Reader Mailbag #27

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Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently.
When does all the hard work of saving money pay off?
How it felt to hit my financial rock bottom
What I did next
And now for some great reader questions!

I am saving $2500/month. I have no debt and I’m 26. My question is what do I do with the money – I really want to invest it in index funds and I feel that it is the right thing to do, but with the market being the way it is, I can’t bring myself to do that when my HSBC savings account guarantees a 3.5% return. What would you do with the monthly saving if you were in my shoes?
- Joe

Joe, your question is emblematic of a lot of questions that I hear. To put it bluntly, you’re putting the cart before the horse.

Why are you saving $2,500 a month? What is the purpose of socking away $30K a year? What are you intending to do with it? Are you going to buy a house? Are you going to start your own business? Are you planning on just dropping out of the rat race in fifteen years?

Figure out what your goals are, then figure out a timeline for those goals and what you need to save to make them happen. Remember, longer-term goals (those more than 10 years down the road) often are best served with stock investments (as they have the potential for big gains), while shorter term goals (those less than 5 years) are best served with very stable investments, like bonds and treasury notes and even high-interest savings accounts.

Let the goals lead you.

Do you have any advice on being effective and efficient on social media sites like Twitter & StumbleUpon?
- Laura

Frankly, I don’t use them very much at all. I like Twittering sometimes, but mostly as a way to just toss off some fun random thoughts. I find most of the social bookmarking sites not compelling enough for me personally to get deeply involved.

Your best bet, if you want your site to be popular on social media sites, is to write good stuff that people want to read and link to. The more good stuff you write, the more likely people are to eventually discover it and share it themselves.

Obviously, you need those initial eyeballs. The best way to do that is to simply link a lot to sites somewhat more popular than you, but not incredibly more popular. If you link to Lifehacker, they won’t notice – they get hundreds of links a day and only notice it when “big” sites link to them and drive significant traffic. Instead, link to sites with roughly 1.5 to 2 times as many subscribers as you have. You should also talk to other bloggers that are even more popular in your genre.

Once you start generating links – and they will start if your writing is good – it seems to almost self-perpetuate as long as you keep writing good stuff.

I recently started a home-based business.
I am struggling to figure out how to get the money for inventory, which I desperately need to have on hand to demonstrate before I can sale them.
My husband and myself are disabled and the only income we live off of is his disability. Our credit is beyond bad, so needless to say we can not get a loan or finance anything.
I have tried to search for grants, but have been told there are no grants for individuals unless it is a non-profit.
I have also considered finding a sponsor but have been unsuccessful.
I need between $2000. to $2500. dollars to get the inventory, and the office space, supplies, etc.
Any help, advice would be greatly appreciated. I am 54yrs, old and tired of struggling from hand to mouth, there has got to be something out there that would benefit not only myself, but the population I would serve.

- Deborah

Have you considered looking for an investor in your business from within your family? Perhaps someone you know will put up the money for a slice of your business, or maybe they’ll give you a low-interest loan to help you get started.

It sounds to me like you have a good idea but you need a bit of cash to get things going. Given the amount, I’d start with family members. If no family members are available, stop by your local credit union and ask about small business loans.

My wife and I are still working out the details, how do you make your kids do their own thing, rather than pushing your agenda on them?
- SteveJ

Even from an early age, I was interested in stuff that my parents were not. My mom’s solution was simple – as long as I wasn’t doing anything illegal or unethical, she gave me a lot of free reign. She took me to the library to find out more about whatever I wanted and, whenever I did have an interest, she would encourage me to follow it, no matter what it was.

My parents only ever wanted one thing from me, that I was a good person who treated others well. That’s all they wanted – anything else I did was up to me. If you have an “agenda” for your kids because you believe you know what’s best for them, dial it back a little. Instead, watch what they’re interested in and encourage them strongly in that direction.

For example, if you want your kid to be an engineer, but they loathe math class and spend all day in their room playing on that infernal keyboard, maybe there’s a clue right there. Instead of preaching about college and good grades, get them some sheet music and encourage them to join a band.

Your goal as a parent should be just to ensure that they have a good framework to build upon: solid character, a desire to learn and grow, and the basic social and life skills they need. Beyond that, it’s really up to them. Focus your energy more on teaching them basic life skills and let them find their own path and their own passions.

Yesterday I received an offer from a bank to open up a new checking account. I saw that they also offer checking accounts to college students and high school students, as long as the parents co-sign. I had to call, and was horrified to learn that 13 year-olds qualify. What do you think about this?
- Francine

A checking account can be a good learning tool for a thirteen year old. Why not? It teaches them about account management, how to write checks, how to use a debit card, how to read statements, and so on. Those are all lessons you can be involved with as a parent, because a thirteen year old is starting to take their first steps into the real world independent of you and it’s your job to teach them life skills.

I am thinking of investing in a good quality microshredder. Would you recommend one? I have a big pile of photocopies which should be shredded before discarding and hence I am primarily interested in good capacity.
- Pankaj

From my experience, all of the Fellowes PowerShred models are solid. It all comes down to how much you value your time, really. If you buy a more expensive one – like the PowerShred SB-97Cs – you’ll get through your shredding substantially faster (because the shredder runs faster, it has a larger bucket, and you can put in more pages at a time), but you’ll pay substantially more up front.

A “big pile of photocopies” might be 50 – in which case a low end one will suffice – or it might be 2,000, in which case a high-end one would be more time-effective, especially if you’ll have more in the future. We’ve had two low-end ones over the last several years and, honestly, I’ve hated them both.

Trent- here’s a question for you. While perusing one of my free credit reports, perhaps with much more thoroughness than normal, I stumbled upon my good “friend” AMEX, and realized they’ve done some major pulling from my credit reports- 13 times since 12/2006. I do not have any accounts with them. Know any tricks, tips, etc. to ask them to stop? I think that’s pretty ridiculous.
- Amanda

Most likely, those pulls are “soft pulls,” meaning they have no effect on your credit rating. Those are done mostly as a pre-screen to send you credit card offers, and there’s not much you can do to keep a specific company from doing “soft pulls” on your account.

There are some sites out there that claim to allow you to “opt out” of prescreened credit card offers, but I have serious questions about their legitimacy and wouldn’t give my personal information to them. Instead, just don’t worry about it – take those credit card offers and just shred ‘em.

On your recommendation, I picked up Ticket to Ride as a birthday gift for my husband. We both love it and we play it several times a week! How did you find out about Ticket to Ride and how can I find other games like it?
- Lisa

Ticket to Ride is part of a genre of board games often referred to as “Eurogames” or “European board games.” I was first introduced to the genre by a friend, who got me into playing Settlers of Catan, which I played literally hundreds of times with my wife and another friend of ours.

After a while, I began to seek out other games like Settlers and I found the best board game resource on Earth – BoardGameGeek.com. It’s a gigantic collection of board game reviews, comments, and recommendations of all kinds. One great place to start is their “Top 100″ list, which lists the highest rated games of all time on the site.

Be aware that some of the games you’ll find there are substantially more complicated than Ticket to Ride. One thing that might be useful if you’re starting from being familiar with Ticket to Ride is the “You Might Also Enjoy…” section on BGG’s Ticket to Ride page, which includes Settlers of Catan, Power Grid, and Carcassonne, all of which we own and like.

I tend to spend very little on clothing, because it seems like a waste of money to me. Recently, though, I’ve been pushed up into a much higher paying job at work where everyone else dresses in new and expensive clothes. Yesterday, one of my new coworkers took me aside and basically told me in no uncertain terms to upgrade my wardrobe. What should I do?
- Helen

You need to update your wardrobe, not because you personally value it, but because it’s part of the expected decorum of your workplace. For better or worse, professional attire is an expected part of certain jobs. From my perspective, it’s a hidden cost – if you’re spending $2,000 of your post-tax income each year on dressing for “success,” that’s actually about $3,000 or so in lost salary just for the clothes. Sometimes high-paying jobs aren’t all they’re cracked up to be.

So, how do you go about updating your wardrobe for cheap? My vote is to pick sturdy clothes that mix and match well together so that you can appear to have a diversity of outfits without actually having that full of a closet. Your best bet is probably to grab the most professional-looking dresser in your office place and ask where they shop, then use that as a starting point.

The bill from this is likely going to be painful. Consider it a necessary expense for the nice new job you have, though.

How do you handle it when you’re having a dinner party where you’d like to invite more people than you have room for?
- Annie

It depends on how formal the dinner party is. If things are formal enough that your head count is locked pretty tight, my suggestion is to host a number of parties in reasonable succession so that all the people you want to invite get an invite to at least one dinner.

I know at least one family that seems to have a weekly dinner party with a widely rotating list of guests. They do this to maintain a strong social network and it seems to work well for them. Perhaps you could get into a regular routine of having these events and change up the invite list each time so that people you want to invite don’t get left out all the time?

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

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67 thoughts on “Reader Mailbag #27

  1. What if Helen doesn’t agree that her new job is “nice”? From her letter (and especially how she says she was “pushed up into” it) it’s not at all clear that she does. There are plenty of reasons why someone might prefer a lower-paying job to a higher-paying one within the same field – sometimes the high-paying jobs are a lot less interesting, for one.

    Is there a way to tell an employer, “No, I don’t want that promotion – I’m happy with the position I’m in now” without coming across as an apathetic slacker?

  2. My wife said you mentioned BoardGameGeek.com today. :-)

    I have to include that I have saved a substantial amount of money that goes toward my gaming hobby on BGG. I’ll find games at thrift stores that I know rate okay, then trade them to other members for games I’m after. It’s a win-win situation and everyone saves a couple bucks in the end. I am “fygar” on BGG. Hit me up!

  3. I think among people who don’t value clothes, they assume that people who do dress nicely tend to spend all their free time shopping for expensive clothes, which simply isn’t true. I don’t make much but I think it’s important to look like this job means a lot to me. That doesn’t mean I own very pricey clothes. Suits from places like Benetton, Express, and Lane Bryant, if one is a plus size, are all well within the $200 range, and you really only ever need one. Stock up during sale time (which unfortunately just passed but will come around again in Dec/Jan). Upgrade your pants to at least three pairs of the following colors: basic black, gray, and a striped option, and then get a few button down tops in various sleeve lengths. You don’t have to be a fashionista to look put together. Think if it as a school uniform.

  4. I was intrigued/confused by your suggestion that a checking account is a good idea for 13 year old. My oldest is 17 and opened a checking account earlier this year for direct deposit of her paycheck. She is a fairly responsible child but if I ask her what the account balance is, she usually has no idea. I have yet to be able to impress upon her the need to write down all of her deposits and withdrawals in her account register. Fortunately, she does not make many withdrawals and she has never incurred fees, but I could see this easily happening if I did not keep on top of it. She wants a debit card so that she can us it to buy “gas for my car mom, I promise I won’t use it for anything else”. I have nixed this idea until she can prove to me that she is keeping track of her account activity for several months. I cannot imagine doing this with a 13 year old. Plus, at least in PA where I live, she cannot legally sign a check. The account is in both of our names but until she turns 18, I am the only one who can legally sign the checks.

  5. I wish I could be saving $2,500 per month. At the moment I am in no debt. However, I am about to go into a marriage where my wife and I will have over $10,000 in debt. I am hoping to pay this off before we get married or within a few months so we can start building wealth together.
    Also hoping the income from my entrepreneurs blog will start covering more of my online expenses.
    Thanks for the reader mailbag. Can’t believe you have done 27 already. Can’t wait for 28

  6. Question for the next mailbag: What is your proudest Simple Dollar moment? You’ve received a lot of media mentions, surpassed some pretty big subscriber/traffic goals, etc. I’m curious which Simple Dollar “moment” you are most proud of.

  7. Kudos to you for encouraging your kids to discover their own passions. My own parents would be horrified at your advice, however. They would wonder how any responsible parent could encourage their child to be a starving musician instead of a well-paid engineer. That’s the approach they took with me, anyway.

  8. I have a question:

    My parents are financially well-off and come round to visit every now and then. They are particularly interested in home/garden stuff and often notice if a bit of work needs doing on the house and ask me why I don’t get it done. The reason is almost always because I am saving for it (being on a tight budget myself). They will then always offer to pay for it, saying what’s the point in them having money and whilst I don’t. I’m not against accepting help but I don’t want to live off other people’s charity (even my parents). On the other hand am I an idiot to turn down help like this?

  9. I got my first checking account at 11, and my 3-year-younger brother got one at the same time. It’s pretty common in Holland. Kids’ checking accounts can only ever stay in the black – no overdraft possible. Of course, a kid with a checking account can waste his/her money pretty easily, but so can a kid who gets their allowance cash.

    I think the special kid-accounts are a nice way for kids to learn how to deal with things like online banking, writing checks, using their debit card and getting money from the ATM. Of course, the ‘no overdraft allowed’ feature makes it somewhat less pertinent to know the balance, since you can’t get into trouble anyway. However, I’m 25 now and STILL can’t overdraw my account, since I never enabled it. And yes, I do know my balance!

  10. I’m also a huge fan of “Ticket To Ride” and other Eurogames. It’s sometimes hard to find these games locally, and they can be very expensive depending on who you buy them from. So I wanted to mention the site GameSurplus.com. It’s a store run by a family of gamers and is based out of Lititz, a small town in Central PA. They discount all of their games by 20-40% and offer reasonable shipping rates (You can even stop by and pick up your games in person if you’re local).

    They’ve had amazing customer service when I’ve dealt with them in the past, so I wanted to give something back to them, and also help out any of your readers who, like me, have a weakness for games but are also trying to be frugal at the same time.

  11. Joe might be surprised at how much he might need $30k in the bank at some point. It pains me to have that in my money market earning only 3.5% interest. But when the car got totaled and the insurance company took a month and a half to cut a check I was glad to have that money to go buy a new car with cash. I built the fund back up. Then I decided to move for a better job opportunity. I needed cash to move and a little extra for a house down payment – no problem…didn’t have to sell any equities, just took it out of the bank. Sure it seems a bit silly, but its the right thing to do – you’ll just have to change your mind set a bit – you aren’t a kid any more, you need money in the bank.

    Helen – Arlene gives good advice – navy, black and gray slacks go a long way with sweater sets and blazers. I usually shop at stores like Talbots and I used toll go to department stores too for sales. Just don’t buy cheap clothes because they are inexpensive. You want quality brands that are cut for you. You’ll eventually get to the point where you know what brands look best on you and shopping will get easier. You’ll also be surprised at how much confidence you gain when you look your best – I know that’s superficial, but its true. Good luck!

  12. Helen, I’ve had good luck acquiring nice, gently used dress clothes at second hand and charity stores. This could work for you if you are not too picky about dressing with the latest trends, if you are wanting to go with a more classic style, and if you have a little bit of time to put into shopping. I tend to cruise pretty quickly through the selection by looking at an item’s brand first and size second. Color, cut, etc. are all secondary. If the thing is from a quality brand and in my size, more likely than not I buy it.

    FWIW, I’m a professional, and I’ve been buying about 75% of my work clothes and shoes this way for years. Nobody knows (until I brag about my $2 suits).

    Good luck!

  13. I’ve got to disagree on optoutprescreen.com, which lets you opt out of unsolicited credit card offers. It’s legit (Google it and see – it has a Wikipedia page and everything), and my junk mail had been dramatically reduced since I submitted my information.

    It’s actually a good measure to take against identity theft, especially if your mail isn’t totally secure – someone can grab one of those pre-approved offers and open the card in your name, and you won’t know until you check your credit report. Then, even if you’re not on the hook for the charges, you have the hassle of getting it all cleared up. It’s better for the environment to not get all those offers, too.

  14. To Helen who needs a new wardrobe:

    Figure out where the nearest outlet mall is. Drive out there very early on a Saturday and plan to spend the whole day there. Remember that you probably can’t return what you buy to the regular stores, so make sure that whatever you buy makes you look fabulous before you drive home with it.

    The prices are sometimes only a little cheaper than regular stores, but you will probably save time (and maybe even gas) because otherwise you’d be driving all over the place from mall to mall because it’s rare for one mall to have all the clothes you need at prices that you can actually make yourself pay.

    I guess I’m just very cheap when it comes to clothes. I would never, ever consider paying $200 for a suit! It makes me choke just thinking of it. I once got a good-looking pantsuit at KMart for $38. It didn’t handle washing well, but I wore it to a job interview and other important events before it wore out. My most recent suit was an outlet buy: $130 at Banana Republic Outlet. A little pricey, but this one is higher quality than the KMart buy.

    Hint: If you’re like me and wear widely differing jacket and pant sizes, it’s next to impossible to find suit pieces sold as separates. Good luck.

  15. It’s worth noting that the availability of good-quality used clothing can vary a lot depending on where you are. In the UK, there are charity shops on every street corner, they sell good-quality stuff, and you can find almost anything if you’re willing to look hard enough. In the US, thrift stores are fewer and farther between, and (in my experience anyway) the quality isn’t nearly as good. At one shop in my area, almost everything I looked at was stained or damaged in some way – I never had that problem at shops in the UK.

  16. I am definitely not a clothes horse and do not like clothes shopping, but what Trent said is true, you do need to be presentable for your job. Unlike others I have not had much luck finding clothes at consignment shops, because to me I want both clothes that fit my style AND fit me well, to and the amount of time/and clothes to go through to find that is not worth it. My number one favorite place is Lands end catalog, who will also hem your pants for free. Not the most cutting fashion but well made clothes that look good and last.

  17. On the topic of checking accounts, I had a savings account and ATM card by the time I was eight. That option might be more appropriate for the younger age set, and a parent might hold the ATM card if a child had responsibility problems. I think it might be appropriate for a child to have a checking account once they have a job.

  18. I’m kinda disappointed with the answer given to Deborah. I personally question why she’s starting a business in the financial condition she describes. If your credit is bad and there are two of you living off one person’s disability check, then the one who is not on a disability check should be getting a regular job somewhere for a year and trying to fix your credit score with debt reduction and save the 2,500.00 yourself.

    Small home businesses can be great, but at the same time the facts are very clear about them. 75% of them fail and the ones that DO make it often take 4 to 7 years to break even from their initial start up costs. Can your 2,500.00 investment REALLY pay you more than minimum wage reliably for the next 4 to 7 years AND pay for the business debts?

    My father after retirement had the bright idea to open up an icecream shop. To even compete with Dairy Queen and Baskin Robbins, he had to offer coffees.. then he discovered he was competing again Starbucks as well. To draw in the crowd who’d pay, he had to upgrade the store to look pleasing. It’s year two now, and it took the first half of the year just to break even for the year. Now he’s finally making profit and an income for himself.. but the point I’m trying to make is that hidden costs, things you never counted on, upgrades, inventory, advertising, networking, down turns in the economy… those were all things he never really took into account. Opening up a small business, even an in home business, is only something you should really do if you have the rest of your life in order and you’re ready to devote all of your time to it to make it really work.

    My other story is of someone who ran an inhome business doing internet sales. It barely broke even for three years and she finally gave up. When the company was dissolved, she AND her husband were left with a 22,000 debt that had to be paid because the inventory she had would not sell– so a new loan had to be taken out. They’re going to be paying that off for years. Be careful.. your brilliant idea may make your credit even worse.

  19. Question for a future mailbag: I’d like to start a home daycare. Home-based business books advise consulting an accountant, but I’ve never done so–I’ve always done my own taxes and checkbook-balancing. I’m unclear when I should contact one, and the best uses of an accountant going forward. What can I do myself, and what should I leave to the professionals?

  20. If you are worried about hits to your credit and not wanting to receive pre-screened offers, I suggest optoutprescreen.com. It’s run by the reporting agencies, but has FTC approval:
    http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm

    Frankly, I was mostly concerned about how many trees were being wasted on offers I wasn’t going to use.

    And I fully support the idea of custodial accounts, as long as the parents are involved!

  21. @ Trent: FYI:

    you wrote,”[my mother]… gave me a lot of free reign. ” above.

    Although “free rein” is a fairly common misspelling/ misusage of the phrase and appears to have a logical connection with the intended meaning of “free rein”, ‘free rein”, is the normative form for this phrase and no dictionary of reputation that I am aware of lists “free reign” as acceptable usage. I have also never seen “free reign” in a book by written by a reputable author known for his or her craft in English writing, as opposed to mere subject expertise. Even American Heritage dictionary, not known for being prescriptive, lists “free rein” as standard, not even mentioning the phrase “free reign”.

    You will find acknowledgement for “free reign” in some online dictionaries, but not from the authoritative ones like Merriam-Webster, which accept responsibility for directing correct usage. Here is a link to M-W’s entry for the phrase, followed by the actual text of their online definition:

    http://www.merriam-webster.com/dictionary/free+rein

    ree rein
    One entry found.

    free rein

    Main Entry:
    free rein
    Function:
    noun
    Date:
    1952

    : unrestricted liberty of action or decision

  22. trent, feel free to delete my post above as well as this one if you want after you’ve read and considered them. since I noticed you are now monitoring your submissions I didn’t bother emailing you privately about it.

    P.S. It may be obvious, but i believe the “rein” in free rein refers to the procedure of giving an animal such as a horse a slack/loose or “free” rein so they can move in any direction they want.

  23. @ Ticket To Ride
    Try “Rat Race” too – it’s great!

    @ Checking account for 13-year-olds
    I got my first checking account when I was about 15 or 16, mainly do I could have a debit card to stop me carrying around a lot of cash and so I could buy things from the internet. I know my balance to the nearest £5, and have no overdraft facility and no fees. It’s a safe place to keep money and any irresponsibility is severely limited!

  24. Trent, I also have recently come into the need to wear suits to work rather than the business casual I had been accustomed to (and my new wardrobe doesn’t come with a new salary, unfortunately!)

    Someone at work mentioned that new suits for work might fall under the category of “non-reimbursable business expenses” and might be tax-deductable as such.

    Since this is my first year of “real” work, I’ve never done line-item deductions on my taxes. I work for a small company now with a corporate salary – is this something I should be doing now and do new suits for work count as something I can deduct?
    Thanks
    ub

  25. Hi,

    Therov, I have had a home business for about 10 years and I could not have done it without the advice and guidance of a my very good accountant. I set up my Corporation/busines and found her all in the same week. While some people are good with computer software such as Quicken (Business) I found it all so confusing and frustrating that I have her do everything related to accounting… I earn a good salary from my business and pay the taxes monthly… I’m in Canada so maybe the rules are different in the US but I would say to get a good consultant and accountant early on… I’m glad I did!
    And Aggie is right – it took me a few years to start making a good profit/salary from my home business… luckily I had planned for this but still went through a big chunk of savings to carry me through to the good years… good luck everyone and thanks Trent for the great site. I’ll be debt free in less than a year, have my emergency fund in place and saving 10% of my salary. Since I’m self-empolyed I need to take care of my own retirement… good luck everyone :)

  26. I don’t know if credit card companies check the no junk mail lists before doing soft pulls, but I’ve haven’t received many credit card offers since I stopped my junk mail. I did it through the direct marketing association, which is legit and free.

  27. I’ve had good luck with the opt-out actually. It’s drastically reduced our junk mail, not only for credit card offers, but other “stuff” as well. Google “opt-out prescreen”.

    Re: shredders – we have a Fellowes here at my office and it is great. It is pretty large though, with a big bucket and 25 sheet feed capacity.

    Has the lady starting the business tried prosper.com?

  28. “but I have serious questions about their legitimacy and wouldn’t give my personal information to them.”
    Trent, the government website links to them. They are legit, and it is much easier to stop the offers than to shred the several offers I used to get every day. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm
    Please research them before you say they aren’t legit, as people do take your advice. Or at least explain where your serious questions are.

    Also, I agree checking accounts can be of value to a 13 year old. I had a checking account around them. I’m sure it was mostly empty, at least until I had a job, but it was educational.

  29. therov – I’m a CPA and we always wish people would get an accountant (preferably a CPA) before they do anything. That way we won’t just be cleaning up a mess. A CPA can advise you what entity is best to set up – corporation, sole proprietor, LLC, etc. Also can advise on how to track your business activities to get a better handle on cash flow, inventory and the like.

    Depending on how much work you want to do, you can save on accounting fees. However, is your time better spent running your business or doing the accounting/tax work? Only you may be able to make that call. Good luck.

  30. @Mary Beth:
    Cut the apron strings. There’s no excuse for a 17-year-old to be unable to manager her own checking account, and as long as mommy will step in and fix everything for her, there’s no impetus for her to grow up. Your daughter is like 90% of the girls I knew in college: away from home for the first time and barely able to tie her own shoes, and therefore unbelievably easy to take advantage of. It’s a recipe for lots of early-20′s heartache.

    Let her grow up. The teen years are when you’re SUPPOSED to make mistakes.

  31. Deborah might look into a loan from Prosper or LendingClub or similar sites.

    I’ve used the credit card opt out and it has significantly reduced my junk mail credit card offers.

    Jim

  32. @marybeth:

    i would get my daughter a statement savings account. They take direct deposit and you can also use them to transfer money electronically to places like ING and any sites that take bank transfers as payment.

    Since she can’t legally write a check, why put yourself on the hook for it.

    Also, I would agree that if she has an account and money to spend, I would consider stepping back from policing it. Let her pay for her own mistakes, as long as those mistakes are fairly limited in scope.

    If you are so concerned about her responsibility, I would say cancel the checking AND the statement savings and let her go with a passbook account. If she wants added convenience, she can demonstrate her responsibility and capability first.

  33. Trent –

    How is your “get healthier” plan going? I know you mentioned a while back that you were ramping up the excercise. Has it resulted in some weight loss yet? You mention that you eat a lot of fresh, organic foods. This must help as well.

  34. I have had a checking account since I was 13 years old. It would still have the same account number now, more than a decade and a half later but I was the victim of identity theft. That was one of the hardest parts, having to change my account number after all those years.

    MY QUESTION anyway, for Trent is this: Why is it that when you finally get to a point where you can get ahead you get slammed with unexpected bills? My husband and I just recently got to the point where we are not living paycheck to paycheck. We have a small emergency fund, and have some money each month to snowball. He has even been making a lot of overtime, but since that has happened we have had two emergency room bills, my daughter had new orthodontist bills which we were not expecting, I had to spend half of our emergency fund preparing for Gustav which did not hit us too hard thank goodness… and now our dryer is on the fritz!!! I have yet to use any of that money for the purpose of paying off our debt because of these new bills. I guess the best thing I can say is at least we HAVE the money to pay the bills!! A few months ago I don’t know what we would have done. Why does this always seem to happen to people? It is really throwing off my efforts!!

  35. I meant to say “throwing off my efforts to repay our debt”. I also told my husband we should be debt free in five years, but now I am not so sure!!

  36. michael (Post 21)

    Oh my, you hit the nail on the head for my college dating experience. Girls I knew went from broke to getting their check from home and then blew it all on beer and extravagances. Then they’d go looking for a Sugar Daddy.

  37. Trent, question! In your answer to Joe, you imply that, if he continues to save 2500 a month, within fifteen years he would be able to drop out of the rat race. Is that really possible? Imagine that he does save 30k a year, for 15 years. Let’s imagine some realistic interest earnings of 6 to 8% a year (and nothing like “the company investing the same”, because this is very rare). Would the amount saved be able to support him for the next, say, forty years, supposing he would basically spend the same he spends today? Thanks!
    http://www.escrevalolaescreva.blogspot.com

  38. One thing I didn’t see in the comments, but would suggest to Helen – find someone you trust and who you feel dresses well and ask them to go shopping with you. Not only can they help you search for good deals, but they can be invaluable for letting you know what works – and what doesn’t so you don’t buy things that are cheap, but unattractive on you. I would occasionally fall for the “but it is a good deal!’ ploy, until I realized that $5 spent on something that looks bad on me is $5 wasted. Having a friend help can be wonderful and make shopping less stressful.

  39. @ Helen – There is some great advice online about dressing for success w/out spending a fortune. All I can really say, go for a classic simple look, and fit is very important. Also, find some nice shoes & a nice purse/briefcase.

    Monochromatic, darker clothes – solid pants, and solid or subtle stripes for your shirts. Find some classic black shoes (leather) and keep them polished, and they will look great. Also, find a simple, high-end purse in black and it will last through many seasons.

    you can always update a classic look by updating the accessories – perhaps splurge on a designer scarf to go with your plain white shirt – what people will notice is the designer name on the scarf.

  40. In regards to the question about Twitter, etc. – you advise to “link to sites with roughly 1.5 to 2 times as many subscribers as you have. You should also talk to other bloggers that are even more popular in your genre.”
    I’m new to blogging and I wonder how you find these sites – ones that are somewhat more popular.
    Thanks,
    Robyn

  41. For dress clothes, careful monitoring of the websites of places like J. Crew and Ann Taylor and Banana Republic can be quite helpful. They have frequent online sales, and with patience you can do fairly well there (it doesn’t take too long to check the sites). Lands End, too, although it’s a bit dowdier.

  42. Kids with checking accounts: totally depends on the responsibility level of the kid – but if it’s their money anyway, why not? I had a HARD time getting a checking account at the age of 17 when I went off to college – the local banks would not give one to a minor, even with a co-signer. It’s awfully hard to have your parents pay all your bills from 400 miles away, especially if you get a job and are earning money yourself.

    The advice for Helen is pretty good, IMO – I found a lot of help from the books “The New Women’s Dress for Success” (although it’s a bit dated) and “Casual Power”. Both are geared toward women in exactly this type of position – KNOWING you need to dress better, but not really knowing how. “Casual Power”, in particular, has good pictorial examples.

  43. @Robin:
    You read a lot in your genre. It’s important to connect with people who might be interested in your blog. Depending on your niche you might be able to estimate relative size by number of comments, or by numbers of subscribers.

    In any case, it doesn’t hurt to link to people who are small, nor does it damage your credibility to link to people who are big. But about the same and bigger is the most helpful.

  44. Question: What are the rules in the United States in regards to loaning money to individuals such as friends and family? What dollar limits and interest rates am I allowed or limited to?

    Does the IRS have a ruling on this and if so what is it? I assume, being as greedy as our government is, that there are some sort of rules.

  45. In responce to the woman who needs new clothes…
    I know exactly how you feel. I was just in the same situation. Consignment shops are wonderful! No one has to know that your clothes aren’t brand new. Also outlet shops.

  46. I also got my first checking account at 13. My parents encouraged me to keep track of my money when I was young, and it worked–I began investing by the time I was 18. Letting kids be in control of their money can give them an incentive to pay attention to it.

    Also Trent, next time you go to buy a board game, I HIGHLY recommend Agricola, which was released about a month ago. It’s a bit pricey and a little complicated at first, but it’s just a refreshing style of game play.

  47. My situation is a little different. How do I go about getting paid for a CD after the bank changes hands. The CD in question was bought in 1997, and the original owner died; however, he had named me as survivor on the CD in case of his death. The CD has a renewable clause until it is paid. The bank says that they absorbed the CD after 7 years and that there is no record. I know this is different from the other banking posts, but if you have any ideas; I sure would like to hear them.

  48. Jane, did you contact the bank upon the original owner’s death and convert the ownership to yourself? The bank would never know of the circumstances the CD unless someone tells them. Unclaimed accounts and those with no activity are typically listed in local newspapers after a specific period of time when correspondence to the owner of record goes unanswered. Depending on your state’s banking laws, either the bank or your state’s treasury will confiscate unclaimed funds after the public announcement does not result in finding a rightful owner.

  49. Regarding the self-employment thing: reading between the lines, it sounds suspiciously like one of those AMWAY things, where they talk about helping people start their own business– but actually make all their money by selling inventory kits (and such not) to new recruits, who almost never make back what they put in (for inventory, training videos, seminars, etc).

    Something just smelled funny about the description, and I worry that Deborah and her husband are being sold a line of goods (so to speak) and getting ripped off on an “inventory purchase” that isn’t even going to earn them back their starting investment.

  50. For Helen:

    I have had very good luck clothes shopping at thrift stores. You have to be patient and take the time to go through the racks and try everything on, and check for stains and damage. If you keep looking, your patience will be rewarded. I recently scored the perfect “little black dress” for 8 dollars at a thrift store. I would have paid ten times that much if I bought it new at the store it originally came from.

  51. I agree with all the others here about secondhand shops.

    My wife and I often find brand new items at places like goodwill and savers. I bought 4 T-shirts a few weeks back and 3 still had the tags on them and the other one still had the folds and appeared to never have been washed. I paid $1.25 for each one. They were all brand name and would have cost me well over $30 at retail stores.

    That being said, you do have to be patient as it is a hit or miss type of shopping. My strategy is to look only for items that appear new or nearly new, regardless of color, and buy the ones that fit.

    Good luck.

  52. As for giving teens or tweens a chequing account, I think this is a very good idea and an extension of ideas I first read about in books by Linda and Richard Eyre.

    They recommend turning over buying clothes and managing their money when kids are about 8 years old and present some good reasons for doing so, most notably that kids that age are enthusiastic and crave responsibility and that the mistakes they will inevitably make aren’t life-threatening.

    If you give a kid $100 for clothing for this quarter and he goes out next week and buys a pair of runners for $75 and blows the rest on non-clothing items he’ll probably regret it within a week and will have to wait until the next installment of clothing money in 3 months time.

    The same with other allowance money. If she blows it all at 7/11 the day she gets it on pop and candy, she won’t have money to go to the movies with her friends or buy a gift or pick up a new lipstick.

    But by the time those kids get to college, they’ll probably be incredible at managing their money.

  53. Trent, first I want to thank you for this informative blog it helped me more than anything I read about money related articles or books.

    Secondly would you please tell me if an electrical oven and tea kettles suck watts? My husband thinks that our electric bill is going high because of these two items.I can’t work without tea kettle in my kitchen and am not willing to give it up :(

    Also I was wondering about watts consumed by irons and microwaves.

  54. Jane -

    Were you listed as a POD on the account (payable upon death) by the original owner? If so, it’s probably just a matter of going to the new bank with the old account number – they should have records of what accounts were transferred (and likely renumbered in the buy out).

    Alternatively, if it was just left to you by virtue of the decedent’s will – have you contacted their estate attorney? If it didn’t go through probate you could probably bring a copy of the will to the bank and show them you are the rightful owner.

    But like someone else said, depending on how long it’s been, they may have turned the CD over to the state as “unclaimed property”. You can usually search your state’s website for this type of thing and submit a form proving you are entitled to the funds.

    Good luck.

  55. Some of my own ideas regarding professional clothes on a budget:

    1. Train yourself to recognize degrees on the casual-dressy continuum. I have noticed that many people who want to avoid spending money or time on clothes tend to go too casual. Especially watch your shoes (there are dressy low-heeled shoes out there if you look).

    2. Avoid machine-washable clothes for work. I know that a lot of people disagree with me on this, but something that looked ok for work when it was new at the store looks much less so after going through the washer a couple times. Cashemere or merino sweaters and many women’s dresses can be hand-washed, and taking good care of clothes like suits means they can go a long time between dry-cleaning.

    3. Wear a slip. I seem to be the only woman in America who still does this, but it makes your clothes look better on you and it helps keep them clean from your sweat and body oils (meaning spending less on dry-cleaning).

    4. Change out of your work clothes when you get home (don’t cook in them!). Again, this just makes them last longer and saves on cleaning.

    5. The more you’re going to wear something, the better quality it should be. It seems as though a basic black skirt should be the cheapest thing to find, but it rarely is. In my experience, watching for sales like a hawk is the best way to get basics (though they’re still not cheap, they’re within my price range), while thrift stores can help fill in with more interesting items.

  56. Oh, and one more:

    6. Unless you absolutely hate it, try to learn something about clothing construction and fabrics (at least take note of what you get complimented on). You can skim a thrift store very quickly when you can spot quality fabric at ten feet. You can also better identify what might be worth full price because it will last you ten years.

    None of these tips will make you indistinguishable from people who spend $1000 on an outfit, but they can make you look pulled-together enough that people assume you know what you’re talking about.

  57. When it comes to your FICO score I read it is best to leave your credit card accounts open and not close them……….. I have several but don’t activate them for use……does this make any differance on my FICO score??????

  58. optoutprescreen.com is the only FTC-approved site for opting out of prescreened offers while the Direct Marketing Association is a private org funded by the very companies making prescreen offers. I’d recommend optoutprescreen over the DMA. Unless they’ve changed the procedure, optoutprescreen requires you to print out an online form that you have to mail. Could have made it easier but it’s not in their best interest for you to opt out so they don’t.

  59. I have to third (or fourth?) the thrift store comments. I was required to get ‘nice’ clothing for the competitions I go to, so I hit my favorite thrift store, and picked up several outfits for about $20. That was a huge amount in comparison to what I usually spend, but I ended up with 4 shirts, three skirts, and two pairs of slacks. 4 years later, I still wear the same things, though I spilled a can of pop on a shirt and had to replace it. Formal dresses are the same way. Unless you are really oddly shaped (I feel quite happy to be as flat chested as I am when I look at old dresses) they have a huge selection. I’ve never spent more than 8 dollars, and have always had a ‘new’ dress for each dance. One of my friends got one dress for $150, and her mom wouldn’t let her buy a new dress the next year. So she had to wear the same thing, and a lot of people bugged her about it. Meanwhile, I gallavanted around in my $7 dress and $10 shoes (that matched PERFECTLY or I wouldn’t have spent so much on them… I’m a sucker for nice shoes in my size since my feet are so big) and no one said a word… unless it was in praise.

  60. The idea that the lady with the disabled husband can go out and get a job is lovely, but often not realistic. The husband may need some (or a lot of) care during the day, and having the burden of the entire household work and management plus the yard and car and kids and pets are often so overwhelming that working from home is the only realistic option.

  61. Lola – After 15 years of saving $30k a year at 8%, you would have ~$880,000. Experts recommend withdrawing 4% which would allow you to give yourself a “raise” each year without ever running out of money. This equals an income of over $35,000, which is pretty reasonable. Right now, if he is able to save $30k, I imagine his expenses are pretty low, so this amount would be appropriate. Even better if he takes advantage of investing pre-tax in a 401k, a company matching (which is pretty common), and Roth IRA’s which allow tax free withdrawals. Also consider that he may have his mortgage paid off by that time, eliminating a huge expense.

  62. Question for a future mailbag or post — my husband has his own service-based business with no employees and very little capital involved, netting $20-30K/year. As he has been starting up over the last couple of years, we have had no trouble keeping careful track of his income and expenses from this business separately from our other income and expenses. But he doesn’t have a separate bank account or credit card for his business. Last week his father expressed shock that we were “mingling” our funds in this way. Do you have separate accounts for the Simple Dollar vs. your personal accounts? What are the pros and cons of starting separate accounts for a small business?

  63. About Board Games…

    “Eurogames” can be quite expensive and even with the great descriptions and reviews on Board Game Geek it can be hard to pick a game you’ll love to play again and again. Lisa should check in her area for a boardgaming group. Here in Ohio, we have CABS (Columbus Area Boardgaming Society), which meets 3 times a month. It’s cheap (first visit free, then $3 per visit or $35 yearly membership), family-friendly (kids under 18 are free with paying adult), and best of all, the game library has over 1,000 games! If you’re a member, you can “check out” a game to take home between meetings. Although my husband and I do own quite a few games, they’re mostly ones we’ve played at CABS and enjoyed.

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