A Brief List of National Parks and Forests I Will Be Visiting Later This Summer

Reader Mailbag

Shawnee National Forest. Daniel Boone National Forest. Cherokee National Forest. Great Smoky Mountains National Park. Pisgah National Forest. Sumter National Forest. Osceola National Forest. Ocala National Forest. Possibly more.

I can’t tell you how much I’m looking forward to this. National parks and forests are an amazing opportunity to see our nation’s beauty for a very small price.

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. Coming back from financial armageddon
2. Mother-in-law and lottery
3. Home air filters
4. Springpad
5. Credit card limit question
6. Grocery store quality
7. Ebook insights
8. Nervous about big transactions
9. Tax deductible donations
10. Retirement savings in Australia

Q1: Coming back from financial armageddon

About four months before my good friend told me about your blog, I reached my breaking point in terms of personal finance. I finally opened up with another friend about the fact that I had $12,500 in credit card debt and that I felt hopeless about it. I had given up. She told me about her debt that was substantially larger than mine and together we talked about hope. I no longer feel I have to live beyond my means to blend in to society and I no longer feel that ugly wash of shame about my situation because I am taking control of it and I am making big progress toward my goal. Since then I have been attacking my debt with fiery passion. Because I have been just burning to get my credit card balances down, I have ignored my friend’s advice about creating a $1000 emergency fund. I haven’t yet resisted the temptation to throw every extra dollar at my debt. Here’s my question: Soon I will be inheriting about $3000. My first impulse was to throw it all at the highest interest credit card. I’m now ready to take my friend’s (and your) advice and use $1000 for an emergency fund. So, with the remaining $2000 I plan to immediately put it toward my higher interest card. Am I on the right track?

A quick look at my finances:

I’m 31, single, I take home about $3500, and contribute 7% of wages to my 403b (balance of $11,000 currently). Debt: $6,500 credit card at 6.25% interest which will be lowered to 5.25% soon, $4,000 credit card at 1.99%, student loan balance $4000 at 2.35%. I have no savings. I have a mortgage payment of $965 and my total debt payments are about $870 (about $400 of this is extra credit card payment toward the higher interest card). I am routinely selling off things that I don’t need in order to have comfortable living allowance. I am considering canceling my data plan on my cell phone and getting a more fuel efficient car (I spend on average $250/mo on fuel). I am clearing out space in my home and looking for a roommate to help with my mortgage and bills. Free the debt is resolved, I want to build a stronger savings and invest.
– John

You are absolutely on the right track. Your financial moves make a lot of sense given your full situation. Get that $1,000 emergency fund, then start hammering the credit cards.

The best thing you did, though? Talking to your friend about it. More than anything else, I think that really opened the door to this change.

Trust me – your situation isn’t as bad as it seems. It won’t be too hard for you to fix this.

Q2: Mother-in-law and lottery

My mother in law spends $20 a week (at least) buying lottery tickets. At the same time she sometimes doesn’t have enough money for groceries and ends up having to eat at a soup kitchen. How can I convince her to stop her lottery ticket habit?
– Ellen

From a strictly financial standpoint, lotteries are a terrible idea. The odds against winning are so small that you’re essentially throwing your money away.

Still, I understand why people do this. When you’re in a tight financial situation, a lottery ticket is a (relatively) cheap way of dreaming of a way out. When it doesn’t feel like you’re going to be able to ever get ahead, a lottery ticket is at least an avenue of possibility, dreaming, and hope.

From your description, it sounds like your mother-in-law is retired and living on a fixed income. That spending is probably her way of feeling a bit “free” in a situation where there isn’t much freedom.

In situations like this, you can’t make someone change. They have to find reasons for change themselves. All you can do is be ready to help when they’re ready for change.

Q3: Home air filters

Is it worthwhile to change home air filters right on their due date? If I buy one that needs to be replaced every month, am I losing more money by leaving it in there for longer?
– Sandy

Generally, with air filters, the longer the filter is in place, the dirtier it gets. The dirtier it gets, the harder it is for air to blow through the filter, meaning your air handling system has to work harder.

There is so much variability in how the systems work, how “dusty” your air is, and other factors that it’s really hard to tell when the “perfect” moment to change the filter is.

Given all those unknowns, I think it makes the most sense to just stick with the date on the package.

Q4: Springpad

I was wondering if you’d heard of Springpad and what you thought of it? I’ve been using it for a few days now and my feeling is that it’s going to replace my use of Trello. It seems much more inuitive than Trello and it’s far easier to see everything in one place on Springpad.
– Amy

I went to check out Springpad after reading this email and I found out that it’s actually shutting down on June 25. They’re migrating all of their users to Evernote.

Frankly, I just use Evernote for everything. Their checklists have gotten so good that I just use those for all of my to-do lists. I have Evernote on every computer and phone that I have.

I used Trello for a while. I think it would be a great tool if you had several people collaborating on to-do lists, but for one person, it’s not the optimal system, at least for me.

Q5: Credit card limit question

I had a question about getting a new credit card. I got my first card after graduating college, having paid for college expenses with my debit card/checking account. I had some trouble getting approved initially since I had no previous credit built up, but after trying through my bank and other places I was able to get a Chase card with a $1000 limit. In the 9 years since then I have paid my bill in full every month and the limit has increased (both on its on and at my request) to $1,800.

I basically see my credit card as a way to build credit, always paying it off on time and using the card rewards as a bonus. I would love to get a card with a higher limit, however, to pay for some of my occasional higher cost expenses. For now I use my debit card for those but I would like to be able to get similar credit card based rewards while still paying my card off from my checking account.

I’ve been getting lots of credit card offers in the mail but do not want to apply and get approved for a card only for it to have a limit of under $2,000. Any thoughts on the best ways to get a higher limit card? Should I try again through either my commercial bank or my credit union?
– Alison

Your best approach is to continue to request a limit increase on your current card. If you’ve had the card for nine years, you should have a good record with them.

If you apply for a new card, in terms of your credit score they’ll treat the credit limits as a combined number. So, if you get a new card with a $2,000 limit, your credit score will act as though you have a $3,800 limit in total. Since part of your score relies on your credit-to-debt ratio that mostly comes from your credit cards, this can be important, but as long as you keep paying things off in full each month, it won’t make a big difference.

Unless you have a day-to-day reason for a higher limit, I wouldn’t stress out over it.

Q6: Grocery store quality

On every frugal website I read people are encouraged to shop at Aldi. Every time I go there, the store seems dirty and the selection is awful. The items there are cheap, but the produce is always old and I usually end up only buying two or three things. Do people “settle” for cheap groceries?
– Stan

Here’s the thing: an Aldi in your area is not the same as an Aldi elsewhere. There are a lot of factors that differentiate them, from the distance from their warehouses and the employees at each store to the customer load and the individual store management.

I had a terrible experience at Aldi as a kid, but I’ve gone to other Aldi stores as an adult and had no problem.

The only Aldi near me is very small, not near the other stores I go to, and usually doesn’t cover what’s on my grocery list, so I don’t go there often. However, I have stopped there intentionally to buy marzipan and German chocolate, as the quality you get there for the price is incomparable.

Q7: Ebook insights

I’m looking for a good way to e-publish a book and was wondering if you had any advice about the steps involved from writing, editing the contents to sell it online (software for editing, self or editor publishing and selling on Amazon).
– Grover

I’m an old hand at HTML, so when I’ve worked on Kindle books in the past, I’ve just directly edited the HTML.

The one editor I’ve used that I’ve really liked is EasyEdit. It’s probably what I would recommend for you.

If you’re writing a huge document and expect to do that over and over again, it’s probably worthwhile to learn how to use Scrivener. It has a steep learning curve, but once you get it, it’s amazing!

Q8: Nervous about big transactions

Whenever I have to spend a lot of money at once, like when I buy a car, I get really nervous for a few weeks beforehand. I keep thinking I’m going to mess something up, lose my money, and be left with nothing.
– Annie

I think it makes sense to be nervous every time you make a major expenditure, but I think this might be carrying it a bit far.

As long as you have receipts for every time money or items change hands, you’re going to be fine. You should also never give money without getting something immediately in return and without clear documentation.

If you follow those rules, you should be in the clear. If it doesn’t feel right, talk to a lawyer, as the small fee a lawyer would charge you can make all the difference.

Q9: Tax deductible donations

Can you give me a “personal finance 101″ explanation of how charitable donations affect your taxes? I donated $1,500 to charity last year, but when I did my taxes, it basically told me that they didn’t matter and that I would just get the standard deduction.
– Charles

When you file your taxes, the government essentially gives you two choices. One choice is to take the “standard” deduction, which for a single person is $6,100 and for a married couple is $12,200, or you can choose to itemize your taxes, which means that you make a list of all of your deductions and submit them.

If the only thing you spent money on last year that could be deducted was your $1,500 charitable donation, you have the choice of deducting $1,500 or deducting $6,100 from your taxes. Obviously, you’ll take the higher number.

The only way a charitable donation will directly impact your taxes is if it goes on top of a pile of deductions that add up to more than the standard deduction.

Quite often, people have more total deductions than the standard deduction. In that case, they simply submit a list of their deductions to the IRS. If you take the standard deduction, you don’t have to submit any such list.

Q10: Retirement savings in Australia

I often read retirement saving advice on your website but am unsure how to adapt this to our system in Australia. Here employers are legally required to contribute an additional 9.25% of an employee’s income into a superannuation fund. Most people therefore are automatically accumulating retirement savings from the time they enter the workforce. Voluntary contributions can be made into the superannuation fund, either before or after tax. But would it ever make sense to pay extra into superannuation while you have a mortgage with 5% interest? My approach has been to throw all surplus income at that mortgage to pay it off as quickly as possible, then consider increasing retirement savings.
– Violet

Wikipedia offers a great explanation of the superannuation retirement system in Australia.

It depends on how you invest that 9.25%. If you invest in age-appropriate investments – aggressive when you’re young and less aggressive as you get older – it will get you somewhere in the ballpark of what you need. I would definitely supplement it at least a little as you get older.

From what I can tell, though, the percentage contributed is going to rise to 12% in the relatively near future. If that happens, then that 12% will be very close to what a younger person should be putting in during their professional life.

If you’re young – say, below 30 – you’re probably fine. I’d get rid of the mortgage first. If you’re older than that, I’d probably add an extra 1% or 2% to the superannuation, then focus on the mortgage. If you’re getting close to retirement, you’ll have to assess what your retirement will look like before you decide what to do.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. IĆ­ll 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 many, many questions per week, so I may not necessarily be able to answer yours.

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