Reader Mailbag: Projects, Projects, Projects

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. Debt snowball questions
2. Cost-effectiveness and breast pumping
3. How much life insurance?
4. Which debt to pay off?
5. Choosing 401(k) investments
6. Saving for nieces and nephews
7. DirecTV arbitrage
8. How websites make income
9. Carpooling stress
10. Challenges of single motherhood

Right now, I have so many projects in the queue that it feels like I’ll have something to do almost around the clock for the next, say, fifteen years.

Whew.

I have a few quick questions in relation to setting up a debt snowball plan (I know this is a Dave Ramsey thing, but you’ve talked about it before and I like you a lot more than Ramsey!)

1. It’s advised you put away $1,000 right from the get-go. That doesn’t seem like enough, but I want to start paying down debt as soon as possible! Do you think socking back $1,000 (this will take me about two months) and then adding $20/a week is a good way to go?

2. I have three main credit card debts, and I’ve set up a spreadsheet to calculate the payments, interest, etc. However, I have some smaller debts. It roughly goes like this (rounded a little):
Credit card 1: $12,000
Credit card 2: $7,000
Credit card 3: $2,200

The smaller debts are:
IRS: $900 (I pay them $75/month)
Hospitalization bill: $500 (been paying on this one for two 1/2 years at a rate of $55/month, it was originally $2,000)
Hospital tests bill: $330 (pay $70/month, been working on this one since beginning of 2010)
Doctor’s visit: $100 (new bill this month)
Dentist: $100
Hospital tests #2: $70 (new bill this month)

I was wondering if I should include the smaller bills in the debt snowball. I feel like I could have them paid off fairly quickly in the next few months even outside the debt snowball because none of the smaller bills have interest added to them (except the IRS, and it’s a very small amount) and payment plans are already worked out for them. I wonder if I should just focus on the credit cards because they have higher interest.

I also want to note I’m current on all these bills.
- Sarah

The reason for the small-ish emergency fund early on is that a $1,000 emergency fund will handle a lot of the smaller emergencies life sends at you, like a forgotten bill or a small car repair. A lot of the emergencies that send people over the edge into debt aren’t the big apocalyptic emergencies, but the little ones that stretch a wallet just a bit too far.

On the other hand, shooting for a big emergency fund right off the bat will help you handle almost every emergency, but while you’re doing that, you’re compounding debt.

At some point, you have to turn the corner from an emergency fund to tackling the debt. $1,000 is a reasonable number for doing that. If you’d like to aim higher than that, go for it, but the sooner you get on your debt, the sooner your monthly cash flow problems will clear up.

As for the smaller debts, they should all be included in your debt snowball because they’re all debts that interfere with your monthly cash flow. Get rid of them quickly so repayments aren’t clogging up your plans.

Sarah also had a follow-up question about cost-effective breast pump choices.

I read your article on the cost benefits of breastfeeding. I’m having my first child in six weeks (give or take!), and I’m going to be working part-time and supplementing by working at home. Even my part-time job will only involve about 10-12 hours a week outside the home (all my work is writing, which is wonderful because you can do it from home, as you know!). I’ve looked at breast pumps, but I’m wondering if since I’m only going to be out of the house for 10-12 hours a week for work, do I really need a fancy expensive electric model? Can I get by with a manual pump? This may be a question for your wife :-)
- Sarah

I asked my wife what she thought in this case (after having pumped for three kids and working full time while doing so) and she suggested that, in your case, you shouldn’t buy a pump. Instead, you should check with your hospital about the cost of renting a pump for a few months.

She says that at first, you’ll need to pump much more frequently than later on, so at first, you’ll probably need to pump when you’re outside the home. Later on, your child will go longer between feedings and you’ll be able to go longer between pumpings, so you won’t need the pump then.

Of course, this depends on how your twelve hours outside the home are spread out. If it’s all in one day, you’ll need the pump for much longer than if it’s in two or three hour blocks.

My question is how much life insurance should my husband and I have now that we have a newborn? Is there some formula for figuring this out?
- Anastasia

There’s no exact formula. Different people say very different things when it comes to how much life insurance to have.

I would, at the very least, make sure that you’re replacing five years’ worth of salary if you have a young child at home. So, for example, if you make $30,000 a year, I would have a $150,000 term policy at the very minimum.

I’d encourage you to get a 20 year policy if this is going to be your only child or a 30 year policy if you intend to have more. After all, the biggest result of the policy will be to protect the children.

If you want to use a more specific calculator, try the one at Bankrate.com.

I have the opportunity to pay off my wife’s school loans (130k) or the mortgage (about 160k).

The school loans’ average interest is about 5.5% and the house is at 5.25%.

I’m at odds with which to pay off. Any guidance would be appreciated.
- Jason

With the interest rates so close, I’d pay off the one that has the largest monthly payments.

Why? It’s all about the cash flow. If you have fewer/smaller required payments each month, you’re much more likely to just roll through problems that occur in life. Your emergency fund will last longer. You’re more able to put massive payments toward the other debt.

I’d pay off the school loan, in other words.

I have a question regarding my 401k. I promised myself that I would start contributing towards my retirement when I turn 27. I turn 27 in two weeks, so it is time to start planning for the future

I am currently a single woman who owns her own house, and car. I have a small amount of CC debt and my student loans. I am currently working a full time job and a 2 part time jobs. I use my full time job to pay my bills and my part time jobs as my fun money.

My question to you is, I want to start contributing to my 401k. My company will match up to 5%. All of this is straightforward and I will be able to start investing at 5%. However, there is a list of 19 companies that I can invest my money into. I have to chose the companies I want. I have no idea where to start. I am not sure if I should pick one company over another. I know i don’t want to put all my money into one company, as that would just spell disaster. Should I spread the 100% equally over all 19? The 401k is through ADP Retirement.
- Barb

If your 401(k) offers 19 separate companies to invest in, I would diversify, diversify, diversify. I would put a small amount into each of the companies, if that’s possible. $5 to each company each paycheck, perhaps?

Here’s the reason. Each of those companies has some chance to fail and some chance to greatly succeed. If you put all of your money into one or two companies, you’re taking a giant risk with your retirement money.

Instead, you should be focusing on minimizing risk. The best way to do that is to simply spread out your money as evenly as possible.

Frankly, I don’t like retirement plans that require investment in specific companies. A good retirement plan offers the ability to invest in a broad-based index fund which essentially lets you spread the risk over thousands of companies at once.

My brother and sister-in-law are horrible with money. In tons of credit card debt, one has a shaky job, the other is unemployed and complains about not finding work without actually trying to find anything, they have two children which they put in daycare (which also goes on the credit card), etc. etc. It drives me nuts, especially as they are always buying new stuff they don’t need – a new tv, designer shoes and purses, exercise equipment. My question is in regards to how much we should help them for the future. While I would never give them or loan them money as I don’t want to encourage their behavior, I do feel that it shouldn’t negatively impact our niece and nephew. My husband and I make a very good salary (over 150K combined) and our only debt is our mortgage. I feel like we should set up some sort of college fund for our niece and nephew so they have something when the time comes around (15 years from now for the oldest), but at the same time I don’t want their parents to know as they’ll then count on it and I feel they’d be less likely do anything for the kids on their own. I also would like to have access to the money in the event my husband and I ever fell on hard times, which I know probably negates setting up a 529 plan (and I’d like to keep it if the kids choose not to pursue college, hopefully that doesn’t sound mean). Do you have any suggestions? My current thought is to set up a savings account in our names that we transfer money into with the intent of giving it to the kids at the appropriate time, though I know it won’t earn too much in interest.
- Danielle

Given your requirements, a savings account is probably the simplest choice. You likely won’t have enough in the account to invest in other things for a while without brokerage fees that would eat any extra gains.

However, I’m not sure that you actually want to give this money to your nieces and nephews. I get the feeling that you’re annoyed by your siblings’ poor buying habits and you see this negatively affecting your niece and nephew and you want to help, but you don’t want to be on the hook for their future. That’s completely fine.

The end result, though, is that you’re going to end up with poor results with your saved money than if you either fully committed to a college savings plan for them or you just didn’t save for them at all and invested yourself. I would suggest really looking at those two options instead of the savings account route. Honestly, I’d probably lean towards getting yourself into the best shape. If you build a strong foundation now, you may be able to help those kids a lot later on.

My wife and I are both Canadian, and live in Michigan about 30 miles from the border, with many relatives in Canada. We are currently subscribers to DirecTV (a conscious choice on our part as we do not go out to see movies, or eat out that often)… this is our entertainment spend and we enjoy it. Because Canadian broadcast rules preclude DirecTV being sold in Canada, we “supply” the service to some of our relatives by providing them with a receiver, which is added to our subscription (it’s all legal). In this way they can access programming that otherwise wouldn’t be available to them (i.e. MLB, NFL, NHL games, Big10 Network, Top Chef, etc.). My wife and I thought it was fair to divide our monthly bill equally, in addition to passing along the cost of the receiver, so that everyone who shared the benefit, also shared the cost. Some of our relatives are upset with paying for the ongoing programming as they view that as a sunk cost (i.e. we were going to be paying for it anyway), whereas we view it differently. These relatives are using the service as a replacement, or enhancement to their current cable/satellite choices. On a monthly basis we’re talking about everyone’s share being about $12, so it’s not a great deal of money, but more about the principle. Your thoughts on how to handle this?
- Jeff

It’s your account, right? You choose the channels. You’re essentially letting them have boxes from your account for $12 a month. If they don’t want to do that, they don’t have to participate.

Obviously, if someone wants a particular channel, you should work out an arrangement with them and probably add the channel to your plan, but you should be able to choose the channels you want and not have to remove them because of someone else’s desires.

If I were you, I’d just have a meeting with everyone at the next family reunion. Let everyone pick the channels they want to have and then get a plan with all of those channels and split the cost. If someone doesn’t want to participate, they don’t have to.

I have gathered from your blog/newsletter that you work at home, and that (with the exception of any income from your wife), The Simple Dollar is your primary source of income. If not, then I guess this e-mail is rather moot! But if it, my question is how? Basically, how do you make money from The Simple Dollar? I have seen some ads on the site, and I see some downloads available for $2 each. Are these the only methods?

The reason I ask is because I have an idea for a website that I think could be helpful and useful to many people, and I would love to work at home as you do. I’m just not sure if this is a practical way of doing so, because I’m not sure how much money I could make off doing such a thing. My website would be an informational site, as yours is, but its focus would be much broader. Basically, my intent is to offer a series of articles on several topics that bridge the gap between school and life – topics such as basic financial info (balancing a checkbook, credit cards 101, 401ks, etc), career (how to get a job, resume building, interviewing, etc), home (basic upkeep and maintenance, basic cooking info, etc) and many, many more. My goal is to help people who would like to learn, or have never learned, basic life skills. Hence, the name: Life Skills Simplified. My thought is that a lot of the people who are in a mess financially or socially are in that mess because they were never taught the skills needed to be successful and productive in life. If they have a resource to learn these skills, maybe less people would be in that mess. I’m not expecting my site to be the greatest thing since Google, but if I can help a few people, I would consider myself successful.
- Vanessa

Writing is my primary source of income. The Simple Dollar helped to launch that and forms a significant part of my income. I also make income from the books I’ve written, selling ebooks, and freelance writing (like my pieces for OPEN Forum covering frugality and small businesses), as well as occasional freelance web development.

It takes a lot of work to launch a successful website. You have to write a ton of content – specifically, content that people will want to read. You have to write it with a machinelike regularity, because if you stop writing, people stop reading. You have to be willing to promote it, too.

It takes a long time to build an audience large enough that you’ll be making much with advertising. Most advertisements that starting bloggers can get pay you $2-3 per thousand page views, which basically means if you manage to build to 1,000 people reading a page on your site each day, you’ll make a whopping $2-3.

It is a long slog, but it’s a rewarding slog if you love to write. If you don’t and are just seeing this as a cash-in… well, good luck with that.

I have recently started a sewing course, about a 20 minute drive from my house. At the end of the first class (there are 9 students in the group), we were talking, and it transpired that two other women in the group live quite near to me. Additionally, they don’t have car access at that time of day, and had arrived by bus, and when they discovered I was going their way, asked if I would mind taking them home. I did this happily, and even provided one of them with my mobile number so that I could perhaps help out in coming weeks instead of them traipsing on 2 buses each way (this was my idea). The second week I didn’t take them because I came straight from a show with my children, so I wasn’t sure I’d even be on time, but the third week (yesterday), I picked them both up on my way, having arranged for them to wait for me in a convenient place.

My gripe, though, is during the journey. I now know what my mother meant when she used to complain of feeling like a taxi driver when taking me places as a teenager…They say they are very grateful to me, always thank me as they leave, but during the journey they completely ignore me. They both choose to sit in the back, and talk to each other all the way home (they are friends from before the course). I actually have to remind them to fasten their seatbelts – the first time I said it, one of them said “okay, but you know that if we get stopped then the fine is for us, not for you”, I replied “whether that’s true or not, in the event of an accident, the guilt will be for me for not insisting” – I guess they are used to taking the bus…

The financial issue is not really relevant – I am going that way anyway, and although I actually take a very slightly longer route to pass one of their houses, it only adds a minute or two to the journey and no extra cost, since my husband has a perk of a prepaid gas budget on his company car and we never come close to that limit. So really, for no extra effort or cost on my part, I am saving them bus fare, time, and hassle. Yet because of their behaviour, I feel I’m being used. This is a 14 lesson course, so I don’t want to cause an uncomfortable situation by confronting them about this, or refusing to take them, but I’m not delighted about doing this for another 11 round trips, either. It’s not that I expect them to be my best friends in return, but I do think that they could keep the conversation at a less personal level so that I could be included.

I’d be interested to hear your thoughts – am I being oversensitive? Should I say something? If so, what?
- Valerie

This is one of those things where no one is at fault, really. Put yourself in their shoes – would you feel more comfortable talking to your friend or to someone that you don’t know well that’s focusing on driving in the other seat? There’s probably a small social wall – built by all of you – between the front and back seat.

Want to break it? As soon as they get into the car, start a conversation yourself with a question to them. Focus on what you have in common – probably the class, for now. Yes, the conversation will probably eventually fold into the two of them talking to each other, but don’t sweat it. You don’t have the established relationship yet.

If it’s all frustrating you, vent. Venting can be very therapeutic for situations like this where there’s really no fault.

So I sit here writing this at a very challenging job that I enjoy the bulk of, but zaps the life right out of me, and leaves little of me for my 2 young children, ages 6 and 2. (I am a paralegal.) I enjoy the majority of what I do, but there is so much of me invested in this, and I feel over-worked. I am currently the only paralegal for 2 very busy attorneys, and I only have a helper to answer the phones for about 20 hours per week. This all leads to my question.

I am a single mother for the majority of the past 2 years due to a nasty divorce. My ex has left me emotionally, logistically, and financially alone to raise these children, the older one of which has Autism. If he shows no interest in them, how hard should I pursue him for the nearly 5 figures he is behind in child support? Yes, he has been Court-ordered to pay, but manages to “hide” his income, and tells people that he has no work. And yes, I really need the financial assistance. I have cut expenses to the bone, and before my last, meager raise, I was receiving food stamps, to my shame. I have moved to a cheaper place, but can’t take on a roommate, as 1. The place is too small, and 2. Not many people can live with an autistic child.

I already pay approximately 25% of my income on nursery school and after-school care. I just can’t face taking on a second job. I am exhausted already, the babysitting fees would be sky-high, and I already feel as though my children don’t get enough of my time.
- Callie

Do not be ashamed to receive food stamps. You’re the person that system was designed for – a single mom with children who’s working very hard to be a good mom and to make ends meet. The negative stigma from food stamps comes from people that abuse the system – you’re the very person the system is designed for. You’re the person I’m happy to have receive assistance from my tax dollars.

You should be using every possible service out there to help you keep your head above water. Use the food pantry in your community. Use WIC. Ask the people running these services for other suggestions.

As for chasing the money you are owed – and yes, you are owed that money – that’s your prerogative. Use whatever channels you have to keep the pressure on him. This is money that you are entitled to and that your children need. I have zero tolerance for people who try to hide money like this, which literally takes food out of the mouth of children.

You’re doing great. Be proud. Take advantage of the helping hands that are out there for you.

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. Sassy says:

    Callie, that money is owed to your children — that said, you still have to decide if you have the energy to pursue your ex. You are a paralegal you so probably know the investment one has to make to work through the legal system. But it sounds like you are fighting to protect your kids and your kids may need that money. Good luck whichever way you choose to go. I admire your dedication to your kids and to your work. And, as Trent said, do not feel bad about the food stamps.

  2. Debbie M says:

    @ Valerie, what if one day there were a large box or cooler covering 1/2 – 2/3 of the back seat, for which you would apologize profusely, but which would require one of them to sit in the front seat? They might still talk only to each other, but at least that would be a bit more amusing for you. Or this might help jump-start a new dynamic. Make sure that if there is a new dynamic that you make sure the person in back is included.

    Also, when they do talk about things of interest to you, do try to insert a comment here and there. And make sure to ask them questions about their sewing trials, successes and goals.

  3. George says:

    @Jason – another factor to consider is that a student loan cannot be dismissed by a bankruptcy, whereas a mortgage can. While no one plans to go into bankruptcy, paying off the student loan will reduce your long-term risk.

  4. Hannah says:

    Danielle, if you recognizes now that your niece and nephew are going to grow up without financial security, setting aside money for them to go to college might be too little too late. If you love those kids, do everything you can to provide them with some stability and security while they are still young.

    Being unemployed doesn’t make someone a bad parent, but there are ways that you can make up for what they aren’t getting without handing cash directly to their parents.Have them come visit for a weekend and make sure they have the necessities for school. Take interest in the hobbies that their parents might ignore, like sports or art. Make sure they know they can call you if one of their parents let them down.

    Kids are extremely perceptive. If they sense that throughout their childhood you stood by and watched their family struggle, handing them a check when they go to college won’t make their difficult childhood go away or repair your relationship with them.

  5. Jane says:

    You can actually buy used breast pumps on Craigslist or Ebay. I was given a Medela Pump in Style that at least two women had used before me, and it still works great. The company and other people will try to convince you that this is unsanitary, but it’s not true. The machine just pumps air through the tubes, so I don’t see how that could be the case. Just buy your own tubing and attachments(or better yet request it at the hospital so that insurance will pay for it), replace the valve (if using a Medela) and get one used for under $100. This is much cheaper than renting a hospital grade pump (which in my area costs $60 a month). Plus the hospital pumps are pretty bulky and come in a hard plastic container that is much more conspicuous than the regular electric pumps.

    If you work at all, you need a good pump. I honestly don’t think it’s a good idea to expect that you can wait between feedings. First off, whoever is watching your baby is going to want some milk just in case. You could certainly use formula for this, but that adds up quickly. Of course to pump with an electric pump you need access to a private room with an outlet. I also bought a cheaper hand pump (Avent brand) that is great for trips or whenever I don’t want to lug the electric one. I have pumped in restroom stalls – not the most pleasant experience, but you do what you have to do.

    Anyone who says breastfeeding is free has never worked or gotten thrush or mastitis!

  6. Julie says:

    Valerie, why not, at the start of the trip, say that you feel like a taxi driver unless one of them sits up front with you on the trip one way, and the other with you on the way back. Otherwise, you can start leaving later, leaving earlier, or simply going elsewhere after the class.

    Perhaps you can manage to give rides half the time-meaning, 7 times, not the full length of the class.

    I’ve made the mistake of offering to drive someone home after work. It added a half hour after my hours with a long drive home late at night. Fortunately, I quit before the Ride became an issue and I didn’t have to deal with it.

  7. Andrea says:

    @Callie: Unrelated to the child support, you may want to see if your daughter qualifies for a state program to help pay for her specialty care. I know Indiana, Michigan, and North Dakota have programs like that (called Children’s Special Health Care Services in Indiana, not sure what other states call it). Autism is usually a covered diagnosis, and from the picture you painted of your financial situation, you would probably have no trouble qualifying for it. (In Indiana the cutoff for income qualification is 250% of federal poverty level; in North Dakota the cutoff is, I thinl, 185%. It varies by program.)

    Examples of these programs:
    http://www.in.gov/isdh/24680.htm
    http://www.ndhealth.gov/cshs/

  8. Johanna says:

    It’s not clear from Barb’s question whether the “19 companies” are 19 individual stocks or 19 investment companies (such as Vanguard) that each offer their own set of mutual funds and other investments.

    If it’s the former, then I agree with Trent that you should spread the risk around as much as you can – and consider also opening a Roth IRA (or traditional IRA) with a company like Vanguard.

    If it’s the latter, then probably for the sake of simplicity you should just choose one. That’s not a recipe for disaster, because the SIPC protects you in case your investment company fails. It’s hard to say how you should choose, though, without knowing what your choices are or what information you have about them.

    Barb, if you’re out there, can you tell us what the 19 companies are?

  9. Kelly says:

    @Sarah
    I recommend getting your own pump rather than renting one from the hospital. You might have to buy tubing if you go the used route. I highly recommend the Medela Pump in Style Advanced. There may also be times where you need to pump and dump, like if you are on a medication that passes through breastmilk and cannot be passed on to the baby. Or if you had something alcoholic to drink and don’t want to feed the baby breastmilk with alcohol in it.
    Check Craigslist in your area for a gently used breast pump.

  10. Michelle says:

    I have to politely disagree with your comments to the woman giving a ride to sewing class to two other women. I can’t imagine accepting a ride from someone I barely know and then ignoring them the entire time. It seems excessively rude to me! If I were the one riding, I would offer to chip in on gas and I would be sitting up front and including the driver in the conversation. I don’t think I would continue giving those two “ladies” a ride anymore.

  11. Gal @ Equally Happy says:

    @Jason
    Depends on your income, some school loans may not be tax deductible. That makes a huge difference when compared to the mortgage. I’m in that situation now which is why I’m trying to pay off school loans first.

  12. Adam says:

    If I ever offered to people a ride and they sat in the backseat and didn’t talk to me, I would be annoyed and probably not talk to them again and certainly not offer them a ride. I’m no one’s chauffeur.

    I also might just ask one of them to sit up front.

  13. chzplz says:

    Valerie – I’d jokingly say something like “Hey, this isn’t a cab. One of you come sit up front with me!”

  14. bellavegirl says:

    @Sarah
    Definitely buy a pump. I looked at renting, and by the time you rent for three months you could have bought one! I also sold mine when I was through. I wished I had bought my pump prior to giving birth, because I had such problems with milk supply and let- down and I only had a manual pump for the first two weeks. Read reviews and ask around before you buy, I had good luck with mine- but I have read reviews from women who had painful experiences with certain brands. The pump is also so good to have in case your little one has latching problems, you can still provide the breast milk in a bottle if you can pump. Best wishes!

  15. AB says:

    I am also happy to that my tax dollars go to help Callie. Trent is right – she is just the person the system was created for.
    I know a single mom of 4 with the spouse in prison for mortgage fraud who refuses to get a job to support her family, even though her spouse has been “away” for 3 years now. She depends on food stamps and so called generous family members to foot the bill. I would not be so annoyed if she was trying to support herself, but she isn’t. She just relies on the private and government handouts and says if she got a job, she would lose the food stamps. THAT is an example of who the system is not designed for.

  16. Gretchen says:

    I’d say it’s pretty clear to me that the people in Valerie’s car are the ones at fault. She’s doing them a favor and they are being rude.

    Not to mention I cannot fathom people needing to be told to put on their seat belt.

  17. MattJ says:

    Barb: Johanna may be on the right track when she suggest that by ’19 companies’ you mean ’19 investment firms that each offer various choices’. Alternatively, you may have 19 mutual funds, and you are misusing the term ‘companies’ to describe them.

    It seems very unlikely that ADP is offering you only the ability to buy stock in 19 companies in a 401(k) plan. The Labor Department monitors 401(k) plans for compliance with the law, and such a limited set of choices would probably fail compliance with the Pension Protection Act of 2006, (and probably earlier laws, as you’ve described it your plan would be truly outrageous) which required allowing employees the option of diversified choices in their 401(k).

    If I were you and my company was offering the very limited choices of only 19 companies to invest in, I would diversify as much as I could to get the matching, and call a lawyer specializing in labor law to determine whether my employer was in compliance.

    I suspect what’s really going on, however, is that you’ve mistaken one thing (mutual fund names) for another (company names). Investing in a single mutual fund (or very few funds) is not necessarily risky if the fund is very diversified.

  18. MB says:

    Danielle, one option is to buy U.S. savings bonds. You can get the money out at any point (if you wait five years you pay no penalty; earlier and you forfeit six months of interest). So you can use the savings for yourself if needed. But if they’re used for educational expenses, the interest is tax free. So you’d have a sound investment you could use either for your niece and nephew or for yourself if needed. A bonus: you can buy bonds (up to $1000 each) with a credit card and get frequent flyer miles from the card company.

  19. Rachel says:

    Callie- You should NOT be ashamed of having been on food stamps. You are not taking advantage of the system; you’re taking care of your kids. You do what you had to do! Be proud of taking care of your kids.

  20. Anitra says:

    Sarah – if you are freaked out by a used pump, I can recommend a good light-duty electric pump: the Playtex Petite Double pump. It costs around $80 brand new, and it works well if you only need to pump twice a day or less.

    This pump worked really well for me, while not breaking the bank. I am a stay-at-home mom, but I crave the freedom to leave my child(ren) with other people for a few hours. I could never be one of those moms who keeps her baby with her 24/7 until they’re weaned!

  21. Brandon says:

    I have to agree with George above, barring major interest rate differences, I’d almost always pay off a student loan asap – if tomorrow you were in an accident and ended up unable to work ever again in any capacity, you could discharge the mortgage in order to fit your new, disabled, lifestyle. The student loan, will stay with you forever. Student loans are pretty much evil IMO unless it’s for an associates degree, a math/hard sciences related-degree, or a Phd/Md/Jd.

    Quite frankly, I think the majority of students and parents would end up more financially stable if they used a credit card or HELOC for college costs.

  22. Erin says:

    Sarah – Trent’s advice about renting a pump is great, your insurance might even pay for it. And trust me, you want the electric pump. If you get a special bra or figure out some tricks you can just start the pump and read or work on the computer while you pump. The manual pump requires, well, hand-pumping the whole time and I found it does not work as well.

    Also, don’t assume you’ll only want to pump while you’re out working. If you go away for a weekend, if you have some sort of all-day business meeting, or even if you want to set aside some extra milk so that your husband or a babysitter can feed the baby while you’re out of the house you’ll want to pump and freeze milk. Young babies need to eat every 2-3 hours. I used to pump and go to bed at 9 pm so my husband could give a bottle at 10 or 11 and I could sleep through till the 1 or 2 am feeding.

    I know the electric pumps are expensive but they are so worth it. Also keep in mind if you plan to have more than 1 child you’ll use it again.

  23. Jackie says:

    I like Debbie M’s idea of a big box or something in the back seat one day.

  24. Debbie says:

    Sarah – I think the answer is that it depends…. as someone said, on how long you will be out of the house. If it’s going to be 3 hours 4 times a week, then you can skip it and your baby will wait for you. Some babies will wait 6 hours because they only want their mama. But if you’re going to be gone for at least 4 hours, most babies will want something in between.
    I have expressed milk for each of my eight (!) children until they were at least 1 year old. For the first four, I did not have my own office and so I pumped in the bathrooms at work using a Medela manual pump. I quickly learned that one side produces 3x the amount of milk as the other side, so I just pumped on that side.
    With baby #5 I had my own office and could lock the door. I bought a double electric pump and it was HEAVEN. It was relatively inexpensive. Made by Ameda Egnell. Since I live overseas, I’m not sure the brand is relevant to you.
    I recommend that, if possible, you pump when the baby would normally nurse. It keeps up your milk supply.
    I would also say that pumping is not for the light hearted. If your baby is dependent on mother’s milk, and mine are allergic to the standard milk based and soy based formulas, then it’s incredibly pressurizing to know that you have to express enough milk each day to feed your baby the next day.
    Keep extra in the freezer.
    Congratulations on imminent birth of your baby. I hope all goes well and that you will soon be holding a healthy baby in your arms.

  25. tarynkay says:

    Regarding Jason’s question: while a mortgage can be discharged in bankruptcy, student loans are forgiven in the case of death or permanent disability. So if tomorrow Jason’s wife was in an accident and ended up unable to work ever again in any capacity, her student loans would be discharged, but the bank could still foreclose on the house.

    I would pay off the mortgage first, and then use the money that frees up to aggressively pay off the student loans. Also, if they use the money to pay off the house and something catastrophic happens, they have a house to potentially sell with presumably at least $130K of equity in it. If they pay off the student loans and something catastrophic happens, they have paid off student loans.

    If Jason and his wife can count on no major upheavals in their lives, then the advice to go with paying off the one with the larger monthly payment makes sense.

  26. Cam says:

    @Jason, the realist in me wants to advice splitting the money (equally?) and refinancing both with the new balances. Same net drop in debt and lowered monthly payments.

  27. jim says:

    Barb: I think it is not very likely that the 19 “companies” offered in Barb’s 401k are actually stock offerings for individual companies. I am guessing that Barb is seeing mutual funds, index funds or bond fund and refering to them as “companies”. I would recommend that Barb find a basic reference about investing so she knows the difference between mutual funds, index funds, stocks and bonds.

  28. Des says:

    @Callie – You should push as hard as you are able for the back child support. That is money he owes to his children, regardless of his interest in raising them or lack thereof. I’m sorry, but in my opinion deadbeat dads are the fourth worst kind of criminal, right behind pedophiles, murders, and rapists. They are his children whether he likes it or not and that is THEIR money. If you can, fight for it. If you can’t, that is understandable, but know that you have every right to push him for every penny. He will make you feel like you’re a bad person, but he is the bad person and you are doing nothing wrong.

  29. jim says:

    Jeff: “its all legal” Who told you its legal?? I’m very sure it is not really legal nor allowed by DirectTV. DirectTV can not provide programming in Canada. And I’m pretty sure they don’t let people share service like you’re doing either. If you pay for service then all receivers are supposed to be in the same home. Why would DirectTV ever let people share service like you’re doing? It cuts their income in half and violates the rule about providing programming in Canada. I’m sure what you are doing is against their rules and likely technically illegal too.

  30. Laura W. says:

    @Callie–my heart goes out to you. I also have a child on the autism spectrum, although it is not severe. Go ahead and apply for Social Security SSI and Medicaid on behalf of your child if you have not already done so. Programs like food stamps, WIC, Medicaid, and whatever else is available in your state were made for situations like this. And I have found my local autism parents support group to be a sanity saver.

  31. Michael says:

    Re: Used Pumps

    “The machine just pumps air through the tubes, so I don’t see how that could be the case.”

  32. Michael says:

    Re: Used Pumps

    “The machine just pumps air through the tubes, so I don’t see how that could be the case.”

    My wife’s pump somehow developed mold in the tubing. Mold requires moisture and a food source so it must not have been just air going in there! We soaked them in bleach water for a bit and they came out clean.

    The pump valves are just simple flaps of rubber so they’re not impervious to a splash in the wrong direction at the wrong moment.

  33. jim says:

    Callie: I agree with Trent that you should not feel shame for taking food stamps. Your deadbeat ex is the one who should feel ashamed, not you.
    Your deadbeat ex-husband needs to pay the money he owes. You work for 2 lawyers, so why not ask their legal advice on pursuing that money. If you feel uncomfortable talking to your employers about such a personal thing then ask them for a referral to another lawyer. Personally I would recommend going after the money with every means possible.

  34. Steve says:

    Brandon (#15) – how would people be better off using credit cards or HELOC for college expenses?

    I didn’t own a home when I was 18. I’m 25 and I still don’t. HELOC was not an option.

    I have $70k in student loans at an average of <4% interest. How could I possibly do better than that with a credit card? How could I get that kind of limit without ever having a full-time job?

    Were you referring to the notion that you could just declare bankruptcy and walk away from it all? I prefer to be a functional member of society by paying what I owe.

  35. jim says:

    Valerie: Its very nice of you to give them a free ride. Very nice. But if you don’t want to do it for whatever reason then that is entirely your right and you don’t have to keep doing it. Most people wouldn’t volunteer to give free taxi rides to strangers so you’re already done more than necessary.
    If you want to talk to them then talk to them. If you try to talk to them and they ignore you or are rude then they don’t need to be getting a free ride from you. If thats the case then simply tell them that you are unable to give them a ride for future classes. If you feel awkward about that or worried they’ll ask “why not” then you could create a conflict like scheduling something else directly before/after the class. “I have to run an errand” is a perfectly good reason as far as I’m concerned.

  36. jim says:

    I strongly disagree with Brandon. Credit cards are not a better way to finance college than student loans.

  37. CAT says:

    Callie, Please try to look at getting help with food stamps like it is a service to your kids. If it would help you to use WIC then please use it. Trent is right, you are the one it was designed for, not perpetual Non-workers who work the system for years on end and don’t bother to get a job. I have a bachelors degree and was living with my husband. We were both working part time. I had my daughter with me at work everyday to avoid daycare costs. Imagine, a paralegal in a private office breast feeding, editing docs and answering the phone all day long! I had to use WIC and only did it as long as I had to. But it was very helpful when the bills started rolling in to know that I didn’t have to wonder if I had enough left over to buy milk. And you should Definately get child support from their dead-beat dad. Im sure you know that there are resources that can help you get it without you spending thousands on an attorney. God Bless.

  38. Ryan says:

    Yeah, I don’t follow how credit cards could be better than student loans.

    I start school in just a few weeks and the Discover card I have with a $500 limit isn’t going to cut it.

    Besides, some federal loans are subsidized until I graduate and can be reduced or discharged for various reasons.

  39. Bill says:

    @Jeff I’m with #22 Jim, no way what your doing is legal. Even if you where doing that with someone in the same country it’s not allowed. I doubt you could get in real trouble but Direct TV will shut you down if they catch you.

    Also Canada’s satellite are at 91 and 82 degrees any installer or hobbyist can tell from the street they are not using Bell’s satellites.

  40. Danielle, Im going to suggest that while helping with college education would be nice, it does seem to me that those children could use assistance in their lives in the here and now. This is the most important time of their lives. If youre uncomfortable giving money to mom and dad, there are lots of large and small ways you can behelping your nieces and nephews. Buying school supplies, paying directly for some day care, purchasing clothes and giving them directly. Please try and make an impact now.

  41. milly says:

    Valerie: I have gotten rides from several people, and at least some have always insisted I sit in the front seat. There is nothing wrong with insisting someone sit in the front with you “so you won’t feel like a chauffeur”. I will switch even for a few miles if the front-seat passenger gets dropped off.

  42. mary m says:

    Barb – I am certain your “companies” are actually “funds” which are already diversified. On the ADP 401K website, you can view the prospectus of each fund, and see what types of business they are diversified in and the names of many individual companies wirhin each fund. There are resources on the site that will give you the risk level of each fund. There is probably a fund that is called 2050 retirement date or something like that if the choices are overwhelming. Also, you could ask your boss to have the ADP 401K rep come in and explain them and answer questions for you and your coworkers.

  43. Brittany says:

    Callie– I grew up in a very similar situation as your children (no special needs, an older child with several younger siblings whose dad sobered up for a few years to have them and then turned into a deadbeat alcoholic again). It sounds from your letter that you no longer qualify for food stamps (and I second/third/fourth not feeling the least bit ashamed about taking food stamps if you qualify–you work hard, you pay taxes, now you need the help). Apply for free/reduced lunch for your school-aged kids. Have you looked into Project Child? It pays a portion of child care for working mom and moms going to school. Get that deadbeat’s wages garnished. What an ass. Best of luck for you.

  44. Amanda says:

    Jeff, a co-worker shares a dish network hardware set up w a neighbor in a remote locale. However, they have separate accounts. I agree w the others that what you’re doing isn’t 100% legal and dealing w the different countries may not be allowed to be made legal by getting separate accounts. But you should at least check w directv. Your family will really gripe then!! Lol

  45. Amanda says:

    Another note: make sure you have enough life insurance to pay off all debt (mortgage,cc,car) and several yrs worth of living expenses. Not a cheap accidental death policy thru a credit union either, it’s not the same as term.

  46. Zach says:

    - Sarah

    I wanted to add a bit to the BF discussion. First – it’s difficult to day beforehand whether a manual pump or an electric is the right choice. My wife has had three children and used three different pumps. Breasts work differently from child to child (and even day to day), so having a good electric with a manual back up is never a bad idea.

    Medela make very high quality pumps (in our experience). A Swing or a Pump-in-Style is a good choice, mainly because of the dual phase pump. My wife used a manual Avent with our first child and kept it as a backup with the other two kids.

    A thought about having a manual backup – sometimes you forget the cord to the electric, or the batteries are dead, or the gasket tears, or whatever. Having something around to express you milk to (at the very least) prevent mastitis is worth every bit of hassle.

    My wife often pumped in the car while I drove. Her “double barrel” Ameda and a pump holder allowed her to pump in the car on the way to work.

    My advice is to see if the hospital will give you a pump (sometime it happens) and ask for a different pump for a baby shower gift. At the end of the day, they’re worth their weight in gold.

    HTH,

    – Zach

  47. Zach says:

    Erm, that first “day” was supposed to be “decide”. Preview first, then post :-)

  48. Evangeline says:

    Like Sarah, I needed a breast pump for limited use. My husband wanted to help with the baby and so I needed something to fill that goal. First, I chose the type bottle (Avent). Next, I selected the same brand manual pump that connected to the bottle. Thus, I could pump a bottle or two for my husband to use for the night feedings or pump enough to freeze for later use. Minimal use with minimal cost. Everybody ended up happy.

  49. Amy says:

    @Callie – I would NOT involve the lawyers you work with in your legal battles against your ex. The worst thing you could do is pull your bosses into your very personal life. I don’t even know if they are child support and visitation lawyers, so they might be of little help anyways.

    When I went through a very difficult and challenging child custody agreement with my ex, I relied HEAVILY on the free website http://forum.freeadvice.com/child-custody-visitation-37/ I made over two thousand posts, saving myself a ton of money and heartache. Its completely free, and you get the advice of lawyers and people who have had similar experiences in court and with their exes. Even if you don’t post, go read some of the child support issues, to learn more about what your options are! Best of luck to you!

  50. Kevin says:

    @Amanda:

    “Make sure you have enough life insurance to pay off all debt (mortgage,cc,car) and several yrs worth of living expenses.”

    That seems a little excessive. I agree that the policy should be enough to pay off all debt, and cover all living expenses for a couple of months while the surviving spouse goes through the grieving process and gets their life back together, but several *years*? That seems unnecessary. With all the debt paid off, the surviving spouses income should be sufficient to keep the household budget in the black, and it shouldn’t take them YEARS to be productive again.

  51. Maria says:

    #4 Hannah- Danielle’s is perfectly justified in her concern. Being unemployed isn’t the issue here. Being unemployed, having massive debt and continuing to make extravagant purchases also teaches the children scary financial lessons.
    So really – If you don’t trust the parent’s with the money, then decide how you’re going to help. College only? Then set up a 529. Regular pocket money for things you don’t think their parents provide well when they reach a certain age? Then a savings separate account is fine. But keeping it in your name- just in case you fall on hard times – means it’s still yours not theirs. You either punish them for their parents or you don’t…. PS… I have the same issue….

    #35 Kevin – If Hubby dies, is wife going to stay home with the kids or return to work? IF so, how much is full time child care? and really, if Dad just died, do you REALLY want your kids in child car a couple months later? Being productive is hardly the issue.

    Callie… hug your children. They need lots of those even though they have a wonderful Mom. You are a good person who doesn’t want to take what you don’t deserve or need. Well – stop pushing yourself so hard – you do deserve, and need the help. Daddy needs a good kick in the pants and there are PLENTY of programs out there for help. I’m pleased when they help someone like you who’s really trying. Please take the help – and please pursue Dad – it isn’t fair for him to get away without supporting his children.

  52. littlepitcher says:

    Callie–Departments of Family and Childrens’ Services in your city, or the equivalent, should be able to set you on the path to recovering back child support. Do not feel guilty about anything they do, since he’s probably spending the money on beer, football, and ‘hos. Plan for two things-you can have his wages garnished. If you do, and he is in a lower-wage or unstable profession, he will quit his job and start working as a 1099 employee. Have a complete list of his assets, including VIN’s and tag numbers, checking/savings account numbers, etc, plus drivers’ license number, SSN, and Facebook/MySpace/Linked In info in case he skips. If your office has a collector/skiptracer, or uses a detective agency, get advance info on how to protect yourself from those maneuvers. In GA, the state will revoke drivers licenses of deadbeat dads. Best of luck from a grown child of a single mother and deadbeat dad.

  53. John S says:

    @Jason
    Pay off the student loan and REFINANCE the mortgage. You can do a lot better than 5.25% right now. As Trent said, getting rid of the student loan (bigger payment) will free up a bunch of cash. Along those lines, a refi will not only save you money long term, but will also further reduce your monthly mortgage payment. So, it’s a win-win.

    Plus, student loan interest is only tax deductible for the first 5 or 6 years, unless they’ve changed the law since I paid mine off. Mortgage interest is deductible for the life of the loan as long as it’s your primary residence. So the effective interest rate on a mortgage ends up being N% lower than the sticker rate, where N is your actual effective income tax rate for the year. (Assuming you itemize, of course.)

  54. John S says:

    @Danielle,
    If your niece and nephew are chips off the old block, then you are wasting your money giving them a college fund handout. They will take it for granted, blow through college without appreciating what they’re there for (other than to party) and will be no better off for it on the other side. Kids don’t appreciate stuff like that. They have no concept of what things cost in the adult world until they’ve paid their own rent, mortgage, car, groceries etc. for a few years.

    But cynicism aside, let’s assume they grow up to be model financial citizens. If you open a 529 in their names, you are negatively impacting their ability to qualify for financial aid.

    If I were you, I would keep your money to yourself until AFTER they graduate from college. Or better yet, after they’ve landed their first career-oriented job. Keep them “hungry” and free of expectation of a handout, until then.

    Then if you still feel inclined to help, give the nephew and niece some money to get them started in life and offset the student loans that they will no doubt have been forced to take out.

  55. John S says:

    @Jeff,
    While I am floored by the despicable entitlement mentality displayed by your own flesh and blood, this situation is, from your perspective, your own fault for not setting the payment rules up front.

    I would start out by politely but firmly telling all the relatives that you’re not the Free TV Fairy, and that paying for their receiver box rental only covers part of the charges needed to deliver them TV signal. Paying for the content is required too.

    Tell them that going forward, the total cost for programming is $X, and that with Y households involved, the share per family is X/Y dollars. Tell them you’re sure that, being reasonable people, they can understand that, and if they have any questions, they can talk to you about it.

    Ultimately, the account is in *your* name, so you do have final say; they are not your “equals” on the account. But that doesn’t mean you should be bearing all the burden of programming costs. You are doing them a *favor*, you’re not a TV provider. You don’t owe them any special favors for this; quite the opposite.

    If they just won’t see it the right way, and it comes down to it, you are now going to have to be firm and possibly nasty in order to get your mooching relatives to either pay their share, or give back the TV box. That’s your call. The way I see it, if you can’t trust your relatives to deal with you squarely, don’t deal with them at all. But you’ll have to make the decision for yourself whether them stiffing you is worth a rupture in the relationship.

    Like you said, it isn’t about the money, it’s about the principle. People who love and respect each other don’t treat each other like they’re treating you over this TV issue.

  56. Nate says:

    @Jason: Itemized deductions are starting to become less valuable because the standard deductions keep growing. The student loan interest is deductible from income whether or not you itemize, and mortgage interest only if you itemize. So when paying off debts, there will be a point where you will probably start taking the standard deduction and then the mortgage tax break goes away. So right now your ‘real’ interest rate for both loans may be like 4% after taxes. Your ‘real’ student loan rate will be that 4% till the last penny is paid but your ‘real’ mortgage cost will probably become the full rate before it’s even half paid off. Yes 4% vs 5% seems trivial but it means one loan is 20% more expensive than the other! For 6 figures that’s not trivial. So I’d say house first. I’d save up to pay off the house in a separate investment account for the sole reason that the bank can take your house whether you owe $10k or $160k if disaster strikes. I’d rather pay off the whole nut at one time rather than in pieces because pieces buy you no more security. Your interest gained in savings vs interest paid on the mortgage would probably lose you a little money but it wouldn’t be much and you’d have way more security in the period before it was paid off.

  57. John S says:

    Nate, your comment ignores that Jason can refinance the mortgage, right now, at a rate where it will be as low as, or lower than, the student loan rate *even if* the student loan interest is tax deductible and the mortgage isn’t.

    Assume effective tax rate of 20% (which would be high for most people):
    Student loan: 5.5% x .8 = 4.4% interest.
    You can get a base mortgage rate of 4.375% easily right now, so that’s slightly lower than the student loan, or at least basically a wash.

    Now add to that the liquidity issue Trent touched on (lower monthly obligation with the mortgage than with the student loans, especially if it’s refinanced), and I think paying off the student loans still ends up with the clear edge.

  58. Lilly L says:

    Really bad advice re carpool stress. This is not a situation where no one is wrong. There is a code of civil, neighborly behavior and the two lady riders are definitely breaking that code. The lady driving is not a bus driver or a taxi service. She’s a friend, a neighbor and a fellow classmate, and she deserves to be treated more considerately. My suggestion to her is to make some excuse for not picking them up, such as she’s coming from somewhere other than home, and to avoid the two ladies at the end of the class so she doesn’t have to give them a ride home. I wouldn’t feel bad about it all.

  59. dianne says:

    Valerie, I can’t imagine hopping in the back seat of a stranger’s car, one who was nice enough to give me a ride on a regular basis. And certainly not with a friend! I’d pile stuff on the seat behind you – make it look legit, like something you’re taking somewhere. This will hopefully force one of them to take the front seat and maybe you all can strike up some interesting conversation. Otherwise, I’d find a way to drop the taxi service. That is just rude and inconsiderate. We’re talking a 20 minute ride with supposedly mature women – not a lengthy trip!

  60. HW says:

    In my experience, if you have to pump breastmilk on a regular or frequent basis, it is well worth it to buy or rent an electric pump. Yes, it is expensive, but the cost is still much less than formula and your baby gets all the benefits of breastmilk, which you can’t put a price on.

  61. beth says:

    I’m catching up on some older posts, so this is a late reply, but a reply nonetheless :-)

    To Callie– I know some states (the one I was in, in particular) will pursue child support on your behalf if you apply for any type of public assistance. They will do everything from schedule and appear at the court hearings to manage the wage garnishments to issue arrest warrants for back support due. Heck, my old state even extradicted from other states if the amount owed was high enough. I would suggest talking to your case worker next time you need to refresh food stamp/WIC/SSI paperwork and ask if they do that. In my experience, the county deducted 1-3% of the amount collected as admin fees, but it was so worth it to not have to manage the case myself (I didn’t even have to appear in court, although I did go to a couple of the hearings to stay on top of the case.)

    Also look in to subsidized child care! Your social services case worker ought to be able to tell you if you qualify for some portion of subsidy there, which can be excellent to help get back on your feet.

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