Reader Mailbag: Grandparents’ Week

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. Switching to joint checking
2. Transferring a Roth IRA
3. Accounts and goals
4. Which debt goes first?
5. Using HELOC to repay debts
6. Gift card arbitrage
7. Debts or further property buying
8. Getting Things Done for kids
9. Difficulty setting big goals
10. Worries about paying property taxes

Our two oldest children are visiting their grandparents for several days. It’s amazing how much quieter the house is and how much more smoothly the evenings go. Our evenings don’t revolve around corraling children – instead, we’ve watched a movie and played some board games in the evenings.

My husband and I are recently married and we are paying down our debts, he is focusing on his credit debits and being able to pay off his balance every month. I am focusing on paying down my student loans. We also have an a (very small) emergency fund and we have a 529 for our 9 month old that we send money to every month. My husband contributes to his 401k although I don’t know the details and I will be eligiable to contribute to mine the in spring. We currently have a townhouse and we are saving money for a down payment on a bigger house (we plan to expand our family and we have out grown our townhouse). We have to options, keep the townhouse as a rental or sell and put the equity to the new house. Ok, having said all of that, my husband suffers from the “Keeping up with the Jones’ ” symdomn and maybe I do too a little bit, but I am a pretty savy and I have really turned my husbands mind on to saving and trying to prioritize spending as well as, spendng it wisely. However, I am considering a joint checking account. Right now we split the household bills and them we are responsible for our own debt. Quite a few of the successful couples we know have a joint account and they say part of what makes their marriage work well for them is the amount of communication that goes into a joint account and those communication skills slip over into the other areas of their marriage. I don’t want to police my husband on what he spends “his” money on, but I think if we both saw what comes in and what comes out it might realign our financial priorities. Also, if we do decide to do this, how does this even begin to work?
- Chandra

I’m not sure what you mean by “how does this even begin to work.” If you have a joint checking account, the money in that account pays for the bills and also provides for the “spending money” for both of you. If one of you just spends like crazy, there’s not enough money left to pay the bills.

Because of that, it often forces couples to start communicating more about their money and realizing that they really are in the same boat when it comes to their finances. It’s often a big step forward for setting goals and planning for the future.

If this feels really uncomfortable for you, you need to ask yourself why. Do you not trust yourself? Do you not trust your partner? You need to dig deep into whatever is holding you back and get it straight with yourself and your partner or else this will just cause further problems.

I am a 26 year old, newlywed, with a 1,000 house payment, no other liabilities, 90,000 total income; 15,000 emergency funds in cash. We have worked hard to save money and our spending behaviors are great. I am just unsure we are doing the right things. I have opened and funded a Roth IRA for the past 2 years (have about 10,000 in assets). As I learn more about mutual funds, I’m becoming disappointed that I chose “loaded funds” through American Funds from a financial adviser/broker. I don’t know that I feel comfortable being sold financial services; I’d rather pay for good advice. Anyway, I own AGTHX and NEWFX. I recently became a husband and am working with my wife to get some investments going. We would really like to max out our Roth IRA’s. I’ve read so much about “no-load” funds and think I want to go with Fidelity funds (“no-load”) for the both of us (either target date funds or something else). My question to you is, what do I do with the American Funds, keep investing in them, stop future contributions but keep the balance, sell them and put them in Fidelity “no-load funds”. Any advice would be great.
- Randy

If you don’t like the offerings that your current broker is giving you, you can easily move your Roth to a new custodian broker.

All you have to do is contact the investment house you want to move your money to, explain your situation, fill out the paperwork (they’ll be happy to provide it), and wait a few weeks. Your Roth money will have moved to an account at the new custodian broker and you can allocate that money as you wish. It’s typically referred to as a transfer.

I have no comment about specific investments, other than to say I have my own Roth IRA with Vanguard and I’m very happy with Vanguard in every way.

I have been reading your site now for the past few weeks and had a question about preparing for my future. I am 21 years old and going into my junior year of college, I current work full time but once school starts it will drop down to part time. I have some savings set aside and trying to find a why that would best suite by needs. What I was looking at doing was to keep my savings account I have for sort term goals and as an emergency fund, open a high yield savings account for long term goals, and a IRA account (not sure which one is the best to use) for retirement. Here is my dilemma I don’t have a lot of money so would it be worth it to go with the plan I have or is there some better alternative I could try? I make enough money to cover all of my bill and can save up to 30-40% of my income. Is it worth it to open the above accounts even though the amount of money in them would be very small?
- Geoff

I think it very much depends on your personal situation. Are you in a field of study that will lead quickly to a job after college? Is your academic and extracurricular performance building towards a good career? Do you have a significant other and post-graduation plans that involve that significant other? Can you move back in with mom and dad if you don’t find a job?

In other words, you need to be able to make some estimates of what your immediate post-graduation cash needs will be. If you have a lot of needs, keep the money in a high interest savings account and sit on it. If you don’t have a lot of needs, putting it into retirement savings is a good idea – I recommend opening a Roth IRA because your income as a student is likely really low, so the tax advantages it has work well for you.

Personal finance is personal – there’s rarely a cut-and-dried answer that’s perfect for everyone.

Starting next month I will be having an extra $300 per month to put towards one of two remaining debts…which would you recommend paying off first?

Vehicle Loan – $15,000 at 1.9% interest (we just bought it last October, 60 month loan, pay $320 per month right now).
Student Loans – $40,000 at 6.5% interest (currently paying the minimum of $200 per month due to our low income).

- Jamie

If your job is looking stable for the short term (next year or two), I’d put money towards the student loan because that will give you the best return for your dollar, but will take longer to pay off.

If you don’t have an emergency fund and aren’t confident about the stability of your situation, pay off the vehicle loan first because it’ll disappear much quicker and will improve your monthly cash flow.

In other words, if you don’t see any big icebergs on the horizon, go for the student loan first.

I am a 53-year old man with a total of 5 months of living expenses in a checking account, earning 3.01% APY, as my emergency fund.
I agreed to pay my daughter’s student loan off in full. She graduated in May, so the loan repayment plan starts in November. I have set aside the money to pay this off in full. Or I could use my home equity line of credit (currently 2.25%) and cash flow the repayment as long as rates remain unchanged. Currently without retirement contributions, positive cash flow of $2500 per month.
I suspended my contributions to my retirement accounts (401K with 3% match on first 6%) and any other IRA in order to increase my emergency fund.
1) Shall I pay off the student loan from cash or HELOC?
2) Shall I restart contributing to my 401K, and if so, regular or Roth 401K? What percentage?
3) I have a 15-year fixed rate (4.25%) first mortgage with 14.5 years remaining, balance of $150,000.
Should I start to prepay once the retirement is maxed out? What is your opinion regarding Ric Edelman and Dave Ramsey’s view on mortgage repayment?

- Allan

Unless you have a ton of money in retirement, you need to be contributing to that retirement above all of your other goals. I would put sufficient retirement savings at a higher priority than repaying that loan, especially since you’re talking about low interest rates. I would not prepay the mortgage, either, unless you’re saving plenty for retirement.

How much should you put away for retirement? I’d use a retirement calculator to figure that out. I personally like the MSN retirement calculator. Just fill out the forms to figure out roughly what you should be saving each month.

You should pay the student loan from cash. There’s no need at all to use a HELOC and put yourself in further debt, especially when you have the cash to pay the student loan. Keep the HELOC in case you actually need it for something else.

My husband is an absolute freak about gift cards. He HATES them. I recall you feel they should be sent soon after received also. Well, today I bought 12 gift cards of various denominations and tonight there’s going to be [trouble] because I don’t think my hubby will ever understand. So I thought I’d plead with you to consider my thinking and see what you think.
First, you should know I am by education an accountant and financial planner. By experience, and accountant and auditor. My brain thinks in numbers, statistics, patterns, ROI, future uses etc.
Second, we are in the long, slow process of remodeling our house DIY style – WHILE we live in it… and trying to stay married!

I purchase several gift cards from big box home improvement stores at a discount of 8% or more. My total purchase was about 60% of what our average home improvement purchases have been at those stores for the last three years. The cards don’t expire. The money I’m using is sitting in my savings account earning 1.25%. We normally use credit cards to shop and pay them in full every month. Our cards pay cash back of 1% on this type of purchase unless there is a special for the quarter. We currently have no credit card debt, only mortgage and student loan, this is pretty much a loan against the next 6 months of DIY spending. Oh, and I WILL put the money back in the account.
I will not loose them – Hubby will carry one at a time and I will carry one. The others have a special place in plain sight so they won’t get lost, misplaced or forgotten – maybe even a calendar reminder just in case?
Am I missing something here? Is there any reason this wouldn’t be a good deal?

- Maria

The only problem I see is that you’re locking your spending in at those big box stores, meaning that if you discover a better source for the items you want to buy, you don’t have the flexibility to use that other source.

I know that from personal experience, you’ll never always find the best prices at one particular store when you’re shopping for hardware. Whenever I have a project, I usually shop around at the “big three” hardware stores around here (Lowe’s, Home Depot, and Menard’s) as well as check in at a few small local ones that sometimes have astonishing prices.

In other words, the big disadvantage here is the same disadvantage that all gift cards have – they (almost always) lock you into one retailer.

My wife and I just moved and have $100,000 that came out of the closing of our old house. I wanted to try and pay cash for a forclosed home, fix it up, and resell it. We owe $40,000 on one filled rental property; $110,000 on another filled rental; $80,000 on an undeveloped land lot; and $230,000 on a 15 year mortgage for our new home. Should we use this money to pay off some of the above debt or invest it by getting a deal on a foreclosure with cash? (I have a good realtor and contractor who work for me…..I can get a house in a good neighborhood for 70% asking price.) Or should we just invest this money in mutual funds; stocks; or savings?
- Doug

You owe a lot of money. I generally think it’s a very bad idea to owe two times your annual income in overall debt, so if you’re making less than $230,000 a year in your household, I’d be very wary about my situation because of the pressure the monthly payments are putting on your cashflow. If your monthly income slips, even a little, you’ll be in a world of hurt.

Because of that, I’d encourage you to pay off some of that debt with the $100,000 you have. Consider it a cash investment that returns a percentage equal to the highest interest loan – the one you should be paying off.

Unless I had a lot of income, that much debt would scare me to death.

Have you thought about teaching your kids about “Getting Things Done”? What would be a good age to start? And how can the lessons be tweaked to become more kid-relevant?
- Cho

I’ve thought about this quite a bit. For our situation, our kids are just too young to really get anything out of it.

I think that GTD starts to come in handy when you have commitments and a to-do list that extend beyond today. Eventually, that happens with most everyone, and when it does, GTD is a good system to learn.

The big teachable skill, I think, is simply getting all of the stuff out of your head and onto paper, then routinely dealing with that stuff you’ve written down. That means learning to use a calendar and having some degree of organization with one’s personal papers.

I have no specific goals. After graduating last year, I moved back home, so I have few expenses. While I’m good at not spending, I’m not sure how to plan for the future. I don’t know if I should be making higher payments on my student loans to get rid of debt, or if I should save money for my goal of moving out. But I have no timeframe for moving out, and as much as I’d like more privacy and independence, I’d save a LOT of money living at home, especially since I live in Los Angeles. I try to save, but I don’t know what I’m saving for, where I should be putting my money, and when will be the right time to spend. Also, I don’t see myself at my job for more than two years, but I have absolutely no idea where I’d move on to. I’m not gaining many skills from the job, but it pays decently for a first job out of college.

Some background on my finances. I earn about $2,000/month after taxes working ~30 hours/week. I have about $15,000 in student loan debt, most of it at 6.8% interest. The minimum payment is about $200/month, but I pay off $400/month. I put away $500/month into an online savings account, which I just opened two months ago when I got my job. I also have about $6,000saved up.

I know I need to set specific goals, but I’m hesitant to dedicate myself to future big financial changes with so much uncertainty about what I will be doing (grad school? Stuck at my job? Still trying to find my passion?). What kinds of goals would you recommend I set when I don’t have any urgency to make big changes, and how should I be managing my money in the meantime?
- Erich

To be frank, it sounds like you’re doing a bit of post-graduation drifting. You don’t know what life really holds for you. You have a degree that interests you, but it’s not something you’re passionate about. You have a job that’s okay, but you’re not passionate about it.

If you’re in this boat, my suggestion to you would be to live as lean as possible and save as much as you can in cash for when you do find your passion. Many people who “drift” like this fall into a lifestyle where they buy stuff to match their income and eventually find themselves unable to make a big shift and jump on board their passion when they discover it.

Avoid that outcome if you can. Live lean now, save, and try lots of new things. You’ll eventually find something that fills you with excitement, and then you’ll be ready for it.

My mortgage is now at the point where I have the right to elect to discontinue the escrow for taxes and insurance. I believe I have the discipline to put aside funds for taxes and insurance in a savings account that I control, and to pay the taxes in a timely manner. And of course I’ll enjoy the flexibility I’ll have in putting aside the funds on my schedule and not the bank’s.

My only concern is that if the taxing authority goofs up and posts my payment to the wrong property, or they claim they don’t receive my payment, I’ll essentially be on my own to resolve it. In the 20 years I’ve been paying property taxes (through an escrow) to this taxing authority I’ve never had a problem, so maybe my concern is unfounded. Just though I’d get your thoughts about this.
- Laura

Your concern is that if you make a payment to the tax authority and they “goof it up,” you’ll be on your own to resolve it? I would consider that a very minor concern.

Just make your payments on time and keep a record of what check you used, what day you mailed it in, and so on. If you’re particularly nervous about the payment, contact the tax authority a week or two after submitting payment, or submit the payment in person and get a receipt for it.

If all else fails and they did goof it up, you have your records to prove that you did issue a payment to them.

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. KM says:

    In the future, could you proofread (and clean up) the letters you use? Some of those were really painful to read.

  2. Stacy says:

    Randy, be sure to read the fine print on your old account before transfering funds out of your “load” account. My husband’s IRA account came with a pretty harsh penalty (5%, on top of the initial load) for pulling or transfering funds within five years of a deposit.

    It may make more sense to let that money sit until you qualify for a no-penalty transfer. You could open a no-load account somewhere else, start making contributions, and transfer the money at a later date if this penalty applies.

    Good luck! :-)

  3. Kevin says:

    @Jamie:

    Why would you buy a brand-new $15,000 car when your income is so low that you can’t even make big enough payments on your student loans to make any progress?

    At 6.5%, your annual interest on a $40,000 loan is $2,600. At $200/month, you’re paying $2,400/year. That means your student loans are actually getting BIGGER as time goes on. Translation: At your current pace, you will NEVER pay off your student loans.

    Sell the car, buy a practical used car, and put the car payment towards that student loan.

  4. Sassy says:

    The first reader’s question sure brings back memories. Six weeks before our wedding, my husband wanted me to go to the bank with him so he could add my name to his account and close my account. We almost called the wedding off. Why? He’d grown up with parents who used a single joint account so that’s what you did when you got married. I grew up with parents who argued about money until they set up separate accounts and my mother began paying the bills (Dad paid them, he just never worried about due dates and my Mom did), so to me, separate accounts meant a good marriage.

    We eventually talked enough that we got two joint accounts so we could each carry a check book — and I balanced them both each month. Now we have one checking account and joint credit cards and it works but it took a lot of talking to get to the point where we were both comfortable with the system. And while I don’t want to jinx anything, we celebrate the 25th in a couple of months.

    So this was a long winded way of saying that Trent is right: you need to figure out what your real concerns are (we figured out mine the moment I said “but I don’t want to get divorced” while we talking pros and cons) and then talk…and talk…and talk some more.

    Good luck.

  5. Aaron says:

    @Randy,

    Both Vanguard and Fidelity are solid choices, but if you’re considering target age retirement funds, Vanguard has a very clear advantage: Fidelity has 3-4x the expense ratio!

    For example, the Fidelity Freedom 2040 Fund has an expense ratio of 0.81%.

    http://content.members.fidelity.com/mfl/fees/0,,315792101,00.html?refpr=mflib_fee01

    Vanguard’s comparable fund? 0.20%!

    https://personal.vanguard.com/us/funds/vanguard/TargetRetirementList#targetAnchor

    If you’re thinking about those funds, I’d highly recommend going with Vanguard. If not, compare the two across the funds you’re interested in. I haven’t compared their other funds.

    I’ve also been very happy with Vanguard, but I have friends who are with Fidelity and are very happy with them, too.

    Hope this helps!

  6. Debbie M says:

    @Chandra – you don’t have to have only a joint checking account. You can each keep your own accounts and contribute just the money to be used for family expenses (such as housing, utilities, vacations) to the joint account. (That can even be done automatically once you work out how much it will be.)

    Also, there are at least two kinds—ask your banker about this. Different things happen when one of you die or something.

  7. Leah W. says:

    @ Jamie & Kevin (#1) — I agree. It sounds like Jamie doesn’t need that $15,000 car.

    I drive a 2002 Honda Accord and plan to until it falls apart. I paid $14,000 cash for it in 2005 and it’s still trucking — 93,000 miles and still driving like the day I got it. Sell your car, go buy yourself something used but reliable (all Hondas come to mind), and pay down those student loans. Your loan situation will keep getting worse, and unless you’re in a public service loan forgiveness program, they will never go away.

  8. Des says:

    @Doug – I’m not sure Trent is the best person to ask of advice in your situation. I could be wrong, but my understanding is that the only investments Trent has are indexed mutual funds. You should talk to someone with experience in real estate investing.

  9. Sharon says:

    Erich…
    Were you looking for concrete advice? I’m sorry Trent wasn’t able to provide it. Here are my suggestions:
    Set yourself up for “take off” in two years.
    Pay off the student loan at an enthusiastic rate. I’m thinking 50% of your take home. At $1000 a month you will have that paid off in about 18 months.
    The rest of the money can be put into savings and monthly costs including something to acknowledge the contribution your parents are making to your life.
    Save up enough to buy a decent car outright so that you will never need a car loan.
    The other asset you have is your time. You say you are only working 30 hours a week. That leaves you about 20 hours to explore some options of where you want to go in two years. Make a list of about eight ideas. Beside each of these eight ideas write down how you can explore that for three months at the rate of 20 hours a week. If you can get a part-time paid job to do that, great. But you can also volunteer, intern or ask to shadow someone in the field.
    So at the end of your two years at the okay job, you will have paid off your student loans, funded a decent car, and explored up to eight possible fields. Hopefully you will have found your passion…

  10. HitEleven says:

    Read about how government money is being used in Missouri to fund broadband Internet schemes:

    http://proposition13.blogspot.com/2010/08/source-materials.html

  11. AJ says:

    For future reference, there’s no apostrophe in Menards, unless there’s a different chain in Iowa than the one in Illinois. ;-)

  12. chacha1 says:

    @ Sharon, good advice to Erich. I would only add, travel a little!

    As to the junior-in-college LW Geoff, I don’t want to be mean, but: I would be more worried about improving my communications skills at this point and less worried about whether to open an IRA.

    I know it’s become the norm to be very careless about communication, but proper English reading, writing and speech are essential for any professional success in the U.S. And if you don’t achieve some professional success you are unlikely to be in a position to fund an IRA.

    So, first make sure you can send a professional inquiry letter that is free of spelling and grammatical errors. Then take a look at your budget and see if there is really room to put aside money that you can’t touch for close to 40 years. Bear in mind that there will be housing, transportation, and relationship-associated expenses coming up very soon after graduation that may make you wish you had just socked away money in a liquid savings account.

  13. Steve says:

    @Maria – Is your relationship with your husband really worth damaging over a 7% discount? (8% minus the 1% cash back you would get. and a tiny amount of interest to boot.)

    Is he against gift cards as gifts (which is quite reasonable, but wouldn’t seem to apply here)? Or against remembering to carry them around and use them, just because it’s more effort? Or worried about losing them? It’s hard to answer your question without knowing what your husband’s objection is.

    We’ve gotten a number of gift cards recently as gifts due to the birth of our child. It’s been a disproportionate amount of effort to keep track of them and go to these various stores trying to find things we want to buy. In fact, in one case the store was half an hour drive away, and then it took over an hour to find something we wanted; we would have been better just throwing that card away.

  14. getagrip says:

    @Randy I was also sold American Funds by an advisor when I first started investing. Actually they aren’t bad funds in some aspects, they seem to do well in their market categories and generally have low carrying fees even though they are “load” funds. So its not like you’re necessarily getting screwed by having bought these funds or paying into them. While the mantra of “never buy loaded funds” is often thrown about, you really need to consider the funds in question and all the charges/fees you get hit with and the time frame you’re looking over. Many “no load” funds hit you with a pretty hefty yearly management fee, which you pay whether the fund does well or not. They may also hit you for fees for not having a large enough balance, so say the value of the fund drops below ten grand because of a dip in the market. Suddenly you get hit with a fee (may be big or small). This is the kind of stuff you have to read about in the prospectus for funds you’re considering.

    You’ve already sunk the up front money into the American funds, so you need to think and run some numbers before just switching that money out or buying into to any no load fund just because they are no load. Say for sake of an example the American fund’s yearly maintenance fee is 0.5%, but the no load you’re looking at is 1.2%, unless you expect the newer fund to outperform the American fund by 0.7% a year, it might not be worth switching. On the other hand, I’d be more likely to put new money into the 1.2% yearly fund since I wouldn’t be loosing 5% up front which would require I keep the money in the American fund for a longer time (say ten years) to make up that initial loss.

    It’s always easy to look back and kick yourself a bit, but just like gambling, don’t chase your losses and just keep moving forward as best you can and in the end it often matters more that you’re saving money and getting some return above inflation versus not saving at all.

  15. Amanda says:

    ?#1 Chandra. You’ve got some major issues. Your husband is trying to pay the MINIMUMS on all his credit card debt? Do u know the details? I think I’d want to bury my head in the sand!! Maybe you need to only let him have his spending $ in a separate acct cut up his cc’s and u need to take over the finances. Do u have term life insurance? If not maybe you should quit saving 529 and take care of the more immediate needs of fam.

    @6 Sharon. Very nicely put.

  16. Katie says:

    Amanda, she said her husband is focusing on paying off the balance on the credit cards every month, not the minimums.

  17. MattJ says:

    Maria,

    I hope that the woman I marry respects me enough not to spend 60% of our yearly home improvement budget in a way that she knows beforehand that I will HATE (emphasis yours). Instead of trying to convince Trent that it was a good deal after the fact, you should have convinced your husband that it was a good deal before the purchase.

    Surely you knew that already.

    Besides other well-known downsides of gift cards, there is also the problem that in bankruptcy, the company must ask the bankruptcy court for permission to honor the gift cards. When Circuit City went bankrupt, you had to spend your gift cards at their liquidation sales, after that they were worthless. So in the event that your big box store goes belly-up (don’t think that it’s impossible, esp. in this economy) you may have to settle for buying hundreds of dollars worth of junk you don’t want RIGHT NOW instead of products you do want on your own schedule.

    But the downside of gift cards isn’t really the major problem here.

  18. Leah says:

    Erich, I’d get another job or look for volunteer opportunities. You could knock out your student loan debt super fast, save up money for traveling/exploration/”finding yourself,” etc, and then set to work on figuring out what you really want to do.

  19. Rich says:

    I don’t mean to be rude to the e-mailers asking questions, but Trent, have you ever considered cleaning up poor spelling in reader e-mails to make it easier for other readers to comprehend? It makes things hard to follow when I have to guess what the word is. I understand that you’re keeping them as presented to you, but a little editing can go a long way sometimes.

  20. John says:

    Which kinds of receipts do you keep, and how long do you keep them?

  21. valleycat1 says:

    Although I agree with the other comments about Jamie’s new car, what jumped out at me in Trent’s response was to pay down the car loan fast if they don’t have an emergency fund.

    If they don’t have an emergency fund, then the $300 needs to go into that until it’s at a decent level, while keeping their credit rating up by paying just the amounts due on the 2 loans. THEN decide which one’s better to pay down. These days everyone has to have emergency $ available.

  22. valleycat1 says:

    And Trent – great that your kids go to the grandparents. My parents ran “camp grandma” for my daughter & nieces for years, & 25 years later those are some of their favorite memories.

  23. Doug says:

    Randy,

    Getagrip makes good points. American has a good reputation and you’ve already paid your load (5.75%). The annual expenses seem reasonable (about 1.0 and 1.17%) but considerably higher than an index fund at Fidelity or Vanguard would be (around 0.2%), and expenses add up. If you like the funds, keep them and start another Roth with another fund company. If you don’t like the funds, or if you want make a fresh start and not be reminded of the load you paid, follow Trent’s advice. Good luck.

  24. ZFarls says:

    Erich-

    I just turned 24 and literally had the same situation as you. I went with paying off the loan route and paid off 20k in 9 months. Now I have another 10k saved up and am debt free. I still havent found my passion and make similar wage at my “day job” Anyway, just want to say how good it feels to be out of debt so that if my passion does arise in another city or a good opportunity comes up, I will be able to take it. I feel good about not having alot of things tying me down and ready for whatever may come my way. Also saved 5k by paying the loans early, Pay those suckers off!

  25. jim says:

    Randy: You’ve already paid the load on the funds so the damage is done. A load is an up front commission and you already lost that. So now, whether or not you keep those funds depends on the other aspects of the funds. I wouldn’t buy more of that fund, but there isn’t a big need to sell them at this point.

  26. jim says:

    Doug: 4 mortgages can be a lot to carry. Paying off some of your debt would not be a bad idea at all. You save interest which is a guaranteed return and you reduce your liabilities. BUT, we don’t know much of anything about your income or cash flow situation. How are your rentals doing now? How is your financial situation overall? Do your rentals easily rent and pay positive cash flow? Do you have a steady job with good income and good surplus money every month? Do you have ample emergency fund and/or other assets? Sounds like you may be doing pretty good with rental properties. But I’m assuming there. You might do well to get another investment property if your current rentals have been a good investment and if you are not going to put yourself in a difficult financial situation in the case of a job loss.

    If cash is at all tight or if rentals are not positive cash flow or if your job is possibly insecure without solid backup cash then I’d just pay down one of your mortgages. But if you’ve got good cash flow, good job security, good amount of assets/cash then another real estate investment might be good idea.

  27. reulte says:

    I’m not normally the grammar police, but today there were so many typos and grammatical errors! Please, Trent, use a spell check and re-read before posting. “Credit debits”, “we have an a”, “to mine the” – sounds like e.e. cummings.

  28. Kevin says:

    @ reulte: the three examples you provide are from reader questions – I imagine Trent simply quoted them as written.

  29. jim says:

    No, Trent should not fix spelling/grammar errors in the mails from individuals. Its not good form to quote someone and then edit the content even for spelling errors. That would be violating the rule of quoting someone and then changing the content of the quote. You can use [sic] to designate original spelling errors.

  30. Kevin says:

    @jim: No one actually said he should fix readers’ errors. reulte seemed to think he’d made the mistakes, and I was merely pointing out that they weren’t his.

  31. jim says:

    Kevin, I thought Rich asked Trent to clean up the errors in comment #15.

  32. Kevin says:

    Jim, ah, you’re right – sorry, I missed that comment. Totally agree with you. Thanks; sorry for the confusion.

  33. KM says:

    Errors in readers’ letters should absolutely be fixed. Trent is not a journalist quoting someone in a newspaper article–it doesn’t matter whether the letters are edited or even completely fabricated. And anyway, most newspapers clean up quotes to some extent (removing “uh” and “um” from someone’s quoted speech, for example). Fixing a spelling error does not change the meaning of anything. The point is for the letters to be readable for the audience.

  34. littlepitcher says:

    Get the prospectus for those Fidelity targeted mutual funds before you jump in. Last time I looked, almost all of the Freedom funds had been running at a net loss since day 1.

  35. reulte says:

    Kevin & Jim – I don’t believe Trent is quoting when he presents a question from the mailbag. He has mentioned that he changes details and I suspect that he cuts & pastes from a longer letter; so the errors are his responsibility if not his directly. Even if the question/situation is lifted verbatim and the misspellings/ gramatical/ factual errors are left to prove a point or to capture the flavor of someone’s speech patterns there are ways to let the reader be aware of this such as the use of brackets or the word “sic”. This many uncorrected errors in a post simply made me give up reading it.

  36. Johanna says:

    I disagree that it’s always poor form to edit a quotation for spelling, grammar, clarity, or anything else. Professional advice columnists do it all the time. (Haven’t you ever wondered why all the people who write to them seem so articulate?) And I do it in the news stories I write at work – although, since I write for a monthly publication, I have time to contact all my sources before we go to press to check whether they’re comfortable with the way I’ve quoted them. With Trent answering 20+ reader questions a week, he’s probably not going to want to do that.

    Look at it this way: Which is more important, the words or the meaning? It’s possible, and more common than you think, to quote a person word for word but to change the meaning radically by taking the quote out of context. (See: Shirley Sherrod.) Correcting spelling or grammar mistakes doesn’t change a person’s meaning (unless, I suppose, you were mistaken about what they were trying to spell or say). The former is poor form. The latter is what’s known in the business as “editing.”

    Of course, the rules are different when you’re quoting published material, as opposed to an email you were sent or an interview you conducted. Published material (such as “Through the Looking-Glass”) really does need to be quoted accurately, with the exception of obvious typographical errors, which can be corrected without so much as a [sic].

  37. reulte says:

    Kevin – Those aren’t examples, they are only the first three major errors I found.

  38. GayleRN says:

    @Laura Paying property taxes is easy. The only time it ever got goofed up it was the bank’s fault. The bank was also in the habit of paying at the last possible minute.

    I just go down to the township office (or your appropriate authority) and do it in person because I like the security of knowing it is done correctly. At that time I also check out new information on parks, recycling, new regulations, and potential special assessments like a new sewer system, repaving projects that would cost me money. You will also need to pay attention to your assessment as it may or may not be in line with reality.

    The one detail that you might not be aware of is that you will be responsible for proving to the mortgage lender that you have obtained and paid for home insurance. There will be some process or form for this, especially if you change carriers.

    I put aside money out of every paycheck into ING subaccounts for these purposes and it works very well for me. Someday when the mortgage is paid off you will have to do it this way anyway.

  39. MattJ says:

    I write & publish a monthly newsletter for a local nonprofit, and I agree with Johanna completely. When I quote someone, I fix both their grammar and spelling (I usually interview by email) before I publish, and I let them see how they’re going to be quoted in my articles so they can point out if I’ve changed their meaning. Some of the people I’ve interviewed have awful English (for some it’s their second language) and I could never publish them without correction.

    In Trent’s shoes, (I imagine he has a quicker turnaround time) I would also ‘fix’ people’s mistakes, while keeping in mind that I may have to ‘decorrect’ some emails occasionally if I were to accidentally change someone’s meaning. Of course, he doesn’t put out a hard copy, so his product is easier to correct after the fact than mine.

  40. Diane says:

    @ Doug. Funny, as I read your question, I was thinking how reasonable your numbers sounded. I was actually surprised by Trent’s answer at first. Then I remembered that he lives in Iowa and I live in California…

    I agree with #5 Des and # 22 Jim.

    To Jim’s excellent list of questions, I’d also confirm your wife’s feelings before forging ahead with this plan. Make sure she’s on the same page with how this money should be spent/invested.

    Trent, I agree with the readers who suggest editing. If the reason for posting these questions is to benefit the larger community, then it’s fine to make the questions (and replies) as readable as possible. Strengthening your editing skills will serve you well in your quest to become a better writer.

  41. Maria says:

    #6 (Myself)
    Thanks Trent – I did break it up between Home Depot, Lowes and Sears.
    For the record. Although most of our funds are joint. We do have individual funds. The ENTIRE amount came from my own savings that I alone have discretion over. So no – I did NOT spend OUR money without asking.
    And as a follow up- He wasn’t thrilled about carrying cards – but was relieved to have the extra funds in the budget – at a discount. Turns out he doesn’t like GETTING gift cards because he would rather have cash since he usually has something in mind- and already knows who has it at the best price.
    And yes – Money and marriage issues always go hand in hand- but keep talking, I found your comments very interesting. Except the grammer (oops grammar) ones. I’m not perfect.

  42. AnnJo says:

    @Laura re: paying property taxes – Many jurisdictions allow you to set up property tax payments as automatic withdrawals from your bank account. That’s the way I have it set up, and it works perfectly. (Just have to set up Quicken to remind me to have enough $$ in the account!) Other jurisdictions allow you to pay online.

    @Maria re: gift cards. I sometimes buy gift cards when they add on a 10% bonus (i.e. a $330 gift card costing $300) for grocery stores or restaurants I use regularly, and have no trouble keeping track of them. But I agree with MattJ that no amount of good financial reasoning after-the-fact will overcome resentment at having one’s wishes ignored about a joint project. Before you explain to your husband why it was a good financial move to buy these cards, you probably should apologize for not talking with him about it ahead of time. If your financial styles are so different, maybe this DIY project needs to be broken down into “his” and “hers” portions and each do your own part your own way. DIY home remodels are hard enough on a marriage; the money you save on discounts may be eaten up in divorce expenses if you don’t respect each other’s styles and communicate.

  43. jim says:

    Johanna & MattJ. If you get permission to change someones quote then thats fine. But without permission its not ok.

  44. mary m says:

    leah, why would anyone sell a $15K car to go buy a $14K car? I don’t think a $15K car is unreasonable.

  45. Johanna says:

    @jim: Trent already truncates some questions, and he already takes some quotes out of context. Correcting spelling mistakes is considerably more ok than what he’s already doing.

    But I think any conceivable problem could be solved by sticking a notice somewhere that says “By sending me your question, you give me permission to use it in a blog post and to edit it for spelling, grammar, clarity, and length.”

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