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. Combining finances with risky partner
2. Brother exploiting sister
3. Using digital images from phones
4. Containing political rage
5. Extra money in the budget
6. Hand washing routine
7. Organizing student loans
8. Personal finance podcasts
9. Frozen meal preparation
10. Roth IRA while over limit
A few days ago, a friend told me that they were going through their grandfather’s house after he passed away and they found a coffee can stuffed under a sink that was jammed full of hundred dollar bills. They just sat it on the counter, divided the hundreds into piles among each of the kids that was there, and each of them walked out of there with several thousand dollars in cash.
While I like the idea of quietly leaving something like that for my children to find, having it all in a coffee can under the sink really scares me. More likely, I’d leave it in a safe deposit box if I were to do such a thing.
Q1: Combining finances with risky partner
My boyfriend and I talk seriously about getting married within the next two years. I have a salary of 55k with about 80k worth of student loan debt. He, unfortunately, has 18k worth of student loan debt that he allowed to go delinquent about two years ago. I’ve offered to help him get on track and asked him to call to set up a payment plan, but so far he’s been hesitant to do so. My question is, what effect would this have on me when we get married? Would my credit rating go down? Could my wages or taxes be affected? I’m very concerned about this because I’ve worked hard to keep up with my payments.
It won’t have any direct impact on you, but it will have some enormous indirect impact. It will make it much harder for you to get loans together and his insurance rates will likely be higher than yours.
Your credit rating relies only on the lines of credit that you have, not the ones your partner has. If your name isn’t on that delinquent loan, then it’s not your problem.
As for garnishments, your partner’s wages could be garnished, of course, and that would have a pretty strong impact on your household finances.
You won’t be directly impacted by this, but the indirect impact of this on your situation is tremendous. This will cost you money. He owes it to your future relationship to get things in order because it’s no longer just his finances. It’s your shared financial state.
Q2: Brother exploiting sister
I have an older sister and a younger brother. Our parents died when my younger brother was in junior high, so he moved in with my sister and she took care of him. The problem is he basically won’t grow up. He parties all the time and can’t hold down a job for more than a few weeks and when he’s in trouble my sister just bails him out. I feel like he’s exploiting her. What can I do?
There’s nothing you can do. Even if you have an exceptional relationship with both siblings, there’s not really much you can do here.
Your sister is going to have to make up her own mind as to when to stop helping your brother. Your brother is going to keep going back to the well until he makes up his own mind to be independent. Both of these things are internal decisions that you have no direct impact on.
If I were you, I’d just avoid the situation unless one or the other of them asks for your opinion. Outside of that, it’s not really your business and there’s almost nothing you can do that will change things anyway.
Q3: Using digital images from phones
To add to your uses of digital camera or digital images from phones: When I was tackling my first rewiring project (upgrading kitchen sink outlets to GFCI) the instructions in the replacement switches were wrong. The Home Depot electrical department manager was able to walk me through the correct installation when I took pictures of the current wires coming out of the wall, printed them on plain paper, he wrote the directions I took home to finish the job. When I had to call him before the project was completed for more clarification I had the picture with written instructions to refer to. Whenever I’m replacing a hardware item I click a picture of the product and the plate that shows the make & model number and pull it up when I’m at the store to make sure I’m getting the right parts for my appliance. I often take pictures of the grocery shelf with prices and size and pull those up when I’m at another store to compare if it’s a better buy. I find it’s better to have a full color picture of what I want to remember than writing down some of the information and maybe not getting all the information I will eventually need.
There are many, many, many uses for digital cameras.
For example, I was recently at a store buying light bulbs, but I wasn’t sure exactly which style Sarah wanted. I took a picture of the three I was considering and sent it to her on my phone. Two minutes later, I had a text response telling me which one to get.
I was recently working on replacing a light fixture in our home. Again, I just took a few pictures of the placement of the fixture and the wiring before heading to a hardware store. This made it quite easy to find the right type of replacement.
In both of these cases, I would have likely bought the wrong thing without that useful picture, and that would have led (in the best case) to a bunch of wasted time.
Q4: Containing political rage
I don’t want to turn this into a political debate itself, so let’s just say I work in an office with several people who have decidedly different political views than I do. They often make loud comments to that effect and sometimes these comments end up being the basis for jokes that I really find tasteless. Some days, I get really angry and upset and I just go to the bathroom and sit in there for a while to cool off. This isn’t a good situation and I know I’m just going to blow up at some point. What can I do to keep my political rage in check?
It’s usually a bad idea to bring your politics into the workplace and they’re clearly in the wrong here, but you’re in a rather sticky position with it.
I’m going to assume from what you wrote that one of the people involved here is your supervisor and it may involve multiple people in your management structure, which makes raising a complaint very uncomfortable. So I’d take a different route.
If they’re talking about politics, actively change the subject whenever you find an avenue to do so. Look for any juncture to send the conversation down another path. If you can’t find one, just listen for nothing but a lull in the conversation and bring up another topic.
Q5: Extra money in the budget
I have a decent amount of extra money in my budget every month after all expenses are paid for. I put a bit into my Emergency Fund, 15% into my TSP for retirement, and then the rest goes towards my mortgage (I’m currently making an extra payment every month.)
I’m not sure where the best spot for my money would go. My emergency fund should be fully stocked with 3 months pay in February (I plan to keep saving until I get to 6 months pay, but it will be at a slower rate.) and I’m only 20 so my retirement is a long ways off, so I feel 15% should be enough there. Is it best to pay off my mortgage quickly, or should I invest all of the extra money I have?
I would knock off your mortgage as fast as possible. The sooner you are free from the monthly leash of a mortgage payment, the better.
You’re already doing well in your current position. You’re twenty, you’ve got a solid government job, you’ve got a great emergency fund, and you’re socking away 15% toward retirement. You’re going to be fine.
The best thing you can do right now is to hit debt freedom.
Q6: Hand washing routine
I read an article recently about how hand washing is vital to living a long and healthy life, so I started trying to establish a routine of washing my hands every time I came into the house, but I’m having a hard time making the routine stick. What can I do to really stick this new routine in my head?
If you can’t associate washing your hands with entering the house, try associating it with something else you do regularly.
For example, you could set an alarm on your phone to remind you to wash your hands every few hours. Better yet, just establish a strong routine of washing your hands before every meal and after every restroom visit, which should take care of the vast majority of opportunities for infection.
If you really want to associate washing your hands with entering the house, your best method is to put a giant bottle of hand sanitizer or soap right at the place you first see when you enter your home. That way, the jarring nature of it will remind you for the first several times, which should be enough to get the habit rolling.
Q7: Organizing student loans
I have $30K in student loans from my undergrad education. I’m on income-based repayment and am currently not required to make payments on it at all, but I know that this just means it’s going to be around longer. I’m planning on starting grad school in the fall. It’s a state school program so it will cost about $12K total. I have been saving almost half of my income so that I won’t have to take out more loans for grad school – but I’m not sure if that is the wisest move. Would it save more money in the long run to put this money towards my debt and take out new loans for grad school?
You’d be better off paying the debt you have now, simply because it’s accruing interest right now whereas the loans you will acquire aren’t accruing any interest yet.
It’s best to look at both of these debts as a single pool that you’re going to have to pay off. Right now, the $12K from graduate school is essentially earning 0% interest, while the other money is costing you a much higher rate than that.
Pay down the debt with the higher interest rate first. In this case, it’s the already-existing student loan.
Carla has a second question.
I don’t really love any of the podcasts that are out there right now, but there are two that I listen to that I’d recommend.
Reuters Personal Finance is a pretty good show with a variety of topics, and host Lauren Young presents it well, though sometimes I disagree with the perspectives presented.
Money Girl’s Quick and Dirty Tips are very short blips, but they usually present a very worthwhile idea.
There are a lot of podcasts that I really like that have gone defunct over the last few years. It’s really hard work doing a podcast on a regular basis, so most of the ones that make it are part of a larger media entity, unfortunately.
Q9: Frozen meal preparation
I love your idea of preparing and freezing meals in advance in order to have a great dinner, but there’s a problem with that. Let’s say I get home at five o clock and turn on the oven and put in the meal. Cooking a meal from a frozen state takes a couple of hours! I don’t want to have dinner on the table at 7:30. That just doesn’t work for my family.
Your solution is to put it in the refrigerator the night before, preferably as far away from the blower as you possibly can. Ideally, you can stick it in the refrigerator even earlier than that.
The goal is to allow the meal to thaw without actually getting warm, and the refrigerator is the perfect place to do that.
While this won’t reduce the cooking time to ten minutes or anything, it should significantly reduce the two hour timeframe you’ve been looking at.
Q10: Roth IRA while over limit
Someone asked if they could keep a Roth IRA even if they increased their income to the point where they no longer qualified. You said yes, I disagree. If your income during a year you have contributed goes over a certain limit, you have to ‘recharacterize’ the amount you have contributed (during that year). You don’t have to put it in a traditional IRA, but if your income is above the limit for contributing to a Roth, you can’t leave it in the Roth (that year’s contribution)…..I could be wrong, but you might want to check it out.
He can keep his Roth IRA, but he can’t contribute to it any more.
His concern was, if he brings in enough money to be over the contribution limit, would he then have to relinquish the Roth IRA entirely and convert it into a Traditional IRA? The answer to that is no – if you’ve made eligible contributions in the past, your Roth IRA is fine.
However, if you are over the income limit, you can’t make contributions to a Roth IRA. If you do make such contributions, you need to talk to your tax preparer immediately.
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.