Reader Mailbag #30

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.
A great discussion about whether you should report sexual harassment
How I manage my ideas
Should you help people who won’t help themselves?
And now for some great reader questions!

I recently changed jobs and will become elgible for the 401(k) plan soon. While I have invested heavily in the 401(k) plan at my prior company I wondering if it would be a smarter idea to take the money I would be investing to continue paying off my debt over the next 6 months, after which I will have eliminated my credit card debt and half of my student loan debt just leaving the morgtage on my primary home, rental propery, and a car note.
- Marc

Ignore the tax implications and penalties of cashing in your 401(k) early for a moment and ask yourself this simple question. If you cash in that 401(k), are you still on a reasonable pace to save up for retirement? For example, if you’re 30 years old, you should have roughly 1.2 times your annual salary in a retirement vehicle. If you’re significantly below that – or would be below that if you cashed it in – then don’t.

However, if you’re in a position where you saved really hard for retirement and cashing in that 401(k) would still leave you in a healthy retirement position, and you know that getting rid of those debts now would put you in a good place in your current life, then cash it in. Just make sure you’re committed to not racking up more debt once this batch of debt is gone, or else you’re just running in circles.

The real key is making sure you have enough for retirement. Don’t even consider cashing in a 401(k) if it’s going to jeopardize that.

You talk about how you keep a list of ideas for potential writing ideas. Do you somehow organize these, or just keep them in a jumble? I tend to be a collector of ideas as well (my dream house, hairstyles I might want to try, recipes for someday), but it’s hard to figure out a system to make things “findable” again. Any suggestions?
- Mary

I basically just keep them in a jumble. I usually devote a page in my pocket notebook or an individual text file to each significant idea or project that I have, but I don’t organize them much at all.

Instead, I just make an effort to go through each of them on a regular basis and see if there’s anything I can do to move that idea forward. Maybe I can jot down a few more ideas for a great future post. Or maybe I might be able to take a baby step forward on this idea by calling up a friend.

It’s really two pieces: one is writing down my ideas as they come to me and not forgetting them, the other is following up on those ideas and making sure the good ones actually happen. Remembering your good ideas and making sure they don’t die on the vine is the key to creative success.

I just turned twenty and am hoping to open a Roth IRA, or at least a retirement savings account soon.

The dilemma is, I don’t know if I should take time to research where to put my IRA, or start investing now to start earning interest. Should i wait and figure out a good place to start investing, or don’t waste a second and stuff my funds in a place where it can earn interest until i retire?
- Mischa

You’re better off saving now rather than later, even if the savings isn’t optimal. My suggestion is to open up an account with an investment house that you’re sure is good and picking some very broad index funds for investment – in other words, invest in everything. Then, when you feel more confident, you can make changes later on.

More specifically, if I were you, I’d open a Roth IRA at Vanguard and put half my money into their Total Stock Market Index and half into their Total International Index. In other words, your money would be invested in basically every stock in the world – as broadly based as you can be. You rise with the tide of the market.

Then, later on, if you get into investing, you can change things around to whatever you like. The key is to start saving now so that compound interest is on your side.

Trent, what is “personally challenging reading”?
- James

Personally challenging reading is any reading that forces you to think and forces you to re-examine your core beliefs and ideas. I believe that personally challenging reading is truly key for any person who wants to be successful in life. Here are some examples.

An atheist might find personally challenging reading in Mere Christianity by C.S. Lewis or The Reason for God by Timothy Keller.

A Christian might find personally challenging reading in The End of Faith by Sam Harris or Why I Am Not a Christian by Bertrand Russell.

Incidentally, I’ve read all four.

Challenging beliefs just scratches the surface, though. Personally challenging reading also includes digging deeper into topics that you know little about. Don’t know much about art? Philosophy? Computer science? Find a key text on that topic and dig in.

The key to personally challenging reading is to stretch what you know and believe – in other words, to exercise your mind. It’s good for everyone to do.

I recently started a new job. The lower level employees have a “sunshine club” where five dollars is collected from everyone monthly. These funds are used (to my knowledge) to purchase beravement gifts or other similar items. I was wondering what your thoughts on this are.
- Jolie

On the surface, it’s just an office cultural norm. It basically prorates the cost for everyone of giving flowers and such to those who are bereaved.

However, in doing this and taking it to that level of formality, the actual true sentiment and meaning of the expression of care is lost. It’s just another bunch of flowers paid for out of the fund, not a symbol of individual caring.

If I worked there, I’d just contribute to the fund, but I’d also send my own note or flowers to people I really cared about.

What were the last ten albums you listened to in iTunes?
- Phil

To make this list more interesting, I eliminated artist duplicates – if I didn’t do that, the three artists at the top of the list would have had all ten of my most recently listened albums.

Migrations by The Duhks (Americana)
New Magnetic Wonder by Apples in Stereo (really upbeat pop)
You Are Free by Cat Power (folk)
Four Thieves Gone by The Avett Brothers (Americana/alt-country)
Not the Tremblin’ Kind by Laura Cantrell (Americana)
Extraordinary Machine by Fiona Apple (pop?)
One Cell in the Sea by A Fine Frenzy (pop?)
How We Operate by Gomez (pop/rock)
Fox Confessor Brings the Flood by Neko Case (Americana?)
Gimme Fiction by Spoon (rock)

Really random mix, and not what I would have actually guessed. Interesting. I actually like it when bloggers I like post such lists, as it often leads me to discover interesting new music. Also, eight of these ten albums are available on emusic for pretty cheap (all but A Fine Frenzy and Fiona Apple).

I heard something the other day that said most lottery winners lose their moeny within the first 18 months of winning a state lottery. I am just curious, what would you do with the lottery if you played and won the jackpot?
- Bobbi

I’d go somewhere where it would be difficult to find me, and possibly change my name. A “rube” who just won $100 million is a target for almost every scamster out there, and they’ll come looking. If I could, I would keep my identity secret, or perhaps go along with having a “false face” put out there so that I wouldn’t be known.

Given that, I’d buy a patch of land in the country, build the house I’ve always dreamed of having, keep enough for myself so that I never had to worry about anything, then dole the rest out to charity. I don’t really want to have more money than I know what to do with, especially when there are people out there who could use the money.

I’d be perfectly happy administering scholarships and charities for the rest of my years, to tell the truth.

Where do you see yourself in ten years?
- Pauline

I see myself writing, though whether it’s about personal finance, I don’t know. I see myself also heavily involved in local politics.

I will likely still be living in Iowa. I will also likely still be living in the house I currently live in, though I think I’ll have it paid off by then.

I predict I will have four children.

Other than that, I don’t know what to predict. If I had predicted where I would be at now ten years ago, I would have had a few things right but most things terribly wrong.

I am legally eligible for a scholarship because of my ancestry. I meet the minimum requirements for it, even though I know nothing at all of that portion of my ancestry. Is it ethical to apply for that scholarship? Last year, there were more scholarships than applicants, so it’s a virtual lock that I’ll receive one of the scholarships.
- Alex

If you’re eligible for the scholarship, apply for it. When a scholarship is offered, usually much thought has gone into who can qualify for that scholarship, so this ethical decision is actually already out of your hands. I’d say apply away.

I didn’t always feel that way. When I was in high school, I was in almost the exact same situation as Alex. I am 1/8 Cherokee, and that enabled me to apply for some scholarships because of that heritage. However, I have almost no connection at all to my tribe of heritage – no cultural or personal connections that I can think of other than some old family heirlooms. Because of that, I chose not to apply.

Later on, I realized I was silly for not applying for it. I met the qualifications they stated and it would be up to the scholarship board to determine if I would get that scholarship or not.

Alex, apply away. It’s not your ethical decision here.

If you were offered the chance to host a show like Suze Orman’s, would you do it? I’d love to watch it!
- Jenny B.

I actually would be willing to host a personal finance-themed show on television if the opportunity came along, though I think the format of Suze’s show would not be right for me. The type of show I think I’d thrive with would be something more like A&E’s Big Spender, where I actually interact with people out in society instead of behind a desk.

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

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54 thoughts on “Reader Mailbag #30

  1. MN Scout says:

    I think Marc’s question was asking if he should put his next 6 months retirement contributions into the new 401(k) or to pay off debt with it. I’d say that it depends which has the higher interest. Right now you are guaranteed a rate for the debt, but the stock market you are not. I’d go for paying off the debt.

  2. Diolla says:

    Trent- I think you mis-read the first question. What I saw was someone asking if they should defer contributing to the new 401(k) in favor of paying off debt not whether to cash out the old one.

  3. Johanna says:

    I don’t think Marc is asking about cashing in his old 401(k). I think he’s asking about postponing contributions to his new 401(k). To which I say: If your employer offers any kind of a match, contribute at least enough to get the match. Beyond that, paying off high-interest debt instead of putting more money in a 401(k) is a good choice *if* you’re sure you’re not just going to run up more debt.

    Oh, and the Duhks rock. I miss their old lead singer, though.

  4. LC says:

    I agree with Johanna – I think you misunderstood the 1st question. I would not recommend missing out on any employer match, but I would also not contribute any more than is necessary to get the full match until you pay off your debt. It might also be a good idea to do half and half. You may also wish to consider rolling over your previous 401k to your new employer if you’re happy with the options or another IRA (or a ROTH if you wait until 2010).

  5. Sophie says:

    I’m assuming you edit Reader Mailbag letters for space, but you might want to re-visit Marc’s question. As posted it sounds to me as if he’s asking about whether or not to begin contributing to a new 401(k), instead of whether or not to cash in his old one.

  6. Trevor says:

    I could repeat what 1-5 said, because that is the original reason I clicked through my reader to comment, but since they covered it pretty well, keep up the good work.

  7. Stephanie says:

    To Mary: on organizing ideas

    I used to keep all my old magazines, thinking I would really look at them again to get that recipie or whatever I thought I needed in it.

    Now I keep a 3-ring binder, labeled in sections. When I read a magazine and come across a recipe or something I think I will need, I just rip the page out and put it in the appropriate section of my binder.

    Now when I go to the hairdresser, I just look through that section and decide what I want. Same for workout ideas, recipes, house projects, etc….

    Hope that helps!!

  8. LisaB says:

    @Alex,

    What about using the scholarship as an opportunity to find out more about your heritage?

    Just a thought!

  9. Trent says:

    If that’s the case, Marc should, at the very least, contribute up to the employer’s match. After that, it depends on how he’s doing – if he’s on a good track toward retirement, then debt repayment might be a better option. If not, hammer that retirement now.

  10. J.D. says:

    I want to echo Trent’s suggestion about reading books that challenge you. There’s “danger” in doing so because you may find that you change your mind about some things. This isn’t a bad thing (and I’m not sure why we condemn politicians for changing their minds) — it’s called intellectual growth. As we become more educated, as we learn more about the world, our understanding changes. That’s a GOOD thing.

    My belief system is very different than what it was 20 years ago. I’ve changed and grown. But the man I was is *still* a part of who I am today. Though I may not hold the same ideals, I remember what it was like to have those convictions, and this understanding makes me better able to understand “the other side”.

    I think too many people — in all walks of life — are scared to challenge their beliefs.

    Trent’s further elaboration on that point is also good. Digging deeper into subjects that interest you is a fantastic way to challenge yourself. I’m always learning something new about writing (hyphenated compound modifiers!) because I keep reading about it. Plus there are some books I read just for the sheer difficulty of it. Proust, anyone?

  11. Sunshine says:

    I remember watching an E special about lottery winners. A finance person advised that the person wait to cash in the ticket, putting it into a safety deposit box. Once they were able, set up a blind trust (not sure what that is) so that the person’s identity would not get brodcasted everywhere. I’m not sure what they recommended after that, but that always stuck with me.

  12. Elisabeth says:

    I thought your answer to the lottery question was interesting. Although it sort of sounded to me like “What would you do with infinite amounts of money.” I would think that if you wanted to buy a house with land, be comfortable moneywise, and have four children, you would find yourself with very little to give to charity.

  13. Lindsay says:

    Hi Trent,

    I was wondering–how did you go about proving your Cherokee ancestory? I’m 1/8 Choctaw, but they require a birth certificate, but we can’t locate one. I’m not sure that one even exists.

    Thanks,

    Lindsay

  14. Steve says:

    One’s debt situation would have to be dire indeed to make it worth cashing in a 401k from a previous employer. The 10% IRS penalty is like 10% interest right off the top. One would be much better off cutting expenses to the bone – and that would possibly be good practice to avoid building up more debt (depending on how the debt was acquired.) Similarly for any employer match – that’s like paying a 50% interest rate. I guess it would be better than getting a payday loan…

  15. SK says:

    Trent, just curious, What is the order of your answering your reader mailbag, i think i posted a question around #26. Are you still catching up on reader mailbags from before, or you choose not to answer some. Would just like to know..

  16. Hi Trent,

    Great advice for Mischa. Money magazine actually addressed this question with a great average joe example of how the saving part is more important than the investing part. “It turns out that picking better funds and adopting a more growth-oriented strategy would have led to modest improvement. But by raising his contribution from 2% of salary to 6%, Joe would have tripled his 401(k) balance, nearly an $80,000 increase.”

    Here is the full article: http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/01/01/8365205/index.htm

  17. Darlene says:

    I enjoy your posts about food shopping choices and I’d like to know what a typical week’s worth of meals at your house is like. What do you eat?

  18. SP says:

    I think it is slightly better to recommend target date retirement funds as opposed to a total stock market. But you are right, just starting is better than waiting.

  19. Trent says:

    “just curious, What is the order of your answering your reader mailbag, i think i posted a question around #26. Are you still catching up on reader mailbags from before, or you choose not to answer some”

    I get about 100 questions per mailbag. I’m about three or four mailbags back in terms of questions, but I discard about 90% of the questions I’m asked. I try to pick out ones that interest me.

  20. Lola says:

    This thing Americans have of considering themselves 1/8 Cherokee or whatever is just so alien to Brazilians! I read that Sarah Palin’s husband is considered of “ethnic origin” and that his marriage to the vp candidate is a “mixed marriage” because he’s 1/8 Eskimo. That would never, ever be taken in consideration in Brazil! Here we’re all pretty mixed. We certainly have problems with racism, but we’re not segregated as Americans. Hearing someone say they’re 1/8 whatever is a huge culture shock to us! I don’t know how that sounds to people from other nationalities.
    http://www.escrevalolaescreva.blogspot.com

  21. Eden says:

    1. Don’t withdraw money from your 401k, period.

    2. Contribute enough to get the employer match, period.

    3. Consider that If you don’t max your 401k (and IRA), you can never go back and catch up. You will always have the option to pay off your credit cards. There isn’t a one size fits all answer to whether you should max these accounts out instead of paying down debt, but not being able to ‘play catch up’ pushes the argument slightly in favor of putting as much as possible into these accounts before doing anything else.

  22. LC says:

    “I would think that if you wanted to buy a house with land, be comfortable moneywise, and have four children, you would find yourself with very little to give to charity”

    I think Trent was saying if he won the powerball or something similar, which is typically over $30M. Here’s what I figured based on Trent’s other posts.

    Trent’s definition of financial independence: $2M – $4M (http://www.thesimpledollar.com/2008/05/30/review-youre-fifty-now-what).

    A house with land: $350,000 (being generous… he could use the equity from his current home. This would cost about $150,000 where I’m from.).

    One third of college expenses for 4 kids in ~2030: $300,000 (also generous…this is if that money earned no interest between now and then)
    (http://www.thesimpledollar.com/2008/08/28/what-do-you-need-to-save-for-your-childs-college-education/)

    Total: $4.65 M.

    Even if he rounded up to $5M to account for misc costs associated with 4 kids, or even doubled it to “be safe”, this is potentially much less than he could win in the lottery (if he played).

  23. ubi says:

    Trent – “Gimme Fiction” has some great tracks, but to be honest it kind of bores me when compared to Ga Ga Ga Ga Ga (ga?). I dunno if they were overplayed in your area (I don’t listen to the radio, I understand some of it was a bit overworked on indie stations) but you should check it out if you missed it.

  24. gr8whyte says:

    Re. Marc’s choice, I agree with capturing his employer’s 401(k) contribution and paying off high-rate debt but stocks are a good buy now so if his new employment is secure, I’d consider buying stocks instead of retiring low-rate debt at this time. One can retire low-rate debt anytime but having the cash to invest at a low point in the stock market doesn’t happen every day.

  25. Anna says:

    Lola, #18: In this country, the definitions of racial ancestry do not necessarily express racism (although they most certainly can). Many government benefits and other benefits (as demonstrated by the scholarship discussion) depend on specific proportions of inheritance from one group or another. At least in part, it is an outcome of the white European “conquest” of the indigenous peoples of North America, and the Federal Government’s sense of responsibility toward them (however weirdly it may have been, and still is, misapplied in many ways).

  26. kristin says:

    TO: Trent & Steve (comment #13)
    “One’s debt situation would have to be dire indeed to make it worth cashing in a 401k from a previous employer”
    When would you consider a debt situation to be dire? For instance what would anyone consider doing in this situation:
    A friend of mine bought his first home last year. He was doing a great job of paying down his debt at the time (which was around $15-$20k) in addition to his mortgage. His annual salary is $62k and he is in his employers 401k plan investing 10% monthly (which is the amount mandated by his work – they put in 12% towards his plan for a total of 22% so he has roughly $40k put away in the 3 years he has been at this job). He is 38 years old.
    Over the past year, for many reasons (some good & some not so good) he has had to rely on his credit cards for some unforeseen bill and has racked his debt back up to close to $50k. He was starting to build up an emergency fund, but ended up using that too. About 6 months ago he had started working diligently on his budget, cutting back his expenses and even selling things on amazon & ebay. However, he is majorly stressed and he feels like he is drowning and barely getting by; paying his mortgage & trying to pay more than the minimums on his credit card payments – at the rate he is going it will take him approx. 5-6 years to pay off the debt and that is if he doesn’t incur any additional debt. In today’s housing market it would be tough to sell his house right now. He has been trying to work with creditors to lower his interest rate as well
    His job requires long hours and a somewhat crazy schedule so he has not found a good part time job that works with his schedule to bring in extra money. He has been working on trying to sell on ebay for others as well as setting up some niche blogs. Also, he does have a roommate so that does help too.
    Lately, he has been considering cashing in a 401k from a previous employer that he rolled into an IRA. In it, he has close to $70-80k. His thinking is, if he could take the money and pay off his debts, he can then take the $1500 he paying in CC debt each month and put it into another investment vehicle. He figures if he can do this he can pay the money back to himself in the same 5 years.
    He realizes that it will take a lot of diligence to ensure he does not rack up debt again, but he hopes that he would be able to automate it somewhat so that it is not dependent on him to “transfer” the money manually. He would have it automatically pulled from his paycheck and put it directly into a high yield account that is not easy to get at. In addition, he would rebuild his emergency fund in another high yield account. He thinks if he does this he can alleviate some worry & stress, so he can concentrate on making smarter decisions for his future as well as concentrate on living more frugally while also working on ways to increase his income through alternate streams instead of worrying how he is going to pay the bills every month.

    So what do you think about this situation? What would you do?

  27. kristin says:

    Oh yeah.. I forgot to mention he realizes there is a major tax implication, however he feels that he would be better off in the long run by taking the hit now, while he is still at an age where he can still work and make a decent salary. Plus, he figures if he cashes the whole thing out, he would pay off the CC debt and put the remainder in a high yield account or CD to accrue interest until it is time to pay taxes in 2009.

  28. Angie says:

    Trent, where did you get that figure about having 1.2 times your salary by age 30 as a retirement savings benchmark?

  29. Phil A says:

    I would advise that person looking for where to invest to go with a Target Date 2050 fund for simplicity. It is easier to allocate money every month to one fund then to multiple ones especially when money gets tight. Trent’s recommendation was pretty good although I would allocate some money to the Total Bond Market fund as well (10 to 20%). Having just a stock portfolio isn’t true diversification even if you are incredibly diversified among stocks. Bonds lower the risk of the overall portfolio.

  30. Lynn says:

    On the subject of helping someone who cannot seem to help themselves, I think besides relaying simple information about what they can do(a rational response)it can be helpful to send a card or a letter thanking him for what you received from him when he was more present/healthy (a more emotional response). It sounded as though the time he spent with you as a teen was a positive relationship and that he mentored you to a degree. A heartfelt letter of thanks to him could reconnect him with that part of himself, perhaps creating a bridge to his present self that seems unable to make good choices. A reminder perhaps, of who he is (not just an addict and debt-ridden, but decent and kind too)to counteract some of that debilitating shame.
    It is painful to see how the better parts of folks can be covered up with drug use and chronic low self-esteem.

  31. Sarah says:

    I absolutely agree with you on the Lottery question…I would do the exact same thing!!!

  32. Dorothy says:

    Trent,
    I was wondering if you read any political blogs or daily news feeds. I find that I’m much better at keeping up with information in daily/blog formats & was wondering if you had any suggestions.
    Thanks!

  33. SK says:

    “I get about 100 questions per mailbag. I’m about three or four mailbags back in terms of questions, but I discard about 90% of the questions I’m asked. I try to pick out ones that interest me.”

    So whats your criteria for screening or discarding…

  34. SteveJ says:

    @Lindsay,

    The Cherokee have tribal rolls, and you prove your ancestry by tracing an ancestor back to one of those rolls. The Choctoaw are in the National Archives, I would start by asking a librarian and searching for an organization like the Cherokee Nation.

    @Lola,

    I’m “1/8th Cherokee” and I always found it a little funny as well. I have a great-great grandmother on both sides (mother and father) of my family that was Cherokee. It doesn’t seem likely to me that both were 100% Cherokee in the first place though, so the whole concept of tracking it to a fraction is pretty silly. It’s also ridiculous because I have no clue how much of any other ethnicity I am (there are several), but as Anna said, we place statistical importance on native american heritage, while european heritage isn’t very interesting unless your ancestors emmigrated in recent generations.

  35. Roger says:

    @ Elizabeth (Comment #11):

    Depending on how much he won (purely hypothetically, of course), there could be more than enough in winnings to buy land, build a house, invest a substantial portion and still give 80-90% to charity. If we use the $100 million figure cited in Trent’s original answer, he could easily accomplish all his stated goals on $10 million, let’s say, and have more than enough money to slowly give out over the rest of his life.

    Excellent and insightful answers as always, Trent.

  36. Michael says:

    I agree that one should read challenging books, but:
    1. Your definition of “challenging” should include old books and syntactically complex books.
    2. Sam Harris isn’t challenging at all. Why don’t you instead recommend people like Voltaire, Thomas Jefferson or John Stuart Mills? And while you are revising your answer, for Christianity recommend people like Augustine, Thomas Aquinas and Blaise Pascal?

  37. Shevy says:

    If Trent won the lottery he`d be giving something like one third of it to Uncle Sam, because lottery winnings in the US are taxable income.

    If I won a lottery here in Canada I`d get all the money because it *isn`t* taxable. Briefly, lotteries are a form of voluntary taxation that you pay after tax dollars into, which is why they aren`t considered income. The interest you earn once you invest them *is* taxable.

    If I won, I`d give tzedakah (charity) off the top, buy a new car, buy my land, build my house, plant lavender and grapes and put enough money into a *cough, cough* secure investment that`s going to return at least 5% interest. One million dollars invested returns $50,000 in interest, so 4 million would provide an income of $200,000 per year or about $100,000 after the government takes its share. I`d buy all my kids houses and cars, take care of fully funding my youngest daughter`s post-secondary education and then the rest of the money could also go to charity, assuming that my hubby was okay with that. I probably should ask him first….

    Considering that tomorrow night`s lottery is $35 million and I don`t even have a ticket (they cost $2) I`m thinking that my chances of winning aren`t so hot. Oh, well.

  38. S says:

    “while european heritage isn’t very interesting unless your ancestors emigrated in recent generations.”
    Personally, I know my European heritage down to the fractions. But no, it isn’t very interesting.

  39. Mary says:

    To Mary on orgainizing ideas, I too use a notebook system. I have one notebook with clear plastic page sleeves that I slip an article, etc. into and label sections. When a section gets too big it may get it’s own notebook. For example we have a Home binder for when we build a home. I have many Craft binders for my kids divided into season/holidays. Then I just have a mixed binder for things that don’t require their own binder, but maybe a few pages each with the stick on divider labels that separate. I can find things so easily. Good luck!

  40. former welfare child says:

    Hi Trent,
    I’ve been educating myself about money, tackling my debt and keeping a record of my finances now for about 9 months. This month I get paid three times. In some of the finance books/blogs/articles I’ve read, they say that the third paycheck is “bonus”. Since I’ve been really tackling my debt I didn’t feel like I got a “bonus” back in May when I was paid thrice and I really want to put more away in my emergency fund. Please help me understand the math.
    Former Welfare Child

  41. Outlaw Punk says:

    Since you seem to like the AltCountry kind of music how about a podcast? Get y’r fill of Ya’llternative Twangtastic Countrypolitian. Enjoy.

    http://www.outlawpunk.com

  42. Georgia says:

    Trent – I read an article, don’t remember where, but it said that the idea that most lottery winners waste their money is a myth. That the majority of them do find ways to invest, use it well, hide from the public, etc. and that the big winners, losers who waste it all are just the ones who get the notoriety.

  43. Allen says:

    Trent (and everybody else),
    It’s my understanding that one of the conditions for accepting lottery money is the permission to use the winner’s picture without further compensation. So it would be very difficult to hide for the first few months. That said, I would do what most of the people here said, pay off my house, fund the kids education, invest. One thing I would do differently is, I would go to several different LARGE insurance companies and buy immediate lifetime annuitites from each. The reason is, the large insurance companies have survived MANY, MANY ups and downs in the economy and still payed their annuities regularly.

  44. LisaB says:

    I concur in Michael’s (Comment 26)encouragement to read older and more complex works. There are many lists of “great books” out there. I found the Great Books program which has a comprehensive four-year reading list:
    http://www.greatbooksprogram.org/readinglist.htm

    Many college and public libraries have Encyclopaedia Britannica’s “Great Books of the Western World” series. I’m currently reading The Iliad and it was more captivating than I thought it would be.

    Thank you Trent, for renewing my interest in the Public Library. I’ll truly converted!

  45. I’m a librarian, so I really liked Mary’s question about some sort of a “system” for creative ideas, ramblings, etc. I, too, like to have a place to save good quotes, decorating ideas, etc, but when I tried to file them “library-style,” it became tedious and counter-productive to the creative process. I use a “Flotsam Jetsam Journal” (my own term. It is a simple, hardcover, spiral book. I paste, tape, write, jot, sketch whatever strikes my fancy. There is no order; there are recipes, party ideas, clothing styles, everything in there!

    And I cannot concur enough about people heading into their local public libraries during these rough financial times! We’re here for you and we have so much more to offer than just wonderful book resources

  46. David says:

    @Allen: The jackpots are paid out as annuities…current Powerball is $15 million, or $500k each year for 30 years. Are you suggesting taking portions of each annual installment and purchasing an annuity with that? If you think it “makes sense” to take the lump sum, run the numbers in Excel or some other spreadsheet program. Make sure you take the taxes out, not just on the initial payout, but on the earnings/ interest/ yield for each year thereafter. You may be surprised which decision puts more after-tax money in your pocket year-after-year.

  47. plonkee says:

    @David:
    Don’t forget to factor in inflation.

  48. Sally says:

    I just wanted to say that Spoon and Fiona Apple are awesome!

  49. Jake says:

    To Mary,

    There is a great program called evernote, that you can download to your computer, access via the internet, and even has an iphone app. It allows you to write notes, take picture notes, clip off the internet etc. Then you can search your notes later. Not great for developing ideas, but there are different ways you can tag them, and even the pictures are text searchable. It’s pretty cool. More info found here: http://evernote.com/

  50. Savvy Frugality says:

    Ha…I actually like that “Big Spender” show, although I can personally attest that not all Oklahomans talk like Larry Wingett.

    Trent, perhaps you could get your feet wet with a video blog?

  51. Moh says:

    Hey,

    Some time ago you mentioned a website which would make suggestions for similar books to the ones user inputs as favourites. Can you please let me know the website? Thanks!

    Moh

  52. Mol says:

    Trent, is this the appropriate place to request a visual guide on checking, cleaning, and replacing an air filter in the car?

  53. Robin says:

    I have a question – Now that Wachovia has been bought, should I keep my checking account there? Is there any way to know how things will change with the purchase?

  54. Chris says:

    I have a question about mutual funds and whether or not I should be taking anything out of them for a financial emergency.
    It’s a long story but essentially the major point is that I am a 60 year old woman who entered the work force later in life, have not accumlulated a lot in an IRA, recently divorced ( no alimony), prior job ended in Dec due to company being sold, now working retail as a supervisor ( which I enjoy )but at a reduced income. In a bit of a financial crisis until
    A-I find a better paying job
    B-my alternate income selling books online increases and/or
    c-I find another part-time job.
    Any suggestions, comments, ideas?

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