Reader Mailbag: Paper Search

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. Refinancing into extremely low ARM
2. Over the Roth cap
3. Dealing with well-meaning family
4. Value of supporting local businesses
5. Walking away from great employer
6. Investing fluctuating income
7. Painlessly ending friendship with overspender
8. Roth or not?
9. Retirement savings without 401(k)
10. Mythology help

Have you ever had one semi-important document just seemingly vanish from the place where you expect it to be?

Sarah and I spent most of the weekend on a document hunt, looking for one single sheet of signed paper that isn’t where we thought it should be. The location makes complete sense and every other document we thought should be in that location was there save one.

Thankfully, we can get a replacement for the document, but I can’t help wondering to myself where this single piece of paper went.

Q1: Refinancing into extremely low ARM?
I hold a mortgage at 4.375% on a 15 year. My wife and I usually pay a good amount toward principle each month also. We have significantly reduced our balance in a short time.

With interest rates being even lower, should I refinance with a 5/1 ARM at 2.85% (3.15% APR)? While we are at it… I wonder if you know if the APR includes all fees (closing and otherwise in the rate?). I just don’t know if it would be worth it, given the closing costs, appraisal for the loan, and all the other fees involved with a refi. We are very good with money and know we have more than a good chance of paying off the amount in 5 years. What are your thoughts?
- Don

I would never put my home mortgage into an ARM, no matter how good the rate is. An adjustable rate mortgage is just begging for the unexpected to happen, leaving you in a situation where your home is held hostage to a rapidly rising interest rate.

This exact story happened to a lot of people during the housing crisis, particularly in 2007 as the first wave of adjustments really hit the market and people were caught unprepared. Countless foreclosures happened to people who thought they could pay it off, only to find out that life had intervened along the way.

If you find a better fixed rate mortgage, refinancing can be a great idea. An adjustable rate mortgage, though, is akin to gambling with your home. You’re hoping your future self can pay it off quickly, and if not, you’re also hoping that interest rates don’t rebound. Your future self is unreliable, as are future interest rates.

Q2: Over the Roth cap
I came in above the Roth ira limit and Turbo Tax says I need to take the money out of the Roth or pay a fine. What should I do?

- Kevin

If this year’s income is unusually high and you expect it to be lower next year, I would just pay the 6% tax and keep the Roth as it is. The 6% tax is probably worth it if it’s a one-time incident. It will add up to about $350.

Another option is to convert your contributions into a traditional IRA, which the IRS identifies as a recharacterization. This saves you the penalty, but now it’s a pre-tax savings. The contribution may or may not be tax-deductible, depending on exactly how high your income is.

Those are really your two options worth considering. For more details, IRS Publication 590 spells it all out.

Q3: Dealing with well-meaning family
I’m very familiar with the book, Your Money or Your Life, which you mention in your rule “Stop trying to impress other people”. A few years ago, my husband and I started down the path to financial freedom, and this rule has played a big part in our journey. We’ve found a great deal of pleasure and freedom in letting go of the material expectations of others, and have been carving out a nice life for ourselves. Prioritizing finances based on our core values is greatly rewarding. However, we keep finding ourselves in situations with certain well-meaning immediate family members, who don’t quite understand that we really are happy with where we are at. We often get looks of pity, sad faces, over how we haven’t “been able” to take fancy trips to Hawaii, or that we have such a “small” house with so much that needs to be done – or we get the “we really wish you guys could have…”. We don’t complain, or lead on that we’re “missing out” on anything, because we don’t feel we are – we’re making choices we can afford, rather than ones that will put us into debt. As much as we’ve tried to acknowledge their wishes, and explain what makes us happy, we still get these types of responses that imply we’re suffering on some level. We are now expecting our first baby, and I know that more discussions of money and “things” will be on the table. I feel it’s more important now that ever before, that we can figure out a way to effectively communicate our values and goals, and discuss money with our family. I’m wondering if you or your other readers have ever run into this type of situation, and how it may have been dealt with?

- Kelly

I usually just grin and nod and change the subject in situations like these.

If they continue to pry, I just simply say something along the lines of “I don’t really want a vacation to Hawaii, at least not in comparison to financial security… it’s just not something, on the whole, I want to spend my money or time on” or “I like having a fixer-upper because it gives me something to do that I enjoy in my spare time, plus I’ll turn a profit on it.”

When they make statements like the ones they’re making, they’re passing a value judgment on what you do. You can simply respond by making it clear you’re operating on a different set of values. That changes the nature of the exchange.

Q4: Value of supporting local businesses
Our town has had a local independent grocery store since before I was born. A few years ago, a Super Wal-Mart opened up about ten miles away, and since then the local grocery store has been struggling mightily. They’ve tried all kinds of things to keep the doors open and keep customers coming in, but so many of the store’s old customers now just go to the Wal-Mart because of the lower prices.

I’m having difficulty convincing people – and convincing myself – to continue to shop at the local store. The prices on a lot of things are higher than the Wal-Mart and the selection there isn’t as good though there are some unusual items for sale there. You’ve talked a lot about supporting local businesses, but what’s the value in it if they offer bad selection and prices?
- Amanda

The biggest reason to support a local business – all things being equal – is that the profit from that local business is likely to stay local. The people who benefit from it will receive it as income, and that income will be taxed on a local and state basis, improving public services in the community. The owners will also often support other local businesses with the money they earn from that business. That is often not true when a chain comes to town.

So, what value does that have directly for you? It’s difficult to judge it without knowing your situation and the state of the town you live in. If you live in a bedroom community or a community with little or no thriving local business, then you have reduced value in supporting local business. If you have children and use things like the local parks or the local library, then you have improved value from supporting local business.

There is no right or wrong answer here because the situations and values are as varied as the colors in the rainbow.

Q5: Walking away from great employer
My girlfriend and I have planned to move to San Francisco once she graduates college this June. We’ve both been applying for jobs, and I just got an offer for a great job that pays well in SF, and I’m set to start in August. I’d love to pick your brain on SO MANY issues here like living costs and moving cities and living with 0,1, or 2 cars in a city, but I’ll hold off, because there is one very important question that looms above them all.

I really don’t know what to say to my current employer. I work for a large public university, which comes with a lot of bureaucracy. My gut reaction is to tell my boss now that I plan to leave in July because I will be moving, so they can plan to replace me (hiring takes a long time at my university) and I can help train. However, my coworkers (I’ve told my 3 closest coworkers) suggest that I don’t say anything until 2 weeks to a month before I leave. They think it will be awkward if everyone knows I’m leaving and I tell them 5 months ahead of time.

What do you think? Is my gut instinct solid – it’s a nice thing to do and it won’t negatively impact my relationship with my work? Or should I go with protocol and wait until the date is closer.
- Shawn

I think there are valid concerns on both sides here. On the one side, a lot of advance notice gives the employer more time to plan for a future without you and makes the transition as seamless as possible. On the other hand, it makes future planning awkward and can throw a strange kink into workplace relationships.

My solution would be to talk to my supervisor about it, but tell him that the discussion does not need to leave the room for the time being. This allows your supervisor to make the personnel moves necessary while giving the office environment another month or two of normalcy before your news drops.

This only works, of course, if your supervisor doesn’t tell everyone the news anyway. That is, of course, an option that your supervisor has, but I would think a good supervisor would handle this well.

Q6: Investing fluctuating income
We have several goals:

1. paying off my student loan
2. paying a wedding of around 15000 euros
3. saving for retirement because both our obligated retirement funds will cover about half our yearly income now which is not enough in our opinion.

In the Netherlands we have an equivalent of your 401K but you have to open that account in a bank. I want to open a target fund with a retirement age around 65 because I love my work and hope to be doing it at least till that age.

I would like to ask you how to divide the surplus money I make every month which will highly fluctuate. In the summer months it will be as much as 3000 euro extra on top of the 2200 euros since I have work lined up for every day those months. I think we should both contribute 200 euros to the ´401K´ monthly since this is 10% of both our fixed incomes. Concerning saving for the wedding I guess we should speed up since it will be in aprox 1 year but what of my student loan. How would you divide payments?
- Linda

If you have a fluctuating income, the first thing you need to do is to build up a very healthy emergency fund. This will allow you to somewhat assume a stable salary instead of a highly fluctuating salary, because the emergency fund will grow a bit on months when you earn a lot, and shrink a bit on low-earning months.

I suggest planning things based on the income you earn on one of your lowest months during the year. Base your monthly budget on that, then figure out what you can contribute based on that monthly budget.

During the months when you’re earning a lot more, you can feel free to make extra contributions if you wish.

Q7: Painlessly ending friendship with overspender
I’ve been friends with a woman for about ten years. She and I used to go clothes shopping together at least twice a month and we’d go out to eat together at an expensive restaurant once a week or so. Everything we do together ends up costing a lot of money.

She has a husband that makes a lot of money. I am recently divorced and I simply don’t have the money to keep up with the way she spends. I don’t want to tell her that because I think she’ll either start going to cheap places with me out of sympathy or start footing the bill, both of which will make me feel miserable.

What should I do here? My gut is to just end the friendship painlessly but I do not know how to do that well.
- Monica

Your best approach is an honest conversation with this friend. If you’ve spent that much time together over the last decade, your friend at least deserves that much.

Besides, there may be a solution to the problem that you’re not seeing here. Perhaps you could have each over for that weekly meal, cutting down the going out to once a month. Maybe you could find another regular activity besides clothes shopping that you share.

The question you need to answer is whether or not the basis of the relationship is the shopping and spending or whether it’s each other. You seem to have assumed it’s the shopping and spending, but that might not be the case. It might just be your own mixed feelings talking.

Q8: Roth or not?
When considering Roth vs Traditional IRA (or roth 401k vs 401k) it seems to me that nobody asks a simple but seemingly relevant question. In my case we have a lot of cash (thanks to good planning/no children and some luck) in CD and Stocks (no debt including our house that is paid off).

Knowing this and the fact that we are saving cash and fully funding 401k which can go to regular 401k or roth 401k. What is your opinion as to where the money should go? My thinking is since (hopefully) we will have cash (or access to cash) that we will be able to pull money out of the 401k and ira at a much lower rate than if we didn’t have cash/stocks so it would be a bad idea to go with roth.

Now if we didn’t have the cash and were going to need to be pulling money out for all expenses at retirement then the roth based 401k would be the way to go.

Does this sound correct or am I missing something?
- Mark

Your general assessment is correct. If you’re going to be pulling out at a low rate, a traditional 401(k) will result in a very low tax bill for you, so given that you have a large amount of cash, a traditional 401(k) is probably your best bet.

Usually, choosing between a traditional 401(k) and a Roth 401(k) is mostly guesswork. The “right” answer depends entirely on what tax rates will be like when you’re retired, and no one can accurately predict what they will be.

My usual suggestion is that people hedge their bets by having some money in a Roth and some money in a traditional retirement investment. That way, you’re paying some of the taxes now and some of them later. In your situation, though, a traditional one is probably the best way to go.

Q9: Retirement savings without 401(k)
I just got my first salaried job, and it’s for a 3 person non-profit. We don’t have 403(b) as an option. I qualify for a Roth IRA and plan to fully fund that, but where do I put the rest of my retirement savings?? I certainly hope to put away more than 5k a year, but I’m not aware of any account with a similar tax-benefit (or “hands-off” motivational mechanisms) as the IRA or 401k to put it in. (I guess this question would also apply to people, especially older people, who want to save more than the approximately $20k an IRA and 401k would allow.)

- Robert

First question: are you married? If you are, you should be maxing out both of your Roth IRAs.

Second question: do you have any self-employment income? If you do, you may able to contribute up to $50,000 to a SEP-IRA or solo 401(k) plan. These two options have some specific rules, but they provide a great way for the self-employed to sock away retirement savings.

If neither of these are true, your best route is probably to simply save money in a normal investment account. I suggest simply opening up an account with a trusted investment house (I use Vanguard) and looking for tax-efficient investments that they have, then investing in those directly.

Q10: Mythology help
I’ve recently become interested in myths, legends, tales, folklore that have some kind of message or moral. But I have no idea how to go about finding good ones. I’m not looking for children stories but something more for teenage to adult. Not sure if you’re into this kind of stuff but I figure maybe you’ve come accross a book or resource that might be helpful?

- Will

The best single volume you’ll probably ever find on mythology is Edith Hamilton’s Mythology, which is just a wonderful and thorough coverage of the traditional Greek and Roman mythology, with some smaller sections focusing on other mythological traditions (such as the Norse).

If you’re looking for more, an unedited collection of the fairy tales of the brothers Grimm is probably appropriate here. The original unedited tales are decidedly not for children, neither in content nor for the audience they were written for. Many have been edited for consumption for children, often distorting or eliminating the point. I actually read these in college; it became a running joke among a few friends that these were my “bedtime stories,” but they were actually quite thought-provoking.

I can’t recommend these two highly enough.

Got any questions? Email them to me or leave them in the comments and 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 hundreds of questions per week, so I may not necessarily be able to answer yours.

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  1. Johanna says:

    Q2: How is it possible to fit so much misinformation into such a short answer?

  2. Kacie says:

    Joanna — what’s the real deal? I was scratching my head on that one myself.

  3. Jackowick says:

    @Q1: How quickly we forget to learn from mistakes of the past. I really can’t see a reason to get an ARM that is “safe” other than if you have have a stash of cash on hand to be able to adjust in case rates change to pay it off/refi. *And that’s not a good reason, it’s the “scratching my head/why the heck would someone still do it” reason…

    @q2 Johanna, how is it possible to fit so much disdain into a short comment without providing an explanation that would establish credibility LOL … but seriously, I love your comments Jo, and I think others would like to read your information if you have it in a longer commment when you have time…

  4. sjw says:

    #1 The standard comments I see on the US blogs around adjustable rate mortgages always gives me cognitive whiplash. In Canada very few people get a rate for more than 5 years, and things seem to work just fine. Even more so if you think with pre-paying you can get it paid off in the 5 years.

    If the rates have gone up in that time to a point that you can’t cope with, you can amortize over longer. I can’t speak to the closing costs etc., but certainly I’d consider this option and run the numbers.

  5. Johanna says:

    @Kacie, @Jackowick: Nope, sorry – I’ve decided it’s not worth my time for me to do Trent’s job for him.

    P.S. @Jackowick: It’s really not polite to call people by nicknames that they don’t use themselves, unless they’ve invited you to do so.

  6. Tracy says:

    @Q2

    Trent’s wrong on the fact that it’s a one-time penalty and he just pulled the AMOUNT of that penalty out of thin air. 6% of an unknown number is an unknown number (it’s NOT based on the yearly contribution limits which is what it looks like Trent used as a figure but the overage amount)

  7. Kacie says:

    Johanna — then why read here?

  8. Adam P says:

    Q2 – And I believe if he takes out the excess contribution before the filing deadline he’d only pay the penalty on the earnings of the overage? A quick google search is more helpful than Trent’s incorrect answer.

  9. Tracy says:

    I can’t answer for Johanna, but I do it for the sheer entertainment value of seeing how wrong Trent is, over and over. And for the entertainment of Johanna’s (among others) comments!

  10. Laura in ATL says:

    I like Johanna’s comments.
    She’s feisty!

  11. valleycat1 says:

    Q3 – It’s really hard to pull off one of the comments Trent suggests without sounding like you’re putting the other person down.

    In this type of situation, we sometimes use the Miss Manners smile along with an abrupt total change of subject, or with one of her suggested comments – how nice of you to care; why do you ask?

    A more positive way to deal with this is to regale them with stories of all the fun you’ve had on your latest camping trip, your latest adventure in home improvement, or the like. Among my friends, it’s become a running joke about the lifestyle I live, what with no dishwasher, no satellite or HD tv, no microwave, no central air/heat, ongoing projects around the house, traveling on a low budget, rarely eating out, etc.

  12. K says:

    I also read for the comments and I really like the “Joanna’s Feisty Fest”. I think she’s sharp-witted and amusing.

    And I also think the worse the blog gets, the funnier the comments are. I enojyed Sunday’s suggestion to check out other blogs poking fun also.

  13. Julie says:

    Another Johanna fan here. She’s one of the few reasons while I still read this blog.

  14. Kacie says:

    Q5 — my husband was sort of in that situation with his last job. He wanted to give them a bigger head’s up, but looking back that would have made things a lot harder on him.

    He gave 3 weeks notice and that was perfect for him. A few months would have been WAY too long. The organization will not come crumbling to a halt when you give notice. 2-3 weeks is fine.

  15. Kacie says:

    Also, Q5, don’t assume if you tell your supervisor, that it will indeed stay confidential. Your supervisor has an obligation to your employer, not to you.

  16. Kathryn says:

    Q5 – years ago i worked for a small company owned by a friend. I applied to go back to college and was really excited about it, and so i shared that at work. I also wanted to give the company plenty of time to find someone to replace me.

    They did not give me the annual raise that year, so i was about 5 months without that extra pay. They also did NOT find someone to replace me in a timely manner. I had surgery 2 weeks before i left, and i spent that last week wearing myself out trying to train the new hire, who was not as qualified as i was. She was a slow learner, and i ended up putting in more than a half day extra on the Saturday of my last week, trying to bring her up to speed. She told me then that several times that week she thought i was going to faint while working. To add insult to injury, they hired her in at a higher hourly wage than what i had leaving.

    I wouldn’t give more than a month’s notice. Except if you have already told co-workers the rumor could get around unless they really are good at keeping a secret.

  17. Vanessa says:

    Q5: Do you have an employee handbook? Does it give you any recommendation as to the length of notice they expect? I know you think you have another job lined up, but five months is a long time from now. Anything could happen. I don’t think you should tell your supervisor until it’s absolutely necessary. I know you want to leave on good terms, but I agree with your coworkers.

  18. lurker carl says:

    Q5 – Two weeks notice is all that is required. BTDT, my experience was similar to other commenters.

  19. Telephus44 says:

    Q1 – run the numbers and see if the interest you save will be cheaper than the closing costs. If you can already significantly reduce the amount of time it takes to pay off a 15 year mortgage with extra payments, I would totally go for a 5/1 ARM. Most have rate caps that the rate can’t adjust more than X% in a year. So if you get 2.85%, year 6 might be 3.85%. Read the terms, but on average it’s no more than 1% per year and 3% over the entire life of the loan, at least from the offers I’ve gotten over the last few years. It’s not a death sentence that if you don’t pay it off within 5 years your rate will sky rocket to 20%. You’re also not counting on something in the future to make it happen, you are assuming that you will continue in your good financial habits. I think that’s a perfectly acceptable assumption for your future self.

  20. BrentABQ says:

    Q1: You certainly should run the numbers with the loans, you will need to recoup the closing costs with the reduced rate and account for the rate change. If you are not sure you are not going to sell in the period, have the cash to refinance, can afford the new payments and the numbers show that you will recoup the money soon go ahead. If not then stick with your already low rate and pay extra if you can.

    Q2: Can someone explain where Trent went wrong if he did? The advice seemed to add up to me.

    Q5: This depends a lot on your supervisor and policy. I’ve worked at locations that will terminate you if you tell them you are leaving at some point (at will state). They don’t want to depend on someone who isn’t invested anymore. If you want to be nice start documenting your work more and instruct others to fill in the gaps that you might leave.

    Q9: Its generally a good idea to have some income being taxed. Paying 25% or more now to save 10-15% later is just not worth it.

  21. Misha says:

    Well, part of where he went wrong was giving an actual dollar amount for the percentage-based penalty even though he either redacted (or never knew) the amount the penalty will be based on.

  22. T'Pol says:

    @Q3, I try to be patient with those well meaning folks and explain myself usually in a funny manner. I also keep telling “I have other priorities”. If they are willing to listen and understand, that’s fine. If not, that’s still fine, you just have to tune them out in a gentle manner.

  23. jim says:

    Q1 : There are 2 aspects here, the financial return and the risks. THe risks are of course that the rate will go up in the future. How much you’re willing to take that risk depends on how sure you are you can pay down the loan faster and what that risk would do to you. Financially its probably not really worth it. You’re looking at cutting your interest rate about 1.2%. You’re also talking of paying off the loan within 5 years. If you pay it off that fast then dropping the interest 1.2% would amount to roughly total savings of roughly 3% of the current loan balance. After taxes that could be a 2% savings. Your closing costs could easily be more than 2% of the current loan balance.

    Q2 : The best and simplest answer is to take the money out now. If Kevin is sure he can contribute in 2012, then he can just reclassify it as a 2012 contribution rather than 2011. But we don’t know that Kevin can do that. Its best for Kevin to just withdraw the excess contribution now and avoid the penalty.

    Q5 : Give them 2-4 weeks notice. I’d go with 2. But if you really feel a need to help them out then 3-4 weeks might be fine. Too much notice and you risk a bad situation all around. Worst case your new job falls through for some reason and you have to stay where you are, then you have to beg your boss for your old job and he knows you want to leave (this is what would happen in most TV shows. ;) ).

    Q7 : Do you not value your friendship? Whats so wrong with going to cheaper places? I don’t get it. Is avoiding the shame of admitting you cant blow lots of money worth giving up your friends? Just tell your friend you can’t afford the expensive places and deal with it. If she’s a good friend then it shouldn’t be a big deal. If you feel ashamed of not having money to blow then thats your problem to fix.

    Q8 Mark: OK it seems your logic is that you’ll use your cash assets and keep your 401k where it is. BUT keep in mind that you can’t keep money in a 401k forever. At age 70.5 you will have to make required minimum distributions from the account. The RMDs will start around 4% of the assets and go up year over year.

  24. AnnJo says:

    Q7, Monica, if your friendship is truly based on these particular activites (shopping, fine dining), and nothing else, then at least be honest with your friend and tell her you won’t be seeing her much because you can’t afford those activities. If she offers to pay, just thank her and say you wouldn’t feel comfortable with that.

    But if you enjoy her company, as opposed to just having her company when you shop or dine, then find some other interest you share in common and suggest it as another way to keep enjoying each other’s company. If you enjoy art, browse galleries; if you enjoy gardens, visit local garden spots or the arboretum; go for walks together; if you’re near a university, check out inexpensive lecture, film or music series there; if you both enjoy fine dining, look into inexpensive cooking classes, or alternate cooking great meals at home.

    If I had a friend I dined with weekly who just “phased me out” for no known reason, I would find it very painful. Give her a chance.

  25. Tracy says:

    @21 Mischa

    It’s not a one time penalty. If the overage isn’t corrected, Kevin will owe the fine again next year – and the year after that, until infinity, until he corrects it.

  26. BrentABQ says:

    Q2: It seems that Trent was assuming a ~6,000 contribution, a penalty of 6% which makes it a $360 penalty if its just this year that he is over and has a lower income and contributes the proper amount next year. If his income stays over the limit he should just withdraw it or recharacterize it before april 17th.

  27. cv says:

    Q5: I know this isn’t what you asked, but unless you and your girlfriend both have to drive to work, definitely don’t plan to have to cars in the city. Parking is insanely expensive (like $30/day in some parts of the financial district), and the street parking regulations are a huge hassle, even in residential areas. We had one car when we lived there because I commuted out of the city, but in general you’d be better off trying to live with no car and see how it goes. Zipcar and other car sharing are much cheaper than owning for many city residents, and San Francisco is a surprisingly bike-friendly place, even with all the hills. Check Walk Score and Mapnificent when you’re choosing an apartment, too, so you can find an area to live where you can get around without a car.

    San Francisco is *really* expensive, but it’s an awesome city. Have fun!

  28. Des says:

    Q3 – Also know that they might not actually be feeling sorry for you, they might be feeling guilty about their own spending habits and feeling “bad” for you helps them feel better. You are right, tho, that it will only get worse when children are in the picture. Most people are fine with others living whatever weird way they want – but when kids join the picture everyone feels entitled to tell you what to feed them, dress them in, school to send them to, etc.

    As an example: We opted to replace our normal-sized (but old and inefficient) fridge with a half-sized fridge. We realized that mostly what we kept in there was condiments, leftovers, and produce. Often, the leftovers and produce would get lost and forgotten and go bad. With our smaller fridge, there isn’t room to forget anything, and our food waste has gone down tremendously. (We do have a deep-freeze to store frozen local meats and produce from in-season.) We honestly haven’t felt cramped using it at all, even when we had 2 foster kids living with us. However, 6 months into fostering DHS noticed the size of our fridge and told us we needed to get a larger one, that it wasn’t big enough for 4 people. Nevermind that we fed those kids much healthier food than the processed stuff they were getting at their former foster home, nevermind that we go through our fresh fruits and veg so fast that they don’t need refrigeration…no, top ramen and blue-box mac was fine, as long as our fridge was large enough to hold rotting leftovers :( Sorry for the rant – point is, people will judge any a-typical decision much harsher when there are kids involved.

  29. Misha says:

    As for why people read here – the commentariat is entertaining and if Johanna had a blog I would read it. Also, I enjoy counting uses of the word “simply.” Four just in this post, I think.

  30. K says:

    You heard it- Johanna – time for a blog!

  31. Johanna says:

    People have been pestering me to write a blog for a long time. Not gonna happen.

  32. Kacie says:

    Johanna, you can’t monetize your comments here. You’ve probably just gotta start a blog!

  33. Evita says:

    Q7: I find sad that you think that this long-time friendship is based solely on spending. Give your girlfriend credit… she knows that you are single and can be very supportive if you would just talk honestly with her. Do it… you might be pleasantly surprised !

  34. Michael says:

    I would love to see Jo start a blog, then see how she makes out….I wouldn’t read it, but would be interested how she fairs. She might attract some of the readers from this blog.
    Jo would likely attract readers like herself – those whose first job is to write something miserably negative about the blogger (her). But, the reader’s comments have to be vague – that way the reader stays safe from taking any responsibility.
    No wonder she doesn’t want to start a post. A no win situation for Jo.

  35. Johanna says:

    Proof positive that the last thing I need in my life right now is the pressure to spend even more time arguing with stupid people on the internet.

  36. mary w says:

    Q5. If you’ve already told 3 of your “closest” co-workers your leaving isn’t going to stay a secret from your supervisor and management for 5 months. If nothing else the 3 will discuss the situation among themselves and someone else will overhear. More likely, each will tell 3 of their friends and so on.

    Q1. Not sure what your mortgage balance is, however, if you plan to pay it off in less than 5 years it’s probably pretty low. I recently played with a re-fi my 90K mortgage. Although the interest rate was much less it was only going to get paid off 2 or 3 months early. Play with mortgage calculators on-line and see how much you will really save.

  37. BD says:

    Yep, I’m still fascinated with Johanna, who hates this blog, disagrees with everything Trent says, seems to dislike most people in general (and their mannerisms), yet, she still reads and comments here more religiously than any other person. She’s probably Trent’s BIGGEST help in keeping his blog numbers up!

  38. Kathryn says:

    #34 Michael – she has already stated she doesn’t like to be called “Jo.” Unless you have prior permission to do so?

    “. . . to spend even more time arguing with stupid people on the internet.” Your choice.

    I don’t like rudeness disguised as “feistiness” doesn’t cut it for me. But to each their own. I like this column because, mistakes aside, Trent seems to write with a genuine desire to live a real life. I don’t have kids, but even his kid posts make me appreciate someone who wants to be authentic.

  39. Tracy says:

    Interesting, Kathryn, because I see the opposite – to me his posts read like that of someone who lives a very insulated life, who is unwilling or unable to recognize realities outside his own preconceptions – even misconceptions.

    I do, however, agree with you that in his posts about his children, they mean the world to him.

  40. Michael says:

    That Michael isn’t me. I’ve thought “Jo” was the worst nickname since my mom made me read Little Women and I wouldn’t wish it on anybody.

  41. Izabelle says:

    RE: Q5

    Horrible, horrible advice, Trent. If one of my staff was to come to me, say they’re leaving in X weeks and ask me to keep it to myself, I’d refuse on the spot and investigate my disciplinary options toward that employee.

    Don’t get me wrong, I appreciate open discussion and ample notice, but asking for secrecy is misunderstanding work dynamics. Your supervisor represents your company. Asking them to jeopardize their loyalty to their employer is bad work ethics all around.

  42. Angie unduplicated says:

    Trent-Missing paper can be a precursor to a bigger problem. My birth certificate went missing; I hid my property deed as a precaution. Later, I learned that a cousin acquired an under-the-table name change and tried to sell my house. Truthfully, thieves and con artists might ridicule a paper chase as an inside joke.

  43. Angie unduplicated says:

    Actually, a major ID theft family calls their game “replacement”. They’ll squall like crazy if you call them on it.

  44. jim says:

    Izabelle, why would you think that warrants disciplinary action? I don’t see why someone asking you to keep something secret would warrant discipline. I don’t get it. I also don’t really see how any company would really be disciplining someone for such a thing. Is your workplace like that?

    I guess this is yet more good reason not to give longer notice. You never know what kind of reaction your boss may have about it. If Izabelle is your boss you may get fired for secrecy.

  45. Izabelle says:

    Jim, by disciplinary I mean seeing if I have to respect the advance notice as is or if I can terminate the person earlier if a suitable replacement is found before.

    In my experience, as soon as people give notice, they quickly become dead weight since they no longer think forward. It is not unusual for their remaining coworkers to have to pick up a few weeks of the “quitter”‘s slack after they are gone. This does not make them bad people or even bad employees! It’s just human nature to protect one’s interest, and once one looks forward to a quitting date, the passion and drive usually go quite quick.

    Asking your direct boss to keep such important information as their quitting date a secret means asking your supervisor to undermine themselves. If your job is at all important, it will take a certain amount of time to find and train a suitable replacement. They need to plan all sorts of things to ensure a smooth transition. Basically, either tell them or don’t, but asking for secrecy is a serious lack of respect.

  46. jim says:

    I wouldn’t see the request for secrecy as lack of respect. I guess I just don’t see why that is disrespectful to you. The person giving that extra notice is trying to give you more time. In most cases emplyment is at will and they are not required to give you any notice.

    I can understand your view that people automatically ‘check out’ once they have another job lined up. But I think firing people arbitrarily because of that is a little harsh though and just based on your assumption of human nature.

    In any case I think we agree that its best to give shorter notice rather than tell your boss well in advance with a confidentiality request.

  47. AnnJo says:

    Izabelle, granted mine is a very very small business and large companies have different cultures, but every one of my best employees gave months of advance notice (just as I gave months of notice when I decided to move my office 15 extra commuting miles away from one employee), and I’ve never seen any drop-off in performance as a result. If anything, each made an extra effort to leave things organized, create training manual entries, help with interviews of replacements, and generally help me transition as best they could. Hire good people, treat them decently, and advance notice just ends up being a part of that.

  48. Jonathan says:

    @Izabelle (#45) – It sounds like you’ve had bad experiences with employees in the past. Personally, I’ve always preferred to receive as much notice as possible. If a replacement can be found early, it provides a great opportunity for the employee who is leaving to pass on his/her knowledge to the replacement. I’ve found that having a good relationship with employees makes this process easier. If an employee could not trust me to keep his/her pending departure quiet until the appropriate time, then I would feel I was letting the employee down.

    I also disagree with the characterization that someone who becomes “dead weight” after giving notice is not a bad employee. I expect the same performance from an employee regardless of whether they are planning to leave in a short period or not. As long as I’m paying an employee to do a job, the are expected to perform.

  49. Izabelle says:

    AnnJo, I have no problem with advance notice, just the secrecy part!

    In my case, finding a suitable replacement for someone in my department requires agressively advertising the position and going through rounds of resumes (usually 100 or so for a single hire). Our hiring processes make it so that it must include HR. I have carte blanche on the hire but I cannot start the process or negotiate salary without the green light from senior management. And good professionals in my field go quick so once we make an offer, we have to mean it. The whole thing is pretty intensive.

    In other words, secrecy would handcuff me severely. I give alot to and for my staff, but that type of request is a no-go.

  50. Izabelle says:

    I also prefer to include the rest of the team in some of the selection process for a new hire, to ensure a good team dynamic. Their input is invaluable.

    Basically, everything about how we function (very open-book) makes keeping a departure secret very, very impractical. Someone who lives it daily, knows how we work and still asks for secrecy does, indeed, lack respect.

  51. Izabelle says:

    “If a replacement can be found early, it provides a great opportunity for the employee who is leaving to pass on his/her knowledge to the replacement.”

    Agreed, but I’m having a hard time imagining that happen while keeping the departure a secret (!).

  52. jim says:

    Izabelle, In your situation given your company hiring practices it is not practical for you to get a start on hiring without it being public. OK. That still does not make an advance heads up and request for discretion about it disrespectful to you. Your employees may think that giving you advance notice will help you prepare. OK maybe it won’t. So they’re wrong. Thats not disrespectful to you. Your employees may still know exactly how the process works yet think theres still value in giving you some heads up. Maybe they’re wrong. Thats not disrespectful.

    If someone says, “hey I’m just letting you know that 5 months from now I’m going to move and take another job, but can you keep it private for now at least?” What harm is this really doing you? OK you can’t hire a replacement. You can’t keep a secret. Then what? I just don’t get it. Sorry.

  53. Izabelle says:

    Jim, let me put it in another way for you: asking for non-disclosure on your impending departure means that you are asking your boss to lie to theirs, if only by omission.

  54. Kai says:

    I don’t think it was supposed to be kept a secret the whole time. And it sounded to me like it was supposed to be a secret just in the immediate environment, so that the upper levels could plan without making everyone wonder.

    Personally, I doubt he’s that important, and I don’t see any reason why it would be a problem for everyone to know he has an end date, as long as he keeps putting in good work until then – especially if, as he notes, he wants to help set up for the next person.

  55. Todd says:

    Johanna’s comments have always been the best part of this blog. I like to imagine that Trent is really a brilliant writer, and that Johanna is a character he created to make the comments interesting. If you are indeed a real person, Johanna, you deserve as much credit for making The Simple Dollar work as Trent does.

  56. Finance Nerd says:

    I am working in the UK this year, and one of the most interesting things I’ve discovered is how long notice periods are here versus the US.

    Most people have to give at least three months’ notice, and many are actually on a 12 month notice period.

    I would have a hard time keeping someone “in the loop” on all the company plans and details for an entire year after they have given notice…

  57. jim says:

    Izabelle, are you always 100% truthful to all your employees about all your company’s activities? Does your company sometimes tell you things and then tell you not to share the details with employees? For example : Say they were going to do a round of layoffs, might they go through a process with management to decide who to cut and keep it a secret until the lay offs are announced? Isn’t this lying to your employees? Is that disrespectful of you for your boss to ask you to not tell everyone about the layoffs until its officially announced?

  58. Lori says:

    Kelly – we have family that make comments to us regarding how we spend our money. Many times we hear that we have to “enjoy” life by doing things – lots of things. We are enjoying life, by not being in debt. Our children are enjoying life, my not having stressed out parents worrying about money. Don’t get me wrong, we do worry about money. How to spend it the best way for our family. Of course, the family members who make comments are the one’s who have credit card debt, financed a car for 10 yrs – yes you read that right, etc. Stay the course that is right for you.

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