Reader Mailbag: Child Independence

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. When to start retirement fund?
2. First house decision
3. Shopping for health insurance
4. Driving school
5. I’m overextended – what now?
6. Making money via social media
7. Working during grad school
8. Trying out games inexpensively
9. Credit reports of children
10. Sales pitch or genuine question?

One interesting part of being a parent is figuring out your own balance of independence and protecting your child while also observing (and sometimes having to deal with) the balance that other parents choose.

For example, I let my kindergartener walk to the bus stop on his own. The walk to the bus stop is quite short – it’s about half a block away and he has to cross a very low traffic street to get there.

At the same time, there are other parents who insist on walking to the bus stop with their kindergarten-aged children.

Another funny aspect of all of this is the protectiveness that my child requests. In the afternoon, he’s asked me to be at the bus stop when he gets off the bus. (There are usually several other parents over there at the same time.) If he ever changes his mind, I’ll certainly wait for him at home.

This happens over and over again with things like playing at the park, visiting friends, and so on. There’s a balance between making sure your child is safe and also making sure that they have the independence they need to grow. I think, by default, I tend to be closer to the “independent” end of the spectrum, but I’ll be there when they ask for me.

Q1: When to start retirement fund?
I am 22, nearly 23 and in 4 months I will graduate with a teaching degree. My boyfriend is 24 and works 29 hours a week as a music teacher, and is being nagged into finding some more work to supliment our income. I am lucky enough to graduate with no debt, and by the years end we should have our credit card ($2000) paid off and $4000 in savings.

Next year I estimate my income to be around $50000, and his about $25000. We are lucky enough to live with my parents, who charge us minimal rent with all bills and food included. They have offered to let us stay for 1 year after I graduate so that we can save a 20% deposit on a house ($50000) which would see us getting a nice enough house in an OK area, close to where I would like to work.

To save $50,000 in one year when our combined income is $75,000 will not be easy, but I am frugal and commited so I think it is possible. I would also be wanting to get a short mortgage (15 years, max) which would see us owning a home freehold by 40, but would also have us spending around 40% of our income on a mortgage.

My question is: How soon should we start a retirement fund, keeping in mind that after 40 we would be able to save around $20,000 per year for retirement (I have a retirement fund which takes 4% of my income)? I would be pouring everything we have into a deposit next year, and then adding to our $4000 emergency fund for a couple of years after that so I don’t know where we would find the money. I would also like to travel, and we do not want children.
– Jill

To save $50,000 in one year when your combined income is $75,000 is nearly impossible because of federal income tax, state income tax, insurance, FICA, etc. To achieve that goal is going to require that you spend nothing in that year. Your parents will have to provide not only housing for you, but also feed you. You’ll also have to basically avoid all entertainment or hobbies with any expense during that year.

That being said, I would still not avoid retirement savings if at all possible. The reason that it’s suggested that people start retirement savings immediately is that you just can’t bank on the future. Putting off retirement savings commits what I consider to be the biggest personal finance cardinal sin.

It puts an extra demand on your future self, and your future self is inherently unreliable.

Never, ever put off until tomorrow what you can do today. Yes, even if that means not having that thing you want at the first possible moment.

Q2: First house decision
My wife and I are fortunate enough to live rent free in a house valued at $210,000. My aunt, who owns the house, lives elsewhere. She has spent the last year trying to sell it and then took it off the market for the year while my new wife and I save for grad school. Currently has a nice pool, shed, half acre, and fenced yard.

The last people to look at it are getting it inspected and will offer on the house this weekend. My aunt said we could have the house for what they owe on it $150,000.

Should we purchase the house with zero down for a 30 year fixed mortgage? Live here until next fall while paying the same amount we would in apartment rent or purchase the house a bargain basement price and rent it out next year? Since we got the house so cheap the rent to cover the mortgage would be low. We would be away for three years at grad school and my parents could be the go to contacts for the renters. I imagine my sister-in-law would rent the house. I know if we did not have to move for grad school we would buy it with no reservations since it is nice in a great neighborhood.

I was looking at it as an investment since the housing market should be in a much better place in 5 years and I would be able to recoup the 150k in costs since we bought it 60k less than the house is valued at.
– Kevin

My speculation is that your aunt is offering the house to you under the impression that you need the house for a place to live. You seem to be looking at it as a potential investment since you’re thinking of renting it and then selling it in a few years for a profit. Before you go down that road, I would discuss it with your aunt or else you might find that you’ve really damaged that relationship with your aunt.

Assuming your aunt is fine with this, I would probably buy it. When you go away to graduate school, I’d live in on-campus housing and do it as cheaply as possible. You do not want two mortgages while in graduate school.

Also, I would not bank this entire plan on the housing market being wonderful in five years. I would call the housing downturn a correction. It’s a return to close to how houses should be priced. I would never expect the fairy tale of the mid-2000s to return and I certainly wouldn’t make financial plans based on that.

Q3: Shopping for health insurance
My husband and I are currently covered by my high deductible plan at work. I have always heard these plans are good for young, healthy people but not too many other categories of folks. We are expecting our first child in the spring, and trying to puzzle out whether it’s a good idea to switch to a more standard coverage plan. We would pay $77 a month for family coverage in my HDHP, with a $6000 maximum annual payout . This plan comes with a health savings account that I am allowed to contribute up to $6150 in pre-tax dollars annually, once this account hits $2500, I am allowed to invest the money (realistically, I’d probably try to keep 5K in this account at all times, so investing would be minimal at first). My company has seeded this account with a $1500 startup contribution. I have about 3K in it now and am aiming to contribute the maximum to it every year as an automatic payroll deduction.

The cost for the more traditional health insurance plan I would choose is $483 a month. Obviously, the max payout for traditional health insurance is a bit less and although we have never maxed our payments out in the past, for my purposes here I think I might as well assume that will be true for the next two years. The thing is, the HSA is pre-tax, allows tax-sheltered investment and tax-sheltered withdrawals. The traditional plan is paid for pre-tax, but some significant costs aren’t totally covered (the last time I was on it, I paid about $700 out of pocket in one year, and I think it’s reasonable to double that estimate for the family plan) and there’s no HSA. This is where the math starts to make my eyes swim, but my gut feeling is that, contrary to the received wisdom that these HDHP plans are not intended for families anticipating a lot of health costs, this plan would actually be a better deal over the long run, esp. since I have a small amount of savings already built up in it. Do you have any suggestions for details I might have missed?
– Lucy

Again, this is all a bet on your future self. You’re assuming that you, your husband, and your child are going to be perfectly healthy in the future.

If I were you, I’d hedge your bets until at least after your child is born. I would choose the insurance plan that offers the most protection during the child birth process and also during the first few months of your child’s life. There are a lot of problems that can happen during birth and there are also early childhood conditions (and a lot of doctor visits) to worry about, too.

If I were you, I’d revisit this question when your child is a year old or so.

Q4: Driving school
I know your oldest child is only about 5 or 6 and my children haven’t been born, let alone conceived. But when I was looking through a seasonal coupon magazine, I saw coupons for driving schools ($45 dollars of classroom and behind the wheel, $15 off just behind the wheel). Have you started thinking about how you and your wife will handle this when you are children are of the age to drive. Are you going to have them save up to pay for driving school, split the cost, or pay for it? (My parents paid for it as reward for getting straight A’s all of freshman year of high school). I guess along the same lines, I’m curious as to your opinion about kids having to purchase and pay for their first car vs getting a hand me down, along with insurance and maintantence. (I don’t think kids should get new cars).

– Matt

In the state where I grew up (Illinois), driver’s education was taught in school as a normal class, so the process of actually paying for driving school is a new one for me.

Assuming I’m faced with that decision, I would likely split the cost with my child. I don’t think rewards actually encourage any sort of long term positive behavior, so I usually don’t do them beyond things like “get the table cleaned and then we’ll have ice cream” or something along those lines.

I asked a few friends who have older children in areas where one has to pay for driver’s school and many of them replied that it was either a fourteenth or fifteenth birthday present. That’s not a bad idea.

Q5: I’m overextended – what now?
I am single, work a fairly decent accounting job. I have a home/mortgage payment, small car payment (w/ only $2k left to pay total), internet, cell phone with bare minimum services. No home phone, no cable tv. I bring my own lunch to work and only allow 1-2 outside lunches a month when coworkers ask me to go with them. I drive to and from work and try to plan all my other trips (library, store for basics, etc.) to all be done in one trip and hopefully on the way home from work. My biggest problem is I have a very large credit card debt ($25k) leftover from my former marriage. (Long story that you don’t want to know about.) I pay $50 over the minimum payment every month in an effort to try and get it paid down. I was working two jobs to try and make extra to pay that off quicker but found that I was spending the extra money on not really necessary things rather than paying it all to the debt. I’ve not had a lot of money my whole life so the extra money coming in was so exciting that it overshadowed what it’s purpose was supposed to be. After a year of two jobs my health started declining. I was sick all the time and having bad migraines. My doctor encouraged me to quit the second job. I continued to work the second job for another 6 months and then finally decided that the poor health was not worth the extra money, especially since I wasn’t putting the money where it should have gone. I’ve cut out every unnecessary thing possible and even started eating from my food storage in an effort to cut back on more expenses. So I only buy the absolutely necessities that aren’t in the food storage (feminine items, cold meds, toothpaste…..). I even make my own laundry soap and dishwasher soap and air dry my clothes.

Ok, all that being said, am I going to be in debt for forever?? Will there ever be a day when I can go hang out with friends because I have a little discretionary funds for entertainment? Do you have any suggestions on how I can pay off this debt quicker now that I have no extra expenses to cut back on and still don’t have enough to pay more towards the debt??
– Carrie

It sounds like you’re doing the right things, but the fact is that financial success takes a lot of patience and time.

You sound like you’re really in a very tight financial pinch without a large income. Have you considered big moves like getting a roommate to reduce your housing costs? Have you considered ditching your car and relying on some sort of mass transit for commuting? Have you considered community food resources?

These are often challenging moves for people to make, but they often make an enormous difference in terms of moving forward with debts.

Q6: Making money via social media
I really don’t understand how most businesses can make money via social media. They give stuff away and pay someone to tweet and post on Facebook. That seems to be a loss for the company.

– Evelyn

They make money by encouraging people to think about their product, talk about their product, and so on.

Let’s take a typical Twitter contest. They’ll have a contest where you have to tweet something like “The new book by Trent Hamm ROCKS! (some link to the book) (some link to the contest information) #trentcontest”

Each contest entry becomes an ad for my book. The same thing happens with a Facebook giveaway, since your comment shows up on your feed.

Bloggers sometimes offer giveaways to get bursts of readers. This provides short-term traffic, but it also increases the blog’s name recognition.

Q7: Working during grad school
I’d love to pick your brain about grad school and employment. I’m two years out of college and planning on going back to school next year to get my Master’s of Public Health. I’ve been working in the field for the past year, I love it, I’m very excited to gain some more skills and knowledge and get a degree that would open the door to higher level jobs for me. I’m not excited about paying for it. While my modest student loans from undergrad are not unmanageable right now, I’d like to keep them that way and minimize the financial impact of my graduate education how ever I can. Beyond the typical financial aid options (loans, scholarships, TA positions, etc.), many programs I’m looking at offer full tuition remission to part-time students who currently work full-time for their institution.

SO, my question is this: would you recommend working full time and stretching my 2-year masters degree to 3 or 4 to minimize my loans (and overall cost of grad school)? Or would it be better for me to use other ways to cut down on my school expenses, finish my degree in two years, and start working at a higher level (and hopefully higher paying job) sooner rather than later?
– Brittany

Do you have a job lined up that you can walk right into after you get your degree?

If a job is in place, I would get the degree as fast as possible. You’re going to be walking quickly into a job with a higher income level, so the increased cost of your education should be quickly mitigated. A great job is a great opportunity and you need to grab the brass ring.

If a job isn’t in place, I’d use whatever method resulted in the lowest debt after you leave school. You’re heading toward some degree of uncertainty and minimizing the debt load you’re carrying into that uncertainty is a good move.

Q8: Trying out games inexpensively
My wife and I have really been talking about your suggestion to try playing board and card games with other couples and we’ve decided to give it a shot. However, when we looked up some of the games you suggested, they were all rather expensive. How can you figure out if gaming will work with a group of people without investing a lot of money?

– Evan

One way to do this is to stop by a gaming shop in your area (use Google to find one) and ask if they have demos or if they have a night where you can try such games before you buy them.

You also might want to shop around online using sites such as Cool Stuff, which is a good discount retailer for board games.

The real key, though, is to just make sure you enjoy playing them. Start off with an ordinary deck of cards and try playing bridge or euchre or pitch with some friends. Build from there.

Q9: Credit reports of children
I know it’s a good idea to review my wife’s and my credit report annually from annualcreditreport.com (we check every four months by rotating between the three companies) to look for mistakes and fraudelent activity. But with the increase in identity theft with children, should I be checking my children’s credit report?

The annualcreditreport.com site doesn’t allow for online checking of people under the age of 13. But I believe I can request a paper copy of the child’s report.

Is this what you would recommend to check on children’s reports or would you do something else?
– Drew

There’s no reason to not check your child’s credit report. Mostly, what you’re looking for is identity theft.

I probably wouldn’t worry about it unless you start to see a reason for it. Is your child getting credit card offers? Have they received any sort of unusual communication relating to money? Those would be warning signs.

I did once request a paper copy of my oldest child’s credit report. I was slightly concerned about identity theft. It was completely clean.

Q10: Sales pitch or genuine question?
How do you decide if a reader is actually asking a genuine question or making a subtle sales pitch at you? For example, if a person asks a question comparing four credit cards, how do you know it’s not just a trick email from someone wanting you to promote a certain card on your site?

– Darren

Simply put, I don’t. I just try as best I can to avoid questions like that.

Writing on a topic like personal finance to a large audience sometimes feels like walking a tightrope. I’m often advising people to the best of my ability on complicated issues, from ethical, financial, and sometimes legal standpoints. There’s also the concern that people need their privacy protected. There’s the concern that both the person asking the question and the person reading the column need to get something out of it. There’s also the worry that you mention above, that I’m inadvertently promoting something I don’t necessarily believe in under the sense that I’m helping out a reader.

I face these kinds of concerns every day, and I have to make calls on them every day. I do the best I can. I’m not perfect, and sometimes I make the wrong choice.

I give a poor piece of advice. I post a bit too much information about someone. I edit a question a bit after posting at the request of a reader and it makes the answer sound nonsensical or wrong. I write an answer that’s too specific, meaning it only helps the person writing the question and none of the readers. Or, I’ll write an answer that’s too general, meaning it really doesn’t help the person writing the question too much at the expense of helping others. I have done all of these things over the years.

All I can say is that I’ve been writing The Simple Dollar for almost five years now, posting at least two posts per day during that entire run. I’ve answered more reader questions than I can count. In the vast majority of cases, I think I’ve done the right thing with regards to choosing questions from readers that genuinely are seeking help, protecting the privacy of those readers, and giving an answer that not only provides them help but provides help to the people reading the column.

That’s all I can really do.

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

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  1. Maureen says:

    Your son may ‘feel’ independent, but a kindergartener doesn’t really have all the skills to handle dangers he might encounter. Children that age can sometimes wander off, too. I’m in agreement with the other parents on this one.

    It will be safer for your child too. I speak from experience here, my 2nd grade daughter was assaulted by a mentally ill parent (who was volunteering at the school) on the school grounds at lunchtime. The teacher on yard duty was oblivious to the danger and took the other children inside the school leaving my child outside alone with this parent. This happened about 14 years ago. I assumed my daughter was safe at school, just as you assume your even younger son will be safe on the short trip to the bus.

    Surely you can spare 15 minutes in the morning to escort your little boy to bus stop. Your child will be safer, the other parents will respect you more and you may even make new friends.

    Your son is still a very young child. He has a long time to buid independence.

  2. Sassy says:

    Re: Question 9 about credit reports on kids. I’ve been told by Experian that I have to submit my child’s birth certificate, copy of his Social Security card, my Drivers license and a few other documents to find out if there is even a credit report (he’s 16; his overdraft protection on his debit card, which he uses when doing gas or grocery runs for us required a credit check and Experian came back with “suspicious SS # because of years that number would have been issued. As it happens those years include when we did get him his number). So they’ve given me a reason to suspect fraud but won’t help me unless I send them all the documentation someone would need to commit fraud. No word on their site as to what they do with the documents sent and because he’s a minor, I can’t get a live person to talk to. How did you just get a credit report on your son? If you felt okay about sending all that stuff in maybe I can bring myself to do it. Thanks.

  3. valleycat1 says:

    Q5 – paying off a large CC debt: It sounds like you’re on the right track, & good for you to be paying this down. Yes, it does seem to take forever, but debts do eventually whittle away. Look at your CC statement – it has a little table that will show you how much more quickly you can pay it off by adding just a little bit to the payments.

    I would add that instead of paying $50 over the minimum payment, set a fixed amount you can afford pay every single month. Don’t look at each month’s minimum due & add $50. In your case, if you could afford this month’s minimum payment + $50, keep making that same total payment every month. If that extra $50 squeezes your budget too tight, then make it less.

    To stay motivated while we paid down our CCs, I always looked at the statement to see how much interest I’d paid to date. Eek.

  4. Andrew says:

    Q1. Jill–your assumptions about the future are breathtaking. Why don’t you concentrate on finding a job (it’s not clear whether you have one lined up), move into your own apartment and stop freeloading off your parents?

    You do not need to plan your entire life at this point. Trust me, you will be thrown curveballs that you can’t even imagine. Just start by being realistic about your income and what it will provide.

    Actually, since you plan to be a teacher, start by learning how to spell the word “supplement” correctly!

  5. Tom says:

    Q2 – PMI on a $150,000 loan with 0% down might be close to $200 a month. Taxes, HOA fees? And let’s not forget that renting isn’t necessarily a walk in the park. I wouldn’t dive head in to what you’re describing, going off to graduate school very soon.

  6. bogart says:

    Thanks for writing about the kids and independence issue; my son will start kindergarten next year and I certainly hope he’ll be game to walk the roughly 1/3 mile involved without parental assistance as the year progresses — I did at his age, and of course, the U.S. is generally safer now than it was then (and as I live in the same town where I grew up this really is a meaningful comparison, though that wouldn’t be true for everyone). Our neighborhood is plastered with kids (and some parents) walking to school every morning and afternoon so I see this as a nice opportunity to encourage him to start to navigate his world with some independence.

  7. Lauren says:

    Q1. For Jill, most states have very good retirement plans for teachers. If you get a job in a public school system, most likely both you and your employer will be required to contribute a specific proportion of your earnings to a retirement plan. If you trust your state to remain solvent and honor its teacher retirement obligations, you won’t as much personal retirement savings, and starting later will be fine.

    You might consider going with a longer-term mortgage and paying additional to the principal each month. If the interest rates are about the same, it’s not a bad thing to leave your options open, in case the future doesn’t happen in quite the way you envision it.

    Good luck!

  8. Des says:

    Q2 – You say the house is worth $210k, but you don’t say how you know this. Every homeowner I know is overvaluing their house right now (I’ve actually heard one say “well, it only appraised at $140k, but its worth $180k.” *rolls eyes*)

    I would have a professional appraisal done before you move any further. I have a strong hunch that it isn’t worth much more than the $150k she is letting it go for.

    Also, where are you going to find a loan for zero down? I would research the rules for buying from a known seller. Banks generally want to see more money down in those situations and will base that off of the selling price, not the “value” of the home.

  9. Lindsay says:

    Q1: $50,000 as a first-year teacher? Where in the world do you work that has “nice enough houses in OK areas” for $250,000 that also pays first-year teachers $50,000?? I’m moving!

    I think I and every other reader on here who’s older than 22 could give the same advice. Your life is about to change A LOT, no matter how well you think you have it planned. It can still be great, but it’s going to be hard. Graduation and entering the “real world” automatically, always, without exception, is a huge life change. Give yourself lots of patience, and don’t go committing 23/24/25-year-old-you to much of anything if you can avoid it.

    Everyone else, if someone had told you when you were 22 what your life would look like now (no matter how far you are past that), is there the slightest chance you’d have believed them? I’m only 25, and I know I wouldn’t have.

  10. Jamie says:

    Q4 – I paid for my daughter’s drivers ed class as I consider it an investment in her safety, future lower insurance rates and I need another driver in this family.

    Regarding ownership of the car, I always thought I’d make her pay for it, or part of it. However, I’ve decided to buy it outright so that I can control the use of the car, particularly when rules are broken. It won’t be an expensive car – something used in the $10-12k range. I will make her responsible for gas, of course, and part of the maintenance and insurance. I think I’ll figure out some monthly “user fee.” If she does well in school and college, I’ll let her keep the car to drive or use as a trade in for something better – whatever she decides. But upon graduation, maintenance and insurance are all hers.

  11. Jonathan says:

    I’m a bit confused by the question about paying for a driver’s education course. Are such courses required in some states? Like Trent’s school my high school offered a driver’s ed course, but I didn’t take it. My Dad simply started teaching me to drive when I turned 16, and about 6 months later I took the test and received my license. I plan to follow a similar process for teaching my own kids to drive.

  12. JS says:

    Q5- You’re definitely in a tough situation. A bright spot I see is that your car payment only has $2000 left. Once that’s paid off, could you take most of what you were paying for your car payment and put it towards the card payments? Maybe take a little of it to loosen your belt so you can don’t have to rely on your food storage so much?

    Q7- I went to public health graduate school, and I agree with Trent’s advice. Some public health jobs can be tough to find right now because many of them are government jobs and there are budget cuts and restrictions on hiring. But the forecast for public health jobs in the future is really good (though it depends on your specialty). If you have a job lined up, hang onto it. If not, you might want to ride out this economy in a full-time job and part-time school, especially if it’s a job in your field.

  13. valleycat1 says:

    Q1 – the other issue here is that you’re counting on the boyfriend remaining the picture. Have you talked with him and reached agreement about your plans, and figured out how to jointly share expenses and allocate the savings toward the house? If each of you is saving a portion of your pay towards a house downpayment, I’d keep each person’s saved $ in separate accounts just in case the unthinkable happens and you aren’t together by the time the house purchase is planned. And you need a plan B just in case you can’t get a job on the schedule you expect, or the pay isn’t $50K, or it doesn’t last forever, or something expensive happens (unplanned pregnancy, or disabling accident, as two prime examples for people your age).

  14. Tom says:

    I was in a similar situation to Lucy, Q3, last year.

    I think a lot of people don’t realize that HDHP’s actually do provide medical coverage after you hit the deductible. You know how people give out advice “raise your car insurance deductible to save money on premiums” – it functions the same way. It’s important to compare costs and features. If you can reasonably assume that the HDHP offers coverage you’re likely to use, and you can afford the deductible, then it’s a smart way to do it.

    We called the insurance to find out what pregnancy was going to cost and their bottom-line answer was “we don’t really know. Every situation is different”
    When my wife was pregnant, we had a false alarm visit to the maternity ward and hit our deductible in one visit. To me, this is the biggest risk in getting the high deductible health plan, assuming the coverage is similar in your options.

    Your plan may be different, but my plan covered preventative care 100%, so that’s all the child’s immunizations and well-baby visits, plus annual physicals and 1 GYN appointment. I also get $1500 from my company, deposited bi-weekly in the HSA.

    One more comment, I did switch once from the HDHP to a traditional insurance, and started getting fees in my HSA because it was no longer tied to an HDHP. It was the managing bank that charged the fee but be aware this could happen to you.

  15. getagrip says:

    @Jonathan State driven requirements since each state issues it’s own license. You need to check with your state office of motor vehicles. The state may also have potential limits on times they can be on the road based on age, who they can have in the car based on age and time behind the wheel, etc. I know when I got my license there were none of those conditions either.

  16. Jonathan says:

    @getagrip – Thanks. I know that my state still doesn’t require it, but I was surprised that other states do. You learn something new everyday. I continue to be thankful that I live in a state that has far less requirements for most things than some other states do.

  17. Gretchen says:

    Q1, even without the other details: start saving for retirement today. Compounding interest and all that.
    Who is nagging him to get more income?

    I didn’t know states required driver’s ed but that explains why I’ve heard of schools teaching it.

  18. valleycat1 says:

    California requires driver’s ed for teens, and has a schedual of steadily decreasing restrictions on kids until they reach age 18 – # and age of other people in the car, how late at night they can drive, etc. Schools offer classes outside the regular curriculum, & I think there’s now an added fee to take it. If I had teens, I’d gladly pay the fee for them, to be sure they get the full training & not just what I can remember or advise.

  19. Des says:

    @Lindsay #9 – I agree that this sounds high to start. I googled average teacher salary and found a list by state. The highest starting salary is in Connecticut at $39k, and the median starting salary is about $31k.

    If I could speak to my 22 year old self, I would tell her to just slow down. Now is the time to be laying the foundation for your adult life, not rushing it to completion. Pay off debt and sock away cash as best you can, but there is no rush to buy a home. The housing market isn’t going anywhere fast for a long time. Lindsay is right that your life will be changing and you’ll be seeing more curve balls than you expected. Everything costs twice as much and takes twice as long as you think it will. Don’t combine finances with the boyfriend until you’re legally married, and don’t pay his debts. Everyone thinks they are the exception to the rules. You will never regret money you saved – start the retirement savings now. You can put it in a ROTH and max it out – then if you *really* need to, you can pull it out for your home purchase, so there is no reason not to max it out every year. Stay with your parents for the year, then rent a place and cram as many roommates into it as you can until you just can’t stand it anymore. Do NOT commit to spending 40% of your income on housing. Just because a loan officer will approve it does not mean you can afford it. 25% is a good number to shoot for. Don’t buy your “forever” home as your starter home. You will learn a lot about home ownership in those first few years, and what you looked for in a house at 25 may be different that what you want at 35. You and your life are changing a lot right now – one of the most expensive mistakes you can make is to think that you can plan for everything and that nothing will change. Stuff happens, and the wise prepare for that.

  20. Brianne says:

    Ohio required driver’s education for drivers under the age of 18 and my school was nice enough to have a special after-school program that only cost $50. (15 years ago) You still got a grade in the class that affected your GPA. Most driving schools in the area were over $300 but they got you through the whole program in 3 days, rather than the six weeks of after school classes. We were also required to have 8 hours of in-car instruction and the driving school let you do it with just the instructor but through my school you had to share the car with three other students and ride around with them during their in-car. So I had three LONG days of sitting in a car with three strangers. The best part was my driving instructor was also my physics teacher the next year so he had a unique perspective on the kinematics of driving.

    In California, I know you don’t have to do driver’s ed if you wait to get your license until you are 18. I think that was the rule in Ohio too.

  21. Katie says:

    There can also be significant insurance discounts for taking driver’s ed, so you can come out ahead on it sometimes.

  22. Adam P says:

    Q5 – for someone in your shoes, it may be worth looking at some sort of consolidation loan for your cc debt. You seem to be very frugal and able to resist temptation, and have this albatross around your neck presumably at huge interest. If your credit is okay, I would look into a <10% interest line of credit or consolidation loan of sorts to put that $25k cc debt on. That will lower your monthly payments and make you pay less interest overall, which would give you a bit of breathing room.

    Good luck, and sorry to hear about your situation! As others have said once the car is paid off you'll have more money for the cc and for yourself.

  23. Kai says:

    Drivers’ Ed isn’t required up here, and is not offered through schools. My dad taught me to drive.
    But insurance companies offer significant discounts on teen insurance if they have passed a course, so most people take one before their test. I took a short course, though I knew how to drive, just for the insurance benefit. My parents paid.

    Good for you for not panicking and trusting your child.
    To Maureen: a generation ago, a kindergartener would have walked the whole way to school, not just the bus stop. And very few of them ever got into any trouble. Crime rates are vastly down since then – it’s only paranoia that’s up.
    Those parents who are still teaching their children independence instead of fear tend to find that their kids do just fine.

  24. jim says:

    Q2 Kevin: Depends on WHY your aunt offered to sell to you at $150k. Is it cause she couldn’t sell otherwise and felt OK taking a loss selling to a relative to get it sold? Was she just trying to help you out by giving you a cheap place to live? I kinda doubt she was just taking a $60k loss so you could have a profitable rental. Maybe thats cool with her, but doesn’t seem like something most people would intend. Ask her if thats OK with her or what. Sounds like she has an offer coming now so I don’t know why she’d sell it at a large loss to you just so you can make some money unless she’s well off and/or very generous or not good with finances. I’d make sure you’re not just abusing her generosity.

    Q3 Lucy : With the information given, it really sounds to me as if the HSA/HDHP plan would be your best bet. If you’re in the 25% tax bracket or higher it may be a no lose proposition. But it depends on how the plans compare otherwise as far as benefits in general.

    Looking at the costs :

    HSA : $77/mo + up to $6000 out of pocket tax protected. = Absolute maximum $6924 more likely $5424 to $6024 maximum and minimum of $924
    Traditional : $483 /mo + maybe $1400 out of pocket. = $7295 likely costs and $5796 minimum

    HSA = $924 to $6924
    Traditional = $5796 to $7295 and up.

    Best case minimum cost scenario the HSA wins by $4772. Worst case scenario the HSA wins by $371. Either way the HSA wins. THere might be some spot in the middle where the HSA is marginally more but I doubt you’d hit that. Seems like the HSA is probably cheaper no matter what and possibly up to $4700 cheaper.

    And the key here is that hte maximum you’d spend with the HSA is in the 5400 to 6000 range. Thats the maximum, not typical and your minimum is $924. A range of $924 to $6024 easily beats $4796 to $7295 or more.

    However you should look at what each plan actually covers carefully. One might have a lot lower benefits overall or they might be equal.
    Since you’re expecting I’d look at the maternity / newborn coverage differences carefully.

    For us the HSA/HDHP option is the clear winner even with a family with children. But it really depends on the plan in question and how the coverage and deductible/co-insurance costs are structured. Many HSA plans have huge deductibles and high out of pocket maximums. Mine is pretty low deductible by comparison and yours seems pretty reasonable too.

    Q7 : I agree with Trent’s take. If you can get a higher paying job soon with that masters then get the degree ASAP, but if there is no job lined up nor fat pay raise expected then take your time and minimize the debt.

  25. Steve says:

    Q3 I agree that the future is unreliable. However I think that is misapplied in this case; the time frames are not that long. And it is quite possible for an HDHP to be cheaper than a regular health plan, even if you have anticipated expenses. It depends on the specific attributes of the plans in question. Take the time to figure out what each plan would cost with the minimum, maximum, and expected health expenses next year. You might find that the HDHP is the cheapest plan. If so it will probably be due to the tax benefits from the HSA, the free HSA money from your employer(s), and the far far lower premiums.

    Q1 Seems to be single-mindedly focused on getting rid of the mortgage no matter what. That kind of focus can be helpful sometimes, but usually it just causes other goals to suffer.

  26. Steve says:

    Q6 I suspectMost social media campaigns are running at a loss right now. Social media is still new and companies are wasting money trying to figure it out. Of course advertising money is also “lost” but seems to work out in the end, so I’m sure they’ll figure it out.

    Q8 You could also see if there is a board game group near you. Many groups meet in public (e.g. libraries, bookstores) and are open to new people.

  27. Kim says:

    The whole issue about walking or not walking to the bus stop has bothered me all afternoon. There is no way I would let my child walk to the bus stop alone. It is strictly a safety issue. Maybe it’s just where I live but there are plenty of sex offenders in our school boundaries and in our city of 50,000. You know some of them are just waiting for the kiddos that are alone. I know 3 kids that have been approached last year. There are other ways to teach independence to elementary age school children such as letting them pick out their clothes, make their lunches, pick their extracurricular activies, how to spend their money. There are safey issues that take precedence over a child’s wants (ie. wearing seat belts, helmets, etc). I also resent the Trent’s attitude of the “parents that INSIST on walking their children to the bus stop”. You have offended me and probably your neighbors too. BTW, I live in a nice neighborhood but it doesn’t make us immune. Trent please tone down your attitude that there is something inferior to people who do not think like you do. It is irritating.

  28. Leslie says:

    Before you let you son get off the bus and walk home on his own you need to double check the policies of your school district. In our district, the bus driver won’t let a Kindergartner or 1st grader off the bus without an adult there to meet them.

  29. Ashley says:

    Q7: If you decide to go the part-time route, be careful of the possible tax implications. Several good friends did this when doing grad school at an extremely expensive private university in a very expensive city. Their tuition benefits were considered income, and hence, they were responsible for paying taxes on them. Taxes on an extra ~$25,000 can be very burdensome when only grossing what many of those jobs pay (~$35-40,000). Plus, their income was often not enough to sustain a semi-enjoyable lifestyle in the expensive city.

  30. Katie says:

    Trent’s kid has to walk half a block to a bus stop where a bunch of other people are waiting. It sounds like he’s never actually out of sight of adults for any period of time. I don’t really see the point of freaking out about potential sex offenders (who, incidentally, are statistically worlds more likely to target children they know and have legal access to).

  31. Riki says:

    Histrionics over sex offenders is neither productive or necessary. Katie is right — children are MUCH more likely to be molested by somebody they know.

    Please, let’s not raise a generation of children who are afraid of their own shadows.

  32. SwingCheese says:

    I believe the world is a generally safe place. I try to teach my child that daily. That doesn’t mean that I don’t keep an eye on him. I am aware that, statistically speaking, if my child is kidnapped or molested, it is likely to be by someone he/we know. I also know that if he were kidnapped or molested by a stranger, those statistics would not make a damn bit of difference in my grief – just because it wasn’t as likely doesn’t make it less damaging. The world may not be inherently dangerous, but it is not necessarily mindful of children, either. That is why they have parents.

    And @Lindsay (#9): 22 yr. old me would most certainly not have thought 33 yr. old me would be where I am. I wonder what 44 yr. old me will think. :)

  33. deRuiter says:

    Q1. If you are attempting to “nag” him into earning more money, it is possible this isn’t your true life time soul mate. It’s possible he is a deadbeat as he earns minimal money now and is sponging off your family. Better both start off contributing heavily to your individual retirement accounts and each of you build a savings account which can later be used for a downpayment on a house. Don’t start co mingling funds with this man who has no legal connection to you and may be in the picture for free room, board and sex. Better you build up a big savings account in your name only for the next year or so, and see if he does the same in his own name. I’m betting that he doesn’t earn more, or save any appreciable amount, that he has a golden goose in you and will continue minimal input and collecting golden eggs while living for free in your family’s house. DON’T HAVE JOINT BANK ACCOUNTS ANY TIME SOON.

  34. Amy P says:

    There’s also the possibility of getting reported for child neglect for not doing exactly what other parents are doing. Being investigated by child protective services would be unpleasant and a big waste of time. Plus, there’s a lot of value in hanging out with the neighbors and meeting them and their kids and sharing information about school, activities, etc. This is potentially a wonderful source of companionship (and carpooling) for your family.

    I was one of those kids who walked to the bus stop two blocks away from kindergarten on. And actually, I disliked the whole bus thing enough that eventually, I made an unauthorized decision to walk to school myself, rather than ride the slow, stinky bus. My mom caught on pretty fast, but I eventually (probably around 7 years old) was walking to school by myself with my mom’s permission. I’m not sure how far it was, but it might have been something like 9 blocks. I survived, but I don’t think I would repeat the experiment with a kid like myself, regardless of current social norms. I think I just was not aware enough of my environment to be crossing so many streets by myself. I’ve read in child development books that age 10 is when kids on average are mature enough to cross roads by themselves, because by that time the average child is able to correctly judge car speed and the prudence of crossing the road under the particular circumstances. Complicating the issue, kindergartners are physically very small and can be practically invisible to cars and buses–nobody’s expecting to see such a small pedestrian crossing the street by themselves.

  35. Roberta says:

    My youngest son is 12, and our dogs and I still walk to the bus stop with him every morning. It gives us a little time together, starts my dog walking routine, and puts one adult with a bunch of kids in grades 5-8, who sometimes still act without thinking in ways that could be dangerous (ie, throwing a football across the street oblivious to oncoming drivers). We also have people who ignore or forget the 25 mph speed limit in our subdivision. Reference the potentially harmful people out there, his size alone at 5’8″ tall and 165 pounds may make him less of a target, but one never knows. I have checked the state website for our suburban town and there are registered sex offenders living close to us. Kids his age have and continue to disappear routinely all across the country. Additionally, numerous other parents have expressed their appreciation for the fact that I am out there every morning and afternoon. It is also a way of getting to know my neighbors and their children better, which I think is important. YMMV, but for the immediate future or until he asks me to stop, I’ll be out there.

  36. Wow, lots of harshing on Jill in Q1. And Trent, maybe you missed the part where Jill said her parents ARE in fact, feeding her. Jill, I say go for it. Yes, you’re setting an audacious goal for yourself. But why not? Practice tightening that belt as far as it will go, and see what happens. I don’t think delaying retirement savings for a single year is the end of the world, particularly since that money will likely go into investments which are all essentially forms of gambling. Remember what they say about investing in the stock market: don’t invest more than you can afford to lose? Why do they say that? Because you can lose a lot of money in the stock market. And most investments are stocks, combinations of stocks, or even worse “derivatives.” It’s harder these days to lose money sitting in a savings account, or sunk into real estate. Just remember to be good houseguests under your parents’ roof, and appreciate what they are doing for you. Whether the boyfriend sticks around or not, this gift of a year that your parents are giving you could set you up very well for early adulthood.

  37. Dee says:

    An article in this morning’s LA Times (9/13)reported that identity thieves are now grabbing social security numbers from kindergarten applications. It might be a good idea to pull credit reports if this is required in your state.

  38. Kathy F says:

    Q5 Consider getting a lower interest loan from Lending Club or Prosper to consolidate your credit card debt and pay less interest. This will help you pay off the $25K debt faster.

  39. Jonathan says:

    I applaud Trent for trying to find that balance with his kids between safety and independence. I think that in many situations parents to a disservice to their kids by trying to protect them from every possible danger.

  40. Maggie says:

    To #9 comment about where I am vs where I was at 22.
    When my husband and I married at 26 years old, we both had very good incomes, ate out at a nice restaurant once a week, owned a small but great starter home (the mortgage was more than our apt rent and was hard to get used to paying a higher amt but not impossible), and saved for retirement with both personal savings and 401K plans.
    We were sure that we could retire at 65 and be set for life.
    Now we are 65 and find that health issues and medical costs are through the roof. We have paid off the mortgage of our home(purchased my husband’s childhood home 35 years ago), and he is retired – forced to by a closing of his job and a sick mom to care for. I am still working and have major health issues (a liver transplant in 1997)but we need the health care benefits at my job. It looks like I will be working at least another 3 or more years, too.
    We have 2 wonderful children who are independent and 2 grands – blessings beyond any expectation however, we thought things would be so different. We wanted to travel and have time for our hobbies at this age. I did not expect to be working still but have a great job at a wonderful company, so that is good.
    We have been blessed in so many ways but our life has not been the easy journey we thought we were on when it began. So my message to all is Love one another, save as much as you can, and don’t have any debt. Have some fun but be prepared for surprises that may come your way that can be costly.

  41. prodgod says:

    After many years of living in the same house, it wasn’t until I started walking my child to school that I finally met many of my wonderful neighbors, who have now become friends, along with many of the other parents at the school. It began as a safety issue for my child, but now it’s more of a matter that we enjoy each others’ company during the walks. For those who encourage the independence, I think that’s wonderful. However, be prepared for that day when your child doesn’t come home on time because they impetuously decided to go to a friend’s house after school and got so wrapped-up in playing that they didn’t think for a minute to call you and let you know where they were. That’s one reason you see younger kids with cellphones – it removes much of the worry and doubt.

  42. slccom says:

    Driver’s education classes are something that I would consider essential if I had a teen with only two legs instead of 4. Frankly, most of you on the road have many atrocious habits. That funny lever on the left side of the steering wheel? It is a “turn signal,” and intended to be used to tell people what you plan to do. Not be ignored altogether, or to celebrate what you just did, and you really need to give people more than two feet worth of warning.

    My back bumper is not the speed limit. You need to be more than five feet from it, especially if we are going really fast — anything over 20 miles an hour. Getting closer and closer is not going to make me speed just because you don’t think that speed limits apply to you, or because you are in a hurry, or because my obeying the speed limit irks you. And by the way, I AM ALREADY IN THE RIGHT HAND LANE!!!! Just where do you expect me to go?

    Hang up the damned phone! No, you aren’t that good a driver. I can always spot people on the phone by the way they wander around their lane (and into the next) and how their speed varies and how close they get to me and how long it takes them to realize that yes indeed, there really is an open lane over there that they can change into.

    That funny red and white sign with the eight sides? No, it doesn’t mean slow down some and then keep going unless there is a semi coming 60 MPH. It means STOP. That means, the wheels of your car STOP rolling. THEN you look to see what the oncoming traffic is.

    Do your kids a favor, folks. No, you aren’t that good a driver. Please don’t teach them your bad habits! You may have been a good driver once, but you certainly are likely to have acquired some bad habits. So, why don’t you join your teen in the lessons? I guarantee that you’ll benefit from them. Or take the 55-Alive course from AARP. Do that every decade or so. We’ll all live longer.

  43. Jonathan says:

    @slccom (#42) – Just because you think everyone else on the road is a bad driver doesn’t make it so. In 15 years of driving I have never been ticketed for any violation. I use my turn signal even in parking lots. I would much rather teach my own kids to drive so I can pass on my driving habits than rely on a teacher to do so. My Dad taught me to drive and apparently did a sufficient job.

  44. slccom says:

    I haven’t been ticketed, either. But I do know that I have made driving errors and just been lucky. And thank you for using your turn signals even in parking lots — you and I are probably about the only two people who do on a regular basis.

    Nevertheless, I still strongly recommend that every driver take a 55-Alive or other course from time to time, at least every decade or so. Driving changes. New hazards arise, and new ways to protect yourself on the highway need to be learned. WE change. Things we used to be able to do with ease years ago get hard, and we may not realize it without someone else pointing it out. And even the best of us get some bad habits that need to be identified and fixed. Traffic laws change, too.

    The role of the teacher is not to replace the parent; it is to supplement the parent who undoubtedly has some bad habits, blind spots about the current traffic laws or other holes in their knowledge. If a teen gets a driver’s ed course, and gets the opportunity to help the parent improve their driving as well, it is win-win for everyone. And you keep on teaching the good habits.

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