Reader Mailbag: Bad Loans and Bad Yeast

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It’s Monday morning… that means it’s time for another reader mailbag!

My girlfriend bought a 2006 Chevy Cobalt in March 2009 because she wanted dependability and good gas mileage. She has put 31000 miles on it since then. She wants to settle down near school and doesn’t need the car anymore/can’t afford the insurance that goes with it. The problem is that she has had it for such a short time that she still owes most of the principle. Here are the numbers:

Purchased for $10086 in March 2009 and financed through the dealer at 15.95 APR
She has $9077 left on the principle by making minimum payments of $246 and insurance at $200
She is 20 years old and has one wrecked car under her belt.

What are her options, if any?
- Michael

15.95% APR is practically extortion on a car loan. Based on that number, I’m going to have to assume her credit was pretty poor at the time and is probably still not great.

The problem with this situation is that she is deeply underwater on the loan. I went to Kelley Blue Book and looked up values on several different variations on the ’06 Cobalt and found that they averaged around $5,500 in resale value.

If she’s really not intending to drive it any more, her best bet is to find a garage to park it in, remove the insurance, and keep making the payments for a while. She should also look into refinancing that horrible loan – she should try visiting a local credit union to find out what her options are.

I’m a 21 year old 3rd-year college student, looking to be in college for at least another 6 years (graduate school) and I’ve had to take out loans to pay for it. Currently, I owe about $2500 in unsubsidized loans and $6000 in subsidized. I’ll be making about $2000 between my taxes and a research project I signed up for, which is almost enough to pay off this year’s unsubsidized loan. Alternately, this is enough to go on a trip to England with my friend and pay for a tour of all the old English castles (I’d only need a few hundered dollars for shopping money and I’d be set with breathing room). This is a rare chance because I want to travel, but I don’t want to do it alone and this is one of the only times I know that I’d have a partner I trust ready to come along. Also, since I’ll be adding to my debt with each year of college, my unsubsidized loans would only be paid off for a year. I’d like to go to Europe now, before I get a career or family to hold me here, and it sounds like a wonderful opportunity, but I know the responsible thing to do is pay off what I can of my debt so I don’t have a problem later. What should I do?
- Kat

Obviously, a trip to England right now isn’t the financially strongest choice. Travel is pretty obviously one of those things that is in the “want, but not need” category that gets many people into financial trouble.

However, your situation is a bit different. You are not going into further debt to make the trip (it seems like) and, apparently, the trip is only costing you a few hundred dollars in spending money. I’m not sure how exactly you worked out that opportunity, but it sure sounds like a good one to me.

If the total cost of that trip really is only in the $300 range and you’ve been dreaming of this kind of travel for a while, I’d encourage you to go on the trip. However, if that’s not a true picture of the cost and you actually are paying for the airline ticket, lodging, etc. (which would blow $300 out of the water), I’d probably reconsider it.

I’m a third-year college student on track to graduate in 2011. I started out my first two years at community college, living with my parents to save money, and then transferred to an extremely prestigious state school last semester and spent last fall away from home. Unfortunately, the school was a bad match for me, and having no income, I was having to live on the surplus of my student loans, which struck me as really dumb; I couldn’t live so frugally that my expenses matched my income of $0, so I transferred again. Now I’m living at home to reduce expenses, attending a a school that allows me to tailor my educational activities to more strongly match my career goals. I’m also trying to find work in freelance web design and writing, and considering taking on a part time (or full time) job once I start at my new school and see what the work load is like. By my graduation I want to start a business and be self-employed freelancing & writing history educational materials for homeschoolers, private schools, and other independent learners.

What I need perspective on is how to invest my income, once it starts. When I finally do get work (I’m investing 5-10 hours a week on looking for jobs and applying to freelance positions, as well as work-related activities like studying to pass web programming exams and improving my writing), should I try to immediately put as much money as I can toward my debts to lower the overall interest I’ll have to pay, or do I invest some of my income in creating a financial cushion for when I launch my business and move out of my parents’ house? The unsubsidized federal loan I took for my last school was $3,500 for my first junior semester. I was awarded $3,750 for this upcoming semester in a slightly better financial aid package (about half of that is a subsidized loan).

If I continue receiving similar financial aid in my next two semesters, my debt will total something around $15,000. I don’t want debt payments to overshadow my future or force me to work jobs I don’t want because freelancing won’t support a debt payment and living expenses. I want to pay my debts off before I move out, and I’d like to be out within a year of my graduation, so by 2012. What’s the best way to handle this debt when my income isn’t certain? Should I just throw all the money I do get at paying off my debts as fast as possible? Should I wait until I’m done with my education, save all my income now, consolidate my loans, and try to pay off as much as possible with the benefit of interest? Should I be seeking a regular job and put all the income from that job into a loan payment? I can’t seem to figure out the best way to get to my goal of freedom from my debts and independence to head out on my own with so many variables.
- Kari

You are putting the cart way, way before the horse here. Do not invest even a single drop of energy counting your chickens before they hatch.

Focus exclusively on making this business work. When you have income from this business, keep it in a savings account and make sure you have the income taxes fully covered.

Don’t even worry about investing it until you have a substantial amount of money built up in that savings account because, quite likely, that account will have to be used for expenses related to your business – replacing your computer if it breaks down, for example.

Once you do have that money, if you want debt freedom, throw some/most of it at your student loans. That, however, is something to not worry about right now. Get your business functioning first.

I’ve tried following your bread recipe a few times, but every time, the dough doesn’t really rise at all, or just a little bit. This seems to happen with other bread baked goods that involve yeast as well.

As a result, the bread/crust/whatever ends up being super doughy and chewy, not at all the consistency of what a bread should taste like. Do you have any suggestions on what I could change in order to keep the yeast from dying or not working? What sort of steps do you think would most impact the yeast and allowing the dough to rise properly?
- Eric

That sounds like bad yeast, to tell the truth. Have you had the yeast for a long time?

The best way to prepare yeast for use in a recipe is to put the yeast in warm water (with a little bit of sugar diluted in the water) and let it sit for fifteen or twenty minutes. It should start making little bubbles near the end of that timeframe as the yeast grows, eats the sugar, and produces gas.

If your yeast doesn’t produce any bubbles when you do that, toss the yeast and buy some new. In terms of the active dry yeast you typically buy in a store, I’ve had the most success with Red Star.

I am a 50 year old woman, laid off last year from a dying industry (newspapers). I have health insurance through my husband’s job, so I’ve been free to start my own freelance business. Through word of mouth, I have done very well. My hourly rate is double what I made at the newspaper. I’m good at what I do, and it’s fun, and I have all the work I can handle.

But there is a cost. I’m a terrible procrastinator. I miss my colleagues. I like working in an office. I spend way too much time reading blogs and catching up with facebook, so I end up working deep into the night. Work fills my weekends, too, and cuts into family time.

Now I have a job offer. It’s at a very interesting and culturally important place where I’d really, really like to work, and “recession proof,” they tell me, and 40 regular hours. In many ways, this is my dream job. But the pay is half my old job pay (a quarter of my freelance rate)! They won’t budge on salary, and they won’t negotiate a deal like more vacation or flexible time off. With 220 applicants, they don’t need to negotiate. I’m very blessed to have been offered it.

So, what to do? Freelance, freedom, flexibility, procrastination, disorderly life? Or stability, low pay, retirement fund, lifetime benefits, regular hours and weekends free? They’re both good. I’m going nuts deciding.
- Francesca

Different people have different strengths in life. Office work doesn’t click with everyone. Entrepreneurship doesn’t click with everyone, either. Some people succeed with absolute hands-off freedom, while other people succeed under a strict regimen.

Based on your email, I think the job is right for you. I would go for the job. I would also try to fill some of my spare time with a small amount of freelance work, which might be easier for you to focus on if you have a lot of social interaction during the day at your office.

I am getting married this summer and my fiance and I want to open a joint bank account. Any advice?
- Jeff

By “bank account,” I’m going to assume you mean both a checking account and a savings account, likely at a new bank.

If you haven’t had a joint account before, I would suggest getting a free checking account at a local bank. I would ask your social circle for bank recommendations – what they use, whether they like it – and follow their lead towards the local bank with the best reputation.

Why use a local bank instead of an online one? When you first get a joint account, there’s going to be some adjustment for both of you to get used to the spending habits of the partner. Having access to personnel at a local bank can make this transition a lot easier, as you can actually talk to a person face-to-face if you have issues with account managment or overdrafting.

Once you’re in sync, you may want to move to one of the many online checking/savings account combos that offer more interest and fewer fees but less customer service.

I have several long held mutual funds.

Seeing as the long term capital gains rates will change at the end of 2010 from 15% to 20%, would it be advantageous to sell near the end of 2010 and rebuy in 2011 in order to reestablish a higher “basis” and pay 15% tax now instead of 20% tax later on the gain I have made already. Obviously, this assumes no extension of the 15%.

This would make some sense to me, and I’m probably not the only one thinking this. Therefore, would you expect a heavy sell-off at the end of this year (from investors implementing this strategy) and thus a negative impact on the market as we near December?
- Kevin

That plan makes sense to me. However, I don’t necessarily think that selling in December would be a wise choice. Quite a few people seem to be thinknig the same way you are, and that means there’s an opportunity.

It might make more sense to sell earlier than that – say, the middle of the year – and then buy the mutual funds back at the end of the year when lots of other people are selling for the tax gains and, in theory, the market is lower.

This makes complete sense from a game theory perspective, but it has no connection to other economic indicators. If the economy is really booming at the end of the year, the upwards pressure will be greater than the downward pressure (from selling) and might convince some to just hold it through the tax changes.

Honestly, my buying and selling of stocks and funds isn’t influenced a bit by a 5% bump in capital gains tax. You blow the tax away by selling at the right time (either for you or when you’re ready to take a big gain).

For those of us considering starting a blog of our own, I am hopeful you might be willing to share your insight as to the best free or very inexpensive places to build that first site. Then, after readership grows, what would your recommendations be for upgrading to a more costly site? I have read your downloadable “Build a Better Blog,” and the tips there were wonderful. With your computer/technology savvy, I’m sure you’ll have some great thoughts and recommendations as to the most cost effective way for a beginning blogger to build their initial site.
- Susan

I started blogging at Blogger. The service is completely free for anyone to use and quite a few well-known blogs use it.

The big advantage it offers is that it allows you to discover if blogging really clicks with you before you start investing money in it. Lots of people think blogging is easy – “I just write a post every day, how hard can it be?” – but it’s a lot harder than you think. A daily post means 365 interesting ideas a year, each fleshed out. Some people can do that – others can’t, at least not over the long term. Starting on a free service like that helps you figure out which group you’re in.

If you’ve actually stuck with it long enough to build a readership, you might want to move to a self-managed domain that gives you a lot more control over site design. There are thousands of such hosts out there. I’d mostly suggest reading through lots of plans, reading reviews of different hosts, and finding the one that works for you.

I just got my Social Security report, yes my birthday is coming up. I am currently a stay at home parent raising 9 children ages 0-20. I did work for 10 years, so I have qualified for social security at age 65 and will receive some income (if it still exists). However, because I do not have enough work credits in the last 10 years, I am not eligible for disability. Any suggestions?
- Jennifer

I’m guessing that you are concerned about not having Social Security disability coverage.

The real question you need to ask yourself is whether or not you could live comfortably without the income or work you provide for your family. Since you’re a stay-at-home parent, you’re not bringing home any income directly, but you do provide countless services to make your family work. If you were suddenly disabled, would most of those services still be fulfilled? Could your children, for example, pick up the slack of the things you do?

If that’s the case, I wouldn’t worry about losing the Social Security disability coverage.

Of course, as the children grow older, you may find the answer to that question changing as your children move out. Of course, at that point, you may want to find work – and thus you’ll eventually get that benefit back.

I have a couple of CD’s set to expire in March with ING – are they worth transfering to SmartyPig just for the better rates? I am not trying to save for anything, just looking to find interest!
- Tim

I’m a big fan of SmartyPig. I use it myself for specific savings goals. Plus, the guys are local (Des Moines) and I’ve met with them a few times, so I know there’s good people working there.

SmartyPig has great rates, but their website is strongly set up for saving for specific goals. One method would be to simply set up a very, very large goal and then set up an automatic savings plan for that goal (which is SmartyPig’s strong suit). That way, you can watch it build slowly towards that goal while still earning their nice interest rate.

In your situation, that’s probably what I’d do. SmartyPig has a history of being very competitive with their interest rates, so if you’re just looking for rates, they’re a good choice, too.

Got any questions? E-mail me with them or ask them in the comments and I’ll try to get to them. However, I do get dozens and dozens of questions a week, so I can’t always answer every question I get – I usually just go through questions until I find ten or so interesting ones for a given mailbag.

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54 thoughts on “Reader Mailbag: Bad Loans and Bad Yeast

  1. Kat: Go for it, and don’t let yourself feel a little bit guilty about it. Traveling like that just gets harder as you get older and lay more roots. The experience will totally be worth it.

  2. Looks like the trip is going to cost $2000 PLUS “a few hundred dollars spending money”, not just the spending money.

    That said, I’d take the trip any day. But watch yourself — between now and then, scrimp and save as much as you can. If you’re still going out for dinners and drinks, for example, stop right away and funnel that money toward the trip. No new clothes, etc. If I were in your shoes, I wouldn’t feel good about the trip unless I had sacrificed something (other than my future) for it.

  3. For the guy going to england on a tour of the castles, don’t count on only needing a few hundred in spending money, you are only fooling yourself, expect everything to cost the same in dollars as pounds (which is about right) which means you are paying 1.6x-1.8x for everything (food and such gets real expensive real quick). You may think now is the proper time to go, but if you end up budget crunched it will be miserable trust me. You will have chances to do similar things later in life, and will be able to enjoy them more without feeling the sting in your wallet.

  4. @Kat: You say you’re going to grad school. Does your field have any conferences in England? Are there researchers there with whom you could strike up a collaboration?

    Grad school is full of opportunities to travel on somebody else’s (your advisor’s grant’s) dime, and many conferences will give further subsidies to students coming from far away. You get your plane ticket paid for, and your lodging and meals while you’re at the conference, and then you can extend your trip by another week or so to travel on your own.

    So I say, hold off on the trip to England for a few years until you can do something like that.

  5. @Eric: Make sure, when you mix the yeast with water, that the water’s not too hot. A good rule of thumb is that if the water is too hot for you to comfortably stick your hand in, it’s hot enough to kill the yeast.

  6. Re: bread- Make sure the water is not too hot when you are activating the yeast. It should be about the temp of baby bath water. If it is too hot, it will kill the yeast.

    Also, make sure you are putting the dough in a warm place to rise. In the summer I just set it outside with a cloth over it. In winter, I heat the oven to about 150, turn the heat off, then stick the dough in the warm oven to rise.

  7. While Matt is right to be cautious about the danger of underestimating what things will cost in a foreign country (for example, the UK has a fairly steep VAT that you may not have taken into account) I think sooner is better than later for Kat.

    I had terrific opportunities to travel (as a child) because my father worked for an airline. Our airfare was free, hotels and car rentals were half price and the dollar was much stronger back in the 1960′s. Those trips are the kind of thing you remember all your life.

    Students in general travel much more lightly and are more willing to stay in hostels, sleep on trains, eat less expensive food, etc. than people in their 30′s and up. Students often live a very bare bones lifestyle anyway and it’s not perceived as a hardship but part of the adventure.

    It’s not so much fun to be living out of a backpack or sleeping on a crummy mattress when you’re 35, and married with a couple of kids. Not to mention that travel may be totally out of the question down the road. Airfare alone for just 2 adults may be more than you would have spent on the entire trip as a single.

    If you put it off now, you may find that you have to keep putting it off until you retire! Marriage, kids, house, repaying your loans, a job that doesn’t let you just pick up and go, parents in poor health, the list of things that may come up in the future is huge. And, if you do wait for that “perfect moment” to travel, you may find that your own health is not optimal.

    Do it now. Enjoy the memories.

  8. Regarding the car… I don’t think parking it in a garage is going to keep you from paying insurance. The holder of the loan is likely to require comp and collision coverage. They don’t know or care if it is in a garage, they just want it covered.

    Dave Ramsey often suggests selling upside down cars and getting a signature loan (credit union) to cover the difference. Might be hard if this person has poor credit. But this debt needs to go away pronto!

  9. And, re the Cobalt, definitely try to refinance through a credit union. If it doesn’t work out now (because you don’t have a long term relationship with a credit union) try again in 6 months. In the meantime, open and use a credit union account, pay a couple of bills from it every month, don’t go into overdraft, build a small savings account there (even $5 or $10/week). I haven’t seen 15% car loans since the 1980′s, when interest rates were insane for everybody. You have to get that lowered.

    As for storing it and removing the insurance, check your contract first! You usually are required to maintain full insurance coverage while you’re financing a car. If you’re allowed to store it, you will probably need (and should have) storage insurance on it. Yes, it will still be an expense, but it will be much cheaper than the kind of insurance you maintain when you’re actually driving the vehicle.

    I also question whether she’s really not going to feel the need for a car anymore. She drove 31,000 miles last year and now she’ll just give it up and walk/cycle/bus? I drive a *lot* including dropping off and picking up at preschool, school and 2 workplaces, plus frequent trips to and from our rural home (4 hours drive) and average 25,000 *kilometers* per year (just about *half* what she drove last year).

    Perhaps getting the car refinanced and cutting down on the driving significantly (which will save a *lot* of money on gas) would be sufficient?

  10. Regarding the Cobalt, and friend of mine was recently in a similar position. They ended up just parking the car, and making the payments. Eventually, a car will likely be needed again, so something like a Cobalt is great once it’s paid off.

    That said, she also learned a life lesson about buying and selling cheap domestics. In hindsight, she realized she could have bought a little 8-10 year old Civic/Corolla, put tons of miles on it, and taken only a small hit on resale. Cobalts are a great value new, but only if you’re going to own it for a reasonably long-term period.

    A couple years ago I was in this situation, buying a new car knowing that there was a possibility I might sell it in only a few years time. As such, I paid a little more and got a Civic, and needless to say, I didn’t regret it when it came time to sell a few months ago. I paid about $2000 more for it (new), but sold it for $6000 more used.

    Reliability and all else aside, resale value is and should be an important consideration for people when buying a car. I’m getting a new GMC next month (which I know devalues quickly), but based on the short and long-term planning I’ve done with my wife, I know it’s something that I’ll be driving until it literally falls apart. Based on this, and several other factors, it actually ended up making more sense than buying the equivalent Honda/Toyota.

  11. Eric: take the temperature of the water before you add the yeast – 100-105 is perfect- yeast will die when it is much over 110. Also salt slows yeast growth, so if your recipe calls for it, don’t add until you have at least part of the flour mixed in.

  12. Kat – take the trip now. I had a similar opportunity to go to France with a friend several years ago and didn’t. Now 15+ years later I’ve still not been and it’s not a possibility in the near future because ‘life happens’.

  13. We’re down to one car for the year since we’re living in a city, so my car is parked in a parent’s driveway in another state. We signed something promising it wouldn’t be driven and our insurance is very cheap. I think it guards against theft… possibly a tree falling on it, I’m not sure.

    In graduate school I couldn’t afford the insurance on my (paid off) car, so I gave it to my high school aged sister for a couple of years. It came back dented.

  14. Eric:

    If you want your yeast to last longer, store it in your freezer.

    If you are using INSTANT yeast, you do not want to pre-grow it in the warm water/sugar mixture that many recipes call for. This will activate instant yeast too soon so you won’t get a good rise later on. To adapt, add the instant yeast to the flour instead and then incorporate the wet into the dry.

    Also, make sure you follow the rest of the comments re: water temp.

  15. I was going to say what Kathy said about water temp.

    I have my own dilemna to inquire of the gang here- maybe for the next reader mailbag?

    ANyhow…

    I have $10k in my emergency fund- and I owe $6k on recent house jobs (siding and new door/frame). I have been paying off the siding at a rapid rate (almost $1k/month) and owe only $3K on the siding (w/ 11% interest on non secured credit). The door and frame cost a pretty penny but were needed (door frame was not all that secure!) and cost $4k- with no interest until June. My thought is that I would completely pay off the door to avoid any interest/fees (out of my savings)and continue paying off the siding at a rapid rate (I’ve been paying about $1k/month to speed up paying off the siding and minimizing the interest paid), then refurbishing the emergency savings. Is there a better strategy for me- like paying off everything, then refurbishing the savings? Warning: I am cautious about paying everything off and having little in savings from my adventure in the recession last spring (laid off and it took 3 months to find a job).

  16. As described, the trip will cost $2000 plus the spending money but there are ways to cut down expenses. As someone who has traveled to England, Italy, and Spain 7 times in the last 4 years because my daughter was studying there, pack one backpak, stay in hostels (some are just for students), eat hand held meat pies or other takeaway items which you can’t get in the states and are very tasty plus cheap, buy your food at the local grocery stores to cook at the hostels or have picnics,carry a water bottle, limit your alcohol at pubs or try not to drink alcohol at all, walk, walk, walk instead of using even buses (people over there think nothing of walking 10 miles), and consider couchsurfing.com for a free place to sleep. My daughter and her friend used the sight when they traveled in Switzerland for all of their sleeping arrangements since Switzerland is very expensive. They met really nice people who provided meals, friendship, acted as tour guides, besides providing a place to stay which sometimes meant sleeping on the floor. Most were other students. It freaked me out at first that she was going to stay with strangers but she gave us a detailed itinerary with all contact information of everyone she was staying with.they only stayed with people who had gotten a lot of positive ratings.She sent a text message every day. It worked out well for her and she got to see Switzerland on a very limited budget.

  17. Kat-Take the trip now, especially since you have someone to go with. Regrets are not just the things you do but the things you don’t do. Scrimp and save until then, can you get an odd job or two to make a few extra bucks ? See if someone will sponsor you for bringing back some info, pictures etc. As a ‘grown-up’ with 3 kids I wish I had done some things when I was younger, there is no chance now….

  18. For Kat, if you’re going to graduate school and want to travel then the obvious solution to me seems to be that you should do your grad school in Europe. This will be probably be cheaper then doing it in the US, give you international experience to put on your CV, and allow for lots of cheap travel opportunities to surrounding countries (once you’re over here it’s easy–I was in three countries yesterday and will be in the UK later this week!)

    Failing that grad school will still give lots of opportunities to travel for conferences and perhaps also to spend some time studying abroad. I share Trent’s skepticism that this trip will be as cheap as you expect. But, if for personal reasons you really don’t see yourself studying/living abroad, then perhaps the experience will still be worth it to you.

  19. Kat, take the trip! But it sounds like you’re planning on taking a tour for the whole time you’re there, and I question whether that’s a good use of your money. Search the web for frugal travel tips — it is certainly possible to spend less than $2k if you’re willing to do more legwork. Staying in hostels, making your own food (or eating cheaply where normal people eat), and mass transport are all good strategies. Now, if that $2k is getting you a multi-week vacation, it’s a great deal. But if it’s $2k with airfare for just one week stuck on a bus with a bunch of other Americans being herded from site to site, it’s not the most amazing experience ever. Check out Rick Steve’s stuff for great information about traveling frugally, and enjoyable, in Europe.

    Also, an aside — if you’re going to be in school another 6 years, it looks like you’re gunning for either med school or a PhD. With both, be highly aware that what you intend might not be what happens. Plus, a few years out working often helps bolster applications and give you a clearer picture of your own goals. So perhaps alter your plan a little — take this time to travel, and plan on working a bit after school before launching right back into grad school. Take it from one who took one gap year before grad school and wished she had taken more. I traveled a little in my gap year, but planning to work for 3-4 years before grad school would have given me more focus, more money, and much more fun travel time.

  20. More thoughts for Kat: If you really want to take the trip now, try talking with your friend about ways to reduce the cost of the trip. It sounds like what you have in mind is a package tour that specifically focuses on castles – is that right? Are castles what you’re interested in, or do you mostly just want to see England?

    In my experience, English castles are not necessarily all that exciting. They all kind of look the same after a while, and unless you’re an English history buff already, it’s kind of hard to appreciate the context of what you’re seeing. If you just want to see old buildings, you don’t need a tour guide to help you find them – they’re everywhere.

    So see if you and your friend can’t save a lot of money by plotting your own course. In addition to what Daria said: If you’re able to go before Memorial Day, you’ll pay a lot less for your flight. England is full of charming B&Bs and budget hotels that are surprisingly inexpensive, if you don’t want to go the hostel or couch-surfing route. And to get from town to town, booking your tickets on trains and coaches (intercity buses) well in advance can get you some ridiculously good deals.

  21. Re: UK trip- speaking from experience, I just got back from going there and trying to do it cheap, make sure you plan everything. I stayed with friends, plane tix were very cheap, lots of home cooked meals, only ate out a half dozen times in 14 days and I still blew a budget of $1000. Grocery stores are expensive, have to deal with VAT plus exchange rates being unfavorable. Taking the underground/national rail/walking still ended up costing almost 150-200 pounds for the trip which ended up being almost half my budget right there. Just be careful, and dont assume you can get by on the same amount of money you would spend in the US, count on everything, even groceries costing almost 2x what you expect. There will be less surprises.

  22. I’m pretty sure Trent misread Kat’s question. It looks like she has (or will have) $2000 and is asking if she should use that money to pay down her debt or to take the trip, and the $2000 wouldn’t even completely cover the cost of the trip. My personal feeling is that when you’re a student with thousands of dollars of debt, it is not very smart to spend $2300 on a trip to Europe. Paying for a trip in lieu of paying off loans is essentially the same thing as taking out a loan for the trip. Sometimes being financially responsible means forgoing things you can’t afford! Maybe if you don’t take the trip now, you’ll regret it later, but then again, you might also regret having more debt.

    @Eric: In addition to the other suggestions (test your yeast, make sure the water temperature is right, let the dough rise in a warm place), it is possible that you are either over-kneading or under-kneading the dough. If you’re using a stand mixer with a dough hook, you risk over-kneading if you knead for the same amount of time as the recipe says by hand. If you’re kneading by hand, you may be under-kneading it. One more thing to try is letting the dough rise a little longer than the recipe says.

  23. For the bread, another things comes to mind, if your tap water is heavily chlorinated it will inhibit the yeast, try using bottled spring water and see if that improves your results. I’ve had nothing but success with trents recipe in the past, and it was the springboard that pushed me into getting move involved in advanced bread baking.

  24. @Kat – Trent, I don’t think you read Kat’s letter very thoroughly. She clearly stated the cost of the England trip was going to be around $2000, not $300. Kat, I would go on the trip. When I was in your shoes, I opted to save the money and not go to Europe during college, and I’ve regretted it ever since. There are some life experiences and opportunities that you can’t get back once you’re older and have a full-time job and a family.

    @Francesca – You didn’t really specify how the lower income will affect your family’s quality of life. Also, it would be nice to consider, if you took the job, whether the decision is easily reversible if it turns out to be less than your ideal situation. Could you get that freelance work back if you needed to? If so, then there’s minimal risk in trying out the job. Your bias toward taking the job is clear in your letter, from the language you used describe it. My intuition is that you’ll be happier in the long run if you take the job and at least give it a go, even if it doesn’t work out.

    @Eric, whenever my bread turns out like that, it’s either because the dough was too thick (too flour-heavy) or the rising conditions were too cool. The safest way to rise dough in a drafty house is to turn on the oven to 350 for 1 minute and then kill the heat. Stick your covered dough in the warm oven. If your house is extremely cold, you might need to repeat this halfway through the rise. Just don’t forget to kill the heat or you’ll end up with a bowl full of partially leavened bread. In all my bread-making days, I have never encountered dead yeast. While I acknowledge that this could potentially be your problem, (which is why you proof the yeast before mixing,) it’s more likely that a too-low rising temperature, or too much flour is the culprit, in my opinion.

  25. I *was* in Kat’s shoes almost a decade ago, and I did take the trip. I would say go for it, but realize that it will cost you twice what you think it will. Not just because things are more expensive in Europe, but because you are financing it. I am still paying off my student loans to this day (but almost done, yay!).

    If you are comfortable spending $4,000 for this trip (and don’t fool yourself, it WILL cost you that much, when all is said and done) then absolutely go. This is a once in a lifetime opportunity.

  26. @DivaJean – You didn’t mention what the interest rate will be in June, on your new door. Also, you state that your debt picture is $6k, but then you list $3k for the siding and $4k for the door. That doesn’t add up.

    Either way, I can tell you what *I* would do. I certainly wouldn’t pay 11% interest for a purchase that I could cover with cash on hand. I would use the money in my emergency fund to completely pay off the siding immediately. You stated you had $1000 in spare income to pay down the siding loans. I would pay that $1000/month back into my emergency fund, instead of to the siding contractor at 11%.

    I would probably sit on the door repayment until June, when the interest kicks in. At that point I would repay that in full, too.

    If you had a true emergency between now, and whenever you make your emergency fund “whole” again, you would still have enough cash in the e-fund to cover your expenses for a while. If needed, you could probably take out a home equity loan (at far lower than 11%) to cover the rest of your emergency. After all, these projects went directly toward boosting your home’s value. So you would be effectively borrowing against them as collateral (if you had to). That’s the beauty of an asset like a home.

  27. re: Cobalt

    My husband and I are in a similar situation with our truck, although it’s driven for him to go to work, it’s truly not needed (we have a 2nd car & I’m a SAHM). We bought it in 05 with a 15.27% interest rate (and a 72 month loan…yes we had bad credit and yes were were stupid!).

    We recently called the company that holds the loan and ended up getting a modification. It lowered our payments and interest rate. Our plan is to still pay our original loan amount, using the extra to pay down the principle. She may want to look into doing something like this.

    As for the insurance, usually if it’s financed they want comprehensive coverage, but if you talk to the finance company, they may be able to have you sign a waiver that it won’t be driven and to have the minimum or no insurance on it.

  28. @Des: “This is a once in a lifetime opportunity.”

    No, really, it’s not. Seriously, England is not going anywhere. And although some life choices are more conducive to foreign travel than others, I have trouble imagining any that would completely rule it out. Even the most draconian employer would probably let you take a week-long vacation at some point over the course of the rest of your life. If you happen to have kids, you can take them along, have them stay with friends or family for a week, or wait a few years until they’re out of the house.

    On the other hand, if Kat finds herself not having kids right away (or at all) and ends up working for an employer who’s not so stingy with the vacation time, there’s no reason why she couldn’t go to England several times a year, every year, if that’s what she wants to do. A far cry from “once in a lifetime.”

  29. Re Kari: Look at the curriculums and books out there for homeschoolers and history. There is a definite need, but you don’t want to put out what is already there. What is really needed in that arena is a 9th -12th grade chronological curriculum covering ancients to current history with a long in depth section on American history. Go to homeschool seminars and see what is there. Check out Kathy Duffy’s top picks. It will show you what are good products and why.

    Re Francesca: Trent’s advice was bang on. The job will be steady. If you are always distracted at home, it won’t be long before you start missing deadlines. You business may be doing well now, but you are flirting with disaster. You obviously have great skills to land such a sought after position. I would take the job, and do the freelance on the side.

  30. @ John S- I meant to put approx $6k- its closer to $6k and change than $7k. The interest rate on the door and framework will be 17% in June- that’s why I think this is the priority to pay off.

  31. @Kevin – before finalizing your plan, check the rules on your mutual funds. There may be rules against having a lot of activity of some kind or there may be additional fees levied.

    In addition, research tax rules. I think there’s one that if you buy individual stocks less than 30 days after you sell them, then you don’t get to call your profits long-term and you have to pay a higher rate. I don’t know if this applies to mutual funds, too.

    I’ve always thought (hoped?) you could get around this by buying the stocks before you sell them. For example, let’s say you own $5000 each of stocks A, B, C, D, and E. First save up $5000. Then buy $5000 more of stock A. Then sell $5000 of stock A and use the proceeds to buy $5000 more of stock B, etc.

  32. Kevin:

    I would not sell the mutual fund just for the 5% difference in capital gains unless you are planning to sell around that time anyway.

    Couple reasons: If you hang on to the mutual fund as it is and it grows then you’ll get more benefit from compound interest than the tax difference. For example say I’ve got $10k of a fund I paid $5k for. If I sell today and pay 15% tax I’ll be left with $9250. Say that doubles in the next few years I’ll then have $18,500 with tax due on half that. Or $16,650. On the other hand if I hang on to the original $10k and hten it doubles I’ll have $20k with basis of $5k. If I paid 20% on that gain then I’d be left with $17,000.

    I would also not pay the tax now if you are not likely to need that money anytime soon. If you have reasonable expectation that you will be able to leave that asset to heirs after you pass away then they’ll get it tax free assuming your estate is not mulit-million dollar level.

    If you give any sizable amount of money to charity then also consider that you can avoid the tax by gifting the mutual fund to a charity.

  33. Michael — Your girlfriend put 31,000 miles on her car in eleven months? That’s roughly 31,000 miles/48 weeks which is almost 650 miles a week!

  34. @Kat – when I was in college, I kept wanting to travel and it never worked out, and now I’m “saddled with two kids” and we don’t have much money. We don’t even have a car. But my husband is a semi-pro juggler and the European juggling convention is in Finland this summer, and we worked out a way to work it into our budget. We will be spending over a week in a cabin in Finland this summer watching performances by some of the world’s top jugglers and 3 days in St. Petersburg, Russia. Did I ever imagine this? No way. I thought my days of travel were totally over when I got pregnant.

    Will it be as carefree as traveling without kids? no. Will parts of it be more fun? Absolutely!

  35. @Johanna

    Going to England is not the “once in a lifetime opportunity”…but going as an independent individual with other friends who are likewise probably is. Maybe Kat won’t get married and have kids and will be free to travel the world as she pleases for the rest of her life, but probably not. Traveling with kids is by no means the same as experiencing something on your own. And through her twenties her friends are going to get married and life *will* change. The travel dynamic is different when people pair up. Not bad, or even worse, but different.

    My employer gives me 6 weeks paid vacation every year. I have the money to travel wherever I want. I don’t have kids yet. But guess how many times in the last decade I’ve been back to Europe. Exactly zero. Yes, I can go, and I probably will. But when I do it is not going to be the same as when I went as a brand new adult. It will be fun (maybe even more fun, since I can afford more now) but it won’t be the same experience.

    I went back then because I didn’t want to regret not going. I can’t say whether I would regret it now if I had chosen differently, but I can say that I don’t regret going, even though I couldn’t afford it at the time.

  36. I don’t think there’s enough information to advise on the England trip.

    2K isn’t very much money once you have a real salary. But 2K at say 11% interest for 6-7 years is a pretty sizable amount. What’s the interest rate on that unsubsidized loan? What is graduate school in? Is it something that will allow you to travel on your adviser’s dime with your class/lab-mates? Is it something that has employment opportunities once you finish (hint: not English)? Will you get a stipend while in school (don’t go unless you do if it isn’t a professional program like MD)?

    England isn’t going anywhere, there will be other opportunities to travel, this opportunity seems to be a fairly cheap one, but how big an impact it makes in your financial bottom line depends on a lot of factors. Fit this trip into the bigger picture and do some cost-benefit analysis on how much it’s really costing you and what you may have to give up in the future (if anything) if you take this trip.

  37. Regarding the bread: excellent tips so far. Incidentally, it takes less instant yeast to achieve the same result as active dry, so it matters what you’re using. You might be using too little. There’s no need to proof instant yeast but proofing it won’t exhaust the yeast’s rising power in just 20 minutes. People who keep sourdough starters know that you can’t exhaust yeast; you can only starve it and you won’t starve it in 20 minutes. Some sourdough starters have been around for literally decades.

    Also, rising times in bread recipes are averages. If my kitchen is cold it can take twice as long as the estimated time for the dough to double. I don’t do the warm oven trick, though I have used a hot water bottle; I like to keep an eye on the dough so I carry it around with me from room to room lol. You can’t rush yeast bread. Assuming you have viable yeast, just wait it out. It will eventually double in volume.

    If you’re really into bread baking, check out (literally if your library has them) Peter Reinhart’s Bread Baker’s Apprentice and/or Rose Levy Beranbaum’s Bread Bible. Good basic knowledge in both of those books in addition so some great recipes.

  38. @Des: Well, you’ve got me there. I never went to Europe when I was 21, so I can’t refute your point that going at age 31 is not the same. But I can tell you that the three times I went to Europe at age 31 were all a lot of fun and very rewarding.

    I’m sorry if it sounds like I’m picking on just you – I’m really responding to all the people here who have said things like “You’ve got to go NOW, never mind the cost, because it will be impossible later.” No. Just because you all have chosen not to make international travel a part of your adult lives doesn’t mean no one can. That’s not a reason not to go now, but it is a reason to mind the cost.

    @triLcat: That’s so cool! Have a great time.

  39. Johanna– I can tell you that going to Spain at age 20 and being broke is nowhere near as fun as going on an expense account for a conference at age 25. Maybe England is totally different… But I’m with you on this on. There were more travel partners at age 25 too. (Husband opted not to come at age 25 because we couldn’t really afford it, but he and small child came to Germany with me at age 31).

    It’s also much more fun to travel abroad when/where the dollar is strong. Worrying about money while vacationing is not fun.

    Still, my husband is going to England for a week next week because a friend is living there temporarily and he won’t have many opportunities in the future to crash on a couch and do touristy things with someone who knows where they are instead of paying for a hotel room and relying on maps. We’re estimating a total cost of $1500, including taking his friend out for dinner several times. Keep in mind that most of those airfares quoted don’t include the taxes that are often larger than the ticket itself. The base fare was something like $300 but altogether with taxes it was somewhere between $600 and $800. GRS had a neat post by Adam Baker I think on different travel websites (like Kayak) and we used all of them.

  40. Mostly my bread baking works out great, but once when I set the yeast to proof with warm water and sugar, it didn’t bubble up–turned out the water wasn’t quite warm enough, and probably the ceramic bowl cooled it down. So, now I use plastic for that step, and take great care not to let it get cold, nor too hot. (105-110 degrees just right.)

  41. This is such an ADD discussion, with all the different topics! Very funny.

    Personally … I’m really looking forward to seeing Europe with DH. I went to France in college – with no money, with a pack of other language students (we lived on campus, it was not a “30 countries in 10 days” tour) – and it was not the experience of my dreams. I got to see Loire castles … from a tour bus with said pack of students, who were mostly concerned with the fact that beer came in liter-size bottles.

    Pay your loans off, Kat, and go when you can truly afford it. The castles aren’t going anywhere and you will have a LOT more fun when you aren’t counting every stinkin’ shilling.

  42. Jeff,

    I would recommend that each of you keep seperate checking accounts and have one joint account that will cover all the bills. The seperate accounts will enable each of you to spend money on the other for birthdays etc without the other knowing ahead of time.

    Congarts of the upcoming marriage!

  43. Russ #45 has THE BEST idea of how to manage the newly joint finances. Now as to Kat, England’s been there for hundreds of yeats, and will continute to be there, castles and all. Suggest you pay off debt in lieu of taking trip for which you already do not have sufficient money. You’re going to have large student loan balances when you eventually graduate. You may or may not graduate. You may or may not get a job in your field. Look around, you may or may not get any job at all when you graduate, right now there’s six applicants for every job. That means five of them don’t get the job. Spend the time when the others are on the trip by EARNING MORE MONEY to throw at your student loan debt, or to spend at school so you need to borrow less money. If you graduate with $4,000 less debt than if you took the trip (trip will cost more than you expect and there is all that interest on the money!) you will be able to pay off the debt sooner. This is a very difficult economic time and the recession, and lack of jobs, will continue for years. We are about to have a second wave of home forclosures, and a huge wave of commercial real estate foreclosures. With too much government regulations, income taxes set to skyrocket (Bush tax cuts set to expire is a tax increase) the American economy, unless all the current members of house and senate, and the president, are replaced by fiscal conservatives, is going to continue to tank, and to go deeper into recession. Most people have exhaused their spending cushions, and they can not save because so many are unemployed, under employed, can only get part time work, or have given up looking in disgust. Sadly, students are sheltered from the real world economy by the proliferation of grants and loans. Suggest you cancel trip, apply money to loan balances, and try to earn more money to pay off even parts of the loans, or take less loans.

  44. Jeff wondered: “I am getting married this summer and my fiance and I want to open a joint bank account. Any advice?”

    Joint accounts are often a good idea, since they provide a clear way for you to pool your resources and pay for joint expenses (rent, food, etc.). They’re a good way to learn to work together on things you used to do separately, so they’re good practice for coupledom. They’re not necessary, however, if you work well as a team. For example, I handle the paperwork to pay all the bills simply because my wife moved to a new city to join me, and I was already paying the bills before she arrived and the chore didn’t bother me. But we share the expenses; each month, I send her a “bill” for her share, she transfers the money to me, and life goes on.

    IMHO, you should have private personal accounts in addition to whatever joint account you agree on. Think of it as the equivalent of the emergency fund that Trent recommends. Reasons range from the sinister (sometimes your spouse turns out to be dangerous and you need to flee; having your own money lets you) to the pragmatic (when my father died, the government froze the family joint account; if Mom hadn’t been warned, she’d have had no money for months) to the romantic (they’re a great way for buying gifts without your partner knowing you did it or what you spent).

    Plus, no matter how well you work as a couple, there are simply times you won’t agree on how to spend money. Making a clear distinction between “my money” and “our money” is an important thing to talk about, and reach consensus about. Having your own money gives you freedom to spend that money in ways you couldn’t do with your joint money.

  45. On the Europe trip – I passed up a trip like that when I was 20 (for $ reasons) & I deeply regret it.

    Now with kid’s & their stuff going on I never have time. By the time I’ll be able to do it without kids arthritis will be kicking in & it won’t be as much fun – it won’t be as carefree.
    Yes, I can go with the kids but I’ll have to be in “Mom mode” and be the one responsible for keeping track of everybody & making sure everything is taken care of. I won’t be able to go off & do what I want – everything would have to be family oriented (no true mountain hiking) & g-rated (no checking out the night scene to see what it’s like and no shopping for clothes I can’t find in the states).

    When I was single I never had those worries & everything was much more carefree – I traveled the American continent on a dime by myself. It was wonderful. Like the one guy said – it’s easier to sleep in a low budget location when your young then when you have a spouse &/or kids to worry about.

    Yes, immature friends could make it a drinking binge however, surely you can do some exploring without them occasionally – maybe there’ll be others in your group who want to explore too & you could all have the occasional excursion.

    I agree with Trent – do it, save every red cent you can before you go so you have as much $ as possible – so you can take advantage of opportunities while your there & not get tooo hosed on the exchange rate.

  46. Kat

    Check on Heritage Passes. They are discount or allow free entry on most (if not all) castles. Stay longer than originally planned. Take time off from your travel companion and do some things alone. Make friends. Stay in youth hostels (I don’t think you have to actually be a member, but being a member let you know where the hostels are.). Make a few professional-type contacts and/or education-type contacts, particularly if your grad-school subject is one that you could do a seminar overseas in. Don’t buy ANYTHING for a souvenier (take photos instead!).

    When you come home, take a job and forego immediately jumping back into grad school for a semester. Live very frugally. Pay off loans.

    I’ve traveled to England 5 or 6 times. I hitchhiked and hosteled one time while another time I treated my parents to a week in a Norman castle and several days at the Ritz in London. Every time was different because of different circumstances, different travel companions.

  47. @Kat – If taking the trip will increase your debt level (which is the case here), then you can’t afford it. I understand that there are situations where it makes sense to take on debt, such as purchasing a home, or possibly to earn a college degree. I do not think that taking a vacation, however, is ever a valid reason to take on debt. As others have said, Europe isn’t going to disappear anytime soon. That, however, is of secondary importance. Even if Europe was sinking into the ocean, the fact remains, you can’t pay for the trip without debt, which means you can’t afford it.

    @Jeff – I am surprised to see some readers suggesting separate accounts for married couples. Personally, I believe that if you can’t manage finances jointly you don’t have much of a marriage. In my marriage there is no such thing as “my money”, it is “our” money. We have been through situations where my wife was the sole income earner, situations where we both earned equal amounts, and currently I am the sole income earner. Our money has always been combined, and it has worked out very well. I do know couples who keep finances separate, and to be honest, it seems like a huge mess. I see tension over finances in those relationships, as well as insecurity from the partner making less. Hopefully you get your marriage started on the right foot, as it seems you plan, and combine everything up front instead of taking on the mentality of my stuff/money vs her stuff/money. Good luck.

  48. BAd yeast once, but repeatedly? Cool temperatures. You need to find a place where the yeast can get a little warm so it’ll raise. Find a warm place in the house. If the house is chilly, try on top of a radiator, on top of a warm dryer…

  49. @ Jonathan, I see benefits to both a joint account and seperate accounts. I sadly know too many woman who were stuck in terrible marriages because their husband controlled all the money and kept track of every penny they spent. A seperate account or even a few large bills hidden could help them out in a desperate time. To the extreme on this however, I had a teacher in HS who had a seperate account from her husband, there was NO joint account. They both wrote checks to pay their half of the bill (ie. 2 checks to pay for the cable) and would split grocery expenses 50/50 in line at Wal-Mart. It makes me wonder how you can ever have a happy marriage when you treat your lover more like a roommate than a spouse?

  50. When selling to harvest capital gains make sure you avoid the wash sale rules. I think they might only apply to losses, but still, be careful because they can be quite a pain in the butt.

  51. This comment is probably far too late to do any good, but I must put it on, just in case.

    You do not have to have a warm spot for yeast to rise.

    My mother-in-law gave me a recipe for Refrigerator Donuts. You make the dough in the morning, put in the fridge until you get home from work, take it out & divide it and it rises quickly. She said the same thing is true for bread.

    The only reason we put it in warm places is to make it rise faster. But yeast will rise regarless of the temperature.

    By the way, the donuts were absolutely fabulous.

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