Reader Mailbag: Competition

Several people have asked me recently why I have a “weekly roundup” (where I link to sites that write about similar things as me) and why I have a big list of blogs I like on every page of The Simple Dollar. Isn’t that just helping the competition?

Maybe. But I don’t really view those sites as competition. My entire purpose for linking is to share what I consider to be useful and interesting websites and articles with my readers. I figure that if you find value in them, you’ll come back here eventually to find more value.

If you don’t, at least I know I improved your life and reading experience.

I recently started seeing a Psychiatrist, and was diagnosed with depression. I’ve probably been living with it for about 6 years now, and now that I am receiving proper treatment, I feel like I just woke up from a coma. Its not that I don’t remember anything I did over the past six years, or that I didn’t do anything, its just that whatever I did had no forward thinking to it. I had no goals. I didn’t really care about anything except eating, playing video games, and making money so I could eat and play video games.

The problem now is, I feel overwhelmed by the amount of things I suddenly care about again. I’m thinking about looking for a relationship, I’m thinking about finally moving back out of my parents house, I’m thinking about changing jobs, I’m thinking about moving out of state, I’m even getting evaluated for bariatric surgery. I’m thinking about all of these things, and I don’t know which to make a priority – but more to the point, I don’t know how to recover my finances to the point where I can realistically do any of them. I have about $70,000 in school loans that cost me $500 a month, I have a car payment that is $400 a month, and the payments for a pension loan I took out which is $235 a month. I have about $13,000 in debt across various credit cards, varying in interest from 18% to almost 30%, totaling up to $415 per month in payments. After those bills, and the $300 monthly cost I pay for a personal trainer (which I don’t want to stop as it has really improved my quality of life a lot over the past 1.5 years). I end up with about $500 left over.

The good thing is, both the car loan and the pension loan (I have a state pension through my job) will be over within the next year. I have 4 months left on the pension loan and 8 on the car loan. I’m pretty much living month to month at this point, and I’m wondering – where would you start the digging out? How much should I try to save a month? How much should I put into paying things off, and what should be the priority for that be?
– Jeff

You’ve got to knock out those credit cards. I can’t imagine that your student loans are anywhere close to the interest rate on your credit cards.

What I would do in your case is make a simple debt repayment plan. At the top would be your highest interest debt, and after that all of your other debts are ordered in order of their interest rate.

Whenever you have extra money, you throw it into an extra payment on the highest interest loan (after making minimum payments on all of the loans, of course).

That’s really the best way to approach this. Once you have only a few debts left – all with interest rates under 10% – you can start really looking at other options. Of course, at that point, your monthly minimum debt payments will be eating a lot less of your income.

It seems that quite often there is a conflicting viewpoint between Consumer Reports (which bases its ratings on testing, and its reliability on consumer surveys) and the reviews/comments I see on the site from actual consumers, or from other comments on sites like epinions.com. Consumer Reports may say a certain model of vacuum cleaner is great, for example, while I’ll see many consumers say just the opposite.

How do you think is the best way to research the purchase of a particular model of appliance (like a vacuum cleaner)?
– Chris

I have a hard time giving a lot of trust to wide-open consumer review sites like Epinions and, frankly, Amazon. I trust Consumer Reports far more.

The reason is simple: when it comes to reviews on websites where anyone can post a review, you often have no idea who the person posting the review is. Sometimes, it’s an individual who has a vested interest in you not liking a particular product or liking another particular product. Given that such anonymity on accounts is easy to achieve, it’s hard to really trust any specific review.

I tend to trust reviews from individual reviewers much more. If I can establish a long history with that reviewer, then their reviews have merit for me. That’s why I love book review blogs and websites – I tend to trust the individual reviewers.

Consumer Reports is more of the “trusted” source. They have a reputation to uphold for unbiased reviews. They can’t afford to write biased ones because they have a reputation at stake. “Sandra from Ohio” on a review website doesn’t have a similar reputation to uphold.

Combined, my wife and I have about 50k in money market accounts (emergency, travel, repairs), about 100k in our 401k’s, 8k in our IRAs and my wife has an additional 10k mutual fund and participates in the ESP plan (roughly 10k). We are both 33 (no kids yet).

We reduced our 401k contributions (up to the company match) in 2008/2009 to bolster our cash reserves. We’re planning on bumping our 401k contributions back up for this year, but I struggle with the IRA.

If we cannot contribute to the Roth IRA, is it worth it to max out a traditional IRA and convert to a Roth every year? Everything I read says this is fine to do (though you pay taxes on conversions). Are we better off just putting that money into our 401k? I’m confused as to the tax implications on converting IRAs every year vs. the tax savings on future withdrawals of the Roth.
– Sean

Essentially, your comparison is between the tax bracket you’re in right now versus the tax bracket you’ll be in when you retire. That involves some guesswork.

One great way to start is to estimate how much income you plan to have in retirement compared to your current income. Are you aiming to bring in the same amount? Substantially less? Figure that number.

My assumption is that if you’re making the same in retirement as you’re making now, you’re better off in the Roth. That’s because it is my belief that income tax rates are going to have to go up.

How many emails do you get a day? (How many do you answer?)
– Bryan

I get between 300 (weekend) and 500 (weekday) non-spam emails a day. I do my absolute best to keep up with them, but there are times where I simply cannot.

At this point, it would be somewhat reasonable for me to actually have an assistant whose job it is to deal with the deluge. However, that’s really an expense that we can’t swing at the moment.

I typically answer about 50 emails in a given day. I also usually use 3 to 5 of them directly for posts on The Simple Dollar – twenty a week for reader mailbags and maybe five more for other posts.

I have no current debt except for my mortgage which I make extra payments on each month. I have 8 months of emergency living expenses saved up. I have a 401k which I contribute up to my employer’s match and I have a Roth IRA which I contribute to continuously. I have also saved up over 30k in high interest savings account. My problem is that I am dying to buy a BMW 335. I sit in front of the computer everyday and read countless professional and consumer reviews and sometimes ride out to the dealership to look at the work of art in the lot calling my name. I just can’t come to terms with emptying out all my savings for a car that depreciates in value yet I want to have the car so bad. I guess my question is how can I deal with this? Should I buy the car if I want it that bad? Should I finance it and then just pay it off really quickly to help break the impact of draining my savings in one swoop? Thanks for your help.
– Christopher

Look, I want things like this, too. I’d love to just drive down to the dealership and buy the car of my dreams.

If I’ve learned one thing over the years, it’s that if you do that, it isn’t long before you want something else. And something else again. We all always want something.

If the BMW is truly the thing you want the most in the world, the thing that will add a ton of value to your life and make everything else pale in comparison, then you should buy it. I would not deplete all of my savings to do it because of Murphy’s Law – the second you empty it, something will come up where you need that money.

I think my wife put it best when she said, “He’d be giving up ten trips to Europe for that car.” That’s certainly another way to look at it.

I am currently carrying around a lot of credit card debt. In college, I never wanted to ask my parents for money so I just charged stuff. It also was the first time I cared about keeping up with what other people were wearing & doing. There began the habit of using credit cards for everything. Outside of college, I kept at it. I got a great job & salary however, did not know how to budget. Honestly, my parents never taught me about money and when I told them I needed help with a budget, they told me I should know how to do that already. But, can’t blame your parents for everything! haha.

Anyway, I’m in my late 20’s and have just had enough. I’m at the point where my minimum payments are so high and I can barely start to ‘snowball’. I’m cutting back my on expenses and trying to spend less than I earn. However, it always seems that I use cc’s as a crutch. If I feel like giong to out dinner but know I wont have enough money to pay for my gym fees, Ill just charge dinner. I know this has to be a lifestyle change.

Honestly, I dont think I can change without closing the credit cards. If I only have cash to rely on, I will be too scared to overspend or not save. I would close the cards but have balances to pay off. I know this could affect my credit, but really, I would rather not have the opportunity rack up more debt and deal with a lower score than keep on my path of using the cards.

What do you think? I’ve tried freezing the cards, cutting the cards, hiding the cards…nothing works.
– Alexis

How do you charge dinner if all of your credit cards are cut up?

Seriously, cut up all of your cards so that they’re completely unusable. Cut them into tiny, tiny pieces. Then see where you’re at.

If you find that you still can’t control the credit card spending, then close the accounts. However, if you’re still able to use a credit card to buy dinner, you haven’t actually cut them all up yet.

Should my HSA (Health Saving Account) be included in my net worth?
– Bryan

I don’t include our health savings in our net worth.

Essentially, I don’t include anything that I can’t easily liquidate in our net worth. If I can’t get cash out of it in less than a week, then it doesn’t go in.

Although you can get money out of an HSA pretty easily, the fees associated for doing so are crippling. Instead, I just ignore it in terms of our net worth. Then, if I actually need to use the account, I’m pretty happy that the medical expense isn’t causing a negative impact on our net worth.

How do you balance your finance goals and your health goals?

My husband and I have just over one year before our student loans come due. We are hoping to save up as much into an emergency fund (current balance of $0) over the next year as possible. After our mortgage, health insurance, car insurance, utilities, monthly expenses (food, medicine, etc.), and so forth are paid we’ll have $600/month to save. The mortgage and our student loans are the only debt we’ll have.

I have health problems which have plagued me since I was 16 (half my life). They are affecting my day to day life and I’m out of commission for 2-3 days a month and have limited ability to do anything physical several days a week. I have the opportunity to get them under control and regain my health. I’m doing as much as I can on my own but I do need medical attention and assistance, both of which cost money.

I feel guilty because in order to get healthy we won’t be able to save as much money. We know we’ll have to replace both the A/C and water heater over the next two years, as well as one of our cars within the next five. We want to have enough cash to cover all that plus several month’s emergency funds. That’s important to us, but so is my health.

How do you make a decision when there’s no “right” answer? How do you decide what’s best when neither is the obvious choice? Financial health and physical health are both important.
– Liz

Your health is more important than your finances. Without your health, you won’t be able to get your finances into proper shape. Your health is already keeping you from financial success.

If there’s a way that you can truly restore your health, do it. Get your health in order. Once you have that, any financial problem can be fixed later on.

Get yourself right. Everything else will follow.

I’m about to graduate from college, and I have no debt and enough in my savings account to cover my expenses for at least 4-6 months (maybe more if I made some lifestyle changes). I want to relocate to another city because I like the climate, the culture, and pretty much everything else about it. I have spent time in this city, but I only know one person who lives there. The cost of living and wages there are similar to where I live now, but I have no job prospects and only somewhat shaky connections. I will have a B.A. and lots of work experience, and I’m pretty confident I could find a job before my emergency fund runs out. Financially, do you think it would be a mistake to go ahead and relocate after graduation?
– Alex

In my eyes, it depends on two things.

First, do you have employment there? If you’re going there without any route to employment, I view that as a mistake. If you’re unemployed, you’re far better off living in an area where you have a strong social network. So, I’d suggest job hunting there before you move.

Second, do you build relationships easily? Some people do, some people don’t. If you have a hard time establishing new relationships, then such a dramatic move will likely leave you feeling very lonely – and that can create all sorts of problems.

If you can safely answer yes to both of these things, I’d go ahead and make the move.

The question is this: I am 31 years old, married, no children, and have the opportunity for a job that would put me in a position to earn $25-$27,000 per year. This, with my husband’s income is more than enough to cover all of our bills and get the emergency fund where I’d like it. The twist? It requires a security clearance and good credit. I have one bill that is about $1000 to pay off. My only option at this time for doing so is to either take an old 401k from a previous job with about $1200 and close it, or withdraw the money from my existing emergency fund which is a Roth IRA w/about $2100. I am unemployed at the moment and was wondering what your take is on which of these 2 options is the better of two evils,since my husband’s income is currently going to all the bills. Once my credit is cleared, and I can start the job, I can repay/re-save the amount within 2-3 months.
– Stephanie

When you say “good credit,” what does that mean? Usually, it just means that your credit report doesn’t have any major delinquencies on it. A single $1,000 outstanding debt usually doesn’t mean bad credit unless it’s way overdue.

The first thing I’d do is get my credit report and check it over. Use annualcreditreport.com to do this – it’s run by the federal government and is actually free with no strings attached. See if you have anything delinquent on it.

If you don’t, I’d say your credit is what I would consider “good.” If you’re actually worried about this, ask your potential employer.

You’ve talked about how you enjoy writing fiction. What do you write? How often? Have you ever published anything?
– Leon

I try to write fiction at least two days a week, usually three. Each time, I attempt to get at least a thousand words on paper, and I try to finish (at least in rough draft form) a short story every week.

For now, I don’t publish them. They’re not what I consider to be “good enough.” I don’t feel comfortable with others reading them at this point, though I do feel that they’re getting better.

If I do publish some, I will certainly mention it on here.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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  1. KC says:

    @ BMW wanting Christopher – I was like you a few years ago – money in the bank, retirement accounts maxed, no debt, and cash saved to buy a car. I’d always wanted an Acura. Although I didn’t want a new one (they’d just changed designs and I didn’t like the new one). So I was going to buy a good used one. I negotiated a good price and paid cash. I was loving it for the first few months.

    But eventually I came back to earth and thought “I just spent how much on a depreciating asset?” I’m still driving the car and I’m still in very good financial shape (car is in good shape, too). But when I put it all in perspective I realize I had a bad case of the “wants”. I don’t necessarily regret my decision (I did need a new car), but I’m still not sure all that luxury was worth it. I guess I’m just sort of underwhelmed by my purchase.

    I’m not saying you shouldn’t buy the car cause it sounds like you are in the position to do it, but I do think you’ll be disappointed. You may keep this car for 15 years, but I’d bet against that – you’ll get the itch for something else in 6 years. Anyway just think a lot about this decision. $30k is a lot to spend on a car – especially since you’ll you never recover the sales tax and other fees and the asset will depreciate from day 1. I’d wait, explore other options (like used) and continue to build up my cash reserves until you are convinced one way or the other.

  2. Johanna says:

    It sounds to me like Christopher’s $30k in savings is on top of an eight-month emergency fund. If that’s right, then Trent’s worry about Murphy’s Law is baseless.

    Christopher also doesn’t say that he *wants* ten trips to Europe – or if he does, that he couldn’t afford them anyway even if he does buy the car. Although he doesn’t say how long it took him to accumulate the savings that he has, it sounds like he’s living well below his means, and that he could comfortably save up for a trip to Europe or even another car, if that’s what he wants next.

    Basically, it sounds like Trent (or at least Sarah) is saying, “You are wrong to want the car. You should want the trips to Europe, or maybe a bigger emergency fund, instead.” And that’s not helpful.

    I think the relevant question for Christopher is: When you built up the $30k in savings, did you have any specific goal in mind for it? If so, ask yourself whether the car takes priority over that. If not, and if you really want the car, then go ahead and buy it. What is the point of saving money if you can’t spend it later on things that you want?

  3. Debbie M says:

    @Liz, I agree that there IS a right answer. I’d rather be able to do things every day of the month than to have air conditioning and hot water. Just not being able to save “as much money” is even less important. Similarly, I’d rather the love of my life be able to do things every day of the month than to have air conditioning and hot water. You may even find that with better health, you will have more energy to do things that help your finances.

    I don’t see what you could possibly have to feel guilty about. I’m assuming you did not cause your own health problems, at least not on purpose. Even if somehow you did, that’s water under the bridge now. It’s time to move on. The whole point of money is to help you be healthy and happy. Give yourself permission to use your money for things that are important.

  4. Moby Homemaker says:

    There is no real “competition” in blogging…everybody has some time to read. It is great to know where the best things are. Trent is doing a service to all his readers–that is a “value” to us.
    Of course, feel free to visit mine!!! lol

  5. Dee says:

    @Christopher:

    I think I read a suggestion on Get Rich Slowly that, instead of outright buying the car, rent one for a weekend or week, etc. every once in a while.

    That may be enough to keep down the urge. If not, then buy it down the line.

    @Jeff
    You may also want to look for a higher paying job or a side gig to help you bring in more money since you have so many bills.

    @Alex
    I agree with Trent. You should not move without job prospects, especially not now. There are lots of people “confident” they will find a job before their emergency fund runs out … who then are still unemployed when the money is gone.

  6. Ten trips to Europe? I just came back from Europe and spent no more than $1,000 for the entire trip (including airfare). I’m sure a frugalisto like yourself could make more than 10 trips to Europe for the price of that car.

  7. sarah says:

    On the car – if you have the money saved, and that is truly what you value – then buy it! I agree that you need to be careful that it’s not a slippery slope to purchasing other wants you can’t afford, but if this is what you truly value and have thought it through, then by all means go for it. My husband is a big car guy, and to Trent’s test, yes, he would pick the car of his dreams over 10 trips to Europe. That’s what he values. (And yes, we buy our cars with cash.)

    I’d also agree, that if the body style, options and all else is equal, at least looking at the option of buying late-model used would be wise. If that meets your criteria, great, you just saved money. If not, you looked at all your options and made an informed decision.

  8. anna says:

    @ Christopher. My mother always says “I have no desire prolonging a life I don’t want to live” She refers to eating extremely healthy food (whats the point of only eating healthy food if you are miserable for 80 years of your life) but I think it can apply to your car also. If you spend 10 years dreaming of a fancy car, that you can afford, than you are only going to hate the car you have more and “waste” time looking up information on the car. If you can truly afford the car and are sure it is what you really want, than buy it!! I think even Suze Orman would agree, you’ve been Approved in my book!

  9. partgypsy says:

    Chris, as far as vacuum go, the most important opinion is your own. Once you narrow down your choices go to the store and take them for a test drive! When we needed to replace our upright vacuum we had 2, 3 friends who LOVED their cannister vacuums and we were swayed to purchase a cannister ordered off the web. It works fine but both my husband and I ,well hate is too strong a word, but highly dislike it due to being really unwieldy and really miss our upright. What one person loves another person may hate, just find one that fits your comfort level.

  10. Johanna says:

    @Alex: It’s true that moving somewhere without having a job lined up is a risk. Just because you are confident that you’ll get a job doesn’t mean you’ll get one, especially in this economy. If you still do not have a job when your emergency fund runs out, do you have a place to go?

    If you do, then I say give it a shot. If you know you want to live in this particular city, and if there are jobs in your field to be had there (not every field has a big presence in every city), then there’s no use looking for a job in a different city where you don’t want to live.

    Trent’s advice also implies that people who are not good at forming relationships should *never* move to cities where they don’t know a lot of people, even if they do have a job lined up. If I followed that advice, I’d be stuck forever in the town where I grew up, and I shudder to think about what that would be like.

  11. Erin says:

    Can I mention something from Stephanie’s email that I found alarming? She says that her current emergency fund is a Roth IRA. That seems like a very bad idea. Isn’t there a 10% penalty on early withdrawals from Roth IRAs? An emergency fund should be something that you can get your money out of without penalty in an emergency.

    Regarding her credit question, I agree with Trent that the one $1000 debt might not prevent her from getting this job. But also, once you pay it off it will still be on your credit report that you had a bad debt and will still affect your credit score. Your score might improve a bit once the debt is paid but not delinquent, but it stays on your credit report for several years. And it takes time once you pay it off to show up as paid on the credit report.

  12. Kacie says:

    Idea for the guy who wants a BMW. See if you can rent one for awhile. It may not be possible, but some car rental companies have high-end cars, and they may be able to get the one you want.

    Rent it for a week, weekend or a little longer and drive to your heart’s content.

    You’ll be able to enjoy the car but you won’t be out ALL that money.

  13. Kacie says:

    Oh, and Stephanie — don’t keep your emergency fund in your Roth IRA! You need it somewhere like a savings account or a CD at the most. You need to be able to get it right away if you need it.

    An emergency fund is not a financial investment — it’s an investment in your piece of mind. Ya know?

  14. Des says:

    @Erin – No, there is not a penalty for withdrawing funds from a Roth IRA, as long as they are your contributions. So, if you put in $5,000 and your account is now worth $6,000, you can withdraw the first $5,000 penalty and tax free. You would only be penalized on the last $1,000 in earnings.

    @Kacie – It isn’t any harder to pull money out of a Roth IRA than a CD if your Roth IRA is in CDs. The IRA is just an account designation, it is not an investment form of its own.

  15. Gretchen says:

    I belive we’ve firmly established here Trent doesn’t care about cars (although I personally don’t remember him ever talking about going to Europe, either).

    The rental plan is a great one.

  16. Ellen says:

    @Jeff – Google IBR student load repayment (IBR = Income-Based Repayment) – if you qualify, your student loan payments may be reduced. This is a legitimate government-developed option. Basically payments under the plan cannot exceed a certain percentage of your income. this might give you some extra cash to help dig out.

  17. DOTTIE says:

    I originally left this comment on the post about not the current post….
    I really enjoy this blog. I have been reading it since a few months shy of it creation several years ago. I am what some my call a lurker.. I enjoying reading the blog and comments to educate myself, however I rarely post a comment. However, I find myself needing to speak this today:
    Johanna, I have noticed that you leave many comments daily and have for many years. A very large amount of your comments are very negative and you hardly ever agree with anything written in the daily blog. It is very very rare that I read something from you that is informative or uplifting. Why do you do this? Wouldn’t it be a better use of your time to read a blog that you would agree with more often? I am all about free opinions and comments however yours never seem to be inspiring. Well just thought I would use ” Had Enough” post from last week to bring my thoughts to the comments.

  18. Kai says:

    Johanna (#2)
    I don’t think you should read Sarah’s comparison as critical. I think it was just meant as a look at opportunity cost. Perhaps Trent and Sarah would rather have ten trips to Europe. Perhaps Christopher would rather have the car.
    It is a useful tactic to consider what else could be done. That is ten trips to Europe. That is perhaps a college education. That is perhaps a downpayment on a home. Stating any option is not to say that it is better, but to say “Take a look at what else you could do. Would the car really be better than any of those options? If so, then I hope you greatly enjoy the car.”

  19. Nicole says:

    Johanna– I appreciate your comments. They’re one of the main reasons I still read TSD. This blog would be dull and much less informative without the comment section. And if everybody just parroted Trent there would be no point in having comments. Agree or disagree, they add value.

    People– if you don’t like Johanna’s comments (or mine for that matter) and can’t handle things you disagree with… take your own advice and don’t read them!

  20. Candi says:

    Um, why do comments need to be inspiring or uplifting? Did I miss soemthing where Trent asked for commenters who agree with him, that only write uplifting statements? I thought the point of comments was to comment. Good, bad or indifferent as long as you wanted to write it in response to a posting here on TSD.

    While I sometimes agree with Johanna, at least she makes comments. She adds and contributes to the discussion. And for all you know she really just likes playing devil’s advocate. . . someone should. Otherwise why read a bunch of comments that just agree that everything Trent says is great! I know I would cease to read them very quickly. But that is just me, maybe a bunch of folks would prfer all the comments to be agreeable, uplifting and inspiring (and who says disagreement is not upifting or ispiring?).

  21. Des says:

    @DOTTIE

    Since you are a regular reader you should know that we in the comments have been through this many times before. Seems like every couple of months someone says they are tired of Johanna’s “negativity”, someone else agrees, then a bunch of commenters come back with their feelings that Johanna adds a valuable depth to the conversation, and rationally counters Trent’s arguments.

    Johanna has never been unreasonably negative and brings another side to the table. If you find you prefer not to read her well thought out comments, you’ll notice that at the beginning of each comment is the commenter’s name. Trent put this feature in a while back SPECIFICALLY so that people could skip past those commenters they didn’t like. Please utilize this helpful feature rather than ask people to refrain from presenting opinions that disagree with your own or the author’s.

  22. Aaron says:

    “$25-$27,000 per year… requires a security clearance and good credit.”
    -Stephanie

    This smells like subcontractor fraud, because there’s no way a security clearance position only pays that much.

  23. Eve says:

    From just below the comments box:

    “Constructive comments of all kinds are welcome. Negativity is not.

    If you’re going to criticize the statements of others, supply supporting information that backs up your statement or your comment will be deleted.

    Comments that don’t contribute to the growth and thoughtfulness of other readers will be deleted.”

  24. Stephanie says:

    First I want to thank Trent for posting my question, and those of you who have commented on it. Second some clarification! The bill that I am referring to is delinquent and needs to be paid in order for me to get the position, that is why I asked which source of funds to pay it off would be better. My emergency fund is in a Roth because it was the best way to get it started with the banking options available to me. All the CD’s I looked at required an opening balance of $500+, and when I started I didn’t have that. I went with the “it’s better to start somewhere, than nowhere” philosophy.

    @Aaron-
    I double checked the amount and it is a bit higher than I listed, however it is entry level and a glorified call center position, but I definitely thank you for the heads up.

  25. triLcat says:

    @Liz – I would be very wary about “cures.” I have fibromyalgia and was told that a series of treatments would make me much better.

    They actually made me much WORSE. Fortunately, that was only temporary, but I was so sick I thought I was going to die for about 2 months.

    I would only spend a lot of money on medical intervention if your Primary Care Physician or a specialist with an MD thinks it has real potential to help you substantially.

    Other fibro sufferers have gone to the Mayo clinic and not gotten much by way of answers either.

    I don’t know about your particular condition, but a lot of people, even doctors, who promise cures, don’t have nearly as much to offer as they would have you believe.

  26. anna says:

    I consider Johanna & others who disagree with Trent’s comments to be playing devils advocate or simply stating their opinion. Different people have different views on frugal lifestyles. Trent might not find a $30,000 BMW a good investment but others might see the BMW as a great investment because they are known to be well built and reliable, spending less on maintenance over the lifetime of the vehicle. I personally would much rather see “negative” or disagreeing commenters than those that nit-pick at the grammer or spelling typos. Disagreeing creates a debate, pointing out grammer errors just puts Trent down and seems pointless.

  27. Bonnie says:

    @Sean-I think Trent missed the point of your question. It sounds like you were asking what the tax implications are of contributing to a non-deductible traditional IRA each year (b/c your income is over the limit for contributions to a Roth) and immediately converting to a Roth IRA. If you have no other deductible traditional IRAs, there are no tax implications. It would be just as though you’d been contributing to the Roth each year. It’s a nice loophole that’s opened now that the income limit on conversions has gone away. It’ll be interesting to see how long congress allows the loophole to remain open.

    @Christopher-I say go for it. If you spend so much time obsessing over the BMW that it’s taking over your life and you have $30k in savings on top of your EF, you can definitely afford it. Just go out and test drive a few & try to find a solid 3yr old CPO’d car. Don’t let the salespeople pressure you into buying a car that’s not right for you, either. I personally don’t get the allure of a “driver’s” car, but DH has a high-stress sales job and his BMW makes all his driving around alot more pleasant. He loves his car (purchased in ’08) and never talks about buying a new car anymore.

  28. Kenny says:

    Be sure to get a good score on your “aggressive butt test” otherwist they won’t sell you that BMW. I have never met a person who drives a BMW (particularly a BMW 3-series) and is not a donkey doo doo.

  29. Johanna says:

    @anna: I don’t think anyone’s talking about buying the BMW as a good investment to save on maintenance costs down the road. Rather, we’re saying that he should buy it because he really, really wants it and has already saved up the money for it.

    It’s OK to spend money for reasons other than saving or making more money. Really, it is.

  30. Nicole says:

    @anna

    I disagree on the grammatical errors– when a person is error free in grammar, spelling, etc., people tend to take them more seriously in terms of content as well. Reminding Trent to be professional and careful or giving him the opportunity to correct a typographical error improves posts.

    Or I could just be a grammar Nazi. But we are legion.

  31. SLCCOM says:

    About moving to a city where you know just one person: I did this when I moved to NYC after I got married, without a job. One of the worst nights I ever spent was the first night there. (My brand-new husband had the flu…) If you don’t have a job, you’ll be initially at great risk of depending too much on your one friend, and that can end up destroying that friendship (if that is what it is.) If this is just an acquaintance, that is even riskier.

    On the other hand, if you really love everything about the city, and be sure to get involved in things immediately and not be dependent on that one person, AND you have a job lined up that you are confident won’t be suddenly taken away, I’d go for it. Just really check out the company you get the job with BEFORE you move!

  32. Brittany says:

    How is saving adequately to transition to a new city if that’s what you really, really want to do much different for saving for another large purchase? If living in that city is what you value more than anything and you have the financial means to make it happen, why shouldn’t you go for it? Playing it too “safe” will make you just as miserable as ruining yourself financially. Also, it is much, much easier to job search once you’re actually in a city. Make sure you have a few months of living expenses, make the move, and be willing to take a menial job with you search for a good one, if need be.

  33. Todd says:

    @Jeff: I just wanted to say hang in there. I was in a similar mess about 20 years ago, and it has taken me nearly all of that time to pull myself out of the hole. It takes a lot of time and dedication, but it is very worth it. I have a great house, solid financial situation and great family now that I never thought I’d be able to have. I’m wishing you the best.

  34. bethh says:

    @Alex: have you considered getting a job where you are and saving more money, then moving after you have a few work-years under your belt? That might be a good middle course to steer.

    However, I want to encourage you to follow your dream – there will never be an easier, less-encumbered time to do so. I did something similar when I was 25, moving cross-country with *maybe* 3 months’ living expenses to a city I loved – where I knew no one, had no job, and no place to live, aside from a weekly-rent flop hotel. I was able to get a $9/hour job after a week or two, and never looked back.

    I did have an escape plan though: I moved in September, and bought a plane ticket to go home for Christmas. I figured if it wasn’t working out after 3 months, I’d go home for Christmas and stay there. However by the time I’d been there three months I was loving it completely!

  35. Trent Hamm Trent says:

    If I didn’t think Johanna’s comments were a net positive for The Simple Dollar and its readers, I would have deleted them and banned her a long time ago. Most of personal finance is NOT black and white and she articulates other viewpoints well.

  36. Inquisitive Raven says:

    I know I’m late to the show, but I’d thought I’d point out some differences between Consumer Reports and a site like epinions.com. Consumer Reports tests many products in a category and does so against an objective whenever possible, reporting the results whether good, bad or indifferent.

    Your typical consumer can’t do anything nearly as exhaustive as CU does and is going to rely much more on subjective impressions. Since there is no product so great that you can’t find somebody who hates it and no QA process so perfect that no defective items will get through, there are people who are going to dislike any given product.

    People are much more likely to go out of their way to complain about a product they don’t like in a public forum than they are to praise one they love. The net result is that consumer review type sites likely to have a biased sample even assuming that everyone is posting in good faith.

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