Reader Mailbag: The “Making It All Work” Series

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. Stuck between goals
2. Dealing with partner’s student loans
3. Preparing for involuntary job loss
4. Replacing a vehicle
5. Jack of all trades
6. Using sleep as “mental downtime”
7. Buy house or attack debt?
8. Using Amazon gift credit
9. Earmarked “baby” money
10. Emergency savings or credit payoff

I’ve started working on the Making It All Work post series that I mentioned a few weeks back (and many readers clamored for). I’m currently reading the book and taking notes, and the post series will start on the first Tuesday in October.

It should be fun. There are some very intriguing pieces in this book, ones that stretch far beyond time and task management and into big overall life choices.

Here’s my monthly financial situation (Single, no kids, age 32):

Monthly take home income: $4,400 (after 401k contribution of $600)
Monthly payments: ~$3,300

Summary of payments:
Rent: $700
Utilities: $50
Student loans: $1,100
Credit card payments: $800
Forced savings: $500
Insurance: $150

I carry about $7,000 in credit card debt (about 5% APR), and about $130,000 in student loans (about 6.9%).

I make 2/3 of my meals, don’t own a car, and recently downloaded a bunch of budgeting apps for the iPhone, none of which seem to be helping me rein in my spending (I don’t own a lot of stuff, but I like to travel and eat high quality food). I also bought Your Money or Your Life, but I’m less than 1/3 of the way through it. My money seems to just disappear each month!

Any help or suggestions would be greatly appreciated.
- Eric

The biggest thing that seems to be missing in this picture is motivation. What is your reason for wanting to spend less? What are you aiming for in life?

Sit down and set some concrete goals for the future. What do you want to be doing or have done in five years? Maybe it’s just as simple as travelling to a certain list of places. Maybe you want something else.

It is much harder to hold onto a difficult set of tasks (like changing one’s spending behavior) when you don’t have an overarching reason to do so. You seem to be very much in a “live for the moment” mode, which isn’t a bad thing, but it usually runs contrary to longer-term financial planning and financial success.

My wife and I have been married almost a year now and we celebrate our first anniversary this labor day. We are 26, live in Upstate NY and we both have very stable jobs. I feel that we are at a strange point financially right now (strange in a good way). We are very comfortable but we both know that we could be doing more with saving and paying down debt. We bring in around $130K total a year. We both paid off our cars in the past six months and with that extra cash flow coming in we are in a happy lull stage. We have a $10K emergency savings account and anywhere from $3K to $5K in savings in our normal savings account. Our debts are primarily school loans and the situation surrounding the debt is not simple. Here are our debts:

My school loans: $12K @ 2.5%
My wife’s school loans: $12K @ 2.5%, $48K @ 6.0%
Mortgage: $111K @ 4.5%, 15yr fixed

My wife’s school loans feel daunting and we are in a weird place because we have never considered our school loans as “our debt”. I don’t expect her to have to pay for my school loans and vice versa. Some background: Before I started college my parents and I came to the agreement that after scholarships they would pay for half and I would pay for half and I would be on my own. My wife never had that type of conversation with her parents… She is the middle child of four and in my opinion the most successful/independent child. My wife deserves a ton of credit, she has paved her own way and made it professionally. My in-laws have paid all of her siblings’ collegiate bills in full and my wife is stuck with $60K in loans. Her parents can easily make it an equal situation among all their children. We would like to start a family but I feel uncomfortable having a child without putting a serious dent in her school loans first. I know we should probably just sit down and communicate this with her parents but we are successful, are proud of our independence and we don’t want it to seem like we are asking for help. In the end we can handle our school loan situation but it is hard dealing with the inequality of the situation. We also have a great relationship with her parents so we don’t think that this is some type of punishment for being independent (or we hope it isn’t). Any advice on how to treat this situation would be great.

If we do plan to tackle our school loans we have come up with the following scenarios: live off my salary and push 100% of her salary to her loans, live off my salary and keep her salary in a savings account if her parent’s decide to help with the loans, or get over our school loan stigma and treat all the debt as “our debt.” We also really want to get into a “SUPER SAVER” mode and living off my salary seems to be a good solution. We have a bounced around the idea of using the flexible/fixed checking accounts or setting up a “my money” “our money” “your money” type of situation where chunks of my salary go into each pot. We both like the my, our, your money approach because we’ll each still have a pot of money that we can individually decide what to do with. Your thoughts and advice would be great.
- Kevin

Here’s the thing: when you’re married, the debts of either partner affect both of you. It doesn’t matter who brought those debts in the door. The fact is that money is going out the door to those debts, and that exiting money affects both of you because it changes how money is spent in your household.

My advice to any married couple is to treat any debts brought into the marriage as “our” debts rather than “your” debts or “my” debts. Pay them off together, then talk before incurring any more debts.

I don’t think there’s anything wrong with each partner having a small pool of “my” money to spend on whatever he or she wishes. However, that money needs to be balanced among the two partners and how it is used shouldn’t affect the other partner at all. If you want to use your little pool of money towards debt repayment, that’s your choice.

My wife and I are young DINK’s (23 and 22) and plan to stay child-free for life. Her salary is roughly 50% of mine, but the benefits are outstanding – primarily, in addition to good matching contributions, she receives $475 in free cash per month straight to her 401(k) since my benefits cover the health insurance.

The trouble is that her position is very high stress, in absurd proportion to her salary. Her opportunities for advancement are very limited, and management is not supportive of her efforts and the projects she works on; for the company, she and her job are very low priority. Although she enjoys her tasks well enough and they’re distantly related to her degree and passion (art), she is justified in feeling overworked, underpaid, and unappreciated. I am extremely happy at work, have an almost unlimited ceiling for advancements, am 100% confident in the security of my job of 5+ years, and make enough to cover our needs and still contribute about 15-20% of my gross salary to savings. She’s thinking about leaving her job some time in the next 3 to 18 months because the stress may not be worth the monetary benefits. No other job opportunity in our local area is going to be better than the one she currently has, by a long shot. If she leaves this job, she most likely would not seek out another.

We have a decent emergency fund (about 2.5 months of necessities) and impressive retirement savings for our ages ($35k+). We have arranged our budgets such that I cover every bill. Our debt is modest and is decreasing. We’re done with accumulating debt, I strongly believe, and have already eliminated the small amount of credit card debt we had. The mortgage ($180k), her student loans ($21k), my student loans ($15k), and all the necessities of life come out of my paycheck. Recently, her paycheck has gone toward improving and fixing up our new home (purchased in January), which we bought as a foreclosure that needed some work. With the projects wrapping up – now it’s just routine maintenance – and her thoughts of quitting, we have restructured our budgets such that 100% of her paycheck will go into savings from now until the time she decides to leave. Essentially, she has already quit her paycheck. We know that the longer she sticks it out, the larger our savings balances will be by about $1400 per month.

Our current expenses include some fluff that we only spend because of her job. For example, we sometimes eat out after she works a 12-hour day, or pay someone else to sand and seal the deck because we don’t have time, or indulge in alcohol or sweets as a “reward” for working so hard. I know from YMOYL that simply by leaving her job, she will eliminate a certain percentage of expenses related to keeping the job. We also plan to use her potential time at home to more aggressively pursue frugal, money saving strategies. Additionally, without her salary, I think we will be bumped down to a lower tax bracket.

Two questions – 1) What are your thoughts on my spouse potentially leaving a decent-paying but high stress job, especially in this uncertain economy? 2) What additional steps can we take to prepare for this transition?
- Ben

I don’t think it’s ever a good idea to bank financial choices on a brighter future (with the lone exception of student loans). Every time you tell yourself that your “future self” will deal with this, you’re telling yourself a dangerous story. I spent most of my twenties telling myself that my “future self” would take care of it. One day, I learned the hard way that my “future self” won’t take care of it – because, frankly, your future self will likely be facing most of the same problems you’re facing now plus whatever burdens you’re trying to stack on him or her.

In other words, I’d prepare very, very carefully for this move. She should make an effort to determine what exactly she would be doing post-job before she leaves. I’m guessing that she’s banking on some sort of art career. Make your emergency fund nice and fat so that any transition costs (or short periods without income) are handled easily. Save more than you possibly think you’d ever need.

She should also leave as delicately as possible, because that’s a bridge that doesn’t need to be burned. She may someday need to return to that field or even to that specific job. You should also discuss the possibility of a counteroffer before she receives it – often, jobs with overworked and underpaid employees will see a big raise offered if someone suggests quitting.

Our family is looking to purchase a van. We have family that lives four hours away and need the room to transport all of our stuff, our two children and our dog. We currently have a small compact car and a four door truck. My question is this. Since we do not have the cash to pay for the vehicle and would have to get a loan, would we be smarter buying a cheaper vehicle and getting it paid off as soon as possible and then saving for the next vehicle or should we just bite the bullet and buy the more expensive van (Toyota or Honda) to start off with? We currently pay $465/month towards our truck (which is more than we are required to pay but we want to pay it off sooner) and we are not going to purchase the next vehicle until the truck is paid off and anticipate that we will just use the $465 a month towards the new vehicle.
- Sarah

In terms of the family, this sounds quite a bit like our own situation. Because we take so many three to four hour road trips to visit family, vehicle reliability and gas mileage are big premiums for us and have both fed our vehicle choices in the past.

If you don’t have enough sitting around to pay for the new vehicle, get one that you can afford now and save for the optimal choice later on. I wouldn’t recommend walking onto a car dealership unless you either absolutely need a vehicle or you have the cash to pay for it. If you’re in a “need” situation, buy low end and start saving for the next purchase after that one.

I would focus on minimizing the monthly payment for your next purchase and then bank the difference between the $465 number you quoted and the actual payment you’d be making. Pay off that vehicle and drive it until it’s starting to become unreliable, then trade it and use the cash you’ve saved to upgrade. Keep doing that until you can continually purchase late model used or even new vehicles without taking out any financing.

Sometimes I get the feeling I am trying to do too much. How you do you feel about the old saying, “Jack of all trades, master of none”?
- Ryan

I think there’s value and utility both ways. A well-rounded skill set is always useful, as is an expert in a particular field.

I tend to apply this general philosophy: be a “jack of all trades” when it comes to what you personally need and be a “master” at whatever trades you need to use to make your money.

The reason? Being a “jack of all trades” in your day-to-day life is a constant money saver and a resource. Knowing how to saute vegetables, fix a toilet, change the oil on a car, find information on the internet, and so on are all “jack of all trades” skills – but they’re constantly useful and can save you money in your day-to-day life. Making gourmet meals for 300, laying pipe for an industrial building, rebuilding a truck engine, writing 100,000 lines of computer code and so on are all “master” skills – ones that have less application in day-to-day life but are ones people will pay for.

Focus on mastering one or two skills and use those to make money. With the rest of your time, don’t be afraid to be a “jack of all trades.”

One thing to consider is that “downtime” is also useful. I consider that I wrote a significant portion of my PhD thesis when I was asleep (I would review material mentally before I went to bed and plan to write the next day having “processed” it in my sleep) or alternatively spend “processing time” doing some mundane household chore. Now I write complex psychological reports for a living and like to work at home where I can so when I get “stuck” on what to say or how to say it. I can do a load of washing or some other small task while I
am thinking about the problem. I try to schedule adequate “downtime” for that reason, particularly if I have very complex material to deal with.

- Carol

I actually often do the same thing. Many of my best ideas come to me when I’m in the shower or meditating or asleep or doing household chores. It’s almost as if the back of my brain is processing information while I do something else that doesn’t require a ton of active thought.

As you mentioned, a good technique for this is to review a bunch of notes before going to sleep or doing some sort of mindless work. For example, with my Making It All Work series, I’ll read a chapter and note the things that I think are key points, then go do something else for a while – take a shower, take a walk, meditate, or something like that. When I come back, I usually know which key points are going to stick, have some ideas of what to say about them, and have an example or two from my own life. The post just pours itself out from there.

Try it – it really works. Before you go to bed or take a shower or something, review whatever it is you’re wanting to think about or trying to learn. You’ll be surprised how much your brain processes while you’re doing something else.

I am 25 and my husband is 27. We just got married in June, and currently have about $25,000 in savings. We both recently got our Master’s degrees, and our debt is made up of student loans and one car loan. We currently have $48,000 of federal student loans at 6.8%, $9,000 of federal student loans at 2.5%, and a $10,000 car loan at 2.9%.

We live in a 2 bedroom apartment in a suburb outside of Boston, and our monthly rent is $1300. Our yearly income is about $120,000, and we are able to save my entire paycheck of $3000 every month. Basically we are unsure if we should use that money to aggressively attack our loans that are at 6.8%, or aggressively save for a down payment on a house. The way we figured it out, if we bought a house first we would have enough saved to do so in about a year and a half. If instead, we attacked the student loans, we would be done with the 6.8% ones in about a year, and then able to buy a house in two more years after that. All of our friends and family keep telling us that we should not miss out on this great time to buy, and that renting is a waste, but we are worried about getting into a mortgage and house before having paid off at least some of our debt. If we bought a house around $400,000 (which is on the very low end for this area) our mortgage payment plus taxes would be around $2500 a month, plus our utilities would be more, which is much more than we are currently paying in rent. We would also like to start a family within 2-4 years, and I have a sinking feeling that if we don’t get rid of the debt now, there will always be something to else to spend the money on once we have a house and/or kids.

So we are basically wondering what you would do in this situation? To us it seems to make the most sense to just keep renting for a few more years until we have no debt and feel more ready for a house, but its tough when everyone around us including parents and peers are telling us that is a bad idea!
- Lindsay

One baseline thing: don’t buy until you have a down payment big enough to avoid PMI. That’s just an extra cost that no one needs, and you’re far better off waiting another year than being saddled with a couple years’ worth of PMI payments. In a nutshell, that means save until you have 20% down (usually).

So, should you stay in the apartment and pay off other debts or start saving for a house? I really wouldn’t worry too much about how great the housing market is right at this moment. Guessing that prices will suddenly skyrocket up is akin to real estate speculation – and remember, just four years ago, people thought house prices would keep going on up to infinity. 2007 to 2009 alleviated some of those dreams.

If you’re content living in the apartment for now, your best move is probably to pay off the debts you have at the moment first. This will greatly increase your monthly cash flow and only delay your actual home purchase by a year or so.

The lone exception to this would be if you see the economy doing a major rebound and start hearing that the Federal Reserve is going to start raising interest rates. That’ll almost always correlate to rising home loan rates, which means you should switch gears and try to get a home loan sooner rather than later – not because of a thriving house market, but because the loans are so cheap right now. If waiting a year causes your 4% loan to go to 6%, you’re better off jumping in now and taking the PMI than waiting.

In the end, I think your best option is to sit tight if you and your husband are happy where you’re at right now. Get rid of your debts, which will improve your cash flow, then focus on the house.

I’ve been saving my Swagbucks to buy one of several things that I need. Since I’m really only able to use them on Amazon (as a gift card) shipping costs become a concern. So – for example, if what I want costs $10 and if I’ve got $15. to spend (which is “free” money) do I buy it on Amazon spending the extra $5. on shipping and the $10. item will really cost $15. or do I buy it in a store for $10. (but that is $10. out of my pocket?)
- Susan

I’m going to assume that this is normal gift credit on Amazon and that you’re not buying anything too exotic with the credit – books, DVDs, kitchen stuff, magazines, video games, etc.

If that’s the case, I would just wait until I have $25 in credit saved up from this program – or perhaps even a bit more than that – and then order from Amazon, using their “Super Saver Shipping” to get the item or items shipped for free.

That $25 threshold can be a dangerous one, though, if you’re just using money out of your pocket. It can be encouragement to buy more stuff – and that more stuff is often stuff that you don’t need. My solution is that whenever I see something on there I want, I just add it to my wish list instead of buying it. My family members and friends often trawl that list for ideas (and I’ve usually forgotten what I’ve added).

We have about $1000 cash we want to start our “baby jar” with. (My mother loves to tell the story of how my grandfather paid the doctor with a bag of dimes for her delivery,… $40 in dimes saved over 9 months in a jar on top of the fridge….but that was 1950.) What should we do with our money earmarked ‘baby’?

My husband thought we should buy a CD, but I thought that would be a mistake with the rates as low as they are right now. We plan to add to the fund every month, which also makes a CD a poor choice. We would like it to be something fairly “inaccessible” which was an advantage to the CD. What I was hoping you might know is if there is any kind of savings fund for “child expenses” like the education plans you can get where money must be withdrawn for tuition etc., except in this case the money is save for infant expenses. There’s probably nothing like that though, so what would you recommend we do with our $1000+.
- Kara

Unless you’re looking further down the road to educational expenses, the answer is, sadly, no.

What I would do in your case is spend some time right now figuring out what you expect for baby expenses. What will you need at the start? What about monthly costs? I can’t tell you what those will be because of the enormous number of variables there, but you can come up with some estimates on your own.

I would take enough of that cash to cover the startup costs and the first three months and put it in a six month CD. It does earn a little better than straight-up savings (usually) and has the advantage of being untouchable.

What about the rest of it? I’d open up a 529 for your child. You can’t do this directly yet, but what you can do is open an account for yourself and then change the beneficiary to your child once he or she is born. This way, the child will have money for future educational expenses, like college or (possibly) private schooling.

I’ve paid down most of my debt and now have about $500 on one credit card and about $6,000 on another. I have a $500 emergency fund and regularly put at least $500 extra toward debt each month. I also set aside about 15 percent of my salary toward retirement.

While lots of things are going well, unexpected expenses — like a big bill for dental work or a costly car repair — continue to trip me up. I have been thinking about setting up targeted savings accounts for home maintenance, car repair and medical expenses so I’m ready when these pop up. But should I wait to do this until I have paid off both credit cards?
- Pam

My suggestion would be to bump up the size of your emergency fund. $500 is a little low even for a single person. I would shoot for at least $1,000 – and preferably, I’d shoot for two months of living expenses (assuming you’re single).

Another step would be to not be afraid to use that emergency fund if you have to. If you can’t swing an unexpected bill – like a car repair – that’s the exact time you should be tapping your emergency fund. Then, over the next few months, replenish that fund and pull back on other things you’re doing with your money to make that happen.

So, for now, I’d pull back on extra debt payments and channel it into an emergency fund until it’s nice and fat. Then, I’d turn the extra debt payments back on until you actually have an emergency. Use your emergency fund, then channel the extra cash each month into the emergency fund until it’s replenished. Keep going and soon you’ll have no debt.

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:

    I noticed that you did not address Kevin’s question about talking to the in laws. I suspect because you think it is not a good idea?

    At any rate, and coming from the perspective of parents who have tried very, very hard to treat all three kids equally, I would suggest that if it this is really bugging Kevin’s wife, SHE sit down and just ask her parents why they paid for her siblings college but not hers. She may have been so independent that they just didn’t think about it…or cash was an issue while she was going…or something else.

    The reason I suggest she ask if it bugs her is because I have watched siblings split apart when they discover after a parent’s death just how unequally they had been treated financially during the parent’s life. And then it is too late to get a reason. Of course, she may not like the reason, so she needs to think it through carefully.

    I also strongly suggest that this is her issue and not one you should participate in. They might consider your presence as pressure, or as the reason she was asking at all.

  2. valleycat1 says:

    Eric – According to the info Trent provided, you have $1100 in discretionary funds each month. I assume the $500 ‘forced savings’ is an automatic transfer to savings in addition to your retirement – good for you!

    You don’t say whether the cc payments are the minimums due or if you’re paying extra. I’d suggest you try to increase those payments to get that debt under control.

    If you feel your $1100 is ‘disappearing’ & the phone apps aren’t working for you, try writing down the amount you pay throughout the month out of pocket – whether charged, debited, or cash. Just keep a small notepad & pen in your wallet or pocket. Small daily routine expenses can add up in a hurry. Or try the cash envelope method.

    After doing that, you can decide whether the amount of money you’re spending in a given category is acceptable to you or something you want to cut down on.

    Good luck!

  3. Johanna says:

    I don’t see how five-year goals are relevant to Eric’s question. Eric, if you don’t understand where your money is going, you need to keep track of where it is going. Write down all your expenses for a month (or two or three), then sit down and look at them.

  4. valleycat1 says:

    Kevin doesn’t really say whether the parents’ help with student loans/equal treatment is his wife’s issue or his. If it’s his wife’s, then I’m with Sassy – parents & child need to talk. It could be that the siblings asked for help but his wife didn’t (because she assumed they would offer); or that the parents don’t realize how much debt she took on herself. And the parents apparently don’t realize she feels she’s been treated differently.

    However, if his wife is ok with how things are, then she & Kevin need to have the discussion to try to resolve their different views on this.

  5. Tristan says:

    I have a quick and easy question for anyone willing to answer.

    I graduated college in May and got a new, higher paying job. I have about $500 extra per month (after student loan payments, and hugely increased commute expenses). I have a CC at 3% with a $4500 balance, a 9% auto loan with about $3700 remaining, and a 7.75% auto loan with about $7500 remaining.

    I am ready to start paying all this down the right way (high interest rate first) and I already have an established emergency fund. However, being at my job for only a month and a half… I am not sure about my job security. I find myself twiddling my thumbs a lot, and it’s not for lack of work ethic.

    Would it be reasonable to put half of that extra monthly income into savings, just in case this job does not pan out? It is not the mathematically sound way of doing things, but I sure would feel a lot more secure…

  6. Julia says:

    “it is hard dealing with the inequality of the situation.”

    GET OVER IT!

    I’m from a family of 10. My parents have tried to treat us all equally but it’s just not possible. Different people have different needs at different times.

    My parents took on parent-plus loans for 2 of my sisters (2 out of 10), and it screwed ‘em! I worked my way through college and I’m completely on my own paying off student loans. My independence feels great! I know that if I ask my parents for help, they will try. But I’ve never asked and I know they’re greatful to not have to worry about me while they’re helping my siblings.

    I’ve also seen some of my siblings have great fights with each other and with our parents about the equality of how we’re all treated. IT’S NOT FRIGGIN’ WORTH IT!

    You are successful and independent. Enjoy it, be proud of it.

    I’ve also noticed that this type of fued sparks up when somebody starts stressing out over their burdons and starts looking for a way out or for somebody to blame. Resist that urge.

    I agree with others that if this bugs the wife, then she should talk to her parents and find out why. But only if she needs it to understand their logic.

    But, Kevin, you’re able to handle this on your own, you’re adults now, and therefore you should handle it on your own. The time to ask for help was before she took out the loans.

    I think your super-saver plan of living on your income and using hers to save/pay off debt is brilliant! Good luck!

  7. Tristan says:

    Also, if it’s helpful to know… $500 is about 15% of my individual income (less counting my wife’s income of course). So, in theory, I could still save the desired 10% of my income and overpay my debt at the same time.

  8. Gal @ Equally Happy says:

    @Ryan,
    I really don’t think you can focus on more than 3 or 4 big goals at the same time. Trying to do more than that will lead you into failing all of them. I would say pick your top priorities and work on those.

  9. Vicky says:

    “My wife’s school loans feel daunting and we are in a weird place because we have never considered our school loans as “our debt”. I don’t expect her to have to pay for my school loans and vice versa.”

    Something to consider might be that since the benefits are equally shared between the two of you (higher income for the household because of your college educations) then any debt should also be equally shared. Learn now to deal with each other’s family with grace and understanding; you’ll have a happier marriage.

  10. Des says:

    @Lindsay

    You are me two years ago, almost exactly. Age, income, life plans. Its uncanny. I can tell you what we did: we bought and I regret it. I wish we would have rented two more years and paid down our debts first. I was in a hurry to buy because 1) I’d always wanted my own home and now I had the income to get it and 2) we wanted kids and I didn’t want to me trying to move and fix up a house while pregnant. We have since paid off our debts and kids haven’t come yet, but we would be in a better position if we had been patient. YMMV.

  11. candylover says:

    I’m growing tired of the reader mailbags in which people break down their financial information and then ask for advice. Many of the questions from week to week are rather redundant and the answers are vague or would be better suited for a financial planner/financial advisor. I’m not saying that Trent doesn’t give good advice, but that I just miss the reader mailbags in which the questions were more general and not necessarily so focused on just one person’s financial scenario.

  12. John S says:

    I sympathize with Kevin’s wife, because I too am the only one among four siblings who did not get anywhere near the financial help from my parents that the other three received. It has been a source of bitterness and anger for me at various points in my life, even as early as grade school forward.

    The crazy part is that it’s mostly because I’m much better with my money than my siblings. So rather than get rewarded for good behaviour, the message I received growing up was, “good behaviour is its own reward, but bad behaviour is rewarded with a parental bail-out.”

    While we were in college, for example, I came home every Spring with more than half of my summer savings still in the bank from the previous summer, whereas my siblings came home thousands of dollars in debt. My parents shouldered some of their debt themselves and gave them an informal interest-free personal loan for the rest (the repayment of which dragged out nearly ten years for one of them.)

    So they got to party it up in college, living high on the hog with no discipline, while I was penny pinching and not having as good a time in college as they had. That’s fine; everyone gets to make his own choices in life. However it used to really bother me that they didn’t have to live with the negative consequences of their choices.

    After college, my parents wouldn’t even co-sign my first apartment lease. Finding a landlord willing to take me on good faith was difficult. (Gee, mom and dad, I’d hate to be a financial risk to you, after you lent thousands of dollars to all three of my spend-a-holic siblings.)

    However, it’s not like they didn’t pay anything toward my college, so I can’t pretend I got where I am with zero help. However, from that point forward I made it on my own. I bought my first home at age 23 on a $37k salary.

    Eventually I came to just accept that it’s their money and they can spend it however they want to. They don’t technically “owe” me an equal share of their child-spending-budget or their child-financial-risk-assumption tolerance. (It would have been nice, is all.)

    At this point, having had such little help from my parents is more like a personal badge of honor. I would *never* consider going back and asking my parents for “equal money” after the fact.

    I did sit down with them earlier this year and I finally told them how badly it made me feel that they gave my siblings all the loans and handouts while basically snubbing me. I will say that it didn’t really get me anywhere. It didn’t change that I love my parents and my siblings. I suppose I just had to get it off my chest anyway.

    At the end of the day, the insults, injuries, and injustices that we perceive done to ourselves are rarely as important or significant to the offenders themselves as they are to us. There may be no way for Kevin to broach this topic without compromising his family’s integrity and possibly damaging the relationship. I would advise having his wife talk to her parents about it ONE time calmly, and if that doesn’t get anywhere, suck it up and leave it alone permanently. Don’t establish an expectation of being given something and you won’t be hurt or disappointed.

  13. valleycat1 says:

    Pam – I’m with Trent on beefing up your emergency fund. But he didn’t point out that the emergency fund is for you to use when you have unexpected expenses like car repair. Then, when you use the $ to cover the expense, you build the fund back up again. So instead of making extra payments on your credit cards, first you use that $ for building up the emergency fund (assuming you don’t need it for some other major expense that month), and then to rebuild the emergency money.

    Also, it might work better if you use what’s left over at the end of one month as the extra payment toward the next month’s credit cards, instead of paying that money in at the beginning of the month & then needing to use your credit card to cover an expense you hadn’t planned on.

  14. jim says:

    Eric: It sounds to me like you’re doing pretty well actually. You’re putting 12% of your income into retirement and then saving another 10%. Thats good. You will get that credit card paid off within in less than 12 months and then you’ll have $800/month more too. You have a large student loan debt that will eat your income for some time. I wouldn’t feel as if you’re somehow failing if you’re saving 22% of your income.

    Kevin: It seems odd that your wifes parents would pay for her siblings college but not your wife’s. Have your wife and her parents talked about this? It doesn’t even sound like there is a clear idea of why her parents didn’t pay. Maybe they think she wanted to do it on her own and maybe she just went and did it on her own. Does your wife feel she was treated poorly or unfairly? Maybe she should at least tell her parents that. It isn’t very fair at all to give all but one of your kids a free ride to college then let the other kid fend for themselves.

    If the parents struggled to help the other kids and your wife went and took care of the expense on her own thats one thing. But if the parents are wealthy and easily paid for all the kids but here then that seems odd.

    Ben: Sounds to me like you and your wife have prepared well and are in a good position for your wife to quit work. If her job is too stressful to be worth it then I think quitting is OK. One suggestion, are there other ways she might find income on her own? Can she pursue any independent businesses that she could start as a work from home business?

  15. John S says:

    Candylover, I usually enjoy the personal financial anecdotes. The ones that really irritate me are the ones where the people are earning so much money that they should need no help. Like Kevin, in this week’s mailbag.

    “Hi, my wife and I are 26 and make $130k/yr in upstate New York. Help me, what do I do?”

    It kind of makes me want to reach through the screen and *slap* someone. (Come on, be honest. Don’t we all wish we were 26 and making that kind of scratch?)

    I freely admit to being jealous of their income situation, which reduces the enjoyment I get from reading and analyzing the anecdote.

    I guess I’d much rather read about people for whom I can feel sympathy, rather than people who have more money than they know what to do with, and are seeking min/maxing advice. *Those* are the letters I’d rather see go to a financial advisor.

  16. Gretchen says:

    More than half the time I wonder why any of the writers write the letters they do.

  17. Kathy says:

    Re: Kevin’s letter.

    Your mentioning that your in-law’s could easily make things “equal” is very selfish on your part. It sounds like you want to ask them for money. It sounds like you have more of a problem with this than your wife does. You need to let this go and just pay off your loans.

  18. jim says:

    Sarah : Buy the cheaper vehicle. You don’t say anything about needing a more expensive vehicle so buy the cheaper one.

    Lindsay: I would just continue to rent and pile up your money for the time being. Then after 1-2 years you can decide if you want to buy a house or what. If you accumulate your cash in savings then you can use it for a down payment or pay off a loan.

  19. Trent says:

    “More than half the time I wonder why any of the writers write the letters they do.”

    I think that when many people write in, they already know what they should do. They just want some additional motivation to do it.

  20. Johanna says:

    @John S: That’s fairly disturbing that you want to hit people merely for making more money than you do.

    Just because somebody’s salary is high(er than yours) doesn’t mean that they automatically know everything about money, and it doesn’t mean that they don’t have any money problems. So maybe instead of just wishing for more money, the rest of us can learn to work with what we have.

    I don’t mind the full-financial-breakdown type questions, but it’s a bit tedious when the majority of the 10 questions in a reader mailbag are of that form. Maybe there could be a separate “help me make over my budget” post each week, with just two or three (or even one) reader letters of that form, and the regular reader mailbag posts could be reserved for shorter questions.

  21. reulte says:

    Kevin – Life isn’t fair and neither are most families. I read an article or a book that indicated that successful children receive less monitary assistance from their parents (both while they are alive and from their wills). I would simply say stay on good terms with your in-laws. You might mention your plans for the future and how you (you being you and spouse) are financing them, but that’s as far as I’d go in your circumstances. She, on the other hand, can bring up sibling rivalry at any time. In her circumstances, I would talk to my parents at least once if it bothered me simply so the parents know how their behavior makes her feel. At that point, I would not accept any money. On the whole, I think your plans and ideas are good including the yours/mine/ours money approach.

    Ben – It sounds like you’re both on-the-boat with your wife quitting her high-stress job. I think Trent is right in that she and you should discuss what she would do on a daily basis. Going to work daily is a hard habit to break and something should be planned to make it easier. Otherwise, she might become addicted to soap operas! I agree that she should mention dissatisfaction with the job when she is prepared to quit. Perhaps the job might go part-time or change duties in some way which would be more to her likeing.

  22. Dee says:

    @ Tristan:

    Focus more on saving money than paying down debt right now. A couple more months of interest isn’t all that much, and the peace of mind from having more money in savings will be beneficial to you.

    Also, you may not even like the job and may want to move to another opportunity. Cash will help you do that!

    And what’s with the high commuting costs? Is that something you can change? If so, I would like into that to save additional money.

  23. Des says:

    “Maybe there could be a separate “help me make over my budget” post each week, with just two or three (or even one) reader letters of that form”

    I would enjoy a segment like this. I like seeing the breakdown of how other people budget. In “real” life, most people don’t want to talk about actual dollar amounts, just generalities or percentages. I like it when people are willing to expose their actual dollar amounts.

  24. reulte says:

    Johanna – I don’t think he wants to hit them for making more money; I think he wants to smack them for making more money AND complaining about it in some way — such as not knowing if stocks or bonds are the better investment in today’s economy. Truthfully, sometimes that irks me and I’ve occasionally been a bit short in my remarks to some people. Both here and in ‘real-life’. I think most of the writers know what they should do or what they are planning to do… they just want some encouragement or validation or maybe just something to show the spouse or floating a possible idea. I like your idea of a ‘help me with my budget’ post once or twice a week.

  25. Sara says:

    Trent, have you considered editing the questions in the mailbag — particularly the really long ones — instead of just copying and pasting? Kevin’s question is 594 words, and Ben’s is 552 words! They probably sent the questions by e-mail, and they are not blog writers, but you are.

    Several months ago, I remember you wrote about blogging advice you read that said to use work that you’re already doing as content for your blog, e.g., instead of answering a reader’s question by e-mail, you should use that as the basis for a post. Around that time, I started to notice a change in your mailbag posts. In earlier mailbags, you used only shorter questions (4 or 5 sentences at the most). It seemed like you put some effort into selecting which questions to use. Now it seems like you just copy the last 10 e-mails you got.

    And I’m with candylover (#11) — it’s starting to get old reading people’s lists of debts and expenses. I’m sure they appreciate the free personalized advice, but it’s not necessarily useful for anyone else to read it.

  26. Mary W says:

    Tristin – I would save the extra money until you have enough to pay off that 9% auto loan. That way you hedge your bets. You’ll know better if this job is a keeper and you’ll still have a focus for your saving. The extra interest you’ll pay is good insurance in case you become unemployed.

    Once you have enough to pay off the loan completely it will help your cash flow.

  27. Tristan says:

    Thanks to Dee and Mary W.

    To answer the question about the high commute costs… I work about an hour away from where I live. While this may be pretty normal for a lot of places, it is a big contrast from working less than 15 minutes away from home which I did previously (about triples my gas expense).

    I think that my commute costs are still low compared to most people, but relatively speaking they are high for me. I drive an hour almost solely on the highway and get over 30mpg easily. So I’m trying not to complain too much. :) Many of my classmates who graduated a YEAR before me are still looking for a job, so I am counting myself extremely lucky.

    I am living in Wichita, KS and working just outside it. Aircraft is THE industry here and it is still suffering.

  28. Dee says:

    @ Tristan

    OK, that explains it.

    After you settle into your job (several months down the road when you feel more secure in your position) you may want to think about moving closer. I don’t like commutes and have heard others complain about the time they take away from family. Plus the expense!

    But yeah, Mary and I completely agree. Keep saving :)

  29. Wren says:

    Johanna, I’d kind of like to smack them, too, but it has nothing to do with income disparity. I’m all for anyone making as much as they legally can. But whining about having to pay of the student loans when it’s obvious they could easily pay the loans off quickly without hardship is akin to a size 2 model complaining that her expensive designer jeans make her butt look fat. It’s not a serious problem, but a bid for validation and attention.

    You’re adults. They’re your degrees. You’re the ones enjoying the benefits said degrees make possible. You are FAR from hurting financially. Now pay off the blessed loans and stop fretting over who mommy and daddy love best and what is or isn’t “fair.”

    Basic laws of life:
    1. Things aren’t fair.
    2. Sometimes you just have to put on your big /boy/girl pants and deal with #1.

  30. Tara says:

    I agree, Kevin needs to suck it up and just pay off their loans. Begging to her parents for money at their age and incomes is pointless and will probably damage the relationship with the in-laws.

    My brother has received FAR more financial help than I’m sure I ever will from my parents, but I don’t care, I’m just proud that I can stand on my own two feet and say to my parents that the only thing I want or need from them is their love. And I know they appreciate that.

  31. DaveOR says:

    Re:Trent’s response to Lindsay.

    I believe most of the market and many commentators have been spoiled by many years of excessively low interest rates. In turn they’ve forgotten about the general, inverse relationship between interest rates and real estate prices – that being “when interest rates rise, real estate values fall” and vice versa “low rates = higher real estate prices”. The basic reason for the relationship is that the resulting monthly payment becomes the “constant”.

    So the issue is this – will this hold true when interest rates return to anything close to historical norms? Say 6.50-7.00%, for a 30 yr mortgage.

    If it does, regardless of why or how much, there may be a profound impact on real estate not noted for a quite some time. Real estate prices may stay low for a very long time, if they’ve risen they may fall again, or they may fall even further from todays reduced values. So jumping on a cheap rate may be offset by a decline in value – ok if you’re very long term owners.

    This is the biggest factor in the real estate market that hasn’t been noticed, discussed or factored into any discussions on either interest rates or real estate values or market recovery.

    At the same time, what happens to investment returns? Prime rate goes to very moderate 5%, so savings accounts are at 3%, a 1yr CD at 3.5-4% and your investment firm, IRA, pension is only getting 4.50% for 30 years of risk. Those mortgages will be trading at huge discounts.
    And those are not historically high rates by any measure.

    So if you think we’re headed for high inflation and thus interest rates – have you thought about what 10% mortgages would do to the market? This could be a massive 1, 2, even 3, punch!

  32. Johanna says:

    @Wren: Well actually, body dysmorphia (i.e., a size-2 woman thinking she’s fat) and its associated eating disorders are potentially fatal, so if that doesn’t qualify as a “serious problem,” I don’t know what does. But that’s not what we were talking about.

    I didn’t see Kevin’s letter as whining, and frankly I think the hostility he’s getting is pretty much uncalled for. I think Sassy gave good advice: This is between Kevin’s wife and her parents. If she’s feeling resentful, she should talk it out with them, without involving him. I don’t care how much you make – $60K in student loans is a big enough deal to at least have a conversation about it.

    As for high-income letter writers in general, I stand by what I said earlier. Having a high income doesn’t magically make you know everything there is to know about money. And it seems to me that they should be allowed to ask for advice without people thinking out loud about how much they want to hit them.

  33. Amanda says:

    Kara have u heard of smartypig or ING Direct? A couple mire options for u to research!

  34. Amanda says:

    Ben maybe your wife could ask for a day off or less hrs each day. I liked GRS post about that yest!

    I think you should at least pay down those student loans by half before she quits completely!

  35. Amanda says:

    Lindsay remember that others don’t have your tolerances for risk, etc. They also don’t know 100% of your finances. It’s a decision only you can make. Sounds like you’ve already made, actually! I think you’re wise. Keep renting!

  36. Amanda says:

    Kim,

    Add a portion of $ to emerg every paycheck. Even if it’s $25 or $50 each time. Then pay all those cc’s off before segregating different savings funds. With the amounts you gave that’s only about 9 mos, right? Very do-able!

  37. Mike says:

    #7 @ Lindsay: I agree with trent that a 20% down payment and current low interest rates will help your cash flow if you decide to buy the house. But don’t buy just because of super low interest rates. The degree of freedom you will enjoy depends on how financially untangled you are and how much free cash flow you keep. The home purchase will create many new tangles for you. I’m doing a series on housing and mortgages at my blog that you might find helpful. http://wp.me/pZTwu-4r

  38. deRuiter says:

    “…..proud of our independence and we don’t want it to seem like we are asking for help.” then DON’T! You are fortunate to have lucrative jobs while so many others can’t find work. Use your excess money to ay off your debt and BE INDEPENDENT instead of talking about how independent you are and trying to shake down her parents for money which they obviously didn’t offer. The parents have their reasons for why they spent THEIR money as they did, and it is not YOUR money. Grow up and BE independent, don’t beg or whine for someone else’s hard earned cash.

  39. reulte says:

    I don’t see Kevin’s letter as whining either. He has a valid question/concern that affects his family. However, due to family relations and social structure, he should not mention his in-laws inequality of support to their children (his wife) — assuming he wants to maintain good relations with them.

    About 15 years ago, my parents gave one of my sibs a $20K no-interest, pay-when-you-can loan to help with a house down payment and that truly irked me because it represented something that they hadn’t given me, that somehow – they didn’t love me as much (feelings aren’t usually rational!). However, when I finally spoke to them last year about how I felt (notice – not about money, but about feelings), I was told that when I desired to buy a house, they would certainly extend to me the same courtesy. D’oh! All I had to do was ask! I move too much to buy a house but it’s nice to know.

    On second thought, when his in-laws start asking when they can expect grandchildren, he can always say “Once the school loans are paid off.”

  40. Michelle says:

    Ben – While I understand that being overworked and underpaid in what seems to be a dead-end job is not ideal, there are some other things to consider. Does your wife ultimately want a career? If so, it is much easier to build that resume with a job – especially one that you describe with “No other job opportunity in our local area is going to be better than the one she currently has, by a long shot.” If she leaves the workforce at this point in time when career-building is essential, I believe she’s putting herself at a grave disadvantage. It is often difficult for young employees to be given the responsibility and credit (and pay) that is commiserate with their abilities. At that age, you are still unproven, and while you might have the stuff, you’ve still gotta prove it. Dropping out will never accomplish that.

    Unless her plan is to consult, or start her own business, or get highly involved in professional associations (but even in that volunteer work after giving up a job would lose some credibility) I think she’s better off either proving herself in that position for a few more years and see what develops (really? The company has NO place for a 23 yo to advance?) or to ask for reduced hours and spend the rest of the time finding ways to advance her career outside of the office.

    Of course if she wants no career that’s a whole different story.

  41. John S says:

    Hi Johanna, thanks for giving me the opportunity to explain that there is a difference between a proverbial “reach-through-the-screen-and-slap” (think cartoon-esque) slap, and an true threat or intent (or desire, for that matter) of committing actual physical violence. Plenty of other people who read my post knew what I meant, and empathized with it, and did not take it as a “disturbing” sign that “I want to hit people for making more money than I do,” (which is not what I said.)

    With all due respect, you seem intelligent enough to separate the literal from the contextual; One can only assume that you chose not to do so on this occasion, for the sake of being argumentative. In case I am incorrect, please accept this as my explicit statement that the slap described in my previous post was figurative and cartoony, not literal and pain-inducing. And it is not because he makes more money than I do, it is because he presented a scenario in which his financial situation is not the issue. He was asking a family question disguised as a financial question.

    Kevin and his wife are DINKs making around 2.5x their region’s median income. They have more cash savings and less debt than any (non-celebrity) 26-year-old couple I’ve ever heard of. I think most of us would find ourselves very well off indeed, with a relatively easy path to financial success, in their situation. Yet here they are, as highly successful adults, contemplating asking Mrs. Kevin’s parents for a handout. Why? Not due to financial hardship, but rather, because she thinks her parents weren’t 100% fair when handing out money to their kids in years gone by.

    Now, I’d be happy to further discuss whether this filial money-grubbing deserves the disdain with which I’ve circumferentially treated it, if that is your real underlying objection.

    However, my second post was directed at Trent, not at Kevin specifically. I know Trent is perpetually interested in feedback regarding the content of his blog, and Candylover had brought up an item of feedback to which I wanted to add. While anecdotes such as Kevin’s, laced as they are with family drama, have entertainment value in a “Jerry Springer” sort of way, this isn’t a Dear Abby column. Ideally, I’d prefer to see more letters where there is a good chance that the underlying financial issue resonates with the average reader. I’m here to pick up tips regarding how to live more frugally and make better financial decisions. Letters like Kevin’s are more of a sideshow in that regard.

    Sorry if I’ve offended; such was not my intent.

  42. JJ says:

    Spot-on advice on Amazon’s “supersaver” shipping. I never pay for shipping on Amazon these days.

    And yes, I also maintain several “Wish Lists” (non-public) where I can put interesting/needed products instead of buying them right away. This not only helps me cool my heels on impulse purchases, but it also gives me a handy list of things I mean to buy that I can add to other purchases to get them over the $25 threshold. (It also gives me a list of books to look up next time I’m at the public library!)

    Don’t forget that Amazon has plenty of small household consumables, often at cheaper prices than you’d find elsewhere. Batteries, weedwacker string, printer ink, mac & cheese dinners… you name it. It’s pretty easy to pad an order up to $25 without having to buy useless/needless/expensive stuff.

    Oh, and if you have CoinStar near you, don’t forget that you can choose an Amazon gift certificate as your coin redemption method. No commission is taken on it.

    JJ

  43. Steve says:

    Regarding the Baby Jar, I think your advice is wya off. It’s hard to estimate how much a baby will cost in advance. Even more than a month after our baby was born, I was still surprised by some of the medical bills that continued to arrive. I would suggest keeping the money liquid for now, up until a few months after the baby is born. Only then would I put the remaining money in a 529 plan. In the meantime, once you know you are pregnant you may be able to save money on taxes by putting the amount of your medical insurance deductible (or even out of pocket maximum) in a health care flexible spending account.

  44. Wren says:

    JJ, I did not know that CoinStar offered redemption in Amazon certificates, so thank you for mentioning it!

    Johanna, I’m not referring to body dysmorphia; I’m talking about a (completely theoretical) trim person who konws darn well she’s trim, proud of it, but seeks validation by saying she’s not. The point is that some people will flaunt what they have by claiming they don’t have it so others will validate by disagrreing. “Oh, don’t be silly. You’re gorgeous/brilliant/popular.” Some — not all, but some — people who make a lot of money cry “woe is me, we are struggling so hard” for the same effect.

    But whatever. John actually said it all much better with the “filial money-grubbing” comment. No one wants to literally hit anyone (not yet, anyway), but the eyeroll factor is increased by the masquerading of perceived family drama as a financial issue.

    So we find ourselves in violent agreement one at least one point – that she should talk to her parents if it’s bugging her. I just don’t agree that the parents have any obligation to take on her college loans at this stage in the game when she can clearly take care of them herself. If she wanted them to pay for her college, she should have brought it up long before now. (And I don’t think parents SHOULD be expected to pay for college. It’s great if they can and do, but it’s not an obligation to be expected.)

  45. Johanna says:

    @Wren: “I just don’t agree that the parents have any obligation to take on her college loans”

    I didn’t say they did. Kevin didn’t say they did. And I don’t think anybody else said they did. So that right there? Would be a straw man. (Not unlike your entirely made-up silly-whiny-woman-who-says-she-thinks-she’s-fat-even-though-she-doesn’t-really-think-she’s-fat. Those imaginary women can be so silly, can’t they?)

    I do, however, think that parents have an obligation to treat their children fairly. Not necessarily identically, since the children themselves are not identical, but fairly. Maybe Kevin’s in-laws think they *were* being fair, but they never talked to Kevin’s wife about their reasons. Kevin’s wife is not necessarily entitled to the money, but she is entitled to an explanation.

    If Kevin was asking for advice for his wife on how to broach the subject, I’d suggest something along the following lines:

    First, assume that they’re not going to give you the money. (Better to be pleasantly surprised if they do than unpleasantly surprised if they don’t.) Second, assume that they have a good reason for doing what they did. Third, find a way to work in some acknowledgement of something positive they did do to help you get where you are.

    So something like: “Mom, Dad, I was just thinking about how fortunate I am to have had you guys to (push me to take extra AP classes, help me find the perfect college, whatever). That’s a big part of why I’m as successful as I am today, so thank you. But you know, I also had to take out a lot of loans to get through college, and I know (John, Jim, and Joe) didn’t have to take out any loans. And I don’t think we ever really talked about why you did it that way, so I’m wondering if we can talk about it now.”

  46. Steve says:

    To all those claim that they wouldn’t be jealous or otherwise bothered by their parents giving tens of thousands of dollars to their siblings with no explanation: you must be a bunch of saints. Even if you don’t need or deserve the money, such a disparity would stick out to most people.

  47. Kate says:

    #46: Steve–as much as I would love to be saintly I have to agree with you.

  48. Jessica says:

    I have to agree with Steve. If my parents were constantly giving my siblings thousands of dollars, I probably would question it.

  49. Tabs says:

    I don’t think that it was a very wise idea for a guy with a wife and daughter to move to go to seminary for a ton of money. My husband and I realized that into his 2nd year of college. Looking back we regret it(tons of student loan debt…God told us that if we were in debt, we were a slave to it, and it’s SO true) and there are some other options out there. For one, there is a free seminary in Fargo, ND that is well known. To be a pastor, you don’t need an accredited university. In addition, I’ve seen some other tuition free seminaries, as well as online schools. Just something to think about before you uproot your family and put financial pressure on you and your wife.

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