Reader Mailbag: Camping on My Mind

Share Button

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. Stock broker help
2. Handling large private party transactions
3. Building a cottage
4. Is deferrment a good idea?
5. Unrealistic investing advice
6. Staying motivated while self-employed
7. Will housing market ever improve?
8. Putting away 10% for retirement
9. Co-owning cars
10. Recommended reading

Camping is a big part of our summer activities. We’ve camped twice this summer (once in a state park, once on private land) and intend to camp again late this summer (probably again in a state park).

Every single bit of it is fun. Our particular favorite part, though, is building the campfire and preparing food over it, often using a seasoned cast iron Dutch oven. We can make soups and stews in it, of course, but you can also make things like cake in it.

Q1: Stock broker help
I’m going to be opening a stock trading account in the near future and was wondering which one you recommended. There are so many to choose from it’s kind of confusing to make a decision.

- Brian

It depends heavily on what your needs are and how many tools you want the broker to provide for you. Generally, what I’ve seen is that the better the tools and service is for online stock trading, the higher the price is per trade.

In other words, if you’re a low-frequency trader (meaning you buy or sell once a month or so), you’re probably better off going for a high-service high-price brokerage like TD Ameritrade or E*Trade. They’re expensive compared to the competition, but they handle problems very well, make everything really easy to do, and offer lots of tools.

On the other hand, if you’re a higher-frequency trader (meaning you’re going to buy or sell multiple times a week), you’re probably better off using a system that might be a bit less user friendly but will save you significant money per trade. If you’re going that route, I’d recommend Zecco or Scottrade. This is not to say that such sites are poor, but that in my experience their tools and interface lag the others a bit and their customer service occasionally lags, too. They make up for it with lower prices per trade.

Q2: Handling large private party transactions
I am planning on selling my car in the next few months and I am unsure how to deal with a several-thousand dollar private-party transaction. I am wary of just accepting a check and signing over the title to a stranger (with no idea of whether there is money in the account), and I don’t really want a giant wad of cash. Should I have some sort of contract drawn up for the ownership transfer stating that the car is sold as is? I have never bought or sold a car before (this car was a graduation present years ago) and have no clue what I am doing. Any advice would be greatly appreciated.

- Maria

This almost exactly describes the situation we were in when we purchased our Honda Pilot off of Craigslist. We needed to make a similarly large private party transaction.

What we did is we executed the transaction at the bank of the buyer. We drew up an agreement that specified the exact exchange that was to take place (a bill of sale), then the notary public at that bank notarized the bill of sale and provided us both with copies. We also handled the title transfer there as well.

I would probably follow something similar to this arrangement. I would conduct the actual sale at your bank so that the cash can either be electronically transmitted or the buyer could bring the payment to the bank. At the same time, I would author a bill of sale describing the transaction in as much detail as possible (total payment, buyer, seller, VIN of vehicle, etc.) and, while both parties are present, have the bill signed by both parties and notarized by a notary public. Contact your bank to find out which branches should be able to offer this service.

Q3: Building a cottage
My wife and I own our home, have paid off our debt, and both contribute to our employer retirement plans 6% and 8% with 6% matching on each. We each fund a Roth IRA for $5000 each year. Our combined salary is about $55,000 and we mostly live off my half and save hers. Problem is we now have about $45,000 just sitting in a money market account earning .450% We have thought about building a small cottage in our back yard and renting that but don’t really want to take out a loan for this. Definitely want to keep about $12,000 in there for our emergency fund. Wondering if you have any suggestions.

- Josh

If you’d like to build a cottage, then that should be your goal. I would attempt to get an estimate on the cost of building the cottage that you want and use that as a baseline for your savings goal.

Since you want to keep $12,000 as an emergency fund, you currently have about $33,000 saved toward the cottage. When you have your estimate, you’ll be able to figure out pretty quickly how long it will take you to save up to that point.

If that goal is less than two or three years out (which I’m guessing it will be), I would just leave it in a savings account (or perhaps buy a certificate of deposit for the short term to get a slight interest boost). The risks inherent in investing in things that might give you a return spike also open the door to the possibility of a loss on that money. You might not have to wait as long – or you might have to wait longer. The volatility in the stock market (and other markets) over that time frame is quite large and unpredictable.

Q4: Is deferrment a good idea?
I graduated out of college with $20,00 worth of student loans, $18,500 of which are subsidized. I also got a private loan from my bank for $10,000. I commissioned into the Air Force out of college, and my plan had been to pay all my loans back within 3 years. However, I just found out that as military active duty member, I can defer my student loans for a maximum of 36 months. During this deferment period my subsidized loans, i.e. the bulk of my loans, would remain interest free. I want to do the deferment to pay back the $10,000 bank loan without having to have paid too much interest on it and then refocus all of my attention on my student loans. Do you think this is a good idea or is there something I am overlooking?

- Rachel

I think this makes complete sense. It maximizes your cash flow each month (since you only have one debt to deal with over the next three years) without causing you to accrue more interest, and it actually saves you some interest because you’re able to hammer on that one remaining private loan by itself, making it go away that much faster.

If I were you, actually, I’d probably defer that loan for the full thirty six months. I’d pay off the other loan, then start saving every nickel and dime I could in a savings account. The day that loan became available, I’d make a huge payment on it, knocking off a large chunk of the balance (or maybe all of it) on day one (and using a bit of savings account interest to help even more).

That’s probably the fastest route to paying off your loans.

Q5: Unrealistic investing advice
Here’s a thought a struck me as I was reading through yet another respectable “how to retire wealthy” type book. These books all seem fine up until the point where they tell you to save regularly for a number of years and just get an 8-10% rate of return. Right, easiest thing in the world. In the current day and age 8-10% is really not so trivial to achieve. Whats your take on this?

- Barry

I agree completely. Most of the time, stock market quotes like that are reflective of the time in which they were written. If you’re writing during a time when the stock market has steamrolled for several years (say, 2007), you’re probably going to be very optimistic about the long term future of stocks.

I tend to trust the words of people who make their living with stocks and have been successful over the long haul. Warren Buffett, for example, estimates that 7% is a good long-term estimate for domestic stock market returns, so that’s the number I often use.

Values higher than that might happen over some time periods, but they’re unrealistic as an assumption for the future. Use something lower.

Q6: Staying motivated while self-employed
When you’re working at home, how do you keep yourself from just doing things like taking care of household tasks when you should be working? What keeps you focused and motivated in such a distracting environment?

- Linda

One of the upstairs bedrooms in our house has been converted into my “office.” When I go in there, I close the door (usually) and I basically forget that the rest of the house is even there.

I’m lucky in that I can focus really well on a task at hand. It is fairly easy for me to get in a “zone,” where all that matters is the writing and I basically lose track of time.

If this were not the case, I would consider having a small office somewhere outside the home that was solely devoted to work. On the rare occasions when there are too many distractions at home to write (like when my wife is home, all of our kids are home, and one of our kids has some friends over), I’ll just go to the library.

Q7: Will housing market ever improve?
My family is like most everyone right now; watching the equity in our house drop every month. We are fortunate to be “above water” on our mortgage but honestly our house no longer suits our growing family and needs some improving, such as new carpeting and painting, if we were to try to sell it. Should we do the improvements and take a bigger hit if it will help us sell the house or live in a house that we don’t like and is inconvenient for us until the housing market improves? Do YOU think it will ever improve?

- Rachel

Your question sounds like you’ve already made up your mind to move, so I’ll not address that part.

Instead, I’ll say that I do think the housing market will improve, but it won’t be immediate. The housing market is still correcting right now. Part of the problem is that too many houses were built by overzealous home builders, so it’s going to remain a buyer’s market for quite a while. Prices only go up when demand exceeds supply and there is simply a glut of supply right now.

When will that supply dry up? It’s just going to take a while. Either some homes will have to be removed from the market (by destroying marginal homes or some other means) or prices will have to drop enough that people who couldn’t previously afford homes now can afford homes. The very low rates on fixed rate mortgages are helping with that at the moment, as I know a few people who are getting into houses right now that would have never been able to (realistically) a few years ago.

If you’re wanting to sell soon, I’d probably ask a few realtors in your area how much more you’d realistically be able to get with the improvements you’re talking about and whether that would make it sell faster or slower. If it creates a better situation for you, do it; otherwise, skip it. It depends on what the market wants.

Q8: Putting away 10% for retirement
I work at a state university and am a part of my state’s Public Employees retirement savings plan. 10% of my paycheck goes into PERS then I have another 9% that is split between a Roth IRA and a 403(b). So I tell myself that I am saving 19% of my income for retirement. But then I think if I were still working for a private employer, I would only be savings about 9% because I would not mentally count the FICA deduction (since the future direction is questionable). What is you opinion, am I saving 19% of my income for retirement or only 9%?

- Maggie

You are absolutely saving 19% of your income for retirement. That 10% you’re putting into that PERS plan certainly will provide you income in retirement. The challenge is figuring out how much it will help.

How much it will help depends heavily on how your PERS is arranged. While I’m not familiar with how all PERS plans operate, most of them seem to essentially be pension plans, where you’re paid some steady amount upon retirement that’s influenced by number of years of service and other factors.

If I were you, I’d use the estimate calculators and see how much your PERS plan will provide for you in retirement. If you don’t feel as though that plus Social Security plus the return on your other retirement investments will be enough, then increase it. Otherwise, I think you’re doing very well for retirement.

Q9: Co-owning cars
A coworker of my girlfriend’s advised her that we could both save on car insurance if we assigned each other joint ownership of our respective vehicles and retained only one auto-policy. Have you ever heard of this? I haven’t found anything online so far, so I’m a little suspicious. That being said, do you see any risks to this strategy other than the obvious stuff that would come about from either of us being untrustworthy and taking advantage of the changes to title?

- Mike

It’s not suspicious. You’d simply be bundling car insurance policies, which usually earns you a reduced rate from insurance carriers.

The only concern I would have from this is the issue you mentioned – concerns about the car titles. With both of your names on the title, you’re going to wind up with a pretty nasty disagreement if you guys decide to separate at some point in the future. It’s usually a bad idea to financially entangle yourself with someone without knowing for sure that there’s a long term future with that person.

Really, it comes back to your relationship. Where is it honestly heading? This is something worth talking over together.

Q10: Recommended reading
I know you’re a voracious reader. What’s the best book(s) you’ve read so far in 2011?

- Emily

The best fiction I’ve read this year so far was easily my re-read of the four books (so far) in the Song of Ice and Fire series, starting with A Game of Thrones. I re-read them in anticipation of both the miniseries and the fifth book in the series, and re-reading them reminded me of how much I enjoyed them and how much I enjoy well-written fantasy.

The best nonfiction I’ve read this year so far was Colonel Roosevelt by Edmund Morris, the third part of a trilogy of biographies focusing on the life of Teddy Roosevelt. This volume focuses on his life after leaving office in 1909, including his third party run for the presidency in 1912, the assassination attempt on his life, and his later exploration of the Amazon with his son. All three volumes in this series were great. I’m almost sad to see the series finished up.

I read voraciously, so I’d fully expect these choices to be different if I were to revisit them in December.

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.

Share Button
Loading Disqus Comments ...
Loading Facebook Comments ...

33 thoughts on “Reader Mailbag: Camping on My Mind

  1. Another thought for Question #9. I’m sure this varies by state, but where I have lived previously, both owners had to be present at the DMV in order to title the car (when you pay off a loan, move out of state, decide to sell, etc). It becomes a much more complicated transaction if both of you have to take off work, for example, just to get DMV paperwork taken care of.

  2. Q8 – Trent, those who pay into a PERS account or similar state retirement plan generally don’t pay into Social Security to (while employed by the state), as Maggie understands. Our state’s PERS plan has a great website with useful calculators for members to figure what the monthly payout would be, based on the relevant factors.

    Q5 – I always check the original publication date of financial advice books. The more recent ones, or updated versions, have more realistic projections for earning rates. In my gut, I think we’ll be lucky to average out at 5% in the next 15-20 years, given how long interest rates have been negligible.

    Q3 – cottage – check out the tumbleweed houses and similar tiny house websites for inexpensive ways to put in a cottage (assuming they’re allowed on your site). And factor in how long it will take to make back your investment & actually get ahead with the rent income, given that your property taxes and insurance costs will be higher. Also, whether having the rental/separate cottage will make your property harder to sell down the road; the cottage would need to be versatile enough that if not a rental, could be used as an office, studio, MIL house, etc.

  3. Q8 – if the employee and/or employer is contributing a percentage of pay, by definition it is a “defined contribution” plan. So the amount the (to-be-former) employee will get in retirement is NOT based on years of service etc. It is based on how much was contributed.

    I don’t think a reader mailbag goes by without you giving a factually incorrect answer to at least one question. Granted, the sheer number of questions you answer is mind boggling!

  4. @valleycat, re: Q8 – Indiana state employees pay into PERF as well as into Social Security, so while not doing so may be generally true, as you stated, it is not universally true and I don’t want to see anyone treating it as such.

  5. Q.8 – I could be wrong on this, but don’t most state employees paying into those PERS programs not pay into/receive social security? So you wouldn’t add that in, unless you’re eligible from a previous job or marriage?

  6. Q2, any reason not to just use cashier’s checks?

    Q5, with a little bit of patience and planning, 8-10% is not difficult to achieve in rental property. I won’t get involved in a property unless my (fairly conservative) projections say I’ll return double that rate. And if the value of the property rises (which I don’t assume), and I decide to sell it, the return can easily go up to 25-30% annualized. And while I have only recently begun this path, I know many people personally who have very high net worth (>$5m) and income (>$1m) from cash flow just from intelligent real estate investment.

  7. Q9. Joint titling of cars could also be very expensive if one of you has an accident and you both get sued for more than the amount of insurance.

  8. Q3 – check your county zoning laws as some counties can be quite restrictive regarding a second dwelling on a property. Some counties can require the property be of a minimum size, or restrict occupancy of the second dwelling to only family members with a disability or over a certain age.

  9. Q8 – Our PERS retirement system holds retirement seminars a couple of times a year, & now offers the training online as well. I encourage you to go if you can, or see if yours has the online system – they’re not just for people within a year or two of retirement. I found the in-person useful because of the interaction & live Q&A; & actually went a 2nd time the following year. I wish that I’d gone early on instead of nearer to the time that I’ll be retiring, as some of the info given there about how everything works & how they coordinate with Social Security (I worked in the private sector before going into a public system) would have changed some of the things I was doing to position myself for retirement.

  10. Q3, there is also a small market of modular home builders and mobile home builders that build houses for less than regular stick-built houses. Mobile homes are the homes you see in mobile home parks. They are inexpensive, but for some of them you may have to do some creative landscaping to disguise that “trailer-y” look. Modular homes are built in a warehouse and then the big pieces are assembled on site. Many of them have cottage plans. They tend to look like stick-built homes. But I agree, check with your zoning commission to confirm that it is OK to build a cottage on your property. There may also be restrictions for modular or mobile homes as well, although here in Southern California they are relaxing the zoning restrictions, at least on modular houses.

  11. Q5: The Grain of Salt

    I’ve seen too many people throw away an entire book or article based on the 8-10% projection. They fail to realize the strategy is still sound as far as diversification, timeline for your needs, reinvesting dividends etc etc etc. While the market may have been down over the past few years, history and numbers tell you that you need to have faith. My 401K was not decimated by 2008-2009, and constant monthly investments took advantage of the down market i.e. some individual shares have actually doubled in value, and the dollar cost averaging still puts me in a healthy growth rate.

    Don’t throw out the picnic because a fly landed on the basket, ya dig?

    Many people, much more in recent years, seem to think the key to being “smart” is to find a reason to completely void all conventional wisdom. Finding on flaw in recent growth rates vs historical average is not proving a hypothesis as wrong and thereby justifying putting all your cash under a mattress.

    Things I have done over the past 3 years:
    -Got approved for a mortgage and car loan.
    -Bought a house (which is tracking on estimator sites as only a closing cost’s width below the price paid, not some underwater mortgage nightmare)
    -Increased my savings
    -Increased my retirement fund
    -Watched my portfolio grow at a positive rate

    If you are concerned with the numbers, then tweak them. Halve those numbers to 4-5%. See what you need to do.

    This is usually where someone chimes in about the end of the world, Civil War II in the US, and the complete collapse of the US to 3rd World Status. If you really, really, believe these things to be true, you would not be on a site like this, because you’d be too busy gardening, learning a trade, or building a compound in the woods. Seriously. Our nation was decimated by the Great Depression; we have the huge benefit of more information, data, and faster access to these tools than we did back then. We will recover over time, and you should plan for the historically likely event, not the Black Swan. Black Swans lose 999,999 times out of 1,000,000. I’d rather play the better odds.

  12. Q10 – NPR just did an interview of George R. R. Martin, and how he came up with his ideas, and some very broad discussion on his new book Dance With Dragons. He came across very well – I had never heard of him and would otherwise never have even considered picking up his books. Now I just might…

  13. @Q8: Assuming you are not paying FICA (which it sounds like you aren’t), you are correct that that 10% is essentially your social security. It is likely a public (and thus not PBGC insured) pension. You can estimate how much you will get from that using provided calculators and then discount that by how much you think you will actually get of it (as one would with social security). I would look at it as lowering your “number” that you need for retirement in other savings, because it should provide some portion of your monthly cash in retirement.

  14. Q9 – Do you each have 1 car with separate policies? You may not need to co-own both cars, maybe you can get a “multi-line discount” for having 2 vehicles on one policy. At any rate, you should just call and ask your current insurance carrier(s? if she has a different one from you) how the policy would be affected. Things are handled differently by different companies in different states. Trent’s ultimate advice is right, you should consider how serious this relationship is before you start putting your names on each other’s property.

    I own one car in my name only while our other car co-owned by me and my wife, but I’m married, so that might make a difference. I did get a marriage discount, though!

  15. Steve #3,
    You can actually have defined benefit pensions that have an employee contribution.

    An employee contribution does not define the nature of the pension. You can google the words “Defined benefit retirement plans: employee contribution requirement and method of contribution” to find the BLS site page that lists such pensions in private and public job sectors. 79% of the government workers in defined benefit pensions are required to make an employee contribution. In the private sector its a lot less common to have employee contributions for defined benefit plans and only 4% of private plans do so.

    The pension is defined by what employer promises. THe defined benefit pension is the pension where the employer promises a defined amount based on a formula (like # years x % pay). The defined contribution pension is where the employer just promises a contribution ( x% of pay today).

  16. Q3 Josh : I agree with Sandra that you need to make sure that you can legally have multiple dwellings and rent cottage like that. It may require special permitting or zoning. Also, I’m curious why you don’t just buy a rental property? Theres lots of bargains out there nowadays. I don’t think having a backyard tenant is a great idea and building such a thing is an undertaking. Maybe you’ve got good reasons for the backyard cottage but don’t just rule out or overlook simply buying a 2nd property. Lastly make sure you really want to be a landlord and are prepared for the part time job it actually is. If a furnace dies on Christmas you’re the guy having to fix it and write that check. If a tenant fails to pay rent then you’re the mean landlord who has to force them to pay or evict them or eat a loss.

    Q5 Barry : That 8-10% return is based on long term historical averages over 100 years of an up and down market. Things are grim right now but that doesn’t necessarily mean the long term trends will change moving forward. Nobody can really predict the future so people just rely on what has happened in the past. But of course 7% isn’t a bad guess either.

    Q7 RAchel : Yes the market as a whole will improve eventually. Its hard to say when things will go up steadily. But sooner or later prices will climb again. It could be turning around now.. it could take a year or two.. who knows. However, what will happen in your city depends on your city more than anything else. I’d be a lot more confident in a home in Seattle than one in Detroit right now.

    Q9 Mike : I wouldn’t mix finances in such a major way until you’re actually married. I’m sure you’re committed to marry her if you’re considering such a thing (right?). But you never know what can happen in a relationship, so don’t risk it.

  17. Q8 it sounds like what you’re contributing (from labeling it FICA) is in lieu of Social Security, so presumably you need to adjust your own savings upward to compensate for that (I know many are concerned about SS’s viability, and fair enough — concerns about state pension systems are also appropriate — but nonetheless).

    @Steve @#3 you are exactly wrong; my DH is a retired state employee who for his years of employment contributed about 5% of his salary to the state pension fund, as did his employer. His payout is a fixed, for-life pension whose value is a function of his salary and his years of service. Plenty of defined benefit plans entail fixed contributions (but pay out a defined benefit).

    Q8 Some other things to consider — how long will you stay with your employer? That will likely affect your pension payout. Also, you may get a health insurance benefit in addition to the pension (my DH does). OTOH, how stable are your state’s finances? Public pensions systems are under a lot of stress and their “guaranteedness” (or not) is being challenged, in some cases legally. The closer you are to retirement, the less likely your individual benefits will come under attack (i.e. not be funded/be legally changed), but then again, the less time you’ll have to react if they are.

  18. Q8 it sounds like what you’re contributing (from labeling it FICA) is in lieu of Social Security, so presumably you need to adjust your own savings upward to compensate for that (I know many are concerned about SS’s viability, and fair enough — concerns about state pension systems are also appropriate — but nonetheless).

    @Steve @#3 you are exactly wrong; my DH is a retired state employee who for his years of employment contributed about 5% of his salary to the state pension fund, as did his employer. His payout is a fixed, for-life pension whose value is a function of his salary and his years of service. Plenty of defined benefit plans entail fixed contributions (but pay out a defined benefit).

    Q8 Some other things to consider — how long will you stay with your employer? That will likely affect your pension payout. Also, you may get a health insurance benefit in addition to the pension (my DH does). OTOH, how stable are your state’s finances? Public pensions systems are under a lot of stress and their “guaranteedness” (or not) is being challenged, in some cases legally. The closer you are to retirement, the less likely your individual benefits will come under attack (i.e. not be funded/be legally changed), but then again, the less time you’ll have to react if they are.

  19. Trent said : “Part of the problem is that too many houses were built by overzealous home builders”

    I disagree. Builders really weren’t the cause of problem. THey build houses due to demand and then when demand crashed the builders quickly stopped building and many of them went bankrupt. Builders don’t just pump out a zillion houses and then cross their fingers that they can push them on unwilling buyers. High demand for housing causes more building. I don’t think builders were overzealous but simply meeting the demand.

    There are currently fewer new homes for sale today than any point in the previous 50 years. New homes are a small portion of the current market. In 2010 there were 4.9 million existing home sales and only 323k new home sales. So thats about 94% existing vs 6% new. As of May 2011 there were 3.7M existing homes for sale and only 166k new homes which is 96% existing vs 4% new. By comparison there were over 200k foreclosure filings in the month of June alone.

    The majority of the problem in the market is the high inventory of foreclosures / short sales, underwater homes, crappy economy plus the general lack of confidence in the market.

  20. Hey Trent, a good fiction book I just read was “Robopcaplyse”, by Daniel Wilson. It’s a sci-fi book, along the lines of Michael Crichton. I really enjoyed it. I know you like sci-fi, so I thought I’d pass along the title! I really enjoyed it!

  21. Q3: Cottage in the backyard…In addition to previous comments regarding zoning, talk to your homeowner insurance company. You may find that the type of policy you need will change and sometimes those changes can be expensive. I would get an umbrella policy in addition to homeowners if I had renters in my backyard.

  22. Apparently, not a post goes by without me incorrectly calling out Trent for being incorrect. Oops, my apologies.

  23. You told Q3 to build a house, then mentioned that there too many homes already on the market? Huh.

    I can’t really wrap my head around the concept of wanting to build a rental property right next door.
    Why don’t you buy an already existing rental? not that I would ever want to be a landlord. Huge pain, imo.

  24. @Q2:
    I recently bought a car from someone I found on craigslist. I got the cash out of the bank and took it to the post office to buy money orders. The post office charges $1.55 per $1,000, the bank wanted over $7 per $1,000 (I’m a soon-to-be-former customer of this bank). I gave the seller the money orders (filled out with my info) and he signed the title over to me.

    In hindsight, a bill of sale would have been better, but we had emailed back and forth about the transaction. I think the money orders made us both more comfortable, and if this had been some sort of a set up for a robbery, I would have had the serial numbers and been able to report the money orders as stolen (note: photocopy the money order and leave it somewhere else when completing the sale).

    I went to the sellers house to get the car, unless you’re moving, I encourage you to meet the potential buyer in a public place such as mcdonald’s. If the buyer is going to take the car somewhere to have a mechanic check it out, have the prospective buyer leave a deposit equivalent to the deductible, and document that if the car is damaged, that deposit can be used toward the deductible.

  25. Q8 further thinking on this …
    If you are not contributing to FICA but only to SS then I’d deduct the 7% most of us are contributing to SS since I think the 10% (etc.) recommendation is based on after-tax numbers. So by that calculation you’re at around 10%.

    With my DH’s pension, I used and use the immediate annuities website (you can google it) to estimate the value. Basically what he gets (monthly payout) is equivalent to the amount he’d get if he bought an immediate annuity today for $.5 million so I figure his pension is equivalent to $.5 million in retirement savings. Obviously that’s an oversimplification in many ways but it helps me get my head around how much (or little) of our overall retirement budget it’s reasonable to think of the pension as being. Hope that’s helpful.

  26. “Part of the problem is that too many houses were built by overzealous home builders, so it’s going to remain a buyer’s market for quite a while.” No, builders built houses for peole who wanted to buy the houses. When people stopped buying, builders stopped building. One major reason we keep spiraling down is that the foreclosures are not happening quickly enough. If all foreclosures could be done in the next six months, housing would start to pick up with people then buying the newly available houses at what they were worth. There are so many foreclosures in the pipeline, and the Obama administration has some foolish plan where people who can’t pay can stay 12 more months before foreclosure on the pipedream that they will then be able to pay the additional principal and interest owed, that the market is unable to bottom. According to Gary Schiller, we will see a perhaps 20% drop in the value of houses in the next year due to the foreclosures being sluggish, dragging down the market. You can only start to get better when you hit bottom, in this case. Also the Obama administration is using policies to further destroy the economy. Raise the debt ceiling? Oh great, we owe money, so let’s owe more money. America doesn’t have an revenue problem, it has a spending problem where those clowns in charge overspend no matter how much pours into the treasury. There is plenty of income to service America’s debts, and to pay Social Security and medicare, and a lot leftover which could be aportioned to the remaining obligations, American won’t default if the debt ceiling isn’t raised. Obama and his “redistribution” plan is scaring all business people so they hunker down with their cash.

  27. deruiter, If we don’t raise the debt ceiling it would be disastrous long term. Please spare us the political ranting.

  28. In California banks do not perform notary services for anything other than official bank business. Cashiers checks can be forged. When I have bought cars on Craigslist, I check the car out, then meet at the sellers bank for the paperwork & money, then to the AAA office & head to the DMV desk so it can be Titled/registered. Recently I sold 2 cars at an Estate sale, and the buyers paid cash, got the Title on the spot & we both signed the Bill of Sale. I immediately notified DMV of the sale to reduce my liability.

  29. Hey Trent, how abourt doing a post or two on your camp fire recipes. These might even be adaptable for cooking in the kitchen for those of us who don’t camp.

  30. Dear Jim, #27. No, refusing to raise the debt ceiling will not be disastrous long or short term. It is the same as a houshold which is deep in debt. Being given more credit will not help a household or a country climb out of the debt, it will insure a deeper spiral into debt. Refusing to raise the debt ceiling will force Congress and the President to stop spending more than we take in, more than the amazing, huge, massive sums which come into the US Treasury every day. Politicians got us into this mess, there is no way to get out of the massive debt America is in without political action. The clowns in Congress must be inundated with letters and calls (they don’t bother to read emails) saying that we should not raise the debt ceiling, that Congress should spend less. When a person’s digging a deep hole and wants to climb out, the first step is to stop digging (spending.)

  31. deruiter, If they don’t raise the limit then the govt. will end up defaulting on debt which would be very disastrous.

    It is not at all realistic to think that the government would just abruptly stop deficit spending at this point. The current deficit is over a trillion dollars. They are not going to cut that much anytime soon. Discretionary spending is only around $600-$700B. So where would YOU cut the rest? Defense, Medicare, Social Security, interest payments? THinking we can stop deficit spending right away is pure fantasy. It would be nice if the government was running a balanced budget but no thats not the reality. WE have a trillion dollar deficit that won’t get fixed anytime soon. With that big of a deficit failing to increase the credit limit would cause us to either default on debts which would be disaster to our economy as a whole or to cause massive government shutdowns which would be disaster to anyone working for the government, depending on the government and very severely damaging to the economy as a whole. The limit must be increased and it will be increased.

    The limit was raised 5 times under Bush Jr. and 17 times under Reagan.

  32. Q 9 – don’t do it.
    My son’s Dad & I did that & it was horrible. He was angry a me and refused to sign the title for my car when I needed to trade my car (it was fading fast). In the end I got rid of the car by driving it until it fell apart and then letting the impound lot take it off the street.
    Never again will I go through that. I would strongly recommend that you not share legal claim to anything valuable with anyone that your not either married or already related to.

  33. Q2: Personally, I would go for a cash transfer at a bank. It is possible for a cashiers check to be forged. And even if it isn’t, your bank may refuse to release the funds until they are sure that it has not been forged and that it clears. That could be a problem for you if you need access to the money before they are satisfied.

    Q8: Not all states’ retirement plans/pension systems are alike. My DH is a state employee and pays into social security, has a defined contribution retirement plan (matched by the state) and also has a deferred compensation plan available. If he did not pay into social security we would increase our retirement savings proportionately.

Leave a Reply

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

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