Questions About Student Loans, Social Isolation, Free Software, Old Cars and More!

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. Facing huge student loan burden
2. Selling my house
3. Pantry organization
4. Dealing with frugal social isolation
5. Free software for memorization
6. Bulk buy it for life
7. Keeping an old car
8. “The One Thing”
9. Peer pressure at work
10. Inherited gold coins
11. Collecting on friend’s debt
12. Why doesn’t America save?

One of the most challenging parts of the mailbag is editing the actual questions from readers.

There are several types of edits that I do to questions. One is to clean up grammar and spelling and legibility and paragraph breaks so that it’s easily readable. Some readers send in very clear questions, while others write one long run-on sentence.

Another is to take out identifying information – after all, The Simple Dollar has no interest in revealing someone’s personal information to the world. I’d far rather have me look like a fool than a reader who trusted me with their question.

Another type is to reduce the length of a very long question into something more compact. I’ll often remove unimportant details and other materials from questions.

This does mean that sometimes questions transform themselves a little bit from their original form. Most of the time, I think I strike the balance right, but there are times where I reveal a bit too much in a reader’s question or I remove too much of their original tone in order to make it readable.

Believe it or not, I spend more time on each week’s Reader Mailbag than I do on any two or three other articles that I write. It’s really time consuming to read lots of questions, fix some of them up into a readable form, and provide good answers to them.

Q1: Facing huge student loan burden

I am about to enter my senior year at Penn State. My grades are good and I think I will be able to get a good job after graduating, but I am really freaking out about my student loans. I have already picked up $73,000 in student loans and this upcoming year is going to put me over the $100,000 mark. I don’t even know how I will ever pay that off and have any sort of life.

The entry level job in my field is about $35,000 a year. If I get a job like that I owe three times my annual salary right off the bat. The monthly payments themselves are going to add up to several hundred dollars which means that I will be left with like a thousand dollars a month to live on.

The thought of this is worrying me a lot but if I don’t continue and get my degree I will have $73,000 in loans and no college degree. I don’t know what to do here.
– Stephen

Assuming you’re an in-state student at Penn State with no significant scholarships and without any sort of job to cut back on these expenses, your numbers sound about right.

Unfortunately, you are facing a problem that’s pretty typical among college graduates these days. Many students exit college with student loan debt that’s substantially more than their annual income. I have one friend who took a job after college in her field with student loans more than four times bigger than her salary.

My only advice to you is to keep living cheap. Live like a college student for a number of years after you graduate. Keep a tiny apartment, maybe even with a roommate, and live lean. Don’t go out all the time and eat meals at home. Focus on knocking down those debts and establishing a great start in your career path so that the value of that degree doesn’t go to waste.

These are going to be your “salad years,” as the parlance goes. It’s okay. There will come a time in your life when you look back fondly on them.

Remember at all times that your goal in the first several years after college is to eliminate student loans while not building other debts and build up your career. That is your mission. If you succeed at it, you’ll be set for a very long time.

Q2: Selling my house

My wife passed away about a year ago. I have decided to sell our house as it is too full of memories. I have been selling off her possessions slowly over the last several months and giving some of them to her family members and friends and now I am ready to move into an apartment as I don’t want to deal with the upkeep of a house any more.

When I sell this house, what is the best approach to take for taxes. I have read a number of guides on selling a house but none of them mention taxes. Should I put some percentage of it aside to pay the taxes on the sale?
– James

Assuming that you lived in this house as your primary residence for two of the last five years, you probably won’t owe any taxes on it. Since you’re a single owner, if you meet that qualification, you can earn $250,000 in profit from selling your house tax-free. So, if you bought it for $100,000 and sell it for $300,000, you’ll just get to pocket all of that money.

This is really the trick that some “house flippers” use to make money. They’ll buy a house, live there for two years while they dump their own sweat equity into improving it, and then sell it at a nice profit and they don’t have to pay taxes on their gains. In fact, one of my very closest friends does this exact thing.

Many of the guides you’re reading likely don’t discuss taxes because they make the assumption that you won’t be paying any!

Q3: Pantry organization

How do you organize your pantry? Do you have individual shelves for each type of thing you put in there? Mine just winds up being a jumbled mess after a while.
– Andrew

I mostly just have a bunch of clear jars with labels on them for most of the staples we use regularly. We have something like four different kinds of flour on hand, a bunch of different kinds of beans, a couple different kinds of rice, different kinds of pasta, and so on. All of that goes into different jars. We also have a giant spice rack for all of our spices.

For a lot of that stuff, we buy the same thing over and over again, so we know exactly how it is used. We don’t need pasta cooking instructions if we always buy the same kind of pasta, for example.

The majority of our pantry is like this. We do have a shelf that’s basically “other stuff” that’s organized fairly haphazardly, and we also have another shelf that contains small kitchen appliances.

At some point in the future, I really need to do a full post on this.

Q4: Dealing with frugal social isolation

At the start of the year I found your site and decided to make some changes in my life so I started cutting way back on my spending and I cut some of my bills and sold some stuff. So now I spend a lot of evenings at home alone and I am kind of bored. I feel like I don’t have any friends and don’t do anything social and I really want to go out but I also realize how expensive that can be. Trying to solve the social problem. Help.
– Jane

The problem with this type of question is that people usually have this predisposition regarding what exactly constitutes “social stuff.” If you narrow your definition of “social stuff” down to things that require you to spend money, like going to coffee shops or going to bars or going to clubs, then, yeah, going out is going to be expensive.

The solution is to try other stuff. Go out, but find things to do that don’t involve a cover charge or a required purchase. A good place to start is meetup.com, which is an organizing point for all kinds of groups and activities in your community. Another good place to start is at the library, which usually has a bunch of free activities and groups, and you might also want to check your town’s parks and recreation department.

Just try lots of things. One thing you’ll figure out pretty quickly is that one of the biggest factors in whether something is fun or not is the people you’re doing it with. Fun people can make watching the grass grow into a fun time, whereas boring people can make the most exciting thing on Earth a bore.

Going out and doing social stuff doesn’t have to cost money.

Q5: Free software for memorization

I am atrociously bad with matching names and faces in my head and in my career that is a bad thing and getting progressively worse. In the past I have used printed off pictures from my smartphone as “flash cards” but I am looking for a free solution that can do this. Ideally one that works on both my phone and my computer.
– Craig

When Craig sent me this message, my first response was one single word – Anki – and a URL – http://ankisrs.net.

Anki is pretty much exactly what Craig describes and it’s free. It lets you create flash cards that you can use online or on your smartphone for almost anything. For example, you can create flash cards that depict a person’s face on one side and the name on the other side and then run through that set of flash cards on your computer whenever you’d like.

I used to make flash cards all the time for some of my classes for things like amino acid structures and so on. Man, this software would have been so useful back then…

Q6: Bulk buy it for life

I hope you can provide some insight into a decision I made a few weeks ago and whether it was the right move. My wife certainly things that it wasn’t.

About three weeks ago I stopped at an outlet center to buy a few new pairs of jeans. I noticed that the kitchen supply store there was going out of business and having a big sale and it was late in the sale. Everything was 60% to 90% off. They had things like Le Creuset enameled cast iron pots for $30 or $40 and Global kitchen knives for like $20.

I spent about $300 and replaced virtually everything in our kitchen. We had a lot of beat-up Goodwill knives and pots and pans and stuff and I just got rid of all of it. When I got home I boxed up all of that old stuff and gave it to Goodwill and replaced it with new stuff that will basically never wear out.

My wife was really angry that I spent $300 to replace stuff we already had. She told me that it made sense to replace it a piece at a time but that we couldn’t afford $300. I did put it on the credit card.

My thought was that I basically would never find a chance to get durable kitchen stuff ever again so this was the time to take advantage of it. We’ll never have to replace this stuff for decades while it seems like the teflon was wearing off of pans and things were getting beat up and replaced every year.

Did I make the right call or was she right here? I can see her point, I suppose, but I think the purchase made sense.
– Damon

This is one of those situations where you both had a point. On the one hand, you’re correct in that you probably found a great buy on stuff for your kitchen and now you’re set basically for life. On the other hand, you did drop $300 that was unplanned and you picked all of it out yourself.

If I were in your shoes, I might have just bought a few things at first, brought them home, replaced a few things in the kitchen, then told your wife about the sale. If you just spent, say, $70 on, say, a new enameled cast iron pot and two amazing knives, and then took some pictures of the other sale prices, you may have gotten buy-in from your wife to go back the next day and buy more, perhaps even with her in tow.

In other words, rather than a frugality issue, I think this is more of a “marital communication” issue.

If I were to find a sale like this now, what I’d probably do is start texting pictures to Sarah almost immediately and discuss some purchases that way. We likely would have agreed on buying several things there and I would come home with several purchases that we were both happy with.

Q7: Keeping an old car

I have been driving a 1989 Honda Civic since high school. It is at the 340,000 mile mark and still works like a champ. I’ve had lots of work done to it over the years though and had some body work done so the exterior looks decent (at least for an ’89 Civic!)

My one worry is that the car looks a little dumpy. Does that kind of thing hurt when it comes to job interviews or things like that? I sometimes worry that driving up in an old car will give a bad impression.
– Denae

Honestly, I wouldn’t worry about it.

For starters, most employers won’t even notice your car when you come in for an interview. You’ll likely park, go into a building, and meet your interviewers there, so the car will be a non-issue.

If an interviewer did see your car, it’s likely that they wouldn’t think anything of it. Most people assume that others are noticing details about them that people just don’t notice – it’s a psychological phenomenon known as the “spotlight effect.”

Even if the interviewer did see your car and did care, there’s a good chance that the effect would be positive. Take me, for example; I tend to respect someone who is getting every ounce of value out of a car, which is what you’re doing.

You should never switch cars just to appease that remaining tiny fraction of people who might interview you. It’s not worth it. If a company cares about the car you drive and makes it into a hiring issue, you probably don’t want to work there anyway.

Q8: “The One Thing”

Any thoughts on “The One Thing“? It’s a book by Gary Keller that says you should always choose from among the things you should be doing and you should choose the thing that will bring you the most success. Seems like a good idea but how can it work?
– Andre

I enjoyed the book and, for now, it still remains on my bookshelf over my desk where I keep personal finance and productivity books.

In a way, it’s something that I was already doing. Each evening, I prepare a to-do list for the next day and I usually pick out three things I want to achieve in the coming day. I try really hard to pick those things out based on importance, not urgency. This is essentially the core idea of the book, that you should pick out the most genuinely important things and, in particular, the things that will make other things easier and take care of them first.

There are a lot of good productivity strategies in the book besides that core idea, though. The only thing I don’t like is all of the added underlines and circles that were added at the printer – it seems unnecessary.

Q9: Peer pressure at work

Right now I work in an office with a bunch of people in their twenties. They are mostly single and they’re constantly buying things and going out almost every night. I’m 31 and one of the oldest people in this office group and while I still go out sometimes I mostly enjoy evenings at home with my wife and daughters.

I feel like I need to go out sometimes and do some of the stuff they’re doing in order to build camaraderie at work. It feels like a kind of pressure I suppose. But I would rather be doing other things. I enjoy it when I go out and I do have fun when I buy something new or go golfing with them but it feels like maybe I’m not getting as much out of it as I am spending.

Do you have any advice on how to find a balance here? I know that it’s something you went through in some ways before.
– David

Spend some time thinking about how much you really need to go out to build camaraderie at work. If you didn’t go out at all, would there still be camaraderie? What if you went out once a month? Twice?

The best way to really figure this out is to cut back to a lower level, then carefully watch the interactions at work. Do you still feel like a strong part of the team? Has there been any decline in the camaraderie in the workplace?

Here’s the thing: most of the time, this will make no difference to your coworkers. You don’t want to be completely absent, of course, but people often overestimate their social requirements in the workplace.

Cut back a little and see how it goes.

Q10: Inherited gold coins

I recently inherited a number of gold coins. They are in plastic holders and are dated from various years in the 1920s and 1930s. They all depict a woman on the front with a sunburst behind her and an eagle on the back with a sunburst beneath the eagle.

My understanding is that these are all one ounce coins and they should be worth a little more than the value of an ounce of gold. I am interested in selling them but I don’t know where to go to not get ripped off on the sale.
– Thomas

If I were in your shoes, I’d choose a few coins and have various coin shops in your area appraise them. Generally, coin shops make their money by being brokers for coins like this – they’ll pay you a little less than their current value and sell for a little more. There is a surprisingly active market for these coins, so that difference in price often isn’t as much as you’d think.

You might also want to look at eBay, but I would be very, very careful about jumping in to selling coins worth more than $1,000 on eBay unless you have a lot of eBay experience. There are a lot of scams out there and if you’re not careful, you can wind up with no coin and no money.

Your best bet is probably with a larger local coin shop that gives you the best offer for the coins.

Q11: Collecting on friend’s debt

About two years ago, I loaned a friend $2,500 in an emergency so that they could get a fairly reliable car on the road so that he could keep his job. I didn’t mind doing it because I could afford it.

For a while, my friend talked about repaying me but hasn’t mentioned the debt at all over the last year. I want to be repaid but I don’t know how to go about this without causing a big argument.
– James

Right now, you have to decide whether it’s more important to maintain the friendship or more important to get your $2,500 back. It is highly unlikely that you’ll be able to have both of them, as sad as that might sound.

It is likely that your friend will react negatively toward your suggestion of paying back the money, probably in a way that will damage what remains of your friendship. Of course, it’s important to remember that your friendship is already damaged, or you wouldn’t be asking this question at all.

Unless you have some form of written agreement, you’re relying solely on your trust in your friend to get your money back, so there’s a reasonable chance that you’ll never see a dime of it, no matter what.

Basically, by not asking, you have a much better chance of maintaining the friendship. By asking, you have a much better chance of getting the money back. Which is more important to you?

Q12: Why doesn’t America save?

Why do you think Americans don’t save much for the future?
– Timothy

This is a question that I’ve spent a lot of time thinking about, and the conclusion I’ve come to is a tough one. I think that a big part of the reason that Americans don’t save money and preserve their wealth is that the modern world is unfulfilling in many deep ways, and that we buy things to get a fairly temporary sense of fulfillment.

I think the film American Beauty expresses this very well. I think that for many people, the idealism of their youth is crushed by the reality of the adult world. By the time they begin to really ask themselves if that’s all there is in life, they are somewhat locked into a cycle of debt and they don’t really see a good way out.

What keeps them there? Modern comforts. The nice house, the comfortable chair, the nice car, the cool gadget – those all seem quite attainable. On the other hand, stepping away from all of that by being financially independent seems difficult, especially since you’ll probably have to ditch some of those attainable comforts.

So, people surround themselves with lots of attainable comforts, but still feel unhappy inside. You can cover a wound with the most amazing bandage in the world, but it’s still going to hurt.

So why are people not saving? They don’t see saving as a way to improve their situation. Instead, they see those attainable comforts as a much better solution. Why save when you can buy a comfortable chair or a nice car?

That’s my take, anyway.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. 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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