Reader Mailbag: Children and Productivity

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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. Baby, job change, and move
2. Voting for financial best interest
3. Exiting a mutual fund
4. Biweekly paycheck
5. Selling sports cards
6. Husband’s disastrous credit
7. City or country?
8. Storing LEGOs
9. Experiences trump stuff
10. Smartphones?

The work I do affords me some flexibility. If an emergency comes up, I can usually stop and deal with it.

The personal challenge comes when those problems stack up. Our youngest child was sick for two days this week, followed by a snow day on the third day.

That meant little work during the day for me, meaning that most of the work I needed to do during the week gets pushed off to the latter half of the week and the weekend, meaning I don’t get to spend as much time with my wife and my non-sick children as I would like this week.

Flexibility means flexibility. It doesn’t mean unlimited free time and it doesn’t mean no sacrifices and hard choices.

Q1: Baby, job change, and move
My husband and I are expecting our 3rd child this coming spring. We are super excited but at the same time we are experiencing a few other life changing events that are taking away from the excitement that is a new baby. A few months ago we were facing an enormous amount of credit card debt (over $30K) and decided to make a decision to move in w/ my mother-in-law and rent out our current home in order to pay down debt and save up money. Since then we have been able to refinance our house and add most of our debt to the monthly mortgage which is at a MUCH lower rate than our credit cards. This has helped us immensely and we have just a small remainder about $6K remaining in CC debt that we still need to pay off since were not able to include the entire amount on our mortgage.

We hope to have the remaining debt taken care of by late spring. Because of the new baby, we still thought it would be a good idea to continue with the move so that we could have live-in help with the baby to save on costs for child care. With this move comes the stress of moving all of our things into my mother-in-laws house, but her house is stuffed to the roof with over thirty years of things!

Just to make room in her home for a family of 5 seems impossible as she is not very willing to get rid of many of her things. We also have to worry about renting out our own home and getting the home ready for new renters – painting, replacing some windows, small fixes here and there etc. On top of this, my husband has decided he wants to leave his IT job as it has been a cause of stress for him for over 2 years now and he is at his breaking point.

At this time he does not have a back up plan aside from staying home with the kids and we cannot live on my salary alone. In an effort to diminish some of the stresses, I suggested we put off the move, as with both our salaries we would still be ok financially if we stayed in our current home and would still be able to save a little money every month. Moving and a new baby all at the same time seems like an impossible hurdle, so if we can put off the move and focus on the new baby I would rather do that than have the added stress. BUT the only thing is my husband would have to hold on to his nightmare job or find a new job…but the only problem is he does not want to continue down the same career path if he looks for a new job.

I am just trying so hard to prioritze what is really important here. The baby comes first – I just want to make sure we have a healthy baby, then I feel my husband can take some time off from work (he’s also entitled to maternity leave) to think about what he would like to do for the future as well as have a chance to spend more time with our kids, but at the same time still continue to have his job in place just in case. Then I feel once he has found a stable job or plan B, we can then focus if we really need to move or not. I say if we feel the need to move, we move into another home of our choice that is lower in cost and maintenance and skip moving in with his mother. All in all I feel the move should be last on the priority list. Do you have any suggestions or feeling towards what you would do in this situation?? I am afraid out of desperation to leave his job, my husband will make a bad decision forcing us to HAVE to move in with his mother just so he will not have to continue to work. I cherish having our own home and our own space..
- Linda

If the baby is your top priority, then my suggestion would be to “nest” your home. Clean it as well as you can and prepare it for the baby’s arrival, but make preparations that are non-permanent and easily removable if you decide to move. Many of the steps you take in “nesting” your home will also make it easier to move.

During the period of maternity leave, start assessing where you’re at, and continue that assessment when you both return to work. Having a child will change your life and perspectives in ways that you can’t anticipate yet. Give that sea change a bit of time to kick in.

Once you’ve settled into lives as parents – say, at the six month mark – reassess things at that point. You may find the mother-in-law is more agreeable to your needs if you decide to move in together – or you may find the help much more useful than you thought and are willing to live with some clutter.

Q2: Voting for financial best interest
Why do people vote against their own economic self-interest?

- Vernon

I get political questions like this all the time, often accompanied by rants of various types.

Different people have different political perspectives. Others are going to see a vote for their own economic self-interest differently than you will, because different policies help people in different social and economic situations. I think most people do vote in what they perceive to be their own self-interest, economic and otherwise. Whether you agree with their conclusion is another issue entirely. I view all of that to be healthy and normal.

What’s not healthy and normal is when there is no respect given to people with different perspectives than your own.

I don’t agree with some of the things Obama has done, but I respect him. He’s our president. I didn’t agree with some of the things Bush did, but I respected him. He was our president. I can go back and insert pretty much any president into that equation until you reach a point where the political issues start to become unrelatable and abstract due to the passage of time.

Sitting down and compromising and looking for ways in which everyone can have their way on some issues is the way a healthy government works. Saying that you’ll vote for their bill if they’ll vote for your bill isn’t selling anyone out. It’s getting something done. We’ve lost sight of that, and that’s the true tragedy.

Q3: Exiting a mutual fund
My question is, after 3-5 years, at what point do I know I should be looking to exit from a mutual fund investment? As a layman, I don’t have much faith in my ability to identify transition from a bull to bear market. Do you feel that as long as I am consistently contributing, interest will recover and in the end continue to exceed the temporary losses? I guess what I am asking is, should I consider a sound mutual fund an investment I should never pull out from? Is there ever a time to ‘fold em’?

- Ronald

I don’t believe market timing works even for people who avidly study the stock market. For people who do it from an armchair’s perspective, I don’t think you can do it at all. This isn’t just my view – it’s the view expressed in quite a few investment books, most notably A Random Walk Down Wall Street.

Frankly, I don’t even try. I ignore the immediate ups and downs of the stock market and only make money moves based on how they relate to my goals. As a goal creeps closer, I would start moving money into more secure investments at a steady pace, particularly if I’m getting very close to the amount that I need to move forward on that goal.

The market is going to go up and go down due to impulses and responses that you simply can’t foresee. Your best bet is to just start “locking in” that money gradually as you approach your goals.

Q4: Biweekly paycheck
I get paid every two weeks (yep, federal employee here). My wife and I have been trying to establish a monthly budget but the irregularity of my pay is making it weird. Any suggestions?

- Bill

If you get paid every two weeks, then that means roughly ten months out of the year, you receive two paychecks, and roughly two months out of the year, you receive three paychecks.

Just make your budget assuming that you’re only getting two checks a month. When you have a month where you receive three, use that entire check to pay down debt or bank it for a savings goal.

Let’s say each check you receive is $1,000. That means, over the course of a year, you’re going to receive 26 checks for $1,000 each. Your monthly budget should be $2,000 – 12 months of 2 checks of $1,000 each – with two extra $1,000 checks coming in during the year. That extra $2,000? Pay off your highest interest debt, or start saving for a car down payment.

Q5: Selling sports cards
I’ve got several thousand sports cards . Like yours mine tour mostly eighties and nineties but I’ve got several more. Trying to get rid of the whole collection at once but my question to you is who did you sell yours too.

- Fred

Honestly, those cards aren’t worth very much at all.

The baseball cards I sold off that had some value included most of a 1965 Topps set, some single cards from various 1950s Topps sets, and a few 1930s Goudy Gum cards. The cards of the true star players (Mickey Mantle, Willie Mays, etc.) were actually PSA graded.

The cards I had from my childhood years, from the late 1980s and early 1990s, were almost entirely worthless. The only cards I had with any value at all were a few copies of the 1989 Upper Deck Ken Griffey Jr. card, which I was able to get $5 apiece for.

There are very, very few cards from that era with any value at all because they were so overproduced.

So, what should you do with them? I’d extract everything that was printed before 1970 and any cards depicting Hall of Famers (or obvious future Hall of Famers, like Griffey) and price them individually. The rest? They’re barely worth the paper they’re printed on.

Q6: Husband’s disastrous credit
My husband and I got married in June. In January, we applied for a car loan together and were denied because of his credit. I checked his credit report and it was a disaster up until about three months before we were married. He told me that he had just stopped paying any bills for a while when he was unemployed and then just paid off bill collectors when he got his job back. What can we do to fix his credit?

- Sarah

First of all, he really should have told you this before applying for any kind of loans. If he had tons of unpaid debts from less than a year ago and hasn’t done a thing to rehabilitate his credit, his credit score is going to be a disaster. This is just advice to anyone in a situation like the husband here: talk to your spouse about it and fix it together before it ends up causing real problems.

So, what can you do here? You need to start rehabilitating his credit. One step you can take is to add him as an authorized user on your credit cards, whether or not you choose to actually give him a card or not. If you don’t have a card, apply for one on your own, use it for a while, then add him as an authorized user.

Three things are going to improve his credit score. The big one is time: the more time that passes, the better his credit report is going to be. You should also make sure that everything on his credit report is legitimate – that means going through it piece by piece and verifying everything on there. The other tactic is using your own score to leverage his score through things like adding him as an authorized uzer.

Q7: City or country?
My husband and I moved to rural Nebraska when I found out I was pregnant in 2011. We moved from Northern Minnesota which had some what of a bustling city vibe. We have debated back and forth about moving back to a bigger town, possibly an actual city. He likes the rural small town life as that is what he grew up in. I on the other hand was raised in Southern California, and sometimes I miss the fast paced vibe. We now have a beautiful little girl who is eight months, and we are looking to possibly have another munchkin in the near future. Our finances would allow us to move either way with careful planning, so money isn’t an issue really. Would it be more beneficial for the kiddos to live in a smaller town? Cost of living where we presently are is wonderful. But I feel like if we stay here, my daughter and future kiddo would miss out on some things, being we live in a small town. Any advice is appreciated.

- Ellen

I think it’s really hard to say which is “better” for the kids. It depends an awful lot on the values of the parents – how much time they spend with the kids, how much focus and attention they give to them, and so on.

I think there are more avenues and temptations for older kids to get in trouble in urban and suburban areas and there are also more opportunities for success. I grew up in a very rural area and there just weren’t that many opportunities to get into genuine trouble there. On the other hand, I’m often stunned when I hear about all of the junior high and high school opportunities that my friends who lived in cities had during that phase in their lives.

I think it really comes down to the collective values of your family, and I don’t think there is a right or wrong answer. For me, the ideal is to live out in the country within a reasonable radius of a major city.

Q8: Storing LEGOs
How do you store LEGOs? I actually really like LEGOs as a toy for our children as they can really be open ended, but storing them seems really challenging.

- Jennie

We have a few LEGO tubs that came with lots of basic brick LEGOs in them. These were received by our children as gifts.

As for the kits that they’ve received, we’ve let our kids build the kits, then if they wanted to keep them as models, we put them up for display. If they didn’t – and they usually don’t – we took the instructions for the kit, put them in a baggie with several other LEGO kit instruction books, dismantled the kit, and added the pieces to our ordinary LEGO bin.

This has worked out really well, as our kids use pieces from various LEGO kits to come up with all sorts of crazy things. Our oldest son took pieces from a LEGO Friends beauty shop and merged it with some haunted house items and a few Ninjago pieces to make a crazy “nightmare car” that’s absolutely amazing, and he conceived of all of it himself.

Q9: Experiences trump stuff
It’s the experiences, not the stuff. My car is seven years old and paid for. This type of ‘scrimping’ makes other ‘splurges’ possible. This week my son is visiting Washington DC with his AP Government class from high school. Was it expensive? Yes. Was it worth it? Absolutely. He will remember this experience for the rest of his life–much longer than the smell of a new car!

- Shelley

I agree completely.

I think the number one challenge with personal finance in the modern world is that people do not sit down and seriously think about their priorities and their future. They just assume that the future will be fine and they’ll have plenty of money to do whatever they want – until, eventually, they don’t.

Some people see the dream slipping away and fight for it. Others don’t miss it until it’s gone.

Of course, there might be people out there who truly dream of nothing else other than having a new car and are willing to pay for that experience constantly. I have never met this person.

Q10: Smartphones?
Is a smartphone worth it? My little flip phone comes for free with my wireless plan and I can text and get the weather on it. What else do I need?

- John

Some people use their smartphone for what amounts to a wireless office in their pocket. They conduct business while they’re on the go: handling emails, handling social media, and so forth. For some careers, this makes sense, though I think the business should be footing the bill here.

I think more people use it as an entertainment device in their pocket. They play games and watch movies and so on. This seems like a pretty expensive way to get your entertainment fix, especially considering the up-front cost of a decent smartphone paired with the cost of the data plan.

I don’t think most people really need much more than the phone you describe, though a lot of people certainly have desires for more features than that. It’s an issue of separating needs and wants and separating short-term desires from long-term plans.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. 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 many, many questions per week, so I may not necessarily be able to answer yours.

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