Reader Mailbag: New Format

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. Extra mortgage while underwater
2. Homemade pet food
3. How does a mortgage work?
4. Thoughts on franchising
5. The future of Berkshire Hathaway
6. Writing about an employer
7. Switching careers and emergency savings
8. Parents and debt
9. Roth IRA and education savings
10. Career grinding

Recently, several readers have written to me suggesting minor format changes to the mailbag.

Starting with this issue, I pretty much incorporated all of them.

I think this will make the mailbag a bit easier to read.

Q1: Extra mortgage while underwater
Is it worth it to pay extra on your mortgage when you are considerably underwater in your house?

- Leslie

Unless you are planning on walking away from the mortgage and the house, it makes just as much sense to pay ahead on an underwater mortgage as it does on an above-water mortgage.

In either case, you owe a certain amount of money to a lender. Each day (that’s how it’s often calculated), you’re charged some small amount of interest on that loan. So, if you have a 5% loan, each day you’re charged (5/365)% interest in your remaining balance – about 0.014%. If you have a $200,000 balance, that’s $27.40 a day, which adds up to $821.92 over a month. If you make an extra payment of, say, $5,000, you drop the daily interest down to $26.71 and the monthly amount down to $801.37. How does that help you? Your next house payment (and every one thereafter) will have $20 more go towards the balance of your home and $20 less go into the bank’s pocket in the form of interest. You’ll pay off the house quicker because eventually that extra $20 a month will add up to eliminating payments at the end of your mortgage.

Now, why would it not be a good choice to pay ahead? There’s always a small amount of risk when you pay extra on collateralized debt without paying it off, whether you’re paying ahead or not. You weren’t required to pay that money, and if things fall apart later on and the house is foreclosed upon, you’ve simply lost those extra payments. Of course, this is only a significant concern if you’re in a house where you’re struggling to make the basic payments – if you’re financially secure enough to handle the payments and an extra monthly payment, then this isn’t much of a risk.

I consider that risk small enough for almost everyone that the financial gains of paying ahead blow it out of the water. So, unless you’re going to walk away, I’d pay ahead when I could (unless you have other debt that has a higher interest rate, of course).

Q2: Homemade pet food
Have you ever made your own cat food or done research on whether pets can thrive on homemade food and whether it’s actually cheaper?

- Delores

The problem with feeding your pet homemade foods is that you don’t have clear signals to determine if you’re feeding your pet foods that will contribute to their long-term health or not. The dietary needs of both dogs and cats are different from humans and different from each other as well. Each finds different things to be toxic, different things to be healthy, and different things to be unhealthy.

I compare feeding pets to feeding my children. I have thirty years of knowing what a human diet is like and can use that as a guideline for feeding my own children a balanced diet – plenty of fruits and vegetables, some protein, etc. I do not have that kind of experience with a cat or dog diet, nor does anyone outside of a veterinary research clinic. Beyond that, I can gain additional feedback from my children through conversation – at best, I can rely only on the responses from my pet, which may be caused by the food – or an unrelated ailment, or a particular ingredient, and so on.

In short, I don’t think I’m trustworthy for making pet food. There are too many variables and too little feedback on those variables to make sure that I’m giving my pet a healthy diet. Even if it were less expensive, I wouldn’t trust it.

Here’s a simple example: cats need some amount of taurine in their diet because their pancreas cannot synthesize it. If they don’t get taurine, they go blind at a very early age. If you feed your cat a homemade diet rich enough in taurine to meet their needs, you run other risks due to an imbalanced diet.

If I had a pet, I’d probably ask my vet for a recommendation and follow that recommendation.

Q3: How does a mortgage work?
I want to buy a house. I just got my credit report in the mail through my bank, and my scores are pretty bad, but salvageable. I have almost no real “debt” so to speak – I have one personal loan that I owe about $700 on, and the rest is all defaulted bills and such, totaling just under $4,000. Not too shabby, in the grand scheme of things, I think.

My husband and I both worked happily in a hiring-hall union, which meant that we only worked a few times a month but that the hourly wage was so high that it paid all of our bills – just barely. I am tired of this and have taken a relatively low-paying job that is full-time and reliable, and will pay all of our bills on it’s own (we live rather cheaply). This way the money my husband brings in can go toward fixing my credit (his is at the moment beyond our scope of repair, as he had several years longer than I to screw it up). I’m not entirely thrilled with the job – it’s not intellectually stimulating in the least and I’m on my feet for a good chunk of time – but to me it’s worth it to get the debts paid off and start saving up for a down payment and a general emergency fund.

I think that within a year I can get my debts all paid off and have a decent down payment saved up. Right now there are several homes going for very cheaply in my area and it’s my hope that the market will be somewhere near this when I get everything settled. As you can see, I’ve got a plan and I’m plowing through it. My confusion lay with the way mortgages work.

I’ve tried finding information on the internet and it’s done nothing to help clarify. How is the interest applied? How do monthly payments work? Does the bank pay your taxes? I have a friend who was a mortgage broker for a long time and she was totally unable to explain to me how it worked in terms that didn’t just confuse me. I have for the time being termed it “magic math.” I would like to figure out, based on a gross overestimation, what a general monthly mortgage payment would be for my husband and I so I can begin to build that emergency fund with the right numbers in mind. If you could help me:

A 30 year fixed-interest loan at the appallingly horrible rate of 9%, for, say, $60,000. Could you break that down for me in simple terms? I have to say, this “magic math” has got me totally stumped.
- Natasha

The first thing I would suggest that you do is start playing around with a simple mortgage calculator, like the calculator at Bankrate.com. It can easily take the terms you provide ($60,000, 30 year mortgage, 9%) and give you your monthly payment ($482.77) and a chart showing you how much of each payment is going to interest and how much is going towards the balance of your mortgage.

In more general terms, here’s how it works:

When you take out a mortgage from a bank to buy a house, the amount you borrow from the bank is called the principal.

The bank will charge you some interest rate on that principal.

So, in your example, you have a loan with a balance of $60,000 and a 9% interest rate. Over the course of a year, the bank would expect you to pay in (approximately) $5,400 in interest – that’s 9% of $60,000. You do that by converting the percentage to a decimal – 9% becomes 0.09, 4% becomes 0.04 and so on – and multiplying the two numbers together – $60,000 times 0.09 is $5,400.

(Why did I say “approximately”? Banks usually use a more complicated form of this calculation that usually results in a slightly higher amount of interest – it would be somewhere around $5,480 for a year, but that’s not important right now.)

Now, you’ll be making about $5,400 in interest payments over that first year. Just divide that interest by 12 (for the number of months) and you have $450.

So, your first payment would consist of $450 in interest plus some amount from the principal. As we calculated above, the payment would be $482.77, so your principal amount would be $32.77. After that payment, you now owe $59,967.23 on the house ($60,000 minus $32.77).

Now, you essentially do the math all over again, except you have a new loan balance of $59,967.23. $59,967.23 times 0.09 is $5,397.05. Dividing that by 12, you get $449.75. Thus, on your next payment, you would be paying $482.77, of which $449.75 goes to pay the bank the interest you owe them and $33.02 would go towards your principal.

With each payment, a little bit more goes towards the amount you owe and a little less goes towards the interest, until the home is paid off.

I hope that makes things more clear for you.

Q4: Thoughts on franchising
I’ve been a lifelong employee, and I’m considering the idea of buying a franchise. I’m 42 years old and and mostly debt-free (I have an auto lease and I rent an apartment) with a reasonable amount saved.

What are your general thoughts about this versus starting one’s own business?
- Michelle

The biggest drawbacks to becoming a franchisee usually come from how the business is run internally. How controlling is the franchisor? How expensive is the franchise fee? How much support do they offer you as a new franchisee?

Since you actually work for such a franchise, you should be privy to at least some of this information. Are there a lot of “corporate” procedures you have to follow or do you define them all locally? Is the manager and owner in regular contact with the larger company or do you seem to be pretty much on your own?

Since you work there, you probably have a pretty good grasp on these issues, as well as the legitimacy of the business.

You should note, though, that becoming a franchisee for a well-known business is often very expensive and they’re often very picky about allowing people to become franchisees if they don’t have a fat wallet.

Q5: The future of Berkshire Hathaway
Given Warren Buffett’s age, would you suggest buying shares of BRK-B for the long haul?

- Lacey

My belief is that you buy individual stocks for a specific reason and, if that reason no longer exists, you sell the stock. That’s actually pretty standard investment advice.

What’s your reason for buying BRK-B stock? For most people, it’s probably Buffett and Munger as a team – I know that would be my reason. I would be buying, in essence, to invest in those two guys. If one (or both) of them went away, my reason for investing would be gone, so I would sell.

All I can tell you to do in this case is understand why you would buy BRK-B and whether that reason is changing or not.

Q6: Writing about an employer
I work at a company which is headquartered in another company. The foreign management conducts business differently than an American company would in many ways. Unfortunately, that has caused a lot of problems over the years, and has partly let to the potential of the whole company being lost within the next 2 years.

I have heard from many persons that they should ‘include this or that in their book’, with regard to the goings on at this company. My question is: is it possible to safely write a book about experiences from a job without getting sued for slander/libel? I know I could change names and places to make them have no apparent connection, but is that enough legally? My book would likely follow a pattern of introducing a management failure and then explain why that caused turmoil and how it could have been avoided/mitigated.

I’ve never written a book before, but didn’t want to pursue this one if it will cost me millions in fines and net me a prison term! Thanks in advance for any advice you may have!
- Luke

Libel is a false statement of fact about an employee or organization. Opinions are not libelous – false facts are.

Keep that strongly in your mind as you move forward. If you’re going to be stating something as a fact, document it as thoroughly as you can right now. Get evidence of this fact and make sure you’re not extending your “factual” claim any further than you can based on the actual information.

People get into trouble with libel when they make negative claims about a person or organization without facts to back it up – even if they change names.

Here’s an example. If I write I dislike Robert Kiyosaki’s work, that’s an opinion – I’m fine. If I write Robert Kiyosaki has written hateful things about people who earn a living wage, I’d better have a fact to back it up – and I do, by simply pointing to any copy of Rich Dad, Poor Dad and the passage where he calls employees “hamsters.”

Any respectable publisher will help you carefully check such a book for libel. If you’re even considering self-publishing something like this, hire a libel lawyer to help you avoid any pitfalls – it’ll be expensive, but it’ll keep you out of much worse trouble later on.

Q7: Switching careers and emergency savings
I am 27, single with no kids, and a homeowner. About 5 months ago I changed jobs after being with the same company for over 4 years. It was time to move on, but I hate my new employer and my position at my new employer. It is to the point that I hate getting out of bed every morning and the stress and overall distaste for the company is impacting my life and health outside of work. With that said I have a mortgage and other expenses just like other people. I have saved my money well through the years and have an emergency fund of 13 months of living expenses and have no debt outside of the mortgage. Part of me just wants to quit my current job and start looking for a new job full time, but I know that this could take months. The other part of me would hate to tap into my savings that I have worked REALLY hard to develop. What are your thoughts on my situation? What would you do?

- Ted

I’d keep my current job, but recognize it for what it really is – a job. You go there, put in some hours, get some money. It’s not a career builder for you. Don’t let the overarching issues going on there bother you in the least. Just do whatever work is on your desk.

Use that energy (and time) you’re saving to apply for another job. Don’t be too picky about it, particularly in the current job market and your current situation. When you get up in the morning, don’t think about your current job. Think about your next one. That’s where your heart and energy should be.

Your suffering is coming about because you’re putting too much emphasis on your current unpleasant job (a short-term concern) and too little on what’s down the road from there (the long-term concern). Look long and hard at that long term and start taking actions today to get there.

Q8: Parents and debt
My father was venting to me the other day about my mother and her spending habits. She is going to be 55 in November, has a lot of credit card debt (my father did not give me an exact figure, but it is high), and wants to retire at some point in her life. By no means am I a financial expert, and by no means am I in the greatest financial position myself. My wife and I are currently using Consolidated Credit Counseling Services to help ourselves get back on track with our debt. My father also hinted around he may want me to suggest CCCS to her. Do I give my father the information about CCCS and he can forward it to my mother, or should I just do it myself?

- Joe

This is an issue that depends heavily on the relationship dynamics involved. How close are you to your mother? Do you talk to her regularly? Do you talk about most issues in your life or is your relationship more distant? Do you think you are a very valuable influence in her life? More importantly, are you personally concerned about this debt situation or is it more that you’re concerned because your father is?

The deeper your connection to the issue and the deeper your connection to your mother, the more you should consider bringing this issue up yourself with her. If there is more distance, let your father do it.

Why is this important? Sharing such information is likely to trigger a pretty difficult situation that functions best if there is a lot of trust and rapport flowing both ways. If there isn’t, there can easily be a lot of resentment and denial just from sharing the information – something you don’t need to be dealing with if you don’t have a very close relationship.

Q9: Roth IRA and education savings
I am 24, and have been working full-time for two years. I plan to go to law school next fall. I save 7.5% through my work’s 401k (they don’t match), and I currently have ~$13,000 in a Vanguard Mutual Fund, and $10,000 in a Money Market fund. I am considering moving $5,000 of that into a Roth IRA. Does it make sense to do this, even if I will very likely have to take out school loans for law school next year? And if so, where would it make the most sense to pull the money from? I am able to save ~$200/month from my take-home pay, which is currently going to the Mutual Fund.

- Julia

Unless the 401(k) program at work is stellar, I would reduce the 401(k) contributions and use those to open a Roth IRA. The Roth will result in better long-term returns for your money.

If you’d prefer to fully fund the Roth out of what you already have and not touch the 401(k), I’d sell $5,000 of the mutual fund and get it into the Roth.

In either case, I’m not sure I would keep the mutual fund. You’re apparently saving for a goal that’s just a year down the road, and the one year volatility in the stock market can be tremendous. You could be up 10% in a year – or down 30%. You’re better off guaranteeing that you’ll be up 1-2% in that money market instead.

Q10: Career grinding
I am a poker professional who has averaged mid six-figure incomes last 2 years. This year I’ve had problems motivating myself and just simply grinding mindless hours that I used to do with ease.

This year I’ve been sucessful in motivating myself into other challenges relating to fitness and nutrition, but how can I get back on track and start working hard again? I know I will be very angry at my self at an older age if I continue this way.
- Mike

This sounds to me like you’ve lost touch with your passion for poker, the thing that once drove you to play a lot. Something once made you love it and that something is gone now.

What was it that first made you fall in love with the game? Was it watching the World Series of Poker on ESPN? Was it playing with friends? Was it those first early online wins? Was it the mathematical challenges?

If I were you, I’d return to those things that made it fun in the beginning for a while. Watch the “dumb hands” they show on television and just be entertained. Play with some friends for nickels. Learn a completely different type of poker, like Omaha, or even a completely different game for a while.

Or just take a complete break from the game for a couple months. Take the rest of the year off from poker and catch up on other things in your life. Then start from the point where you can fall in love with the game again.

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. Kevin says:

    thumbs up for the format change.. like it a lot… much easier for me to read with my RSS

  2. Monique Rio says:

    Quickly commenting on the homemade pet food thing. I prepare food for my kitty, and the way I do it it’s more expensive than buying commercial pet food. I can afford it, so that’s what I do.

    Trent’s absolutely right that cats (and to a lesser extent dogs) don’t have the same dietary needs as people. That said, there are a lot of books on the subject (some written by vets) about how to prepare food for you pet. Do you research and you should do fine… but don’t expect to save money except perhaps on fewer vet bills.

    From what I’ve read commercial pet food is a huge part of the reason why kitties many kitties are obese.

  3. Heather says:

    LOVE the new format. It’s so much easier to find the two or three questions you are interested in reading. Thanks for making the change!

  4. Craig Callender says:

    I like the response to the parenting money issue. I agree with your analysis that both parties made mistakes and that it’s up to the parent to kinda “cave” (for lack of a better word).

  5. Michelle says:

    I like the shorter questions. I like that I can get to the meat of the question without getting lost in all the details of someone’s life.

  6. Eden says:

    The new format is great. Thank you.

    Based on your response to Q2, I suspect you haven’t really thought hard about what cats and dogs really are and why we feed them pet food. I’m going to limit myself to talking about dogs as a dog owner, but much if not all of this applies to cats as well.

    Dogs are scientifically classified as wolves. They share the same physiology and therefore we can assume share the same nutritional needs.

    I’m not going to claim to know the answers 100%, but here are some questions that may open your mind and eyes if you think about them seriously.

    Q1: What did dogs and cats eat until the industrial food system started making pet food?

    Q2: What do wild dogs (and wolves) and cats eat?

    Q3: Based on jaw and tooth shape and conformation as well as intestinal physiology, are dogs and cats herbivores, omnivores, or carnivores?

    Q4: Are there examples of dogs and cats living on a raw meat (meat, bones, & organs) and living long, healthy lives?

    Q5: How is kibble made? What types of ingredients are commonly included in kibble? What are the quality standards for kibble?

    Here is one good starting point to learn more and consider your options:
    http://www.rawlearning.com/rawfaq.html

    What do I do?

    I buy raw, unprocessed meat of a variety of types (chicken backs, turkey necks, pork hearts, meaty beef bones, etc.) and feed this to my dog (a Shiba Inu) as is. I aim to give him about 3/4 of a pound of meat each day and keep the organ meat to once or twice a week (about 5-10% of the total weight). I try to source from local meat producers who raise their animals ethically in a clean environment since I know about the horrors of industrial meat. I haven’t tracked the cost closely, but suspect it is close to or perhaps even less than the cost of a “high quality” kibble. I will track my food costs for my dog for the next month and report back if anyone is interested.

  7. Kaz says:

    Julia (Q.9):

    If you’re willing to go through a little extra paperwork, I think it’s a great idea to put as much money as you can into retirement accounts right now (whether it be in the 401k, Roth IRA, or a Traditional IRA).

    The reason I say this is because if you’re going to law school, you’ll be leaving your company – and that means any of your money in the 401k (as well as Traditional IRA) can be rolled over/converted into a Roth IRA. Once that money in a Roth IRA, you’ll be able to withdraw your contributions tax/penalty free (should you decide you need it).

    Also, because you’ll be in school for a few years, those years will probably be with little/no income. This means that when you convert, you’ll be paying very little in taxes. Since you’ll also probably qualify to take the Lifetime Learning Tax Credit, you can see how stuffing away funds in your retirement accounts now can net you thousands in the near future.

  8. Shannon says:

    Julia – as a practicing lawyer, let me give you some unsolicited advice about law school. The legal profession is unbelievably overcrowded. Unless you are going to a top 15 school (with a decent amount of scholarship money), be very wary of taking on 100K+ of debt for law school because the job prospects for many are absolutely dismal and in no way justify taking on a tremendous amount of debt. Check out blogs such as thirdtierreality.blogspot.com to learn more. Good luck!

  9. JJ says:

    Question #8 has a “question behind the question”: Is CCCS the best solution to get their parents out of debt in the first place?

    I’m not a fan of debt-consolidation services. In my opinion (whatever that’s worth), the worst of them are out-and-out crooks, and even the best of them don’t do anything for you that you can’t do yourself better and cheaper.

    JJ

  10. Evita says:

    I really like the new format!

    Re: Question 4
    Where does Michelle say that she is an employee for a franchise? Did you leave out that part of her letter?
    Would your answer be different if she was NOT working for a franchise and did not have inside knowledge of the conditions?

  11. Courtney says:

    @Lacey: Just keep in mind, Warren Buffett is a huge Obama supporter – which means that any good judgement he may have once had is gone!

  12. Shannon says:

    Yes Courtney, because McCain would have been so much better and ensured a swift end to the recession and jobs for all!

  13. valleycat1 says:

    Q2 – cat food – I agree with Trent on the special nutritional needs of cats & dogs, but I haven’t taken the vet’s recommendation because the 2 brands they sell & highly recommend are mostly corn meal/corn gluten based, & my cat’s allergic to that. I buy dry cat food that contains mostly meat & no corn meal or wheat, getting it on sale when possible. Prorated over how long a bag lasts, it’s not that costly per day, as cats don’t need as much of the higher-protein versions. For awhile I bought food from healthypetnet (which is pretty expensive) & they have some good info there about nutritional requirements & what to look for on the labels.

  14. Laura says:

    I have a follow-up question to Q9 — when applying for financial aid to grad/law schools, I know that banks look at how much money the person has saved already and that they often offer less aid for students with substantial savings. This seems like a catch-22 as students are “punished” for saving a lot in their early years. I’ve heard they they don’t look at retirement savings (Roth/trad IRAS, etc) when considering how much aid to offer, is this true? Are there other ways to reduce how much savings banks will “look” at when applying for financial aid (besides spending it, of course :))?

  15. Melissa says:

    @ Natasha (How does a mortgage work)

    If you use online calculators remember the calculator does not include taxes, home owners insurance, escrow, etc. For instance my monthly mortgage payment is about $400 more than the calculator Trent recommended because of these being paid by mortgage provider.

    When you begin looking, I recommend telling your agent/broker/whoever, a dollar amount that you would like your monthly payment to be. Our broker tried to push us a little higher than our set dollar amount, so you may want to tell them a range $50 or $100 less per month than your max monthly budget.

  16. Johanna says:

    @Ted: Is there anything you can do to make your job less painful, at least for the time being? You made the decision recently to apply for and accept this job, so you must have thought it was a good idea at the time. If some aspect of it turned out to be different from what you expected, can you articulate what it is? Do you have any allies at work that you can talk to about it?

    I was recently in a situation similar to yours. I didn’t change employers, but I changed roles, and my new role left me stressed out all the time. It was affecting my well being and it was affecting the quality of my work. I talked to my boss about it, and it turned out that I was trying to do more by myself than he had intended for me to do. We worked out a solution (getting my team to work more as a team), he backed me up in implementing it, and I think it’s going to work out fine.

    Maybe this won’t work for you. Some jobs (and some bosses) are just irredeemably bad. But it might be worth a try.

  17. Mister E says:

    I looked into different food options, including homemade, for a diabetic cat that I had and there is actually a lot of info available online and you definitely don’t need a degree to understand it.

    If you wanted to look into it I would recommend feline diabetic support sites as a very good start.

  18. Eden says:

    Trent,

    Why didn’t you post my comment about raw food? It was factual, informative, and not critical at all. I recognize that this is your blog and you can pick and choose what to allow on it, but the information I presented was done in a polite way and may have been useful to someone.

    Thanks,

    Eden

  19. Jackie says:

    On Q1, keep in mind that even if you’re not planning to walk away, foreclosure may be more likely for those underwater, even if they’re paying down aggressively. People with underwater mortgages are likely to be people who bought at the height of the housing bubble, when non-standard mortgages (variable rates, balloons) were being offered.

    I know I could start paying down my underwater principal by a few hundred/month and unless the market improves I’ll still be well underwater when my balloon comes due. Without ever missing a single payment and paying down the high interest I’ll loose my house. Personally, I’m not making extra payments but saving that money. If the market does rebound, then that money will make a nice down payment on a refinance. And if not, it will easy me through whatever happens when my balloon is due. And in the mean time, it’s an extra back up to the emergency fund.

  20. Courtney20 says:

    Trent – Q9 – mutual fund does not necessarily mean “stock market.” There are bond mutual finds, money market mutual funds, diversified mutual funds, etc.

  21. Tara C says:

    I make my own homemade pet food. It is important to get a balanced diet formulated with appropriate supplements designed for you by a veterinary nutrition specialist to get it just right. I used Monica Segal at http://www.monicasegal.com but there are several out there that are reputable. You can also try using books like K9 Kitchen, Dr. Pitcairn, and Kymythy Schultze to try it yourself.

  22. jim says:

    Luke: I’d also make sure that you aren’t violating any non disclosure clauses in your work contract. When you were hired did you sign a bunch of forms? Make sure none of them bound you to confidentiality.

    Natasha: If your credit is bad then I’d work on improving the credit as a priority first before thinking about a mortgage. WIth good credit mortgage rates of 4% are typical now and a $60,000 loan at 4% would be $286 a month. The interest you pay on the loan will depend on your credit. Bad credit gets you a 9% loan with a $482 payment and good credit gets you 4% at $286 payment. So you’ll save a lot in the long run if you improve your credit to ‘good’ level and get a lower interst rate on the loan.

    Julia: RE: Trents statement : “The Roth will result in better long-term returns for your money.” Roth IRAs are not the blanket best option. Sometimes they are a bad option. There is no real reason here to think a Roth will benefit Julia more than a 401k. The returns on your money will depend on your investments and you could have great returns in a 401k. Theres nothing inherently magic about Roth that result in higher returns. Fees might matter if the 401k fees are high and Roth IRA fees are low, but nobody said thats the case. Taxes will impact the decision on which is better but we don’t know Julias income level or tax situation. (maybe Trent knows and didn’t pass it along?) Maybe a Roth IRA is a good idea for Julia and maybe not. We don’t have enough data to say.

  23. jim says:

    Eden #13 : “Why didn’t you post my comment about raw food?” Did you post a reply comment to this article and is it sitting ‘waiting in moderation’ or something like that?

    Trent probably has just not gotten around to approving your comment.

    Blogs like this will usually have a SPAM filter and some level of moderation. If you had links in your reply it may be forwarded to moderation automatically. Or the SPAM filter may be confused and thinking theres some reason your reply may be SPAM. That is all automatic and not something Trent did. If the SPAM filter didn’t exist then we’d probably have a dozen comments here offering to sell us viagra, porn or help someone in Nigera move money to the US. I’ve also had blogs ‘eat’ comments due to bugs in the software and again that is nothing to do with the blog writer, but just goofy software.

  24. ChrisD says:

    I’m a little disappointed by the pet food answer. You yourself say that you should alway try something for yourself, and a bit of reading could be very informative. Without having done that reading myself (I don’t have any pets) I’m fairly sure that pet food is the cat/dog equivalent of cheap junk food. There are no ingredients on the list, as you say, the animal can’t talk about the food, and pet food commercials only ever compare themselves to other pet foods.
    If a human diet prepared from fresh ingredients is much more healthy and well balanced than a big mac then I’m pretty sure the same holds true for pets. It’s more tricky for cats as they are carnivores, but dogs have been living with us and eating our scraps since time immemorial. I think with enough information to not feed them grapes/chocolate/salt, well thought out table scraps would be much more healthy than canned mulch.

  25. Interested Reader says:

    It is very tricky to make your own cat food. I looked into it because I have a cat with serious stomach issues and can’t eat grains or poultry.

    One of the things that’s tricky about cats is that they need a special amino acid called Taurine in their diets or they will get very sick.

    Instead of making my own cat food I started buying Natural Balance Limited Ingredient Green Pea and Salmon dry food. The ingredients are clearly listed (green pea and salmon are the main ingredients) and Natural Balance is the only thing that took my very lethargic kitten with serious gastro intenstial issues to healthy playful cat.

    Natural Balance is more expensive but it has almost no fillers and so the animals eat less and get full faster. So I go through less cat food than when I was buying other brands.

  26. Luke says:

    Jim: (regarding comment #16): I did not have to sign anything at all related to non-disclosure at any time, so that should not be an issue. I was primarily concerned about whether I would have trouble even if I significantly abstracted the details of the events I want to chronicle. I guess my best bet is to go through a publisher so they can check out any libel issues.

    Trent: Thanks for posting my question! Keep up the great work! ^_^

  27. Anna says:

    @ Julia

    As a practicing lawyer, also, I second (#4) Shannon’s opinion. I graduated from law school in ’09 and had a horrible time finding a job. I ended up with a great job simply because of good networking. However, equally and greater talented classmates of mine are still unemployed in the legal profession and had to seek out other employment while they spend the next decade paying for a wasted education.

    On the other hand, my husband is a registered nurse. He spent the requisite 4 years in college, graduated with less than $6,000 in student loan debt, and has had ZERO trouble getting a great paying job. He works 3 days a week and makes more than I do!!! Consider nursing. Seriously. I’m considering it myself somedays. :)

  28. Johanna says:

    @Courtney: Out of curiosity, which presidential candidate would one have to support to have “good judgement,” in your view? You complain quite a lot about Obama, but I’m not sure you’ve ever mentioned who you think would do a better job.

  29. Courtney says:

    @Johanna: Mitt Romney.

  30. Eden says:

    I’m reposting this without the link. You can find plenty of supplemental information by searching in Google for “raw diet dog” or “raw diet cat”.

    The new format is great. Thank you.

    Based on your response to Q2, I suspect you haven’t really thought hard about what cats and dogs really are and why we feed them pet food. I’m going to limit myself to talking about dogs as a dog owner, but much if not all of this applies to cats as well.

    Dogs are scientifically classified as wolves. They share the same physiology and therefore we can assume share the same nutritional needs.

    I’m not going to claim to know the answers 100%, but here are some questions that may open your mind and eyes if you think about them seriously.

    Q1: What did dogs and cats eat until the industrial food system started making pet food?

    Q2: What do wild dogs (and wolves) and cats eat?

    Q3: Based on jaw and tooth shape and conformation as well as intestinal physiology, are dogs and cats herbivores, omnivores, or carnivores?

    Q4: Are there examples of dogs and cats living on a raw meat (meat, bones, & organs) and living long, healthy lives?

    Q5: How is kibble made? What types of ingredients are commonly included in kibble? What are the quality standards for kibble?

    Here is one good starting point to learn more and consider your options:
    -Link omitted to avoid moderation-

    What do I do?

    I buy raw, unprocessed meat of a variety of types (chicken backs, turkey necks, pork hearts, meaty beef bones, etc.) and feed this to my dog (a Shiba Inu) as is. I aim to give him about 3/4 of a pound of meat each day and keep the organ meat to once or twice a week (about 5-10% of the total weight). I try to source from local meat producers who raise their animals ethically in a clean environment since I know about the horrors of industrial meat. I haven’t tracked the cost closely, but suspect it is close to or perhaps even less than the cost of a “high quality” kibble. I will track my food costs for my dog for the next month and report back if anyone is interested.

  31. Reader says:

    @ Trent re: Natasha’s mortgage questions

    You completely skipped the concept of escrow which was part of her original question (“does the bank pay the taxes?”)

    Answer: Usually you pay the bank an amount over and above the principal and interest ($482.77 in this case) and this is held in your name by the bank to pay your property tax and property insurance, which are both based on the value of your property. You can get loans where you are responsible to pay these expenses yourself, though this is less common and not recommended by most professionals.

    Ultimately the bank pays it with your money. They write the check against money they are holding for you.

  32. TC says:

    I cannot for the life of me find the links for this, but I know there is a website where veterinarians can get dog food recipes for free – they will input the weight of the dog, select a protein source and a starch source, and the website outputs a recipe plus a recommended supplement. Owners would then need to purchase the supplement from this supplier. There is also an option to do it yourself but in that case you need to pay for the recipe and for the supplement. I imagine something similar exists for cats – I would definitely talk to a vet about this. Most vets I know are not wild about most commercial pet foods because so many of them are corn-based.

    High quality homemade pet food is likely not cheaper because you’ll want to include lots of high quality proteins (chicken/fish/etc.). The upside is they do not need to eat as much and are healthier so there might be savings in vet bills.

  33. Barb says:

    Natasha Q3 – This is long so bear with me, it may answer your question. Mortgage payments consist of 3 parts: principal, interest, taxes and insurance (PITI). Principal is the amount you borrow, interest is calculated ONLY on that amount, taxes are property taxes assessed annually and often payable semi-annually, and insurance is home insurance (liability, fire, flood, etc).

    Taxes and insurance are fixed costs that change yearly and you may choose to pay them yourself instead of including them in the mortgage payment. Most people opt for the inclusion so that they are NEVER overlooked (non-payment could cause you to default on the mortgage allowing mortgage-holder to require immediate payment in full of entire mortgage). The total amount estimated for the year ahead is calculated and divided by 12 (assuming you make a monthly mortgage payment). As each payment is made the money is placed in an escrow account and held until the actual bill arrives so that enough is on hand to cover the payment when it is needed. At the end of the year the amounts are reviewed. If they collected too much then they will adjust the amount downward for the next year, and vice versa. This is one reason mortgage payments change from year to year. So let’s assume $550 in insurance and $650 in taxes or $1,200 a year for both, for $100 per month.

    Take your 9% interest rate and divide by 12 to get .0075 (.09 / 12). Multiply your current principal total amount by this number ($60,000 * .0075) for $450. This is the interest you will pay this month. If your monthly payment is $675 then subtract $100 for tax/ins = $575, subtract $450 interest and $125 will be on principal.
    In real life the numbers are never even like this. But next month you will see that. Lets say that was January’s payment.
    Your Feb principal becomes $60,000 – 125 = 59,875. Multiply by .0075 = 449.0625 which rounds up to 449.06. Again 675 – 100 = 575 but now subtract 449.06 and 125.94 is applied to the principal. In March it becomes 59,875 – 125.94 = 59,749.06 principal * .0075 = 448.11795 rounded up to 448.12 interest. And again 675 – 100 = 575 – 448.12 = 126.88 goes against the principal (59,749.06 – 126.88 = 59,622.18). So each month as you pay down the principal the interest amount is a tiny bit less and the principal payment amount is a tiny bit more.
    Unless you chose a variable rate loan the interest rate NEVER changes. The taxes and insurance amounts change every year, usually going up just a few dollars every year as taxes gradually rise and insurance rates also rise. The monthly payment amount was calculated based on ONLY the principal and interest, so as tax/ins rises the actual monthly payment rises slightly almost every year. Sometimes it can drop slightly, all depending on the rates.

    If you think you want a $60,000 loan to buy a $75,000 house find out what the annual property taxes on a similar house are right now. Realtors often have this info, so does your county assessor (to whom you make the payments via your mortgagor). Next call your insurance agent and ask him for a ballpark estimate for home insurance. And don’t forget when you make an offer on a house make the offer contingent on you getting both a mortgage and insurance! If you can’t get insurance you won’t get a loan.
    With the known loan amount and interest rate you can use estimated taxes and insurance to calculate monthly payments and your bank can help. They have tables that show exactly what payments will be at different interest rates and different terms (15 year, 30 year, etc) but they often gloss over the tax and insurance part.

    Trent did all this WITHOUT the insurance and taxes part, which does affect all your plans. Also he assumed that the interest is calculated for the entire year and then divided by 12, which is easier but less accurate. Suppose you want to pay an additional $50 a month on principal: how will this affect your calculations? Okay, here we go. April principal is 59,622.18 * .0075 = 447.16, then 675 – 100 = 575 – 447.16 int = 127.84 prin and 59,622.18 – 127.84 = 59,494.34. Any principal payments are always applied AFTER the current monthly payment, so 59,494.34 – $50.00 = 59,444.34 is your starting principal amount for the month of May. Be extra certain it is being correctly applied as it affects the next month’s calculations. Banks are infamous for not doing this correctly.

    Also when planning for expenses in purchasing a house realize that there are all kinds of little additional expenses included in the mortgage contract. For a small instance, the property taxes are paid by the seller only up to the date of the sale, you are responsible for paying them in advance to the escrow agent at the time of closing. Along with things like title insurance they can seriously cramp your plans if you are not prepared for them. Plan on something going wrong and needing to be repaired as soon as you move in too. Have at least 2% of purchase price set aside for emergencies and/or unexpected costs that pop up during closing. Better to have too much in the emergency fund than not enough.

  34. Barb says:

    Natasha Q3 Addendum – If all of that is too confusing just take Trent’s calculated 482.77 and add the amount you estimate for taxes and insurance. The total of these is your monthly payment and yes it is normal for the bank to pay it for you, but it is in addition to the 482.77.

    No one can give you a better estimate online than your local sources because insurance rates differ from state to state and even from town to town. The property taxes are also specific to your area. Find a local house similar to what you hope to buy and get the numbers on it, add them together then divide by 12 and add to the 482.77. You don’t need to know HOW they come up with the 482.77, just know that it depends on the loan amount, the interest rate and the 30 year term. That part of the monthly payment doesn’t change unless you pay off the loan early.

    If your credit is bad and your husbands is worse then you might look into owner financing. This is a plus for you if you can convince an owner to carry the financing because you no longer need to “qualify” for a loan. Spend some time reading up on how to resurrect your credit rating, it can pay off big-time if you do it in advance of your home purchase!! Good luck.

  35. Erin says:

    Natasha – how did you and your husband’s credit get so bad? Is it just because of what you mentioned about the unpredictable union hall job? Because if you have that much trouble paying your bills, it doesn’t seem like a good idea to add buying a house to the mix. That is just going to make your financial situation worse. Yes, interest rates and prices are low right now but so what? You’re not going to appreciate that the house was good deal if you buy and then the furnace breaks down and wipes you out financially.

  36. Karen says:

    Cats do need taurine that is why they are such good mousers – mice are an excellent source of it. I feed my cats Nutro Natural Choice – no ground yellow corn or by-products. More expensive but in the long run not so much. Plus it has odor control for the litter box – that really helps since I have 2 cats plus one foster.

    I also love the new format. So much easier to read.

  37. @garykrause says:

    I like the initial bold type paragraph for quick review, I then can read the example if the subject matter is of interest for my information search. Nice format.

  38. Luke says:

    I guess my first reply was stuck in moderation…

    Jim, regarding #16. I had no non-disclosure agreement at all, so I should be okay there. It sounds like my best option is to be cautious with my wordings and go through a real publisher and let them handle the libel legalities.

    Trent: Thanks for answering my question!

  39. Des says:

    @Eden – I am interested in your cost analysis. I would love to feed my dogs a more natural diet, but it does seem cost prohibitive. We buy the higher-end food, but I’m interested in what you spend on real food for your little guys.

  40. Gretchen says:

    My favorite cat has allergies. My vet yelled a little when I talked about a raw diet, although he was cool with cooking and grinding. There are books about making your own, if you are serious.

    I decided against it for the consistant time commitment and actually use duck and green pea related to the salmon and green pea mentioned above.

  41. Interested Reader says:

    I do know of a blogger who makes her own cat food – the lovely Beth Terrry at Fake Plastic Fish (she blogs about her plastic free living).

    I won’t do a link but the post about the cat food is on October 29, 2008 with an update at the end.

    If I were a bit more motivated and my cat didn’t have issues with poultry/duck I might try it.

  42. hi Trent, thanks for changing the look of this very interesting section of your blog – it really IS easier to read :-)
    claudia

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