Reader Mailbag: Family-in-Law

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. W4 deduction concerns
2. Christmas worries
3. Retail hate
4. Degree or debt repayment?
5. Logistics of moving
6. Improving professionally without college
7. Estimated tax problems
8. Financial advisor visit gone bad
9. Worried about mother’s future
10. Cleaning computer equipment

When Sarah and I first started dating, my interactions with her family were rather awkward. I was friends with one of her sisters, but I barely knew her parents and I didn’t know any of her extended family at all. The first few times I went to her extended family events, I felt really uncomfortable and clammed up.

Fast forward a decade and a half and I find that seeing Sarah’s relatives during the holiday season means just as much to me as seeing my own family. They’ve become my family over the years.

The highlights of the holiday season grow and grow as you get older.

Q1: W4 deduction concerns
I am wondering if I should ajust my deductions on my W2 at this point or just leave it. Last year I received a $11,000 return, for several reasons that I had not predicted at the beginning of the year. I am resently divorced and received our family home in the the divorce, but lost my job and had to relocate for work. The family home is being rented and last year there were several expenses associated with the rental of my property that I was able to use as write offs on my taxes. I assumed that this year I would not have the same cost (repairs, evictions, so on) that I had last year, so I did not adjust my W2 deduction, but this year my home was vacant for 3 month and I had more repairs, so again I will have several cost that can be written off and I should be receiving a very large return. I am planning to pay off my car loan with the return, but I am wondering if I should adjust my W2 now so that I don’t continue paying large amounts in taxes for the rest of the year. I could really use the money at this point, since my ex has stopped paying child support, but I also worry that my return won’t be large enough to completely pay off my car loan. What do you suggest?

- Chris

Rather than your W2 (which is the form that reports your wages and taxes), I think you’re talking about the W4, which is the form you use to set your withholding exemptions.

You cannot legally claim more allowances on your W4 than you can actually claim on your income taxes. I’m not clear whether or not you are doing this, but if you are, you need to immediately reduce your W4 claims to at least the number of people you’re actually claiming.

Assuming you’re doing that, the best overall financial move is to have a number of claims that results in the smallest possible return without having to pay in. The number really depends on your overall financial situation and what you do with your money. Are you responsible with it, or do you often spend what you have?

If you feel more confident having a slightly larger paycheck now in exchange for missing out on the big return, make the adjustment. If you feel better knowing that large return is going to come in, leave things alone. It really depends on what makes you feel more confident about shaping a strong financial future for yourself.

Q2: Christmas worries
Up until January, I had a wonderful job where I handled all of the IT needs for a small company in our area. At the end of last year, the company was sold and the jobs were folded together with another company with the “redundant” jobs being eliminated, and mine was redundant. Since then I have been looking for work without much success and I’ve been working at a local McDonalds.

Christmas is coming and we don’t have much money to buy gifts for our kids. Basically, we have almost nothing at all. I have no idea what to do. My Christmases growing up were wonderful. What can I do to make this Christmas wonderful?
- Dave

The biggest thing that children need on Christmas morning is parents that love them and care for them. Your children already have this. The material stuff is just icing on the cake.

If you want to have a powerful Christmas morning, talk to your kids about how others are in need and decide together that you’ll spend Christmas morning working at a soup kitchen or something to that effect. Take the focus completely off of the presents.

If you still want to get them a few gifts, get them what you can afford and accompany it with something that you made yourself, like a tin filled with their favorite homemade treats.

Honestly, I’m going to give this question some detailed thought and write a full post on it in a few days.

Q3: Retail hate
I do basically all of my shopping online. I get so frustrated whenever I go to a store. It seems like everyone working there would rather be doing something else and they’re not helpful. You can’t get information you need and when you do get answers they’re wrong half the time. I don’t shop retail.

- Henry

For me, the retail experience varies greatly from store to store.

I often have this kind of negative experience at big box retailers. I usually have a much better experience at local independent retailers who often make an effort to employ people who actually care about the items they’re selling.

I agree with you that bad retailers don’t deserve your business, but I think a blanket statement about all retailers is a bit harsh.

Q4: Degree or debt repayment?
I am 29 years old. I live on my own, have a full time job and a part time job. I make just under 30k a year between the two.

I have 3 years of college completed, which I began at age 18, and due to financial and personal difficulties (severe depression), I dropped out at age 21. I was studying telecommunications at Penn State, and at this point in my life, I would love to have the degree, but I am not sure that I really want to be in that field. If I had it to do over again, I probably would’ve chosen something like English. People tell me I should finish, because I only need 1 year. Unfortunately, even with financial aid, I have not found a way to make this work financially. I would still need my full time job, as I have my bills to pay. I last checked a year and a half ago, and my credits were still good.

At the same time, I am feeling incredibly stuck in my life. I’m bored with the town I live in, bored with my full time job, but not quite sure what I’d like to do, or what I’m truly qualified to do. At one point I worked in retail management and made 32k at that job alone, so I am considering going back to that to simplify my life. But I’d also like to move. I have never lived anywhere other than 30 minutes from where I grew up. It’s important to me to experience more in life, and at the same time I am terrified. I had an illness this year which required surgery, which, even with my health insurance, cost me several thousand dollars out of pocket. My health insurance at my full time job is changing next year to a health savings account, and should my illness come back (which is a possibility), I will be stuck paying more. That is also an incentive for me to find a new job.

Fortunately, I am financially responsible (I believe). My only debt is my student loans, which are around 8k at this point. My car is 10 years old, but (knock on wood) has worked wonderfully. I have one credit card with zero balance, which I got just for emergency purposes. I will occasionally put a small purchase on it and pay it off immediately, just to have some activity. I have a savings account with just over 7k in it- i was getting closer to 10k, but my health costs this year took away from it. I don’t live extravagantly – my biggest expense is my rent at $645 a month. My other bills include my cell, internet, and car insurance.

I suppose my questions are.. should I really try to finish my degree and take on more debt? I’m not sure I would be able to work my same full time job, as the schedule would not work with classes (I would need to take several on campus). I struggle with depression and anxiety and am terrified of having a severe episode and having everything fall apart on me. I’ve worked hard for my savings, work two jobs in order to have a little extra to save, and even sometimes I feel I cannot manage all of this. I am seeing a therapist who is helping me currently. I also am not certain that having a degree would really help me get a better job. The main reason I want to finish, in all honesty, is because I feel insecure about not having a degree. After careful deliberation with a friend, at one point I thought it would be foolish to take on thousands more in debt just to feel better about myself. (Not to say I don’t vale education – I do, but I don’t want to jeopardize my financial well being).
- Sandra

The first thing I would look into is whether or not you can spread out your studies over a longer period of time and take just one class at a time. If you can do that, talk to your employer about whether or not you could take time out to take one class, perhaps as a break in your schedule during class days. This would only add a bit more burden to your life.

If you consider that overwhelming, I would focus on building up that emergency fund, then drop the part-time job so that you can return to some schooling.

If you are not certain that a degree would improve your job prospects, I would not give up a full-time job for it.

Sandra has a follow-up question.

Q5: Logistics of moving
Also, if I were to consider moving to another place…how would I do that? I would assume I would need to find a job first, then a place to live. I’m trying to visit an area about 4 hours from where I currently live, where I have some friends, so that would be a bit of a support network there, and I would know the area a bit before I went. I tend to do well with making new friends.

- Sandra

That’s exactly the path you should take if you’re considering a move. Visit that area a few times and see what’s there and whether you’d enjoy it, and do a thorough job search there.

If you have friends already in the area, employ their help in both of these respects. Use them to help you find a job there. Use them to help you find housing. It’s convenient for them to do so and, after all, this is the kind of thing that friends are for.

If the move isn’t urgent, take your time with it until the right opportunity comes along. It doesn’t sound like something you have to push hard for.

Sandra has a second follow-up, too.

Q6: Improving professionally without college
Also, what things could I do to better myself professionally without having a college degree? For example, I would like to develop better computer skills – I’ve seen some local classes, and they usually run $200 to $300 per class / session. I feel very insecure lacking that last year of college, and if you have any tips on how I can discuss this with employers, I’d appreciate it. It’s never really come up – I’ve worked hard at my various jobs and moved up based on my experience and work ethic. At the same time, even as one person, managing on under 30k a year is challenging.

- Sandra

The first step I’d take is to sit down with the employer I valued the most and discuss additional skills with him or her. Simply ask what kind of additional skills would make you a more valuable employee, and make it clear that you’ll take on some steps to help build those skills.

Depending on the employer, they may or may not help you with this. Note that “help” can mean a lot of things, not just financial. It might mean flexible work schedules to enable you to study. It might mean access to resources that you might not otherwise have.

Take advantage of what resources they offer you, particularly if it helps you build your skill set and resume in any way.

Q7: Estimated tax problems
Like I’m sure you do, I have to pay income taxes every quarter to the IRS because I’m self-employed. The problem is that my income is incredibly variable. Some quarters, I earn nothing at all. Other quarters, I earn a lot. I have a hard time estimating anything close to my annual income, and sometimes it’s impossible to pay anything after a bad quarter. Am I just stuck paying penalties at the end of the year when I file taxes?

- Reggie

No, you’re not. I’m often in this boat myself, as revenues for my various side businesses and enterprises are highly variable.

When you file your taxes and fill out form 2210 (for underpayment of estimated tax), which is the problem you’re likely concerned about, request a waiver by checking the appropriate box. Attach a statement to your tax return explaining your situation.

Every time I have done this, I have not had to pay a penalty.

Q8: Financial advisor visit gone bad
My workplace gives us an annual free visit with a financial advisor. I went to my meeting with this advisor and he basically told me that my retirement plan was a disaster and that I needed to switch to (his company’s) IRA plan. He listed a bunch of warning signs of a bad retirement plan, including earnings that were below the market leaders and low dividends, all of which he said characterized my retirement situation. Is this guy legit?

- Avery

I would be extremely wary of this person.

The situation sounds to me like some enterprising but self-serving financial advisor made an offer to your employer to provide free financial counseling to his employees. That “free counseling” in essence amounts to a sales pitch for his services, and his method of a sales pitch involves disparaging the person’s current financial state.

If you’re actually worried (and I wouldn’t be), seek out another fee-based (not commission-based) financial advisor and have them examine your situation.

Q9: Worried about mother’s future
Now I know initially you will give me the advice “its none of my business”, but I have an issue with my mother’s finances…

I actually work for her as an employee, and I have been told that the idea is, one day eventually she will begin to retire and I will slowly take over the business. This is a fine idea, except she is contstantly complaining about her debt issues etc. I would like to bring it up to her, and make her realize her current living patterns are not going to allow her to retire, like ever. Meaning of course I will not take over the business until she is completely incapable of working (which could be 20 years from now). Which brings me to my next worry…

Debt doesn’t just “go away” and I am concerned that once she reaches such an old age as she cannot function at work/home, that I will not be able to support her, as well as a child (which my Husband and I plan on having at some point, and when she was raising me as a kid, she didn’t have to pay a cent for her parents as they had savings, not to mention even if they had to have paid, there are like, 5 siblings)

Not a month back she went out and purchased a new vehicle, a BRAND new vehicle (up here in Canada that costs some 30,000 bucks) while this is all fine and dandy, she does not have the financial means to be doing this, expecially because she lives alone…. She does this kind of stuff alot, feeling as though she, as she puts it “deserves” these things, however it is hurting her future sevearly, as well as possibly mine and my husband’s eventually.

I think she might be in some kind of financial “denial” and she gets extremely upset when I try to bring up her finances, or when for example my husband and I go out and make a purchase she feels she should be making (ie. We bought a good vacuum, 170 bucks, she gets very offended, as she does not have a 170$ vacumm, although we obtained it through patiance and planning. We paid cash for it, not credit)

What I am wondering is if you could help in setting out a plan to aid her in realizing this is not what she should be doing esepcially at her age (62 this November 2012) I am not doing this because I care about inharitance, nore am I being cruel or selfish, I just don’t want to be stuck paying for her debts (after trying so hard to ensure Myself and my husband are in the financial green), or watching as she becomes homeless. At 21, I feel I’m on the right boat, but this situation worries me… do you think a financial layout would work, or do you think I should seek professional help???
- Kendra

If she has no interest in improving her finances, nothing you can do will change that. She has to be willing to make changes, and it doesn’t sound like she has any interest in doing that.

What you’re struggling with is what every child who cares about their parents and sees them struggling with finances feels. You want to help care for them later in life, but you see them making financial choices that will make the burden harder for you.

My sincere advice to you is to work through this conflict on your own. You’re going to have to make a decision at some point as to how much care you’re going to offer, and the more you think about it and resolve it now, the better off you’ll be later on.

Q10: Cleaning computer equipment
How do you clean up nasty keyboards and mice? If you use them for years they develop grime and soap and water seem to be a bad idea.

- Jeff

For keyboards and mice, I usually use isopropyl alcohol and a clean rag for most of the scrubbing. I usually turn the keyboard over and tap it many times to eliminate (or at least minimize) any detritus inside the keyboard, then I soak a rag with alcohol and give the surface a good scrubbing. I do the same with a mouse. (I only do this if they’re disconnected from the computer.)

If that’s not enough, you can buy a harder cleaner for electronics, such as Goo Gone. This stuff does the job quite well, but you pay for it.

Generally, a regular wipedown with isopropyl alcohol will keep things in good shape.

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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