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. Helping partner build credit score
2. Rechargeable batteries
3. Job and heavy course load
4. Renting a mailbox
5. Reading time
6. Thrift clothes for tall folks
7. To sell or not?
8. Car search in new location
9. Sell now or later?
10. How do you find bargains?

On Monday at about noon, my stomach took a giant lurch. I quickly began feeling tired and mentally out of it. By Monday evening, I barely wanted to leave my bed. I spent most of Tuesday crawling back and forth between the bathroom and my bed.

As I write this Wednesday evening, I’ve lost about twelve pounds, I still hurt all over, and I’ve realized how important it can be to have posts written in advance. I spent most of my “advance” posts over the Christmas holidays, which mean that when I got sick, I didn’t have more than two or three posts written ahead.

This is one of the realities of writing for a constant deadline. Sometimes, you just get sick. Sometimes, your kids get sick. You’ve got to be able to plan for it and deal with it.

Q1: Helping partner build credit score
My boyfriend is 29 years old and has never had any significant financial accounts in his name. He’s had savings and checking accounts with two different banks over the years (currently at my Credit Union), but no credit cards and his credit report does not show any reports (either positive or negative) from his previous bank or any utility companies. In fact, it has very little on it at all other than his previous addresses and an old debt from a medical bill that is paid and just hasn’t fallen off the report yet. We tried using Credit Karma and they said he had too little credit history to even give him a credit score. He recently applied for a credit card (the Chase Amazon card) and was turned down because he had no credit history.

I plan to sell my house (I own it and he lives with me and pays half of the bills) in the near future and we will be moving to a neighboring town, where we will rent for a few years and eventually may want to buy a house together. I have very good credit and could easily get approved for an apartment or mortgage on my own, but if we go in on something together we don’t want his lack of credit history to hurt our chances of being approved. What should he do to start building a credit history? Would a “starter card” with a yearly fee be the only way to go? It doesn’t seem like he’ll be eligible for any decent cards. He’s extremely conservative financially, we’ve lived together for several years and I trust him with money. Could I put some of the utilities in his name? Would that even affect his score?
- Annie

There are a lot of things you can do in this situation.

For one, you could get a card yourself and add your boyfriend as a user on that card. Check with your credit card company to make sure that authorized users you add to your cards have the credit reported to the credit bureaus.

You could also get him his own secured card. This wouldn’t have a yearly fee, but it would require you to pay money up front as a security deposit on the card. Most large banks have such an offering.

Don’t worry about the interest rates on such cards. He shouldn’t be using it for many purchases (though using it for a few is a good thing) and he should be paying off the balance in full each month. If he does that, then there’s no reason to worry about the interest rate because he won’t be paying any interest.

Q2: Rechargeable batteries
I have been thinking lately about getting some rechargeable batteries and wondered if you have posted anything about the cost comparison between getting some decent rechargeable batteries and just buying the standard type. I guess just the standard sizes are what I’m most concerned about (AA, AAA, C, D, and 9volt). I have also been concerned about how well they would perform if you don’t use them frequently (I.e. Flashlights that you only use periodically during power outages etc.)
- Greg

I am a big fan of eneloop batteries, made by Sanyo. I have had good experiences with them over and over again.

Most of the time, rechargeable batteries for “C” and “D” size come in the form of an adapter, which looks like a “C” or a “D” battery, but just contains two or three “AA” or “AAA” batteries. There are eneloop adapters for both of these sizes.

I do not have any experience with 9 volt rechargeables. The only items in our home that use a 9 volt is our smoke detectors, and I don’t use rechargeables in those.

Q3: Job and heavy course load
Right now I’m 19 and a sophomore at a college studying mechanical engineering. It’s a rigorous college, but I like it and I’m doing pretty well. The only part I don’t like is the undue financial strain it’s putting on my parents. We’re not a rich family. My dad’s getting up there in years and being a firefighter is starting to take a toll on him. My mom is self employed in property management, and while it brings in some money it’s sometimes not enough, especially now as she’s trying to refinance her buildings.

I want to get a job. Right now I have some scholarships helping me out but it still comes down to about $12,000 a year for college, not including living expenses, food, etc. I feel guilty every time I get money from my mom and I know that they could be using it to help elsewhere, as my little brother still has to get through college. Every time I try to bring the subject up, my parents tell me it’s not a good idea, and that school is my job until I graduate and I must concentrate on that.

What do you think I should do? My average course load is between 17 and 19 hours for the next two years, and I also have a position as a service coordinator for the local chapter of Alpha Phi Omega service fraternity. Is it worth it for me to get a job to help with the cost of school?
- Sam

During my fourth semester in college, I took on a 19 credit course load and worked an 18 hour a week job and another 12 hour a week job. It was a complete disaster. I didn’t do either of the jobs well and I had my worst academic semester of my entire college career. I was stressed out constantly and exhausted by the end of it.

If I were in your shoes, with a similar courseload to what I had and a job as a service coordinator, I would not add additional responsibilities to the pile. I’d stick with what I have, use student loans to finance the experience, and try to create fantastic results for both the classwork and the service positions. (A reminder: an “A” alone isn’t necessarily the best result from a class. You’ll get much more value out of building relationships with classmates and with the professor and teaching assistants along with the good grade.)

If you come out of college with a solid GPA, a lot of professional contacts, and an interesting resume with a variety of activities and accomplishments, you’ll be primed to get a good job. That is the focus here above all else.

Q4: Renting a mailbox
I started blogging myself in August and ocassionally have readers or sponsors send me packages in the mail. This looks like it might increase a bit in the coming months, but practically we’re looking at two to four parcels a month, average. I feel a bit uneasy about always giving out my home address to people, many of whom I only know online and only a little at that. I would feel more comfortable with a PO Box, but am concerned about the cost.

The local post office rents their smallest size box for $13 per 6 months, which is quite reasonable, but it is significantly out of my way and annoying. I had a PO box there a few years ago and hated going there to see if there was anything I wanted, and the junk mail piled up so that it filled up fast and I usually had to wait in line to get a pile of my mail–most of it circulars that I would toss.

I’ve called around to most of the private mailbox rental stores in my area and the best price I could find is about $10/mo, which is significantly more, but they do have an email service to let me know when something comes and it is directly on my way to work. It is a local shop and I know the people who own it, and like supporting local businesses.

My question is, is it worth it to spend the extra to get a convenient mailbox (that’s $120 per year!!!) or should I go with the annoying but cheap option? Or not sweat giving out my home address for a few packages a month? I’m trying to save money and pay down my debt, not spend more. Am I making too much out of this? I would appreciate your perspective.
- Hannah

For me, it would really depend on the volume of mail I was receiving. If I was making a trip to pick up a package once a month, the trip out of my way to the post office would be worth it.

On the other hand, if this is a daily or a thrice-weekly occurrence, I would go for the more convenient pick-up option, even if it were more expensive.

Let’s say, for example, that the more convenient pick-up saves you ten minutes per package. If you’re receiving one package a month, that’s two hours (120 minutes) of time over the course of the year. The box is costing you $94 more than the post office, so you’re spending $47 per hour of time saved.

Now, let’s say you’re receiving packages three times a week. That’s 26 hours (1,560 minutes) saved by having a more convenient pickup spot. That breaks down to $3.61 spent per hour saved over the course of a year.

For me, the cutoff for something like this would be between $5 and $10 an hour, depending on environmental factors and other concerns. So, for me, if the packages were coming in much more frequently than weekly, I’d rent the more expensive and more convenient box.

Q5: Reading time
How do you find the time to read so many books? I find that a typical book takes me eight or ten hours to read. Where do you find the time for it?
- Angie

I make it an effort to set aside one hour each weekday for reading related to The Simple Dollar. I shut off all distractions and read a personal finance or a time management book.

Also, every single day, I set aside at least an hour devoted to reading for my own enjoyment or growth in other areas. I often exceed this because I’ll take a book with me whenever I go out and about, so I’ll get in fifteen minutes at the doctor’s office or something like that. Usually, this hour is in the evening when other households might be watching television or something.

This adds up over time. On top of that, because I’m such a practiced reader, I can read pretty quickly, allowing me to go through more books than I would if I didn’t practice so much.

That’s really all there is to it.

Q6: Thrift clothes for tall folks
I have been selling clothes on Ebay for about two years. I make about $500.00 per month and am looking for a way to earn more. In your article today you mentioned that tall clothing for men are scarce or hard to find, so that led me to wonder if that’s a niche I should research. If you don’t mind, my question is: how much do you pay in the thrift stores for shirts, tshirts, pants, shorts etc for tall men? This would also help me decide if buying these items for resale would be worth it.
- Alvin

Finding good tall clothes at thrift stores is completely luck-based, but when I do find them, they’re not usually premium priced over anything else. They’re usually hung on racks alongside non-tall items.

The question for you would be whether or not the additional time you spend seeking out good tall clothes that you could likely eBay at a small premium is worth it.

My perspective is that it probably wouldn’t be worth it if you were just hunting for tall clothes. However, if you use thrift stores as a general resource, identifying both tall and regular items that are sell-able, I think you could turn a reasonable profit. You’re essentially acting as a clothes filter in that situation.

Q7: To sell or not?
My fiance and I are living together in a house in Toronto, Canada, which we bought one year ago. We bought it for $415,000, which for our neighbourhood, is a great price. I absolutely love our community – very warm, supportive, good shops etc, and good schools (for the children we’re planning to have in the next 2 years). I’m 30, he’s 32. We have a great relationship (lots of love, and good teamwork), and I’m so excited for our life together. There are two issues for me: current stress based on our present situation, and difficulty knowing what to do for future planning.

Currently: My fiance has no debt (aside from our shared mortgage; $1800 per month, variable rate… a good one, just can’t remember the number at the moment). My fiance makes a good salary (80,000) and has started some investments for our future. Me, on the other hand, I don’t have a good track record for being smart with money, but I’m working hard to change that now in my life. I have a large student debt (40,000 interest at prime through my father’s line of credit, and a personal line of credit 12,000 interest at prime). In addition, my employment has been unstable (a difficult market at the moment for Social Workers) so I’ve been building a Private Practice (which I love, and wish to grow!). Luckily I have a small client base, and I’m working right now on increasing this through an Online Counselling service. I’ve also been working odd jobs part-time for extra income, but most of the money goes towards paying my debt payments, and not towards our life (which causes me frustration). And to top if off, we’re getting married in April … luckily with financial help from our parents… but we’ll have to cover a large chunk ourselves (10,000). I’m not sure there’s any more solutions, per se, for this current situation other than continuing to work hard and communicate with my fiance about finances. What do you think?

WIth regard to the future: as I mentioned, I love our home and our neighbourhood… and I don’t want to move anytime soon. I know from our friend’s experiences that house-hunting in this area is very difficult, and we’d never be able to find another home with these perks for this price. There were lots of strange factors that led to our home purchase, which I won’t go into now… but it was unique, and not likely to happen again. However, my fiance wonders if we should sell our home in the near future and use profits to pay down some of the debt (which I admit, is huge and weighs on us). If it were just me, I’d say sure… but given we want to start a family, I feel being in a good neighbourhood is more important. But I don’t want to push for staying here if there are reasons I’m not seeing which could damage our future financial situation. Finally, when we do have children, I will not be eligible for social assistance because of my unstable employment, therefore we’ll only have one income (and maybe some extra from my private work, if I can afford the time). If you have any insights or advice, I’d appreciate it.
- Claire

The thing you need to keep in mind is that working to pay off your debts is working toward your shared life. Every hour you spend paying down those debts is an hour that will eventually improve your situation. It reduces that debt load and also brings forward the date that you’ll be able to be rid of all of them.

I am worried that you are living a bit beyond your means. The debt load you have is pretty high, you’re working at a job that seems to be relatively low income, and you’re spending more than $10,000 on a wedding.

If you’re feeling like your debts are insurmountable, which seems to be the reason you wrote this, part of it might be your lifestyle level. There are ways to reduce your lifestyle level without selling your home, particularly if it is somewhere you want to live long term.

Q8: Car search in new location
At the end of October, we moved about 150 miles away from our then current home to pursue a new job in a new market that offered significantly more opportunities then where we were. Along with it came a 50% raise (and minimal increases in living expenses) – plus my old job (that I quit to move) is still paying me to consult. In a lot of ways, I have more money than I’ve ever had in my life and projects that were on hold (new bed for the kids, clothes, etc) due to money are finally getting fulfilled.

However, being 150 miles from “home” has presented its own difficulties. We find ourselves driving back to visit family and friends every couple weeks (especially during the holidays). However, because everyone we knew was within 20 miles of us, our car was never purchased with all the miles we’re putting on it in mind. Plus, it’s not all that comfortable for long trips, and lacks adequate trunk space for packing for overnight trips.

So here is the basis of my question(s): how do we even start the car searching process? I want decent gas mileage and decent leg room in the cabin and would like something we can fit more than a few blankets and a suitcase into. Since it will also be my wife’s primary vehicle, reliability is a must as well. I have to admit, I’m overwhelmed just looking at the options and not sure where to start.

The other half of my question is: We had to take out a small loan (4,000) to move here – knowing we would be able to pay it off quickly. I have the money to pay off the loan, plus some savings, plus some extra money in my checking account, which would give me about 10,000 to pay on a vehicle (if I didn’t pay off the loan). Would it be better to pay cash for the vehicle and make payments on the loan, or better to take out a small loan for the vehicle and pay off the moving loan? I have no idea what interest is on a car loan (have never had one), but the moving loan is at 11%. Otherwise, the only other debt we carry is school loans which are currently in deferment.
- Fred

Your best move would be to pay off the loan, buy a lower-end vehicle that you can afford to pay for with cash, and then start saving right now to replace it. That way, you avoid debt, which is just money lost to the bank, and you also avoid depreciation on a higher-end car.

As for your specific car choice, we find ourselves in a similar boat. All of our extended family lives about four hours away from us, so we often find ourselves on road trips to visit people. That’s a long car ride, particularly with three kids.

What we’ve found is that the two most important factors on the trip are reliability and fuel efficiency, assuming that we have minimum space for our legs and our belongings. Most of the time, we make that trip in our Prius, which gets great gas mileage and is very reliable. It has enough leg room for me, too (I’m 6′ 6″).

I’d suggest just going to the lot and focusing on fuel efficient cars that you fit comfortably into. Test drive a few to get an idea of what you like in terms of comfort, then shop around for the best deal on some of the models that fit your needs.

Q9: Sell now or later?
I am potentially facing the issue of selling my condo at a loss or renting it out at a loss. I have applied for a job within my current organization in another city roughly 1.5 hours away so commuting for me would not be an answer. The city I would be moving to is a lower cost of living area but my salary would also drop approximately $5000.00. I figure I will be bringing home $1450 ($200.00 less) every two weeks after taxes and pre-tax items. I have lived in my condo for 5 years, but I just refinanced in April to a 20 year mortgage with a 4.875% interest rate.

If I would sell today I think I would break even on what I owe on the mortgage $140,000; however, to pay realtors, closing costs etc. I think I would have to bring $8,000 to $12,000 to the closing table. I have that amount but I would be left with little or no emergency fund. If I try to rent the condo I would probably get $1100-1125 per month in rent. My known costs would be the mortgage of $1048, condo fees of $335 and payment to someone to manage the place of $125. I would be short approximately $485.00 per month. I believe I can make up the $485.00 by changing some lifestyle habits, not paying extra principle on the mortgage and cutting back on saving for a new car which I will not need in the next 4-5 years.

The big kicker is if I took this job it would probably only be for 5 to 7 years and I would likely move back to where I live now and move back into the condo if I keep it. Strictly on the basis of money would you sell at a large loss now or have the losses over a few years? I don’t expect rents to go up that much because of the size of the condo, the lack of a dishwasher (I can’t add one) and the laundry is down the hall. Also as an FYI the condo is not underwater but I have lost approximately $75,000 (all equity from the sale of a previous property I put in at closing) in value since my purchase.

In the new job I would be doing what I actually want to be doing in my career right now. I would be away from a lot of the bureaucratic issues I am facing right now and I would get out of a job situation that I am not a 100% happy in. The job is in a city I use to live in. I have friends there, a church family that I miss and I will be closer to my immediate family. I miss the sense of community I use to feel in that city. There is a lack of that in the metropolitan area I live in right now.
- Connie

The decision of whether to sell would hinge on a lot of factors that you haven’t really specified here.

How likely is it that you’ll move back there in five to seven years? Are there other opportunities besides the career path you’re on that would cause you to move back there? How is the market for rentals in that area? Are there a lot of rentals sitting unoccupied or are they in high demand? How much of a shortfall would there be on the mortgage payment if you rented out the property (after taxes and after management fees, assuming you go that way)?

The less likely I was to return to the area, the more I’d lean toward selling. The more likely I was to rent it, particularly at a price that would pay most of or all of my mortgage, the more I’d lean toward keeping it.

This is one of those situations where there is no strict right or wrong answer because we can’t see the future. We don’t know where our path leads. All we can do is give it our best guess and move forward from there.

Q10: How do you find bargains?
What I’ve never really been able to understand about frugality is how people find all of these amazing bargains. Let’s say I need a new kitchen knife. I do some research and find some potential knives that I might by. Then, I go on amazon and a few other sites and find prices and then I do the same thing in local stores. Usually, I just buy the lowest priced one I find, but I never seem to find these amazing discounts people seem to find. How do they do it?
- Darla

When you hear about a big discount, it’s often on an item that the person wasn’t necessarily planning on buying. They just happened to find that bargain, had enough sense to see it for the bargain that it was, and had the resources to pounce on it.

It gets much trickier when you’re looking for a discount on a very specific item. The more narrow the item you’re looking for, the harder it is to find a big bargain in that specific area.

What I often do is wait. If there’s an item I would like to replace but I can hold off for a while, I sit on it and look for a bargain for as long as I can.

Sometimes, it pays off. For example, I mentioned how I waited around for the right price on a blender. Our old blender had a broken lid (which meant that it would splatter if you used it) and a motor that had a very loud whine to it that started after my son dropped it on the floor. However, it was still usable, so we kept using it. I started watching a variety of places very carefully for a discount on a really good reliable blender that wouldn’t easily break and might survive a bump and would also blend anything we threw in there (our old one was dodgy at times when it came to blending perfectly), but I knew I could just go buy a $30 replacement for it at Target if we needed to switch it.

What happened? After some waiting, I found a wonderful new blender on sale at a local food store that was going out of business and had marked it way down – something like 70% off the sticker price. About a day after that, I found an even better price on Craigslist for a similar blender.

People find bargains through a mix of serendipity and patience. You can’t wake up one morning and expect to find a huge discount on the specific item you want.

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.

Whenever I find myself with extra cash in my pocket, I’m often tempted to spend it. I usually look at that cash as having already been accounted for, so there’s really nothing bad about spending it on something fun, right?

When those thoughts pop into my head, I know exactly what I need to do. I just go empty that spare change into the spare change jug on my dresser. That jug contains a mix of coins and dollar bills that have found their way into my pockets.

In a way, the same exact thing is true with my checking account. If I look at my checking account balance and it’s quite high, I can sometimes feel tempted to spend money on things that I don’t really need.

The solution for my checking account is really not all that different than the solution for my pocket change. I have a plan for that money, a plan that’s so incredibly simple that it becomes trivial to follow it.

I simply pay all of my bills automatically out of my checking account. Online banking makes this a snap. I just have every bill I possibly can – and that’s most of them – set up to pay automatically near their due date each month.

This serves several purposes.

First, I don’t really have to think about it. Once it’s all set up, there’s not really anything to do. Your bank just automatically does it for you. Your bills are paid without even having to lift a finger.

Second, it adds just a bit of concern about excess spending from my checking account. This, for me, is a very good thing. I know that when I look at my checking account balance there are going to be further withdrawals from the account automatically. It’s similar to the sense that I get when I know there are outstanding checks, except that I don’t actually have to write the checks.

I’m encouraged by this to not spend frivolously from my checking account and instead make better choices about how to spend my money, because the consequences of going ahead and spending – potential overdrafts, potential missed bills – are worrisome. I’m simply more careful about my checking account.

Third, I’m never late for bills. If everything is paid automatically and set to arrive before the bill’s due date, then I know I won’t be late for bills. I don’t have to check due dates. I don’t have to remember to make sure that a certain bill is paid. It just happens.

Fourth, it saves me time in the process of paying bills. I don’t have to sit down with a checkbook and a calculator every two or three weeks to pay a pile of bills. They’re just paid. I check my online banking perhaps once a week as part of my normal web surfing, taking perhaps a minute or two, and that’s it.

Finally, it enables me to reach savings goals. This is really the clincher for me. If I’m saving for a goal (and I’m usually saving for two or three of them), I can automatically have the money routed away from my checking account into my savings account (or accounts). The amount would be whatever it would take for me to reach my goal in the desired timeframe.

So, let’s say I’m saving so that I have $10,000 to buy a car in four years. That takes 48 months, or 204 weeks, to achieve. I might decide to have $50 taken out of my checking account every week for the car, or $200 every month. This could all be done automatically so I never have to think about it. Then, at the end of the four years, I have the $10,000 I need to buy myself a nice car without going into debt for it.

Automation is the key to all of this. It saves time, it keeps you psychologically from sinking into a spending routine, and it helps you achieve your savings goals. Automating your finances as much as possible is an essential tool for personal finance success.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

Whenever there’s a significant vote or election, I find myself tuning into the results the evening after the vote. I’ll visit tons of websites, looking for the latest results and different perspectives on what they mean.

The funny thing is that it’s usually impossible to really say what the impact of a vote really is until a long while after the vote.

So, why do I tune in? I guess I just like politics from a “fan’s” perspective. It often seems to me like a complicated high-stakes game.

What If I Lost My Career? Envision, then Act This is spectacular advice for people facing a rocky path in their career. At some point, you have to consider restarting your career, and this is really good food for thought if you’re in that situation. (@ free money finance)

Career Fairs, Part One and Part Two Career fairs can be completely useless or incredibly valuable for a potential job seeker. It all depends on the preparation you put into it and how seriously you approach it. I’ll be the first to admit that I didn’t approach career fairs with enough seriousness when in college. (@ penny pinching professional)

Unfinished Business I think that anyone who has a successful career or is running a successful small business is going to eventually face the “black hole inbox” where there’s simply more stuff there to do than there’s time and energy to do it. If you’re doing something of value, people are going to want your attention and effort. I think this is some great advice on dealing with it. (@ unclutterer)

“How Can I Stop Being Overwhelmed by Big Projects?” My solution is to not take on too many of them and focus as intensely as I can at the next step in the project. (@ happiness project)

Clearing Your Life for a New Year This is a good process to do regularly, not just when a new year occurs. (@ zen habits)

For the first two years of our marriage, Sarah and I barely spoke to each other about money. We’d touch base with each other just enough to make sure the bills were paid, and that’s about all.

“Honey, did you drop off the rent check?” “I took care of the bills for this month.” “Do you have your wallet handy to cover the bill?”

Comments like these were the extent of our communication about money. We just trusted that the other person had their money under control and never really bothered to investigate it further.

We never had a plan for the future. We never had a joint checking account. We never had a cohesive idea of what our retirement might look like.

Is it really any surprise that our finances bottomed out?

One of the first things Sarah and I did once we really began to grasp our situation was to sit down and have a long chat about our money and our future. What did we want out of our lives? Were we ever going to buy a house? Were we ever going to retire? Were we ever going to dig out of our debt hole?

It was from that initial conversation – and many more that followed it – that a cohesive plan for our finances came together. We came up with a plan that suited us for buying a house (do everything we could to save for a down payment until a second child forced our hand and forced us out of our tiny apartment). We came up with a joint plan for retirement.

We started talking about other life goals in a much more concrete fashion, too. We planned carefully for a second and, later, a third child. We agreed that I should devote a significant amount of spare time to writing (although The Simple Dollar took us completely by surprise).

In short, we constructed the scaffolding of the life we have built together. All it took was a conversation about money to get things going.

What did it take to get the ball started? It took one of us (me) to simply get the ball rolling. The biggest key was that I assigned no blame for the situation we were in. Any blame that was out there, I placed directly on my own shoulders, even if I felt it was a shared blame. If you start out a discussion like this with accusations, you’re not going to get very far.

Another key element was to stick with numbers. When we talked about money, we didn’t say things like “I think we can afford it.” We got out our checking account balance and our bills and started calculating to see if we really could afford it.

The final essential element was honesty. I had not really revealed the extent of our credit card debt to Sarah, as I had been “taking care” of that bill for a year. When it was all laid out there, she was upset for a while, but then it became clear to both of us that if we have all of the cards out there on the table and are being fully honest, we can actually solve this problem together.

There’s another key element to all of this. Money talks aren’t just useful with your partner. There is a lot of benefit to talking financial issues over with trusted friends, close family members, and other people around you. You don’t ever have to reveal your full financial picture, but talking about the challenges of debt reduction, great frugality ideas, and other such issues can be a great way to not only learn new ideas, but to relieve the burden of dealing with such issues through conversation.

I have quite a few people that I talk to about various aspects of our financial life. I have a small business friend who often discusses taxes and tax opportunities with me. I often trade frugality tips with various friends and family members. I have another friend with which I’ve discussed retirement planning many times. All of these people have proven invaluable in getting my finances in better shape. Each of them started very tentatively (mostly because I was uncomfortable talking about it), but each grew into a valuable series of conversations for all parties involved.

If you’re dealing with money challenges, don’t bottle them up inside of you. Conversation about them lets you relieve some stress, plus it often opens the road to solutions to those problems. That’s a double win.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

“I think the girl who is able to earn her own living and pay her own way should be as happy as anybody on earth.” – Susan B. Anthony

Today, I’m going to talk about my daughter.

In many regards, she’s a pretty typical four year old girl – at least judging by her peers. She likes to play dress-up – in fact, we have a dress-up tub in our basement just for her. Her favorite place on our property is the sandbox, and the part about winter that she hates is that she really can’t play in that sandbox. She loves to sing and dance, and we can rarely drive more than two minutes without her bursting into song in the back seat. Her favorite toys are building blocks, from which she can build giant towers and crazy sculptures. She seems to believe that a day isn’t complete without an art project, preferably one that involves paper and glue and markers and pens and clay.

Of our three children, she’s often the one I have the hardest time relating to. I grew up in a household that held nothing but boys. All I have is brothers, and all of their friends and most of my friends growing up were boys. The only children close to my age that lived near us were boys. I’m used to the “boy” experience and I understand how boys respond to most situations. The behavior of my oldest child and my youngest child – both boys – makes sense to me based on my own experiences.

My daughter is a bit of a different story. I find myself often watching how she acts more than the other two simply because she often reacts and does things in ways that I don’t expect. She’s a beautiful enigma to me at many times.

After her fourth birthday, we started giving her an allowance, just like her older brother. They both use Money Savvy Pigs and divide up the small weekly allowance (paid in quarters) among the slots.

My oldest son has always taken the “invest” slot in the bank for granted. He puts the minimum amount of quarters into that slot and, although he occasionally asks about it, he actually focuses more on the “save” and “donate” slots. He’s not much of an impulse spender, as he’s already been able to save up for a few very expensive items, and he’s proud to be saving his nickels and dimes for Jump for Joel.

My daughter, on the other hand, was immediately curious about that “invest” slot. What will we do with that money? Will we spend it? What does “I-N-V-E-S-T” mean?

I told her that the money in that slot was for saving for things when she was much older, like college or a car or something like that. We talked a little bit about how many quarters would be in that slot by the time she was sixteen.

Then, I set the hook. “You know, the money in that slot has the power to grow on its own.”

Her eyes lit up. I explained that we could take that money to a bank and put it in a savings account, and for every four quarters she left in there for a while, the bank would give her a penny. I mentioned that there were other things you can invest in where you might even earn more than that, but you might also lose some money, too.

She was fascinated. She wanted to start “invess-TING” right now. Right now.

Before I had a daughter, I didn’t know what to expect. Now I do. This girl is a thoughtful, intelligent, quick-witted, vibrant person who deserves every chance in the world to take it all by storm. She has all the ability in the world and a skill set that is different from but at least equal to that of her siblings.

When I hear that there is still a pay discrepancy between genders, I shudder. She’s growing the passion and skills needed to take on practically any job thrown before her, so why should she not receive equal pay?

When I see that an opportunity discrepancy still exists (whether in fact or in perception), I shake my head. She’s incredibly capable of taking on impressive challenges, even at her young age. Why shouldn’t she get that opportunity as she reaches adulthood?

One of the personal goals that Sarah and I have for our children is to ensure that they can follow any educational path after high school that they wish and they won’t be limited by money or economic opportunity. Part of achieving that goal is to make sure that they have every skill and every piece of knowledge that we can give to them as they grow up. I want every single one of them to swing for the fences, and the biggest thing I hope for is that they’re each judged by and are given opportunities by the level of their skills and the content of their character, not by their gender.

How do we do that? We have well-funded 529s for each of them. We spend a lot of time engaging with them on educational endeavors – a trip to the Science Center of Iowa is a family event, for example, and we’re constantly doing writing activities and math activities and science experiments together as a family. In contrast to a lot of what we see around us, we’re encouraging our children to take control of tasks and projects and assert their independence. For example, our six year old can find his clothes, take a shower, get himself dressed, brush his teeth, pack his backpack, and get out to the bus stop in the morning (I’m around to converse with him, but he does this himself).

This little girl (and her two siblings) deserves every opportunity in the world, and it’s our job to make sure they have every tool we can give them to grab ahold of those opportunities and run wild with them. Doing that is a financial commitment and a time commitment and an energy and patience commitment, but it’s one that has giant rewards: independently functioning and thinking adults who can make a positive impact in the world.

That, to me, is “invess-TING” at its finest.

One of the best personal finance tasks I ever took on was building a personal net worth calculator.

It was a simple little thing (in fact, I wrote a tutorial on how to build one in any spreadsheet program you have, very little knowledge required). All it did was add up all of my assets, add up all of my debts, then subtract my debts from my assets, leaving me my net worth.

The spreadsheet simply consisted of a list of all of our significant assets – our retirement accounts, our checking accounts, our savings accounts, our vehicles, our home – and their approximate values. It would also include each of our debts – credit cards, car loans, mortgages, and so on – and their current balances.

All I had to do was enter the new balances and values for each of these things at the start of the month, and the spreadsheet would automatically calculate my total assets, my total debts, my new net worth, and how each of these numbers compared to the previous month and to the previous year.

For years, I did this diligently every single month. It almost became a ritual for me. I’d open up that spreadsheet, gather up all of my information, and then either revel or despair in the results.

It was an enlightening and valuable experience.

Why was this so worthwhile for me?

First of all, the whole process gave me an incredible amount of motivation. Each month, I felt strongly motivated to make sure that my net worth went up. It was a very simple way to check whether or not I was truly living by the “spend less than you earn” mantra. If my net worth went up, then I was spending less than I earned. When that happened, it felt good. It felt like I was making good decisions in my life.

The change in net worth became a big driving factor in my day-to-day decisions. I would often use that number as a motivator to make lots of little choices throughout the month. I would choose not to stop at the bookstore, for example, because I would tell myself that it would hurt my progress with that number.

Perhaps just as important, the numbers would clearly tell me if I wasn’t following a good financial path. If I didn’t see an increase like I expected, or if I saw a net worth decline, I knew I had to shape things up.

Numbers don’t lie. If your net worth goes up over a given period, particularly if you don’t have a large amount of money invested, then you were making good financial choices during that period. If it goes down, then you were perhaps making poor financial choices during that period. At the very least, a decline means that you need to look into the reasons for that decline and likely make some changes.

Avoiding the numbers is a mistake. If you choose to trust your instincts or your gut feelings when it comes to your finances, you’re almost always going to find yourself bitten by those instincts. It’s incredibly easy to overlook and forget about little things along the way. When you rely on the numbers, the little things don’t just disappear on you.

Eventually, I reached the point where the ups and downs in my retirement savings and my children’s college savings were having more of an impact on my net worth than any of my personal choices, so the routine became less important. Over the years, though, the process instilled in me a great deal of accountability about the power of the little decisions I make every day.

If you’re struggling to get your finances in order, start making yourself accountable. A simple net worth calculator is a great place to start.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

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. Trading cars before a move
2. Handling an old retirement account
3. State income tax after leaving
4. Student loan repayment plan
5. Unexpected job offer
6. Job change and unfinished mortgage
7. Reconnecting
8. 401(k) loan for debt?
9. Which insurance policies?
10. Best books of 2011

Yesterday, my wife and I took a long walk in the park with our kids. The grass was green and there were people jogging and riding their bikes.

We stopped at the playground and played for an hour. Several other kids joined them at various points.

This is mid-January in Iowa, remember.

Q1: Trading cars before a move
In May 2011, I bought a 2008 Certified GMC Acadia for $28,5000. Currently we are paying 2.5% APR loan, a very comfortable $400 monthly payment, and owe $16,000. The problem is my husband just received news we are moving to Italy. Italy has small roads, lots of mopeds, and tiny parking spots. A SUV that has a lot of blind spots is not ideal when it comes to driving in traffic, mountain areas, or parallel parking in the city. Not to mention the likelihood of accidents and the high cost of repairs in not good. I also have a child and back issues. So considering all of this I am thinking about trade-in my GMC Acadia for a BMW X3 or something similar. My car is on only worth around $23,000. A total depreciation of $5,500 in 8 months. We do not have time to private sell, only about a month til we ship the vehicle. Am I making a huge mistake trading in the car? Can I ask the finance company to finance the other car, and will the dealership trade in a more expensive car for a cheaper one?
- Kelsey

I agree that large SUV is really not a good choice in that environment. If I were in your situation, I would probably sell the Acadia.

Your challenge, of course, is the short time frame. If I were you, I would list the vehicle on Craigslist immediately for something approaching the list value of the car. We purchased our car on Craigslist and were able to go from listing to completed purchase in about two weeks, so you do have time for that.

If that doesn’t work for you, your best option is probably to trade in the car. You’re much more likely to get some value approximating the trade-in value in the United States rather than in Europe, so I would trade in the car for something smaller before I left. If you downgrade enough, you should be able to make the trade-in work without incurring a big lump sum expense.

Q2: Handling an old retirement account
My husband had a retirement account for his post-doc that ended in march. It was in a TIAA-CREF account. We are no longer making contributions to it and am wondering what to do with it. We will be leaving the country in 2012 and will be working in a different economic structure, therefore, we don’t know our future regarding coming back to the states or staying out. I think the balance last we checked was around $8000. We also have a state fund with maybe $300 or something in it. I honestly have no idea how these things work and the money is sitting. What would you advise us to do?

Our finances are simple: $1800 monthly income, about $1200-$1300 expenses, $6000 in student loan debt at 1.65%. no other debt/expenses.
- Monica

I would leave the money for the time being. When you reach an appropriate retirement age, you can withdraw it as normal income in the United States.

The other option would be to empty it out right now, but you’re going to take a tax penalty for doing so. From what you’ve described, there really isn’t any sort of rollover option that would provide you any real benefit.

I would just leave the money there and consider it a start on your retirement. You’ll be able to get the money out of it wherever you’re at.

Monica had a follow-up question.

Q3: State income tax after leaving
Leaving the country, we are required to pay income taxes. I’m aware of the $92000 income limit on federal tax exclusion on foreign income. Virginia (where we live, we rent) requires tax on all income, regardless. This is what I know. However, we will be leaving and probably will forward mail to my parents (who live in VA). Would you happen to know how this works? We don’t own property and won’t rent so technically we aren’t residents anymore. Does that mean we still need to pay VA taxes?
- Monica

In order to maintain U.S. citizenship, you have to continue to file federal income taxes each year, and you’ll have the income tax exclusion you mentioned.

However, it is often very difficult to get rid of your “tax domicile” status in states once you move abroad. You will need to remove all evidence of your residence in the state, including voter registration, addresses, your driver’s license, and so on.

If I were you, I would consult a Virginia tax attorney to help with this process. The cost of it will be more than made up by the taxes you’ll save by doing this correctly.

Q4: Student loan repayment plan
I’m a 25 year old college graduate that took out $29,500 in student loans (no credit card debt). In 28 months of repayment, I’ve gotten my outstanding balance down to $17,925. I’m fortunate enough to be able to afford my payments and even have some money left over to eat and have fun, but I want to start paying down this debt aggressively, and I’d like some help gaming the system. I’ve been running some numbers, but I’d appreciate getting them double checked by someone who knows a bit more than I do about the subject.

Now for the numbers (rounded to the nearest $5):
$3,545 @ 4%
$9,790 @ 4.538% (weighted average)
$3,180 @ 6.55%
$1,410 @ 2.625%

My current minimum payments are $277.53 and I’ve decided I can pay an additional $300 every month (which I’ve been applying to the loan with the highest interest rate). No matter what my minimum payment becomes, I’m going to continue paying $577.53 per month and applying the excess to principle.

The last three loans I listed are serviced by the same company and I’m eligible for an income contingent loan repayment option that would cut my total minimum payment to $173.40 (and possibly extend the repayment term up to 25 years).This seems to be the best option to me because what I didn’t tell you is that I’m planning on applying to graduate school in fall 2012 and will (hopefully) begin school again before my loans are fully repaid (in which case the lower monthly payment will be really helpful). Or should I consider consolidating all my loans and just pay that down aggressively.

Lastly, is there any way I could get in trouble for what I’m trying to do? I can’t imagine that I would, but I don’t want to get blind-sided by something I can’t imagine.
- Lily

You should not consolidate your loans into a loan with a higher interest rate than any of the loans you consolidated. So, for example, unless the consolidation offer is less than or equal to 2.625%, I wouldn’t consolidate that bottom loan.

The reason for this is that the higher your interest rate, the more you’re going to pay over time to that financial institution in pure interest. You want to do what you can to minimize that interest.

If you’re not sure you’re going to be able to cover the payments in graduate school, save that additional $300 a month for now and use it to have a healthy emergency fund.

No, you’re not going to get in trouble for any sort of consolidation that you do.

Q5: Unexpected job offer
I have been at my current job for 6 months and I love it, but the pay is not great but I knew that going in and is enough to support my family especially when my wife finishes nursing school.

Recently though I have been approached by 2 separate companies about working on the private side in the same field for considerably more money. These jobs would require a few more hours and less flexibility. I was not searching for the jobs and had no idea before hand that they were available. They both would have me doing almost the exactly the same things in the same area.

If the money was not a good bit better I would not consider them because I am happy but that kind of pay increase would make a difference. MY main hesitation is I have only been here 6 months and don’t want to burn bridges because the new jobs would interact highly with the people I work with now.

Should I pursue these offers or stay? I would hate to leave and regret it if there is something I do not like. I would also hate to stay and wonder what if.
- Annie

You never have to burn bridges when you leave one position for an obviously better position. If you’re open and candid about your reasons for changing positions, virtually all rational people will understand. If you leave in a way that makes the transition easy for your previous employer, that’s even better.

That doesn’t answer the question of whether the grass is greener on the other side of the fence, though. If you have enough to support your family, is the additional money worth the risk of having a worse job environment?

I can’t answer that question for you, but if I were in your shoes, I would lean toward sticking with the good thing.

Q6: Job change and unfinished mortgage
I’m soon to begin the final semester of my Master’s degree program in Public Administration. With this goal nearly accomplished, I (along with my wife) am facing a difficult decision in looking for a new job. I am interested in entering the field of city management upon graduation. Initially, this change is likely to force us to move to a smaller, more rural community. We currently live in a suburb of the Twin Cities metro area. While I’m not so concerned about the culture change, I do worry about the housing situation in potentially having to continue paying the mortgage for our current property while also either renting or purchasing a home in a new area. Is there any advice you can give on making such a transition given the current housing market? Would we be wise to try to find renters for our current home or put it on the market as soon as we know where and when we may be moving?
- Ron

I would put it on the market now, actually. List it for the price you would like to get, then gradually lower it as your expected moving date nears.

If you get it sold for the price you want, just move into an apartment for the remainder of your stay in the Twin Cities. It will have been worth it because of the extra money made from the sale and the fewer months spent paying interest on your mortgage.

Also, the longer it’s on the market, the more likely you are to simply find a buyer, which can be difficult in the current housing market.

Q7: Reconnecting
Is there really value in reconnecting with people you haven’t seen in a long time? I recently got an email from someone I used to work with but haven’t seen in ten years. She’s coming through town in a few weeks and wants to know if we can have lunch somewhere. I’m trying to figure out if this is even worth my time for my career. Any thoughts?
- Lindsay

If you have no interest in seeing this person beyond a questionable amount of career improvement, it’s probably not worth the time. You’d be better off spending your lunch shoring up a connection you actually value than this one.

Having said that, there is value in maintaining professional connections, even ones that don’t seem to be specifically beneficial to you at the moment.

I’d ask myself if there was something better I could genuinely do for my career during that lunch than meeting with the old contact. If there is, I’d do that. If not, I’d meet that person for lunch.

Q8: 401(k) loan for debt?
I hope you have time to answer this question. Here’s the info: I have some credit card debt. $2500 on one card with 10% interest and $2000 on another card with 8.9% interest.

I am considering taking a loan from my 401K of $2500 to pay off the one credit card. Then I would concentrate on the other one, making $500 payments per month to pay it off.

The 401K loan would be for 6 months. The interest would be $67 and the fee to take out the loan would be $100. The payments would be automatically deducted from my paycheck.

I have $1400 in a savings account and approximately $100,000 in my 401K and IRA.

Part of me thinks I should take the money out of savings, pay down the smaller amount and keep paying monthly until it’s paid off and then focus on paying the other one and NOT take the loan.
- Elizabeth

I would not take out the loan. 401(k) loans work okay if everything goes perfectly, but even in that case, you’re still borrowing money to pay off other borrowed money. You’re not really getting ahead.

If it doesn’t go perfectly, the drawbacks can be pretty bad. The interest you paid already is lost. The loan is taxed as normal income, plus there’s a 10% penalty that you have to pay to the IRS. That’s far worse than the small amount of interest you’re saving.

If I were you, I would keep at least $1,000 in savings, use the extra $400 to pay down the loans, and just focus your energy on wiping them out through small steps and good choices.

Q9: Which insurance policies?
I have recently (November 2011) transitioned from a full-time position to three part-time (online) positions in order to allow me more flexibility (while I complete my doctoral dissertation). My wife is stay-at-home mother to our (almost) six children. We expect to remain in this situation for up to 6 months. Each of the current income streams are considered part-time employment (W2; not 1099). None come with benefits.

I’m comfortable with not contributing to any retirement plan during this short-term situation (particularly since its a 40% pay-cut for the short term). My concerns and inquiry relate to insurance coverage.

We currently have health insurance in the form of a HSA account with a HDHP. That was/is separate from my employer. We lose vision/dental coverage and I’m comfortable with that for the short-term. Life insurance plan (both the base employer-provided plan and the additional rider) are gone (at least I assume they are). Disability insurance plan is gone. I do have a liability policy that was/is separate from my employer but it specifically notes that it is secondary to the policy previously provided by my employer.

During these next 6 months, what sorts of policies should I be getting?
- Robbie

If you have six children, you absolutely need life insurance coverage. You need a term policy that will take care of those six kids in the event that something happens to you. This is without question. Get this now and don’t relinquish it even after you’re employed.

The other plans are more or less connected to the actual state of your finances at the moment. I’m not clear as to whether you’re going to be struggling to keep your head above water during this period or if you’re spending far less than you earn. If you’re cutting it close, the one I’d consider most strongly would be the disability plan.

The biggest thing you need to be concerned about is making sure those kids are protected if something disastrous happens to you. Life insurance is the 800 pound gorilla here.

Q10: Best books of 2011
Over the past few years, you’ve often made a top ten list of the books you’ve read from the previous year. Did I miss it or did you make one for 2011?
- Charlie

I did make such a list for 2011, but I posted the list over at my other blog that focuses on my other writing endeavors and non-personal finance stuff.

Anyway, here’s the list. It’s the ten books I read that were actually published in 2011 that I have a desire to read again at some point. Pretty simple, huh?

Steve Jobs by Walter Isaacson
1Q84 by Haruki Murakami
Moonwalking with Einstein by Joshua Foer
REAMDE by Neal Stephenson
Ready Player One by Ernest Cline
The Information by James Gleick
These Guys Have All the Fun by James Andrew Miller and Tom Shales
A Dance with Dragons by George R. R. Martin
Blue Nights by Joan Didion
In the Plex by Steven Levy

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.

Yesterday, we talked about the ten second rule, which you can use to protect yourself against impulse buys that are well within the limits of your pocket money. We’re talking about things like a pack of gum, an inexpensive board game, or something like that.

As I know all too well, though, many of the purchases we make are much larger than that one. I’ll give you an example: our blender.

We use our blender for a lot of things: making smoothies, beating eggs, making pesto, and so on. A while back, one of our beautiful children did something incomprehensible to the blender (as children sometimes do), rendering it very difficult to use. You could still use it, but you had to hold something over the top of it while also holding the entire machine firmly in place.

Our initial instinct was to just rush right out and replace the blender with a similar model. It did a decent job, though it would often leave big chunks in the blender and had other little design issues that we didn’t like. It would also take forever to blend certain things.

Instead, we made the decision to buy a better blender.

Now, we could have easily still ran to the store and bought a better blender, but the decision to buy a better one meant that the cost of the blender likely jumped up into the “more than pocket money” category. We weren’t going to just buy a $20 blender.

Instead, we gave it a month. During that month, we researched a lot of blenders. We did some evaluations of what features we actually needed and which ones were superfluous. We settled on a few models and did a ton of price comparisons.

In the end, we wound up with a top-notch blender for far less than we ever expected to pay for it (meaning we did not pay anything close to Amazon’s price for that blender).

That month did a lot of things for us.

We had time to figure out if this was something we really wanted to do. Did we really need a nicer blender? Could we just use a simple replacement for the one we already had? Did we need one at all? These questions are often enough to talk you out of an unnecessary purchase. Try doing this with, say, an iPod Touch, and you’ll find yourself not spending $200 or so on a portable music player.

Obviously, this question didn’t fill all of our thoughts for the month, but it was something that we thought about.

We had time to actually identify the specific item we were looking for. We identified all of the specific features we wanted as well as features we deemed unnecessary. We were able to research a lot of models using tools like Consumer Reports and, eventually, we were able to whittle our choices down to a handful.

We had time to carefully shop for the right item. Instead of just charging ahead once we had an item in mind, we spent some time shopping around for that item – and waiting for the right price. We set up some notifications for prices on the items we were interested in and looked at a lot of different options.

Eventually, the blender we picked up popped up with a large discount, so we pounced.

Give yourself thirty days to go through this process. Most of the time, you’ll talk yourself right out of the purchase, which is a good thing. Even when you don’t, your research and price investigation will often lead you toward getting the best item at a very nice price, rather than just getting whatever item happens to be at your local department store.

You should also set a price threshold for the thirty day rule. What do you consider to be the line between an impulse purchase out of your pocket money and a more significant purchase? For me, it’s usually between $20 and $40, depending on how much of my alloted “pocket money” for the month that I’ve spent. It’s going to be different for each person depending on their income level, behavior level, and other factors.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.