, a dance class for the girl), and it was our choice, not their request. What would you say to a non-parent trying to mentor a child as far as money decisions? I don’t want these children to think of us as rich, but the reality is we do have a lot more freedom to do as we choose. How can we relay our choices to them? Do you think that is even possible?
- Kim

I think it’s difficult to do this because of the social “taboo” of talking about money. It’s a subject that many people do not feel comfortable talking about, particularly when you’re looking at situations where there are economic inequalities between families (as there seems to be here).

I think your best approach is to just drop little hints here and there. I’d do things like say, “You know why I like this car? It doesn’t use much gas, and gas is expensive, so I can use my money for other stuff. It gets me to where I want to go.”

Those little things have surprising impact on kids. For one, when you say things like that, kids often have a sense that you’re talking to them like an adult, which they tend to crave. For another, kids are often information sponges, pulling in little things from all over the place and synthesizing them. I see all three of my kids doing this all the time.

Don’t push it. Don’t overdo it. Just drop little hints.

Q3: Food shortages
I’ve been reading and hearing a lot lately about the coming food shortage and how we should be prepared. I believe this is tied to our disastrous economic situation in the US with a 14 trillion dollar debt. If somthing does happen to where we can’t get to the grocery store, or that trucks won’t deliver foodstuffs, or that farmers won’t be able to grow our food due to weather or govt. overspending, what would you do? What are your thoughts on this subject? Do you agree that we’re headed for a tough time soon? Do you think it’s all bunk? Or should we really be prepared for the worst?
- Julia

I don’t think there will be a true food shortage. The United States produces absurd amounts of food. However, there are challenges.

One challenge is logistics. The places where much of the food is produced is in a different place than where it’s consumed, and if you add in processing, that’s often in yet another place. There’s a cost in transporting those foods from place to place. It takes fuel, for one.

Another challenge is international trade. Free trade zones, resistance to such zones, high tariffs used as a bargaining chip in other negotiations, changing currency prices, and many other such factors all alter the cost of imported food.

What’s likely to happen isn’t a food shortage, but a change in the foods that are available at reasonable prices, likely followed in a few years by shifts in agriculture to handle the changes. I think if you expect to always have this specific food available at this specific price, you might be disappointed. Flexibility is always a good thing.

Q4: Selling unused items
I have started trying to sell some collectables, toys and books of my children’s and attempting to declutter our small home. However I am not finding it all that easy. I am using Craigslist and EBay, but many of our items are repeatedly going unsold and I don’t understand why. I see other similar items selling for sometimes more money than what I am asking. Am I just better off donating the items and taking a tax deduction? It is a bitter pill to swallow when you realize the things you have spent so much money on are virtually worthless.
- Cindy

Part of the difficulty you may be having is in your promotion of the sale. For one, you’re probably using an account that doesn’t have a long history of successful sales. The seller is certainly a factor in determining whether a buyer hits the bid button on eBay.

Another factor might be in how you’re describing the item. Use pictures. Make the description shine a little. This will entice bidders to bid. Shipping costs can also be a factor.

If you’re still having difficulty finding buyers, you may want to consider donating the remaining items or take them to a consignment shop.

Q5: International transitions
I’m 26 and live in the UK. I’ve completed three degrees. I have no debts, and I have £12k in an ISA earning less than 2% a year (though it tracks present interest rates, so it used to earn around 6.5% a year). I’m about to move to the US for my first job, a wonderful three-year position of my dreams, and will be making around $60-65k gross a year. At the end of three years, I am coming back to the UK to find a permanent job.

I’m very financially inexperienced at best, and this situation has me totally confused. As this is my first job I want to start off my independent financial life on the right foot, as it were. I have already good spending and saving habits. I know that I want to save as much as possible from this job, so that I’ll be in a position at the end of it to get a mortgage once I’m back in the UK. But how does one manage transatlantic finances? I have three questions.

1) My present UK savings: Should I be investing that £12k in something other than a 2% interest ISA while I’m away? I don’t need to access it. I’m highly risk averse and have never done any investing at all. From your writings I have the sense that I ought to put it into some kind of fund that tracks the stock index, but I have no idea how to do this. Or ought I just to leave it in the ISA, be content that it’s earning at least a bit above present interest rates in the UK?

2) My future US earnings: What would be the best way to save and grow my income from my US job? If I put money into a US pension fund (for which I would get no employer contributions) or into a Vanguard or Fidelity investment fund, how, if at all, would these earnings transfer to the UK? What taxes would I pay on them? Should I be trying to watch currency rates and transfer money into sterling when they seem propitious? Or ought I to leave the dollars I earn in the US and let them grow in US-based funds, thus maintaining separate UK and US accounts?

3) My credit: Having been a student most of my adult financial life thus far in the UK, even though I have large savings, I have basically no (or bad) credit history. I’ve never used a credit card, only a debit card, and never taken or had to pay back any loans. I know credit history doesn’t follow you to another country, so I’ll start fresh in the US and conscientiously build my credit there. But as my goal is to get a mortgage when I come back to the UK after 3 years, how can I ensure that my credit rating is good enough *in the UK* to get a good interest rate, when all my credit history will be US-based?

I’d be really so grateful for any wisdom you might have about this. I’m basically looking for a little help in putting together a transatlantic financial gameplan. I’m very sorry if you’ve answered a question like this before, and if you have, I’d be perfectly happy for you to point me to it rather than compose a whole new reply. Thank you so very much for your time.
- Rachel

For the first question, if you’re saving for a long-term goal (even a nebulous one) with a timeframe over ten years, you’re probably better off in a broad-based stock index fund, at least with some of your money. I’m not sure what sort of investments are available within the UK, but my understanding is that you can easily invest in investment houses in the US that offer index funds. I use Vanguard. You may want to think about a 50/50 split, where you leave half of your money in stable savings and put the other half into something more adventurous. This protects you against losses, but doesn’t allow you to ride the rocket ship of gains quite as much.

For the second question, my big concern would be taxes. I would discuss this with an accountant and find out how taxation would be handled with such investments. Another factor in this is your long term plans: where are you going to wind up over the long term?

For the final question, I would try to get a card in the UK before leaving, then attempt to use it occasionally while in the US (while keeping the balance paid off every month). Use it for sending gifts online for appropriate occasions or for when you return to the UK on trips.

Q6: 2011 versus 1980
I’m probably an “older” person as I remember the 1980’s and waiting on line for gasoline, and purchasing my first brand new car for $7800. at 18.9% financing. Yes, you read that right, I financed my first car at 18.9%. I worked at a bank and I remember mortgage rates being over 20% for a while during that time too. Credit cards were at 24%. How does the economy around now differ than it did around then, except for the high interest rates? Unemployment was in double digits then and people did not spend as much. I’m just trying to understand why people say the economy is so bad now, when not a lot of people remember the 1980’s and how bad it was then.
- Maureen

People have short memories. The economy was disastrous in the late 1970s and early 1980s. We had unemployment over 10% in 1982 and interest rates were as you describe. Virtually every significant economic indicator was as bad or worse then compared to now. We had negative GDP growth almost every quarter from 1978 to 1982.

Throw on top of that the 1930s… and 1907-1908… and even earlier periods, and you see that economic downturns do happen, and they can sometimes be quite lengthy.

Interest rates are low now because the Federal Reserve is handling the downturn differently than in the late 1970s and early 1980s. Bernanke is different than Volcker, plus one could say that they learned some lessons from the earlier downturn. My opinion is that they blunted the worst of it, but it probably created a slower recovery than before.

Obama is doing exactly what Reagan did in the early 1980s (late 1982 to 1984) to fix the economy: deficit spending plus lowered interest rates.

Patience is the key, but patience is a virtue very few people seem to have during a down economy.

Q7: Annuity rollover?
My husband changed jobs in March and recently received a letter stating that he earned money through a pension program – Single Life Annuity. Since the amount is less than $10,000, he is eligible to receive a lump sum immediately. We don’t want to pay penalties for early withdrawal. Are we able to move this money into a 401(k) or IRA, or would it be best to leave the money where it is?
- Kendra

You absolutely need to see an accountant if you want to try to roll that lump sum over into an IRA.

The rules involving such things are extremely nebulous and change constantly, so if I gave you specific advice on it, it’d be wrong next year (most likely). Not only that, your picture is a bit incomplete as it contains no information about your income (for one).

My guess is that you won’t be able to roll that money over into anything else, so you’ll have to choose between letting it sit or just taking the payout and paying taxes on it. That’s a personal choice you’ll have to make.

Q8: Establishing a budget
I’ve spent a lot of time trying to come up with a solid budget/savings plan….but I’m not really finding a lot of comparables. I dont know if I’m going overboard with trying to be aggresive in saving, or if I am not being aggresive enough. So, like everyone else, I figured I would air out my “facts” and see what your opinion was, and where you might suggest making some changes. Im 26 and have roughly $10,000 remaining in student loans (divided amoung 3 of them all at ~5%), and bring in about $4,200 a month (after tax/insurance/ and a 5% contribution to 401k). After that, Im maxing out my Roth IRA by contributing monthly, putting an additional $400 a month toward longer term savings, or an eventual down payment on a house, $350/month toward student loans, and another $700 tithed to my local church. My car is paid off, and I carry no credit card balance. Whatever doesnt get sucked up by regular monthly expenses at that point sits in my checking until I hit a certain value, and then I chop it down by throwing some into various investment accounts and savings. Am I on track with everything, or is there something I am missing? Any suggestions you have would be very helpful. I read several financial blogs like yours on a daily basis, and feel like I have tried to take a mix of advice from them, as well as some books I have read, to come up with my plan thus far.
- Jill

You’re doing just fine for the most part. You’re contributing a pretty significant chunk of your income to future savings beteween the longer term savings, your Roth IRA, your 401(k), and your use of your checking account excess.

My only concern is that you don’t seem to really have a plan with that money. The Roth and the 401(k) are understandable – they’re for retirement. However, you’re “putting an additional $400 a month toward longer term savings, or an eventual down payment on a house” and you’re also using your checking excess by “throwing some into various investment accounts and savings.”

This is good, but it’s not directed and it’s possibly costing you money. What is your goal? If you don’t know, ask yourself where you want to be in five years. Ten years? Identify what the big cost is in that picture and focus everything toward that. If it’s a down payment, direct all of that excess money into savings for that down payment. If it’s something else that’s longer term than ten years, put some of that money into other investments. The longer off your big goal is, the more of it should be in something with more risk and higher reward.

Figure out your goals and make your moves based on that.

Q9: Wedding registry ideas
My fiance and I are getting married this coming October. As such, we are going through the process of registering for wedding gifts. I have mixed feelings about people spending so much money on us but I figured we can use this opportunity to acquire some quality items. So far during the process, we have been trying to be smart about the things we decide to put on our registry. This means adding things have we’ll definitely use often, will last a long time, and will enhance frugality. It’s been difficult since we are being pretty selective. We both want to have less “stuff” laying around the house and I refuse to get any “uni-taskers”. Do you have any suggestions for items to put on the registry? Perhaps, there are some things you received that have stood up to the test of time.
- Eric

In my mind, it’s more a matter of what you do around the house.

If you cook, for example, you really only need three good knives (bread knife, chef’s knife, paring knife) and three pieces of enameled cast iron (two pots of different sizes and a saucepan) and perhaps a skillet to cook almost anything you’ll need. However, each of those items can be a bit pricy – you can get the bread knife and the paring knife relatively cheaply and a fairly inexpensive chef’s knife will work, but enameled cast iron will cost you.

It all follows from what you like to do. Focus on those things, research them in detail, and you’ll be in good shape.

Q10: College savings made easy
We have 2 daughters under the age of 3. They have just about every toy imaginable (thanks, grandparents!), and both have birthdays coming up. We are considering setting up some type of college savings for them. Do you know of any type of account that family members or friends can easily contribute to instead of adding to the Toys R Us in my living room? An easy-to-use website would be ideal.
- Dana

Many 529 college savings plans allow direct contributions from anyone. I would look into the 529 offerings in your own state to see what’s available.

Another option (if you don’t want to use the money strictly for school) is to open up a SmartyPig account and set up a savings goal for each child. Again, this allows anyone to contribute. It doesn’t have the education restrictions of a 529, but it might not have the same “pull” to convince people to donate that a 529 would have.

We’re more or less in the same boat as you. We have grandparents who love to give gifts and, at times, it feels like we have too many toys around. Part of the challenge is that we’ve not eliminated some of the toys our oldest child has outgrown because he has a younger sister followed by an even younger brother.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.