Reader Mailbag #36

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. Since Thanksgiving is coming up, several people have asked for Thanksgiving tips. Here are three articles to help with the holiday (and I’ll have another new one or two in the coming weeks).
Don’t Let Thanksgiving Dinner Go To Waste!
Seven Quick Tips To Make Your Thanksigiving Dinner Cheaper, Tastier, and Faster
Five Easily-Available Wines Under $12 For Your Holiday Table

And now for some great reader questions!

I live in Spain and, in a matter of one year and a half, I will buy an appartment (still under construction) with my boyfriend. My question is: if we empty our accounts (leaving just a safety nest of 2 months-expenses), we can pay the appartment in cash. Should we do that or take a mortgage (in which case we would have the money growing in the bank but we should have to pay the interests)?
– Artemidoros

Given that you’ll still have two months’ worth of an emergency fund in the bank, I’d pay for it all in cash. Then, as soon as the deed is done, replenish that emergency fund, getting it back up to a nice healthy multi-month cushion.

There’s almost no reason to go into debt if you have the cash to pay for a real asset like that. Even if something did go desperately wrong, you still have a big asset there, one that’s completely paid off, and one that can be borrowed against in a major time of need.

I realize that US and Canadian deposits are insured up to the amounts required federally in both countries, but if ING were to have difficulties in Europe what impact (if any) would that be likely to have here in North America?
– Shevy

It would be felt like just another bank failure. Your assets would be moved swiftly and quickly to another bank, as was the case with the recent WaMu failure. Likely, your banking functions would continue to work just like they always had after a day or two, and gradually you’d be moved to services at your new bank.

The greater worry would be the economic impact of the failure of another top-tier bank. Thankfully, I don’t believe any more big failures are in the pipeline (though I think several more small- to medium-sized banks will fail over the next few years). I think that the governments in such nations will do all they can to keep big banks from failing, because that hurts everyone – many smaller businesses rely on those big banks to keep credit available so they can conduct business.

I observed something very unethical at work. For now, I’ve been keeping my mouth shut about it, but the fact that such behavior is going on is really gnawing at me. What should I do?
– Shanda

If it’s something severe enough that it’s causing additional workplace issues – distracting you, making you distrust people you need to rely on – you need to talk to someone about it. Find out if there is a way to blow the whistle anonymously within your organization.

If there isn’t, seek out an upper management person that you trust deeply – even if they’re not connected to the situation at all – and request a meeting with them. Request that what you tell them does not leave the room and then let them know what’s going on. Tell them why you felt the need to report it, too, so that it’s clear you’re not blabbing for the sake of blabbing.

That’s the course of action that I would follow, anyway.

This year is the first year that I’ve earned a strong income in my life. I want to buy my parents something very nice for Christmas this year (a large flat panel television for their living room – Dad’s a sports fan and Mom watches a lot of movies) but your advice seems to argue against that. What do you think I should do?
– Charlie

I do not feel that a one-time gift like this, particularly to someone who has obviously had a great deal of positive impact on your life, is a bad thing.

However, there are a few things I’d want to be sure of before moving forward with a gift like this. First, it needs to be clear that this is a one-time gift, that such extravagance is not a pattern. Second, you need to be sure that such a gift would actually be welcome. Third, be sure that such a gift does not derail your own financial plans – I can certainly say that as a parent, I’d prefer that my own children keep their financial plans in good shape rather than giving me an expensive gift.

If you’re sure all three are covered, then it seems appropriate to me to give such a one-time gift to people who have done so much for you in life.

Now that the election is over, how do you feel about what happened?
– William

I’ll keep this short and sweet. The election of Barack Obama and a heavily Democratic Congress was clearly a mandate from the people. It is now their responsibility to use that mandate to bring forth the changes they’ve claimed. Having seen how Obama ran his campaign – and his very smart choice of Rahm Emanuel as chief of staff – I think he’s enough of a leader to get things done. I think his biggest challenge will be herding cats in Congress.

Will the changes be good? I honestly don’t know, but I think we’re definitely at a point where some experimentation is needed. We’re involved in two lengthy and costly foreign wars, in debt up to our ears, and facing a nasty economic crisis. Clearly, something needs to change, and I think now is the time to try out some new ideas.

I’m wiling to give President-Elect Obama the benefit of the doubt for the time being. I see no reason not to.

Now that you’re a full-time writer, do you treat this blog as a small business? Is it registered as a business (sole proprietorship, LLC, etc.)? Do you plan on expanding the Simple Dollar as a brand into other areas besides blogging?
– Your Friendly Neighborhood Computer Guy

I treat all of my writing activities as a small business with accounting kept separate from my personal finances. I regularly pay myself from my business accounts – aside from that, the finances of my writing endeavors (of which The Simple Dollar is a part) and my personal life do not touch.

Right now, I have a ton of different opportunities on my plate with regards to The Simple Dollar, many of which do involve expanding the brand to new media. I am pretty picky about what I want to do, so I’m taking my time with these choices and trying to make sure I’m making a good choice with regards to my real mission here, which is helping people talk about their money and make better personal finance choices.

You’ve talked about how you manage your time during an individual day, but how does a typical week work?
– Billy

I usually spend Mondays and Tuesdays focusing more intently on research and fleshing out ideas, Wednesday and Thursday more on actually writing, and Friday is almost entirely brainstorming.

Ideally, by Wednesday morning, I have a rough outline of at least a week’s worth of posts with all of the needed facts contained within that outline. I then usually write all of those posts on Wednesday and Thursday. I usually try to write “a week plus two” worth of articles so that I eventually build up enough to allow me to take time off without leaving you all out in the cold. Sometimes, of course, I interrupt this to run more timely articles.

On Fridays, I tend to brainstorm and work on special projects if I managed to get all my writing done on Thursday.

What does your wife think about how you manage your time?
– Sarah

For the most part, she’s very supportive of my time management. Our only conflicts really come about when my work week is interrupted in a difficult fashion.

Take, for example, this past week. On Wednesday, our home lost power for several hours during a horrible thunderstorm, then just as the power came back on, my daughter fell ill and I had to spend the remainder of the day tending to her. On Thursday, my wife stayed home with our daughter and on Friday, I spent the day focusing on her, too.

This left me with a lot of writing during the week left unfinished, and I had to make it up during the weekend. This left my wife feeling somewhat grumpy, because this took away from some of the time we usually spend together on weekends, particularly during our children’s nap time when we usually play games together.

Most weeks, though, she’s not home when I work, so my personal time management doesn’t impact her in the least. That makes things very easy when we’re all at home spending family time together.

I’ve been trying to get a grip on understanding how the economy works, but I confess to not really understanding what’s going on. Where would you suggest that I start?
– Annie

The best education you can get on economics and how the world works in a broader sense is by reading. My suggestion? Start with a subscription to The Economist and set aside a half hour a day to reading it intensely at first.

What do I mean by “intensely”? I suggest reading an article in there (Economist articles are very brief, but each issue has a lot of them) and marking down anything you don’t fully understand, then turning to Wikipedia and looking these terms up.

Hop around the magazine and pick out articles at random. I suggest picking one article from each section of the magazine for starters. Read each article you tackle intensely, though, and eventually you’ll start assembling some pieces.

My biggest regret with my time is that I don’t have more hours to spend in focused intense reading like this. There are many, many areas that I’d like to study with such vigor, but there are only so many hours in the day. In a given week, I try to get through the current issues of The Economist, BusinessWeek, and The New Yorker in this fashion, along with the current issue of one of several monthly magazines.

I spend roughly three hours a day reading, believe it or not, and I wish I could read more than that.

Do you have any video game picks for the DS or Wii this Christmas? My “son” wants to know what games to ask for.
– James

Your “son,” eh?

Sticking strictly to new releases, here are four games I’d suggest for gifts for the Nintendo DS this year: Castlevania: Order of Ecclesia (side-scrolling adventure), Chrono Trigger (remake of the best console RPG ever made), N+ (side-scrolling button-smashing action), and Disgaea DS (strategy).

For the Wii, I’d do one thing above anything else: get that console hooked up to a Wi-Fi connection (you can do this if you have a PC with broadband quite easily) and get a couple Wii Points cards. The best new games for the Wii are ones you can download via their online service. Check out World of Goo (the best puzzle game I’ve played in years), Alien Crush (a gorgeous and very fun pinball game), Tetris Party (Tetris which you can play online against others), and several others are all worthwhile.

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

If you enjoyed reading this, sign up for free updates!

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. Brian says:

    One Wii game I’ve been enjoying lately is Zack & Wiki: Quest for Barbaros Treasure. It’s a great problem solving/puzzle game. Also, if you like Tetris style games, Dr. Mario is one that you can download and play via the online service.

  2. Trent, your suggestions for reading business/economy magazines is the best I’ve ever heard. Very easy to do. I will start today. Thank you.

    Congratulations on the opportunities to expand your Simple Dollar brand. You have worked hard to provide us useful information and are deserving. I think all of us appreciate your dedication to accuracy and your transparent personal accounts to illustrate the subjects you cover.

  3. Nick says:

    Trent:

    This might be a very naive question because I don’t really understand how small business taxes work, but if you are taking in income from TSD as a small business, don’t you have to pay taxes on it twice?

    Once when the money is received by the business and then once when the business distributes it to you personally?

    Maybe you could elaborate on how that works?

  4. Lauren says:

    @Nick
    As far as I understand it, for sole proprietorships and partnerships, all income is lumped together for tax purposes, you and the business are considered the same entity. This means personal and business income is not differentiated. Also, you pay taxes on the income, not whether you took the distributions.

  5. leslie says:

    I just wanted to add my love for Zack & Wiki: Quest for Barbaros Treasure. It’s a great adventure game in the footsteps of Monkey Island! The puzzles are difficult and the storyline is relatively strong. It’s about a 20-30 hour game.

  6. Adrienne says:

    Interesting you would recommend subscribing to magazines, which IMO is a big money suck. You can read the Economist and many other magazines online- I don’t know what the difference is between what’s available online and the print issues but surely there’s enough to start with, and one can go to the library for more.

    Also, I’m wondering, when you were working in an office, would you have used paid time off to stay home and look after your daughter? Would you have had to go into the office on the weekend and make up work? As a self-employed person, couldn’t you decide to give yourself that benefit when it’s truly needed?

  7. That One Caveman says:

    If you get a Wii Points card, save 1000 points for Mega Man 9. I grew up with Mega Man and this game has brought me nothing but nostalgic joy!

  8. Justin Reese says:

    I also recommend the two previous Castlevania DS games, since they should be available for less than the new one: Castlevania: Dawn of Sorrow and Castlevania: Portrait of Ruin. (Disclaimer: Both of those are Amazon affiliate links, but I own and can endorse both games.)

  9. Andy says:

    @Nick:
    Lauren is right – sole proprietorships, partnerships, LLCs, LLPs, and S Corporations are pass-through entities, meaning the business is not taxed outright. The net income passes through to the owners who are taxed.

    C corporations are the only ones taxed as separate entities.

  10. AD says:

    “I live in Spain and, in a matter of one year and a half, I will buy an appartment (still under construction) with my boyfriend.”

    Buying a place with a boyfriend can be very messy if things don’t work out. I’ve known more than one couple who bought a home, only to have the relationship fizzle out. Not that marriages can’t fail, but there is a different level of commitment, even just legally, with marriage. I would be very, very sure of this person before you spend almost all of your savings buying an apratment with him.

  11. Kevin says:

    Nick – Lauren is correct on how the income would work for a sole proprietorship. The income is taxed on Schedule C of your regular individual tax return, so any money Trent pulls out of it has already been taxed and therefore would not be taxed again.

    I assume TSD is either set up this way or as a single-member LLC – which would function the same way, unless he has another partner in the business (in which case it would be a partnership). If that is the case, TSD would actually file it’s own tax return and report the income to Trent on a tax form called a Schedule K-1. He would then pay tax on that income, and usually the partnership distributes cash to the partners to pay taxes and other expenses.

    If TSD is a corporation, Trent would take a salary like any other regular employee.

    That’s a crash course in taxation. It’s certainly more complicated than that if you get into the nitty-gritty.

  12. AD says:

    Not aprat…apart. Gah.

  13. I disagree on the economist as a starting point of learning more about the economy. It’s a bit too heavy for someone starting out.

    My local paper runs WSJ articles on Saturday or Sunday, those are often very insightful.

    I’ve got a question: Veteran’s Day, Columbus Day, and the like are days many businesses are closed. If you were still a 40 hour stiff you’d likely have them off like I do. Do you remove yourself from work on these days as well for a break or do you generally work through them? I ask, because as a writer who works full-time, I use it as a time to catch-up.

  14. Lauren says:

    Hi Trent,

    I love your website. I read it everday. Since discovering your site a little over a month ago, I have created a workable plan to eliminate all my credit card debt by March 2009, while tithing 10% and saving 20% of my income for retirement. I already have $1000 in my emergency fund.

    My question for you is:

    What steps did you take to obtain corporate advertising on your blog?

    Thank you Trent!

  15. Michael says:

    Annie, The Economist’s analysis will help you talk about economics but not understand it. You’re better off doing your own. Be sure you have a classical, liberal education and then read primary sources, talk to the man on the street, and analyze and debate the best modern writers (this list is in descending order of importance.) It’s better to read an author deeply to understand him than to read a lot of random articles. Also, mix macro analysis written by economists with micro analysis written by industry insiders.

    Also, stay away from the daily news cycle. Let the weeklies/monthlies/quarterlies/annuals (if you can) iron out the whiplash for you and float the important stories to the top. If you need daily data for your own calculations you can always pull it down at once. And if you want more news just read more infrequently-published periodicals to get that deep analysis.

    But my best advice is to not learn economics in the first place. It’ll dull your mind and rob you of mental clarity because it is a global, abstract set of ideas, its theory is confused with reality, and it doesn’t bring joy to anybody. You won’t make much money from it either.

  16. KC says:

    Charlie – Have you checked with your parents to make sure they want this TV? My parents would have an absolute fit if I spent that kind of money on them, eventhough I could easily afford it. About 14 years ago my sister and I went in together to buy them a small TV for their bedroom – it cost us about $50 each. My mom had a fit that we spent that much on them. I assume you are about to spend at least $1000, I’d run it by them first and if you think its still a good idea then follow Trent’s advice. Hope you and your family have a wonderful Christmas with or without the TV!

  17. KC says:

    Annie – Try a book called The Naked Economist. Its very easy to read and humorous. There are other books like it out there (check amazon and it will list suggestions). It is a good rudimentary study of the economy and factors that effect it. You can probably pick it up at your library.

  18. Brian says:

    Annie – I like “Economics in One Lesson” (you can find the text for free online) and “The Undercover Economist.”

  19. Studenomist says:

    Let me tell you something sad but true. I have been in school for the last 3 years working on my business degree, many of my courses being in economics. Every time I think I know it all about the economy, I realize that there is sooo much more left to learn. It will take many years to have a full understanding of the economy. Many books will help you grasp the fundamentals.

  20. Your Friendly Neighborhood Computer Guy says:

    Thank you for responding to my questions. I recently started a part time computer consulting business, much like you started writing part time, and am very interested in how you handle the business aspect of TSD.

    It’s great to hear that you are taking your time with all of the opportunities presented to you, it’s this kind of vetting and thoughful consideraiton that had turned me into a loyal TSD subscriber. I look forward to hearing about what projects you’ll eventually decide on.

  21. George says:

    Trent – don’t you have a laptop computer that should work through power outages? And if power outages threaten your income, wouldn’t you consider it wise to purchase a generator?

  22. Nick says:

    @Andy, Lauren, Kevin:

    Thanks for the explanation guys. I figured there had to be some way to avoid being taxed twice.

    That’s very helpful.

  23. Andy says:

    The Economist website includes most of each weeks magazine and it’s free. Also try the library. The magazine is kind of expensive

  24. liv says:

    lovvve video games! you said chrono trigger is coming out in time for christmas?! score :)

    i just found out the new professor layton is out (i might have to double check that), but if you dig puzzle games w/ a cheesy storyline wrapped around it for DS, that is a good one too!

  25. Asav Patel says:

    Well, you have not told that what kind of firm is this? Is this a sole proprietorship or a LLC? According to me you are a very intelligent person so you Must not have a sole proprietorship structure for this blog. You must have taken care of Asset protection (Protection of this Blog) in uneventful event.

    I think you may have adopted LLC. Don;t you?…..

  26. bethh says:

    Understanding the economy is a pretty tall order! I found two podcasts presented by This American Life to be extremely informative. It would probably take a couple of listens to start to grasp all of it, but I felt like they gave me some real understanding of the mortgage crisis and the bailout. I’m hopeful they’ll do another one soon.

    You can access all their podcasts at their webpage. Here are the links to the two podcasts I referenced above.

    The Giant Pool of Money, from May 2008:
    http://www.thislife.org/Radio_Episode.aspx?sched=1242

    Another Frightening Show About the Economy, early October 2008:
    http://www.thislife.org/Radio_Episode.aspx?sched=1263

  27. A says:

    I don’t agree that having 90% of your net worth in real estate, even if it’s your home, is OK. Take a mortgage – don’t pay cash for the apartment. Real estate is safer than most investments, but you can have bad luck with any investment. I’m a cautionary tale in having too much of your portfolio in any one asset, even if it is my house. Turns out the underground oil tank leaked for the last 15 years (even though it tested fine when I bought the house 4 years ago). Now my paid-off home will require more in clean-up costs (even with insurance paying its portion) than the house is worth. If I had a mortgage, it would be much cheaper to give the keys to the bank and walk away.

  28. Courtney says:

    Hi,

    Thanks for all your great posts.

    My question is about savings bonds. Friends and family have purchased federal savings bonds for our little one. Once mature, is it better to “let them ride” and continue earning interest or is it better to cash them in and invest either in more bonds or elsewhere? We intend to use this funding for his college education.

  29. prodgod says:

    As a sole-proprietor, I have never felt the need to keep my finances separate. I have a business checking account, which I use for all personal business as well. I have both personal and business credit cards and use them interchangeably. None of this makes any difference for me from an accounting standpoint because it’s remarkably easy to keep business and personal expenses sorted, even though they’re all mixed in the same accounts. For instance, if I make a business equipment purchase with my personal Visa, I’m still going to deduct that from my taxes at the end of the year. However, if I take my family to dinner and pay with my business credit card, I won’t deduct it. Simple for me.

  30. Todd says:

    I do not recommend the Economist for an overview. A good introductory book is New Ideas from Dead Economists by Todd Buchholz.

    It basically takes you through a very simple, easy to understand history of economics, starting with Adam Smith and going all the way through Milton Friedman’s contributions. It’s good stuff. Books like Freakonomics and the Undercover Economist give you some basics as well (and are pretty fun to read, too).

  31. Nate says:

    Trent, along the same lines as the Economy question. How does someone learn more about politics?

  32. prodgod says:

    @Asav: My understanding of the difference between a sole-proprietor vs. LLC is the hefty annual incorporation fee to the Secretary of State. When you’re a one-person operation, you ARE the corporation, which makes the corporate veil pretty easy to pierce in the event of any liability issues, so why waste the money and incur the extra hassle at tax time?

  33. B. Watts says:

    Since I will be giving Wii games to grandchildren (girl age 15, and boy age 12-1/2) I wonder what “purchased at Circuit City type store” you would recommend as the children in question have yet to give me a list and I want to accomplish this purchase before the stores run out?

  34. Claire says:

    @Nate
    Congress.org and Megavote.com
    are a couple of good ways to find out how your congressmen (and women) are voting on the issues, without any spin or bias.
    Also, The Week is a good conglomeration of political articles, but kind of pricey at $50 per year. But worth it!
    Claire

  35. Lauren says:

    Question – my 13 yr old car is starting to rack up bills (I put $600 into it two months ago, it’s currently in to fix a $500 fuel leak, and of course the mechanic found $3000 of other stuff wrong), so I was thinking about breaking down and getting a new car. I always assumed I would get a used car, but due to the economy there are a lot of great deals going on (0% apr for 36 months at nissan, for example). My husband and I make nearly 100k per year, we have no debts outside of student loans, we have excellent job security, and I have impeccable credit. Is buying new worth it in this case (I’m looking at a fairly modest sedan), or is used always the better way?

  36. My take on buying new cars – you’ll get a better deal paying cash. If you go for their 0% for 36 months, they will get you on the front end. Best to negotiate the price that you want, then pull out the checkbook when they send you back to the finance department.

  37. ontguy says:

    What games do you usually play with your wife during the kid’s nap time?

  38. Charles says:

    Of course we have to give Mr. Obama a chance to try to fix the economy. However if he does what he promised, which he said was his economic plan, it is a recipe for disaster. You cannot tax your way out of recession, a proven fact. Also, increasing taxes on producers and lowering on non-producers is not going to be a stimulus to growth, rather to moving funds offshore or to protect them from taxes. Producers create jobs as they spend on investing, expanding their businesses which employ more people, and spending on more than just necessities. As compassionate as it sounds to give tax cuts who don’t pay taxes or don’t make a monetary contribution to the GDP, will do little because it will be spent on debts, necessities, or perhaps moderate luxuries.
    Obama’s promise of a 95% tax cut for working families is nothing more than an illusion. – The Wall Street Journal
    http://www.fastcompany.com/big-idea/obama-s-promise-95-tax-working-families-nothing-more-illusion?page=2

  39. Lauren says:

    @prodgod
    If you actually spend the time and money to establish as an LLC, AND do it properly, then piercing the corporate veil becomes a lot more difficult. If however you try and use the LLC as a way to shield yourself from liability and don’t do certain things that are generally performed regarding your business structure and the like, then yea you could very possibly lose a lawsuit.

  40. John says:

    @Lauren:
    Used is always the better way from a costs perspective. The minute you drive it out of the showroom the car falls like 10-20% in value. In the first years especially the price drop is so huge that I cannot imagine that weighing up to savings on maintenance in the first year(s)

  41. kanthi says:

    Hello there,
    I have been following the articles for a few days now and I am glad I found this site. I do have a strange question that I always knew the answer (NO) but am afraid to say so. Well here’s my issue.

    I am from a typical indian family, brought up with nothing but basic necessities. My education was almost free for the most part. My parents have always worked hard but never ever planned anything. I mean, they worked hard but never really enjoyed the fruits because they did it the wrong way.

    A typical example: My dad started his job with 2K a month. He clearly knew he could not afford a house, but still thought he would get a raise every year so he will be fine. We actaully spent 400K on the house when we had just 50K with us.We were just in 8th grade then not smart enough to give him advice. After 8 years his pay increased to 12K a month. He kept re-financing on the house and eventually the debt increased 4 fold.We grew up and for graduate studies we needed money. He took other personnel loans and gave us. We did well in studies, not out of interest, but only because, we wanted to help my dad out of his troubles by getting good grades. We (me and my brother) always met his expectations. Its been 13 years now. I have a decent job. Make enough money to help my dad out of all his troubles.
    When I firs got my job I promised my parents I would clear their debts upto the last penny, re-build the house (now its not good for them so…), clear all my student loans and buy them a car. And thats it, not a penny more. I promised them I will build my own career, life, house, everything on my own. So that we are not mutually obligued to one another. I have cleared their debts, re-build the house. I am two months away from clearing my student loan. 8 months away from buying them car. So in 10-12 months from today I will be debt free. The whole thing cost me around 2 years of my pay cheques.

    Everything is fine so far. Now my mom wants me to buy a house for myself in the next year ( I live in US in an apartment with friends, not married yet). They clearly know its not possible. But stil they think its a wise investment for the long term.
    I want to make them happy, but I really don’t want to screw myself just for the sake of it. Based on my 26 years of experince with my parents, this is what I observed. They plan the 2nd step thinking that they will be done with the 1st step in no time. But they get so deep into trouble that they sacrifice all their life’s happiness just to cover their mistakes.

    I do not want to repeat the same. But the thing is I try not to repeat it, but there are some weak moments where I do exactly what they did(may be because of the genes).

    I want to save my money, invest for my future. House is the last thing on my mind. I will get married in the next couple of years, so I do want to have solid cash with me. I always believe in the cash is king policy. Call me crazy but I have always seen my parents in debt, So I am tired of being in the -ves. I am soo waiting for the day I can be in above 0(debt free).

    How do I communicate it to my parents(they are old fashioned and they think they are always smarter than me).

    Hoping for a nice advice

    thanks
    bunty

  42. Kevin says:

    prodgod – actually an LLC and a sole proprietorship are different entities, legally speaking. Therefore if someone sues your LLC, if it is set up correctly and funds are not co-mingled, they cannot successfully come after you personally. And the fees are not that steep depending on what state you’re in. I’m in Missouri and I think it’s about $150 to register, no annual fees after that.

    Come tax time it is a disregarded entity (single member LLC) and taxed on the individual’s return. If your LLC has two or more members it is treated as a partnership for tax purposes.

  43. Christine says:

    I have a 20-year-old grandson who just got a good-paying job. He is considering returning to college, but isn’t attending right now. I see him being a bit extravagant with his new earnings. But I still think he wants to be more financially responsible. Can you recommend an easy-to-read book that would appeal to a 20-year-old male that could help him manage his finances? Thanks!

  44. Bekki says:

    I have a question that I’ve been struggling with lately.

    My husband and I are the not-so-proud owners of a mountain of debt – roughly 70% of our annual income.

    Two years ago, we started a business, and our income more than doubled. Most of that extra income has been going towards paying off the debt (which used to be much, much more).

    Currently, we pay very little rent for our apartment, but we need to move sometime next summer, as we’re expecting a baby in March. Moving into a place big enough will cost us about twice what we pay right now – about $2000/month.

    After paying our current rent, living expenses and debt payments, we have about 25% of our monthly income left over.

    I’m torn between hurling all that money towards paying off debt, or saving to buy a small house next year. With the recent downturn in the markets, there are a few houses that are in a price range affordable for middle-class families (we live in a very expensive area of NY).

    My question is this: If we could get a mortgage payment lower than what we would pay for rent, is it better to save the money for a downpayment on a house, or are we better off knocking down a lot more debt before we take on such a huge financial commitment?

  45. Stephanie says:

    The Economist is pricey at over $100/year, but you can sometimes use frequent flyer miles for it. Delta offers it and charges 3,200 miles. If you could get a $500 flight for 25,000 miles (and I think that’s rare), then a $100 magazine for 3,200 is a pretty good use of miles. It’s an even better deal if you don’t fly often enough to get your miles balance up to that 25,000 range! And now you have something to read on your next flight!

  46. prodgod says:

    Thanks, Lauren and Kevin. Here in California it’s $800 a year to incorporate. And that’s $800 EVERY year.

  47. Michael says:

    IL and CT charge $250/year for an LLC.

  48. Artemidoros says:

    Thanks for the answer!

  49. I have recently started looking into couponing. My question is this. I have always shopped at discount stores (WalMart, Sams, etc.) and bought generic brands to save money. Do coupons really save that much money over doing that since you typically have to go to the more expensive stores to get the deals that are advertised (double coupons) and buy brand name things? Thanks!

  50. Lynne says:

    Regarding the election, the ‘mandate’ was based on no real knowledge of the candidate. But that’s okay, I guess it’s time to give full-blown Socialism a try.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>