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. Icebreaker game
2. Sell inherited gold coins
3. Time to upgrade car?
4. Angry future in-laws
5. The “bank of dad” question
6. Self-employment taxes
7. Open-ended baby gift
8. Can I trust dealers?
9. Dealing with crisis
10. Liberal or conservative?
I am asked all the time for podcast suggestions.
Over the last few years, I have listened to a lot of podcasts. Most of them were quite good.
After all of those listens, there are two that make me excited when I see a new episode.
Although there are many other podcasts I enjoy, I think those are the cream of the crop.
Q1: Icebreaker game
I will be visiting a family in Germany and I thought it would be fun to bring a game to play with them as an icebreaker. I doubt that they speak much English and I don’t speak any German. Is there a simple game that isn’t language dependent, but fun, and won’t weigh down my luggage?
It’s suggested that 56% of Germans speak fluent English, so, given that you’re visiting a family with some international connections, I’d say that there’s some chance that they will be able to speak English well with you.
Also, if there’s a nation on Earth where you can find families that have interesting games in the closet, it’s Germany. Germany houses the world’s largest game fair and publishes the most board games per capita. Your hosts very well might have the perfect game for you.
My suggestion would be to take a lighter game that doesn’t require the ability to read a particular language but will help you find ways to communicate without taking up much space in your luggage. A good idea here would be The Resistance – I think it perfectly matches all of your needs.
Q2: Sell inherited gold coins?
My grandfather bought a bunch of old gold coins over the last several years. When he passed away, he split up the gold coins evenly among his grandchildren, meaning I now have 21 gold coins. These are all certified and each in a little plastic holder. They are mostly Double Eagles. They each weigh an ounce. I am wondering if I should sell them now or sit on them for a while.
The first thing I would do is evaluate your own financial situation. Do you have any outstanding debts, particularly anything with an interest rate above 7% or so? If so, I would sell the coins and pay off this debt entirely.
If your only debt is low interest and you don’t have any major expenses coming up in the near future, it’s really up to your own gut.
However, I personally would not have most of my assets in gold. I wouldn’t feel bad about having a small portion of my money in gold, but it would be nowhere near a majority. Gold is incredibly volatile, with 50% value swings in a year not unheard of. Gold might be $500 in a year or it might be $3,000 and it’s really hard to tell which it will be.
Q3: Time to upgrade car?
I have a Mercedes C280 which is fully paid off. I believe it to be worth around $9,500. This past year, I had to perform an expensive repair for $1,300 and just replaced the starter for $900. I am in the unfortunate predicament where, since it is a Mercedes, many local places are not able to work on it, and I must get it repaired at the dealership.
The car has 112,000 miles on it, and I bought it at a time when I was not very fiscally responsible. I wanted the ‘nice’ things, not necessarily what made the most sense money wise. However, with the latest string of repairs, I’m trying to figure out if it would be best to keep the car, hoping that the worst of the repairs have already occurred, or if I should trade it and put more money down for a newer, more cost effective car (I am thinking something like a Hyundai Elantra).
So, I don’t know what’s best – keep my current car, which could have more expensive repairs down the line, and is generally more expensive to maintain (oil changes are even more expensive), or put money down and trade my car for something else. I’ve been doing a lot of thinking and can’t figure it out!
I would get a mechanic to assess the car and figure out what kind of shape it’s in and what long-term repairs you’re going to be looking at.
Ask around your social network for a trusted mechanic who’s willing/able to work on a Mercedes and give you an accurate assessment of the car.
That information should quickly tell you whether or not it’s time to sell the car or hold onto it. If expensive repairs are far off, then I’d hold onto it. If repairs are coming up soon, I’d sell.
Q4: Angry future in-laws
A few weeks ago, I suggested to my wife-to-be that we sign a prenuptial agreement to protect both of us no matter what happens with our marriage. She was fine and we both signed one that my lawyer drew up that is pretty fair to both of us. My future in-laws were enraged and have told her that I’ve already decided our marriage will fail, etc. I don’t think she really believes such garbage, but I’m not really sure what I should do now.
This is your marriage, not theirs. The arrangements that the two of you have are your business, not theirs.
Your in-laws are going to be biased and they’re going to want the best possible situation for their daughter. In my experience, that often means an expectation that their child’s marriage will favor their child. A prenuptial agreement might violate that vision.
My advice to you? Unless you’re really unwilling to tear up the agreement at this point – and you shouldn’t be – I would ignore the raging in-laws and let it blow over.
Q5: The “bank of dad” question
In one of your articles you wrote about showing to youth’s how interest rates can really hurt. You suggested to give a “loan” to them, when they really want to buy something, and then letting them pay back, using significantly higher “interest rates”. You wrote about 20% if I remember right.
But what about the other side ? What about investing ? How can I show my son’s (11 and 14), how interest rates can have a very good impact on your assets if you invest your money (if they’re are not as low as these day’s …). Would you recommend, to open a savings account for them at the “father bank” and pay them much higher interest rates ? Let’s say about 20%, too. Of course the savings at the father bank granting this interest rates should end at a certain time or amount.
I think this is exactly what the “bank of Dad” is meant for.
The wheels of investing turn slowly, and it’s often at a timescale that kids can’t appreciate. This type of thing just speeds it up a little.
While you’re doing this, you should point toward real-world investments for comparison. They should be aware that the “bank of Dad” is a good deal, but that they can earn a nice return on their own without the “bank of Dad.”
Q6: Self employment taxes
In January, I started a YouTube channel and I’ve earned about $4,000 this year. I am completely lost as to how to do the taxes on this. Can you give me the basics on what I should be doing?
That $4,000 is income and thus you’re going to have to pay both state and federal income taxes on it. This website does a great job of explaining the process in detail.
At this point, you’ve probably not paid quarterly taxes on your income, but it won’t be a big deal – you should not stress out about it. The government generally expects you to estimate your income on a quarterly basis and pay that estimated amount every three months rather than doing it once a year, but if you miss it, you’ll just end up paying a small extra amount on your annual taxes. Given your current level of income, I wouldn’t worry about it this year.
At the end of the year, though, use a home and business TurboTax package to calculate your taxes. That package will help you get your quarterly payments for 2014 set up, easy as can be.
As for your income, I would put aside half of it for taxes. You’ll probably not end up actually paying that much in taxes on it (meaning you’ll end up with leftovers), but you’re better off over-saving than under-saving.
Q7: Open-ended baby gift
We are the proud parents of a brand-new two-week old boy (our first child). Many of our parents’ friends have been sending checks as gifts, made out to us. One check had the name blank and asked us to fill it in after he was born. Where is the best place to put this money for him: our own checking account, our savings account, a new savings account in his name, a college fund (like 529), or something else? Thanks for your help!
I would start a 529 for your child and start it off with this money. You can decide for yourself whether to supplement it regularly with your own money, though I recommend it.
I’d start by investigating the 529 plan in your state. Do you get a tax benefit from using it? Some plans let you deduct contributions from your state income taxes, which can help. Also, make sure that the plan from your state can be used for any education expenses and doesn’t lock you into a certain school.
Here’s a list of all state plans. Do not worry about the rankings, as they’re based on very short term investment returns. Just use this as a way to find the plan for your state.
Q8: Can I trust dealers?
My great-grandfather left me his stamp collection when I was young. I don’t know the first thing about it and I don’t even really know how to figure it out. There is a stamp collecting store in this tow which seems like a sensible place to take it, but how do I know he’s not just lying to me and cleaning me out?
You do it by getting multiple assessments of your collection. Don’t just trust the word of one dealer.
So, yes, take the collection to that stamp store, but mention that you’re just wanting a rough appraisal of the collection. Depending on the situation, there may be a small fee for this.
You should repeat this appraisal with at least one other stamp dealer, if not more.
That appraisal should point out some of the individually valuable items in the collection, which you can then research on your own as well using internet tools.
Q9: Dealing with crisis
Me and my wife have a 20 year mortgage which we have 10 years left. The bad thing is I had lost my job a year and a half ago and have been aggressively looking for a job but ha e not landed one yet. Well got behind one payments and my wife wrote them a letter and explained our situation and faxed it to them awhile ago but have not got anything back. What could I do if anything to keep my house. I belive even with one income if they would reconstruct my mortgage we could make the payment. Have never been w/o a job since I met my wife over 25 years. Please any info would be appreciated. Getting so depressed and could not or would not go on if I lost my home. It kills me when I tell my 10 year old son, We may lose our house. He and my wife know how hard I am looking for employment but both know I am no longer to do the factory work I use to do but all that I have done, but have arthritis in my spine and have been getting treatment for over 5 years. Its really upsetting no one will give me a shot with over 23 years perfect attendance which 17 years of that at my last employer.
You’ve already done what you can do to keep your house. It’s simply in the bank’s hands if you get behind in your payments. If they choose to push foreclosure, they have the complete legal right to do so.
As for employment, you may have to look for jobs that are outside of what you’re looking for. You might think a service job, like being a cashier or a janitor, is a misuse of your skills, but if your skills aren’t in demand, you have to settle.
You clearly have a record of reliability, so I would think that you should be able to find a service job fairly easily. Once you have income rolling in, you can keep looking for other work, of course.
Don’t be hard on yourself, though. You are in a tough career spot, but that does not mean you’re not a good worker. It just means the job market may have changed.
That’s by design. I try really hard to keep my personal political viewpoints far away from The Simple Dollar (though I’m not 100% perfect at it).
The reason for that is the poisonous political environment, where if I said I was a conservative/liberal, quite a lot of people of the opposite perspective would immediately disregard anything I had to say. It’s ludicrous, but it’s true, and I’ve witnessed it more than enough times to make me sick to my stomach.
The truth is that personal finance advice can help people regardless of their political persuasion. The ideas of spending less than you earn, living frugally, and building up your social network and resume are strong whether you are liberal or conservative.
Better yet, none of those ideas have anything to do with one’s political standing.
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.