Reader Mailbag #42

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. Here are some Christmas thoughts from years past on The Simple Dollar.
The Day After: Six Ways to Deal With the Post-Christmas Money Blues – And Plan Ahead for Next Year
Christmas, Money, Family, and Love
Twelve Great Gifts Under $10 I’d Love To See Under My Tree

And now for some reader questions!

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?
– Nick

Not at all. The Simple Dollar (and a few other related endeavors) is organized as a LLC, which basically means that I report all income from it as personal income on my income tax returns. LLCs are an effective way for self-employed individuals to manage their business efforts without sinking into the challenges of corporate taxes.

LLCs have their limitations, however, and if I were to attempt to grow The Simple Dollar into a larger business structure, I’d likely have to change that status and begin doing effectively as you say – pay taxes on the business profits as well as my personal income. Most smaller businesses tend to find a good division between the two – rolling some of their profit back into the business while paying themselves some of the profit.

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.
– the weakonomist

My holidays are defined basically by my wife’s work schedule. If she has a day off that’s a holiday, then I take it as a holiday.

The exception comes during her extended summer break – she’s a teacher. During that period, we plan for certain periods of vacation, but outside of that, I work as I normally do. This is usually for the best, because she’s usually involved in a bunch of her own activities – taking classes, doing small home improvement projects, and so on.

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!
– Christine

Significant changes in personal finance behavior usually do not happen unless the person is self-motivated to make the change. Although you’re making a good move in making the information available to him, it’s really going to be up to him to read it, absorb it, and make the change.

That being said, I’d look at a number of different books, depending on his personality. Automatic Wealth by Michael Masterson seems like a solid fit based on what you’ve said. You’re So Money by Farnoosh Torabi might also be a good match.

There is something basic I don’t understand about economics. Why are people always encouraged to spend? And given loans to do so?
– WhirlMind

That’s capitalism in a nutshell. Capitalism is the trade of goods among people and groups for the purpose of producing profit. If each trade of goods results in a small profit for a group, then the more trades that occur, the more profit they can earn.

Since we live in a capitalist society, our economy thrives on trades – the more, the better. Thus, people are encouraged to spend, as are businesses. The more transactions that occur, the more opportunities individuals and businesses have to profit from those transactions.

Do you have any suggestions on how to save money when renting cars?
– Jon

Get only the car you need, nothing more. That’s the biggest way to save money when renting a car. Many people like to rent a more luxurious car than they actually need – but they pay out the nose for it.

Besides that, most car rental places like to ding you with extra fees: CDW (collision damage waiver) fees, deposits, airport surcharges, drop-off fees, fuel charges, mileage fees, taxes, underage driver fees, second driver fees, out of state fees, equipment rental fees – they’ll fee you to death if they can. Because of this, it’s useful to get quotes in advance, so you can compare the fees, and you can also often negotiate away some of these fees.

Never leave yourself standing in an airport at the mercy of the car rental desk or you’ll find yourself paying out the nose.

Have you made any progress with your dreams of writing fiction?
– LadyAnn

I attempt writing fiction every once in a while, but I haven’t yet made a move to publish anything. I genuinely feel like I need more practice at fiction writing, and the only way to do that is to write, write, and write some more.

In some ways, I made the mistake of starting The Simple Dollar without sufficient practice at writing nonfiction and many of the pieces here have suffered because of that. Since I have time, I’m going to take it slower with the fiction, working out the kinks on my own before throwing it out there.

Is the cost of an Ivy League education worth it? What’s your take?
– B

I think it largely depends on your profession. Some professions – like business and law – tend to be heavily defined by the people you know and the name on the degree, whereas degrees in other fields – like MIS, for example – don’t rely nearly as much on the institution.

The big rule of thumb is this: how important are connections and interpersonal relationships in the career you hope to have? The higher the importance of connections, the more worthwhile an Ivy League education will be.

You caught a lot of flak (and generated a very interesting conversation!) a while back for going to a bookstore and reading a passage from a book you were interested into a recorder instead of purchasing the whole book. Has publishing your new book changed your perspective on that action? And congrats on the book!
– Anne

My perspective hasn’t changed a bit. I encourage people to walk into a bookstore and read through my book before buying it, and if they see only one tip of use, feel free to just keep that one in mind. If my book is not of use to you, don’t buy it.

For me, if I find a piece of information in a book that’s really useful to me, I have a very high tendency to go back and eventually purchase that book. The book has already shown that it’s useful and contains valuable thoughts and information. On the other hand, buying a book blind sometimes results in a book that doesn’t really pan out – and then I’m left holding a subpar book that doesn’t have any real use for me.

You said: “Two months’ worth of family living expenses for every dependent listed on your income taxes. That’s the rough rule of thumb I use.” I think you’ve said this before, and I don’t get why it wouldn’t just be “X months”, and only the dollar amount would change based on how many people you have. Why do dependents come into play?
– SP

Generally, dependents are unable to earn a wage for themselves to help pay the bills. You are responsible for paying the bills that they accrue – putting food in their bellies, clothes on their backs, and school supplies in their hands.

Because they’re unable to go out and earn in a pinch, you have a greater responsibility than you had before the dependents appeared on the scene. You are responsible not only for your own needs, but for their needs, too, and their needs won’t be magically covered by their income.

Since you’ve moved from one income covering the expenses of one person to one income covering the expenses of multiple people, you have a greater responsibility. Having a longer-term emergency fund is one very effective way to handle that responsibility.

Do you really believe being cheap will make your life better in the long run? Whenever I go cheap, I feel cheap and it’s not worth it.
– Carl

No, I do not believe being cheap will make my life better in the long run. I do think that putting concerted effort into figuring out what exactly it means for me to be cheap and attempting to work on a better definition of what is “enough” in my own life is a valuable activity, though.

The next time you feel “cheap,” ask yourself why. Why do you think of this activity or this item as cheap? Is it because of marketing? Is it because you have standards that are unnecessarily high? Is it because you are made to feel better by frivolous features?

The more you reflect on such questions, the more you realize that “cheap” is often just something you’ve made up in your own mind to limit yourself.

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

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  1. Tommy says:

    Like alot of people, I have major credit card debt. If I die first, is my wife (or legal partner) responsible for that debt?

  2. Johanna says:

    @Christine: Another possibility is “The Complete Idiot’s Guide to Personal Finance in your 20s and 30s.” My parents got it for me a couple of years ago, and I’ve found it really helpful. But as Trent said, it depends on his personality. I’m the type who doesn’t mind books that are written on a basic level, because it makes me feel smart to read stuff that I know already (although there was plenty in the book that I didn’t know already). The book covers everything from distinguishing between needs and wants to retirement savings and the difference between a Roth and a regular IRA.

  3. Peter Owen says:

    Excellent answer to the last question of this post. I absolutely agree. A very simple example from my life is this: I really like bar B Q sauce. I mean really really like it. So instead of buying some generic brand, I get one that is about 2-3 times more expensive. It’s worth it to me, but it may not be worth it to you if you’re not a big fan. Finding places to cut costs of things that you don’t really need (and won’t even miss) is a great way to keep more of your hard earned money.

  4. wren says:

    That’s an excellent answer to Carl’s question, Trent. I’ve been working on this particular quirk in my psyche myself; it’s always a challenge to get beyond the idea of keeping up with the Joneses, and takes a lot of work. But I am learning that in the end, nothing is really as important as keeping up with the ones I love, and being happy in my life. That goes far far beyond what any toys or other truly unnecessary expenses can do. Yes, I may always want more, and the best of that, but in the end, I’d rather spend time snuggling with my husband, than snuggling with the fastest computer or some shiny earrings. But, that’s just me. :D

  5. DrFunZ says:

    Hello, Trent (and others)! It says if you have a question, to leave it in the comments, so here is my question:

    A local bank (Newport Fed)is offering something called e-loop checking. You will earn 5% APY on every dollar UP TO 50K in their saving account and have free ATM fees anywhere if you do the following – make 10 check card transactions per calendar month and have one direct deposit or ACH exchange per month. For every dollar over 50K you earn 1.2%. If you do not make the required transactions, then you do not earn 5% for that month, you only earn the 1.2%. You have to use electronic statements.

    This sounds like a good deal (except for being a bozo and forgetting to make the purchases and the ACH) because I can keep my emergency fund in there and take it out anytime.

    So, is this a good deal or does it just sound like a good deal? I realize that you are not a financial planner, but you are good with numbers!
    Thanks, Trent, and I love your blog.

    FunZ

  6. Thanks for answering my question. You also had a great perspective on the usefulness of an Ivy League education. If you are a globe-trotter and don’t plan to stay in one region for your career, it could pay off. If you’re regional, it may not really pay for itself. Down here in the south Duke, Emory, UNC, etc all carry as much prestige as the Ivys. I’m a business guy so I’m mostly speaking from the b-school perspective. That being said, if you have the opportunity to get a degree from an Ivy on their dime like my father, go for it.

    As a follow-up to Nick’s question, do you have a set amount or percentage of your income you plan to reinvest into The Simple Dollar and other projects? Reinvestment can lead to growth, but sometimes at the expense of income.

  7. DrFunZ says:

    OOPS – error on the description of the e-loop account by FunZ… if you do not follow the rules, you only get .1% on the account for that month. This is cetainly an incentive to not mess up!
    FunZ

  8. Goalhunter says:

    Regarding Nick’s question: You typically don’t have to pay tax twice anyway. A corporation has to pay its own taxes but businesses pay fewer taxes than humans. When the business eventually pays the owners, the owners pay lower taxes but that’s only because the business itself paid taxes already. Wether the total is more-or-less in which situation is complicated.

    The tax disadvantage to not having a corporation is that all the profits go to you right away, and when you make income that’s when you are taxed. In a corporation the owners can decide when the corporation pays out so the money can grow in a bit of a tax sheltered environment.

    Humans with jobs are taxed the worst.

  9. JM says:

    Just some tips on keeping car rentals economical:

    – Try to find a good credit card that includes collision damage to reduce the total price. Many cards include it for free or for a low annual price so check it out. You will have to do some paperwork to get reimbursed but it’s relatively painless.

    – Coupons and discount rates – take advantage or any discout codes or coupons. The Entertainment book includes a few coupons that could save you a lot of money if you rent more than one time a year. Also, check with your work if there is any corporate discount rate … sometimes this gets you a cheaper daily rate or just included unlimited miles for long trips.

    – Plan your car classes wisely – Check how economical the car you will be receiving if you are planning a long trip … I’ve gotten free upgrades to SUVs or full size vehicles and ended up paying $40 extra in gas. Sometimes you can get better cars by timing your rental reservations with peak periods … Friday evening before a long weekends at a busy location will sometimes net you a upgrade after all the vehicles in a certain class have been rented … but could also be dangerous in leaving you without a vehicle at all.

  10. Josh says:

    There is something basic I don’t understand about economics. Why are people always encouraged to spend? And given loans to do so?

    I do not think this policy is inherent of capitalism. Rather, it is more related to Keynesian economics. Classical economists had subscribed to Say’s law, which is supply-side focused, whereas Keynes’s theory sought to address the failures of classical theory and focused on stimulating growth through increasing demand. Keyne’s theories became very popular in US policy after WWII.

  11. Liz says:

    I have a question!

    I’m a 24 year old grad student, and I’m thinking about starting an IRA. I don’t have any debt – I have student loans but I have the money in the bank to pay them off (and since they’re subsidized, I’m waiting to pay them back to earn the interest on the money). I’m not eligible for a 401k through my employer. I think a Roth IRA is the way to go, and I’m eligible for one.

    My question is, in this economy, what should I be investing in with the IRA? Or should I not even worry about an IRA at all yet?

  12. On the cheap question, I think language comes into play. Trent has some good types on exploring the why’s, but I would like to offer up the word frugal:
    “economical in the use of money or resources;”

    Cheap often implies lazy, poor quality, or low class were as frugal has to do with wisely spending your resources. Sometimes buying the most expensive item is the frugal option, but never the cheapest. Personally, I learn more and more that the cheap option is often the most expensive, since it breaks more, doesn’t provide as much value, or has negative side effects.

  13. Kevin says:

    Trent, unless you take on a partner, you likely wouldn’t have to change from an LLC to something else. Even if you took on a partner, the LLC could continue, but it would have to file it’s own tax return.

    How to organize your business is one of the most challenging aspects of tax law – if anyone has questions a CPA is a good resource.

    As far as Goalhunter’s description goes, it is a little more complicated than that. I would actually argue that humans that are self-employed are taxed worse than a human with a “job” since the self-employed folks have to pay both employer and employee FICA taxes. Those of us with jobs have an employer that pays 1/2 while the other is withheld on our paychecks.

  14. Nicole says:

    @B Ivy league education is (in my opinion) worth the money because of the connections and the experience. Something to consider these days: lots of the Ivys (including Pomona and some other “west coast Ivys”) are now paying for people to go to their schools (regardless of need). They’ve got huge endowments and can basically choose who they want to educate. If you know someone who can get in, it’s worth it.

    I went to Pomona and my husband went to a big UC school. Even though his school is a “research” school, I was intimately involved in research for 3 years and knew my professors very well while he rarely had a conversation with a professor because classes were so large.

  15. Trevor - 14 Year Old Money Blogger says:

    Wow.

    Great post about the various questions that your reader asks and replying them in a simple manner.

    Thanks for the information today!

  16. Kevin says:

    Trent:

    re car rentals… Use a service like Pricline.com – you can get some really good deals. And if you have an auto insurance policy, decline the insurance on your rental car – your insurance will cover you. NOTE: doing this may require you to pay for repairs out of pocket and THEN get reimbursed by your auto insurance company. If you don’t have enough cash or credit available, it’s probably not a good idea for you.

  17. Johanna says:

    @Nicole: The things you describe sound like respects in which Pomona is very different from the Ivies, actually. Harvard, Yale, Princeton, and the like are all research-oriented universities where there is not really that much focus on quality teaching, small classes, or fostering interaction between professors and undergraduate students. And when I was applying to colleges, all of the Ivies seemed to think it was almost a bragging point that they did NOT offer merit scholarships, despite their large endowments. The line I often heard was, “All of our students deserve scholarships, so we would have no way of choosing.” Which is quite obviously nonsense, but that is what they said. But this was in the mid 1990s – things may have changed since then.

    My take is that an education from an Ivy league school (or any expensive, selective, prestigious school) is valuable, but not worth the price they charge in most cases. And anyway, if you’re planning on getting a postgraduate degree, it’s very likely that where you get your grad/law/med/business degree is a LOT more important than where you get your undergrad degree.

  18. K says:

    FunZ
    That is a good deal for a checking account APR. The problem is, the requirements basically make this an “everyday use” checking account rather than one for an emergency fund which you don’t touch. If you wanted, you could kind of use it as both if you were very careful not to dip into the emergency part, but this is potentially very dangerous. Basically what you would do is put $15,000 or something as your emergency fund and treat that as a “zero” balance. So if you had $16,500 in the account, you may want to edit your checkbook register to say $1500 so you don’t think that the $15k is available for spending. Then just set up a small transfer from your paycheck or an automatic bill pay to take care of the 2nd requirement. As far as the 1st, just use the check card for groceries, gas, etc, and you should be over 10 without much trouble.

    I would advise against it unless you are extremely disciplined because the “easy access” to the emergency cash could cause problems. Better to accept a lower interest rate at a bank with a separate account that you don’t deal with every day.

  19. Bill M says:

    “Do you really believe being cheap will make your life better in the long run? Whenever I go cheap, I feel cheap and it’s not worth it.” This is the best question I heard all month.

    Simple answer: Live cheap now, so later you can live wealthy.

  20. Leslie says:

    I have a question for your mailbag:

    What is a good book or program to teach a teenager about saving money? I have a stepson that does not learn anything from his mother (she cannot manage finances so isn’t teaching him anything) and our time with him is limited since he lives in another state.

    When he is here and earning money for chores and such, we do make him put half into savings and tithe 10% and then he can spend the rest as he likes. However, he still doesn’t understand the value of money and thinks that it grows on trees. We did make him purchase his own Wii with money he earned, however we didn’t make him put half into savings so he didn’t work more to earn it (as he should have if we followed our own plan) and didn’t purse other options to earn more money.

  21. pam munro says:

    My advice as an Ivy League Alumna is if you have the grades and the scores and everything else – APPLY – don’t count yourself out because of finances. There are LOTS of scholarships out there.

    I went to Barnard College of Columbia Univ. & it IS noted for small classes and a good teacher/student ratio. I did see a big difference between the level of education there when I worked at a top UC school on the undergrad level. My college years were wonderful and stimulating. And I was surrounded by people who were all on my level or far above, which is challenging.

    My Ivy League cred has helped me in ways as an alumna that I couldn’t have foreseen. Not a free pass by any means – but it still has some force…

    But I also see kids burdening themselves with tremendous debt from their undergrad years. Beware of that unless you can hope to make enough to pay it all off! But DO make a serious effort to research all possibilities of financial aid – and use the resources of your financial aid office – they are professionals and can make up complicated packages of various sorts of aid.

    And if you get a full scholarship to say, Cornell, as a friend of my niece did – by all means GO! (sad to say my niece settled for a much lesser school because she didn’t want to go back E.)

  22. Deborah says:

    I would recommend hotwire.com for car rentals. I got an EXCELLENT deal for a car rental in L.A. for a car rental.

    If you have a gold mastercard, you also can use that to reserve your car and pay for it and that will cover the insurance issues.

    Also, when you book your plane tickets (if you do so online) most major airlines also will connect you with car rental information that also may provide some savings. I typically have priceline, hotwire, and the airlines tabs open when I book tix.

  23. stef says:

    re: car rentals…during a trip to seattle a few years ago, i left the car rental up to my friend, who promptly forgot to rent a car. so, we ended up at the seattle airport without a car rented. after going to all of the counters and getting astronomical quotes, i walked over to the side, called a couple of reservations numbers for the rentals, and got rates at almost half what the walk-up rates were. i made a reservation by phone, told them i’d pick up the car in an hour, hung up, and walked over to the reservations agent to pick it up. no questions asked. so even if you’re stuck at the last minute, you still have options.

  24. southcampus says:

    went to an ivy school- cost bc of aid 20,000 for the 4 yrs. made the best of friends and life is great.

  25. jreed says:

    As a self employed individual for over 24 years, I just file as a sole propietor and pay self employment taxes on the business’s net income. I checked into a LLC and my lawyer said it is only to protect your personal assets from the results of an employee’s error (not yours; you are still personally liable if you harm someone or something while on the job as you are off the job). These websites are fun but I agree with Kevin, you need to consult with a CPA and lawyer before you make business structuring and liability decisions.

  26. I’m with you on the fiction stuff Trent. Practice practice practice. It’s way more difficult than non-fiction, at least in my experience. But the reward can really make all the work/frustration worth it.

  27. Elisabeth says:

    I think that SP’s question may have meant why are you saving per person, when you already said “two months worth of FAMILY living expenses.” That would imply that that accounts for all the dependents already, and then you are doubling (or tripling, or whatever) that amount based on how many dependents you have.

  28. Reinder says:

    How much should a person invest to keep business equipment going? I have an old A3 SCSI-based scanner that would take up to 2000 Euros to replace with a similar but , but because it’s old, it’s becoming harder to find parts. How much should I spend on special orders for replacement SCSI cards, cables, expert help etc, before cutting my losses and laying down the money for a new model? Half the replacement costs? A third?

    I would not benefit much from greater resolution or improved speed on a new scanner, by the way – a new scanner would be used the same way as the old one.

  29. Patricia Tucker says:

    Thanks for the answer about capitalism. It only dawned on me about that answer when I read recently in our local newspaper that our whole economy is about spending money. It has been really hard to separate myself totally from our capitalistic society and culture, not because I am universally damning the idea – it just doesn’t feel right to me. It took me a while to separate the idea from what I “need” to do. However, the constant hype of “free” money and buy, buy, buy is hard for me to resist.

  30. Nancy says:

    Love your blog – keep up the good work! Question for your next mailbag.

    My husband and I are in our early 30s and have managed to get rid of all of our high interest debt. In this crazy market, what would you be doing if you were in our shoes — continue to chip away at our mortgage (5.75%) or invest as much as we can since everything is on “sale”?

    Thanks for everything!

  31. Andrea says:

    I guess all my talk of personal finance and budgeting has rubbed off on my SO because a couple weeks ago he came up with a budget of our shared household expenses which basically uses the envelope system and we will be implementing it beginning Jan 1st. In his research, he found that even though he still needs to have a smartphone for his freelance business, we could cut our combined cell phone expenses by almost $70 a month by switching to a family plan instead of me having a pay-as-you-go account with a different company (plus we both get more minutes than previously, I’ve been bumped up to free evenings and weekends, and a whole slew of other great features we didn’t have before). So, for Christmas I got an iPhone and a boyfriend who is finally beginning to take all this budgeting stuff somewhat seriously.

    My question is, since we’re switching to an all cash system in the New Year, and I want to make sure we both keep diligent track of where that cash is going, does anyone know of an iPhone application that will be functional but still “fancy” enough to actually keep him interested in sticking to our new budget?

  32. SteveJ says:

    My experience with upper-echelon schools was similar to Johanna’s. I was accepted and courted by my first choice school (MIT), and boy was I bummed when they wouldn’t give me a merit scholarship. Meanwhile nearly every state school in the country is trying to one up each other on ‘free ride’. If one is a frugal undergrad, I think the absolute best thing you can do is look for a large university with an established honors college or program. The large university gives you access to tons of resources and the close-knit feel of an honors program gives you access to professors (who in turn will flaunt you to colleagues). Additionally honors students can usually arrange special projects for credit and take grad-level courses (for undergrad credit in my experience). I did a few real-world projects for real companies and non-profits and I have Mech Eng friends that were working on robotic organs and even cooler things as an undergrad. It doesn’t necessarily translate in terms of “alumni connections”, but if you’re looking to get a whole lot of education out of your dollar, I think it’s a viable option. If you take advantage of your opportunities you can get a first-class education at an in-state tuition rate. I really do believe that anyone can get more out college (and life) by working at it harder than anyone else(regardless of any special status); there’s always people that notice persistence and brilliance, though they may have to impress the adjunct before you get access to the dept head.

  33. Mule Skinner says:

    Re insurance for rental cars: I believe that the state of Minnesota requires insurance companies — operating there and insuring residents — to cover rental cars for policyholders. Inquire about it.

  34. Reinder says:

    @ comment 18: That should be “similar, but more contemporary”.

  35. Economically_Challenged says:

    I live in North America and I finished school after a lengthy 6 years. After 4 months of post-school boredom I
    finally landed a very nice job that pays well considering the current economic state of affairs. My family is an
    immigrant family who has ‘dug the whole’ for their children and live cheque to cheque and have accumulated
    allot of debt. I also have accumulated debt due to getting a loan for school, having 2 credit cards to pay for
    things and even though I try not to spend too much both have a sizable amount of money on them.

    My position has me moving to Chicago (I’m a Canadian), and will have to get a place to stay.

    I will be making a base salary of $50k/yr and with a bonus and other compensation as well (my company has an
    interesting pay pyramid with utilization fee’s etc, essentially the more I work, the more I get paid) I can expect
    to make close to $60k-70k/yr a year.

    My govt. loan for school is $13k – I worked while going to school to cover some of the costs and keep the loans to
    a minimum
    Credit Cards are:$5k
    My parents debt totals around $60k of varying from several Line of Credits to credit cards etc. Insane interest lol

    My question is in regards to how I should focus my financial attention towards achieving all my future goals
    that is, to pay down my debt, and my parents respectfully while trying to put some away to invest if possible.

    My plan is to attack my debts first starting with Credit Cards then school debt and all the while slowly
    helping out my family until I free my debt up enough to tackle it in larger amounts.

    I will have to pay rent, and living costs food, clothing etc etc.

    Is this the right way to be attacking the situation? Also, where should I invest if the bank’s are failing, gov.
    backed bonds? and how long can I realistically expect to be free of these shackles. I am predicting that my
    debt can be undertaken in a solid year or two while my parents will take maybe 3-5yrs. (of course I understand
    it may take much longer)

    Forgive the long Question.

    P.S. One more thing, I am 25 and would like to buy a house before I’m 30, the housing markets look to be in my
    favor but accumulating the capital seems to be another issue, what are your thoughts?

    Thank’s for the read and hope you get to answer, and of course keep up the great work on The Simple Dollar!

  36. Johanna says:

    I should note that “Ivy” is not synonymous with “upper-echelon school.” The Ivy League is a group of eight specific schools in the Northeast (Harvard, Yale, Princeton, Cornell, Dartmouth, Brown, Columbia, UPenn). These schools tend not to give merit scholarships, although some of them may have changed their policies since last I checked.

    There are other expensive, upper-echelon private schools that do offer merit scholarships: Duke (my alma mater) and Washington University in St. Louis are two that I have some experience with. But there are only a handful of these scholarships per year (in my class at Duke, there were more people with full scholarships for women’s lacrosse than for academic merit), so they are very hard to get – you really need to have distinguished yourself at a national level in some way or other. If you get one, though, it’s a fantastic opportunity. I know people who turned down free rides to Duke in order to pay full price at Harvard. I think these people are nuts.

  37. Nate says:

    Trent,

    What wordpress plugins do you use?

  38. April says:

    re: rental cars

    My advice is to go online, shop around, and lock in a price on an economy car before you go. At the counter, they will push you to upgrade, and you just have to tell them no.

    I made the mistake one time of agreeing verbally to an upgrade, because the rate increase sounded negligible. The agent was persistent and I was tired from my flight. So the agent did the paperwork for the mid-sized sedan, and when the rate was totaled up for my entire week stay, it was $300 more than I originally had agreed to online. I refused to sign off and said give me the economy car that I asked for online. So I paid what I was quoted online … and they ended up giving me the more expensive car because they didn’t have an economy car on their lot at that moment!

  39. Andy Kleiner says:

    Dear Simple Dollar,

    I recently received a gift of $10k from my father in law, yes this is truly a gift. However, he told me that he would like to see me invest in and create a handsome roi. I agree. I am a second year law student, I own a home in AZ (that I currently rent out) but live and rent in another state. I have 55k in a money market savings with capital one, no 401k, or other investments, I have about 80k in student loans accrued with about 30k more to go. I am trying to figure out what would be the best vehicle(s) to invest in. I keep hearing gold is strong and stable but don’t know too much about it, my wife thinks we should just put it in a CD for 1.5 – 2 years, I disagree, especially since the markets should rebound within the next year or two and I would hate to miss out. What would you recommend, I would love to have a 10% roi for this upcoming year, but realistically 5-6% would be suitable. What do you think?

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