Reader Mailbag: Self-Therapy

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. Is non-profit right option?
2. Old papers
3. Solution for not seeing leftovers
4. Coworker who always borrows
5. Best savings option for newborn
6. Why did I start blogging?
7. You Need a Budget kudos
8. Retirement home decision
9. Selling home directly / FSBO
10. Trusting spouse

Anyone who juggles a lot of things in their life eventually finds themselves struggling with it. You feel inadequate and you also feel like you’re letting others down. It can even turn into a downward spiral if you’re not careful.

When this happens to me, I find that I feel better about things if I just write all of those things on my mind. I get them down on paper and, during that process, I start seeing all of the holes in that negativity. Sure, I have some difficulties, but I have a lot of positive things in my life, too.

Writing out your feelings. Talking about them. However you communicate the best, let it out. It really helps.

I think of it as self-therapy.

Q1: Is non-profit right option?
I’m a lawyer who has been unemployed for almost two years. Thankfully, my income-based repayment schedule means I have had $0 payment all this time (which count as payments in full, if that should ever be necessary to know). Like most the law school grads I know we’re not up to about $200k including interest and capitalization.

Several loan forgiveness programs exist, most commonly the one that forgives after 25 years’ worth of on-time payment (may or may not be chronological). If you’re willing to work in the public sector (governments, local agencies, religious organizations, political organizations, basically anything that can qualify as non-profit under the tax code.)

I have always been interested in the non-profit sector, but even there the market is very tight, perhaps more so than the private sector. My theory is that I would like to open my own non-profit law practice. If I did that, I’l become my own boss, not the owner of the company, technically. I’d have a set salary, and it would like be very low, especially to start with.

So here is the problem I’m encountering. I want to know how the loan forgiveness I could get by being a CEO of a self-made nonprofit would compared to the local forgiveness under the normal 25 year income based repayment plan.

On its face, it seems like 10 years of full-time work will result in greater loan forgiveness than waiting 25 years of full-time work. However, it is possible I could be taxed for the forgiven income regardless of program. Currently, the 10 year program says forgiveness will be tax-deductible, but we’re still years away from anyone filing an application, so anything could change.

I’ve been trying to find a way to represent this mathematically, but I’m failing, and I haven’t found anything but the most simple student loan calculators online. The practical results I’m struggling with is whether I should open my own law practice normally and hope the money comes or become a nonprofit and enjoy the benefits that can provide?
- Thomas

Calculating this out wouldn’t be that tricky. The money you’d save by doing this is fifteen years’ worth of minimum payments.

The trick is truly assessing whether or not this type of non-profit would actually earn you as much money as other career paths, and that type of analysis is purely speculative. You can’t really drop numbers into a calculator and expect it to tell you what will happen.

Your best approach is to talk to people who have actually done what you’re thinking about doing and see how they did. Do they regret it? Did their income live up to expectations?

Again, it won’t predict what will happen to you, but it can give you some insights.

Q2: Old papers
How long should you keep old papers? I have a cabinet full of old documents and I’m not sure what to do about them.

- Reggie

I keep tax documents forever and other printed documents for seven years.

However, the best move I ever made was to switch to a digital document system. I store all of those kinds of statements on three different hard drives and, at the rate they’re accumulating versus the rate at which hard drive space is increasing, I will never run out of space. I can store them forever.

This way, once the document is scanned, I can just get rid of that document as I have a digital copy of it.

Q3: Solution for not seeing leftovers
I have lived a frugal lifestyle and read THE TIGHTWAD GAZETTE back in the 1990′s. I feel like I have lived like a queen compared to most people even though we did without a lot of what my extended family and others considered “normal.” We homeschooled our four children for $300-$500 a year mostly using the library, had one car for a while and learned to be content with what we had and where we were.

The children are grown now and except for our daughter, we are alone, getting ready to downscale to a smaller home and moving back into the city from the country. I am excited to go back to small again after living in a wonderful, BIG, house that was great for 4 kids, but now only the downstairs is being lived in and it is a waste.

One of the articles I was reading today talked about you not seeing leftovers in the fridge. This used to happen to us a lot because I put leftovers in cheap plastic containers that eventually cracked. I switched over to glass pint or quart canning jars with the wide mouths. Now we clearly see everything and it is so wonderful to be able to quickly find what you are looking for. Walmart also carries a MAINSTAYS brand of plastic reusable screw on wide or small mouth lids that fit canning jars and are reusable and do not rust. We like storing in glass over plastic and because the jars have height compared to wide, flat plastic opaque containers, we also have more room in our fridge.
- Lori

This is a really good idea that we’re going to try in the near future as we replace our containers.

I think part of the challenge with leftovers is that when we glance into the fridge, leftovers in a container that isn’t clear do not pop out at us as something to possibly have for lunch or to use as a supper ingredient, so we miss them sometimes.

Simple ideas like this can make all the difference.

Q4: Coworker who always borrows
I have a coworker who goes out to lunch with various people, but half the time he says he doesn’t have enough money to pay then asks to borrow a few bucks. Then he never pays anyone back. Some people always seem to invite him along to lunch, too. What should I do?

- John

If I were you, I’d sit down with this guy privately and have a chat about this situation.

Tell him that many people in the office have noticed that he borrows money for lunch and that he doesn’t pay people back with any consistency. After that, give him a few chances to get back on a reasonable path.

If he continues to do it, then I would make sure that people around the office understand the situation with him and then avoid eating lunch with him.

Q5: Best savings option for newborn
I currently live overseas and will return to the US for the college years. I have setup a 529 fund for my first child who is 2 years old. Im now looking to setup a college fund as well for my second child. What options do I have other than a 529 fund for her, or is a second 529 probably my best bet?

- Bill

A second 529 is probably your best bet.

The only drawback to a 529 is that it assumes that the child will have educational expenses down the road. If the child does not, then it’s actually not a great option.

However, most people, at some point in their life, do have educational expenses that they have to cover. A 529 is designed to help with that.

Q6: Why did I start blogging?
Why did you start The Simple Dollar?

- Robert

I’ve always enjoyed writing and experimenting with different writing “voices.” I’ve started several blogs over the years, too.

When I started The Simple Dollar, I was very focused on our family’s financial turnaround. I knew that a lot of my friends were going through the same thing and I wanted to share the useful things I was discovering.

Although lots of people write with a jaded and sarcastic tone online, I chose to try to write in a very friendly and earnest way. People seek out personal finance when they’re struggling, and when you’re struggling, you need a friendly hand to help you.

Whenever I write an article, I try to visualize someone who is really struggling with a problem. They’re searching Google for answers. They’re probably scared to some extent. What can I do to help that person out, calm their fears, and point them toward an answer? That’s how I started and that’s still the idea I have in mind.

Q7: You Need a Budget kudos
Just a quick thanks for recommending You Need a Budget in one of your columns a couple of weeks ago. My wife and I have always spent within our means and are in pretty good financial shape but we’ve always had trouble tracking all of our purchases. Its tough to know throughout the day and week what the other is buying and this program and the app really help with that.

My wife made the comment last night that this is exactly what she’s been trying to do manually in Excel for years now. She’s always been frustrated.
- Ronald

Although I still prefer Excel’s flexibility – you can pretty much do anything you can imagine with it – I am deeply impressed with You Need A Budget.

It does a great job of presenting a budgeting software package that’s far easier to pick up and start using than an Excel spreadsheet and can be kept private, unlike the many online personal finance tools.

It’s become my go-to recommendation for personal finance software.

Q8: Retirement home decision
My parents are getting quite old and are having a lot of trouble doing things like keeping their house clean and taking their medicine. I now stop in three times a day just to make sure they’re eating and taking their medicine and I do a bit of cleaning.

But I can’t do that forever. They have plenty of money in the bank, but I’m not sure they have enough to afford a home nurse. Should I start talking to them about going to a retirement home?
- Danielle

It’s not a bad idea to open the conversation.

You’re going over there three times a day. One of these times, just sit down with them and talk about their growing need for help around the house.

Don’t make it sound like they are incapable of helping themselves. Simply suggest that they could use more help than you can constantly provide and ask them to think about some options.

This is a tough bridge for people to cross, so you want to be very gentle here. Different people will react very differently.

Q9: Selling home directly / FSBO
What are your thoughts on selling a home “For Sale By Owner”? Have you done it or known anyone who did? I have a mid-60′s home in Florida that my boyfriend paid way too much for during the housing bubble. We have been aggressively paying it off to the point where we “think” it will sell for what we still owe. We have put nearly $50,000 into this house, so it will be a HUGE financial loss for us. But we both hate Florida passionately and want to move back out west where we both are from so we are willing to take the hit. We have no children and this house is our only debt. We are planning to rent for a few years after we move. We cannot foreclose because his brother co-signed the loan and we don’t want to negatively affect his credit in any way at all. So, we having spoken with several real estate agents and they are all over the place on what they think we can get for this house. Houses of similar age and size around us are being sold as foreclosures for around $80,000. We owe $115,000. However, like I said, we’ve put a lot of money into improving this house and this is not a little rat hole house like the others around here kind of are (and this one was when he bought it). Anyway, I have been considering trying to sell it myself. I figure I could tell people better what they are looking at, and I have more of a vested interest in MY house selling. We have been told that our house will sell for anywhere from $100,000 to $130,000. We want to get the $115,000 we owe (+ realtor fees and closing costs et al) if we end up using a realtor that is. I know you can’t tell me if my house will sell or for how much, but I was wondering if you have any insight into how to sell it myself or how to find a good real estate agent and any other tips you might feel compelled to give me. Thanks so much!

- Charlotte

You will undoubtedly find some people who are very enthusiastic about selling their home themselves and you’ll find lots of success stories about it.

However, most of the people who sell successfully themselves put in a ton of footwork to make it happen. They end up making more money on the sale, but they’ve done a lot of work along the way. Having someone sell the house for you takes away a lot of the footwork, but it means you’re going to have to give the seller a cut.

It’s very hard to estimate whether it’s worth it. If you’re willing to put in a lot of time and be patient, I’d try selling by owner. If you’re less patient or are strapped for time, I’d have someone sell it.

In your situation, I see no reason not to try selling it yourself. If you decide it’s not working, you can bring in someone to help you sell it.

Q10: Trusting spouse
I am forty five years old. A year ago, I married for the first time. Although my wife has suggested many times that we merge our savings and checking, I have been reluctant to do it. I think the problem is that I got so used to independence that it’s hard to open things up to someone else.

- Jerry

Sarah and I did the same thing at first. We didn’t fully merge all of our accounts for the first four years of marriage.

Now, I wonder why we didn’t do it sooner. It just makes everything easier.

More important than that, it’s a symbol of the trust we share. All of our spending is totally open to each other, which means that every dime we spend represents us, not an individual. It’s a symbol of our trust, something that has brought us closer together.

Got any questions? The best way to ask is to email me – trent at thesimpledollar dot com. Iíll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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