Reader Mailbag: Sensitive Information

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. Marriage and debt repayment
2. Charitable giving
3. Over-the-air television
4. Is a house too big?
5. Emergency calls with no landline
6. Dealing with lying spouse
7. Mortgage insurance
8. Property taxes
9. Large debt load
10. Parenting books

A few people have written to me asking about contacting and other specific information regarding some of the questions used in the reader mailbag.

Generally, I change anything I consider to be sensitive personal information that could actually identify someone. This includes names, specific dates, specific lending institutions, and so on.

The mailbag is not about “outing” someone because of their personal finance situation. I can give the same advice to “Carla” as I can to “Sheila.” I can give (virtually) the same advice to someone dealing with Citibank as someone dealing with Chase. I can give the same advice to someone with $80,000 in student loan debt versus someone with $90,000.

What I never want to do is have someone’s story be identified by a friend or a family member of theirs and have their willingness to share and to ask for help come back to haunt them in their personal lives. It’s simply not worth it.

Q1: Marriage and debt repayment
It’s likely my girlfriend and I will get married in the next year or so and we have a plan moving forward. I have debt to pay off (about $20k in credit cards and $20k in student loans). Our plan is to completely live off of my salary for a year or so and throw her entire salary at all of the debt. We figured in about two years time we’d be debt free and on our way to saving for a house down payment.

I definitely think paying off the credit cards first is the way to go, but on the student loans I’m not so sure. My rate is 2.625% fixed and payment plan set up on a 20 year note (started in 2004). If my calculations are correct, we’re talking about a savings of about $2,700 over ten years if we paid it off immediately vs just letting the payment plan run its course.

Do you think it’d be worth it to pay off early? Or would the $20k be of better use elsewhere (build up full emergency fund / savings / house down payment / etc?
– Stephen

There really isn’t a strictly wrong or right answer here. It really depends on the goals you have mutually with your wife-to-be.

If you’re willing to wait an extra year or two, paying off the debts you have now is the best course, but many people aren’t that patient when they get married.

I would strive for debt freedom and a nice emergency fund before thinking about home ownership.

Q2: Charitable giving
Is it better to give to a local charity that provides help in your community or to a global charity with organization and reach that can help a lot of people?

– Kim

You should give to the charity that is responding to the needs you see as most pressing.

Do you consider the needs in your community more pressing? Or do you see global concerns as being more pressing? Is it more important to make sure people in your community have plenty of food – or people elsewhere in the world having mosquito nets?

That’s a moral judgment, and there’s really no “wrong” or “right” there as most charities serve real needs. You just have to find the ones that speak to you.

Q3: Over-the-air television
I bought an antenna to pull HD channels off the air.

So, I am only paying for basic internet service ($15/month).
It is a huge savings.

– Jim

This works well if you’re close enough to such signals to easily pick them up.

In our location, we were unable to pick up reliable digital signals consistently, even with a roof attachment.

I consider this a great option for people in cities… but perhaps not the best option for people living rurally.

Q4: Is a house too big?
How do you know if a house is too big or not before you live in it? We currently rent a 600 sq. ft. apartment for the three of us and it is just too small. We are looking at a 900 sq. ft. place that we can easily afford and a 1,400 sq. ft. place that would stretch our money.

– Angie

If you’re surviving in a 600 sq. ft. place, then adding 50% is going to feel like an enormous increase in space. Given that the 1400 sq. ft. place would stretch your finances, I simply wouldn’t make that leap.

I’m not clear on whether you’re renting or buying in this scenario, but in either case, I’d go for the smaller of the two options.

You can always go a little bigger in the future, but once you’re in a bigger house and you fill it with stuff, downgrading is much, much harder.

Q5: Emergency calls with no landline
I am searching for emergency phone options when we don’t have a landline. We haven’t had a landline for many, many years. We’ve had some great unlimited cell phone deals. At one point for several years, we had Vonage but over time we found we used the cell phones more so we decided it was a waste to pay for it. Not having a landline hasn’t been much of an issue.

Fast forward a few years and our son is older and can be left at home alone for short periods of time. Sometimes we leave one of our cell phones but that’s not always an option. We have used Skype with some success. We do have an old cellphone that does allow for 911 calls. But, if its not a 911 level concern and he’s flustered, I don’t want an extra layer of things he has to try and remember to do to contact me. I just want a handset that is ready for him to pick up and dial and reach me.

We don’t want to take on a monthly bill like with Vonage. Magic Jack appears to need you to be on the computer. We have also considered a pre-paid cell phone. Basically, we know this probably won’t be used regularly but want to make sure there’s an easy, reliable means of communication for him that is relatively inexpensive commensurate with the anticipated usage (or lack thereof).

What suggestions do you have?
– Jenna

I would use a pre-paid cell phone. Keep it charged, put your cell number on it, and put it in a place where your son knows where it is.

To be sure, make sure the phone you buy has E911 capabilities on it. Most do, some don’t.

I would also go through some scenarios with your son and make sure he knows his home address and could recite it in an emergency.

Q6: Dealing with lying spouse
I decided to start getting our financial house in order and I started by looking at some credit card bills. I looked at our most recent one and it had some charges from some websites that I don’t use. My wife denied it and tried to blame me. I know I didn’t do it, so I know she’s lying about it. What should the next step be?

– Dan

First of all, she may be telling the truth. Are these sites that she would actually use?

It may be that your credit card info has been stolen and is being used for unapproved purchases. This happened to a close friend of mine not too long ago.

You should contact your credit card company quickly and make sure there aren’t any other unauthorized purchases. You should also check your browser history on your computer and make sure no one in your family has been to those sites.

Q7: Mortgage insurance
Recently I’ve received a letter in the mail from the bank that holds my mortgage telling me that I owed an extra $600 to my escrow. I’ve spoken to some higher-income friends and they report similarly, except their payments are in the thousands. I just bought my house in 2012 and last year my escrow actually sent me a check, not a bill. Now my mortgage payment is considerably higher on an otherwise fixed-rate mortgage. I understand that fluctuating taxes and the cost of my homeowner’s insurance has an impact on this, however $600 is almost an extra mortgage payment for me, and not something I wanted to dip into my emergency fund for, especially since I have automatic bank drafts taking out half the mortgage payment every two weeks, and therefore I pay an extra mortgage payment per year anyway. On top of paying the extra $600 they billed me for this year, they also raised my escrow payments by an additional $30 a month.

Now for the question:
My mortgage payment is made up of the several factors mentioned above, but also nearly $100 of that every month goes to mortgage insurance. I know why I need it, but do you think this is something I can shop around for (like homeowner’s, car, or life insurance)? Or is it something that I’m stuck with unless I spend thousands of dollars to refinance? The bank that holds my mortgage didn’t give me a straight answer. They just told me, “We’re the cheapest you’ll find anyway.”

– Kelly

That’s a pretty arrogant response from them.

There’s no reason not to shop around a little bit for a refinancing option. You may be able to find a lower interest rate from a bank who would be willing to take over your loan (effectively, they pay off your old one for you and then you owe the new bank instead).

Depending on your exact situation, you might not necessarily need the insurance. You might also find a bank that manages their escrow better. I don’t know the exact situation you’re in, but it can’t hurt to shop around.

Q8: Property taxes
What happens if you can’t afford to pay your property taxes?

– Bill

Usually, there’s a grace period, after which you’re hit with some sort of late fee.

After another period, you’re usually sent a notice that you have a certain number of days to pay your taxes or your home will be put up for sale to cover those taxes.

If you still fail to pay, you’ll be tossed from your home and it will be sold to cover your taxes.

The periods here vary quite a bit from area to area. Some let you stay for a long time, while other areas are pretty quick about it.

Q9: Large debt load
I need so advice. I am currently in debt of 17,100 dollars. I’m thinking about bankruptcy. But my girlfriend doesn’t want to do that. I am torn. What’s your advice?

– Alvin

Bankruptcy is a pretty severe step for that level of debt. That’s an amount that can be paid off without bankruptcy proceedings unless you’re unemployed. It will just take time.

In any case, you should contact the companies that you owe money to and attempt to get them to lower your interest rates, which will both lower your monthly payments and reduce your overall debt (over time). Just call the number on your phone bill. It doesn’t hurt to try.

I would not seriously consider bankruptcy for that level of debt, even if I were earning minimum wage.

Q10: Books on parenting
I’m an avid reader like you. We’re about to have our first baby in December. Do you have any recommendations for books on parenting?

– Sam

This might seem odd, but the best book I’ve read on parenting in terms of practical things is The Read-Aloud Handbook by Jim Trelease. It doesn’t just help with reading to your children – it really helps with communication and building a bond.

I also found NurtureShock to be really valuable as well, as it made me think quite a lot about how I handled discipline and rewards.

Some of the “standard” books, like What to Expect When You’re Expecting, weren’t that useful, as they just packaged up information I could find online with Google searches.

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

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