Reader Mailbag: Backdating

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Investing in light of default
2. Debt eradication
3. Loans or emergency fund?
4. Repetitive questions
5. What’s next on my path?
6. Time for a financial advisor?
7. Polite hygiene advice
8. Wedding and financial planning
9. What are readers like?
10. 2012 predictions

How long does it take for you to stop dating checks and other documents with the previous year after the calendar flips?

I’ll admit that it will probably take me most of January to get used to writing 2012.

Q1: Investing in light of default
I have a small IRA, with half in a mutual fund, which has topped out, and the other half in two stocks which are near to bottoming out, from a lag factor associated with recession and reinvestment.

I anticipate a currency devaluation as an effect of renegotiation or default on national debt limits. Would overseas money markets be a safe place to stash funds from the sale of the mutual while I wait for it to drop so I can repurchase it? If you believe that our debt problems will negatively impact overseas money markets, what is an alternate spot, exclusive of index funds, which will drop as the market does?
- Monica

I don’t think I would trust overseas money markets more than domestic ones, as I think a lot of economies are facing some sort of currency devaluation due to the ongoing economic conditions.

I also wouldn’t bank my entire plan on market timing, particularly when you’re making moves based on a sense of a fund having “topped out” or “bottoming out.” If I were you and I moved forward with this plan, I’d set some thresholds on when to buy back in. For example, you might want to say that you’ll buy back in after three months if either the value of the fund is down, say, 15% or it matches the value you sold it at.

Don’t worry about what the absolute top of the market is or what the bottom is – worry about making money for yourself.

Q2: Debt eradication
I’m a 22-year old student who will graduate with a B.A. in December. I took out some federal and private loans to pay for school. I saved for the past year and paid off the private loans while in school. I’ll be left with $16,000 at 6.8% when I graduate. I have no other debt and a 3-month emergency fund ($6,000). I plan to make payments well over the minimum to pay this balance off in 2 years or less.

Is this a good thing? The more I research credit and credit scores, it seems that a relatively low-balance loan isn’t a bad thing to keep around for ten, even fifteen years. However, having a positive net worth is my #1 priority. Should I be making aggressive payments or simply using that money to pad my retirement and savings while keeping the loan around? While paying the loan aggressively I’ll still be contributing 15% of my net income to an IRA. I have one credit card with a $500 limit; never carried a balance. I pay bills on time every month. I currently rent. A house isn’t on my to-do list, and I’ll buy a car outright if I get one in the future. Is it enough to build my credit without a credit card balance, mortgage, car payment, and (soon) no student loan?
- Belinda

I don’t think the value of having a 6.8% student loan (in terms of your credit score) is worth the financial cost of having to pay 6.8% interest on the balance every year. If it’s within your means without causing other financial troubles, I would pay it off sooner rather than later.

Given that you do have a continuing line of credit in the form of your credit card, your credit report won’t go completely empty after you pay off the student loan. I would consider using the card regularly (and paying off the balance) and being open to moderate raises in your credit limit.

You’re doing very well. Keep along your current path and you’ll continue to do very well.

Q3: Loans or emergency fund?
I’ll graduate from grad school this May with $25,500 in federal subsidized loans (spouse and I also still have $27k combined undergrad debt at 5.3%). I haven’t technically needed these loans for the last year of school but because they’re subsidized I’ve been storing the money in a rewards checking account earning about 3%. It will be around 12,000 total in November when the subsidization ends and 6.8% interest kicks in. This is the extent of our short-term savings/emergency fund right now (my spouse and I are also saving for retirement). So, since we are looking to save for life’s big things in the next few years (car, family, and house, probably in that order), and we don’t have a defined emergency fund amount, I wonder how much of that 12k should we pay back immediately? We’re currently steadily employed though I’m seeking new full-time work in my desired field instead of my current part-time job. We have roughly $1000 extra/month to put to good use on student loan repayment and savings (we’re a pretty frugal couple), but I’m not sure what the best combination would be. We have to pay minimum $400/mo on our student loans. Is it best to pay more on student loans and postpone more emergency/car/baby/home savings? Is it best to pay back the entire $12k “savings” (which is really borrowed money) and start our “real” savings from scratch? I’m lost and confused and would be interested in your and your readers’ opinions.

- Danika

If I were you, I would establish a new emergency fund and fund it with enough money to provide three months or so of living expenses for you and your partner. I would then use the remainder to pay off your highest loan and then use the subsequent $1,000 per month toward minimum payments and whatever loan has the highest interest rate.

I would count that 6.8% loan as already having that rate and make “payments” on that debt to a savings account. Then, when the subsidization ends, I’d pay the entire balance of that savings account to that 6.8% loan.

In terms of balancing emergency protection and a path toward debt freedom, I think this is a very good plan.

Q4: Repetitive questions
I’ve noticed that there are a lot of consistent shall we say themes in your reader mailbag questions. Student loans come up a lot for example and so does retirement. Why repeat so much?

- Shaun

The reason these stories show up so often is because they’re the type of concerns that cause people to really start thinking about their finances and because they are so common among people. A lot of people leave college with student loans and they worry about paying them off.

I use a lot of these types of questions because there are a lot of variations in the story and because it’s a genuine concern that a lot of people out there have.

I try to choose questions that reflect the whole of the questions that I receive. I do often pick out specific interesting ones, but I also see from my email inbox that I get a LOT of questions about student loans, so I cover those questions.

Q5: What’s next on my path?
I’m now fortunate to be in a position where I’m (finally) earning a great wage at a company I have no intention of leaving anytime soon, living in a city (NYC) that I love, and living well below my means.

It’s been drilled into me for years that paying off your credit card(s) and building a healthy emergency fund are the first foundation steps to a healthy financial life. I’ve accomplished both (finally!), and have $0 credit card debt (only one credit card), and $11,000 in savings. I still have outstanding student loans, which I’m paying back and contributing more than the minimum on each month – these are at a very low interest rate, and the total repayment each month comes to $350. Paying off one would save me about half of that amount as the payments are pretty much equal between the loans.

I’m also putting $12,000/year into a 401(k), and am planning on continuing to contribute $1,000/mo into my savings account for the next 9 months – until it reaches $20,000. Since I live in NYC, I plan on renting for quite a few more years and I’m planning ahead for when I’ll want to move (moving into a new apartment here typically costs $4-5,000 upfront in costs for my price range – first month’s rent, last month’s rent, possibly a broker’s fee and a security deposit). 6 months of my bills (if I were laid off) comes to about $15,000, and that’s my emergency fund savings goal since I don’t have close family in the area and wouldn’t want to have to move due to prolonged unemployment. The $20,000 goal for this year assumes that I’ll want to move within the next year, which is a possibility (but not set in stone).

I’m not in a hurry to change my plans right now as I still have a bit of time left to contribute to my savings account, but I’d like to have some solid steps in place when I get there.

So – what comes next? It seems like after the savings account, credit card and retirement account are all healthy (or being contributed to healthily), that any number of options open up. I don’t get an employer match on my 401(k), so it’s 100% my own money in there, and I’d like to max it out for a few years, due to not being able to contribute anything in my younger 20′s (4 years of working w/o the spare $$ to contribute). But, I’ll still have a good amount of money that I’m now putting into savings left over after maxing out my 401(k), and I want to make sure I’m investing it wisely, if that’s even the right first step after this.

Are there any recommended steps after this point, or does it depend on the individual and their goals?
- Jill

It really comes down to goal-setting more than anything else.

Simply put, there is no general right way to invest. There are only good ways to invest to help you reach a specific goal. If you don’t know what you’re saving for, you’re probably going to save in an inopportune manner.

Let’s say, for example, that you decide to start investing in stocks because you heard they have a great return, not because you had any goals in mind. Let’s say you make this decision in January 2008. In December 2008, you decide to buy a house because you got pregnant and you decided you needed a house for that child. Your money has now lost 40% of its value.

You would have been far better off in a savings account had you incorporated the idea of buying a house in the next one or two years into your plan.

Spend some time thinking about where you want your life to be in five years or ten years. Where are you headed? Your investment choices should really follow that.

Jill also had a follow-up question.

Q6: Time for a financial advisor?
At what point does a financial advisor become wise? I’ve never had the need of one before, but is there a certain point that someone should start thinking about consulting with one, if only to make sure they’re on the right track and not missing anything they should be doing?

- Jill

I’m of the belief that given all of the amazing tools available to individuals online, most people don’t need a financial advisor. You would have to have a lot of money in the bank in order for the benefits that an advisor can provide to make up for the amount you’d be paying this person for advice.

For most people, particularly those without a ton of money in the bank, doing it yourself is a much better option.

What’s the dividing line? I think some of it comes down to your gut, but if you’ve got enough money that a percent or two of it is a significant amount of money itself, that’s when I’d get an advisor.

Q7: Polite hygiene advice
How do I politely tell a coworker that they have really bad breath? It’s bad enough that it’s distracting in the workplace. I don’t know how to properly approach it.

- Anna

Unless the relationship with that person is poisonous, I’d quietly bring it up with that person directly. There’s a very good chance that the person does not know this and the vast majority of the time that person will be very glad to have that advice as it helps their career chances.

If you have a bad relationship with this person, then you might want to consider going to their supervisor. I wouldn’t register it as a complaint, but instead encourage that supervisor to have a chat with the employee about it.

The purpose of all of this is to improve the office environment on the whole. Candor without negativity or snark is almost always a good way to go.

Q8: Wedding and financial planning
I am 28 and currently in the process of saving for a house with my fiance who is 25. We both currently work at the same company where I am a full time employee, and he started this year as an intern working 30 hours a week. We are looking to buy a house next year after we come up with the necessary 20% down payment for up to a $200k house. So our goal is to have $40k + closing costs saved by early next year.

When it comes time to purchase, unfortunately the mortgage will be in my name alone since he has bad credit; whereas mine should be immaculate by the time next year rolls around. I have no debt, and pay off my credit card balance every month. He has about $5.2k in subsidized student loans that are currently in deferment until he graduates at the end of 2012. All his other delinquent accounts have been more or less settled.

Right now we have $11k saved in our emergency fund and have $9.7k in the down payment fund. I’ve set the ambitious, but attainable goal to set aside at least $2.5k a month. We would be projected to have saved just about $30k by the end of the year. My mother has offered to additionally gift me $10k which I can use as my “new” emergency fund if I have to dip into my current one.

I earn just under $50k a year, and he is set to make $25-$27k depending on if he works the full 30 hours a week. So our net income is about $4.5k-$5k a month depending how many business days there are in a month. My company matches 75% of my 401k contribution up to 7% of my annual salary which I am currently taking full advantage of, but since he’s not a full time employee, he does not get the same benefit.

Right now all his income (lesser $200/month into another account that will be for when the student loan comes due) goes straight into the down payment fund, and we live off about half of my gross salary. We have a few things in the pipeline that would be advantageous for us to have a house by first quarter of next year. Our wedding is slated for the end of May 2012, and our goal is to have the wedding reception at home with just family and a few friends. This would be about 30 people at most, and the total wedding costing less than $2000 (I hope).

Should I set up a Roth IRA for him and myself now? I had planned on waiting until we purchased the house. But the best contribution for retirement is time, right? Starting a Roth IRA would set back the time frame of when we would purchase our house.

We likely will have additional expenses such as furnishing and/or appliances for the house. Should I use my emergency fund to buy appliances? Should I save for longer, so that when we close, we can pay for furnishings in full? Or should I live using our existing, aged pieces until we save up enough to buy those new furnishings later? My mattress is over 10 years old and is due for replacing.
- Jean

You’re currently contributing about 12% of your salary to your 401(k) including match, which is a very good number given your age. I don’t think you need additional retirement savings when you have other such pressing financial goals. It might be worthwhile for your husband to have one, which could just be routed from the money he’s contributing to the down payment fund. $500 a month would get him past the annual Roth cap. Given his salary, I would probably shoot for about $200 a month, giving him about 10% of his salary toward retirement.

When we bought a house, we used a lot of the furnishings we had at our apartment at first. Supplement that with whatever low-end furniture you need to fill out, then slowly begin replacing it as you need to. This is exactly what we did and we were quite happy about it.

If your mattress needs replacing, replace it, particularly if it’s interfering with your sleep in any way.

Q9: What are readers like?
Do you ever get visual images of your readers or add in more details in your mind than what they give you in their emails?

- Connie

I imagine details about readers all the time.

I usually do that so that I can see them as a person rather than as a dry question. I try to imagine the best picture I can of the person asking the question so that I want to help them.

Sometimes, that can backfire because I’ll put more positive details with the person than there really should be. Most of the time, though, I find that if you make an effort to look at a person’s best side, they’ll step up the plate.

Q10: 2012 predictions
What do you think 2012 holds in store for our world? Got any big 2012 predictions?

- Kenny

I think Barack Obama will win re-election, not because he’s done a stellar job, but because he’s done a “good enough” job compared to what the competition is. I think we will see a significant third party impact in this election, too, because the Republican party’s coalition of social conservatives and fiscal conservatives is becoming more and more frayed.

I think the American economy will show continued signs of rebounding and will look comparatively stronger (economically) than Europe throughout the year.

I think that December 21, 2012 will pass without any significance other than perhaps a few reactionary people overreacting to a quirk in the Mayan calendar.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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42 thoughts on “Reader Mailbag: Backdating

  1. Cheryl says:

    re: backdating
    Get out your checkbook and write the year on the first 5 checks.

  2. Johanna says:

    Q5: First of all, congratulations. Having more money than you know what to do with is a very nice problem to have. :) I have a few suggestions:

    You talk about your 401(k), but don’t mention an IRA. Can you contribute to one of those? Even if you’re over the income limit to fund a Roth IRA, you can (as I understand it) contribute to a nondeductible IRA and convert it to a Roth.

    Are you living life to the fullest right now, or do you find yourself postponing things like fun purchases, vacations, and other experiences? When you have plenty of money, it’s OK to spend some of it on things you want but don’t need.

    Something else to consider is giving a few percent of your income to charity, if you’re not doing that already.

    Once you’ve done all those things, if you still have money left over, I’d recommend opening an account with Vanguard and investing in some mutual funds through them. If you have a specific goal you’re saving for, that can help you decide whether you want to invest conservatively or aggressively. If you don’t have a specific goal right now, that’s OK too – the Vanguard website has tools to help you choose investments that are in line with your personal tolerance for risk.

  3. Susan says:

    @Cheryl – that’s what I do. That simple trick saves me every year now. :)

  4. Johanna says:

    Q2: It’s a myth that you need to carry a balance on your credit card for it to help with your credit score. Using the card and paying off the balance each month is just as good – and you won’t be paying any unnecessary interest.

    But a weird thing that does affect your credit score is the percentage of your credit limit that you use – even if you pay it all off at the end of the month. If your limit is $500 and you charge $400, you’ll be reported as using 80% of your credit limit, even if you pay it all off. It’s best to keep your credit use below 20-30% of your limit – for a $500 limit, that’s just $100-150.

    If you typically charge more than that in a month, you have a few options. You could ask for a higher limit. You could get a second credit card. You could use your card less and pay for more things in cash. Or you could make multiple payments during the month – as soon as your balance gets to $150, pay it all off and start again.

  5. justin says:

    Obama has done a, “good enough job”? Really? you just lost any respect i had left for you. You dont care though, since this isnt your website anymore.

  6. Courtney20 says:

    Justin – key phrase is “compared to what the competition is”.

    He wouldn’t win my nod for Best President Ever. But if the election were tomorrow I’d vote for him over any of the candidates the GOP circus has managed to produce so far.

  7. Johanna says:

    @Courtney20: Careful what you say. Justin might decide that you’re secretly a Kenyan Marxist Muslim too.

  8. justin says:

    @johanna you think your funny dont you? You are on every single commet thread complaining about something. Very annoying. I didnt say obama was a kenyan marxist muslim. If you think all his trillions in spending is good for our economy or national security you are wrong. Im not going to talk about his other policies. And ill say i didnt like bush much either. But we are all on a personal finance blog about whose main purpose is frugality and obama is the poster child for overspending. He has spent more than all the other US presidents combined. I guess, im gonna get attacked now, but the majority of americans agree with me.

  9. Andrew says:

    Oh please, let’s talk about the Maya instead.

  10. justin says:

    i will say he is a marxist though, after all, sometimes its good to spread the wealth around. I think maybe we could start spending johannas wealth around first. since she is a “tax expert” lol, she should have lots of money to give to the lazy.

  11. Jessica says:

    Seriously? Complain to a supervisor about somebody’s bad breath? If I were a supervisor, I certainly would have much more important things to worry about than somebody’s breath. Why not place a bowl of peppermints out and offer Mr Stinky a mint? Or some gum? Or not sit next to him at meetings?

  12. RANDOM ANONYMOUS says:

    Obama has done a “good enough” job. Unemployment shoots to over 10% and gas prices almost double in less than 3 years. I can’t imagine what it would have looked liked if he had done a “bad job”.
    Also, perhaps the economy in Iowa has seen “signs of rebounding”, but much of the country hasn’t seen that yet.
    Of course comparing our economy to Europe will make us look good. Their socialistic policies have ruined their economies and we are not quite as far along that same downward slide.

  13. jim says:

    Q1 Monica : Theres no reason to cash out of the US economy in general. The USA is not going to default on its debts. Raising the debt ceiling won’t have any impact on our currency. So you can stop worrying about those. Our economy is still the largest in the world and generally viewed as among the very strongest. We have reason to be concerned about our growing debt levels but it won’t ‘ruin’ us. Our debt level as % of GDP was significantly higher after WWII and we went on to have boooming growth after that. (BTW, we never actually paid off that post WWII debt)

    However it doesn’t hurt to diversify your investments in general. You can always buy mutual funds that invest in international companies to do so and spreading your money around some is generally smart.

  14. jim says:

    Trent, if you want to avoid politics as you claimed then saying Obama is doing a better job than the GOP would isn’t really how you avoid politics.

  15. jim says:

    “Unemployment shoots to over 10% and gas prices almost double in less than 3 years.”

    Unemployment hit 10.8% under Reagan and gasoline prices nearly quadrupled under George W Bush. Under Bill Clinton unemployment never exceeded 7.3% and dropped as low as 3.9%. Under Clinton gasoline prices never went up more than 50% the entire time and didn’t get above $2 So does this mean Clinton was a better president than Reagan and Bush?

    Unemployment and gas prices are not direct measures of the qualify of a president.

  16. TLS says:

    Question – Is anyone else having this problem? When I visit The Simple Dollar website, the most recent post is one from Dec 30. I had to go to Trent’s twitter feed to see more recent posts. I checked the website on two different computers, but all I could bring up was the Dec 30 post.

  17. Cam says:

    Q8: Please proceed with caution. You might want to hold off buying the house until both of you are in a stable position. What if your fiance can’t find a permanent job in your city after he graduates? Has your fiance learnt from the mistakes that led to his bad credit rating?

    If it’s possible in your city, try purchase a house that you can afford on your salary alone.

    I admire your ambition – I can’t imagine saving 50% of my net pay. Life happens, and even with my aggressive saving plans, there are always things (sometimes great opportunities) that tend to take an unplanned chunk out of savings.

    Best wishes, Cam

  18. Katie says:

    I’m having that problem as well, TLS.

  19. valleycat1 says:

    #16 & 18 – I’m not having any problems seeing current posts on the main website. His afternoon post today appeared right on time. But, I did have to update my bookmarked page on my smartphone yesterday, as it couldn’t find it for some reason using the shortcut – had to type in the web address again & re-save it.

  20. Courtney20 says:

    @Jim, and Q1 – I wondered how old that question was when I read it. Last summer perhaps? Not that I would have recommended drastic action then either, but it seems like a strange thing to be concerned about right now.

  21. Kai says:

    “Obama has done a, “good enough job”? Really? you just lost any respect i had left for you. You dont care though, since this isnt your website anymore.”

    It sounded to me not like Trent was passing judgement, so much as that he was estimating majority opinion.

    I didn’t like Obama from the start, having pegged him as a demagogue (an opinion he has yet to dispel), and I figured he’d be in big trouble because no person could possibly live up to the expectations his fanbase had when they elected him as some kind of saviour.
    While a lot of the problems he’s had are left over from before his time and would be difficult for anyone to do, I would normally think that his poor presidency would mean he would lose re-election – Americans generally treat a second shot as a report card, rather than as a contest between two men/parties.
    But the GOP has fielded a ridiculous slate of possible candidates this year. I say this as a conservative who would likely vote Republican if I were American.
    I think the Republicans don’t need to run someone awesome, since opinion is already anti-Obama, but they have to find someone who at least seems vaguely competent – and I haven’t seen that candidate show up yet.
    I think the undecideds probably don’t feel all too positively towards Obama right now, but they aren’t being given any reason to vote for anyone else.
    Thus, I would agree that obama has done a good enough job *compared to the competition*.

  22. Kai says:

    Regarding financial advisors, you pay them money, so that they do the research for you, and take care of your money.
    Basically, having one is choosing to use money instead of time.
    I’d recommend getting one when you value your time more than your money enough. If you’re very busy, or you have poor math/accounting skills, or you’re bored out of your mind by finances, and you have the money, you may decide it is worthwhile to pay someone else to do it for you.

  23. justin says:

    @Kai, just curious, could you tell me a couple things (in detail) that obama has done to make our country a better place? If you could vote for obama what would be your reasons? Anybody that is going to vote for him in 2012, Please tell, why? Id rather vote for a great president, than a “he just did good enough”.

  24. jim says:

    “opinion is already anti-Obama”

    Obama’s current job approval rating just polled at 49%. His favorability rating is 53%. Thats not “anti-Obama”.

    I wouldn’t consider that really “anti-Obama” in any national view. Its not a ‘good’ approval rating but its not horrible either. Especially considering about 40% of the population considers themselves Republican and are very unlikely to approve of a Democrat president.

    In his 3rd year Reagans approval rating dropped under 40% and he spent nearly half his 4 years under 50%. GW Bush’s ratings were sub 50% pretty much his entire 2nd term. No president since Kennedy has stayed above 50% approval their entire presidency.

  25. Kathleen says:

    Justin, cool your jets. As Kai said, “good enough job” is a prediction that the majority of voters will determine Obama has done well enough to vote for over the competion. It doesn’t necessarily reflect Trent’s opinions about Obama policies. I agree with Trent, and I’m a dyed-in-the-wool conservative.

  26. TLS says:

    Problem fixed, thank you.

  27. Johanna says:

    “Obama’s current job approval rating just polled at 49%. His favorability rating is 53%.”

    And a fair amount of Obama’s disapproval comes from the left. Those people may or may not vote for Obama in November (they may stay home, or they may vote for a third-party candidate instead), but they sure won’t be voting for his Republican opponent, whoever that turns out to be.

  28. Kai says:

    “@Kai, just curious, could you tell me a couple things (in detail) that obama has done to make our country a better place? If you could vote for obama what would be your reasons? Anybody that is going to vote for him in 2012, Please tell, why? Id rather vote for a great president, than a “he just did good enough”.”

    Nope. Can’t tell you a thing.
    I’m not American, and I don’t follow your politics carefully.
    If I were American, I would consider myself a moderate republican. If I were to vote in your next election, I would probably vote for a third party, because I have no use at all for Obama, and very little for the democrats, but I can’t imagine voting for any of the currently suggested republicans.
    I too, would rather vote for a great president. But I don’t see one showing up on your ballot, so ‘good enough’ is the best you can vote for. (or refuse your ballot, of course. Can you do that down there?)
    I could easily see unaffiliated voters looking at obama and not feeling too positively, but then looking at the republican candidate and deciding that obama’s the better of the two options.

  29. jim says:

    In one poll in Dec. they asked people if they thought Obama deserved to be re-elected. Only 43% said ‘yes’ that he deserved a 2nd term. Then the same poll they also asked if the election were held today between Obama and Gingrich and 51% said they’d vote for Obama and 42% for Gingrich. Obama had a slimmer 1% lead over theoretical Romney opponent with 47% Obama & 46% Romney.

    So in that poll in mid Dec at leat there were 8% of the population that didn’t think Obama deserves a 2nd term but prefer him over Gingrich. 4% of the population doesn’t want Obama again but would take him over Romney.

    I think this supports Trents opinion.

    Source : GfK Roper Public Affairs & Corporate Communications. Dec. 8-12, 2011 as found on the polling report website.

  30. jim says:

    Kai, If I were in your country I’d probably vote for a 3rd party too. But then I don’t follow your politics much and I don’t know much about your government or anything. But your current leader just strikes me wrong and I don’t like the look of him/her much at all.

  31. Kai says:

    I’m thinking we get a lot more of your political news than you get of ours.
    I watched your previous election fairly closely, and formed my opinions of obama then. I have watched less closely in the intervening time, but enough to have re-evaluated my opinion a few times, and wind up in the same place.
    But i don’t follow it carefully enough or care about an internet commenter enough to give detailed points as to what obama has done for the country.
    Especially given my personal opinion to the contrary, which kevin seemed to miss.

    I don’t mean my commentary as a complaint against the states. It’s a common problem in all democratic countries that an election comes around and you don’t like any of the viable options.
    In my last federal election, I did refuse the ballot because the leadership options here were in a similar state to where they seem to be now in the states.

  32. deRuiter says:

    “if you’ve got enough money that a percent or two of it is a significant amount of money itself, that’s when I’d get an advisor.” NO, NO, NO, DON’T GET A PERCENT BASED ADVISOR!!!! This is giving some clown permission to churn your account to earn comissions for himself! NEVER USE A PERCENT BASED ADVISOR!!!! The writer of this finance blog may not know that there is such a thing as a fee based advisor. That is the only kind you want unless you are a rock star or member of Congress who has engaged in major insider trading like Nancy Pelosi who has made millions for herself passing laws for or against certain things and done her insider trading before the laws were passed. Even then a percent based advisor has a license to pick you clean like an apple tree, which is sadly what happens to so many professional athletes who hire percent based advisors. Go to a fee based advisor, heck, go to a few fee based advisors and pay them each for one hour of their time. You will learn what each person thinks is a good way to handle your finances. See what three of them say and then make your plan using the most logical ideas from all three. A percent based advisor who trades your stocks and picks investments (like fancy life insurance plans touted as “investments” which they aren’t really, but yield stupendous up front comissions to the sellers are to be avoided at all costs.) Folks, I may disagree with many who comment on this site, because I’m old and was raised in a different era from the young here who have been thorough our Leftist modern school systems. I still don’t want anyone who works and earns money to be taken to the cleaners by percent based advisors. If you want to pay for an hour of advice, fine. You writers on this comment section are 90% of you as well equipped or better equipped to handle your own investments than a percent based advisor. The other 10% are aparently so mired in student loan debt like $150,000. to get a degree in the social sciences where your new job will earn you $40,000. per year that you will never be out of debt so those people don’t need any advice except “Get a part time job on the side, spend nothing, buy nothing and pay down your debt.”

  33. getagrip says:

    @ deRuiter Trent’s point didn’t strike me as being about getting a fee based advisor. It’s about waiting to get an advisor until you have already accumulated a large enough amount of money that a “percent or two” of it feels significant to you. I seem to recall that in other comments and threads Trent has suggested a fee based advisor when he does suggest them.

    Q2 I’m not sure why, if you are doing so well, you feel you need to establish credit or have a great credit score. Paying your bills and keeping no balance on your credit card should keep your score good enough for all “non-credit” purposes some are trying to use credit scores for lately. The benefits of staying out of debt outweigh worrying about a credit score IMHO. The only real reason for wanting a great credit score is if you’re planning on taking out loans. If you have enough money by savings and investments that you don’t need to take out a loan, then seeking the absolute best credit score isn’t necessary and more likely to get you into trouble and cost you more in the long run, especially if you take out a loan and carry a balance just to make the score look better.

  34. deRuiter says:

    #33 getagrip. It’s important to explain over and over why a fee based financial advisor is working for you, and a commission (percentage) based advisor is working for himself milking you, the client, the more he churns your account, the more he sells you, the more he earns. You may be right about the author’s idea of when you need a financial adviser, and I disagre with him. Why scrimp and save for 20 years, not making optimum financial decisions, when a one hour session every year or two from the start (graduation and first real job) could help steer you to better financial decisions? If I were starting out I’d consider going to a fee based advisor for one hour every year or two, to have a dispassionate person who’s interested in finance look over what I’d accomplished and suggest ideas to do better. A financial planner, fee based, will suggest ROTH IRA, traditional IRA, maxing out any employee plans to get the max matching amount, avenues for investment, how to structure sound financial deals. You can often call the advisor during the year if you have a question about how to structure some deal or plan. The fee based advisor has a stake in telling you what you need to know so you will come back for another session. The commission (percentage) based advisor wants to churn your account and sell you oddball, fee heavy life insurance. Thinking it over getagrip, I believe you are correct about the author’s advice being to wait until 1 or 2 % of your money is a substantial amount. I think getting professional financial advice once a year or every two years from the start is a better idea so you don’t go 10 years saving in an inefficient way when there was a better way to amass more money with less effort.

  35. Jackowick says:

    Oh how I do enjoy when a personal finance site becomes political.

    If you look at the actual numbers, the US Dollar Index as appreciated *13%* since March 2008, and is comparitively little changed since 1991. But we don’t like to do our homework in the internet era, despite the wealth of ACTUAL stats and facts from REAL news sources. The dollar is still a very safe and stable place to keep your money, and many people still knee jerk that ONE credit agency downgraded the US to one step below the HIGHEST RATING.

    As we pull slowly out of this economy downturn, which is happening despite the doom and gloomers (bad news makes headlines, good news gets buried) remember that interest rates can only go up, which is good for cash savings, bad for debt.

    So, getting this BACK on topic, the advice here is always sound advice; build up emergency/liquid assets, pay down your debt. We are in unique window where those who can build cash over the next year as well as pay down/pay off debt, will see a nice little pop to their financial situation. Pay down debt, build up savings is always the right idea, but the next 12-24 months offers a very unique window of opportunity.

    And to the people who ask/question the “repeat” questions here (Q4), good advice doesn’t change, and some people need to be beat over the head before they recognize it. Plus, I actually do enjoy the reinforcement of reading good courses of action as well as the little variances in the questions, such as the debt to asset ration for some people.

  36. Jackowick says:

    Oh how I do enjoy when a personal finance site becomes political.

    If you look at the actual numbers, the US Dollar Index as appreciated *13%* since March 2008, and is comparitively little changed since 1991. But we don’t like to do our homework in the internet era, despite the wealth of ACTUAL stats and facts from REAL news sources. The dollar is still a very safe and stable place to keep your money, and many people still knee jerk that ONE credit agency downgraded the US to one step below the HIGHEST RATING.

    As we pull slowly out of this economy downturn, which is happening despite the doom and gloomers (bad news makes headlines, good news gets buried) remember that interest rates can only go up, which is good for cash savings, bad for debt.

    So, getting this BACK on topic, the advice here is always sound advice; build up emergency/liquid assets, pay down your debt. We are in unique window where those who can build cash over the next year as well as pay down/pay off debt, will see a nice little pop to their financial situation. Pay down debt, build up savings is always the right idea, but the next 12-24 months offers a very unique window of opportunity.

    And to the people who ask/question the “repeat” questions here (Q4), good advice doesn’t change, and some people need to be beat over the head before they recognize it. Plus, I actually do enjoy the reinforcement of reading good courses of action as well as the little variances in the questions, such as the debt to asset ration for some people.

  37. Kevin says:

    @justin:

    “Could you tell me a couple things (in detail) that obama has done to make our country a better place?”

    He pulled your troops out of Iraq (where they never should have been in the first place).

    “He has spent more than all the other US presidents combined.”

    That’s so ridiculously incorrect I can’t even think of a funny way to highlight how wrong you are. Your statement is funny enough on the face of its ignorance alone.

  38. jim says:

    “He has spent more than all the other US presidents combined.”

    The saddest part is that particular total BS gibberish idiocy probably came from Senator Eric Cantor.

    “What you’ve seen (in Washington),” he said, “is a crowd that has taken advantage of a crisis back in late ’08, early ’09 and spent more money than this country has spent in the last 200 years combined, in the two years since.”
    – Eric Cantor, R-Va
    October 12, 2010 on The Daily Show

    Of course as a US Senator Cantor ought to know better. Therefore he is either grossly incompetent or a manipulative liar. Possibly a bit of both.

    The lie is easily dismissed by facts about US spending :
    “you only have to add together 2006, 2007 and 2008 to reach $8.3 trillion, which exceeds the $7.2 trillion of 2009 and 2010.”

    You can fact check all this easily via google search for “eric cantor politifact spent more”

  39. Johanna says:

    Not that it detracts from your point, Jim, but Eric Cantor is in the House of Representatives, not the Senate.

  40. valleycat1 says:

    Thank you Kevin & jim.

    I would add that the President (at any point in time, not just this President) is not the only one to blame for the current situation, and in my opinion it’s the legislators, not the President, who have the real opportunity to fix things. Obama has had to deal with a legislature whose Republican members have publicly stated they would oppose anything the Democrats try to pass, regardless of the merits or possible benefit to the country, just to be able to say Obama has failed & we need to get a Republican back in the office. And Obama’s having to deal with this while trying to fix the problems he inherited from the previous POTUS.

  41. jim says:

    Johanna. oops, thanks. Not sure why I thought he was a Senator. *shrug*

  42. RANDOM ANONYMOUS says:

    @valleycat
    It is interesting that you blame the Republicans in Congress when (as he proved with Obamacare) for 2 years President Obama could pass legislation without any Republican support. In fact, there could be bipartisan opposition and the law could still be passed.
    While many people enjoy the excuses and blaming Bush, I think it is childish and irresponsible to always blame others. The overspending by Bush (which Senator Obama opposed) was one of the reasons the Democrats had absolute power for 2 years after the 2008 election. Unfortunately, Obama has not only continued the failed Bush policies, but expanded them.

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